Senate Finance Committee Says Customs Modernization Bill a Priority

The Senate Finance Committee's chairman and ranking member said it's time to turn their attention to customs modernization, with both saying any bill will need to both enhance enforcement and make legitimate trade move faster and with more certainty.

Ranking member Mike Crapo, R-Idaho, said tackling customs modernization is critically important, with Congress in a good position to tackle it "because CBP and its advisory committees started thinking about many of these issues, starting in 2018, when CBP launched its ‘21st Century Customs Framework Initiative’ to develop ideas about what a modernized customs regime might look like."

He gave an example of importing wet pet food, where importers have to submit data not just to CBP, but to USDA, FDA and NOAA.

"These agencies cumulatively want 54 data elements. But, 21 of these elements are redundant, and there are 16 inconsistent definitions for the same data. Under these circumstances, the importer faces the challenge of figuring out what exactly is required and our law enforcement authorities may end up with information of little utility," he said Feb. 16 at the committee's first trade hearing of the year.

A CBP official recently used the same example when discussing the agency's 21st Century Customs Framework at a trade industry conference (see 2301180028).

The hearing featured Cindy Allen, vice president for regulatory affairs and compliance at FedEx Logistics; John Pickel, senior director-international supply chain policy, at the National Foreign Trade Council; Brenda Smith, former CBP trade executive and global director for government outreach at Expeditors International of Washington; a union leader from Century Aluminum in Kentucky; and Scott Nova, executive director of the Worker Rights Consortium.

Allen, Pickel and Smith talked about the need to incorporate the voices of the trade in shaping a bill, and the need to offer benefits to trusted traders. Allen said the single government window is really a 47-paned window because of partner agencies, and that a good modernization would use an interagency council to simplify processes.

Committee Chairman Ron Wyden, D-Ore., said he shares her view that partner agencies' demands should be harmonized in ACE.

In her prepared testimony, Allen said Congress should raise the informal entry threshold and make it easier to use for importers, such as by not requiring specific HTS numbers unless it was a "restricted" good.

All three also said the goal should be "requiring the right data at the right time from the right party." Smith said in her written testimony, "More data isn’t always better; quality is more important than quantity."

Smith also said the bill should allow authorized economic operators to share information ahead of the border so that shipments could be waved through at the Mexico-U.S. land border in a true green lane. She said we have the technology to make that a reality. She said once the bill passes, CBP's non-uniformed staff needs to be bigger to implement it properly.

She said CBP has 3,000 full-time trade staffers that are not uniformed -- trade specialists, auditors, analysts, attorneys -- and she recommended 6,000 such staff.

Sen. Bill Cassidy, R-La., the author of a modernization draft bill, has suggested that lowering the U.S. de minimis threshold could pay for ambitious nearshoring and reshoring initiatives. Cassidy did not attend the hearing, but new Finance Committee member Sen. Thom Tillis, R-N.C., said the government should encourage businesses to move supply chains from China to the Western Hemisphere.

Nova's testimony said the $800 de minimis threshold isn't so much the issue -- few packages are for more than $200, he said -- but forced labor scrutiny is stymied in the system. He pointed to news coverage that Shein apparel, sent directly to consumers from Asia, contains Xinjiang cotton (see 2211210071).

Allen and Pickel defended the de minimis level as beneficial to American consumers and businesses, and Allen said repeatedly that there's a misconception that CBP is not able to inspect de minimis shipments.

CBP has officials at FedEx's massive Memphis logistics hub, and Allen said "there's a robust amount of information" for all shipments, including those under $800. "We have a number of seizures that result of that very robust targeting process," she said.

Sen. John Thune, R-S.D., said maintaining the threshold established in 2016 is important.

The question of how to best stop the import of goods made with forced labor is a major priority for Wyden. He told Nova that the answers he got from auto companies suggested to him "they’ve got a lot more work to do."

Wyden said the committee will be looking at the entire auto supply chain when it comes to forced labor, and asked Nova what advice he would give companies.

Nova said they need to find out where their inputs are originating, and if any are from Xinjiang or from Chinese firms that use transferred Uyghur laborers. "Sometimes they will act as if the inputs that go into their cars is some kind of unfathomable mystery," he said. "They have not been prioritizing gaining and maintaining that knowledge."

For all manufacturers, he said, due diligence at the level of detail needed hasn't happened "not because they can’t figure out how to do it, but because it costs money to do it right."

Nova also was critical of CBP's enforcement of the Uyghur Forced Labor Prevention Act so far, though he acknowledged implementing such a broad mandate would mean growing pains. He questioned why no more firms had been added to the entity list, when independent researchers have identified hundreds of firms that belong there.

He said CBP is spending too much effort on the tiny amount of shipments that come directly from Xinjiang to the U.S., when they need to track raw materials such as polysilicon, cotton, aluminum and PVC to their downstream uses, and then track those products to U.S. ports.

CBP should be more open about what products it is detaining -- aluminum, solar panels, apparel -- and what countries they are coming from. He said in his written testimony that it could not possibly jeopardize law enforcement or trade secrets to identify what percentage of detentions were from goods sent from countries other than China; whether any shipments were detained because they came from entity listed firms; or which forced labor detentions were due to the UFLPA.

Witnesses and senators suggested other trade bills should be part of this package. Andy Meserve, the Century Aluminum union officer, said Ohio Sen. Sherrod Brown's antidumping laws rewrite, the Level the Playing Field Act 2.0, should pass as soon as possible.

Sen. Robert Menendez, D-N.J., asked witnesses if importers need to know what tariff levels will be before their goods are on the water. Allen and Pickel said yes, and Menendez said that's why he and Cassidy introduced the Fair Tariff Act in the last Congress, which would have banned tariff increases unless there was a 60-day notice. He said it would protect goods on the water from surprise tariffs without compromising our trade policy. Wyden said he agrees it's "an extraordinarily important issue."