Government, Customs Brokers Will Need to 'Evolve' in Face of Rapid Changes, CBP's Smith Says

RANCHO MIRAGE, Calif. -- Both the government and customs brokers will need to keep agile in light of the fast-moving changes in the world of international trade, said Brenda Smith, executive assistant commissioner-trade at CBP. "The relationship between the government and private sector is very much facilitated by the role of the customs broker," Smith said during a May 2 interview at that National Customs Brokers & Forwarders Association of America's annual conference. "I believe those that do international trade are helped by the knowledge and expertise of customs brokers. I think very often there is a financial function that customs brokers can also perform for the private sector. For CBP, I think, they help educate around requirements and we believe that's a very valuable function."

Asked about what she sees as CBP's responsibility to customs brokers, Smith said she believes "it's the responsibility of the government to oversee a framework for international trade that supports a prosperous U.S. economy and that keeps people safe," and "when the function of a customs broker supports those goals, and generally it does, we have a very productive partnership." Smith would like to see that continue, "recognizing that with all the changes in the economy, changes in supply chain, and changes in the government framework, that will require both the government and customs brokers to evolve to ensure that we are both looking towards the goal of prosperous economy and safe trade," she said. Smith declined to discuss specific parts of the revision to 19 CFR Part 111 that is making its way through CBP, though she said industry should expect few surprises.

CBP doesn't have an imminent plan for a national enforcement policy for Section 321 entries at the ports, but as individual ports develop positions CBP will consider expanding such policies, Smith said. “We are very interested in the changes and the activity around 321” and “we are trying to take a strategic approach through things like the e-commerce strategy, but have always believed some of the best ideas and some of the early warnings of risk come from our ports and our field personnel,” she said. “We are always open to taking a good idea from the ports” and employing it on a national basis.

CBP is taking a circumspect approach to outstanding ruling requests on various 321 issues, Smith said. CBP is trying to “ensure that our policy goals and our legal interpretations are consistent with each other,” she said. “As we have been thinking through things like the answer to Sen. [Ron] Wyden's question around authorities and doing our research with” the Commercial Customs Operations Advisory Committee (COAC), CBP has “been getting educated to be able to make better policy decisions” -- and the “legal interpretations will catch up.”

The agency's approach to audits is also evolving, Smith said. “For years, very often our primary audit tool was to do a full-blown audit,” she said. In recent years, CBP has moved toward a “more risk-based approach,” she said. “A survey is a further evolution of that approach where we have a situation where we know there's a risk and there are certain business entities that are being touched by that risk or perhaps driving that risk,” she said.

The survey allows for a “quick hit” that “is very consistent with audit standards” to evaluate a risk, she said. “It's been very beneficial for us because we can cover more groups and we can get a better sense of the landscape by going in and doing a more comprehensive review by covering a larger part of the universe at a thinner level.” Surveys are being used for forced labor concerns and antidumping and countervailing duty risks, and that approach has been “very effective,” she said.

While there's been some industry pushback over the use of the surveys, “anytime the government shows up, people are going to be nervous when we start asking questions,” she said. “But, that's what auditors do, auditors ask questions. Our intent here is to ask questions in an efficient fashion with a targeted population. These are not random and we don't go in and stay for a year.” The number of annual audit activities by CBP is “a relatively small number,” she said. During fiscal year 2017, CBP performed 324 audits and 94 audit surveys, an agency spokesperson said.