COAC Broker Regulations Recommendations Elicit Some Disagreement

Multiple members of the Commercial Customs Operations Advisory Committee (COAC) voted against two recommendations related to a customs broker regulations update. The two controversial recommendations involved recordkeeping and where brokers may conduct customs business. Those recommendations were ultimately approved on April 27 by the full COAC alongside more than 30 recommendations produced by the broker regulations working group (see 1604250011). Most COAC recommendations are approved unanimously.

One of the recommendations that drew concerns called for "electronic customs records to be stored in an electronic format within the customs territory" of the U.S. and "must be available and retrievable by a broker upon request by CBP." Adam Salerno, senior director for the National Security and Emergency Preparedness Department at the U.S. Chamber of Commerce, said he objected to the recordkeeping recommendation over "data localization" concerns and cloud data storage. Data localization prohibitions were negotiated as part of the Trans-Pacific Partnership and are being considered in the Transatlantic Trade and Investment Partnership, he said. "We recognize the need, clearly, for Customs to have access to the data," he said. But forced data localization regulations can lead to huge added costs and cybersecurity risks, he said. A list of the recommendations is (here).

The other recommendation that received pushback was that CBP "ensure customs business as performed by a customs broker may only be conducted within the customs territory of the United States with the issuance of a permit." That issue deserves further consideration, said Michael White, the U.S. director of Cargo Facilitation, Security and Standards for the International Air Transport Association, who voted against it. "As companies are more global, I think we have to rethink this a little bit as to where they are based," he said. International airlines, which may also act as brokers, may look to centralize in order to make increase efficiencies, and there's some question as whether such brokers should be required to be located within the U.S., he said.