Deputy Commissioner McAleenan’s Keynote Remarks at the 2016 West Coast Trade Symposium
Remarks as prepared for May 25, 2016
Good Afternoon and thank you, Maria Luisa.
Commercial traffic continues to increase worldwide, and technological advances have been driving much of that growth. We see increased automation of supply chains, quicker cargo turnaround times, and a major growth in e-commerce.
Innovation is changing the trade landscape and increasing the complexity of CBP’s mission to both facilitate and secure the global supply chain.
CBP has been transforming the way we do business to meet those challenges.
We are leveraging technology and innovative practices to operate within that growing complexity, while effectively balancing efficiency and security.
I’d like to take this opportunity to focus on where and how CBP’s business modernization, alongside our security and enforcement efforts, fit into the larger global supply chain; where we are with these efforts; and where we are headed.
In other words, I want to talk about:
Finishing What we Started—a few updates on our key joint priorities—
Embracing New Challenges—tackling emerging issues in partnership
The Foundation for the Future we have built together.
But let’s start by talking about my Boss for a minute. Now some would question the wisdom of talking about your boss in front of 500 people, including international media. But it’s pretty easy for me.
I realize he can’t hear us across the Atlantic, where he is working on continuing to enhance and strengthen international partnerships and capacity to further support the global supply chain, but I think it is worth a moment to pause and recognize his tireless efforts.
The Commissioner has been incredibly engaged, and laser-focused, on working with the international trade community and advancing trade issues—building CBP’s internal capacity, working with critical stakeholders, enhancing and developing international partnerships, and charting a consistent vision on the importance of trade issues to CBP’s mission and the U.S. economy.
He has been open to dialogue and ongoing engagement with just about every major association, national and regional trade leadership group, and industry representative.
He has presided over every single meeting of our Commercial Operations Advisory Council except one. I got to fill in!
He has earned CBP a valued, critical seat at the table with the interagency and White House Trade leadership, with the National Economic Council, and the U.S. Trade Representative, Department of Commerce and others.
He has enhanced relationships with leading Trade Members and staff on Capitol Hill.
This all started the moment of his confirmation.
And to think that some of our partners—maybe even some in this room—were concerned that he might be just a Police Chief.
I’m glad you gave him a chance!
More than this, the Commissioner has the uncanny knack, to borrow from Wayne Gretzky, to skate to where the puck is going to be.
Let me just share one story on that note. Hoverboards. I remember this quite clearly. One Friday night into Saturday morning, when the news had just broken (fairly quietly really) on a hoverboard battery catching fire, I had 3 emails from the Commissioner on hoverboards. Now the Commissioner is a strategic executive, in the finest sense of those words.
I don’t think there are many topics I have ever received 3 emails from him on—I mean this gentleman can chart a course for us in 5 handwritten words, and expects us to execute. Three emails in 12 hours and setting a meeting for Monday on “hoverboards”? Really. I admit I was a little skeptical that this needed to be the issue of our day on Monday.
Well…I was wrong. 100,000 hoverboard seizures later, a holiday season worth of stories and concern, and a number of kids and households protected, and you can see how he skated to where the puck was going to be!
He continues to do that, whether it’s moving quickly to do CBP’s part on AD/CVD enforcement as the global overcapacity in steel creates market distortion, understanding the need to proceed carefully with new initiatives on exports, or pushing us to the finish line on ACE. And it is great to see the benefits of his leadership.
The only downside I can think of, and it’s just personal really—not organizational—is that I haven’t had the opportunity to engage with you directly as much as I would like to, but I want you to know, I’m there, tracking closely, and driving forward on our shared trade priorities with the best team in government--in Executive Assistant Commissioner Smith, Executive Assistant Commissioner Owen, our incomparable Maria Luisa, Phil Landfried, Eugene Schied and their teams, and not least, Patrick Schmidt in our front office.
Maria Luisa insisted that I tell you that it may be behind the scenes, or at least inside the Beltway, but I have the privilege of helping drive the execution of a number of the key issues you are discussing at this symposium, including:
Chairing our Quarterly International Trade Committee where that team I just mentioned gets together with key staff to talk about how we turn the Commissioner’s vision and our shared priorities into action with strategies and timelines.
Chairing the ACE Executive Steering Committee, where we work through complex IT, acquisition and budget, policy, schedule, and interagency coordination issues, consistently, every month, through the successes and challenges that we have had
Hosting Border Interagency Executive Councils where we are wielding the power of the federal government departments and agencies with border equities working together
Pressing forward at Deputies Committee Meetings on Single Window at the White House, and
Overseeing our Planning and budgeting processes to help ensure we make the key Investment decisions to support enhanced capabilities and services for our trade mission, among other things.
So we are staying closely engaged and working to maintain key relationships with many of you to solve emerging issues or just get a sense of challenges ahead. And I look forward to more.
So I’m fired up to have the chance to be the one with you here today!
Finishing What We Have Started
Okay, finishing what we started. Since our last West Coast Trade Symposium, we have made significant progress in modernizing our trade enterprise, expanding our zone of security, and transforming our business processes.
I’d like to highlight several of those initiatives today—two where we are delivering and close to achieving our shared objectives, several where we have started to, and two other where we need to get moving together aided, I hope, by the discussions here this week.
Modernizing the Enterprise: ACE and Single Window
Working closely with the trade community, our Advisory Committee, and our Partner Government Agencies, we are on track to meet the Administration’s year-end 2016 goal for full implementation of the Single Window.
CBP has delivered two-thirds of Automated Commercial Environment—or ACE—functionality; and through close collaboration with our government partners, all key Single Window capabilities.
Importer and filer use of ACE has increased dramatically just over the last few months:
Cargo release filings in ACE have increased from approximately 25 percent of all in January to over 80 percent today;
- Let’s pause on that one for a moment. 80 percent of a $2 and a half Trillion Dollar economy is filing in ACE.
- And approximately 98 percent--virtually all--of entry summary filings are now in ACE.
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.
Credit for is due to a broad array of partners: the experts in customs processes and policies; software providers, IT and systems professionals; and the brokers, importers, and exporters who have devoted countless hours and made major investments to test and refine the system.
And you have worked with a tremendously dedicated team within CBP and across the U.S. government; a team that has been relentlessly focused on delivering an efficient, reliable system that is revolutionizing the way the U.S. government manages the flow of cargo across its borders.
Many of you are here today, I want to acknowledge our partners who were early adopters and have worked hand-in-hand with us to guide CBP, PGAs, and industry through this transition.
Our measured approach to implementation of ACE and the Single Window reflects input from you, and has helped build filing in a responsible way.
When we needed to set deadlines together, we did, when the trade or other partners needed us to move them, we listened, but together we have collectively held our feet to the fire and we are all doing our part.
We must continue to spread the message to file in ACE, and CBP and our partner agencies are conducting extensive outreach to ensure that filers are ready.
So thank you to all of you here, from the trade to your vendors to our interagency partners, and to my team for what you are doing. Working together, we will meet the President’s challenge.
Modernizing the Enterprise: Centers of Excellence and Expertise
We have also made great progress with our Centers of Excellence and Expertise (CEEs) this year.
As of March, all 10 Centers are now fully operational. So what does this mean for you? These remotely-managed Centers bring CBP in line with modern business practices, focusing on industry-specific issues and providing support tailored for that industry or commodity.
This does three things:
Increases consistency across Ports of Entry;
Speeds up the resolution of compliance issues; and
Enhances CBP's understanding of key industry practices.
All of this lowers costs for you, and centralizes and simplifies operational decision making for us.
- The Petroleum, Natural Gas & Minerals CEE has realized an 80 percent reduction in the number of protests, with a 65 percent reduction in processing time.
- The Apparel, Footwear & Textiles CEE has cut detention times in half for partner accounts.
The Centers’ deeper industry knowledge also enhances our enforcement capabilities, as experts in the CEEs work regularly with industry to better understand specific commodities, and identify new and complex methods of evasion and fraud.
Now that we’ve talked a bit about our major initiatives to move data and share expertise, let’s talk a bit about some of our efforts, which have begun to achieve significant results in moving cargo at the borders.
Business Transformation: Announcing Truck User Fee Automation
And these major, international, enterprise-level innovations are bolstered by other improvements we’re implementing that modernize and streamline our operations.
For example, approximately 10 percent of all commercial trucks arriving at U.S. borders make manual fee payments at the inspection.
This process requires CBP officers to collecting the $13 user fee in primary, taking up valuable processing time.
This has been an issue for years, which is why I am proud to announce that CBP is rolling out a pilot that allows commercial trucks to prepay the single-crossing user fee via web or mobile device, prior to arrival at a port. The pilot will begin the on June 2nd at the El Paso, Detroit, and Buffalo ports of entry and last for approximately one year.
Allowing trucks to pay this fee online, prior to arriving at the border reduces fuel consumption and wait times. It also removes the payment process from primary inspection, enabling CBP officers to process vehicles faster, and reducing heavy congestion.
Business Transformation: RPM – Revised Operational Settings
And user fees are not the only area in which we’re making tangible process improvements. We have revised the operational settings on our Radiation Portal Monitors (RPMs) to reduce the number of false alarms, an adjustment that has had a significant impact on our operations.
For example, the Port of Los Angeles alone saw 24 officers freed up and about 60,000 fewer RPM alarms per year.
Nationwide, CBP has seen a decrease of more than 200,000 alarms annually, saving more than 50,000 hours in adjudication time for both CBP and importers—without reducing security or our ability to identify threats.
We’ve also leveraged our public-private partnerships — key to our trade transformation efforts — to make some of these changes.
Working with the Buffalo and Fort Erie Peace Bridge authority, CBP replaced 18 RPMs in primary inspection lanes, reducing radiation “nuisance alarm” rates by more than 50 percent, significantly decreasing delays.
Today, CBP has deployed these revised settings to RPMs at the top 26 seaports, 15 critical land border crossings, and the mobile RPM fleet.
Under the cargo pre-inspection pilot program, certain cargo is inspected in Mexico prior to crossing the border into the United States in an effort to improve the flow of trade as well as reduce border wait times and transaction costs.
With our Mexican counterparts, CBP is implementing cargo pre-inspection at two locations along the Southwest border:
Mesa de Otay, Baja California, Mexico: just across from the Otay Mesa POE in California, this pilot began last month; and
FOXCONN, Chihuahua, Mexico: (near Santa Teresa, New Mexico), projected for mid-2016.
And we’ve implemented a similar pilot for Mexico-bound cargo at the Laredo International Airport in Texas, pre-inspecting air cargo from the automotive, electronics, and aerospace industries destined to eight Mexican airports;
Pushing Borders Out: Trusted Trader Pilot
CBP is also integrating supply chain security and trade compliance by unifying C-TPAT and the Importer Self-Assessment programs under our Trusted Trader Pilot.
This approach allows CBP to provide additional incentives to participating low-risk partners, while benefiting from the added efficiencies of managing supply chain and trade compliance within one partnership program.
Fifty-six importers volunteered to be involved in the pilot, and CBP has started testing the program with the companies selected for participation.
Embracing New Challenges
But we are not resting just driving ongoing initiatives forward, we are also tackling new challenges and taking advantage of new opportunities.
Trade Facilitation and Trade Enforcement Act / “Customs Bill”
Nowhere is that more apparent than our efforts to implement the Trade Facilitation and Trade Enforcement Act or, as we like to call it, the Customs Bill.
I know many of you worked for years to get this important legislation across the line, and it’s hard to believe we are approaching 100 days since it was signed.
In the Customs Bill, Congress and the Administration have sent a clear signal that economic competitiveness and enforcement of our trade laws are critical priorities.
It is also a major milestone for CBP, as it is the agency’s first authorization since its creation within the Department of Homeland Security in 2003.
We actually exist, and we are actually called CBP now! Thank you!
The Act also 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.
The new law includes a number of key provisions:
Supports CBP’s business transformation:
Authorizes continued funding for operations and maintenance of ACE.
Formally recognizes the Centers of Excellence and Expertise.
Increases De Minimis values (not a De Minimus issue for many of you): Effective March 10, the law increased the de minimis value for an imported shipment from $200 to $800. This was long overdue change will save you money, exempting low-value shipments from certain duties and taxes. CBP has implemented this provision, and will be working closely with government partners and the trade to monitor impacts and benefits.
Modernizes Drawback: The law simplifies and modernizes the drawback process for duty refunds — making drawback more workable for CBP while increasing efficiencies for trade stakeholders;
Tools to Better Enforce IPR and AD/CVD: Provides CBP with new tools to better enforce intellectual property rights and antidumping/countervailing duty laws, including:
Enhanced targeting and increased bonding for high risk imports;
Process for swift and thorough investigation of allegations of AD/CVD evasion; and
Mechanisms to supplement IPR enforcement, collaboration with IP rights holders, targeting through the IPR Center, and international partnerships to stop counterfeiters.
Eliminates Consumptive Demand Exception: The new law also eliminates the “consumptive demand” exemption, meaning that goods made with child, convict, or forced labor are no longer allowed into the country just to meet U.S. demand.
This law clearly recognizes the role CBP plays in safeguarding the American economy, and as the official name of the legislation clearly underscores, facilitation and enforcement go hand in hand in that effort.
The Customs Bill brings new emphasis and focus to our Trade Enforcement Efforts. I want to highlight a few key areas where 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 will focus on three priority areas:
Infringement on Intellectual Property Rights (IPR);
Antidumping/Countervailing duties; and
Importation of goods produced with forced, child, or convict labor.
Trade Enforcement: IPR
IPR violations threaten the competitiveness of U.S. businesses, the livelihood of American workers, and consumer safety.
Trade in counterfeit goods also helps fund transnational criminal enterprises.
CBP’s targeting of high risk shipments, joint operations with our colleagues at ICE, and ongoing communication with IP rights holders, has yielded significant results.
Just last month, CBP and ICE reported that our agencies seized nearly 29,000 shipments of products containing IPR infringements in FY 2015, a 25% 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 has resulted in more than 2,800 voluntary abandonments, saving the U.S. government an estimated $2.2 million in seizure costs.
Trade Enforcement: AD/CVD
CBP has a core statutory responsibility to detect and deter the circumvention of AD/CVD laws and collect all revenue owed to the U.S. government generated by these imports.
We are working to enhance AD/CVD detection and enforcement protocols, improving our targeting and analysis, and employing all available authorities to disrupt increasingly complex evasion.
The scope and importance of this mission are immense, which is why, just a few weeks ago, Commissioner Kerlikowske announced the creation of a Trade Enforcement Task Force while speaking the Association of Steel Manufacturers.
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.
It will strengthen CBP's ability to detect high-risk activity, target illicit trade networks, and focus expertise from throughout CBP and our interagency partners to safeguard a fair and competitive trade environment.
And this team bolsters CBP’s recent efforts to improve AD/CVD enforcement, which include use of single transaction bonds and “live entry” requirements on higher risk imports to identify and deter evasion.
Additionally, in 2015, CBP created an AD/CVD Collections team within to help resolve outstanding debts.
This Collections team is increasing CBP’s technical expertise around AD/CVD collections, and more proactively identifying potential duty evasion.
Trade Enforcement: Forced Labor Goods
On forced labor CBP is recommitting resources to vigorously enforce the prohibition on goods manufactured with child, convict, or forced labor.
In addition to dedicated resources within the Trade Enforcement Task Force, the Commissioner recently signed Withhold Release Orders for certain shipments of soda ash and potassium products made with convict and forced labor.
We expect to issue more withhold release orders as well.
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 works with non-governmental organizations, industry, and importers to clarify the process for petitions, appeals, and our standards for compliance.
As you dedicate resources to ensuring the integrity of your supply chains, and your business processes, CBP commits to providing clear guidance and being responsive to your questions.
Foundation for the Future
I want to leave you with a note on continuity.
At this point in an election cycle—especially this, shall we say, “Unusually interesting” one—it is a natural concern to be seeking some continuity.
Especially when we know your supply chains thrive on predictability and certainty.
Well I think we are in a good position, and together have built a very strong foundation for our future partnership between CBP and the trade community—structurally, statutorily, and, critically, culturally.
Customs Bill. TFTEA. We exist! We have an authorizing statue, recognizing our organization, our name, and our structure.
Establishing in law key mechanisms and priorities.
Realignment. Recognized in the Customs Bill, at CBP’s request, the EAC for TRADE as one of our four operational offices. 2 of our 4 operational offices, constitutionally focused on trade and facilitating supply chains.
Evolution of COAC. In addition to being rechristened in the Customs Bill, the last 3 sessions of COAC have really been incredibly productive.
Moved from a frank exchange of views with an audience (we sometimes still get that, of course), to a dynamic collaboration between CBP, and now ICE, along with leaders from across the international trade community, to solve the toughest emerging problems.
Each term, due in large part to the dedication of our trade community members and their time, energy, and ideas.
This manner of work, and spirit of partnership, provides a great foundation for the future.
Establishment of BIEC.
Mindset of collaboration—dare I say co-creation. Starting point of every new endeavor is engaging our trusted partners to get their ideas on how best to do something.
And lastly, still on the culture side, and invaluably so, we have developed strong personal relationships—real bonds built from shared experiences in the trenches, mutual understanding of perspectives, and common goals--that run several layers deep now, at HQ and in the field, between trade community leaders and CBP executives and managers and front-line experts.
I know we will only deepen them this week.
All of these things will serve us well as we engage the challenges of the coming months and years.
So let’s tackle them together in the panels here, the breakout sessions, and those insightful conversations in the hallway.
I want to thank you all for participating in this two day Symposium. The opportunity to have CBP leadership sit down with you for two days, to leverage your insight and expertise, is essential.
The Trade Symposium is our opportunity to envision and build the next generation of CBP and trade partnership.
We look forward to continued collaboration and increasing success.
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.