Licensed customs brokers serve as the funnel through which U.S. Customs and Border Protection, as well as more than 40 other federal agencies, receive electronic data to evaluate the compliance of numerous imports entering the country each day.
With this capability, the industry sees itself playing an important role in assisting CBP and other agencies with combating the rising tide of counterfeit and pirated products entering U.S. commerce.
“Part of the solution to the counterfeiting problem must involve greater transparency and information sharing between the government agencies responsible for policing this issue and the legitimate members of trade that are being asked to support the mission,” said Amy Magnus, president of the National Customs Brokers and Forwarders Association of America (NCBFAA), in a written response to a recent Federal Register notice requesting public comments on how to counter counterfeit and pirated imports.
“Providing customs brokers with information regarding trends and known instances of counterfeiting activity will allow them to better screen the supply chain and identify potential ‘bad actors’ before merchandise arrives in the United States,” she added.
It’s estimated that the nation’s customs broker industry processes more than 100,000 import entries each day through CBP’s Automated Commercial Environment (ACE).
“Brokers use a high standard of care and reasonable due diligence in preparing the entry paperwork and transmitting the declarations of the importer. Yet, the customs broker does not own the merchandise and, in fact, only on rare occasions do we even lay eyes on the product,” Magnus said.
“Nevertheless, the broker’s responsibility to know the importer and insist on receiving data on the parties in interest means more reliable data is submitted to CBP for targeting violative shipments,” she said.
On April 3, President Donald Trump released a memorandum directing the homeland security and commerce secretaries, as well as other federal agencies involved with trade, to prepare and submit a report regarding third parties’ facilitation and work to combat trafficking in counterfeit goods.
A July 10 Federal Register notice requested public comments related to the presidential memorandum, with a deadline for submitting those comments by July 29.
A final report from the Homeland Security and Commerce departments is due to the White House by Oct. 3.
The report is expected to detail the involvement of online third-party marketplaces in the facilitation of counterfeit goods imports, as well as include data on how these goods are currently trafficked through the commercial import system. The departments also will recommend to the Trump administration possible administrative, regulatory, legislative or policy changes related to third-party marketplaces involved in e-commerce.
During the past two years, CBP has highlighted the increasing difficulty for its information technology and officers to manage and detect illicit goods, such as counterfeits, within the rising tide of small package imports entering the U.S. that do not require a formal import entry due to declared values below the $800 de minimis.
CBP estimates that U.S. international mail processing facilities now handle more than 1.8 million packages a day with declared values of less than $800. That volume is expected to increase in the years ahead.
To get a handle on its oversight of e-commerce imports, the agency recently initiated a pilot to determine the feasibility of requiring additional data in advance for imports valued below the $800 de minimis. Nine eligible participants will be picked from among e-commerce carriers, customs brokers, freight forwarders and online marketplaces. The pilot is expected to start Aug. 22.
Magnus called the pilot “a step in the right direction,” adding that “it shows that CBP recognizes the challenges of targeting de minimis shipments and realizes that more data is needed to identify high-risk shipments.”
Another CBP test related to targeting illicit shipments in the voluminous small package supply chain involves new import entry type, referred to as “Entry Type 86.” However, this entry primarily is designed for shipments from the de minimis but still subject to PGA (partner government agency) requirements, such as the U.S. Department of Agriculture and Food and Drug Administration. Customs brokers are expected to have the option to use Entry Type 86 for de minimis shipments.
The Entry Type 86 will require a 10-digit Harmonized Tariff Schedule number, along with a written description of the product, which is expected to help with commercial targeting, Magnus said.
The NCBFAA supports the test and looks forward to its customs broker members’ participation, but “we remain concerned that the proposed Entry Type 86 still does not require all the data elements needed for effective targeting, such as the identity of the manufacturer and the U.S. buyer,” Magnus said.