E-commerce platforms and rapidly changing IT are challenging the agency’s regulatory oversight and systems to keep pace.
U.S. Customs and Border Protection recognizes that trade supply chains are rapidly transforming themselves through the world of e-commerce and wants its regulatory oversight and technology to keep pace.
Robert Perez, CBP’s deputy commissioner, during the agency’s 21st Century Customs Framework public meeting in Washington, D.C., on Friday, said there’s “a great sense of urgency” within the agency to more fully understand those changes in international trade and how best to weed out illicit activities.
He noted that the 1993 Customs Informed Compliance and Modernization Act “was a generation ago” and it’s long overdue for “substantive change” to reflect the current and future trade landscape.
Within the past three years, e-commerce trade, which includes mostly small shipments with de minimis values of less than $800, has been a boom for the U.S. economy, but CBP officials worry about the potential safety and legitimate business threats that this rapidly moving cargo may contain, such as opioids, unhealthy products and counterfeits.
“We have consumers functioning as importers without an awareness of how international trade functions,” Perez said.
Last year, CBP oversaw about $2.6 trillion in imports, processed about 29 million imported containers and collected an estimated $52 billion in duties, taxes and fees. More than 2 million e-commerce shipments enter the U.S. daily.
Another challenge for CBP is ensuring its information technology, namely the Automated Commercial Environment (ACE), has the capability to incorporate and participate in the latest business data management tools, including blockchain, artificial intelligence and machine learning.
Perez said CBP’s 21st Century Customs Framework will focus on cutting-edge technology by leveraging the latest technology; data access and sharing to improve risk management; engaging new rules in the supply chain and knowing the responsible parties to the transaction; intelligent enforcement by using the latest technology tools to “keep us all safe and protect legitimate trade;” and 21st century trade processes. The agency also will consider the creation of a self-funded customs infrastructure.
Numerous trade association and company representatives offered their views on how CBP may more efficiently regulate e-commerce risks at Friday’s public meeting.
“Many importers out there really don’t understand what their obligations are to what they can legally bring into the United States,” said Amy Magnus, president of the National Customs Brokers and Forwarders Association of America, emphasizing the front-line role for trade that the nation’s licensed customs brokers continue to play.
The concern over the contents of small packages has been compounded in recent years by the accelerated rise in the number of e-commerce platforms and their multitudes of customers.
Michael Mullen, executive director of the Express Association of America, which represents FedEx, UPS and DHL, said, “CBP could leverage partnerships with e-commerce platforms to more accurately identify shippers who have a long history of compliant behavior, which would allow the agency to provide expedited clearance for products with a history of compliance and focus their resources on less well-known shippers.”
He also suggested that “CBP should share more data on known or repeat illicit traders and consider adding these entities to denied party lists, similar to the procedure followed for export control violators.”
Trade executives also emphasized the growing importance and acceptance of blockchain in commercial supply chains. Jeff Rittener, vice president of global trade at Intel Corp., described blockchain as “one version of the truth” for these business transactions.
John Drake, executive director of supply chain policy at the U.S. Chamber of Commerce, urged the agency in his written remarks to “continue exploring blockchain applications through pilot programs and industry collaboration to identify technology that supports interoperability between different technology platforms.”
More details about CBP’s 21st Century Customs Framework initiative and industry input are available here.
Intel’s Rittener, meanwhile, complimented CBP for holding Friday’s public meeting, adding that most governments customs administrations around the world “don’t listen” to their industries.
“You don’t see a panel like this in other parts of the world. It would never happen,” he said. “We need to continue this discussion.”
Perez called the agency’s 21st Century Customs Framework initiative “a tall order, but we’re dedicated to getting this done.
“Collaboration is key,” he added. “We’re going to ask you [the trade] to be shoulder to shoulder with us.”