NCBFAA Keynote Address: CBP Headquarters Update
Remarks by Commissioner R. Gil Kerlikowske at the National Customs Brokers and Forwarders Association of America in Orlando, FL on Tuesday, April 21, 2015, 8:00 a.m.
Good morning, everyone. Thank you, Geoff for that warm introduction. It’s great to be here in Orlando – the land of Mickey, Minnie – and, at least this week, ACE and eBond.
Today, I want to talk to you about the important relationship between U.S. Customs and Border Protection and brokers and forwarders. You are integral to CBP’s trade mission, and serve as a lynchpin in our relationship with American businesses. That is why CBP has such a major presence at this week’s conference.
Yesterday, you heard from Ana Hinojosa, our Deputy Assistant Commissioner for International Affairs. Earlier this year I was proud to nominate Ana to be the U.S. delegate to the World Customs Organization’s Director of Compliance and Facilitation. If elected, Ana would bring considerable expertise to this international body, and her leadership can strengthen our work with our key trade partners.
You also heard from CBP’s two newest Assistant Commissioners – Brenda Smith, from our Office of International Trade, and Todd Owen, from our Office of Field Operations.
And later today and into tomorrow, you will hear from more CBP leaders and experts about the role of brokers in protecting national security, CBP’s targeting and enforcement efforts, as well as ACE and the Single Window. All of our participants are experts and innovators in our trade mission, and are tremendous assets to the agency.
As a good Fed, it is my sworn duty to start with statistics:
- During FY 2014, CBP processed more than $2.4 trillion in imports, and $1.6 trillion in exports, both increases of nearly 4 percent from the prior year.
- We also collected approximately $35 billion in duties, up 9 percent over FY 2013.
These numbers put into context the scale of CBP’s trade mission: securing the global supply chain; enforcing trade laws; and collecting revenue. The success of each of these requires strong and evolving relationships between CBP and brokers and forwarders.
Trade Facilitation for the Customs Broker
In the middle of all this economic activity is the customs broker. We have made great progress together: since 2009, there has been almost a 90% drop in the number of broker violation penalties. This is even better news when you consider that the top 100 brokers have increased their volume by four percent over the past four years.
You are critical to our mission success. Today, brokers submit more than 95% of all the electronic entries, allowing us to better segment risk automatically through our automated systems.
Brokers also contribute to successful revenue collection. In FY 2014, CBP collected $35 billion of estimated duties, much of which is was the result of brokers submitting duties quickly and correctly.
Clearing cargo securely and efficiently is the hallmark of a good broker. That’s why we’ve taken major steps to improve our processes: going paperless, centralizing operations, and reducing administrative burdens so you can predict outcomes and quickly respond to your customers.
Centers of Excellence and Expertise
One key development is the expansion of CBP’s Centers of Excellence and Expertise. The Centers are transforming the way we operate by consolidating an entire industry’s processing under the authority of one Center, instead of scattering it throughout hundreds of ports of entry.
The Centers provide a number of benefits:
- Improve our ability to identify high-risk commercial importations;
- Increase consistency and predictability for the industry; and
- Reduce transactional costs for the trade and CBP.
On January 28, three of CBP’s 10 Centers – Los Angeles (electronics), New York (pharmaceuticals), and Houston (petroleum) – began managing all post-release activities within their industries. The remaining seven Centers will continue to expand through volunteer importers while we finalize full expansion plans.
CBP has collaborated extensively with the brokerage community to develop these processes, as well as key technical instructions for operating in a virtual and transparent Center environment.
Trusted Trader Programs
Key to CBP’s security and compliance mission are our Trusted Trader programs. Our flagship Trusted Trader program, of course, is C-TPAT, or the Customs-Trade Partnership Against Terrorism. C-TPAT imports now account for 54 percent [by value] of all imports into the U.S.
C-TPAT is collaborating with our partner government agencies (PGAs) to reduce redundancy. For example, beginning this year, C-TPAT air carrier revalidations are being conducted by the Transportation Security Administration (TSA) during the airline’s annual TSA assessment. This change reduces government site visits and saves money.
I’m also pleased to highlight that C-TPAT is adding an Export Entity to the program. The Export Entity’s first of three phases was deployed this past December, and once the second phase is deployed this spring, C-TPAT will be able to accept applications from U.S. exporters. This Export piece was co-created with our private industry partners on COAC, our Advisory Committee on Commercial Operations, and is a major step forward in CBP’s export mission.
C-TPAT is also actively working with more than 40 countries and their Authorized Economic Operator (AEO) programs. Relationships with international AEOs not only streamline government-to-government processes, but enhance government-to-business relationships by creating security standards for the global supply chain.
We have signed 10 mutual recognition arrangements (MRAs) since 2003. Most of these are with our main commercial partners such as the European Union, Canada, and Mexico. But we are also working very closely with China, where we have conducted more than 300 joint validations with China Customs. And C-TPAT is now working with the Customs administrations of India, Brazil, and the Dominican Republic to explore MRAs.
Importer Self-Assessment (ISA)
The other critical part of Trusted Trader is the Importer Self-Assessment Program, or ISA. Implemented in 2002, ISA lets C-TPAT members located in the United States assess their own compliance with our trade laws in exchange for less CBP oversight.
It provides ISA members a host of benefits, including expedited cargo release, entry processing through the CEEs, and removal from the audit pool. It also allows CBP to focus on high-risk and unknown importers.
The Trusted Trader Program will unite C-TPAT with the ISA to integrate supply chain security and trade compliance, and it will align with other Authorized Economic Operator programs around the world.
This enables CBP and our government partners to provide additional incentives to participating, low-risk partners, and the agency will benefit from managing security and compliance within a single program.
And we’re driving forward with deployment of our import/export processing system – the Automated Commercial Environment –ACE.
You all recognize what a huge shift this is, moving from paper-based and legacy systems to faster, modernized, and more cost-effective electronic submissions.
As we close in on key milestones – which are May 1st – just nine days away – and November 1st of this year, and October 2016 – CBP continues to develop, test, and deploy new capabilities to transform cargo processing in the U.S.
As most of you know, ACE is the core of the Executive Order signed by President Obama in 2014. This set a December 2016 deadline for completion of a “Single Window” to streamline the entire U.S. government export/import process for American businesses.
CBP and DHS are spearheading this effort, and ACE is the “Single Window” that will allow all relevant Federal agencies to simultaneously review and respond to cargo movement, reduce costs, and speed the cargo process – getting goods into the commerce stream faster.
I know some of you have questions about CBP and PGA readiness, and our communications with all of you, the software vendors, and your customers in advance of our deadlines. As we approach these critical dates, I want to assure that we are constantly looking for potential gaps, and our entire leadership team depends on all of you to help us understand key issues and identify solutions.
Steve Hilsen has been named as the CBP Lead Executive for the Single Window Initiative. Steve – who will be speaking tomorrow – is the primary point of contact for the Single Window, and I know you won’t be shy in raising issues with him. But I want you to know that NCBFAA has been a crucial partner in helping us build the system, get the PGAs on board, and prepare for these upcoming milestones.
BIEC Single-Agency ACE/ITDS Pilots
And let me briefly update you on the PGA pilots. Currently, the PGAs are implementing limited, single-agency ACE/ITDS pilots, testing agency-specific processes at a limited number of ports of entry.
The new, cross-agency pilots will focus on products regulated by multiple agencies. The agencies involved will reach out to importers and brokers to gather participants, and I encourage you to get involved.
On January 3, CBP successfully deployed “eBond” processing in ACE. Now, when you electronically transmit a bond to CBP, you receive a positive response from ACE within 10 or 15 seconds. Compare that to the world before eBond, when you might have to wait 4 or 5 business days, and you can truly understand the magnitude of this change.
In the first month of eBond, more than 11,000 bonds were created in ACE. Today, more than 90 percent of the CBP bond market is submitting electronically.
Even before my confirmation as Commissioner last year, I heard from trade and Congressional leaders about the importance of enforcing U.S. trade laws, and the critical role CBP plays in protecting American business and the U.S. market. I recognize those concerns, and we have made some important strides.
For example, CBP and Immigration and Customs Enforcement, Homeland Security Investigations (ICE/HSI) continue to enhance training, processes, and operations to attack smuggling and explosive growth in shipments of counterfeit goods, many of which pose serious threats to public health, safety and both national and economic security.
As a result, trade penalty assessments have increased by 140 percent from $385 million in FY 2011 to $926 million in FY 2014.
CBP leadership is also working with industry and Congress to increase communication around our enforcement efforts, reporting monthly on Anti-Dumping/Countervailing Duty (AD/CVD) collections and cases. We are also identifying how tools, like single transaction bonds, can improve outcomes and prevent evasion.
Role of the Broker
To date, CBP has completed or nearly completed many of the Role of the Broker initiatives, including:
- Automation of broker exam registration;
- Automation of the application, payment, and licensing processes;
- Allowing for electronic submission of the Triennial Broker Report.
All of these move CBP forward as you modernize your businesses.
Future of the Freight Forwarder
The development of Single Window will also benefit freight forwarders by making all licenses, permits, certifications, and PGA data electronic – most likely saving whole forests-worth of paper.
By transferring the filing of Electronic Export Information into ACE, carriers and freight forwarders will see meaningful efficiencies. But forwarders play a larger role for us in helping ensure the integrity of the supply chain, and I look to you for new ideas and solutions.
Regulation: Starting the Conversation
Earlier, I touched briefly on the Role of the Broker project, and our Regulations & Rulings office is preparing a number of proposed amendments to 19 CFR Part 111. We worked with NCBFAA to draft these, including the incorporation of the National Permit and a supervision and control framework. We welcome your input as we work through some of the remaining issues.
The regulatory process involves complex and time-consuming discussions, but your ideas can make a real difference.
CBP plays a crucial role in protecting America’s national security, safeguarding the supply chain from terrorism, transnational crime, and fraud. We carry out that mission, while still facilitating the lawful flow of commodities and business across our borders. We must be an agile organization, able to modernize our operations to meet that demand.
Our ongoing dialogue with the NCBFAA is critical to our ability to accomplish this mission, and I appreciate the opportunity to discuss these issues with you here today. Thank you.
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.