Deputy Commissioner McAleenan’s Keynote Remarks at the American Association of Exporters and Importers (AAEI)
Remarks as prepared for June 6, 2016
It’s great to be back here with you, nearly two years after my last opportunity to speak with all of you together in Minneapolis. AAEI has always been a very strong partner to CBP.
Since the last time we spoke, the trade landscape has changed dramatically. It’s been an evolution, or in some ways, as your conference title notes, a revolution, marked by accelerated globalization and growth in trade, the development and application of new technologies, and – more recently – the enactment of new legislation that bolsters our efforts to enforce U.S. trade laws and level the playing field.
On the way in this morning in our new, even worse Washington D.C. commute, story after story on the radio covered the work we do together. How are the U.S. and China addressing the global overcapacity in steel? How can President Obama and Prime Minister Modi deepen trade ties with India?
By the way, we signed an MOU toward implementing Global Entry with India last week. I hope you are all members by the way—and if you are on the fence, think you may not travel enough internationally, I should note that Global Entry also gets you TSA PreCheck.
As the trade landscape has continued to change rapidly, CBP has been keeping pace — by working to transform and streamline our operations and by partnering closely with you to innovate so we are ready for what’s next.
Our mission — to protect our borders and our national security and facilitate the flow of lawful goods and people in and out of the country — continues to confront increasing complexity and challenges in the face of rising trade volumes and increasing and diverse threats to the security of our global supply chains.
We are at record numbers in all areas, and in all modes. On a typical day, CBP screens more than 70,000 truck, rail, and sea cargo containers, and hundreds of thousands of express consignment shipments and mail parcels. In Fiscal Year 2015 alone, CBP processed $2.4 trillion in imports – and more than $1.5 trillion worth of U.S. exports—that’s nearly $4.5 Trillion in international trade—largely represented by the folks in the room. Those numbers will only grow this year.
And global organized crime continues to seek new ways to exploit the supply chain—whether it’s to smuggle contraband, diversify funding sources with trade based money laundering, or by peddling fraudulent goods.
Since we last met, with your insights and your input, CBP has made a great deal of progress, and today I’d like to provide you with several updates on some of the key changes we’ve made since we last spoke and how we are evolving to meet the demands of an increasingly complex global supply chain.
Let’s start with ACE and the Single Window.
In February 2014, the President issued an Executive Order titled “Streamlining the Export/Import Process for America’s Businesses.” Some of you here, may have had a role in ensuring that this set of issues, had Presidential attention, and the results have been impressive. The Executive Order recognized the importance of a secure and efficient flow of international cargo to U.S. economic growth, jobs, and national security; and mandated that the U.S. government reduce supply chain barriers by improving technologies, policies, and other controls governing the movement of goods across our nation’s borders. The cornerstone of that Order was the successful implementation of the International Trade Data System —the U.S. Single Window — of which ACE is the backbone.
Today, I am proud to report that we are on track to meet the President’s year-end 2016 goal for full implementation of the Single Window. I know you discussed ACE implementation and port-level training earlier this morning, but I want to highlight, briefly, what we’ve accomplished since I spoke with you two years ago.
CBP has continued to deliver critical ACE functionality, and through close collaboration with our government partners, all key Single Window capabilities. By automating the collection and review of import/export information for 47 government agencies, the Single Window provides earlier visibility into shipment data, expediting import/export assessments at the border and enabling near “real-time” decision making.
Importer and filer use of ACE has increased dramatically over just the last few months:
Cargo release filings in ACE have increased from approximately 25% in January to over 86% today;
And approximately 98% of entry summary filings are now in ACE.
We worked with you to get here. When you suggested that we needed clear deadlines, we set them. When we heard from trade partners that we needed to adjust our schedule to keep everyone on track, we were flexible. Our measured approach to implementation of ACE and the Single Window reflects input from you, and has helped build filing in a responsible way. As our Partner Government Agencies continue and wrap up their pilots this summer, we must continue sharing the message to file in ACE.
For many of you, the development of ACE has spanned more than a decade, and as we near the December 2016 deadline, credit for this impressive progress is due to a broad array of partners: the experts in customs processes and policies; IT and systems professionals; and the importers and exporters who have devoted countless hours and made major investments to test and refine the system.
Our progress over the last two years in the import environment is mirrored by some major developments for exports. When we last met, I emphasized how much we had learned from industry about export processes and the need to undertake improvements in our export processing with your business practices in mind. We talked about our plans to enhance automation of exports and to ensure that we worked together to streamline our process to allow you to get U.S. manufactured goods to your international customers as quickly and securely as possible.
Toward those ends, so important for the U.S. economy, CBP started the transition of the Automated Export System, or AES, and AES Direct to ACE last year. Today, we have transferred all accounts into the new system. This transition provides important benefits:
ACE generates an electronic proof of export, which you did not have before.
It also provides access to export reports, a feature that was not previously available. As many companies run 1000+ reports a week, data and reporting through ACE gets you the information you need, with data looking back over the last five years.
We are also automating export processing for our Partner Government Agencies critical to the efficient movement of outbound cargo. This includes: the ATF, the Agricultural Marketing Service, DEA, EPA, Fish and Wildlife Service, and others. Within the next two months you will be able to identify which agencies regulate the commodities you are exporting by the designated Harmonized Tariff Schedule number, and provide their required information electronically.
Exporters have been leaders in automation. The Trade Act of 2002 requires electronic submission of carrier manifest information for all modes of transportation, and last year CBP announced three automated export manifest pilots for the submission of export manifest data for air, ocean and rail carriers.
These pilots are underway and we are seeing the benefits already, as we now know the exact departure port for your shipments, allowing us to more accurately assess risk and reduce delays.
And in an effort to better manage risk in the export environment, CBP is working closely with industry to lay out the future of Option 4, also known as Post Departure Filing. I know there has been a lot of concern from industry about these future changes. I promised you in Minneapolis that we would proceed with caution, and we have done so. Together with Census and BIS, we are working closely with a COAC working group to identify the right approach to advance information. We are currently exploring several options, including:
Collecting information through the electronic export manifest;
Applying a progressive filing approach; or
Implementing a trusted trader strategy in the export environment.
We still have work to do, but I would like to ensure you that both Commissioner Kerlikowske and I are paying close attention to this, and we believe that thanks to the efforts of COAC members like Heidi Bray, Liz Merrit, Michael Young, Vince Iacapella, and Julie Parks, we are close to finding a workable solution.
We have also made major 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:
The Centers increase processing consistency across Ports of Entry;
they speed up the resolution of compliance issues; and
they enhance CBP’s understanding of key industry practices.
All of this is designed to lower costs for you, and to centralize and enhance operational decision making for us. And we are seeing results:
The Petroleum, Natural Gas & Minerals CEE has seen 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.
While you’ll be hearing more about the Centers from one of CBP’s experts tomorrow, Joanne Colonnello, from the Pharmaceuticals Center, I would like to preview for you, what’s next for the CEEs.
With all 10 Centers up and running, we are extending true account-based processing to all importers. We are ensuring that all importers have the points of contact within their correct Center, and we will leverage those relationships to drive consistency of operations at all ports.
CBP also continues to build out Center staffing and capabilities, adding entry specialists and other key personnel to ensure the Centers are fully equipped to successfully manage accounts and to get you the answers you need. And based on the specific recommendations we received from COAC — CBP’s Advisory Committee on Commercial Operations —we are building out communications capabilities at the Centers and focusing on ensuring that our strong, port-level relationships with brokers and importers continue under the Centers.
I also want to highlight the recent launch of key programs facilitating cargo flow between the United States and Mexico. These cargo pre-inspection pilots allow us to work hand in hand with our international counterparts to expedite and secure inbound and outbound cargo before it reaches its destination — an important new partnership model.
Through these pilots, CBP and Mexican officers inspect cargo in Mexico prior to crossing the border into the United States. This improves the flow of trade and reduces border wait times and transaction costs
With our Mexican counterparts, CBP has and is implementing cargo pre-inspection at two locations along the Southwest border:
Just this past April, we implemented the pilot in April, in Mesa de Otay, Baja California, Mexico; and
- We plan to roll out another at FOXCONN, in Chihuahua, Mexico: (near Santa Teresa, New Mexico), in the coming months.
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.
And as we continue to evolve and enhance our processes, Congress and the Administration sent a clear signal that economic competiveness and enforcement of our trade laws are among the country’s highest priorities through the recent passage and signing of the Trade Facilitation and Trade Enforcement Act in February of this year. The Act is also a major milestone for CBP, as it constitutes the agency’s first authorization since its creation within the Department of Homeland Security in 2003.
The Act 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 that:
Support CBP’s business transformation:
Authorizing continued funding for operations and maintenance of ACE; and
Formally recognizing the Centers of Excellence and Expertise.
Increases De Minimis: 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.
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; you’ll discuss this in more detail during tomorrow’s panel on drawback.
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 we understand our responsibility to clearly communicate our standards, priorities, and processes for enforcement of our nation’s trade laws.
Before I close, I would like to offer a few words about the agency’s leadership into the future.
Commissioner Kerlikowske, has been a true champion when it comes to trade facilitation and trade enforcement. Under his leadership for the past 2 and a quarter years, CBP has made tremendous strides in every aspect of the agency’s trade mission.
He’s earned CBP a valuable 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. And he’s enhanced relationships on Capitol Hill with leading Members and staff.
Commissioner Kerlikowske has placed CBP in a key position within the U.S. government, and has cultivated strong relationships with his international, and private sector colleagues. And we arecommitted to maintaining that momentum during the transition. CBP is fortunate for the depth of its trade expertise:
Brenda Smith, Executive Assistant Commissioner for International Trade;
Todd Owen, EAC for Field Operations;
Eugene Schied, EAC for Administration; and
- Phil Landfried, Acting AC for Information and Technology.
And I am profoundly grateful to them for their guidance, their energy, and their passion for CBP’s trade mission.
We have also developed close bonds at multiple levels of leadership, from the top executives I mentioned through our directors, and leaders in the field. More than that, we have adopted, comprehensively, an approach to working together, to tackling each new initiative in partnership that is clearly a better way to do business and how we will continue to do business in the future.
I would like to close on that note--by underscoring CBP’s commitment to partnership with all of you – our federal, international, and private sector partners. As I look at the tremendous progress we have made on the President’s Executive Order, and on the wide array of trade facilitation and enforcement priorities that are core to CBP’s mission, I recognize it would not be possible without the strong partnership and advocacy of AAEI and its members. Thank you for hosting me here today. Given that my executive team is here with me for support, I’d be happy to take a few questions.