Commissioner Kerlikowske’s Remarks at the National Customs Brokers and Forwarders Association of America (NCBFAA) Annual Conference
Remarks as prepared for April 20, 2016
It’s great to be here in Tucson. I’d like to thank Geoff Powell and his team for inviting me here, and I especially want to thank Barbara Reilly, who has served the association as Executive Vice President for nearly 18 years.
Barbara will be leaving the association effective June 7 – and her impressive accomplishments include:
Increasing the association’s profile in Washington; coordinating a partnership with the Department of Commerce that let the NCBFAA participate in the Department’s traveling U.S. Export Pavilion as the only NGO for more than a decade; and working to help the association secure the coveted Presidential “E” Award for Exports – the highest recognition that any U.S. entity can achieve for the expansion of U.S. exports. Barbara previously served as executive vice president of the Florida Customs Brokers and Forwarders Association for nearly two decades, and she will be greatly missed. Let’s give her a round of applause.
I would also like to recognize some of my CBP colleagues here today: Bill Brooks, Director of Field Operations here in Tucson; Richard DiNucci, Executive Director of Cargo and Conveyance Security, Office of Field Operations; Troy Riley, Executive Director of Commercial Targeting & Enforcement, Office of International Trade; and Deborah Augustin, Executive Director of ACE Business Office, Office of International Trade.
Most of you already know these folks, but I want to highlight their presence here today, and the invaluable roles they play in shaping CBP’s trade facilitation and trade enforcement efforts.
So much has happened in the year since I spoke to your association, though I was fortunate to catch up with many of you recently in Washington at the Trade Support Network conference as well as last fall at your government affairs conference.
So today, let me go over what’s new at CBP and then open things up for discussion.
I don’t have to tell any of you that trade volumes are rising.
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 – which 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. We’re using technology to cope with these changes, and the Automated Commercial Environment is a great example.
Brokers and forwarders have been instrumental in our progress toward successful implementation ACE and the Single Window. Thanks in large part to your major investments of time, expertise, and money, we are heading toward full implementation by December.
And we marked a major milestone just a few weeks ago, on March 31st, with the mandatory filing of the most common entry summary types, along with filings for the Animal and Plant Health Inspection Service (APHIS) Lacey Act and National Highway Traffic Safety Administration.
Meanwhile, the volume of filings in ACE continue to increase. Just last week, we achieved all-time highs, with 72% of Cargo Release and 95% of Entry Summary filings in the system. This is tremendous growth since the first of the year, and none of it would be possible without the commitment, investment, and flexibility from all of you.
As you know, we are closely monitoring filings, and conducting extensive outreach to ensure that filers are ready. And our port personnel are reaching out to local filers, working closely with you to work through outstanding issues and increase filing.
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 – especially those of you who have been actively participating in these pilots.
We now need to get the message out to the rest of the industry – don’t wait for the mandatory dates, you should be filing everything possible in ACE today.
That brings us to the next mandatory date – May 28 – when we begin requiring specific entry types to be filed in ACE. And our PGAs are concluding their pilots with the aim of having all entry and entry summaries in ACE this summer. And although the U.S. Single Window system doesn’t currently allow for cross-border exchange of data with other countries, we continue to coordinate with partners in Canada and Mexico to identify process streamlining opportunities.
Now, I’d like to talk a little 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.
It supports CBP’s efforts to ensure a fair and competitive trade environment, and bolsters CBP’s enforcement of intellectual property rights, antidumping/countervailing duties, and forced labor-derived goods.
For brokers, the Act is extremely significant. First, it mandates that CBP requires brokers to collect information on both domestic and foreign importers to verify their identities. Second, it allows CBP to revoke the license of any broker that is convicted of terrorism.
CBP collaborated with the COAC Broker Regulations Working Group to develop recommendations on the best way to institute the importer identification program. We’ll take these recommendations into consideration as we draft our own recommendations, due to Congress on August 22nd.
At the same time, CBP has submitted to OMB our recommended new CBP Form 5106, which includes new sections to report importer information.
The new law also includes several other key provisions: Authorizes continued funding for operations and management of ACE; provides CBP with new tools to better enforce intellectual property rights and antidumping/countervailing duty laws; enhances targeting and increased bonding for high risk imports; creates a process for swift and thorough investigation of allegations of AD/CVD evasion; and provides mechanisms to supplement IPR enforcement, 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, meaning that goods made with indentured, convict, or forced labor, including forced child labor, are no longer allowed into the country just to meet U.S. demand.
I recently signed Withhold Release Orders for certain shipments of soda ash and potassium products made with convict labor in China
We’re committed to vigorously enforcing the legal prohibition on the importation of goods manufactured with forced labor.
As part of our recommendations to Congress, CBP will identify the minimum standard for compliance and we’ll provide guidance to brokers on how they can demonstrate due diligence.
The new law also contains other significant provisions: increases De Minimis, effective March 10, the de minimis value for an imported shipment increased from $200 to $800. CBP implemented this provision as required by the law, and will be working closely with PGAs to determine impacts for those agencies and their stakeholders. Formally Recognizes the Centers of Excellence and Expertise, acknowledges the importance of these 10 Centers in modernizing and consolidating operations by industry sector. I’m proud to note that all 10 CEEs are now fully operational as of the end of March. Modernizes Drawback, simplifies and modernizes the drawback process for duty refunds – making drawback more workable for CBP while increasing efficiencies for trade stakeholders.
Speaking of “doing business,” the rise in e-commerce is generating significant policy and enforcement questions – such as how to align CBP operational efforts with e-commerce and trade.
Take IPR enforcement, for example. The concept of a 40-foot container full of IPR-infringing merchandise has taken a back seat to the direct-to-consumer small package arriving via an express consignment carrier or international mail. While many on-line purchases are made through large sites, there are increasing numbers of transactions being made between small businesses, entrepreneurs and individual consumers. E-commerce drastically lowers the costs for buyers and sellers separated by thousands of miles or even an ocean.
Overall, 90 percent of all IPR interdictions occur in the international mail and express consignment environments – which are the most conducive to the e-commerce and direct sale business models.
The numbers involving e-commerce are truly staggering.
Current e-commerce statistics state that 40% of internet users world-wide have bought products or goods online via desktop, mobile, tablet, or other online devices. This amounts to more than 1 billion online buyers, and this number was projected to continuously grow with global sales expected to reach $1.4 trillion by the end of 2015.
CBP’s IPR enforcement is keeping pace, with a 25% increase in IPR seizures in FY2015, totaling nearly 29,000 shipments. An additional 2,800 shipments were seized as the result of CBP’s voluntary abandonment pilot initiative.
That brings me to the subject of the Trans-Pacific Partnership (TPP) –the first international agreement to promote internet-based commerce and specifically includes a section on e-commerce. The TPP will ensure that data can flow freely across borders, removing red tape in the Customs process by requiring fewer documents and promoting electronic pre-arrival processing/shipment clearance.
This eases both digital and physical trade by encouraging: the use of electronic customs forms; electronic signature and authentication; the opening of markets for cross-border services; and ensuring secure on-line payment.
TPP also will help businesses – especially small and medium-sized enterprises – take advantage of e-commerce because it encourages cooperation on policies regarding: personal information protection; online consumer protection; cybersecurity threats; and cybersecurity capacity.
This is particularly important given the growing frequency of cyber-attacks and the global diffusion of malware.
And it’s good news for brokers, because it increases demand for broker services among small and mid-sized businesses.
CBP is committed to the effective implementation and enforcement of all trade agreements – including the TPP – and we will continue to rely on the broker community to promote compliance.
Brokers, like importers, are facing a multitude of change this year and in the foreseeable future. As if dealing with all of CBP’s changes—like ACE and the Centers— isn’t enough, you also face an increasingly competitive market, along with increasingly complex tariff systems and trade agreements. Your highly-valued expertise in customs operations make your profession essential to the future of the global supply chain.
COAC recently convened the Broker Regulations Working Group to provide recommendations to CBP for the modernization of 19 CFR 111, the regulations that govern customs brokers. The working group comprised 30 representatives from the stakeholder community, including this association, as well as express couriers, importers, sureties, and CBP representatives. The group invested over 1,300 hours in less than 90 days to draft more than 30 recommendations that will update the regulations in ways that will enable brokers to work more efficiently.
I want to thank the working group members for their dedication, their expertise, and their valuable candor.
The group did excellent work, and though I realize COAC is in the process of approving these recommendations, I want to highlight a few themes that will ultimately benefit the broker community: A renewed focus on responsible supervision and control that takes into account what brokers will need to manage a virtual work force; strengthening the relationship between brokers and importers by recommending that brokers obtain powers of attorney directly from importers; and flexibility regarding the disclosure of confidential customs information to third parties, as dictated by the agreement that importers make with brokers.
The recommendations will be presented next week at COAC’s April meeting, and COAC will publish the final recommendations in May.
CBP will review and consider the COAC recommendations prior to publishing a Notice of Proposed Rulemaking to update the Broker Regulations.
CBP’s mission is incredibly complex, and we view trade facilitation and trade enforcement are critical to our nation’s economic growth. Our ongoing dialogue with the NCBFAA is vital to our ability to accomplish this mission, and I appreciate the opportunity to discuss these issues with you here today.
Thank you, and I think we have time for a few questions.
U.S. Customs and Border Protection is the unified border agency within the Department of Homeland Security charged with the management, control and protection of our nation's borders at and between the official ports of entry. CBP is charged with keeping terrorists and terrorist weapons out of the country while enforcing hundreds of U.S. laws.