Trade Compliance Checklist: Product Classification Records, Origin Determination Evidence, Supply Chain Diligence Files, Recordation and Marking, and Detention and Seizure Response

By Casey Scott McKay · 2024-02-17

A nine-phase working checklist for a trade compliance programme, covering the records that have to exist before anybody asks for them. Phases one and two cover governance and the import profile that scopes the work. Phases three to five cover the classification determination record, the origin evidence file, and the valuation analysis including assists and royalty dutiability. Phases six and seven cover supply chain mapping and the forced labour traceability file. Phase eight covers marking, intellectual property recordation, and border enforcement. Phase nine covers detention response, prior disclosure, and correction. A closing phase covers audit, recovery, and metrics. Each phase ends with a gate.

IP and Technology > General IP | Checklist | Published 17 February 2024 - Updated 14 April 2025 | Casey Scott McKay - marksy.us

How to use this checklist

Trade compliance is a documentation discipline. Almost every expensive problem in the field reduces to the same sentence: a position was taken, it may have been correct, and there is no record supporting it.

This checklist is therefore organised around records rather than around conclusions. Each phase asks not "what is the answer" but "what document proves it, where does it live, and who produced it".

Nine phases plus a closing assessment, each ending with a gate. Run them in order for a new programme; run any single phase as a diagnostic on an existing one.

Use alongside Building a Trade Compliance Programme and What the Border Asks. Templates sit in the Customs, Tariffs, and Trade Compliance Toolkit.

Phase 1 — Governance

[ ] Name one person accountable for classification, origin, and valuation determinations, and record the appointment.
[ ] Give that person express authority to hold a shipment, in writing.
[ ] Identify the executive sponsor and establish a quarterly reporting line.
[ ] Establish the determination record: a durable repository holding each classification, origin, and valuation decision with its reasoning, supporting documents, date, and author.
[ ] Insert a trade compliance gate in the product introduction process requiring sign-off before sourcing.
[ ] Establish a standing connection between the intellectual property function and the trade function, with a recurring agenda.
[ ] Write a short policy that describes what people actually do.
[ ] Identify every entity in the group that acts as importer of record.
[ ] Confirm each importer of record has a valid bond sized for its exposure.
[ ] Confirm powers of attorney to brokers are current and correctly scoped.
[ ] Establish a training programme covering procurement, product, engineering, logistics, finance, and legal.
[ ] Record training completion, since coverage is evidence of reasonable care under 19 U.S.C. § 1484.

Gate 1. An accountable owner exists with authority to stop a shipment, the determination record is live, and the product introduction process has a compliance gate.

Phase 2 — Import profile and risk scoping

[ ] Obtain the company's own entry data from the agency for the last five years.
[ ] Reconcile it against internal purchasing and logistics records, and investigate discrepancies.
[ ] Build the profile: importing entities, countries of origin, classifications, values, duty paid, ports, and brokers.
[ ] Rank classifications by duty paid, and identify the concentration.
[ ] Rank suppliers by value and by risk.
[ ] Identify products carrying action-based tariffs and the classification each depends on.
[ ] Identify products sitting near a classification boundary with a material rate difference.
[ ] Screen every product family against antidumping and countervailing duty orders in force, by scope description rather than by classification alone.
[ ] Identify products with inputs associated with high-risk regions or commodities.
[ ] Count the tiers between the company and raw material for each such product.
[ ] Identify every preference claim being made and whether the supporting documentation exists.
[ ] Identify the company's own marks eligible for recordation and whether they are recorded.
[ ] Screen imports against outstanding exclusion orders under 19 U.S.C. § 1337.
[ ] Identify the export classification exposure alongside the import analysis, per the Export Control Checklist.
[ ] Quantify: duty paid, duty at risk, penalty exposure at each culpability level under 19 U.S.C. § 1592, and the cost of a detention on the highest-volume lane.
[ ] Present the quantification to the executive sponsor and obtain the budget.

Gate 2. The import profile is built from actual entry data, risk is ranked and quantified, and the programme is scoped to the concentration rather than spread evenly.

Phase 3 — Classification determination records

Inputs

[ ] Complete a classification request form for each product: full technical description, materials by weight and by value, function, how sold, how packaged, assembled or unassembled at import, and the bill of materials.
[ ] Obtain photographs, drawings, and specifications.
[ ] Obtain the product datasheet and the marketing description, since the two sometimes disagree.
[ ] Identify any component that could drive essential character.

Analysis

[ ] Apply General Rule of Interpretation 1 first — the terms of the headings and the relevant section and chapter notes — and record the application.
[ ] Apply Rule 2 for incomplete, unfinished, or unassembled goods and for mixtures.
[ ] Where two or more headings apply, work Rule 3 in order: 3(a) most specific description, 3(b) essential character, 3(c) last in numerical order.
[ ] Record the essential character analysis explicitly and with reasons wherever Rule 3(b) decides the outcome.
[ ] Apply Rules 4, 5, and 6 as needed and record.
[ ] Consult the explanatory notes and record what they say.
[ ] Search published rulings for materially identical goods and record what was found, including anything contrary.
[ ] Determine the full statistical suffix, not just the eight-digit subheading.
[ ] Identify every collateral consequence of the classification: action-based tariffs, trade remedy scope, quota, licensing, and regulatory requirements.

Certainty and control

[ ] Escalate genuinely uncertain classifications to a binding ruling under 19 C.F.R. § 177.
[ ] Weigh publication before applying, since rulings are public and competitors read them.
[ ] Record any tariff engineering as a documented design decision in the product development file, so that planning is distinguishable from misdescription.
[ ] Load every determination into a classification database keyed to the internal part number.
[ ] Issue the database to the broker and require entries to be filed from it.
[ ] Diary an annual review of the top twenty classifications by duty paid.
[ ] Diary a review on every tariff schedule amendment and on every product change.

Gate 3. Every high-value product has a written determination with the rules applied in order, boundary products carry rulings, and the broker files from the database rather than from invoice descriptions.

Phase 4 — Origin determination evidence

Non-preferential origin

[ ] Identify the last country in which processing occurred.
[ ] Describe the operations performed there: what equipment, what skill, what duration, what inputs in and what article out.
[ ] Apply substantial transformation and record whether the processing produced a new and different article of commerce with a new name, character, or use.
[ ] Support the conclusion with evidence rather than description: process flow diagrams, photographs, equipment lists, labour records, and production times.
[ ] Visit the plant, or commission a competent visit, for any origin position carrying material duty consequence.
[ ] Record contrary indicators honestly, since a file that only contains helpful facts is not credible.
[ ] Obtain a ruling where the position removes goods from an action-based tariff or a trade remedy scope.

Preferential origin

[ ] Identify the applicable agreement and the rule of origin for the classification.
[ ] Apply the rule: tariff shift, regional value content by the specified method, or specific processing requirement.
[ ] Obtain the producer's bill of materials and cost data, and hold them.
[ ] Confirm the certifying party and that it can support the certification under verification.
[ ] Confirm records retention obligations extend to the producer and are contractually secured.
[ ] Re-verify on any change of input source or production location.

Marking origin

[ ] Determine the ultimate purchaser under 19 C.F.R. § 134.
[ ] Determine whether the article or its container must be marked.
[ ] Confirm the marking method satisfies 19 U.S.C. § 1304: conspicuous, legible, indelible, permanent, and in English.
[ ] Check any special marking rules for the article type.

Advertising origin

[ ] Assess every origin claim used in marketing against the Federal Trade Commission all-or-virtually-all standard under 15 U.S.C. § 45.
[ ] Confirm nobody has assumed that customs origin permits an unqualified domestic-origin claim.
[ ] Route claims through the process in Made Where? and the Labelling and Packaging Compliance Checklist.

Gate 4. Each origin position rests on production evidence rather than a supplier certificate, preference claims are supported by producer data, marking is decided, and advertising claims have been separately assessed.

Phase 5 — Valuation analysis

Basis

[ ] Confirm transaction value applies under 19 U.S.C. § 1401a, or identify and document the alternative basis.
[ ] Confirm there is a bona fide sale for exportation to the United States.
[ ] Identify the price actually paid or payable, including indirect payments.
[ ] Confirm the treatment of any rebate, discount, or credit.

Statutory additions

[ ] Test packing costs.
[ ] Test selling commissions incurred by the buyer.
[ ] Test proceeds of subsequent resale accruing to the seller.
[ ] Test assists — materials, components, tools, dies, moulds, and merchandise consumed in production, supplied free or at reduced cost.
[ ] Test non-US engineering, development, artwork, design work, and plans as assists.
[ ] Value each assist at acquisition or production cost and apportion over the units produced by a documented method.
[ ] Cross-check the assist analysis against the tooling and design arrangements in every contract manufacturing agreement, per the Contract Manufacturing IP Checklist.

Royalty dutiability

[ ] List every licence under which the company pays a royalty or licence fee.
[ ] For each, ask whether the royalty relates to the imported merchandise.
[ ] For each, ask whether the buyer must pay it as a condition of sale of the goods for export.
[ ] For each, identify the recipient and its relationship to the seller.
[ ] Record a written dutiability conclusion per licence.
[ ] Feed the analysis back into licence drafting, since structure is negotiable before signature and not after.
[ ] Coordinate with the licence file so that the customs record and the licensing record describe the same arrangement, per the Royalty Audit and Licence Compliance Toolkit.

Related parties and first sale

[ ] Identify related-party transactions and test whether the relationship influenced the price, by circumstances of sale or test values.
[ ] Reconcile the customs position with the transfer pricing position under 26 U.S.C. § 482 and 26 C.F.R. § 1.482-4, and record the reconciliation.
[ ] Where a middleman exists, assess first sale: bona fide sale, clearly destined for export at that time, and arm's length.
[ ] Assemble the first sale documentary chain contemporaneously, not retrospectively.
[ ] Establish a reconciliation programme for post-importation adjustments, rebates, and transfer pricing true-ups.
[ ] Record a valuation methodology memorandum per product family.

Gate 5. Every addition has been tested per product family, every licence has a written dutiability conclusion, assists are identified and apportioned, and related-party pricing is reconciled with the transfer pricing file.

Phase 6 — Supply chain mapping

[ ] Start with the product families identified as high-risk in phase two.
[ ] Map tier one: finished goods suppliers, with legal entity names, addresses, and production sites.
[ ] Map each successive tier to the depth the risk requires — for textiles, to farm; for electronics, to refined metal.
[ ] Record production site addresses rather than corporate headquarters, since the site is what matters.
[ ] Obtain the map through contractual obligation rather than request.
[ ] Rewrite the supplier contract template to require: accurate origin declarations with supporting documents; disclosure of sub-suppliers to the required tier; retention of records for the statutory period; audit and inspection rights; notification of any change in production site or input source; cooperation in verification and detention response; and indemnity for duties, penalties, and costs.
[ ] Confirm procurement is actually using the revised template.
[ ] Provide a confidentiality structure that answers the supplier's objection — disclosure to a named compliance function or to an independent verifier.
[ ] Screen every mapped entity against restricted and designated party lists.
[ ] Re-screen periodically and on any list amendment.
[ ] Record the map in a system that can produce it on demand, not in a spreadsheet on one person's laptop.
[ ] Re-map on any sourcing change.

Gate 6. The high-risk families are mapped to the required tier depth, the map rests on contractual disclosure rights, every entity is screened, and the map is retrievable.

Phase 7 — Forced labour traceability file

[ ] Identify every product within scope of the rebuttable presumption, remembering that "wholly or in part" reaches a single upstream input.
[ ] For each, assemble the transactional record at every tier: purchase orders, invoices, packing lists, bills of lading, production records, payment records, and transport documents.
[ ] Assemble production records showing volumes and dates consistent with the claimed chain.
[ ] Assemble worker recruitment, hours, and payment records where the regime's guidance requires them.
[ ] Document the due diligence system itself: policy, risk assessment, supplier engagement, verification, remediation, and reporting.
[ ] Assess sectoral indicators as well as regional ones — recruitment fees, retained identity documents, restricted movement, excessive overtime, and debt bondage.
[ ] Use physical or analytical verification where available for high-risk commodities, and record the results.
[ ] Consider segregated production runs with documented chain of custody where traceability is otherwise unachievable.
[ ] Confirm the file is assembled to the standard 19 U.S.C. § 1307 practice requires — clear and convincing evidence, following demonstrated compliance with published guidance.
[ ] Rehearse assembly: who produces the file, from which systems, in what format, within how many days, and who signs it.
[ ] Align the file with modern slavery reporting obligations and customer contractual requirements, so it is built once.
[ ] Where traceability cannot be established at acceptable cost, record the decision to re-source and act on it in advance rather than at a port.

Gate 7. Every in-scope product has a tier-by-tier transactional file, the due diligence system is documented, assembly has been rehearsed against a clock, and unachievable chains have been re-sourced deliberately.

Phase 8 — Marking, recordation, and border enforcement

Marking execution

[ ] Move the marking decision to artwork and industrial design stage rather than packaging.
[ ] Confirm the article itself is marked where required, not only the carton.
[ ] Confirm method, placement, size, and permanence against the product's nature.
[ ] Confirm the English-language requirement is met.
[ ] Confirm any repackaging or relabelling downstream preserves the marking.
[ ] Confirm marking and advertising claims do not contradict each other.

Recordation

[ ] List every registered trademark and copyright eligible for recordation under 19 C.F.R. § 133.
[ ] Record them, and diary renewal against the registration term.
[ ] Prepare a product identification guide for the agency: genuine features, security markings, packaging, authorised importers, and known counterfeit indicators.
[ ] Update the guide when packaging or security features change.
[ ] Establish the internal contact for detention notices on recorded marks.
[ ] Establish a response process for seizure notices under 19 U.S.C. § 1526, per the Anti-Counterfeiting Program Checklist.

Grey market controls

[ ] Document material differences between authorised US product and product sold elsewhere: formulation, warranty, labelling, language, service, quality control, and packaging.
[ ] Confirm the differences are real, consistent, and disclosed, since manufactured differences fail.
[ ] Apply for restricted gray market enforcement where the Lever Brothers Co. v. United States analysis supports it, noting the common control exception from K Mart Corp. v. Cartier, Inc..
[ ] Tighten distribution contracts so diversion is a breach and the source is traceable, per Controlling a Distribution Channel Without Violating Exhaustion.
[ ] Note the limits of patent and copyright leverage after Impression Products, Inc. v. Lexmark International, Inc. and Kirtsaeng v. John Wiley & Sons, Inc..
[ ] Work the enforcement sequence in the Gray Market and Exhaustion Checklist.

Inbound intellectual property risk

[ ] Screen the company's own imports against recorded marks and outstanding exclusion orders under 19 U.S.C. § 1337.
[ ] Confirm no general exclusion order reaches the company's products, remembering that it binds non-parties.
[ ] Confirm supplier warranties address third-party intellectual property and carry indemnity.

Gate 8. Marking is designed in rather than added on, every eligible mark is recorded with an identification guide, grey market controls rest on documented material differences and contractual traceability, and inbound exclusion order exposure is screened.

Phase 9 — Detention, seizure, and correction

Before it happens

[ ] Write the detention response protocol: notification path, named assembler, systems, format, signatory, and counsel.
[ ] Confirm the broker knows who to notify and how fast.
[ ] Pre-position the documents most likely to be requested for the highest-volume lanes.
[ ] Model the daily demurrage and detention cost on each major lane, since it drives urgency.
[ ] Rehearse once, on paper, with the people who would actually do it.

On detention

[ ] Record the notice date and calculate the statutory deadlines.
[ ] Identify the reason code and what it actually asks for.
[ ] Assemble the responsive file — classification support, origin evidence, or the traceability file — in the specified format.
[ ] Respond within days rather than weeks, since charges accrue and the agency's patience is finite.
[ ] Escalate to counsel immediately where forced labour, intellectual property, or trade remedy evasion is the basis.
[ ] Consider export or destruction where the goods will not be released and the carrying cost exceeds their value.
[ ] Preserve every document and communication, since a detention can become a penalty proceeding.

If excluded or seized

[ ] Confirm the deadline for protest under 19 U.S.C. § 1514.
[ ] Assess judicial review in the Court of International Trade under 28 U.S.C. § 1581.
[ ] Assess petition for relief from forfeiture where seizure is under 19 U.S.C. § 1526.
[ ] Assess whether a pattern exists and fix the underlying documentation rather than litigating instance by instance.

Correction and disclosure

[ ] On finding an error, quantify the loss of duty across all affected entries.
[ ] Assess culpability exposure at each level under 19 U.S.C. § 1592 — negligence, gross negligence, and fraud.
[ ] Decide on prior disclosure quickly, since its value evaporates once the agency begins an investigation.
[ ] Prepare the disclosure: circumstances, affected entries, and tender of duties owed.
[ ] Assess False Claims Act exposure under 31 U.S.C. § 3729, noting that relators are frequently competitors or former employees.
[ ] Fix the procedure that produced the error, and record the fix.

Gate 9. A rehearsed protocol exists, the response runs in days, escalation paths are defined, and any error found is quantified and disclosed before the agency finds it.

Closing assessment — audit, recovery, and metrics

Internal audit

[ ] Audit annually against the programme's own procedures, at counsel's direction where privilege can attach.
[ ] Sample entries and reconcile against the classification database.
[ ] Test the database against the current tariff schedule.
[ ] Test origin determinations against the underlying evidence.
[ ] Test valuation for undeclared assists and royalties.
[ ] Test marking against physical product.
[ ] Test record retrieval against the 19 U.S.C. § 1508 requirement and the production obligation in 19 U.S.C. § 1509.
[ ] Sample broker entries monthly against instructions.
[ ] Record findings and remediation with owners and dates.

Recovery

[ ] Review the top twenty duty lines for classification overpayment.
[ ] File protests on unliquidated entries where a better position exists.
[ ] Establish or review a drawback programme against export volume.
[ ] Assess foreign trade zone or bonded warehouse treatment for re-exported goods.
[ ] Assess temporary importation and repair provisions for warranty, service, demonstration, and testing flows.
[ ] Assess first sale on the largest lanes.
[ ] Pursue available exclusion processes with product-specific evidence.

Metrics

[ ] Percentage of active classifications with a documented determination.
[ ] Percentage of origin determinations supported by production evidence.
[ ] Percentage of licences assessed for royalty dutiability.
[ ] Percentage of contract manufacturing relationships with assists valued.
[ ] Tier depth achieved per high-risk family, as a number.
[ ] Entry accuracy rate from the monthly broker sample.
[ ] Detentions per thousand entries, trended.
[ ] Days to respond to an information request.
[ ] Duty recovered through drawback, preference, and protest.
[ ] Training coverage by function.

Closing gate. The programme is audited annually, recovery opportunities are worked rather than assumed away, and metrics are reported quarterly to the executive sponsor.

Trade remedy exposure — a standing screen

Antidumping and countervailing duty exposure arrives retroactively and can transform a landed cost on entries already sold. Run this screen at onboarding and on every sourcing change.

[ ] Screen every product family against orders in force, by scope description rather than by classification.
[ ] Where the scope language is arguably applicable, obtain a scope ruling prospectively.
[ ] Assess circumvention risk for any third-country assembly of subject-country inputs.
[ ] Assess minor-alteration risk for any product modified to sit outside a scope.
[ ] Confirm the supply chain map supports the origin claim under an evasion allegation.
[ ] Confirm supplier contracts carry origin warranties, records access, and indemnity.
[ ] Confirm the bond is sized for a rate change at short notice, and confirm the surety's requirements.
[ ] Quantify the retroactive exposure for finance, since it cannot be passed to past customers.
[ ] Monitor for Enforce and Protect Act allegations naming the company or its suppliers.
[ ] Record a position paper on any product where a competitor could plausibly allege evasion.

Documents that must exist — a one-page inventory

The programme is only as good as this list. For each item: does it exist, where does it live, who owns it, and can it be produced in three days?

[ ] Owner appointment and authority to hold shipments.
[ ] Written compliance policy.
[ ] Training records by function.
[ ] Import profile from actual entry data.
[ ] Risk ranking and quantification.
[ ] Classification determination memorandum per product.
[ ] Classification database issued to the broker.
[ ] Binding rulings obtained.
[ ] Origin determination file with production evidence.
[ ] Plant visit reports for material positions.
[ ] Preference qualification file with producer bill of materials and cost data.
[ ] Ultimate purchaser and marking analysis.
[ ] Artwork sign-off records.
[ ] Advertising origin claim assessments.
[ ] Valuation methodology memorandum per product family.
[ ] Royalty dutiability conclusion per licence.
[ ] Assist identification and apportionment schedule.
[ ] Related-party pricing reconciliation with the transfer pricing file.
[ ] First sale documentary chain where claimed.
[ ] Reconciliation programme records for post-importation adjustments.
[ ] Supply chain map per high-risk family, to the required tier.
[ ] Revised supplier contract template and executed agreements using it.
[ ] Restricted party screening records.
[ ] Forced labour traceability file per in-scope product.
[ ] Due diligence system documentation.
[ ] Recordation certificates and product identification guides.
[ ] Material differences evidence for grey market enforcement.
[ ] Exclusion order screening record.
[ ] Detention response protocol and rehearsal note.
[ ] Prior disclosure files and remediation records.
[ ] Internal audit reports with findings, owners, and dates.
[ ] Drawback, protest, and preference recovery filings.
[ ] Broker instructions, entry sample reviews, and quarterly meeting notes.
[ ] Bond documentation and surety correspondence.
[ ] Five-year records archive with a tested retrieval process.

Sector variations

The nine phases hold generally, but the weight shifts by sector and applying an even effort across all of them wastes the budget.

Apparel and textiles

[ ] Expect classification to turn on fibre content, construction, and garment features, with rate differences of many percentage points across adjacent subheadings.
[ ] Expect the forced labour analysis to dominate, with cotton traceability to farm level.
[ ] Expect preference claims to require yarn-forward or fabric-forward analysis with mill-level documentation.
[ ] Expect marking rules specific to garments, including fibre content and care labelling under separate regimes.
[ ] Expect seasonal volume peaks to make detention timing especially costly.

Consumer electronics and connected devices

[ ] Expect essential character analysis to decide classification for multi-function devices.
[ ] Expect action-based tariff exposure to turn on third-country assembly and substantial transformation.
[ ] Expect software loading to raise an unsettled origin question.
[ ] Expect assists to be substantial: tooling, industrial design, and firmware development supplied to the manufacturer.
[ ] Expect radio and safety approvals to sit alongside the customs analysis as admissibility questions.

Industrial and capital equipment

[ ] Expect classification to turn on function and on chapter notes about machines with multiple functions.
[ ] Expect high unit values, which magnifies the cost of a single wrong classification.
[ ] Expect temporary importation and repair flows to be significant and badly handled.
[ ] Expect spare parts to have their own classification and origin analysis, frequently ignored.

Food, beverage, and agricultural

[ ] Expect quota, licensing, and regulatory admissibility to sit alongside duty.
[ ] Expect origin claims to be commercially central and legally regulated in more than one regime, per the Alcohol Beverage Brand Checklist.
[ ] Expect labelling requirements to be prescriptive and enforced.
[ ] Expect forced labour exposure in specific commodities.

Pharmaceutical, medical device, and life science

[ ] Expect regulatory admissibility to dominate over duty.
[ ] Expect valuation questions around research and development contributions supplied to a contract manufacturer.
[ ] Expect royalty dutiability questions on licensed compounds and platforms.
[ ] Expect serialisation and marking obligations from a separate regime.

Luxury and branded consumer goods

[ ] Expect recordation and counterfeit response to be the highest-value activities.
[ ] Expect grey market controls to matter more than duty optimisation.
[ ] Expect material differences documentation to be the enforcement foundation.
[ ] Expect special marking rules for watches, jewellery, and leather goods, per the Jewellery and Watch IP Checklist.

Broker and service provider management

The broker files the entry and the importer owns it. Manage the relationship as a controlled process rather than as an outsourcing.

[ ] Confirm the power of attorney is current, correctly scoped, and issued by the right entity.
[ ] Issue written standing instructions covering classification source, valuation elements, origin declarations, and escalation triggers.
[ ] Supply the classification database and require entries to be filed from it, with any deviation escalated before filing.
[ ] Require the broker to escalate rather than guess where a product is not in the database.
[ ] Pull entry summaries monthly and sample against the database, the commercial invoice, and the purchase order.
[ ] Reconcile declared value against the accounting record, including any element that should have been added.
[ ] Track error rates by broker and by port, and address patterns rather than instances.
[ ] Meet quarterly, with the error data in front of both parties.
[ ] Confirm the broker's own record retention satisfies the importer's obligation, and obtain copies rather than relying on their archive.
[ ] Confirm the broker's engagement terms do not purport to shift the reasonable care obligation, which cannot be shifted.
[ ] Apply the same discipline to freight forwarders, customs consultants, and any third party preparing declarations.
[ ] Where multiple brokers are used across ports, confirm they are all working from the same database and instructions, since inconsistent classification across ports is a visible red flag.

Mergers, acquisitions, and new entities

An acquisition inherits the target's import history, including its errors, and the diligence is rarely done.

[ ] Obtain the target's entry data for the full look-back period.
[ ] Test the target's classification determinations for documentation, not just for plausibility.
[ ] Test origin positions on any product with action-based tariff or trade remedy exposure.
[ ] Test valuation for undeclared assists and royalties, which are the most common inherited liability.
[ ] Identify any preference claim that cannot be supported on verification.
[ ] Identify any forced labour exposure and the tier depth of the target's mapping.
[ ] Identify open detentions, penalty notices, audits, or evasion allegations.
[ ] Quantify contingent exposure at each culpability level and reflect it in the price or in an indemnity.
[ ] Plan the prior disclosure strategy before closing, since the calculus changes once the buyer has knowledge.
[ ] Confirm the target's bonds and powers of attorney transfer or are replaced without a gap.
[ ] Confirm recorded marks transfer with the registrations and are re-recorded in the new owner's name.
[ ] Integrate the target into the classification database, the supplier contract template, and the audit cycle within the first year, and cross-refer to the Carve-Out and Divestiture IP Checklist where the transaction is a separation rather than an acquisition.

Twelve failures that recur

[ ] Classification inherited from a broker and never reviewed. The most common finding in any assessment, and the easiest to fix.
[ ] Origin accepted on a one-line supplier certificate. Nobody visited the plant and nobody recorded what happens there.
[ ] Royalties never assessed for dutiability. Intellectual property counsel drafted the licence; nobody asked the customs question.
[ ] Assists never declared. The tooling the company paid for and the designs it supplied, invisible to the person filing the entry.
[ ] Traceability stopping at tier one. Sufficient for a customer questionnaire, useless against a rebuttable presumption.
[ ] Marking decided at packaging stage. Rework, marking duty, and a delayed launch.
[ ] Marks never recorded. A brand funding enforcement litigation while declining a border remedy that costs a few hundred dollars.
[ ] Records retained but not retrievable. The statute requires production on demand; an unsearchable archive fails in practice.
[ ] Preference claimed without the producer's cost data. The claim collapses on verification, on entries long since sold.
[ ] Drawback never claimed. Money left uncollected, frequently more than the compliance function costs to run.
[ ] No rehearsed detention response. The file is assembled from scratch while demurrage accrues daily.
[ ] No named owner. Every other failure on this list is a symptom of this one.

The three-day test

The quickest diagnostic on any trade compliance programme is to pick one product at random and ask for five documents within three working days: the classification determination, the origin evidence, the valuation memorandum with the additions tested, the supply chain map to the required tier, and the marking sign-off. A programme that produces all five is in good order. A programme that produces two is the ordinary case. A programme that produces none has a policy rather than a practice, and the gap will be found by somebody less friendly than the person running the test.

Key Authorities at a Glance

Entry, care, and records. 19 U.S.C. § 1484 — reasonable care on entry. 19 U.S.C. § 1500 — appraisement and classification. 19 U.S.C. § 1508 and 19 U.S.C. § 1509 — retention and production. 19 U.S.C. § 1514 — protest; 28 U.S.C. § 1581 — judicial review.

Valuation. 19 U.S.C. § 1401a with 19 C.F.R. § 152; transfer pricing interaction under 26 U.S.C. § 482 and 26 C.F.R. § 1.482-4.

Classification. General Rules of Interpretation; binding rulings under 19 C.F.R. § 177.

Origin and marking. 19 U.S.C. § 1304 with 19 C.F.R. § 134; substantial transformation from Anheuser-Busch Brewing Ass'n v. United States; advertising claims under 15 U.S.C. § 45.

Forced labour. 19 U.S.C. § 1307 and the Uyghur Forced Labor Prevention Act presumption.

Intellectual property at the border. 19 U.S.C. § 1526 and 19 C.F.R. § 133; 19 U.S.C. § 1337; 15 U.S.C. § 1114 and 15 U.S.C. § 1125; K Mart Corp. v. Cartier, Inc.; Lever Brothers Co. v. United States; Impression Products, Inc. v. Lexmark International, Inc.; Kirtsaeng v. John Wiley & Sons, Inc..

Penalties. 19 U.S.C. § 1592; 31 U.S.C. § 3729.

| Phase | Provision | Record that proves compliance | | --- | --- | --- | | 1 Governance | 19 U.S.C. § 1484 | Owner appointment, policy, training log | | 3 Classification | 19 C.F.R. § 177 | Determination memo or ruling | | 4 Origin | 19 U.S.C. § 1304 | Process evidence and plant report | | 5 Valuation | 19 U.S.C. § 1401a | Additions analysis, royalty memo, assist schedule | | 6 Mapping | Supplier contract | Tier map with disclosure rights | | 7 Forced labour | 19 U.S.C. § 1307 | Transactional traceability file | | 8 Recordation | 19 C.F.R. § 133 | Recordation and identification guide | | 9 Correction | 19 U.S.C. § 1592 | Prior disclosure with duty tender | | Closing | 19 U.S.C. § 1508 | Retrieval test on the five-year archive |