CBP Looks Set to Allow Multiple Options, Including ABI and Manifest, for Section 321 Filers

CBP looks set to take a wide open approach to electronic filing of Section 321 entries, with a “range of options” that allow filers to “do whatever works best for their business model,” said Michael Mullen, executive director of the Express Association of America, in an interview. Clearance off manifest would likely continue, using an item descriptor to identify cargo, with electronic filing expanded to other modes. CBP will also likely allow Section 321 entries in the Automated Broker Interface using the 10-digit Harmonized Tariff Schedule number, Mullen said.

The Section 321 entry type in ABI would be an informal entry that does not require payment of duties and fees, Mullen said. Not only would this entry type open up Section 321 entries to other filers that have not previously been able to file them, it would also will allow the express industry to file partner government agency (PGA) entries and still take advantage of the de minimis duty exemption. Currently, express filers must transmit informal entries with a 10-digit HTS, but still pay duties and fees, when filing a Section 321 entry of goods regulated by a PGA, he said.

Clearance off manifest in the express mode would continue unchanged, but CBP would likely also open manifest filing up to other modes, using an item descriptor, for non-PGA cargo, he said. Not all would see this option as viable. "You have to have a pretty high volume to justify the kind of investment” it takes to develop the required systems, and for low volume operations, “it might make sense to keep filing entries the way they always have,” Mullen said. “I think CBP is going to do this in a way that provides a good range of options for all the different business models that are out there,” he said.

The “two-track” approach has been discussed as a possibility by CBP officials for some months (see 1709120025). CBP was set to announce its Section 321 policy at a conference in December, before putting those plans on hold at the last minute over concerns about NAFTA negotiations (see 1712050025). Section 321 data requirements, and in particular whether to require the 10-digit HTS number, are among the NAFTA issues being discussed among the U.S., Mexico and Canada.

Those NAFTA sensitivities, plus the difficulty of finding funding for automation, means the new electronic Section 321 filing scheme could still be some ways off, Mullen said. But “of all the things they don’t have the money for, this is a high priority” for CBP, “so we’re hopeful that this is going to get resolved pretty quickly,” he said. Mullen said he hopes that “by the end of the year this is moving forward some.” CBP did not comment.

Customs brokers have previously rejected two-track Section 321 filing (see 1710170032), instead calling for a 10-digit HTS requirement on all de minimis entries in a debate that has roiled the trade community (see 1708230042). “I don’t think it’s a great solution,” said Amy Magnus, vice president of the National Customs Brokers & Forwarders Association of America, speaking on the general approach rather than any specific CBP plans. CBP has developed a cargo release process in ACE and runs that data through “the best the government has to offer in terms of targeting,” she said. “I don’t know how you target on verbal descriptions of goods.”

The Pacific Coast Council of Customs Brokers and Freight Forwarders has also “advocated for the use of the 10-digit HTS for Section 321 shipments so that these shipments can be processed in ACE/ABI and can be properly processed for trade compliance and PGA requirements,” said Vincent Iacopella, president of the PCC. “After all, how will one know, in a high volume, automated environment, what Section shipment requires PGA data and processing?”

Iacopella, who declined to comment on any tentative CBP plans, said his group’s position isn’t meant to favor certain filers or modes, “as long as CBP and the PGAs have the data to process these shipments properly.” The PCC has not taken a position against Section 321 clearance off manifest as long as the playing field is leveled by allowing customs brokers and carriers into the automated filing process, and the 10-digit HTS is used, Iacopella said. “There has been, in 2017, an extensive dialogue with the trade and the agency on this issue regarding automation of the filing of Section 321 shipments, and CBP’s proposed policy would probably flow from these discussions,” he said.

The longer CBP waits, the more business processes will solidify around current requirements, NCBFAA’s Magnus said. Bonded warehouses may be popping up in Canada and Mexico to break up container loads of goods into Section 321 shipments to individual consumers in the U.S., she said. Carriers are also making decisions on how to do business, with some truckers on the northern border refusing to pick up shipments valued over the $800 de minimis level.

Forwarders “have a stake in this as well,” and are working out how they can take advantage of Section 321 clearance going forward, said Brandon Fried, executive director of the Airforwarders Association. The current scheme “seems to be a bit lopsided in favor of express carriers,” and some forwarders have even been looking into the possibility of opening up an express consignment center and “join the club,” Fried said. Any plan to open up electronic Section 321 manifest to other modes would be “encouraging,” because any new facilities “would require substantial investment not only in facilities, but also in CBP personnel time,” he said, adding that the group will be discussing the issue extensively at its next meeting.

UPDATE 02/15/18: The two-track system opening up both Automated Broker Interface and electronic manifest filing of Section 321 entries to all filers is the likely result of ongoing discussions on the issue, said Michael Mullen of the Express Association of America, clarifying that his remarks in this report are his opinions and not a statement of CBP’s official position (see 1802150042). The issue is still under discussion by CBP and the trade, he said.