Testing of New ACE 2.0 Capabilities Ramps Up; Funding Top CBP Concern

PHILADELPHIA -- Getting the funding for ACE 2.0 is the biggest challenge, the executive director of CBP's trade transformation office said. He said the agency was unsuccessful in the budgetary process, and asked industry to lobby their representatives for funding.

"At least at the staffers level, they do understand there's a need," James Byram said, and they understand that the additional capabilities CBP wants to have in ACE are linked to the new approach of more early data from non-traditional sources that is at the heart of the 21st Century Customs Framework.

Byram said he credits that level of awareness to trade interests' lobbying, and said they are also pushing for funding to keep up with the current ACE and correct irritants in how it operates.

The panelists at the CBP Trade Facilitation and Cargo Security Summit told the audience that unlike the switchover from the Automated Commercial System to ACE, ACE 2.0 will not replace the current ACE, it will augment it and change it, but use the same technology platform.

Five years ago, blockchain was the sexy idea for traceability in supply chains, but Vincent Annunziato, director of CBP's business transformation and innovation division, said the agency has decided against using that method to verify the credentials of players in the supply chain or to verify certificates of origin. He said that creating blockchain identifiers is costly in terms of computing power, is too slow, and could have been prohibitively expensive for importers.

Instead, Annunziato said, CBP is focused on creating a Global Business Identifier that is cryptographically verifiable, and on the systems that will be needed to check that a digital passport, a certificate of origin or a driver's license is legitimate, similar to how the police officer that pulls you over goes back to the patrol car to check your license against the DMV records.

The panelists shared the results of the 2023 ACE integration tests for Canadian oil and for Mexican steel (see 2309130025). The Mexican steelmakers were able to send more than just the bill of lading and entry information. They sent a mill test report, information on where the steel product's raw steel was melted and poured, an invoice, delivery schedule, delivery ticket, purchase order, and multi-modal bill of lading.

Whether Mexican steel exports are products manufactured with semi-finished steel from other countries has been politically sensitive in the U.S., and Annunziato said the Mexican steelmakers saw including that data as a source of protection for their own firms, because they want to show that nothing is being slipped in.

Test participants suggested the processes could be improved with a clear definition of seller, manufacturer and buyer. They noted that the country of origin of a good and the manufacturer location could be different. There also was one mapping error during the test.

Annunziato said part of this process is sending an "intent to import," something that's never been part of customs before, and the first step in volunteering to share supply chain information with CBP. The focus is on legitimacy, he said.

"The brokers that have been involved have loved what we're doing," he said. One of the brokers during the question-and-answer session said getting partner government agencies' involvement at the start is smart. "I think this is going to solve a lot of problems," she said.

The next test (see 2402270037) is more complex, as it will involve the FDA and EPA, as well as testing e-commerce transactions. There will be systemic verification of credentials, and it will aim to make ACE more of a true single window. "We think we can reduce duplication of data by 30 to 40 percent" through ACE 2.0, Annunziato said.

Mary Jo Muoio, in the panel's question-and-answer session, noted that FDA's country of origin is not the same as CBP's country of origin. She asked CBP to work with PGAs to harmonize definitions. The panel said that may not be possible due to FDA's regulations, but they could clarify it by naming the box "FDA country of origin."

The test will cover blueberries and avocados, and EPA forms on pesticide residue. Annunziato said farmers will use a mobile app to submit their data, and packing plants and carriers will all be submitting data.

WalMart, UPS, A.N. Deringer, Global Legal Entity Identifier Foundation (GLEIF) and GS1, a non-profit, international organization that develops barcodes, are all interested in participating, and there is still room for more companies to join the test. The Inter American Development Bank will help South American countries afford to join the test, and Congress has funded CBP's side of the test.

Around January 2025, CBP will run a test with other countries, in an effort to show how a trusted trader in the U.S. could automatically be enrolled as an authorized economic operator in another country. Up to 10 countries can participate. None have signed on yet, but there's interest from New Zealand, Canada, the U.K., Australia, and a number of South American countries. They think it could be possible to have Singapore, the EU or South Korea participate, as well.

This international test would provide an automated proof of export, and Annunziato said that when he spoke to CBP's trade policy office, they said, "for drawback purposes, this is outstanding."

If the agency can secure funding, CBP hopes to turn the Mexican steel and Canadian oil tests into actual import processes in March 2025, and they hope that the upcoming test for food, natural gas and e-commerce could go live in 2026.

The Commercial Customs Operations Advisory Committee is working with CBP to shape the concept of operations for further ACE development, and CBP plans to establish a trade working group that can provide feedback at the end of summer or in the early fall.

The panelists also encouraged people to write to cargodevportal@cbp.dhs.gov if they would like to sign up to be alpha testers. CBP will support open source tools for testing, which will allow companies to use their own data management systems as they test APIs (application programming interfaces) by subject matter. CBP will offer JSON (JavaScript Object Notation) specifications for each.

Thomas Mills, executive director of the cargo systems program directorate, invited listeners to "test to kick the tires" with Harmonized Tariff Schedule queries or manifest queries.