CBP Hosts Second Virtual COAC Meeting during COVID-19 Pandemic

As the coronavirus pandemic has continued to surge worldwide, severely impacting the global economy, U.S. Customs and Border Protection’s trade advisory group has continued to forge ahead. Undeterred by the unprecedented health crisis, the Commercial Customs Operations Advisory Committee, known as COAC, convened virtually for the second time this year on Wednesday, July 15.

The meeting began on a somber note when U.S. Customs and Border Protection Acting Commissioner Mark A. Morgan, who co-chaired the public gathering, recognized CBP’s workforce for the sacrifices they have made. “This year, we have had 10 employees die in the line of duty. Eight of those have been directly related to COVID-19,” he said. “These folks have sacrificed a lot to get up every day to do their jobs. Not only to safeguard security, but also to facilitate the free flow of trade and travel.”

In his opening remarks, Morgan underscored that trade is continuing to flow across the U.S. borders. “Despite COVID-19 and everything that’s going on, CBP continues to process cargo. We never stopped from day one. There was a false narrative out there that the borders had shut down. That was false then and it’s false now,” he said. “Americans and American businesses must continue to have access to necessary goods and supplies throughout this pandemic.”

One proactive measure that Morgan spoke about was CBP’s COVID-19 Cargo Resolution Team, which was established to facilitate critical shipments of personal protective equipment and resolve cargo admissibility issues for legitimate trade. Morgan noted that since its inception in late March, the special team had responded to nearly 2,500 questions from the trade community and facilitated the clearance of more than 400 FEMA-arranged flights filled with critical medical supplies.

“We also are continuing to seize counterfeit and otherwise prohibited COVID-related products,” said Morgan. “Unfortunately, every single time there’s a crisis, criminals come to the forefront to try to take advantage of it for their own greed and profitability. COVID-19 is no exception.” Morgan shared that “from January 1 through July 7, CBP has seized more than 120,000 FDA-prohibited COVID-19 test kits, more than 12 million counterfeit face masks, and more than 24,000 FDA-prohibited chloroquine tablets.”

The acting commissioner also discussed a number of the agency’s significant initiatives. The U.S.-Mexico-Canada Agreement, or USMCA, which took effect on July 1, was one of them. “Every day, more than $3 billion in trade transits the borders of the U.S., Mexico, and Canada,” said Morgan. “We know that this trade is absolutely essential to the economies of not just America, but all of the North American countries.”

Morgan explained that the new USMCA agreement eases compliance by not requiring a specific paper form. As such, it differs from the trade agreement that preceded it, the North American Free Trade Agreement, known as NAFTA. Instead, USMCA resembles more recent trade agreements such as the Dominican Republic-Central America Free Trade Agreement, or CAFTA, and the revised United States-Korea Free Trade Agreement.

“USMCA also improves our ability to combat human trafficking and forced labor, and it expands our customs authorities to allow us to better enforce threats to human and agricultural health,” said Morgan.

In regards to forced labor, Morgan told the virtual audience that CBP has pursued several enforcement actions over the past few months that prohibit the importation of goods produced with forced labor. Two withhold release orders have been issued to prevent the importation of hair products from companies in China that use systematic forcible mass detention and forced labor. A third withhold release order was issued against a Taiwanese-owned fishing vessel. Working with the National Oceanic and Atmospheric Administration, CBP found indicators of forced labor, including debt bondage, excessive overtime, and restriction of movement. “The inhumane labor practices for financial gain are just disgusting,” said Morgan. “The conditions and what they make some of these individuals do to produce cheaper products is really unbelievable.”

Morgan also welcomed Jon Perdue, the new executive director of CBP’s Office of Trade Relations. “Jon served the last three years in the Latin America and Caribbean Bureau of USAID,” said Morgan, who then announced that Brian White, the director of global logistics and trade compliance for The J.M. Smucker Company, would be serving as one of the COAC co-chairs along with Lenny Feldman.

Speaking on behalf of the COAC, Feldman, a senior member of the Sandler, Travis & Rosenberg law firm, expressed appreciation for the payment flexibility given to importers who have faced a significant hardship due to the pandemic. “We were glad to see the duty deferral that went into play April 20th. It was fast and furious to say the least for the 90-day period for March and April entries,” said Feldman. “About 2600 importers took part in that. Almost $600 million in duties, taxes, and fees were postponed. A good start,” he said. “Now we’re hitting that 90-day mark, and we’re going to find some companies may have challenges paying those duties and fees. So we’re going to need to look at the policy.”

COAC co-chair Brian White shared his views on a number of trade concerns including intellectual property. “As a brand owner, intellectual property rights are really critical to us, especially for a food manufacturer like Smucker and other food manufacturers,” said White. “Think about food safety and food fraud and the different things that can occur with this sort of branded products. Known counterfeiters like terrorists, different proliferators, and other bad actors present a threat to U.S. health and safety, and the security of our economy,” he said. “So we’re looking to establish mechanisms that help to identify and eliminate these bad actors from the supply chain.”

Acting Commissioner Morgan echoed the seriousness of the threat. “The American people really have no idea of the significant loss to this country on multiple fronts because of the theft of intellectual property from American businesses. It’s devastating to this country,” said Morgan. “That’s why what we are doing together as partners is so important.”

The meeting, which also was co-chaired by Timothy Skud, the U.S. Department of Treasury’s deputy assistant secretary of tax, trade, and tariff policy, included updates on trade programs and COAC subcommittee work. Among the many topics discussed was the in-bond process, which delays the customs clearance and release of cargo until it reaches its final U.S. destination or is exported. “One of the key areas we want to address is the total visibility of in-bond transactions,” said COAC member Michael Young, the vice president of business process and system for OOCL, a container shipping and logistics service company. “Right now, we have a number of situations where when cargo moves under bond, not all the parties within the supply chain have visibility of the cargo’s status. Some may have visibility later than others and that impacts the ability to effectively move cargo efficiently through the supply chain,” said Young. The lack of visibility also can result in huge financial penalties.

The benefits of participating in CBP’s voluntary supply chain security program, Customs Trade Partnership Against Terrorism, or CTPAT, was also discussed. The COAC presented recommendations on how CBP can identify, implement, and measure benefits for companies that participate in the tiered trusted trader program. “We believe that there’s a need for the continuous assessment and measurement of the existing benefits as well as the implementation of new benefits in order to keep the trusted trader programs current and relevant as business environments change and supply chains continue to evolve,” said Alexandra Latham, a COAC member and the director of customs compliance for Costco Wholesale Corporation.

At the meeting, 46 recommendations were presented and unanimously passed. Eleven of the recommendations pertained to CBP’s trusted trader programs. The remaining 35 recommendations focused on exports, remote and autonomous cargo processing, in-bond, forced labor, intellectual property rights, bonds, anti-dumping and countervailing duties, and modernizing the customs broker exam.

COAC is a 20-member advisory committee that was established by Congress in 1987. The committee provides advice and recommendations to CBP and the Department of the Treasury on the commercial operations of CBP and trade-related interdepartmental functions. Some of the issues that COAC focusses on include enhanced border and supply chain security, international efforts to harmonize customs practices and procedures, import safety, compliance, and modernization and automation processes used to facilitate trade.

Announcements were made regarding the next COAC meeting, which will be held in Philadelphia or via webinar on October 7, 2020, and CBP’s first virtual Trade Week, slated for September. The Trade Symposium that was scheduled in August in Anaheim, California, will not be held as originally planned.