‘True allies’

‘True allies’ Importers, not brokers, to gain most from customs simplification, Sandler says.

   U.S. Customs and Border Protection Commissioner Alan Bersin’s recent appeal to customs brokers to support him on simplifying Customs procedures sounds good in principle, but was directed at the wrong audience, according to Lee Sandler, a prominent trade lawyer and founding partner of Sandler, Travis and Rosenberg.
   Bersin has launched an internal review of how to simplify entry and financial processes to expedite legitimate trade, provide for earlier release decisions and streamline the submission of information and payments. Two pilot programs are underway to explore ways to implement some of the concepts.
   The overarching goal is to manage a large pool of final transactions for an importer instead of managing trade compliance shipment by shipment.
   At the National Customs Brokers and Forwarders Association of America’s annual conference in Phoenix on April 4, and in other venues, the commissioner has reassured brokers that a system of management by account is not intended to drive away business, which largely depends on fees for each customs entry filed. Instead, Bersin said, regulatory changes being proposed would enable brokers to parlay their expertise into new trade-support services.
   In an interview, Sandler said CBP has not provided specifics on how brokers are supposed to capitalize on customs reforms.
   ‘I don’t see a real business plan there,’ he said. The objective of simplification ultimately is to reduce reliance on experts, and asking brokers to lead the way on building industry consensus for regulatory changes ignores the fact that brokers don’t have a strong incentive to embrace change.
   Any regulatory changes streamlining customs matters would create a short-term demand for brokers and lawyers to manage the transition to a new system, but eventually would reduce their traditional functions, he added.
   ‘The true allies for simplification are the importers and exporters’ because it creates more efficiency and profits for them, Sandler said. ‘Brokers should be supportive of simplification, but that’s not the real business (driver) of the brokerage community.
   ‘I don’t think the brokerage community is an advocate of maintaining complexity, but it’s not intuitive for them to support simplification on the grounds that it’s going to bring them more business.’
   In the mid-1990s, then-Commissioner George Weise pushed through a new process called Remote Location Filing over the objection of the customs broker industry. RLF allows importers and customs brokers with a national permit to electronically file standard customs entries and supporting documents from any location outside the port of arrival, reducing the need to maintain multiple offices and enabling more uniform processing.
   Brokers now generally consider RLF a positive development that simplified procedures and created new profit centers.
   ‘So I think history teaches us that simplification is not easily embraced by brokers and that the real ally for the commissioner should be importers and exporters,’ Sandler told American Shipper.
   People normally resist change, he added, especially if the long-term benefits aren’t very obvious.
   ‘I wouldn’t expect them (brokers) to be at the forefront of the battle,’ he said.