The United States Customs and Border Protection (CBP) conducts audits and verifications to ensure that goods imported under the United States-Mexico-Canada Agreement (USMCA) comply with the rules of origin and other provisions outlined in the agreement. Here’s an overview of how CBP audits USMCA compliance:
Steps in USMCA Audits Conducted by United States CBP:
- Random Audits: CBP may conduct random audits on importers to verify their USMCA certifications. These audits involve reviewing the importer’s records, invoices, bills of materials, and other relevant documentation to confirm that the imported goods meet the agreement’s rules of origin.
- Focused Assessments: CBP may also conduct focused assessments or targeted audits based on specific information or concerns of an importer’s compliance with various customs laws and regulations, including those related to the USMCA. These assessments may include interviews with company personnel and detailed examinations of records and processes.
- Importer Self-Assessments: Under the USMCA, importers are responsible for self- assessing themselves and are expected to perform due diligence to ensure their goods meet the USMCA requirements, including accurate certifying that their goods qualify for preferential treatment. CBP may review importers’ self-assessments to verify the accuracy of their claims. Importers must keep records and supporting documentation to demonstrate that their products meet the USMCA’s rules of origin and other requirements.
- Requests for Information: CBP may issue Requests for Information (RFIs) to importers to request additional documentation and information related to their USMCA certifications. Importers are required to respond to these requests promptly.
- Documentation Review: During an audit, CBP will review documentation related to the importation of goods. This includes the Certificate of Origin, supporting records, bills of lading, purchase orders, production records, and any other relevant documents.
- On-Site Visits: CBP may conduct on-site visits to the importer’s facilities or the facilities of the producer or manufacturer to physically inspect the production process, inventory, and record-keeping systems. These visits help ensure that the rules of origin are being correctly applied.
- Supplier Audits: CBP may also audit suppliers or producers to verify the origin of specific components or materials used in the production of goods. This is especially important in industries with complex supply chains.
- Recordkeeping Requirements: Importers are required to maintain records related to their USMCA certifications for a specified period, typically five years. CBP can request access to these records during audits and verifications.
- Post-Entry Audits: Even after goods have been imported and have entered the U.S. market, CBP can conduct post-entry audits to verify that the claimed preferential tariff treatment was correctly applied. This may involve a review of customs entries, supporting documentation, and physical examinations of the goods.
- Penalties for Non-Compliance: If CBP finds that an importer has failed to comply with USMCA rules, penalties and fines may be imposed. Importers can also face consequences, such as losing preferential tariff treatment for their goods.
- Cooperation with Canadian and Mexican Authorities: CBP may collaborate with their Canadian and Mexican counterparts, the Canada Border Services Agency (CBSA) and the Servicio de Administración Tributaria (SAT), to share information and coordinate audits on trilateral trade issues under the USMCA.
To avoid costly penalties and disruptions to their supply chains, it’s important for importers and businesses involved in USMCA trade to maintain accurate records, understand the rules of origin, and have robust compliance programs in place it is recommend to work with specialists like Frontier Trade Consultants.