CBP & COAC Work on Broker Reform, Could Include more Rigor for Importers

At the August 18, 2011 COAC meeting, CBP officials and COAC members provided an update of their work on CBP’s broker revision project, which could include more robust broker vetting of importers and restricting the off-shoring of customs business.

The COAC Broker Subcommittee and CBP’s “Role of the Broker-Broker Regulatory Revision” Workgroup (a partnership with NCBFAA) have been reviewing the role of the customs broker and the broker penalty regime, as well as the modernization of the broker regulations. CBP is expected to finalize its recommendations (as informed by COAC input) and submit them to Commissioner Bersin in October 2011.

CBP and COAC Examining Five Areas of Reform

Both the COAC Subcommittee and CBP Workgroup are examining the need for reform in five areas: (1) an expanded broker role, (2) broker responsibilities, (3) professionalism, (4) modernization of 19 CFR 111 (the broker regs), and (5) penalty/regime disciplinary actions¹.

The CBP workgroup has proposed options for all five of the areas listed above and has begun preliminary drafting regulatory language. The COAC subcommittee has completed its examination of three of the five areas (broker responsibilities, regulatory modernization, and professionalism), and expects to complete its work on the remaining two areas by the end of September.

(The subcommittee’s goal is to present recommendations to the full COAC for review and approval, so that COAC’s views can inform the CBP Workgroup’s recommendations to the Commissioner; note however that revising aspects of the broker’s role may be controversial, due to the different roles licensed brokers take on in the business world (they can work as a CHB, importer, attorney, etc.)

Expanding the role of the broker

CBP workgroup‘s proposes expanding the role of the broker by requiring “pre-certification” of importer C-TPAT applicants, and pre-application support for Importer Self-Assessment (ISA) applicants.

Pre-certification of the C-TPAT application could consist of fast-tracking of an importer’s application. Pre-certification could allow CBP resources to be redeployed, and additional touch points (expanding pool of applicants). Pre-application support for an ISA applicant could consist of leveraging existing relationships with clients, and the potential for ongoing assistance with importers in meeting program requirements.

COAC’s Subcommittee has not yet completed its examination of this topic.

Broker responsibilities

Both the CBP workgroup and COAC subcommittee are contemplating broker involvement in a more robust importer validation and improvements in the power of attorney (POA) process.

For the CBP workgroup, this could consist of establishing a requirement for importers to present their bona fides, requiring broker to obtain evidence of bona fides, sharing responsibility for validating importers’ identity, requiring the broker to receive the POA directly from the importer (or another licensed broker) to perform customs business on behalf of the importer, and requiring that “customs business” be conducted from within the U.S. Customs territory. (The COAC subcommittee dealt with off-shore operations under the modernization topic.)

The COAC subcommittee is also examining improvements in the broker-forwarder relationship and using the broker as a force multiplier for small and medium enterprises.

Professionalism

Both the CBP workgroup and COAC subcommittee recognize that revising broker license requirements could be desirable.

According to CBP’s workgroup, this could consist of an apprenticeship prerequisite, a continuing education requirement, etc.

The COAC subcommittee is also considering improvements in examination requirements and continuing education.

Modernization

Both the CBP workgroup and COAC subcommittee acknowledge that modernization could involve the discontinuation of the triennial status report, and clarity on the country location where “customs business” can occur.

According to CBP’s workgroup, this could consist of replacing the triennial status report with an automated annual status reporting, allowing at will uploading of employee data into ACE, and the collection of only minimal employee data that CBP actively uses.

The COAC subcommittee is also pondering the issue of business practice modernization and clarification on off-shore operations (CBP’s workgroup dealt with off-shoring under the topic of broker responsibilities).

Broker penalty regime/disciplinary actions

The CBP workgroup states that 19 USC 1641 language could be revised to provide for the immediate suspension of a broker’s license (threats to national security) pending review of case, providing a due process provision, and focusing on a bad actor’s license revocation rather than filer code remediation.

COAC’s subcommittee has not yet completed its examination of this topic.

¹In January 2011, CBP established a “Role of the Broker-Broker Regulatory Revision” Workgroup in partnership with the National Customs Brokers and Forwarders Association of America. The COAC Broker Subcommittee has been working on the Broker Revision project with CBP since May 2011.

(See ITT's Online Archives or 04/15/11 news, 11041523, for BP summary of the broker revision initiative and the role of the broker from the 2011 Trade Symposium.)

Handouts from the meeting on the broker revision project available here