COAC Urges Rethink of Bonds for FTZ Operators as Risk-Based Bonding Effort Still Looms

The Commercial Customs Operations Advisory Committee (COAC) is asking CBP to revise its policies on continuous bond amounts for foreign-trade zone operations to create a more level playing field for FTZs, it said in a document posted to the CBP website in advance of the April 15 COAC meeting. Some ports are basing bond amounts on values instead of the risk of loss of revenue, “which is very low for FTZ,” the COAC said.

“The minimum FTZ continuous bond amount is $50,000 yet some ports are asking for as high as $250,000 to $400,000 for a new FTZ operation with no justification,” the document said. “This is not a level playing field for FTZ operations and causing barriers to entry that COAC is asking CBP to resolve.”

CBP’s risk-based bonding effort in general appears to have slowed somewhat since the COAC’s last meeting five months ago, when it was said that the agency hoped to issue a proposed rule on single transaction bonds for new or high-risk importers by March (see 1912050044). The COAC document now says CBP hopes to issue the proposal sometime in 2020, and an advance notice of proposed rulemaking on incorporating risk-based factors into continuous bonds in 2021 “or beyond.”

In the meantime, CBP is forming “an inter-agency product team (IPT) to discuss the risk-based bonding initiative, inform decisions and gain support moving forward. The IPT will be made up of representatives from, but not limited to, the United States Trade Representative, Department of Commerce and Department of Treasury,” CBP’s status update said. The agency also will continue to hold internal discussions “to ensure that the risk-based bonding requirements are consistent with our legal authority and judicial guidance, as well as ensure optimal protection of the revenue,” the agency said.