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Customs reauthorization focuses on trade over security
Monday, 14 September 2009 00:00
Pending bill reverses trends of last eight years.

Ever since the United States was hit by terror attacks in September 2001, many international trade practitioners have complained that the reaction of the federal government emphasized the role of Customs in providing cargo security at the expense of facilitating trade.

A bill currently pending before the Senate Finance Committee, dubbed the Customs Facilitation and Trade Enforcement Reauthorization Act of 2009, could put trade facilitation back in the mix if it should become law. The committee plans to take up the bill once it is finished with its health insurance reform measure, perhaps in three or four weeks.

The bill includes several provisions that should gladden that hearts of traders, such as those pertaining to the Customs-Trade Partnership Against Terrorism. There are also a few potential worrisome provisions in the measure.

Key provisions of the bill would create several new positions and offices within Customs & Border Protection (CBP) and the Department of Homeland security focusing on Customs facilitation and enforcement. The legislation would also mandate the assignment of additional commercial enforcement officers at the nation's 40 busiest ports of entry, authorize $300 million a year for the Automated Commercial Environment (ACE), streamline the duty drawback process, and create pilot programs at several land border crossings on the northern and southern borders at which Customs would be open 24 hours a day. The proposal would also reverse current policy by allowing CBP to use data from Importer Security Filings for commercial enforcement purposes.

"There is likely to be strong industry support for many provisions in the bill," said Jon Kent, the Washington legislative representative of the National Customs Brokers and Freight Forwarders Association of America. "There appears to be a renewed sense in the bill of the importance of Customs for commercial operations. For so long this has been dwarfed by the agency's attention to security-related issues." Kent emphasized that the NCBFAA has yet to take an official position on the legislation.

Michael Ford, vice president for regulatory compliance at BDP International in Philadelphia, viewed the appointment of a commissioner for trade facilitation and enforcement in a positive light. "It's not that Customs hasn't worked enough in those areas," he said. "But it is better to have this designation, so that if someone has an issue they know where to go. Having a commissioner focused 100 percent on trade will be a good thing."

Kent was somewhat skeptical of the reorganization provisions in the bill. "Some people may be concerned about the effect this will have on the smooth operation of the agency in the short term," he said. "They have been through reorganizations before and may be concerned about going through another."

Amy Magnus, a district director with A.N. Deringer in Champlain, NY, is particularly pleased with the creation of the position of trade advocate. "It shows Congress wants the agencies to work closely with industry," she said. "The bill also mentions coordinating with the World Customs Union. We need to stop thinking about trade in US-centric terms. Trade is global and we need to harmonize and coordinate efforts globally."

More worrisome are the bills provisions allowing security filings, the 10+2 data, to be used for commercial enforcement purposes. "There is a level of confidentiality in the security information," said Kent. "There is a concern about how the information will be deployed across the agency for commercial purposes." In other words, some may fret that sensitive information will become public.

Magnus is confident that the agencies in question can keep a secret. Anyway, she said, "I could never understand how they could not use this data for commercial targeting because the two could be linked."

Her concern relates to the technicalities of trade law that prevent anyone but licensed Customs brokers from filing Customs data. The Importer Security Filings (ISF) can and are being filed by others, such as freight forwarders.

"With the nuance of ISF data being used for commercial targeting, we need to rethink all of that," said Magnus.

For Ford, the benefits of Customs' access to security data far outweigh the small risk of leaking that data. "The data being collected is giving Customs a better picture of what is being shipped in a container," he said. "It could help Customs make better decisions over time on which companies and shipments to target."

Ford also believes that use of the data could streamline the importation process by facilitating a Customs account management process. "We have heard over the years that Customs want to treat importers as an account with centralized management regardless of where goods enter the US," he said. "This data could provide Customs and the importer a better understanding of the goods coming in."

The draft legislation also provides for streamlined procedures for duty drawback. "This is the first simplification of drawback procedures undertaken in years," said Kent. "These came about through discussions between CBP and the private sector through the Trade Support Network and an agreement was reached 18 months ago. The provisions will make it easier to claim refunds, allowing companies to reduce staffing and alleviating the general burden of applying for drawbacks."

Ford emphasized that reform of duty drawback procedures should be linked to the further development of the Automated Commercial Environment (ACE). In other words, electronic drawback processes need to be put in place.

ACE may be getting a boost in the draft legislation, as the bill would authorize spending of $300 million per year on the continued development of ACE. ACE has been developed in fits and starts over the last several years and funding for the project has been a problem. The legislation's authorization provides a ceiling for funding and is not equivalent to the actual appropriation of funds.

ACE received appropriation of $265 million during the current fiscal year, noted Kent, a marked decline from previous funding levels. "ACE has fallen behind schedule," he said, "and Customs has had problems setting priorities. The NCBFAA is working with customs to define those priorities. The authorization in the bill is more of a statement in support of ACE than in actually providing funding for the completion of ACE."

"Three-hundred million dollars sounds huge but there is still so much left to be done," said Magnus. "ACE may never be finalized but we need to be able to get to a point where we have an end-to-end commercial system which captures all of the information required by Customs and other government agencies. It is not clear to me whether there is enough funding in the act to get us there."

Magnus is more excited about the proposal to open Customs operations at some land crossings 24 hours a day. "Those who make our livings at the land borders would love to be able to file statements, pay duties, and talk to commercial specialists 24/7," she said. "Trucks don't stop operating at 5 o'clock when the customs house closes. When you have a commercial or operational issue after hours, you have to wait until the next day. This is an example of the emphasis in this bill on genuinely facilitating trade."

The big picture for Magnus is just that: bringing trade facilitation up to par with security concerns. "The totality of the bill has a clear focus on trade and that is refreshing," she said.

American Journal of Transportation, 9/14/2009