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Customs Outlook for 2013

Reproduced with permission from Daily Report

for Executives, 9 DER S-7 (Jan. 14, 2013). Copyright

2013 by The Bureau of National Affairs, Inc.

(800-372-1033) <http://www.bna.com>


Customs Debate Will Continue in 2013 As Agency Steps up Enforcement Efforts

BNA Snapshot

Customs 2013 Outlook

Key Development: House Ways and Means Committee to consider comments on customs legislation introduced last year.

Next Steps: Customs measure is also expected to be introduced in Senate.By Rossella Brevetti

The introduction in late 2012 of two competing customs proposals in the House sets the stage in 2013 for a debate on the bills' divergent proposals to clamp down on evasion and underpayment of dumping and countervailing duties even as U.S. Customs and Border Protection plans its own stepped up enforcement.

The Democrats' proposal (H.R. 6656)—introduced by House Ways and Means Committee ranking member Sander Levin (D-Mich.) and Trade Subcommittee ranking member Jim McDermott (D-Wash.)—would impose strict timelines for U.S. Customs and Border Protection to take action when an evasion allegation is made and would also require Customs to collect additional security from importers when evidence indicates that evasion is occurring.

On the other hand, a GOP proposal (H.R. 5708), introduced by Rep. Kevin Brady (R-Texas), incorporates the so-called PROTECT Act (H.R. 5708), which contains targeting and information sharing provisions to address evasion and underpayment as well as provisions that would end the ability of so-called new shippers to post bonds during new shipper reviews.

Rep. Camp Wants Bipartisan Bill

House Ways and Means Committee Chairman Dave Camp (R-Mich.) has said he wants to move a bipartisan customs bill in 2013 if possible.

A Senate Finance Committee bill is expected to be introduced relatively early in 2013, according to industry sources. “Chairman [Max] Baucus (D-Mont.) hopes to pass a customs bill and will work with Ranking Member [Orrin] Hatch (R-Utah) to do so,” a Finance Committee aide told BNA in an email.

“Both [House] bills are out there as markers. They want some industry comments,” American Association of Exporters & Importers (AAEI) President Marianne Rowden told BNA in a telephone interview. “The highest priority for [AAEI] is getting [the bill's] drawback [provisions] right,” she added. AAEI's concern is that the drawback language it had submitted to the House and Senate committees, with which CBP agreed, has been changed. “We've got to fix that,” Rowden added.

The other area at which AAEI will look closely is trusted trader programs, Rowden told BNA. The House bills refer to a “certified importer program,” she pointed out, commenting that CBP's Importer Self Assessment (ISA) program remains controversial in some quarters. “A lot of companies do not want to join the ISA program but that does not mean that they lack good internal controls,” she told BNA.

Customs has also signalled that it will work in 2013 to consolidate benefits in its Customs-Trade Partnership Against Terrorism supply chain security program with the ISA to arrive at a single trusted trader program. “The risk that you're looking at is different in those two programs—supply chain security risk is different than risk to the revenue,” Rowden remarked, noting that this could be a stumbling block.

Jon Kent, a partner at Kent & O'Connor and Washington representative for the National Customs Brokers and Forwarders Association of America (NCBFAA), said that the next step for C-TPAT is to cross over from a security program into the commercial environment. But he added that there was “some resistance to see a security program apply in a commercial environment.”

Kent told BNA that stakeholders comments to the two 2012 customs bills will inform the process of developing a measure in 2013. Asked about the divergent approaches on enforcement in the two House bills, he remarked: “potentially it's a problem but there's time to work on that problem,” and he predicted that a new House measure could emerge around spring time.

The Finance Committee last year endorsed the approach taken in the Levin/McDermott proposal. “We're going to get some horse-trading and then we'll be off to the races,” Rowden remarked, expressing the view that the Finance Committee will not hold additional hearings in 2013 on the customs bill.

Permanent Customs Commissioner Needed

Meanwhile, industry sources contacted by BNA speculated that the White House would not be in any hurry to nominate a new Customs commissioner as they said it was still unclear whether Department of Homeland Security Secretary Janet Napolitano would remain in her current position during the president's entire second term. Deputy Commissioner David V. Aguilar has been leading Customs since the departure of former Commissioner Alan Bersin, who started implementing a trade transformation agenda that is expected to continue under Aguilar's watch.

Any uncertainty surrounding the DHS post is seen as having a trickle-down effect on Customs. “I can't imagine” that there will be a CBP appointment soon, Kent commented.

Work to Continue on ACE

CBP has been engaged in revamping its trade processing procedures to make the agency more responsive to the 21st century—a trend pushed forward by Bersin that will continue in 2013. As part of this effort, Customs has established a three-year deadline for completing work on the Automated Commercial Environment (ACE) cargo processing capabilities in approximately three years. ACE is the new import and export processing system Customs has been building and deploying in stages.

Going forward, CBP said in a recent report that it is committed to working with ACE stakeholders to develop business cases for additional ACE functions to secure the additional funding needed for implementation. “The primary objective of ACE is the consolidation of trade cargo processing in one modernized system and the decommissioning of [the Automated Commercial System]. Essential to achieving this is the re-engineering of the business processes that drive the technology,” Customs stated recently. CBP has said that the next priorities include cargo release, entry summary edits, resolution of critical system fixes, and export processing.

Simplified entry, which CBP has successfully piloted in the air mode, is the first phase of cargo release being developed in ACE. CBP is expected to continue building on simplified entry to achieve full cargo release capability in ACE.

“That's just wonderful news. To see that there is a light at the end of the tunnel,” Kent told BNA, commenting on the ACE three-year deadline. The unknown factor is appropriations, he commented. “I think they can get us halfway to three years [with current funds] but the second half has got to be funded,” he said.

In 2013, Customs will also continue its Role of the Broker initiative aimed at transforming the relationship between CBP and the broker. According to CBP, future plans for the initiative include formulating policy decisions and potential regulatory alternatives. CBP said it would work to answer several questions:

• does CBP need to seek statutory changes and what should be regulatory?

• what should be contained in guidance?

• how does CBP reward the best practices of highly compliant licensed customs brokers?

CBP will review existing policies to determine what the agency can do without regulatory amendments and start drafting a Notice of Proposed Rulemaking and economic analysis.

Kent told BNA that NCBFAA and brokers want to hold discussions with Customs as the agency moves forward in 2013. Whether CBP will decide to take an expansive view of changes to be made to Part 111 broker regulations remains unclear, he remarked.




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