International traders that don’t get onboard new U.S. Customs system risk being left at the station.
U.S. Customs wants to make importers and exporters aware that the ACE train is picking up steam and now is the time to get onboard.
In less than two years, all transactions involving inbound and outbound cargo must be done through the Automated Commercial Environment. But interim milestones for key parts of shipment processing are looming next year.
ACE is the new internal platform for automating all trade-related functions within the agency, including the collection of all required documentation for clearing the border and payments of duties and fees, and communicating with trading companies, as well as other government agencies, about the status of shipments. After more than a dozen years of development and numerous delays, it is finally poised to replace the quarter-century-old Automated Commercial System and make electronic any remaining paper-based filing requirements.
Two years ago only 8 percent of entry summaries (the post-release form for settling duties and user fees) were filed through ACE instead of the legacy system. Entry summaries in ACE reached 26 percent between the fall of 2013 and April, and the agency is now receiving 45 percent of the documents in ACE, according to Brenda Smith, the new assistant commissioner of international trade.
“We needed 45 to 50 percent of entry summaries filed in ACE by the end of the calendar year,” she said Sept. 15 at a National Customs Brokers and Forwarders Association of America conference in Washington. “We exceeded that. So if you’re not filing at least 20 percent of your entry summaries in ACE and starting to work on the entry piece, you’re behind the curve.”
Customs and Border Protection officials consider ACE a critical enabler of their transformation initiative to re-engineer processes, become a better partner for business and remove bureaucratic impediments to trade. The modernization effort is now entering its second phase.
On May 1, all import and export manifests must be filed through ACE. The deadline for mandatory filing of all cargo release information and entry filings is Nov. 1.
The agency has completed more than three quarters of import manifest functionality in ACE, with the final piece for air import manifests currently being tested and scheduled to be delivered in January, said Smith, who at the time was in transition from her prior job as executive director of the ACE Business Office within International Trade. In that role she acted as the voice of the internal and external users during software development.
More than 70 percent of core cargo release processing functions—including split-shipment entries and partial shipments—have been delivered in ACE and a basic simplified entry process is now available for all modes, after initially starting as an air-only pilot. Under simplified entry, filers only need to submit prior to arrival about half the information required on the standard customs entry, along with some data from the Importer Security Filing. CBP will give them a quick “conditional release” or request further documentation, if necessary.
Simplified entry is considered the first step in creating entries in ACE.
And, Smith added, more than 60 percent of post-release functionality, such as correcting an entry, as well as about half of export-processing capability has been delivered.
Functionality to support the filing of export air manifest in ACE, for example, was deployed in October and CBP plans to soon solicit private sector volunteers via a Federal Register notice to help test the module in a real-world setting before being rolled out for public use.
“Deployed” in CBP parlance means the software code is available for users to update middleware so their systems can interact with the module.
The agency is also spending time training inspectors on the automated functions, as well as new policies and processes related to exports.
“The ACE Business Office is working closely with the Office of Field Operations to make sure that when our officers use the functionality that they’re really solid on the policy and the regulatory framework behind it,” Smith said.
The agency is now gearing its development and deployment schedule towards producing post-release capabilities, the CBP official said.
“The deployment schedule is pretty solid, but as we do more analysis of what this is going to take, as we take advantage of the opportunity to modernize the business flow, we’re finding that certain pieces of capability take more or less effort,” she said. “So that can change the schedule a bit.”
CBP’s biggest challenge, arguably, is integrating other government agencies into ACE so there can eventually be a streamlined, consistent and predictable cargo release process for goods subject to multi-jurisdictional oversight.
ACE supports what is called the International Trade Data System, which will serve as a “single window” for data exchange designed to eliminate redundant filing to multiple agencies. The platform will enable CBP and other agencies to follow an automated decision tree that is expected to speed up inspections and release decisions. Shipment delays at ports of entry are frequently the result of inefficiencies and holds by agencies other than Customs.
President Obama has ordered 47 agencies with a role in international trade to have their systems ready to regulate import and export transactions through ITDS by the end of 2016.
Key to achieving that goal is for agencies to follow a unified government approach by aligning policies and procedures with CBP’s risk management strategy, including the establishment of trusted shipper programs. Another important component is agreement on a common set of data that will be collected, along with unique elements for each agency, to verify the admissibility of shipments.
The Environmental Protection Agency and Food Safety Inspection Service last spring began a pilot program to test receipt of the consolidated list of data elements for a narrow group of products, and how they respond back to CBP with release or hold decisions.
A couple other ACE pilot programs related to a document-imaging system for filing supporting documents and an interoperable Web service are also underway.
But Smith said the testing is not as robust as possible because there has been a shortage of companies volunteering for the demonstrations.
She encouraged firms to sign up, adding that early adopters set the baseline for how the system eventually works, and can recommend changes to fix any problems they notice.
Customs brokers may be unable to participate because it is an extra expense at a time when many budgets are strained by IT investments to connect with ACS, ACE and ITDS, Mary Jo Muoio, senior vice president of trade services at OHL, responded.
CBP is working with participating government agencies and identifying commonalities among them. A Customs advisory group comprised of industry representatives has mapped out every step of a typical import transaction, documenting the flow of goods, data and documentation to identify every party’s roles and responsibilities in five distinct modes of transportation: conventional air cargo, express air, ocean, truck and rail. The import mapping is designed to unearth inefficiencies so they aren’t simply perpetuated when converting other government agency processes to ACE.
Industry compliance professionals say they hope the agencies can streamline communications back to them so they know when goods can be released for sale.
CBP in conjunction with the Agriculture Department’s Animal Plant and Health Inspection Service deployed an automated Lacey Act filing in mid-October. The Lacey Act combats trafficking in illegal wildlife, fish and plants by requiring importers to provide details about the genus, species and country of harvest. More work is necessary to make sure operational procedures are in place so field personnel know what to do with the data, Smith said. The agencies are seeking trade participants for a validation pilot and plan to convene a working group in November to guide the project.
The agency is also helping the USDA and Food and Drug Administration transition to ITDS and make sure the necessary data gets to the correct place.
“We want to make sure the data we need for admissibility is actually presented at time of entry. If it isn’t, then a warning will be issued back. We don’t want ACE to be implemented and have a tremendous amount of holdups,” Domenic Veneziano, FDA’s director of import operations, said.
One improvement the FDA hopes to build into the new system is a way to electronically issue violation notices to importers instead of mailing them out, he said.
The FDA is scheduled to be integrated with ITDS in July, according to CBP officials.
With all that progress, Smith’s message to importers, exporters and customs brokers is: “Don’t wait until the last minute.”
In order to transmit data to CBP systems via electronic data interchange, filers must test with the agency to ensure all programming is correct and their systems are able to send data to, and receive data from, CBP.
CBP wants more filers to start filing a significant portion of their entry summaries in ACE. There are 765 approved filers in ACE. In September, 422 importers or their agents filed entry summaries, according to Debbie Augustin, acting executive director of the ACE Business Office.
Companies that don’t file in ACE now are “behind the curve and probably at a competitive disadvantage going into the next year,” Smith said.
Trusted Shippers. Meanwhile, ACE will give Customs better options on how to expand the trusted trader program concept to other government agencies, Smith said in an interview with reporters at CBP headquarters following her September appointment.
Customs operates the Customs-Trade Partnership Against Terrorism, a voluntary supply chain security program that offers trade facilitation benefits to certified companies, and the Importer Self-Assessment (ISA) program, which allows companies with a proven system of compliance controls to avoid customs audits. The investment in internal controls indicates to CBP that a shipper is low risk and can be trusted to operate with less scrutiny. It is now testing the concept of forming an integrated trusted shipper program that rewards companies for meeting or exceeding security and trade compliance criteria, as well as safety and other standards enforced by other agencies. The pilot program is being run in collaboration with the Consumer Product Safety Commission and FDA.
Expanding the trusted trader concept to other government agencies could provide the necessary incentive for more importers to sign up because other government agencies often are the reason shipments are held up for inspection at ports.
Pilot program participants benefit from not being subject to random container security exams, reduced FDA risk scores in its targeting system for exams and potential offsets against compliance penalties received.
The integrated trusted shipper program is being developed with the cooperation of liaisons from the trade community.
CPSC and FDA do not have trusted trader programs of their own, yet. However, in 2008, CBP and CPSC began a pilot program called ISA-Product Safety aimed at providing privileges to companies that demonstrate a high level of product safety compliance and the ability to prevent the import of unsafe products. There are only five companies participating in the pilot, but CPSC eventually intends to roll it into the integrated trusted trader program, Carol Cave, the agency’s director of import surveillance, said.
Achieving trusted shipper status is one thing, but equally important is making sure that information is available to multiple agencies and is properly fed into automated risk targeting systems supported by ACE, according to Smith.
“You need to take that designation and figure out, ‘O.K., so what does that mean in ACE? How do we label and process that info? What does that mean at the port of entry, where you may or may not have a FAST lane, or the FAST lane may only be good for the last 200 yards before you hit the port?’” she said.
In the end, the best way for members of the industry partnership to get the most benefit from their investment is through process coordination with other agencies, Smith said. The Border Interagency Executive Council is the primary vehicle for coordinating risk assessment, inspection and admissibility approaches across government. And the new Centers for Excellence and Expertise, which are designed to create a more holistic work flow for entry summary and post-release activity, will eventually add value to trusted shipper programs, Smith said.
This article was published in the December 2014 issue of American Shipper.