Senate to vote on Customs reauthorization bill

After ironing out a dispute over taxing Internet access, the Senate is expected to vote this week on a Customs bill supported by industry because of its focus on trade facilitation and enforcement.    The United States Senate is expected to vote Thursday on a Customs reauthorization bill that has been years in the making.
   The vote is for a compromise bill agreed to in a bicameral conference committee that resolves differences between the House and Senate versions of the Trade Facilitation and Trade Enforcement Act of 2015. The House voted 256-158 on Dec. 11 in favor of the conference report.
   The reauthorization bill aims to modernize outdated U.S. Customs and Border Protection policies and programs to reduce the burdens of cross-border trade, while also improving enforcement of intellectual property rights and violations of other regulations. Many new initiatives are already underway, but the bill would institutionalize them in legislation so officials know they have congressional support to proceed.
   A key piece of the bill addresses the Automated Commercial Environment and the International Trade Data System, which together will enable the streamlined exchange of import and export data between traders and dozens of federal agencies, as well as between agencies themselves.
   It also gives permanent status to the Centers for Excellence and Expertise, a popular effort begun in 2011 to centralize post-release entry processing by industry type and bring more consistency to the review of import paperwork.
   A Senate vote in December was stalled over a dispute over how to tax Internet sales. 
   Senators such as Richard Durbin, D-Ill., opposed the bill after the Permanent Internet Tax Freedom Act was added as a rider during House-Senate negotiations. The PITFA would permanently ban states from taxing Internet access or placing multiple taxes on e-commerce transactions. Original legislation that temporarily banned Internet access taxes was first enacted in 1998 and has been extended five times since then.
   Senate leadership has agreed to have a separate vote on PITFA and legislation to require online retail sales to be taxed the same as sales in physical stores, clearing the way for the Customs reauthorization to move ahead.
   “Outdated customs and border policies are costing manufacturers billions of dollars a year in increased operating costs and unfair competition, while also preventing manufacturers from moving their products in and out of the United States efficiently,” the National Association of Manufacturers said in a Dec. 11 letter to senators urging them to vote for the Customs reauthorization bill.
   “Existing customs rules have not kept pace with the growth and changes in trade or fully embraced technological advances, leading to bottlenecks at the border that impede the just-in-time manufacturing process. Manufacturers are also harmed by the growing problem of evasion of U.S. trade remedy rules, intellectual property theft overseas, and the failure of our trading partners to fully enforce their trade agreement commitments. Small businesses face substantial challenges in reaching new markets overseas as well.”
   The legislation includes a provision, the Enforcing Orders and Reducing Customs Evasion (ENFORCE) Act, designed to hold the U.S. government accountable for the enforcement of U.S. trade rules when evasion arises. It will also create new tools to improve enforcement of intellectual property rights overseas and trade agreement commitments. The legislation also reauthorizes the State Trade and Export Promotion (STEP) program to provide important matching funds that help small businesses advance their export opportunities overseas
   The bill requires Customs and Border Protection to establish performance standards and metrics for measuring progress on trade facilitation and enforcement functions, and to report results to Congress.
   CBP and Immigration and Customs Enforcement are also directed to conduct educational seminars for CBP specialists and ICE agents to improve their ability to quickly classify imported items and determine whether they comply with import regulations.
   Industry groups support a provision in the bill that reduces paperwork burdens for low-value shipments. The bill would formalize CBP’s current practice of allowing informal entries for consignments up to $2,500 in value.
   Informal entries expedite customs clearance because they requires less documentation, eliminate the need for a surety bond and reduce the $25 minimum merchandise processing fee to $2 for entries filed electronically. Express delivery companies, in particular, say the policy is important in helping small businesses overcome reluctance to engage with overseas markets by reducing their compliance burdens.
   The legislation also authorizes CBP to establish preclearance operations with countries such as Canada (where a framework agreement already exists) and Mexico, and to finalize development and implementation of the Automated Commercial Environment – the IT linchpin to modernizing policies and operations at ports of entry.
   The executive branch will also be held accountable for enforcing U.S. trade rules when evasion arises, and gets more tools to assist carry out that mission.
   Specifically, CBP is instructed to use better techniques to go after foreign traders that evade antidumping and countervailing duties under strict deadlines and ensure that all distributions of such duties are made to domestic victims, and the bill requires CBP to provide IPR rights holders with samples to identify counterfeits.
   The bill also establishes a new enforcement fund to provide resources to enforce trade agreements, expands Special 301 Reports by the U.S. Trade Representative that identify barriers faced by U.S. companies overseas to include trade secrets, creates additional IPR monitoring tools and establishes a Chief Innovation and Intellectual Property negotiator at USTR, and gives the USTR new oversight of trade enforcement. And it establishes the Interagency Center on Trade Implementation, Monitoring and Enforcement.
   The Customs reauthorization bill includes other pieces of significance to the trade community as well.
   Although the Customs-Trade Partnership Against Terrorism was codified in the SAFE Port Act of 2006, many have questioned whether the 10,000-plus companies that voluntarily allow CBP to check their import security processes from the point of origin receive tangible benefits in terms of faster clearance and less transactional expense. The new bill urges CBP to make sure benefits are transparent, to consolidate industry partnership programs to enhance participation and to regularly report to Congress on the progress of such programs.
   CBP has already moved in this direction with plans being formulated for how to meld C-TPAT and the Importer Self-Assessment, a trade program that allows companies that meet strict criteria for internal compliance controls to self-report mistakes and avoid burdensome regulatory audits.
   CBP and ICE are directed to submit to Congress a joint strategic plan on trade facilitation and enforcement every two years.
   Congress also extended the period that private sector members of the Commercial Operations Advisory Committee can serve from two years to three years, meaning someone can now serve for six years instead of four within the confines of the two-term limit. And the ICE director was also instructed to participate in the meetings for the first time.
   CBP must also set up a “known importer” program that will require customs brokers to collect information about the identify of any importers for whom they do business.
   The bill also formalizes the interagency import safety working group that CBP spearheaded the creation of five years ago.
   In an organizational change, the heads of the Office of Field Operations and the Office of Trade, are elevated from assistant commissioners to executive assistant commissioners in the new bill. Those offices are currently headed by Todd Owen and Brenda Smith, and the transition puts them directly behind the deputy commissioner on the agency’s leadership hierarchy.
   President Obama is expected to sign the Customs reauthorization when it reaches his desk.