Commissioner Kerlikowske’s Remarks at the Global Supply Chain Summit 2016
The Future of Global Supply Chains
Remarks as prepared for May 18, 2016
Good morning, everyone. Thank you, Ann, for that kind introduction. I’d also like to recognize Maria Luisa Boyce, CBP’s Director of Trade Relations, and my advisor on trade issues, Patrick Schmidt. Mark Wallace just demonstrated how and why “minutes matter,” and so I’ll try to make every minute count here today.
The theme of the conference is “Integrating Innovation.” I know that it’s both easy – and dangerous – to speculate on where we’ll be, say, 10 years from now...but I can tell you we’re on firm footing when it comes to integrating innovation.
We are committed to transforming the ways we do business to help your companies navigate uncertainty more efficiently and securely – thanks to trade facilitation efforts like ACE and our Centers of Excellence and Expertise. These programs certainly help make it easier to import and export lawful goods. They help lower costs for larger enterprises, and they help reduce complexity for smaller businesses. But our nation’s economic security also depends on strong enforcement of U.S. laws and regulations.
Trade volumes continue to rise. In Fiscal Year 2015, CBP processed more than 26 million imported cargo containers, along with $1.5 trillion of U.S. exported goods. We also collected approximately $46 billion in duties, taxes, and other fees – this highest amount collected in the past five years. And technology – the kind of technology that is spurring “e-Commerce,” for example – is radically changing the face of the global supply chain, increasing its complexity and challenging all of us to stay ahead of the curve.
CBP is using technology to meet those challenges. Technology is the foundation of our trade facilitation efforts, and automation will shape and drive the future of the global supply chain.
As the “Single Window” for transmitting electronic information about imports and exports for 47 agencies, ACE is critically important for streamlining the supply chain, eliminating more than 200 paper forms. We’re working closely with you, our trade community, and our Partner Government Agencies towards full implementation by the end of December 2016.
And we’re seeing the results, with approximately 97% of entry summary and nearly 80% of cargo release being filed in ACE. This is tremendous growth since the first of the year, and it wouldn’t be possible without your commitment, investment, and flexibility.
For many of you, the development of ACE has spanned more than a decade, and as we put those filing numbers into perspective, I want to acknowledge how far we have come, and how we got here. I want to express my sincere thanks to many of you who have been early adopters and who have been working hand in hand with us through this transition. Now it’s important to make sure the remaining companies sign up, and we’re urging everyone to file in ACE now – don’t wait for remaining mandatory dates.
Turning to another example of trade facilitation, I am proud to say that CBP has brought all 10 Centers of Excellence and Expertise to full operability. Prior to the Centers, providing uniform decisions required a remarkable level of coordination among the Ports of Entry.
The Centers provide tailored, account-based support, which does three things: First, it increases consistency across Ports of Entry; second, it facilitates the timely resolution of trade compliance issues; and, third, it strengthens critical agency knowledge of key industry practices.
All of these result in lower costs for you, and they centralize and simplify operational decision-making for us. For example, the Petroleum, Natural Gas & Minerals center has realized an 80 percent reduction in the number of protests, with a 65 percent reduction in processing time. Another example: the Apparel, Footwear & Textiles center has cut detention times in half for partner accounts. And the deepening industry and commodity expertise that the Centers bring is helping us better enforce our trade laws. The experts in our CEEs are able to work regularly with industry to better understand their specific commodities, and identify new and complex methods of evasion.
All of CBP’s work to efficiently move cargo across our borders goes hand in hand with our critical enforcement mission. Our enforcement of U.S. laws helps ensure that U.S. manufacturers and American workers compete on a level, global playing field.
While CBP’s trade enforcement mission is a broad one, I want to highlight three priority areas:
- Infringement on Intellectual Property Rights (IPR);
- Evasion of Antidumping/Countervailing duties; and
- Importation of goods produced with forced, child, or convict labor.
IPR violations threaten our business competitiveness, the livelihood of workers, consumer safety and national security. CBP’s targeting of high risk shipments, joint operations with our colleagues at ICE and 22 other partners at the IPR Center, and ongoing communication with IP rights holders, all help yield significant results in IPR enforcement.
Just last month, CBP and ICE reported that in FY 2015, our agencies seized nearly 29,000 shipments of products containing IPR infringements, a 25 percent increase over the prior year.
These seized products would have been worth over $1.35 billion had they made it to the U.S. market, and could have posed major threats to consumer health and safety, and brand integrity.
CBP is also partnering with the private sector to allow IPR holders to assist CBP in identifying authentic and low-risk shipments.
For example, in partnership with the Express Association of America and its members, CBP developed a new administrative process allowing for the voluntary abandonment of suspect counterfeit goods. The program was supported through a formal recommendation of the Advisory Committee on Commercial Operations to CBP (COAC) and has resulted in more than 2,800 voluntary abandonments at an estimated $2.2 million in interdiction cost savings to the government.
The rise in e-Commerce has also created pressing policy and enforcement questions.
CBP has implemented a multifaceted approach to address the evolving risks created by the expansion of e-commerce sales and imports through the mail and express environments.
We are educating consumers and engaging key e-commerce retailers and business, and are working with our partner agencies to adapt enforcement operations to this new marketplace.
Now, I’d like to talk about antidumping and countervailing duties (AD/CVD). CBP is constantly enhancing AD/CVD detection and enforcement protocols, improving our targeting and analysis, and employing all available authorities to disrupt increasingly complex evasion.
This is why, just a few weeks ago, I announced the creation of a Trade Enforcement Task Force. The Task Force will focus on AD/CVD evasion, along with other core priorities such as the interdiction of products manufactured using forced, convict, or child labor. Its work will strengthen CBP's ability to detect high-risk activity, target illicit trade networks, and focus expertise from throughout CBP and our interagency partners. And this team will bolster our other recent efforts, including use of single transaction bonds and “live entry” requirements on higher risk imports to identify and deter evasion. Furthermore, in 2015, CBP created an AD/CVD Collections team within to help resolve outstanding debts.
Another enforcement area involves goods derived from forced labor. I’m proud to say that CBP is recommitting resources to enforce the prohibition on goods manufactured with child, convict, or forced labor. In addition to dedicated resources within the Trade Enforcement Task Force, I recently signed Withhold Release Orders for certain shipments of soda ash, potassium, and Stevia products made with convict and forced labor in China.
It is crucial that companies conduct their due diligence in examining supply chains to understand product sourcing and the labor used to generate their products. CBP is working with non-governmental organizations, industry, and importers to clarify the process for petitions, appeals, and our standards for compliance. And with all of CBP’s trade enforcement priorities, it is imperative that we work closely with all of you to clarify compliance standards and clearly define our processes. As you dedicate resources to ensuring the integrity of your supply chains, your business processes, and your people, CBP commits to providing clear guidance and being responsive to your questions.
Now, I’d like to talk about the Trade Facilitation and Trade Enforcement Act, signed by the President on February 24th. Congress and the Administration have sent a clear signal that economic competiveness and enforcement of our trade laws are among the country’s highest priorities.
This law is a major milestone for CBP, as it is the agency’s first authorization since its creation within the Department of Homeland Security in 2003. The new law includes several key provisions.
First, it authorizes continued funding for operations and management of ACE. Second, it formally recognizes the Centers of Excellence and Expertise and acknowledges the importance of these 10 Centers in modernizing and consolidating operations by industry sector. Third, it explicitly raises the de minimis value for an imported shipment from $200 to $800, effective March 10. . CBP implemented this provision as required by the law, and is working closely with PGAs to determine impacts for those agencies and their stakeholders. Fourth, it provides CBP with new tools to better enforce antidumping/ countervailing duty laws and more quickly and transparently review allegations of evasion. Fifth, it provides mechanisms to supplement IPR enforcement, including collaboration with IP rights holders, targeting through the IPR Center, and international partnerships to stop counterfeiters.
The new law also eliminates the “consumptive demand” exemption, which means that goods made with child, convict, or forced labor are no longer allowed into the country just to meet U.S. demand.
Partnerships – both here and abroad – are also essential to CBP’s trade mission. Thanks to the Chamber’s efforts, our nation’s leadership at the World Customs Organization, in the High Level Economic Dialogue with Mexico, and through your partnership with the Canadian Chamber, are sharing best practices in customs operations and supply chain security around the globe.
We’re also mindful of the importance of Trade Facilitation Agreements, and the critical role they play in helping small and medium-sized enterprises comply with often complex rules.
CBP continues to harmonize our programs through Customs Mutual Assistance Agreements, Mutual Recognition Arrangements and other agreements, including non-binding agreements.
For example, since I met with you in May of last year, we’ve signed an Authorized Economic Operator Joint Work Plan with India; a Declaration of Principles on CSI with China; a similar Declaration of Principles with New Zealand; a Cargo Information Sharing MOU with Peru; a Joint Work Plan towards Mutual Recognition with the Dominican Republic; and a similar Joint Work Plan with Uruguay.
These agreements often serve as the foundation for exchanging Trusted Trader information between CBP and foreign customs administrations – which is critical for ensuring seamless, end-to-end supply chain security.
In closing, I want to thank you for welcoming me back to the Chamber for this important conference. I’ve participated every year I’ve had this job, and I want to underscore CBP’s view that trade facilitation and trade enforcement are critical to our nation’s economic growth.
Thank you. I’d be happy to take a few questions