Importer Insolvencies Could Jump, CBP Flexibility Needed, COAC's Gelsomino Says

There could be a dramatic increase on the number of Importer insolvencies in the near future unless something major changes, said Lisa Gelsomino, a co-chair of the Commercial Customs Operations Advisory Committee (COAC) and CEO of Avalon Risk Management. “We're expecting that if things don't change soon there's going to be at least a 25 percent increase of importer insolvencies from last year,” she said during the April 15 COAC meeting. With many small businesses now shut down for about 30 days, a lot “really are not going to have the ability to pay, come soon,” she said.

While the Trump administration seems to have decided against deferring customs duty payments (see 2004030047), Gelsomino and the COAC continued to recommend flexibility around the payments. “COAC recommends that CBP should relax and be flexible in its collection of duties, fees and taxes to the greatest extent possible to assure the economic health and stability of the trade and logistics industry,” it said in one of the COVID-19-related suggestions.

CBP “needs to come up with some sort of plan, one way or another, because right now there are importers who are filing entries timely, but just don't have the ability to pay,” Gelsomino said. That may be due to economic hardship or the lack of access to the checks or paperwork within an office, she said. CBP should consider “forgiveness on things like late files, liquidated damages, give other options to pay,” she said the COAC recommended in a broader white paper. That white paper is expected to be released publicly by CBP, once it's reviewed by the government.

The COAC also recommended that CBP and the partner government agencies “adopt a consistent, clear and transparent communication process to share and receive vital information from stakeholders leveraging technology whenever possible.” The government should also use a unified approach and engage the Border Interagency Executive Council “to ensure trade flows continue despite multi-jurisdictional admissibility and/or revenue collection requirements,” the COAC said.

The advisory group also suggested more CBP discretion for inspections and enforcement. “COAC recommends that except for life threatening concerns or egregious violations during the national emergency, CBP should exercise its discretion to inspect cargo and to engage in informed as opposed to enforced compliance and mitigate or cancel claims altogether where such non-compliance does not pose a threat to consumer health, safety or welfare,” it said.

Email ITTNews@warren-news.com for a copy of the presentation slides from the meeting that include some of the recommendations.