CBP Hopes to Increasingly Use Regulatory Audits for E-Commerce

CBP is now using audits in some cases to make sure e-commerce importers are compliant with the regulations, John Leonard, acting executive assistant commissioner for trade, said while speaking during a Coalition of New England Companies for Trade conference May 13. “We have begun to utilize them in the small package space, but it's baby steps,” he said. Many of the “stakeholders are not traditional importers that will have a normal set of auditable books and records that we're used to with larger entities.”

CBP is starting out slowly on using regulatory audits, “but they will get more and more into it as we all get our arms around it, especially as we start getting more and more of this regular data,” he said. The participants in the Section 321 low-value shipment data pilots are showing dramatic decreases in the numbers of held shipments, he said. “We are taking all those best practices and starting to look to write a notice of proposed rulemaking that will turn into a permanent regulatory framework whereby that's how we'll get data on these small packages,” he said.

Forced labor has become a major focus at CBP in recent years and reflects an “evolution in trade policy enforcement in areas that we traditionally never delved into,” he said. While in previous decades trade enforcement was largely focused on tariff issues, “now, administrations are using trade enforcement to fulfill a lot of different policy areas,” he said. That includes environmental issues, illegal fishing and USMCA labor issues (see 2105110032), Leonard said.

The next evolution on forced labor is “the piece whereby we bring compliant importers into a place where they can have the resources they need to make sure that forced labor is not in their supply chains,” Leonard said. “Is CBP going to be giving you everything you need to do so? Nope. That's not going to happen. We're going to hopefully meet you halfway. A lot of it is going to be education by the companies to know how to trace that supply chain back and know where you might be in areas of concern.”

There remains some question as to exactly where forced labor fits within the Customs-Trade Partnership Against Terrorism program, Leonard said. “We really haven't baked in any forced labor conditions or verifications into that security criteria,” he said. “It's not there yet. I think that's the reason we just can't carte blanche just say 'Oh, you're CTPAT, we're going to release your shipment quickly or treat differently than another shipment that might have forced labor.'” That is “what we have to reconcile” and is something CBP is working on, he said.

Asked about the use of technology to show the origin of raw goods, such as cotton, as a way to demonstrate a lack of forced labor in the supply chain, Leonard said it is something CBP would like to see. It is working with one company, Oritain, and is open to working with other companies or technologies, too, he said. Still, “we're in early days,” he said. CBP would also eventually like to provide more information on bad actors, but “we're not at the point where we're ready to release some massive list,” he said. CBP has said it is currently unable to provide much information about the subjects of its forced labor investigations (see 2104130050).