Senate CBP Bill Streamlines Drawback, Adds Intellectual Property Provisions

Customs reauthorization legislation, introduced March 22 in the Senate, aims to streamline CBP’s drawback process through electronic claim filing and the establishment of objective eligibility requirements. The Trade Facilitation and Trade Enforcement Reauthorization Act of 2013, sponsored by Senate Finance Committee leaders Max Baucus, D-Mont., and Orrin Hatch, R-Utah, is very similar to CBP reauthorization legislation previously introduced in both the House and Senate (see 13032610).

As in previous bills, the Baucus-Hatch legislation sets a five-year time frame for filing drawback claims and says the claims should be filed electronically -- changes that would not be effective until two years after the bill’s passage. If drawback is claimed for exported merchandise, it will be calculated as the number of units of claimed items multiplied by whichever of the following is least:

• The amount of duties, taxes and fees paid on the line item for imported merchandise, divided by the total number of units for that item, or
• The amount of duties, taxes and fees applied to exported merchandise if it were imported, divided by the total number of units of exported merchandise.

The bill also defines drawback claims for imported merchandise, exported merchandise and destroyed merchandise. Other specific drawback sections include:

• Drawback can only be claimed if the person imports the merchandise on which the claim is based or obtains authorization from the original importer. The person must also export or destroy the merchandise, or obtain authorization from the exporter or destroyer, to claim drawback.
• Substitution merchandise in a drawback claim must be classifiable under the same eight-digit Harmonized Tariff Schedule subheading number as the original merchandise during the five-year period of import.
• As in the 2012 House bills, the Schedule B number can be used to determine, under the substitution rules, if merchandise is or has been classifiable under the same HTS subheading as other merchandise.
• Requires the Government Accountability Office to provide relevant Congressional committees with a report evaluating the costs of all the drawback changes in the bill.

The Baucus-Hatch bill also authorizes $140 million for fiscal years 2014-2016 to complete development of CBP’s Automated Commercial Environment Computer System, and allocates another $115 million for the following two fiscal years for ACE’s operation and maintenance. The bill sets a September 2015 deadline for the full implementation of ACE, and requires the CBP commissioner to submit a report to Congress about how the agency’s plan to meet that deadline. That report would be due by the end of 2013.

The bill allocates $25 million in fiscal years 2014-2018 to activate the International Trade Data System. The Treasury Secretary is also directed to stimulate information sharing among federal agencies participating in ITDS.

The Baucus-Hatch legislation also includes a variety of intellectual property protections. Unlike previous bills, it establishes a National Intellectual Property Rights Coordination Center within the Immigration and Customs Enforcement Agency (ICE) to coordinate federal efforts on intellectual property protection. The bill requires CBP to share information about suspected infringed merchandise with rights holders, train border personnel on IP infringement and establishes a process for enforcing copyrights while registration at the Copyright Office is pending.