Industry Reps Praise IPR, ACE Provisions in Senate Customs Bill; NCBFAA Urges Caution on De Minimis Increase

Industry representatives commended the Senate customs reauthorization bill in its first formal hearing May 22, and said the bill’s provisions on intellectual property rights, the Automated Commercial Environment, the International Trade Data System and de minimis will go a long way towards facilitating trade. The bill -- S-662, the Trade Facilitation and Trade Enforcement Act -- was introduced by Senate Finance Committee leaders Max Baucus, D-Mont., and Orrin Hatch, R-Utah, in March (see 13032906 for more on specific provisions in the bill).

CBP is making “real progress” in completing the Automated Commercial Environment (ACE), but the legislation will help ensure the agency completes the rollout in a timely fashion, said Chrysler’s Director of Worldwide Logistics and Customs William Cook. Though his company has already seen “tremendous benefits” from ACE, the positive benefits are marred since some of Chrysler’s filings must still be done through the Automated Commercial System, Cook said. Full implementation of ACE -- set for September 2015 in the Senate bill -- will be a huge undertaking, he added, but the project should still be fully funded and completed.

“It is imperative that ACE funds not be diverted or sequestered and there be recognition that ACE is fundamental to CBP’s cargo facilitation and security missions,” said the National Customs Brokers and Forwarders Association of America in submitted comments.

Cook also praised the bill’s $25 million in funding for the International Trade Data System, and its mandate for information sharing among federal agencies participating in ITDS. Mary Ann Comstock, brokerage compliance manager at UPS Supply Chain Solutions, called the ITDS component “critical … We have to have this thing completed.”

The de minimis increase mandated in the bill is also critical, Comstock said. The current $200 de minimis level was set in 1994; the Senate bill raises it to $800. For an express company like UPS, de minimis is “one way to shrink the haystack, if you will” and help speed border transactions, Comstock said. Raising the value will help small and medium enterprises, as well as individual customers, she said.

In response to a question from Sen. John Thune, R-S.D., Comstock said she “absolutely” supports linking the de minimis level to inflation. Thune cosponsored a bill to do just that in March. It also raises the de minimis to $800 and asks the U.S. Trade Representative to encourage other countries to establish commercially meaningful de minimis values (see 13030805).

NCBFAA, however, warned that the potential de minimis increase, and the bill’s proposal to raise the informal entry threshold to $2,500, will compound the problem of “unscrupulous importers [squeezing] themselves under the current limits to bypass CBP scrutiny.” While the association "will not stand in the way of advocates for reasonable increases of these limits, we must observe that increases beyond adjustments for inflation run counter to trade enforcement objectives provided elsewhere in this same bill,” the group’s comments said.

The bill’s trade enforcement provision, which came from 2011’s Enforcing Orders and Reducing Customs Evasion Act; gives CBP deadlines when investigating possible duty evasion. NCBFAA said a better approach is to design and implement a prospective system to assess antidumping and countervailing duties altogether. Comstock agreed, adding that the twelfth term of the Advisory Committee on Commercial Operations of Customs and Border Protection (of which Comstock is a member) advised CBP to move towards a prospective duty collection system.

The Commerce Department takes, on average, three-and-a-half years to make a duty determination, Comstock said. “That’s just not quick enough for any average business,” and it doesn’t provide the certainty companies need to survive, she said. Because duties are unknown for so long, “it’s almost an incentive to evade.” Moving to a prospective system gives CBP the ability to collect duties “right then and there,” she said.

It would also free up CBP’s resources, allowing the agency to better target bad actors purposefully seeking to evade proper duties, NCBFAA said. For more on the AD/CVD section in the Senate bill, and its conflict with House versions of customs legislation, see 13040911.

Other industry representatives at the hearing commended S-662’s intellectual property provisions, such as creation of the National Intellectual Property Rights Coordination Center. “Brand owners are in the best position to determine whether the product is counterfeit,” said Clark Silcox, general counsel for the National Electrical Manufacturers Association, speaking in support of the bill’s requirement that CBP share suspected infringed merchandise information with rights holders.

That provision would enable CBP to more efficiently authenticate goods, said David Cooper, global customs compliance manager at Procter & Gamble. Cooper also threw his support behind the trusted trader sections in the bill, but stressed they must include measurable benefits for participating companies. Procter & Gamble is part of the Customs-Trade Partnership Against Terrorism, for example, but has yet to see benefits “supplied in a measurable way to our company,” he said. The benefits should be faster clearance times, fewer inspections for trusted traders and expedited inspections should they occur, Cooper said. “We believe those provisions are in place, but there is [currently] no way to measure them.”

In comments, NCBFAA also recommended changes to S-662’s section on importer of record numbers. The bill requires CBP to establish a program that assigns and maintains importers of record numbers. The current numbering system if “fraught with problems,” NCBFAA said, but the bill’s method does not include a requirement to work with other agencies to coordinate the numbering system. “So, even as we move to a ‘single window’ to the government under ITDS, an importer could have a different number with each of the 47 agencies participating in ITDS. There is no requirement to work with the private sector to ensure that the system works from a commercial perspective.” Instead, NCBFAA recommended conducting a critical review of the current system -- as well as the Manufacturer’s Identification numbering system -- then collaborate with stakeholders and other federal agencies to develop a solution. Once that’s developed, present it to Congress and start a rulemaking. -- Jessica Arriens