AAEI Developing 'Mod Act 2' Legislative Proposal

The American Association of Exporters and Importers is working on proposed legislation that is meant to improve and allow for a more modern customs process, the group said in comments on CBP's request for input on creating a new customs framework (see 1812200003). The proposal, which the AAEI refers to as "Mod Act 2," has been under development for more than a year. The legislation "seeks to take the process of accounting for imported goods and the collection of Customs duties thereon in a new and more modern direction," the trade group said.

The “Mod Act 2” proposal "will pave the way for a more efficient, equitable and rational system of duty assessment," the AAEI said. "We expect to have our legislative language and explanatory materials available soon and will share them with CBP and other stakeholders. The centerpiece of the proposal, however, is its streamlining of importers’ financial accounting procedures to meet a 21st century business environment." Meanwhile, the group said CBP "needs to totally rethink a regulatory regime based on the 'Importer of Record' model." Though the buyer may “cause the importation” of a product, "it is the foreign seller who is in the best position to provide customs with the information about the product," it said. "Therefore, CBP must construct a global risk management system based on identifying and assessing the risk of the true buyer and seller as they are the only parties that have a financial interest in the goods."

An ad hoc group of trade associations and apparel companies would like to see federal law changed to allow for de minimis entry for goods from foreign-trade zones, the group said in comments. The group, which calls itself 321 Coalition, said its members "are deeply concerned that their U.S. operations are unfairly discriminated against because of an unintended consequence of the application of the law; namely, we are not able to compete on equal footing with offshore distributors in the e-commerce sphere." There's been an ongoing discussion about the roles allowed for FTZs within e-commerce distribution after a CBP ruling on the subject (see 1808150007).

The coalition complained that the current law favors foreign distribution facilities over similar operations in the U.S. "Failure to fix this problem jeopardizes U.S. jobs and results in a lost opportunity to use the de minimis procedures while ensuring a higher level of compliance with other U.S. laws and regulations governing imports," the group said. "Many compliance concerns can be allayed through the use of FTZs, which operate under closer CBP supervision." Amending "federal law to allow de minimis entry for goods withdrawn from U.S. FTZs will help address concerns about 321 being misused for illicit purposes," it said. "FTZ operators have a much better record of compliance than non-FTZ and foreign warehouses." Members of the coalition include the American Apparel and Footwear Association, the National Association of Foreign-Trade Zones, Columbia Brands USA and Carters.

CBP needs to at least provide guidance on its Section 321 policies, the Commercial Customs Operations Advisory Committee said in its comments. "We urge CBP to provide critical trade guidance as it relates to CBP’s and the PGA’s administration of the section 321 de minimis threshold," the COAC said, while noting some internal disagreements on the issue (see 1708230042). "This has become increasingly mission critical due to the increase of de minimis transactions in light of trade policy changes. Many companies are withholding critical business decisions until CBP formally articulates its section 321 policy. In particular, we note that CBP should reconcile the trade’s differing viewpoints, including within COAC, to achieve the appropriate balance between facilitation and enforcement."

CBP also ought to update the enforcement process, the COAC said. "CBP should endeavor to operate in a more transparent, visible and streamlined paperless environment throughout the enforcement cycle akin to the ACE entry process," the committee said. "It usually takes months for CBP address enforcement actions including detentions and seizures that often involve a sense of urgency." The customs regulations could also use an update, the COAC said. For example, the recordkeeping requirements "do not reflect commercial reality," and the COAC will present recommendations for regulatory updates at the Feb. 27 meeting, it said.

The Express Association of America also said CBP should update its position on recordkeeping. "Mandating storage of data on U.S. based servers challenges effective secure storage of data, impedes adherence to privacy laws and is not cost effective," the EAA said in its comments. The agency could improve data sharing by providing more information "on known or repeat illicit traders and consider adding these entities to denied party lists, similar to the procedure followed for export controls violators.

Intel said it would like to see CBP implement processes for processing of customs information before arrival at a port and the "release of goods prior to final disposition on duties/taxes/fees." Airlines for America asked that CBP reduce "port-to-port variation in CBP requirements" and "that any local communications generated by a port to the trade community -- such as port 'pipelines' -- should also be distributed nationwide via CSMS messaging and maintained centrally on the CBP.gov website." The Chamber of Commerce also said the port pipelines, as well as notifications from the Centers of Excellence and Expertise, should go out through CSMS. The comments in the docket will be used by CBP to help guide a March 1 public meeting on improving the customs framework (see 1902110020).