When President Bush signed the Trade Act of 2002 last month, the mainstream press noted that the legislation gave him so-called "fast track" authority to negotiate trade agreements with other countries without interference from Congress. Under that legislation, Congress may only take a yes-or-no vote on any trade pact negotiated by the president during the next five years.

But few people realized that buried in the law were a host of new requirements imposed on U.S. importers and exporters that could make it more difficult to make last-minute international shipments. "Quite frankly, this [legislation] wasn't on a lot of people's radar screens," says Peter Gatti, vice president for international policy with the National Industrial Transportation League (NITL) in Arlington, Va., which is the nation's largest shipper group. "They took stuff from pending legislation and put it in the trade act."

The legislation makes it illegal for an exporter to tender cargo that is not properly documented to an ocean carrier. The exporter or its agent now must submit a complete set of shipping documents to the steamship line no later than 24 hours after the cargo has been delivered to a marine terminal operator and at least 24 hours prior to a vessel's departure. At present, exporters may tender documents immediately prior to shipment.

Another provision requires the exporter to file a shipper's export declaration (SED) electronically with the U.S. Customs Service's Automated Export System (AES). Although a majority of shippers now file SEDs electronically, they were not required by law to do so until now. Shippers also must submit a complete bill of lading and master shipping instructions to the carrier.

On top of that, shippers that fail to file those documents will be subject to greater penalties than they have in the past. For example, shippers that disobey the law could have their undocumented cargo seized, and they also could face a civil penalty equal to the value of the cargo or the cost of transportation, whichever is greater.

The law imposes new burdens on importers as well. The Trade Act directs the treasury secretary to issue new regulations requiring electronic transmission of import data to Customs. The secretary has one year after the law's enactment to come up with those rules. Furthermore, those rules will apply to cargo that is imported via air, ocean, rail or motor carrier.

The treasury secretary also must establish a task force that will set standards and develop a process for screening freight prior to its arrival into and departure from the United States as well as set up a system for monitoring the security of cargo in transit. The law additionally requires the treasury secretary to solicit input from shippers and other affected parties.

Gatti believes that shippers will have plenty of time to prepare for the new requirements. "As we read this, these are not self-implementing provisions," he explains, noting that the government is expected to issue detailed rules next August after the comment period ends. "It will take a year before those requirements will apply."

When the new rules take effect, they will have an impact on the way shippers send freight and even parcels not only overseas but also to Mexico and Canada. To meet the 24-hour notice requirement, shippers will have to plan movements of exports and imports well in advance. "In a lot of instances now, the cargo is put together and then [the shippers] follow up with paperwork," Gatti explains. "The way I read this, you won't be able to do that. It will change the way people do business to some extent."

In a related development, at press time, the U.S. Customs Service had just proposed new regulations that all sea carriers be required to submit cargo manifests to the Customs Service 24 hours prior to the lading of cargo for shipment. The agency said that this information was needed for Customs to evaluate the risks posed by cargo containers before they were loaded onto vessels bound for the United States. Such information would allow Customs officers posted at foreign ports to identify high-risk containers. At the moment, Customs is seeking comments on its proposed rule.

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