CBP Says CEEs Are "Virtual Ports," Regs Need to Support that

At the February 21, 2012 COAC meeting, U.S. Customs and Border Protection officials discussed ongoing work on the Centers of Excellence and Expertise (CEEs). They provided information on the post-entry processing CEEs would do for "trusted partners" and the benefits they would receive. CBP officials also stated that CEEs would be virtual ports and that the agency's regulations may need to be amended to "line up" with what the CEEs will do. COAC's Trade Facilitation Subcommittee also listed certain metrics that could be used to measure the success of the CEEs.

(CBP has stated that CEEs will continue CBP efforts to increase uniformity of practices across ports of entry, facilitate the timely resolution of trade compliance issues nationwide, and further strengthen critical agency knowledge on key industry practices. The CEEs bring all of CBP's trade expertise to bear on a single industry in a strategic location and are staffed with numerous trade positions using account management principles to facilitate trade.)

CEEs' Scope for Trusted ISA Partners, Brokers to Bring More Applicants

According to information provided at the COAC meeting and CBP's Frequently Asked Questions document on CEEs, CBP expects the following in relation to the creation and expansion of the CEEs:

CEEs to focus on ISA partners. The CEEs will serve as a centralized, single point of processing for importers that are both C-TPAT certified (Tier 3 or 2) and in the Importer Self-Assessment (ISA) program. Note that to participate in the ISA program, an importer must be a member of C-TPAT. See ISA Handbook here.

Post-release processing at CEEs for ISA partners. The process flow for entry and entry summary will not change for ISA trusted partners, revenue collection for these firms will continue to be carried out at the ports of entry. However, the location of CBP processing for post-release aspects of trusted trader shipments will move from ports of entry to the appropriate industry CEE¹. The centers will perform all validation activities, protests, post entry amendment/post summary correction reviews, and prior disclosure validations for the trusted partners within their industry.

Fewer delays, reduced costs, etc. also expected. CEEs will eliminate unnecessary transaction work from compliant imports, which will result in fewer cargo delays, reduced costs, and greater predictability. The CEEs will also improve relationships with CBP as small and medium-sized importers (SMEs) will have a streamlined inquiry process for resolving their concerns. This will also increase uniformity and transparency for the trade.

Brokers to pre-certify ISA applicants, some may open offices near CEEs. To increase the number of ISA trusted partners, CBP plans to allow customs brokers to pre-certify ISA applicants. CBP expects to announce a pilot ISA pre-certification (ISA-PC) program in early summer 2012. The initial pilot phase is expected to be limited to customs brokers or brokerage firms that are (i) C-TPAT certified, (ii) licensed, and (iii) have a record of filing entries for importers for at least five years. Importers applying to be pre-certified for ISA must be C-TPAT certified and able to show evidence that they are experienced in an internal control regime. (See ITT's Online Archives 12022425 for summary of COAC's recent discussions on this topic.)

According to comments at the COAC meeting, some Customs brokers will want to move near the CEEs in order to work seamlessly to facilitate imports for their clients, and want CBP to ensure that the statutes and regulations supported this. CBP answered this query by stating that the agency was spending a lot of time reviewing the regulations to ensure that they line up with what the CEEs will do. The official stated that CEEs are virtual ports, and since many of the customs regulations reference port directors, the agency is examining how the regulations may need to be modified to transition to these new business practices.

CEEs will partner with OGAs. CBP officials stated that conversations with other government agencies (OGAs) are going to be one of the advantages of CEEs; however, the CEEs are currently focused on C-TPAT and ISA trusted partners. The Centers will be expected to partner with OGAs (such as FDA, CPSC, etc.) and promote the adoption of risk management and segmentation practices, which will result in even greater facilitation of legitimate trade and enhanced enforcement activities.

Schedule for Future 7 CEEs Not Yet Finalized, CBP to Work on Existing 2 CEEs

CBP has established two CEEs for the Pharmaceuticals and Electronics industries. The schedule for creating additional CEEs has not been finalized. Instead CBP is focusing its efforts on the two existing CEEs to "get them right" before expanding their coverage.

(The Pharmaceuticals CEE will be expanded to include pharmaceuticals, health and chemicals, and the Electronics CEE to cover information technology and consumer electronics. CBP sources have previously stated that the agency intends for the expansion to take effect in mid-fiscal year 2012 (March-May) and that the seven additional CEEs will be created over the next three years.)

The two existing CEEs and the seven future CEEs and their locations have been detailed by CBP as follows:

(It is anticipated that based on the following planned locations for the future CEEs brokers may move to cities were their industry CEEs are located.)

COAC Subcommittee Developed Concepts to Evaluate Success of CEEs

The COAC Trade Facilitation Subcommittee has discussed various aspects of the CEE and Account Executive (AE) concept. The Subcommittee has examined the question of metrics to define the success and value of the CEE/AE’s. The Subcommittee believes developing the following concepts will help in the evaluation of the CEE's overall success:

• Reduction in CF 28’s/29’s: One potential benefit of the CEE/AE’s is the reduction of redundancy of many CBP Forms 28 (Request for Information) and 29 (Notice of Action). To measure success, the CEE/AE’s could define a base year and evaluate the reduction of these forms.

• Effectiveness of targeting: Another expected benefit is that by allowing CBP to better understand an industry, it will also better understand the causes of non-compliance. With this understanding, CBP should be able to conduct better targeting. Another metric, therefore, could be the assessment of targeting effectiveness within the CEE/AE’s.

• CEE and trusted program participants: A goal of the CEE/AE’s is to transition low and medium risk importers into low risk importers. Two measures of these transitions are: (1) The number of participants in the CEE/AE. How has active participation grown with the CEE/AE? (2) The number of participants within a CEE that have joined trusted trader programs such as ISA or C-TPAT.

• Industry Specific Issues: There may be metrics that align with specific industries. For example, the pilots have shown more effective enforcement against counterfeit pharmaceuticals in the Pharmaceutical CEE. Metrics relating to existing Priority Trade Issues (PTI’s)³ may be used within the CEE’s to evaluate effectiveness. One member cautioned, however, that different industries present different levels of difficulty, so that results may not be comparable across CEE’s.

¹With CEEs, ports of entries will shift their focus to high-risk shipments. This will allow for more complex enforcement work for highly skilled CBP employees and improved enforcement results, including (i) increased import safety, (ii) increased revenue protection, and (iii) reduced economic lost to IPR theft.

²CBP refers to these CEEs by their new names, which reflect their future scope; however, this expansion has not yet occurred. (See ITT's Online Archives 12020903 for summary.)

³PTIs are high-risk areas that can cause significant revenue loss, hurt the U.S. economy, or threaten the health and safety of the American people. There are currently eight PTIs designated by CBP, including: (i) agriculture programs; (ii) antidumping and countervailing; (iii) import safety; (iv) intellectual property rights; (v) penalties; (vi) revenue; (vii) textiles; and (viii) trade agreements. (See ITT's Online Archives 12011314 and 12010414 for summaries of the IPR and textiles PTIs.)

(See ITT's Online Archives 11121307 for overview of CEEs.)

FAQ document on CEEs is available here.

CBP report on CEEs is available here.

COAC Trade Facilitation Subcommittee Trade Executive Summary is available here.