Long Wait for TFTEA Drawback Regulations Leaves Little Time for Programming and Testing, Developers Say

With CBP regulations on new drawback procedures still not issued, software developers are growing concerned about whether they will be ready for the new system’s upcoming deployment in ACE. CBP has pledged to have capabilities in place for the new Trade Facilitation and Trade Enforcement Act drawback provisions on Feb. 24, but though the agency has found funding and begun its own programming efforts, software developers have been unable to start coding, leaving little time for testing before the deadline, several developers said in interviews.

CBP issued draft Customs and Trade Automated Interface Requirements for TFTEA drawback on Sept. 29 to allow software developers to finally begin the coding process (see 1710020022). But “it’s not just a matter of simply getting the programming done, it’s the lack of time to plan for these changes, and the impact on all the other ACE changes being asked of the industry,” said Steve Platman, president and CEO of software developer International Trade Systems. “We are waiting for the Final CATAIR, as there have been many times in the past where changes are made prior to the final version which end up costing us a lot of money to rework,” Platman said.

The timing of the “rough draft” came as a surprise, seeing that the draft guidelines were issued before the final TFTEA drawback regulations, said David Corn of Comstock & Holt. Though the drawback section of TFTEA is relatively detailed, several significant details, such as how to handle changes in classification that take place after the Harmonized Tariff Schedule (HTS) number is originally declared on an entry, and how to extend the “lesser of” concept to manufacturing substitution drawback, still need to be worked out in those implementing regulations (see 1606070040).

The long-awaited regulations are currently under Treasury Department review, and may be subject to review by the Office of Management and Budget, before coming back to CBP for publication, Corn said. Some had expected that a proposed rule would be issued for comment in late summer 2017 (see 1706230024). Corn said he has “not heard anything about CBP using an interim final regulation,” which would speed up the rulemaking process by eliminating the traditional pre-final rule notice-and-comment period. CBP did not comment.

Software developers have up to now been unable to start programing and testing TFTEA drawback capabilities without the TFTEA drawback CATAIR, said Liz Connell, vice president-product management at software developer Integration Point. “We need the regulations so we can get the CATAIR, so that we can start development and testing,” she said days prior to the release of the draft. CBP may have started its programming, but “the trade is still in a holding pattern while we wait for the regulations and CATAIR,” she said.

The draft CATAIR guidelines are still subject to revision before the final version comes out, “but it is our responsibility to code it for now,” said Fany Flores-Pastor, director of R&D compliance systems at the software developer Descartes. The Trade Support Network leadership council, which counts Flores-Pastor as a member, had been voicing concerns about the already short lead time before TFTEA drawback goes live, which left little time for testing, she said. “Now this is going to become a priority.”

CBP’s simultaneous release of ACE “core” drawback on Feb. 24, 2018, is less of a concern, given the ample time the trade community has had for testing, Corn said. “We first started in the [certification] environment before we thought ACE was going live on Oct. 1. We have worked through validations on numerous items with CBP and it has benefited both sides,” he said. Nonetheless, “there will be some complications when the new ACE system is live for [core] drawback, as would be expected with a new system of this magnitude,” he said.

The combined deployment could make it more difficult for the trade community to troubleshoot drawback issues that arise around the deployment and determine which drawback system is causing an issue, said Flores-Pastor. She plans to raise the issue with CBP, but “even if they wanted to do something, they don’t have the time anymore,” Flores-Pastor said. Under TFTEA, importers will have a one-year grace period until Feb. 24, 2019, wherein they may choose to apply either the “current” drawback regulations or the amended drawback provisions of TFTEA (see 1603010043).

“Core” drawback does include some changes from the old system in the legacy Automated Commercial System, including the provision of additional documentation to CBP electronically,” Connell said. “Filers should be preparing with their software providers, or whoever’s doing their drawback, to make sure they know the new data elements, even if they want to use the current regulations,” she said. Also set for deployment on Feb. 24 in ACE are reconciliation, liquidation and the Automated Surety Interface (see 1707270035).

In the nearer term, CBP on Dec. 9 is set to deploy ACE statements, manufacturer ID creation and “e214” foreign-trade zone admissions, which was recently delayed from CBP’s original September deployment date in response to industry concerns (see 1709110024). “The testing wasn’t going well,” with many FTZ filing scenarios remaining to be tested, Connell said. With the additional time, “I think the trade will be prepared for Dec. 9,” she said.

Though most of the programming will be on CBP’s back-end, statements could present a bigger issue. The trade community needs to be vigilant of issues affecting statements that may arise during the deployment, said Melissa Irmen, senior vice president-thought leadership at Integration Point. Filers should be on the lookout for messaging problems and data not posting to the system correctly. “It’s a good idea to be aware that CBP is making the transition” and watch transactions so that they go “as expected,” Irmen said.

CBP’s recent Sept. 16 deployment of duty deferral and Importer Security Filing went relatively smoothly, though some issues did arise with ISF. CBP was having issues getting messages out, leaving some importers with delayed responses or having to retransmit the ISF, Connell said. Differences in how filers input data on ISFs -- now case-sensitive in ACE -- caused some issues too, Flores-Pastor said. The problems resulted in a flurry of CSMS messages, but have now been mostly resolved.