House passes Customs reauthorization bill

The Customs bill formalizes many reforms designed to facilitate trade, reduce red tape at the border and improve enforcement of U.S. trade laws    The U.S. House of Representatives on Friday passed a Customs reauthorization bill aimed at modernizing and streamlining many functions to help facilitate trade and improve enforcement of import regulations.
   The bill, which goes to the Senate this week for a vote after clearing a joint conference committee last Wednesday, institutionalizes successful programs underway at Customs and Border Protection that operate at the discretion of the agency’s commissioner. Among the programs achieving permanent status is the Centers for Excellence and Expertise (CEE), a highly acclaimed effort begun in 2011 to centralize post-release entry processing by industry type and bring more consistency to the review of import paperwork.
   Competing versions of the Trade Facilitation and Trade Enforcement Act of 2015 cleared the Senate and House in May and June, respectively, and were then forwarded to a bicameral group of negotiators to resolve their differences. Until now, Customs reauthorization legislation in various forms had languished on Capitol Hill for more than seven years.
   “Expanding trade is key to our pro-growth agenda for America. Our bipartisan agreement turns the page on impractical, outdated customs and border policies that have hurt American workers and job creators for decades,” new Chairman of the House Ways and Means Committee Rep. Kevin Brady, R-Texas, said of the legislation. “By replacing inefficiency with innovation, this bill will make it easier for Americans to compete and win in marketplaces around the world.
   “In addition, strong enforcement provisions will also level the playing field and help ensure that other countries follow the same rules. This conference report fulfills our commitment to members of Congress during the discussion of TPA to make sure the President enforces trade agreements, not just negotiates them.”
   The bill requires CBP to establish performance standards and metrics for measuring progress on trade facilitation and enforcement functions, and to report results to Congress.
   CBP and Immigration and Customs Enforcement are also directed to conduct educational seminars for CBP specialists and ICE agents to improve their ability to quickly classify imported items and determine whether they comply with import regulations.
   Industry groups support a provision in the bill that reduces paperwork burdens for low-value shipments. The bill would formalize CBP’s current practice of allowing informal entries for consignments up to $2,500 in value.
   Informal entries expedite customs clearance because they requires less documentation, eliminate the need for a surety bond and reduce the $25 minimum merchandise processing fee to $2 for entries filed electronically. Express delivery companies, in particular, say the policy is important in helping small businesses overcome reluctance to engage with overseas markets by reducing their compliance burdens.
   The legislation also authorizes CBP to establish preclearance operations with countries such as Canada (where a framework agreement already exists) and Mexico, and to finalize development and implementation of the Automated Commercial Environment – the IT linchpin to modernizing policies and operations at ports of entry.
   The executive branch will also be held accountable for enforcing U.S. trade rules when evasion arises, and gets more tools to assist carry out that mission.
   Specifically, CBP is instructed to use better techniques to go after foreign traders that evade antidumping and countervailing duties under strict deadlines and ensure that all distributions of such duties are made to domestic victims, and the bill requires CBP to provide IPR rights holders with samples to identify counterfeits.
   The legislation also establishes a new enforcement fund to provide resources to enforce trade agreements, expands Special 301 Reports by the U.S. Trade Representative that identify barriers faced by U.S. companies overseas to include trade secrets, creates additional IPR monitoring tools and establishes a Chief Innovation and Intellectual Property negotiator at USTR, and gives the USTR new oversight of trade enforcement. And it establishes the Interagency Center on Trade Implementation, Monitoring and Enforcement.
   “Outdated customs and border policies are costing manufacturers billions of dollars a year in increased operating costs and unfair competition, while also preventing manufacturers from moving their products in and out of the United States efficiently,” the National Association of Manufacturers said in a letter to lawmakers last week urging passage of the reauthorization bill.
   “Existing customs rules have not kept pace with the growth and changes in trade or fully embraced technological advances, leading to bottlenecks at the border that impede the just-in-time manufacturing process. Manufacturers are also harmed by the growing problem of evasion of U.S. trade remedy rules, intellectual property theft overseas, and the failure of our trading partners to fully enforce their trade agreement commitments. Small businesses face substantial challenges in reaching new markets overseas as well.” 
   The Customs reauthorization bill includes other pieces of significance to the trade community as well.
   Although the Customs-Trade Partnership Against Terrorism was codified in the SAFE Port Act of 2006, many have questioned whether the 10,000-plus companies that voluntarily allow CBP to check their import security processes from the point of origin receive tangible benefits in terms of faster clearance and less transactional expense. The new bill urges CBP to make sure benefits are transparent, to consolidate industry partnership programs to enhance participation and to regularly report to Congress on the progress of such programs.
   CBP has already moved in this direction with plans being formulated for how to meld C-TPAT and the Importer Self-Assessment, a trade program that allows companies that meet strict criteria for internal compliance controls to self-report mistakes and avoid burdensome regulatory audits.
   CBP and ICE are directed to submit to Congress every two years a joint strategic plan on trade facilitation and enforcement. 
   Congress also extended the period that private sector members of the Commercial Operations Advisory Committee can serve from two years to three years, meaning someone can now serve for six years instead of four within the confines of the two-term limit. And the ICE director was also instructed to participate in the meetings for the first time.
   CBP must also set up a “known importer” program that will require customs brokers to collect information about the identify of any importers they do business for.
   The bill also formalizes the interagency import safety working group that CBP spearheaded the creation of five years ago.
   In an organizational change, the heads of the Office of Field Operations and the Office of Trade, are elevated from assistant commissioners to executive assistant commissioners. Those offices are currently headed by Todd Owen and Brenda Smith and the transition puts them directly behind the deputy commissioner on the agency’s leadership hierarchy.
   The bill easily passed the House by a vote of 256-158, but congressional newspaper The Hill reported only 24 Democrats supported it because many don’t feel it does enough to address human trafficking, currency manipulation or climate change.
   President Obama is expected to sign the Customs reauthorization when it reaches his desk.