Industry Associations, Customs Brokers Decry Heavy New Burdens in CPSC Compliance Cert Proposal

The Consumer Product Safety Commission’s proposed new requirements for certificates of compliance would impose a heavy burden on importers and customs brokers, said several companies and trade associations in response to the proposed rule (here). CBP hasn’t implemented CPSC compliance data in the Automated Commercial Environment (ACE), so electronic filing would likely take the form of complicated and time-consuming PDF submissions, said industry groups. And the proposal’s definition of importers brings customs brokers under the new requirements, even though they’re not in a position to certify compliance with product safety regulations, the National Customs Brokers & Freight Forwarders Association of America (NCBFAA) said.

The requirement for certificates of compliance at entry would put a heavy burden on industry and government alike, said the American Apparel and Footwear Association, urging CPSC to keep the requirement that certificates be provided upon request rather than for every entry (here). “The surge of entry documents, almost entirely on products that are compliant with product safety rules, will add increasing costs to both companies and to the agencies,” said the AAFA. Processing times would increase because CBP would have to manually examine entries that are accompanied by certificates, it said, given the current lack of ACE functionality for CPSC compliance data. “The increasing backlogs could magnify across ports, especially during peak seasons, as the impact of federal budget cuts and sequesters limit personnel and require enforcement resources to be allocated to meet risk.”

The U.S. Association of Importers of Textiles and Apparel (USA-ITA) and the U.S. Council for International Business (USCIB) agreed. Although CPSC outlined a choice between a data elements approach and a PDF certificate approach to electronic submission in its proposed rule, the current lack of ACE functionality would necessitate the latter, said USA-ITA (here). “CBP is able to accept PDF documents but they will have to be submitted apart from the normal entry filing system and the certificate would have to be annotated with the entry number in order to connect the two,” it said. “We assume this would be a manual process. Clearly this jury-rigged approach will create delays and complicate the entry process unnecessarily,” said USA-ITA.

“PDF submissions are impractical for CBP, CPSC and importers for a number of reasons,” said USCIB: “because of the administrative burden associated with them, the lack of clarity over which agency would retain the PDF certificate, and reinsertion of paper requirements in the midst of a drive towards a paperless environment, to name a few.”

Burdens Would Fall on Customs Brokers Too, Says NCBFAA

The proposed rule’s definition of importer "would extend these burdensome requirements to customs brokers too,” said the NCBFAA. The proposed rule uses CBP’s definition of importer of record, and that would include customs brokers acting as importers of record on their customers’ entries. The proposed rule “does not consider that many importers are actually service providers who are not in a position to certify the compliance of an imported product,” said NCBFAA. The proposed rule should be modified so “importer” means the party with a financial interest in the imported goods like the owner, purchaser, or distributor, it said. And all references to “customs brokers” as potentially subject to the certification requirements should be removed from the proposal, NCBFAA said.

“By virtue of their being licensed and regulated by CBP, customs brokers do not have any particular knowledge regarding product safety requirements and are not in a position to certify compliance of any product,” NCBFAA said. “Their involvement in the international supply chain should not require them to assume additional regulatory responsibility (and liability) for issues that they do not control.”

The proposed requirements would create significant issues for customs brokers if they are finalized without CBP capability to manage certificate of compliance information through ACE. Customs brokers wouldn't even be able to tell if a certificate of compliance is required, because ACE doesn't currently flag items that require the certificates. According to NCBFAA, CBP isn’t even working on edits that would flag items covered by the rule. And unless CPSC requires that certifying parties transmit data electronically, most certificates will be generated in hard copy, and customs brokers would have to reformat, transcribe, and transmit the data to CBP prior to entry. “Given the uniqueness of the information set forth in the certificate of compliance, these documents will be subject to unique input efforts,” said NCBFAA. “This will require a large amount of independent data input which is likely to increase the cost of clearing imported merchandise,” it said. Any final rule needs to let importers transmit certificate data well before arrival of merchandise in the U.S., NCBFAA said. The current 24-hour rule proposed by CPSC doesn’t take into account complicated modern supply chains, it said.

"It does not make sense to us to involve our industry and add us as another responsible party," said customs broker Christopher Witt of Marisol International. "It duplicates work that is already being done by importers and in turn requires those importers to pay higher brokerage costs," he said. The changes could also create new technical burdens on brokers "that would cause even higher costs to the importer," said Witt.

Requires Importers to Reveal Sensitive Sourcing Info

The proposed changes requiring certificates identifying foreign manufacturers could also result in the release of proprietary manufacturing information to the benefit of competitors, said Frette, an importer of high-end bed linens, in its comments. "The identification of qualified skilled suppliers is highly sensitive among competing business," it said. "The proposed change would jeopardize such investments by essentially giving competitors throughout the supply chain access to its factory base." Also, as a result of the information, U.S. customers would be able to contact manufacturers directly, cutting Frette out of the equation, it said. Instead, CPSC could require a Manufacturer Identification (MID) code, similar to the codes used by CBP, it said. The MID would substitute the manufacturer name on certificates of compliance and obfuscate the identifying information for competitors.

The Writing Instrument Manufacturers Association (WIMA) also found the idea of identifying the foreign manufacturer to be troubling, it said. "Even within the WIMA, the names, let alone, the address of foreign suppliers, are treated as the utmost trade secret," it said. Such information would be very valuable to competitors and "if there is one change that would significantly improve the proposed rule, it is dropping the foreign manufacturer from the matrix. -- Brian Feito, Tim Warren