Expeditors International of Washington, Inc. (EXPD) Earnings Call Transcript & Summary

All right. Good morning, everyone. We appreciate you joining us today for our import best practices for Pharmaceuticals webinar. My name is Danielle Berger. I'm the Customer Retention and Development Manager here in the Raleigh Office, and I will be your host today. [Operator Instructions]. This session is being recorded, so we will hold all questions to the end of the content. Last year, we did provide surveys to get your input on what topics you might like to see us cover this year. Importing of pharmaceuticals and the complications of other government agencies were often items that came up. So today, we have Matt Springate, from our subsidiary, Tradewin joining us. Matt is the principle for Tradewin U.S. consulting practice. He has extensive experience working with our importers and exporters to perfect their compliance operations. He specializes in duty recovery programs, preferential trade agreement qualification, tariff classification, prior disclosure and audit support. Prior to this role, he also ran our Tradewin office in the U.K. Matt, we certainly appreciate you being here with us today to lead us on this topic. I'll turn it over to you to go ahead and get started.

Danielle, thanks so much for that introduction, and thanks to everybody on the call for attending. Thanks for the Expeditors Mid-Atlantic and Northeast regions for sponsoring the event. I just realized that I'm wearing the same tie as I'm doing in my head shot. So that's a little bit embarrassing, I do have more than one tie in closet. A little bit about Tradewin, who we are, what we do in the context of the broader Expeditors network. Before we get into the nitty gritty of importing in the pharmaceutical space. So Tradewin is a wholly owned subsidiary entity to Expeditors and we focus on and specialize in customs and trade compliance, solutions for companies here in the U.S. and around the world. We've been in this business since 1997. We operate in 3 regions: North America, the European Union and the Asia Pacific region and have offices around in about 30 countries, excuse me -- in about 18 countries around the world. We do a lot of stuff for companies, but if you wanted to really sort of boil down those services into 3 discrete but very important buckets. One would be what you think of as traditional consulting services, things like risk assessments, manual development in rulings, other types of regulatory analysis. We also do brokering services in terms of post entry via protests, reconciliations filings and due drawback. And then third and finally, we have managed service programs that we support customers with around classification -- dual-use classification, FTA analysis, FDA program development and implementation, all of those kinds of good things. So we're really excited today to talk to you more about importing in the pharmaceutical space. Some of the challenges around it and what are some best practices that you as a participant in this space or an interested party can know about to help perfect that compliance operation and that flow of materials. When we think about where we invest in trade compliance at a very general level across all industries, there are really kind of 3 goals at any trade compliance director or manager or any person involved in a trade compliance space has. One is to ensure that freight moves swiftly through the supply chain has -- and you have good velocity of freight. And that's really driven by, amongst other things, having good trade compliance data in place to facilitate a 7501 in Partner Government Agency review more on that later. The second piece of any good trade compliance program is looking at how you optimize and mitigate your duty exposure, making sure that you've got goods classified correctly at the right time, making sure you're availing yourselves if any trade compliance programs that might be available to you to mitigate duty, doing those kinds of things to help the balance sheet of the company that you represent. And third and finally, you're looking at helping try to manage long-term risk versus short-term velocity of freight in your own supply chain and doing things like making sure that you are conducting audits and controlling that supply chain flow and that trade compliance program so that you know that through that 5-year statutory window in the United States or a different period and a different jurisdiction you've got control of your risk. As it relates to pharmaceutical products, it's an interesting industry vertical in a sense that when we think of most traditional over-the-counter or pharmaceutical drugs and we look at that, we really think about an industry that historically has had very low duty rates in a lot of scenarios in Chapter 30 classifications. As a counter to that, there are a preponderance of what we call partner Government Agency requirements or additional data controls or holds that might necessarily avail themselves of certain products, depending on what it is. Some common questions that we get in our line of work, both on the Expeditors side and on the Tradewin side are why do I get so many FDA holds? Why is the Food and Drug Administration so involved in reviewing our shipments, selecting them for examinations? Some other questions we might have, is I'm importing a pharmaceutical ingredient? The finished drug is duty free. Why am I having to pay duty for my active pharmaceutical ingredient. Why is a CAS number needed to clear entry in the United States? How do we classify certain consumable goods as part of the research and development process of pharmaceuticals and can I just classify that as a medical device? And then also, we get questions around, hey, I'm just importing product into the U.S., and I have no intent to sell it here. I'm just using it to manufacture and then export. Why do I still have to go through all the rigor of an FDA review as part of that? And we attempt to answer all of those questions. But first, what I want to do, sort of walk through our agenda today and then talk about it at a really high level, drugs covered or scope covered from a product perspective. And then also what do we include or what do we think about in terms of steps that need to be reviewed as part of that importation process. So first thing I want to do, I'm going to talk about what do we consider to be a pharmaceutical product? And then what's an ancillary product in pharmaceutical space that we need to be aware of? The second piece that we'll talk about is importing fundamentals. So who are the parties involved, what agencies or party involved to the transaction? What parties are involved to the importation? And what is the good trade compliance or logistics manager need to consider in terms of facilitating those import processes? And then finally, what we'll try to do throughout the session is talk about what are some best practices for your companies within industry to help prevent errors and help make sure that your goods flow seamlessly through the supply chain? So first and foremost, we want to talk about pharmaceutical stuff, what we consider to be part of the pharmaceutical industry or pharmaceutical trade? Well, there are -- what you guys would all think of traditionally is what are you buying at CVS or Walgreens on the shelf or behind the counter. We think about finished prescription drugs, and then we think about over-the-counter drugs. However, in manufacturing and testing environments and in clinical trial environments, there are a litany of different other products that are potentially noncommercial that could be imported or exported as part of broader pharmaceutical trade. One of the key ones would be active pharmaceutical ingredients. So those are -- when you look at the back of a drug label for aspirin or atenolol, whatever, right? It's that drug that imparts the chemical function that helps employ the measured use of the drug, right? It's not the filler, it's not the candy coding on the Advil, it's not any of that kind of stuff. It actually does what the drug is supposed to do. And then obviously, as we all know, the research and development as well as testing process to bring any new drug to market can be extensive and exhaustive. And for every 1 drug that is brought to market, there are 10 that are left on the laboratory floor because they're ineffective or not as effective as they would like to be by the manufacturer. And the creation of all of those drugs are employees importing a number of different inputs. So there could be biological products, blood tissue, plasma, animal products or derived products from animals. There could be chemicals involved in the process. And then there could be medical devices and consumables, whether or not they are regulated or not regulated by the Food and Drug Administration. So all in all, when we talk about pharmaceuticals, there's a broader suite of imported products that we need to be aware of and have a strategy for it in order to make sure that we are mitigating any of those 3 risks that we talked about in managing a good trade compliance program. So the next thing we want to talk about is really thinking about when you look at the customs entry life cycle and how you get a product into the United States that falls into that pharmaceutical sphere, what are the steps that need to be followed? And what are the different agencies that we need to be aware of that have control over that importation process? And I would say as well, one thing to be aware of is that the United States takes a really different view on product safety controls than a lot of other countries and customs jurisdictions in the world do. The U.S. as opposed to perhaps some of our European neighbors or others, really thinks about protecting destination market as a border control. And that's why all these Partner Government Agencies are connected to and part of U.S. Customs and Border Protection through that entry life cycle process, whereas a lot of other customer jurisdictions really look at some of those controls of more post importation process before you bring goods on to market. So that certainly adds some complexity and some stress to any logistics manager or trade compliance person here in the United States that might be overseeing a program. But thinking about the steps in terms of making sure that good slow seamlessly through the supply chain, really starts with advanced review of trade data that can be submitted to your customs broker for completion of a customs entry. And there are all those traditional data elements for pharmaceuticals that we, of course, have to provide to our customers, brokers via parts databases or via invoice information, just like we would for any other product type classification that will drive the duty rate and the admissibility, the value of the product, the country of origin of the product, those kinds of things that we need to look at as really fundamentals, really considered to be sort of the trinity of good trade compliance fundamentals. And then on the pharmaceutical side, as with a lot of other products, we want to look at additional data elements that may be required by a Partner Government Agency. Most people playing in the pharmaceutical space are very familiar with Food and Drug Administration regulations, but there are, of course, a lot of other Partner Government Agencies that could be a part of the pharmaceutical trade. Using FDA as an example, and we're going to go into each one of these data elements in more detail later on in the presentation. We think about product codes, FDA product codes, which are different than classifications, affirmations of compliance codes, drug registration information, things like that, that kind of help the Food and Drug Administration do a review of the risk levels of particular import. Now once you as a trade compliance practitioner go through and determine partner government agency applicability and then all of these other different data elements U.S. Customs and Border protection really sits as the window between you as the importer and communication with these different Partner Government Agencies. And that, of course, lends itself to the submission of a customs Form 7501 or formal customs entry as part of the importation process. And of course, we all know there are certain things that we have to do in terms of making sure that we can file 7501 in order to facilitate clearance. It's making sure that there's a registration for the importer of record, making sure a customs bond is in place, making sure you've got a good nominated customs broker in place to file that entry for you, and then making documents and the data available to file those goods. U.S. Customs and Border Protection, while reviewing all that information really works as the gateway in terms of spilling out and pushing different information to the different partner government agencies. And I've listed a few of them there. We're going to go through them in more detail on a later slide, but in the pharmaceutical space, particularly given the complexity and the risk nature of the product, there can be one where multiple PGAs involved where data needs to be reviewed prior to the release of the shipment and the allowance of an importer to sell the good on a fair market or distribute them as they wish right? So taking a little bit of a deeper dive on the trade data elements, we really want to start and think about how to classify or best classify pharmaceutical products. And what are potentially some of the catch-all that importers run into when they're reviewing those products in the pharmaceutical space. Classification is really important in the U.S. market for driving the duty rate of the product. Again, as we said, a lot of pharmaceutical products are duty free or very low duty. It may be different than a different industry vertical like wearing apparel where there can be very different duty rates depending on how the product is classified. But most importantly, U.S. Customs and the U.S. government uses the classification for imported merchandise to generate Partner Government Agency flags or where they believe based on the classification, another Partner Government Agency may be or will be involved in controlling the importation of that product. And so from a velocity of freight perspective making sure that the HTS classification of the merchandise is correct, or helps you as an importer: a, make sure that the entry is filed timely by your broker; and b, make sure that entry correctly triggers the right Partner Government Agency reviews and the data that you need above and beyond that, right? Now when we're looking at finished pharmaceutical products, and here we're talking about over-the-counter medicine or finished pharmaceutical drugs, the information that you really need to render that classification is really sort of forming function. What's the drug do? What form is it in? And that's really going to help drive the form of the classification of the product. Now taking a step back and thinking about the fundamentals of how you classify a product, there are what are called general rules of interpretation that as a trade compliance practitioner need to be employed to make sure that in reviewing the accuracy of that classification, you're making the right decisions based on customs methodology for how that classification is to be derived. So above and beyond anything in the pharmaceutical space, it's important to make sure that you're referencing the general rules of interpretation and the information within the tariff in order to make those classifications appropriately. Now we see most pharmaceutical products, finished pharmaceutical products being classified in Chapter 30 of the Harmonized Tariff Schedule. Anything classified in Chapter 30 is going to go through some kind of a Food and Drug Administration review. Now the Chapter 30 is not a big chapter. There's only 6 headings or 4-digit level within Chapter 30, but there are some fairly significant differences in how goods are classified within those 6 different headings. One of the most common changes or issues that we see in terms of classification is there's a big difference between pharmaceutical drugs that are brought in directly for therapeutic use. So again, a finished, Ibuprofen or Advil or whatever versus a drug that is brought in for testing, inspection, sampling, further analysis, things of like that. Those different types of use of the drug will change the classification. So it's very important to make sure that in reviewing that you know that the drug is brought in directly for patient use or it's brought in for another purpose because it will have an impact on the classification. Another really interesting thing, and this really goes to show how the tariff changes over time is that there is a new classification within Chapter 30 that was created as part of the big World Customs Organization, 2022 HTS update, which classifies -- provides specific section for placebos. So that's something to keep in mind as well when you're bringing in placebo drugs or placebos into the United States as there a specific place for them within the tariff, right? Now moving away from finish over-the-counter or prescription pharmaceutical drugs people that are trading in pharmaceuticals also know that it involves a lot of chemical classification. And again, as we said, the classification of the merchandise is going to drive the duty rate but also the admissibility review of the product. Really where we see chemicals being imported rather than like reagents or things like that, that are used as part of the testing and analysis process are typically active pharmaceutical ingredients, which we talked about a few slides ago. A lot of people think that these can be classified exclusively in Chapter 30 as a pharmaceutical drug because it is an active ingredient in a pharmaceutical drug. But if it's typically or just distinctly coming in its raw chemical form as a pharmaceutical ingredient, and it's not mixed with any fillers or additives, it's more than likely that this product is just going to be classified as a chemical in Chapter 29 based on its chemical structure, right? Now there are some dutiable products in Chapter 29. So that does have a bearing on the duties that are paid as part of the import process. But again, we're looking at form and function here. And if that API is coming in, in the form of raw chemical and it's not designed for therapeutic use or otherwise, we really need to look and see, does that need to be more appropriately classified in Chapter 29 as a chemical item? One aid that's very helpful in classifying chemicals, but also as a mandatory data element on invoices as per the customs regulations 19 CFR is the Chemical Abstract Service or CAS number. So any time you're importing chemicals into the United States, it's important to know the CAS number and cite that on the invoice per that CFR designation. So something to keep in mind as part of your import process. And then finally, we want to talk about importing and classifying biologicals and materials. So it's the blood, tissue samples, anything else that might be used the inorganic nature in order to do testing or sampling. And then we're also thinking about different materials that are used in the classification process -- or excuse me, in the analysis process. So like pipettes, petri dishes, laboratory protective gear, but also potentially finished medical devices. On the biologicals, it's, again, very important to review whether or not those products are being directly imported for patient use for direct therapeutic use or they're being used for different testing and analysis, and they will have different classifications depending on that particular use. On the medical device front, this is again outside of Chapter 29 and Chapter 30. But one of the common errors or issues with medical device, medical device classification, and there is a real big push to classify probably overclassified items as a medical device, simply because of the low duty rate, is the specificity of that product, whether or not is sterile. So finished medical devices will be classified in Chapter 90, but that's conditional on them being imported for direct treatment of a patient and they typically will have to be sterile. Otherwise, a lot of times those things will need to be classified as it institute material. So a pipette that may be classified as an article of plaster, right? That's where these are items where it's really important to review the chapter in section notes within the HTS schedule as well as look at and pay attention to any sort of other binding rulings or ICPs and Informed Compliance Publications that are published in the United States to help aid and determine a classification for the product, right? So looking at value and changing a little bit moving towards that sort of next pillar of the trade compliance data. At a really high level, outside of the pharmaceutical space, when you import product into the U.S. and you sign a value to them, you're really looking to understand what is the price actually paid or payable for the merchandise. And in most commercial transactions where there's an arms length buyer and seller of merchandise and they determine a price on the Faron market for the product that's a very easy thing to determine. It's simply based on whatever the negotiated price for the product is. However, where value gets complicated as scenarios where there are nonmarket transactions, so transfers of materials. Where there are considered to be sort of material assist or additions to price actually paid or payable, where you see inputs being provided for recharge to a manufacturer or you see consumables or you see dies and molds and things like that, shipments for testing and evaluations like clinical trials, again, I serve non-buy-sell arrangement transfer of merchandise. And then for more developed pharmaceutical manufacturers, there are a number of different related party transactions through a multinational structure that may lend themselves to different transfer pricing analyses that are needed as part of that. All that to be said, that this is an industry and a space where there's probably more nontraditional valuation methodologies than perhaps any other industry importing into the United States or any other geography. The important thing to remember in looking at how you assign values to products is that it cannot be an arbitrary situation. So if you're shipping a tissue sample from one place into the U.S. or in one place to another, you can't put an arbitrary price of $10 on it, right? There has to be some methodology used to assign that value and that methodology needs to follow the custom's valuation methodologies as published in 19 CFR 152. So again, things to keep in mind is part of that review process, okay? Now, if we go back to that, we'll go through the middle section of that slide that we looked at in terms of parties involved in the transaction. Let's start with the U.S. Customs and Border protection. Everybody knows CBP, right? For our purposes and for purposes of pharmaceutical imports, we consider CBP really to be the gatekeeper for importing to the U.S. They're going to be the recipient of the customs Form 7501, and they're going to be the party that's going to disperse the Partner Government Agency information to the relevant parties for further review of the merchandise. They're going to conduct an initial review of the entry, and then they may conditionally release goods where there could be a hold until the PGA is reviewed. A common example of that would be I'll do a conditional release to your facility, pending a PGA holder. You have to hold the merchandise at your facility until the FDA can release or decide to inspect the merchandise. All of this data and all of this transfer of information is done within the Automated Commercial Environment or ACE. I think most of us are probably familiar, but for those of us who aren't ACE is sort of the single window for U.S. Customs and the PGAs where they are logging and receiving trade information and then dispersing it as part of the entry and release process, okay? Looking at the partner government agency structure for how these things are managed. Let's start with the Food and Drug Administration. And again, that's one that I think everybody is going to be well familiar with in this trade compliance space. At a really high level, the FDA protects the U.S. market by controlling a number of different -- a number of different types of products. The way that I like to think about it is anything that touches you or touches your skin or can be ingested is probably going to be controlled by the FDA in one way or another. We all know and expect food to be controlled by the FDA, which is why they're going to controls around label reviews and things like that prior notice. This mud requires additional food and drug administration data elements to clear into the United States. Medical devices are controlled, human drugs are controlled. Cosmetics are also controlled. So -- and there are differences to the level of control, whether or not it's something like lotion that just enhances the nature of skin or that has an SPF and it is going to change the nature of how it's controlled by the FDA. Tobacco products are controlled and then radio emitting -- radiation emitting products are controlled as well, which is why sometimes you have electronics manufacturers that are involved in the FDA space, crazy, even true, right? If you look at data elements required to clear FDA and again, these are going to vary depending on the nature of the product that you're importing. But one of the key ones is going to be the FDA product code. We're going to talk about that in a minute. The other piece of it is going to be an affirmation of compliance code. That's going to be an optional data element that's going to give additional information to the Food and Drug Administration to help them review and clear the merchandise. And then some products, depending on the nature may require prior authorization from FDA to review and clear. What's important to understand as part of this process is that following the submission of the 7501, the Food and Drug Administration is gathering all of this information together and reviewing it in a systematic way and then in a human way to try to understand what the risk levels are for the product that's being imported. That risk level or that risk review is going to then determine whether or not additional documentation or a physical review of product may be required as part of that process. And that's why FDA holds can exist. It's a review based on a risk level or risk understanding. Diving a little bit deeper into some of those data elements that are important for the Food and Drug Administration program. Again, the key one is going to be the FDA product code. It's a separate nomenclature from a product registration. If you have, for example, a registered medical device with a registration number with the FDA, really any product that is controlled by or requires additional data elements from the FDA is going to require a product code. The nice thing about FDA product codes is they don't necessarily follow the same legal rationale as the HTS classification in terms of looking at GRIs, chapters and section notes, things like that. They do follow a Syntec structure and the FDA makes tools available on their website that are really helpful to help make those FDA product code determination. There's a pretty good FDA code builder that you can use to help identify the FDA product codes. And as an example, 62 GBA, 41 equals Ibuprofen, right? That would be something that you would submit to your customers' broker as part of the entry. We talked about affirmation of appliance codes earlier. Again, affirmation of compliance codes really supplement the entry information and assist FDA in reviewing and confirming that the importers provided the right detail and content in order to file the entry. They may not be mandatory, they could be optional, but additional data review is really helpful in the FDA reviewing and understanding what's included within that shipment and what the risk levels are. Now these are helpful when there's a registration requirement for the imported product, this prior approval, a prior authorization that's needed, any other kind of compliance data element that's required in order or required or helpful in order for the FDA to make their review can be supplemented through an affirmation of compliance code. So example, REG is the code for a drug registration number? And when you're filing the entry, you could do REG and then whatever that drug registration number is. AOC qualifiers, so these are things where you can get -- even work with your manufacturers to get additional information in order to assist with filing that entry and helping review to clear, okay? So in terms of looking at the Food and Drug Administration's process and reviewing what happens and how it works and what you need to be aware of. The FDA, separate from ACE operates what's called the Import Trade Auxiliary Communication System or ITACS, which is an FDA window for status. So for example, if you've been notified that you have a shipment that is subject to an FDA hold and it needs to be held at your facility following additional documentation being required or an exam. That system can be used to track the request as well as upload documentation, help schedule exams and then receive notices of FDA actions. We talk about FDA exams a lot. An FDA exam is a physical hold of merchandise where they will come to your facility and look at the segregated freight and potentially retreat a sample of the merchandise for testing. And again, that determination is done based on known or perceived risks for the product. Following all that information gathering and information review, if your product is subject to an FDA exam and if the requesting additional documentation or samples. There's an FDA compliance branch that will review that data and the samples to determine if the item can be released or detained. Through that review process, importers are allowed to provide additional information and that can assist in FDA administration's review of that product. The FDA is going to release or refuse the product depending on whatever the result of that is going to be. If you are unfortunate enough to have a product that is refused by the FDA, you've got a couple of options. You either can destroy the product or you can export it outside of the U.S, okay? One thing to kind of keep in mind is part of this process. When we talk about the Food and Drug Administration and sort of the flow of data from you, the importer through CVP to FDA, FDA doing the system review, FDA doing the manual review determining if the shipment needs to be held, all of those other kinds of things. That whole process is predicated on good data being fed to the FDA to do that review and analysis process. If there are incomplete or incorrect data or missing information submitted with the entry that does increase the risk that an FDA holder exam may occur. So it's really, really important to make sure prior to reporting any product into the United States, you understand what the classification is but also what are the Partner Government Agency requirements for that product and what are the data elements that are needed to be submitted with the entry in order to make sure that you facilitate a seamless clearance as you possibly can, right? Now we talked about several slides ago, not just the FDA, but there's a lot of other Partner Government Agencies that might be a part of the control environment for these pharmaceutical goods. And we'll go through some of them not a tremendous amount of detail, but just kind of talking through what they control and what's important in terms of doing that review. The first would be Fish and Wildlife, right? And Fisher Wildlife is going to control certain animal or wildlife derived products, typically in a CITES or Convention Of International Traffic and Endangered Species perspective. So if there's a product that's being imported as part of a drug manufacturing or drug testing or analysis process that is subject to CITES as the Fish and Wildlife Agency is going to be the one that controls that. We certainly see a lot of control for Fish and Wildlife in the wearing apparel and retail space for things like Mother of Pearl Button and certain reptile skins and things like that. But if there is anything that is controlled under that CITES convention Fish and Wildlife life is going to be involved. The Department of Agriculture, very similarly and the Animal and Plant Health Inspection Services is going to have controls on certain plant and animal products imported into the United States. And if that's done as a partner pharmaceutical industry, there potentially could be a control there as well. APHIS is really focused on and concerned with looking at inputs into that can affect the biodiversity of the U.S. ecosystem, right? So that's really their prime function in terms of looking at that and kind of protecting the U.S. and control ecosystem. The Center of Disease Control also gets involved, potentially depending on what's imported. The CDC controls live animal imports. I remember when I was living in London and my dog over -- back over the U.S., I had to get a CDC permit to do it. But they're also in this space really more involved with certain documentary or control reviews of infectious diseases like viruses or bacteria or other things like that, that could be imported into the United States as part of testing process or what have you. And then I think probably the largest Partner Government Agency outside of the FDA that could be involved is the Environmental Protection Agency, specifically around controls for the Toxic Substances Control Act or TSCA. That really looks at controls chemical imports into the United States and so depending on what the nature of that chemical is, there may need to be a TSCA certificate that is logged on file saying -- simply saying that this product is subject to TSCA requirements, but it meets all the conforming requirements of that regulation as part of the process. Those TSCA certificates can be quite blanket in nature, but they also carry heavy monetary penalties if they are missing or done incorrectly. So it's important to make sure that those are done correctly and accurately as part of the review process. right. So I think thinking reflectively in terms of your import in terms of your pharmaceutical program, there's a couple of things that we really want to leave you with as far as best practices goes and as far as making sure that you obtain those or maintain those goals that you have, which is velocity of freight, mitigating your duty spend and then making sure that you aren't creating a long-term compliance risk. Prior preparation is key, right? So just like any other industry vertical, but perhaps more importantly, for pharmaceutical, getting the right classification as well as doing the correct review of importing requirements and trade data is incredibly important to make sure that, that shipment is lodged, cleared and delivered as quickly as efficiently as possible while mitigating any future review process by a Partner Government Agencies. Having that entry key accurately is really, really, really critical to avoid potential detention or examples. The other thing I would pour is that when we talk about the Food and Drug Administration, there's a macro risk analysis done by that inputted trade data. And that risk analysis happens automatically via their systems. But again, having good sound data and review processes in place prior to filing the entry is going to significantly minimize holds and controls as part of the product. So again, just like anything else, and I think I've said this a thousand times, I think it say, 1,001 times, preparation is key and prior due diligence is key prior to the import process. And that's for the benefit of everybody on the call just simply because a little bit of prevention on there can save a very costly delay downstream in the supply chain. So again, it's a very important process to follow. So with that, I've concluded the bulk of my presentation. I want to thank everybody for joining the call, and we're welcome for a few questions before we close. Thank you.

It looks like we have one question in the Q&A box. Is TSCA accessible to the public or only for brokers?

That's a good question. I believe it's accessible to the public, but I'm not 100% sure on that. That's something I might need to follow-up on and check it's certainly accessible by our broker.

Great. we'll provide some follow-up on that. All right. So I don't see any other questions in the Q&A box. No, we have a couple more that have just come in. All right. So if there is above-average FDA holds, what is the right approach to get it resolved directly with the FDA? Or should they be working with their broker?

I think the answer to that question is going to depend on what the root cause of the FDA holds are. Is it the nature of the product? Is it the nature of the data being submitted to the broker? And are there any anomalies with the data? Or is there potentially a feeling on the FDA side that there's a previous track record for noncompliance that can be mitigated? I would say, as an importer, if you feel like you've got a fairly sound compliance program in place and are doing the right things on A and B product analysis and submitting the right information. It never hurts to conduct outreach to FDA to at least if they're willing to do it, have a discussion with them or a working session to explain what you're bringing in, why you're bringing in, how you're bringing it in and what your controls are in place? We've certainly anecdotally heard stories through an industry of different companies that have felt a little bit picked on by FDA. And usually the result of that is there's some concerns on the FDA side about something going on that hopefully can be alleviated by a conversation.

Great. Thank you for answering that one, Matt. A couple more have come in to the chat box. The next one, can I TSCA a take statement or form be issued on an annual basis for my broker to use?

I believe so based on the product, right? If you get differences in the product and things like that, that's going to change the things. But I believe TSCA certificates are annual.

Yes, a copy of this presentation will be provided that will be sent out in the next 24 to 48 hours. So look for that coming from Samantha. All right. How common are exams by the FDA?

I think it really depends on the importer and the product and the data being submitted. They certainly don't have limitless capacity like any government agency. But I think, again, it just really depends on the product and how good the information is.

Great. All right. Are you open to taking direct phone calls if needed?

Yes, absolutely. I've got my e-mail address on the bottom of the presentation and if anybody's got any questions following on from the call, please send me an e-mail or -- and we'll set up a time to talk.

We have a question here around intended use codes. Do you need to apply for all shipments into the U.S.? Does this apply to sample shipment or standard rather?

It's a good question. I think it's going to depend on what the sample is and if there's any sort of minimum quantity exemption. I think for the person answering that question, maybe grab me by e-mail and we can give you a little bit more in detail and discuss that further.

All right. Is there a common error you see? What are the most common errors you see with the FDA? That one's pretty broad.

Well, I think going back to that point of more is better if you've got a good compliance program. If you've got the ability to provide an affirmation of compliance of code and you don't. That's probably an area of potential risk. Again, the more information that you're giving them to show that the product is in compliance with the requirements, the better.

Great. all right. Allison, I know you've got a question there for a USDA statement, that one is fairly specific. So I will go ahead. And Matt, I will get with you offline on that one, so we can get Allison answer back there. Any resources or additional guidance on FDA product code? Like you said, it's not as detailed as HTS rules.