Simplify, or Perish? (part 2)
Responding To Industry. The commissioner said simplifying shipment entry procedures will go a long way towards reducing administrative and other fees associated with crossing the border.
He reminded the audience about two pilot projects underway that CBP is using to learn how to manage importers on an account basis rather than reviewing paperwork on every shipment upon arrival.
Supporters of modernizing trade facilitation want the process to be more predictable, simple, efficient, transparent and uniform.
The Account Executive program is working with two electronics firms on account treatment for low-risk importers in the areas of audits, rulings, payments, customs bond coverage, documentation and other customs activities. The effort is driven by the concept that CBP can strategically monitor trusted shippers, with proven compliance capability, instead of checking their every action.
Bersin even suggested moving to a quarterly billing process for companies with accounts in the agency's still-to-be-completed umbrella computer system, the Automated Commercial Environment. The current program allows importers and their brokers to pay duties and fees in a consolidated fashion once a month.
The idea holds attraction as an economic stimulus tool if money flows into the economy more by allowing companies two extra months to hold onto their cash, Cindy Allen, executive director of the ACE Business Office, told NCBFAA delegates.
Cynthia Whittenberg, director of trade facilitation and administration, and Bruce Ingalls, chief of the revenue division at CBP's finance center in Indianapolis, have spent several months developing minimum criteria for a simplified payment process that has the least amount of impact for businesses to adopt.
Rationalizing the entry process has proven elusive for CBP during the past 25 years, and new internal working groups have struggled with how such concepts would work in practice.
In February, Bersin directed the Office of Trade to try to achieve a 'strategic breakthrough' using the collaborative approach followed by Todd Owen, executive director of cargo and conveyance security, to quickly ramp up pilot programs for collecting advance data on air cargo shipments in the wake of the Yemen package-bomb plot in late October.
That approach was characterized by the involvement of the private sector from the outset of the project. Together, representatives of the express carrier and air cargo industries quickly identified data elements that could be shared earlier for targeting purposes and established procedures for transmitting the data and how to respond to potential threats, without causing any operational delays in shipment flows. Within six weeks, CBP began receiving advance data from UPS well ahead of departure, quickly followed by FedEx in January and DHL in March.
'This manner of operating is the model for going forward,' Bersin said at the public meeting.
On April 8, the Office of Trade presented its preliminary ideas on simplified entry and financial processes during a conference call with representatives from the National Association of Manufacturers, the American Association of Exporters and Importers, the Business Alliance for Customs Modernization, the National Retail Federation and NCBFAA, according to CBP and industry officials. The organizations are part of a new working group that will try to flesh out concepts that all agree are still at a very preliminary stage of discussion.
AAEI Executive Director Marianne Rowden said she recommended that the private sector parties think about how they would design a perfect import system if they didn't have to worry about Customs regulations and then backward engineer CBP's requirements for security, cargo release and payment functions onto that framework.
The group hopes to develop some new approaches within a couple of months, Brockman Smith added.
A second demonstration program is the Center of Excellence and Expertise, which is designed to be a clearinghouse of compliance and enforcement best practices, and guidance, for internal and external stakeholders associated with a particular industry. The initial area of focus is pharmaceutical manufacturers.
A big potential benefit is uniform enforcement across all ports for certain commodities by following how ports that attract most of those cargoes apply customs rules, Bersin said.
As an example of the red tape identified by the project that he would like to cut, Bersin described a European drug maker that filed paperwork for each of its 428 shipments last year certifying the product doesn't include certain chemicals.
Other industries have their own documentation requirements and Bersin said he wants to move to a system in which a single certification applies for all shipments and is good 'until it is replaced by a correction' as facts change.
In an attempt to allay concerns that brokers could lose business if the customs process is simplified, Bersin told the audience that management-by-account would first be implemented for large companies. 'But I see no reason why brokers shouldn't be managing accounts consisting of smaller or medium-size companies,' he said.
Agents could aggregate and consolidate account data for importers unable to support their own information technology connection to ACE, he elaborated.
'This is a once-in-a-generation type of moment where you have the opportunity to not only look at how you do business today, but really challenge yourself and think about how you're going to do business in 10, 15 and perhaps even 30 years,' said Allen, a former educational director at the NCBFAA and before that an executive for a freight management company.
'So when we say simplification, that doesn't automatically mean do away with the broker. Far from it,' she said. 'It's how do we work with the brokers that handle over 95 percent of the entries into the United States every day, how do we make this work for you and make it work for the importer that mirrors a business process that the trade has right now?
'It's a challenge for us at CBP to think about how importers do business because we don't have an in-depth understanding. You understand much better because that's your livelihood. So when we talk about simplification, its how can we make it simple for everyone, not just one side of the equation.'
Kohn Ross questioned whether there is widespread demand among importers for entry simplification in the United States, where things tend to move rather smoothly compared to many other parts of the world.
Reducing the cost of clearance is more of a factor, especially in the Los Angeles region where fees are high at container examination stations that provide the labor for physical searches ordered by Customs, she argued.
Reforming the traditional way Customs does business is a massive undertaking, especially given the constraints of statutes spelling out the agency's mission and delays with ACE, and is not something many expect to be completed any time soon.
Jeffrey Whalen, an assistant general counsel for customs and international trade at Nike who sits on a federal advisory panel to CBP, expressed concern at the meeting that officials would have difficulty expanding the demonstrations into a national program and getting other agencies to participate.
'In the business world, when we do a pilot everyone pays attention, everyone respects the direction and the pilots usually work pretty well. But when you actually try to implement on a larger scale you encounter an inertia, or institutional resistance, that provides some challenge,' he said.