CBP official envisions fewer cargo exams, more post-entry compliance reviews

CBP official envisions fewer cargo exams, more post-entry compliance reviews The Customs officer intent on finding technical violations of trade law by snooping through as many international shipments as possible before they leave agency custody could become an image of the past if Assistant Commissioner Dan Baldwin has his way.
   Baldwin, who took over in mid-October as head of the new Office of Trade within U.S. Customs and Border Protection, outlined an enforcement philosophy at last week’s Trade Support Network meeting and annual Trade Symposium in which the vast majority of cargo is quickly released to the importer, and documentation checks are conducted in the post-entry environment.
   CBP wants to find alternative ways to verify compliance of duty payments, classification and other documentation issues without holding up shipments at the port of entry. Physical inspection doesn’t necessarily have to be the first line of defense for trade laws, Baldwin said.
   “We should be using the cargo exam as a verification exercise not as an examination exercise,” he said.
      Most trade compliance problems, such as paying correct duties or anti-dumping fees, can be pinpointed by importer account managers and auditors using analytical techniques and open-source data, Baldwin said. By reviewing a company’s books, and following the money and business transactions involved, these specialists can identify errors and work with the importer to resolve problems.
   CBP would “use the cargo exam process to pulse how the company performed” and validate that documentation errors were corrected on future shipments, Baldwin said.
   Some types of criminal activities, such as transshipment of textiles to avoid import quotas and intellectual property right violations, would still require Customs officers to see the cargo to identify violations.
   “We can have a much more layered process for performing our verifications and free up some of our border resources” to allow for more security exams or follow-up checks for trade compliance, Baldwin said.
   “Cargo exams are just one piece of the puzzle and we need to exploit the other pieces,” he added after one of his presentations.
      Moving to a post-entry review of imports for compliance purposes is “going to take some time” but is “absolutely critical” because “the lack of facilitation is hurting our economy,” Baldwin told hundreds of trade professionals at the Trade Symposium.
   Commissioner Ralph Basham established the Office of Trade at the urging of Congress by consolidating the agency’s trade-related policymaking, legal, audit and facilitation functions so the agency speaks with one voice to industry and officers at the port level. The Office of Field Operations remains in charge of enforcing policies and decisions made by the Trade Office.
   Officials decided to keep import specialists, who are tasked with helping importers make sure their shipments are properly documented and meet trade rules, in Field Operations because of a desire not to disrupt the normal business activity of industry and CBP, Baldwin said.
   Removing the import specialists from OFO posed “too great of a risk, at least at this point,” of slowing down cargo processing, Baldwin said. “We want to give optimal service to industry and the port director to facilitate trade and enforce trade laws.”
   Many customs brokers who handle entries for shippers complain that the agency has siphoned off too many import specialists to carry out cargo security functions at the expense of commerce. CBP needs more and better-trained personnel to handle growing volumes of trade, Baldwin acknowledged. Basham has promised to hire enough import specialists by the end of the year to meet legally required staffing levels, but CBP will likely need more specialists to handle projected import growth.
   Baldwin said any attempt to move the import specialists away from the border where they can review electronic entries from any port must also be carefully considered to prevent any disruption in port operations.
   The new reorganization of trade functions possibly is “the best thing that’s happened to Customs since Alexander Hamilton established the Customs Service in 1789,” Richard Belanger, a trade attorney with Sidley Austin LLP and general counsel for the Business Alliance for Customs Modernization, said.
   To ensure success, the Trade Office must prevent any drop in service levels, continue to issue rulings in a timely manner, and make sure auditors and attorneys render objective decisions, Belanger said.         
      Baldwin reiterated previous assurances that the Office of Regulations and Rulings and the Office of Regulatory Audit would continue to issue independent judgments without pressure from policymakers now under the same roof.
   “I’ve been quite encouraged that we’ll see objective decisions coming out of those two offices,” Belanger, a former Customs attorney, said.
   “I believe this reorganization is going to be the catalyst for the next age of trade facilitation” and enable CBP to complete improvements it should have made the past decade under the Customs Modernization Act, said Brad Shorser, customs compliance manager for Sears Holdings.
      His wish list of top CBP priorities includes improving remote location filing, moving to 100 percent paperless entries and instituting conditional releases of cargo.
   CBP created remote location filing in the late 1990s to enable shippers to file their customs entries from a location within the United States other than the port where their goods arrive or are inspected. The idea is to allow importers to centralize preparation of their entries or use preferred brokers without needing staff in each port location.   
   But the process is not as efficient as it could be.
   As currently practiced RLF is “a glorified paired ports concept” in which the filer is essentially limited to filing at the port of arrival or destination, but not a third, unrelated location, Shorser complained.
   “Filing needs to be separated completely from the movement of cargo,” he said.
      Shorser, who heads a Commercial Operations Advisory Committee subgroup that will review CBP’s organizational efforts, said another pet peeve is Customs’ failure to completely automate the filing of entries and supporting documents.
   Although importers and their agents electronically file entries, CBP frequently seeks additional information, such as invoices, in hard copy form. That means companies, especially those filing from remote locations, have to use couriers or scan documents to CBP, increasing the dwell time at the port until cargo is approved for release.
   “Our paperless rate is only 80 percent, and that’s just for Type 1 entries,” Shorser said.
   The Sears customs expert also asked CBP to conditionally release containers listed together as a single shipment on an entry form when only one of the containers is flagged for a compliance exam. Shippers should not be penalized for including multiple bills of lading on an entry if those same containers would be cleared if they were filed as separate entries, he said. As the term suggests, CBP could still recall the goods if it determined there was a potential problem.
   But that is a risk many importers are willing to take.
   “Give me conditional release. Give me the right to sell my merchandise” and make a profit, Shorser said, adding that the earlier goods are released the better companies can plan labor to unload and distribute the merchandise.
      Shorser said he is “very encouraged” by the new attitude at CBP towards making Customs processes more efficient and devoting more resources towards trade facilitation.