Congress Completes Customs Reauthorization Conference Bill

Lawmakers finished up work on a conference version of long-debated customs reauthorization legislation that combines the underlying concepts of the Senate- and House-proposed customs bills, said Conference Committee members on Dec. 9 (here). Notably, the compromise legislation (here) would impose the ENFORCE Act's firm deadlines on CBP to investigate claims of antidumping and countervailing duty evasion, and would require new regulations on customs broker identification of importers, under threat of penalty. A new provision in the legislation -- absent from either chamber's original bill -- would hold CBP to stricter deadlines for reliquidating entries. The bill could go to a vote on the House floor as early as Dec. 11, a congressional staffer said. The lawmakers also released a summary (here) and joint explanatory statement (here) on the bill's provisions.

While the legislation largely retains the basic conceptual framework of the ENFORCE Act in the draft version Senate bill released in April (see 1504210018), it also creates a new Trade Remedy Law Enforcement Division (TRLED), extends proposed deadlines for CBP—for both starting and completing—and would grant the CBP commissioner the ability to further extend investigations that are especially complicated. The TRLED was initially proposed in the PROTECT Act, introduced by Rep. Charles Boustany, R-La. The bill would go into effect 180 days after the President signs it into law. As expected (see 1512080030), a miscellaneous tariff bill (MTB) reform measure wasn't included.

Conference Bill Adopts Modified ENFORCE Act Deadlines

Specifically, the bill states that investigations must start 15 days after an evasion allegation is submitted, and that they should wrap up 300 days after initiation, unless a probe is “extraordinarily complicated” because of the number and complexity of transactions being investigated, the “novelty” of the issues presented, or the number of entities to be looked into, according to the conference report. The draft bill and language of the ENFORCE Act, originally introduced by then-Sen. Max Baucus, D-Mont., would have given CBP 10 days to start an inquiry and 270 total days to finish it, and included none of the excepting provisions of the conferenced legislation. Notably, the bill didn't include an "opt-out" provision, an area of concern for some lawmakers (see 1512020032).

Aligning with ENFORCE and the draft bill, the conference version states that the commissioner must decide after 90 days of starting an investigation whether there is “reasonable suspicion” that merchandise entered the U.S. through evasion. After giving this designation, the commissioner can suspend liquidation and extend liquidation periods. If it is discovered that goods entered the U.S. illegally, the commissioner can then implement or modify rule sets for identifying importers, other parties, and merchandise “that may be associated with evasion…particularly through the Automated Targeting System and the Automated Commercial Environment.” If found to be evading duties, importers have the right to appeal within CBP, and file suit at the Court of International Trade if their appeal fails.

New Provisions Hold CBP to Strict Reliquidation Deadlines

The compromise bill's stricter provisions on reliquidation deadlines would provide that the CBP may only reliquidate within 90 days of the actual date of liquidation. Current statute under 19 USC 1501 allows CBP to reliquidate an entry within 90 days of the date the notice of liquidation is provided by the importer. CBP has recently issued several rulings finding it could reliquidate entries, sometimes years after deemed liquidation occurred, by sending an importer notice (see 14061818 and 14080712), a policy CIT found technically permissible in October (see 1410200053). Customs lawyers have argued the policy removes finality from the entry process by allowing CBP a mulligan.”

Customs Broker Importer ID Requirements

The compromise bill would also adopt provisions, originally included in the house bill, that require CBP to issue regulations implementing procedures for customs brokers to collect the identity of importers and maintain “records of the information used to substantiate a person’s identity, including name, address, and other identifying information.” Brokers that fail to collect the information would be subject to a $10,000 penalty under 19 USC 1641, and license suspension or revocation. The bill leaves minimum standards for collecting the identity of importers to CBP’s discretion, requiring that CBP issue regulations outlining specifics. No such provisions are currently in the Senate bill. The National Customs Brokers Association of America criticized the "heavy handed" approach in a letter sent to Congress in June (see 1506220022).

Industry Reacts

Industry mostly expressed favor toward the compromise legislation, as the U.S. Council for International Business pledged to work on getting the bill passed and “signed into law quickly,” it said in a statement. “American business needs this legislation, which is long overdue and sets the United States on a path to remain in the top-tier of nations when it comes to trade facilitation and customs modernization,” said USCIB CEO Peter Robinson. Meanwhile, the National Customs Brokers & Forwarders Association of America and the American Association of Exporters and Importers, which also opposed use of ENFORCE within the bill (see 1512070018), said they are still reviewing. CBP didn't comment.

The National Association of Manufacturers was also mostly pleased with the conference report. “This legislation will address the outdated customs system and multi-year government failures to enforce effectively U.S. trade rules, which together are costing manufacturers in the United States billions of dollars a year,” said Linda Dempsey, vice president of international economic affairs at NAM, in a blog post (here). Of particular importance, she pointed to “new customs modernization provisions to eliminate red tape, unneeded border delays and outdated processes” and the inclusion of the ENFORCE Act. Still, the lack of a “concrete new” MTB process marks a major misstep, said NAM’s Director for International Trade Policy, Ken Monahan, in a separate blog post (here). Congress effectively maintains “longstanding distortions in the U.S. tariff code” and its “failure to act is a squandered opportunity and inexplicable given broad bicameral, bipartisan support for the MTB,” said Monahan.

Democratic Dissent

Despite the initial cheers from industry, not all conferees are backing the legislation. Rep. Sandy Levin, D-Mich., the top Democrat on the customs reauthorization Conference Committee on Dec. 9 distributed a letter to his congressional democratic colleagues urging them to vote against the legislation, saying that the bill “falls short” on certain key issues, such as charting a path forward for a miscellaneous tariff bill, as well as human trafficking and climate change. “All of this is disappointing because there are positive aspects of this bill, such as [the] ENFORCE Act, which will help to address the circumvention of antidumping and countervailing duties to address unfair trade,” the letter says. “The bill also closes a loophole to more effectively ban the importation of goods made with forced or child labor. And other provisions will help to facilitate trade. Unfortunately, even though we have been working on a customs bill for many years, the unjustifiable [Trade Promotion Authority] amendments now overshadow that work.”

Provisions Remain on Drawback, De Minimis, New Importer Program

The compromise bill includes drawback modernization provisions, among others, that were found in the House and Senate bills. Goods of one eight-digit HTS subheading would be able to qualify for drawback when goods of the same eight-digit subheading are exported (including for Schedule B numbers). While the legislation mostly parallels drawback provisions in the Senate draft bill, one apparent difference is that the current one would “provide for” drawback refunds of exactly 99 percent duties, taxes, and fees paid on imported merchandise, instead of amounts “up to” that percentage (here; also see 1504210018).

Among other things, the bill also keeps an increase to the de minimis exemption from $200 to $800, exempts residue from duties, authorizes the commingling of certain goods, and establishes an “importer of record program” to reduce duplication and ensure accuracy of importer of record numbers.

Email ITTNews@warren-news.com for a copy of Levin's letter calling for votes against the conference bill.