CBP depends on international engagement to manage trade, Kerlikowske says

In what possibly could be his last major address before leaving office, Commissioner Gil Kerlikowske outlined Customs and Border Protection’s top accomplishments on trade during his tenure.    To what extent the United States, under a more inward-looking and enforcement-minded Trump administration, pulls back from international partnerships remains to be seen, but when it comes to border management and securing commercial supply chains, collaboration with foreign governments is vital, CBP Commissioner Gil Kerlikowske said.
   In his final big speech before leaving office, the former police chief said Thursday that the agency’s enforcement, security and trade facilitation missions can’t succeed without working closely with overseas counterparts, especially as threats from criminals and terrorists quickly evolve.
   CBP shares information, technology, and best practices, along with coordinating enforcement actions with other customs administrations to fulfill multiple responsibilities, including for cargo security, import safety, intellectual property rights (IPR) protection, and duty evasion.
   “The tremendous growth in the volume and complexity of trade requires increased cooperation among customs authorities to detect, deter, and disrupt networks engaging in illicit trade,” Kerlikowske said.
   “Traditional trade fraud schemes – activities such as transshipment and undervaluation – are becoming harder to detect and prove, without tracing the goods back through the supply chain. And relatively new trade fraud schemes – such as identity theft and trade-based money laundering – pose risks not only to U.S. national security, but also to those of our closest trading partners.
   “Increased information sharing among customs agencies – through an International Customs Network, for example – would facilitate global enforcement, improve risk management, and help stem the proliferation of illicit trade,” he said.
   CBP is also leading international efforts to modernize customs processes in other countries. One of the key initiatives is aligning cargo processing and data collection with Mexico and Canada – one of the goals the Obama administration has established with both countries to help make the common borders more secure and friendly to commerce. Common data standards for electronic processing systems across North America would save companies time and money.
   Intellectual property rights (IPR) enforcement is another area that involves international cooperation, with Customs authorities in Mexico, Hong Kong and elsewhere participating in joint operations to stop counterfeit merchandise from reaching the U.S. market. In fiscal year 2016, U.S. authorities made more than 31,000 IPR seizures, a record and a 9 percent increase over the prior year, Kerlikowske said.
   The future of the North American Free Trade Agreement, trade facilitation and supply chain security were top of mind for industry professionals attending U.S. Customs and Border Protection’s Trade Symposium in Washington last week.
   Kerlikowske’s speech primarily was an opportunity to outline key accomplishments of his 30-month term, including the completion of Automated Commercial Environment (ACE) and the Centers for Excellence and Expertise.
   The commissioner said ACE is already proving its worth to the private sector and the government, despite a bumpy road through the development cycle.
   The massive information technology project, nearly 20 years in development, is mostly complete. It is the primary system through which companies will report imports and exports, and the government will determine shipment admissibility. And that function won’t just apply for CBP decisions on cargo clearance, but for all agencies with clearance authority over goods. Under an executive order from President Obama, all agencies with oversight of trade issues must conduct business in the International Trade Data System by the end of the year, and ACE will serve as the “single window” for routing documentation to agencies without the need for redundant filing. The past couple of years have focused heavily on getting traders to transition out of the legacy CBP trade processing system to ACE. Mandatory use of a few remaining functions, such as filing drawback claims, will not kick in until early next year.
   Kerlikowske said ACE saved Customs an estimated $20 million in fiscal year 2016, ended Sept. 30, and more than $40 million for the trade community.
   That’s because the system automated more than 300 paper forms and other government agencies now receive shipment data much earlier than at time of entry, enabling them to make faster admissibility decisions.
   Industry users can check whether shipments have received the green light from regulators to move shipments and run various reports analyzing their compliance history.
   And electronic bond submissions, a capability almost two years old, has reduced paper bond submissions by 95 percent and has significantly cut processing times from days to seconds, Kerlikowske said.
   The commissioner said he was also proud that all 10 Centers of Excellence and Expertise (CEE) became fully operational under his watch.
   The CEE’s are organized around 10 industry clusters to streamline and centralize processing of post-entry reviews and revenue collection. Entries are handled on an account basis rather than by transaction at each port. The Centers also provide knowledgeable points of contact that ensure compliance requirements are uniformly enforced around the nation, thereby offering shippers’ predictability and transparency for finalizing entries. Additionally, the experts’ familiarity with shipment patterns related to their industry often enables them identify compliance bottlenecks and help identify enforcement targets for investigators.
   As with ACE, the industry integration centers are making trade much smoother for many companies, Kerlikowske said. The Automotive & Aerospace Center, for example, collaborated with a major importer to streamline the process related to filing protests. The importer is now able to consolidate numerous monthly protests filed on the same issue into a single protest, resulting in only 12 protests per year and reducing time, effort and expense for both the company and CBP, he said.
   The same CEE was able to help another importer get faster release of a shipment that had been held up after inspectors discovered live pests in the wooden pallets used to hold boxes of goods. The Center worked with officers at the port of entry to get the pallets quarantined while the goods were released – avoiding a costly plant showdown – and then began discussing with the importer possible packing and shipping alternatives to wood pallets, Kerlikowske said.
   Pilot programs underway for electronic filing of export manifests in the ocean, air and rail modes are already proving valuable to participating transportation providers, he said.
   Export manifests allow CBP to know the exact departure port for shipments, which allows offices to more accurately assess risk and reduce delays. Under the voluntary testing, ocean participants submit export manifest data at least 24 hours prior to loading of the cargo instead of submitting a paper manifest within four days of vessel departure (and nine days for a small few filing electronically in a legacy system).
   In the maritime environment, Maersk Line and Overseas Oriental Container Lines are submitting electronic manifests to CBP through the ports of Newark, N.J. and Long Beach, Calif., respectively. This pilot is estimated to save each carrier about $900,000 annually for copying and courier costs alone. And Maersk is looking to expand its participation in the pilot to another east coast port shortly, the commissioner said.
   Last week, BDP International began initial filing of export bills of lading for air cargo. A number of other carriers and freight forwarders have begun the process to submit air export manifest at least four hours prior to loading.
   And in the rail environment, Union Pacific and Canadian National Railway have begun electronically submitting bill of lading information to CBP two hours prior to loading, he said.
   CBP has also established a truck electronic export manifest working group to decide which data elements would be required for the manifest in a potential pilot for the trucking environment. The working group is also considering the Canadian and Mexican import manifesting requirements for the Single Window initiative.
   E-commerce is also getting more attention under Kerlikowske’s watch. In mid-September, CBP established the e-Commerce and Small Business Branch within the Office of Trade. Kerlikowske said the branch reflects the new internet-based business models and the shift to direct shipping to customers, and a desire to help small and medium-sized enterprises move their legitimate cargo more efficiently, without unnecessary costs and delays.
   The Trade Facilitation and Enforcement Act (TFTEA), enacted at the start of the year, gave CBP several tools to increase enforcement of trade violations. The law, for example, eliminated a loophole that allowed prohibited imports made by forced labor if there was not enough supply to meet domestic demand. Kerlikowske has used his new power to block entry of soda ash, calcium chloride, potassium products, Stevia and its derivatives, and peeled garlic from China.
   “It’s imperative that companies examine their supply chains to understand product sourcing and the labor,” he cautioned.
   The TFTEA also gives CBP more authority to investigate merchandise suspected to be evading antidumping and countervailing duty orders. The agency has established a website to share information with the trade community and whistleblowers can now file these unfair trade tips electronically via the agency’s e-allegations web portal on cbp.gov, Kerlikowske announced.
   In fiscal year 2016, CBP enforced 364 AD/CVD orders covering about 150 products worth a combined total of $11.2 billion and CBP collected $1.8 billion in AD/CVD deposits, the commissioner said. Congress has been upset about CBP’s inability to collect more of these duties, which is difficult given the retrospective way duties are assessed. The increased investigatory powers, however, are intended to catch cheats sooner.