By Marcy Mason
It was just like old times during pre-pandemic days when a record crowd flocked to Boston, April 17-19, to attend U.S. Customs and Border Protection’s 2023 Trade Facilitation and Cargo Security Summit. The three-day conference, which attracted 1,200 on-site and 3,000 virtual participants, garnered the highest attendance ever drawn to the agency’s signature trade event.
The summit began with a moment of silence in remembrance of the victims of the Boston Marathon bombing that occurred 10 years earlier at the iconic race that also was being held in the city that day. CBP Acting Commissioner Troy A. Miller then spoke about another milestone anniversary in his opening remarks.
“We just celebrated the 20th anniversary of CBP and the formation of the Department of Homeland Security,” said Miller. “Personally, it’s hard to believe that 20 years have gone by. It feels like it was just yesterday when I was at the Ambassador Bridge in Detroit as the tragic events of 9/11 unfolded, not knowing that all of our lives would change, be affected and our mission would so drastically change.”
“Looking back, it’s incredible to see how far we’ve come. It has not always been easy. I’m sure many of you are aware of the challenges we have faced and continue to face,” said Miller. “The past two decades have clearly shown how integral our mission is to our nation’s economic health and the safety and security of the global supply chain. I’m also deeply appreciative of the role that all of you have played. Protecting the security, health and economic vitality of the American people has required intense work and commitment from customs brokers, logistics experts, importers and exporters, legal advisors, civil society and many more. Thank you for your partnership.”
Miller also spoke about the historic creation of the Customs Trade Partnership Against Terrorism, CTPAT, which established a new standard for partnership. “We started with seven companies, and now CBP works with more than 11,000 CTPAT partners to secure global supply chains one-by-one and confront heinous threats like forced labor and drug smuggling. Thank you to all the CTPAT members here today. To those of you who are considering joining CTPAT, we encourage you to do so,” said Miller.
The acting commissioner also explained that CBP’s effectiveness in protecting international trade is improved by collaborating with international partners through authorized economic operator programs worldwide. AEO programs, as they are known, are similar to CTPAT in that they adhere to internationally recognized standards developed by the World Customs Organization to protect supply chains from global threats.
“CBP, of course, also continues to partner directly with dozens of foreign customs administrations to ensure compliance with critical supply chain security requirements from point of origin in one country to point of distribution in another,” said Miller. “We do this by engaging and reaching mutual recognition arrangements or MRAs, and we’ve signed 16 of these arrangements so far.”
One of the highlights of the three-day summit was when audience members were able to witness the signing of two new mutual recognition arrangements with the customs administrations of Guatemala and Colombia.
“Over the last two years, our efforts have mostly focused on our closest and most trusted neighbors in the Americas,” said Miller. “By cooperating with our regional partners though these types of bilateral arrangements, CBP hopes to make regional supply chains more resilient and ensure sustainability and inclusive trade. Going forward, CBP will continue to develop and lead the world of AEOs as we adapt to the evolving universe of trade.”
Audience members also had the opportunity to meet Ian Saunders, the U.S. candidate nominated for secretary general of the World Customs Organization, the customs equivalent to the United Nations. Saunders, who is currently the deputy assistant secretary for the Western Hemisphere at the International Trade Administration within the U.S. Department of Commerce, shared his views in a one-on-one conversation with Deputy Executive Assistant Commissioner John Leonard of CBP’s Office of Trade.
One priority issue Saunders spoke about was gender equality and diversity in customs and trade. “This has been a hot topic in the WCO in recent years, and I foresee that it will continue to be an important one,” said Saunders. “It’s not an issue about numbers. For me, it’s an issue of organizational health as we think about the challenges that customs administrations face from the external environment, the increasing complexity of trade and the increasing complexity of the adversaries who are trying to circumvent the system. There are people using every resource they have to try to undo the good work that customs does,” said Saunders. “So that means that customs needs to be in a position to bring the best minds, the best problem solvers to make sure that it’s staying the best it can, a step ahead of the people who would try to circumvent the rules. For me, that ability to problem-solve comes from having as many problem solvers with as many views as possible as part of the conversation, leaving no motivated person outside of the room. Because if customs is going to bring its best, it can’t leave women, it can’t leave other demographics outside of the room. We need the benefit of every good thought to make sure we’re doing the best we can to preserve the system and to make it better.”
De minimis challenges
Among the many general sessions featured during the three-day event, held at the Omni Boston Hotel at the Seaport, was a panel discussion on De Minimis Challenges and Solutions led by Diann Rodriguez, CBP’s acting executive director of cargo and conveyance security. “De minimis refers to the low value high volume segment of shipments that are coming into our country every day. These are shipments with an aggregate value of $800 or less that are going directly to individuals, businesses, or direct business to consumer,” said Rodriguez. “Every day over two million shipments arrive at CBP facilities for targeting, review, and potential physical examination, and there has been a 410% increase in volume over the last seven years. For fiscal year 2022, air [transport] accounted for the vast majority of the de minimis shipments entering the United States. And although these packages are low value, they pose the same potential health, safety, national and economic security risks as our larger and more traditional containerized shipments.”
Rodriguez added that CBP is also seeing bad actors trying to exploit the volume growth to smuggle their illicit goods into the country. “Last year alone by volume count there were a significant amount of narcotic, counterfeit, and health and safety seizures in the de minimis environment. Given all of those factors in terms of volume, risk and illicit goods, CBP created a de minimis workgroup made up of executive leadership, operators, and subject matter experts from across the agency to analyze and develop an overarching strategy to address the challenges and risks that we face in this environment.”
Panelist Carlos Martel, director of field operations for CBP’s Los Angeles Field Office, shared that “In L.A. alone, we’ve seen a 929% increase in de minimis type shipments, so it has had a tremendous impact on us. We’ve tried to get a handle on it through staffing, facilities and technology in addition to trade compliance, but one of the things we are responsible for is passenger processing and that takes up a lot of our resources in the airport,” said Martel. “With the onset of the pandemic, we had an opportunity to move staffing to help process the cargo, review the manifests, release the shipments, and that worked, but it wasn’t the solution,” he said.
Martel and his team also discovered while running operations that they didn’t have the bandwidth or space to do inspections in some of the airport’s warehouses because of the high volume and consolidated shipments. So, they looked at options and focused on a centralized examination station model. “It’s not a new phenomenon, but we didn’t have one for the air environment, so we started looking at how we could model a centralized examination station to address the volume,” said Martel. “We engaged the trade, many of whom are here today. We took their concerns and interests into account because we know there’s a cost to this. And although there’s a solicitation period to establish one of these, we wanted to be transparent about this and we were able to reach a consensus. We developed an operational model and, in 2021, established the first air designated centralized examination station in the country and it’s worked for us,” said Martel. “We process 15,000 shipments a day. Our commitment to the trade [community] is we process shipments within 24 hours, but the reality is unless shipments are violative, they are cleared and processed within 30 to 60 minutes. That helps us keep up and move the compliant cargo, but again, we’re searching for a needle in the haystack, and we’ve found that a good percentage of goods are violative.”
Cybersecurity and trade
Another panel discussion focused on Cybersecurity & Supply Chain Resiliency. Panelists spoke about the scope of the issue, the current level of preparedness, and the steps the trade community can take to protect their companies from cyberattacks. “Data is the lifeblood of our daily work. Individually, each of us generates about 1.7 megabytes of data per second on the internet and about 2.5 quintillion bytes per second per day in total. Worldwide, we will generate about 181 zettabytes by 2025. What that means is in the last five years, the amount of data has gone up 20% each year, which is stunning,” said Assistant Commissioner of the Office of Information and Technology Sanjeev Bhagowalia, CBP’s chief information officer, who moderated the panel.
“Each year one billion emails are exposed in privacy cyber breaches throughout the world. One of five users are exposed in these breaches and malware infection has grown from 12.4 million in 2009 to nearly a billion in 2023. Cybercrime is skyrocketing too, from $3 trillion in impact in 2015 to $6 trillion in 2021, and is expected to go even higher,” said Bhagowalia. “According to the Information Systems Audit and Control Association, ISACA, 60% of small companies that suffer cyberattacks will be out of business in six months if we don’t pay attention to this.”
Bhagowalia added, “While many institutions have suffered from these cyberattacks, CBP has remained quite safe and secure. CBP blocks approximately 100 million network cyber attempts each workday and completes 36 million cyber patches a year. We have implemented a holistic, 24/7 cybersecurity framework and strategy to stay ahead of the threats. However, we must remain vigilant and never be complacent because our adversaries are playing with no rules.”
Panelist Scott Davis, chief information security officer and executive director of CBP’s Cybersecurity Directorate, offered practical advice by telling the audience, “We’re all in this together. You’re not in this alone. So, whether you are a small, medium or large company, there are people that you can lean on.” Davis cited DHS’s Cybersecurity and Infrastructure Security Agency, or CISA, as a great resource. He also recognized CBP’s Office of Information and Technology. “We have a team that works 24/7 and is constantly looking at things that are going on. They are always looking for threat intel. We also have a cyber threat hunt team that is proactively looking across our IT enterprise and then we’re capturing that information, synthesizing it and putting it out to our partners,” said Davis.
Panelist Kyle Griffin, the branch chief of CBP’s Trade Modernization Division, explained that the agency is working on broad comprehensive guidance to help the trade community react to cyberattacks. “But in the meantime, we have just published Cyber Incident Guidance for Customs Brokers, a collection of best practices based on our experiences,” said Griffin. “My recommendation is to print it out and staple it to your business continuity plan. The most important information is the phone number of CBP’s Operations Center, 703-921-6507, or you can reach the center at email@example.com.”
Forced labor enforcement
The agenda also featured a panel discussion about Global Perspectives on Human Rights and Responsible Business Conduct. “I’m not sure if you are aware of how many people are actually in forced labor throughout the world,” said Marcia Eugenio, one of the panelists and director of the Office of Child Labor and Human Trafficking at the U.S. Department of Labor. “That number, based on estimates of global modern slavery, is staggering. There are 28 million people in forced labor. That’s actually an increase of three million people since 2016.”
Eugenio explained that forced labor is work performed involuntarily under the threat of penalty by an employer or an agent of the employer. “Two-thirds of the people in forced labor are exploited in the private sector. Forced labor occurs in services, manufacturing, construction, agriculture, mining and fishing. We can go on and on and on. It happens in big and small enterprises,” said Eugenio. “Forced labor affects everyone. All people of all ages—children, adults and older people—all backgrounds and all nationalities.”
Eugenio was adamant. “Forced labor has no place in our world. It harms workers, it harms our families, it harms our communities, it worsens development outcomes and poses a significant risk to companies and to government procurement processes,” she said. “This underscores the need for urgent action. The risk of labor abuses can be very high in long and complex supply chains.”
Panelist Eric Choy, executive director of CBP’s Trade Remedy Law Enforcement Directorate, emphasized the need for collaboration. “Since the repeal of the consumptive demand in the Tariff Act through the Trade Facilitation and Trade Enforcement Act of 2015, CBP has really ramped up its enforcement program to not only stop illicit goods from coming through our ports, but also to drive a global discussion and drive change broadly around the world,” said Choy. “It exemplifies our values as a nation and it causes, creates and pushes for change here domestically to protect consumers and create a level playing field for U.S. industries. It also positions us as technical experts. We are the first customs agency that is really tackling this issue of forced labor globally around the world, and we’ve had great success in that.”
“But it’s not something that we do alone and it’s not something that we can do alone,” said Choy. “We have authorities to stop those goods made with forced labor from coming in at the ports of entry, but we’re working in close collaboration with our law enforcement partners, Homeland Security Investigations and the Department of Justice, as well as with other federal partners such as the United States Agency for International Development and the Department of Labor. We’re also working very closely with civil society, investigative media and academia. These partners are the foot soldiers on the front line of forced labor and they are the ones who have people on the ground. They are the ones who have first account witnesses and put a significant amount of resources out there to illuminate these issues for those who care.”
Choy also talked about some of the agency’s enforcement accomplishments. “Over the past three years, over $50 million has been repaid to workers overseas who have been put into conditions of debt bondage. We’ve improved living and working conditions and new business processes have been implemented by these foreign manufacturers. There also have been commitments to work on work incentive solutions. These are interim successes that have occurred as a result of enforcement,” said Choy. “But where do we go next and how do we sustain the momentum behind the enforcement? Lasting change takes a whole of government, a whole of society approach.”
Attendees also had a chance to hear from CBP’s senior leadership during a Town Hall-style panel. Executive Assistant Commissioner Pete Flores, of CBP’s Office of Field Operations, spoke about how the agency’s operations have evolved since CBP was created. “The biggest change over the past 20 years is our mission requirements, and those requirements are a lot,” said Flores. “The only way we’ve been able to accomplish where we are today is through partnerships. We’ve been able to strengthen our partnerships across the board with all entities involved in the trade process. We’ve been able to increase the flow of information, how we interact, how we create new regulations and the policies and procedures that affect the way cargo moves today.”
Flores also noted that advanced data has enabled the agency to assess risk better. “We’ve come a long way in our ability to analyze information and use a risk-based approach to determine what we need to look at,” he said. Technology is another area that has improved. “Our ability to use technology to help expedite cargo coming across our ports of entry at all of our locations also has been a major change,” said Flores. “I think we’re in a good place now, but we still have plenty more to do.”
Executive Assistant Commissioner AnnMarie Highsmith, of CBP’s Office of Trade, shared her perspective on the agency’s 21st Century Customs Framework initiative and its impact on the future. “For the uninitiated, 21CCF is our effort to address some of our most hopelessly outdated authorities. Some of the statutes that we enforce today originated from legislation in 1789. That’s not a joke,” said Highsmith.
“But we know our future challenges are coming and right now we have legislative barriers. We have statutory barriers in our ability to be flexible, move fast, help merchandise move efficiently and target high-risk shipments effectively. And so, working collectively with our trade partners and our government agency colleagues, we have developed a set of proposals,” said Highsmith. “We do have broad consensus on nearly all of the proposals. We’re still working on some. The package is gaining broad bipartisan support and I am anxious to see the progress that we’re going to make. It’s going to get done. We know it’s going to get done because it has to get done for us to be successful as an industry and fulfill our purpose of supporting the global supply chain. But it is also necessary to underpin our modernization efforts to allow greater transparency, swifter and more thorough information sharing to protect our data, and to enable the robust use of that data for artificial intelligence, machine learning and to spur innovation across our global supply chain.”
The summit’s agenda also featured notable speakers such as DHS Deputy Secretary John Tien, who spoke about the department’s priorities. One of the most critical, Tien said, “is increasing the department’s cybersecurity and being prepared for what is clearly one of the fastest growing and technically one of the most dangerous threats to the United States of America.”
“Eighty-five percent of the critical infrastructure of the United States is owned and operated by the private sector,” said Tien. “All of us have a responsibility to ensure that our cybersecurity systems are one step in front of the enemy. They are thinking of ways to do harm to the United States. So the ask is for all of you to have your own personal, corporate, institutional systems responsibilities and make sure that your cybersecurity is meeting not the minimum threshold, but the optimal one.”
Other speakers included Matthew Axelrod, assistant secretary for export enforcement for the Bureau of Industry and Security at the U.S. Department of Commerce; Salvatore R. Mercogliano, associate professor of history at Campbell University in Buies Creek, North Carolina; and Raul Aguilar, deputy assistant director for Homeland Security Investigations’ Transnational Organized Crime Division.
A variety of different breakout sessions were held on the second and third days of the trade summit. One of the panel discussions focused on cargo modernization. “When we look at cargo modernization for CTPAT, we really need to focus on our ecommerce strategy because ecommerce is what is driving a lot of the momentum in the field,” said panelist Manuel Garza, CBP’s director of the CTPAT program. “By creating a new entity within the CTPAT program that has eligibility requirements for ecommerce, we can help shift some of the attention on those small packages, so our officers can view them the same way as big containers shipped by trusted CTPAT partners.”
Garza said CBP started conducting tests last summer using artificial intelligence in the air environment. Land environment testing began in the fall. “We’re using artificial intelligence to help us identify what’s good and what’s bad within ecommerce shipments, and it’s proving to be a real success,” he said. “This will enable us to keep prohibited items out of the country before they are even loaded on a ship, airplane or truck crossing the border. We are looking to implement this new entity in the CTPAT program by the end of 2023.”
Panelist Christopher Sullivan, CBP’s director of manifest and conveyance security, gave an update on the Vessel Entrance and Clearance System, VECS, a new system that will digitize and automate the entrance and clearance process for vessels. “It’s all electronic, so the vessel agents don’t have to come in to submit paperwork and our officers don’t have to go through the paper forms that are currently required by CBP regulations,” said Sullivan, who shared that the agency had successfully tested the system at three sites in Mobile, Alabama, and Gulfport and Pascagoula, Mississippi.
“We did an analysis and vessel agents will save $28 million in time cost because they won’t have to physically come in and file paperwork at customs offices around the country. They’ll be able to do it electronically. It’s also going to save taxpayers $10.7 million, the cost for CBP to facilitate the paper process,” Sullivan said. “Our goal is to have the system installed at 18 seaports by the end of September this fiscal year.”
Panelist John Sagle, the deputy executive director of CBP’s Agriculture Programs and Trade Liaison Division, shared another example of cargo modernization. “Last year, we finished a five-year strategic plan with USDA’s Animal Plant & Inspection Service. One of the first ideas we had was to measure risk better to keep cargo moving. This would enable us to focus our resources more effectively so that we’re inspecting shipments that actually pose a risk,” said Sagle. “It’s also a benefit to industries and commodity groups that are historically clean. It keeps their products moving more quickly.”
The risk-based sampling approach was first tested on avocados from Mexico. “Years and years of avocados coming in, pulling a sample bag, and not finding anything made it the perfect commodity to test,” said Sagle. “Over time, we were able to demonstrate that the product was statistically low risk and compliant. If we find something we need to check, we’ll check it. This is not really a novel concept, but it’s novel in this realm and it’s a win-win. It helps facilitate trade better and it helps us direct our resources to things that are more important.”
Other breakout session topics ranged from Green Trade, Broker Modernization, Innovative Data Exchange, and 21st Century Customs Framework to Intellectual Property Rights, the Automated Commercial Environment, Combatting Organized Theft Groups, E-commerce, Recent Smuggling Trends and Supply Chain Security to two panels on the Uyghur Forced Labor Prevention Act and multiple on CTPAT.
One of the most popular breakout sessions was the opportunity to meet one-on-one with the directors of CBP’s Centers of Excellence and Expertise. All 10 of the industry-specific centers responsible for processing the country’s imports were represented. “There’s been a great deal of interest in forced labor,” said JoAnne Colonnello, director of the Pharmaceuticals, Health, and Chemicals Center based in Newark, New Jersey. “A lot of companies have their reputations on the line, especially with pharmaceuticals. They don’t want to have anything that’s made with forced labor within their supply chain. I also think morally they understand what’s happening to these people and they don’t want to fund buying goods from countries that are using forced labor.”
A worthwhile experience
Many of those who attended the summit said they found it worthwhile. “For as long as CBP has been hosting these trade events, I’ve been coming to them,” said Elizabeth Little, senior director of global logistics & customs compliance for Talbots, an American specialty retailer for women’s apparel based in Hingham, Massachusetts. “I’ve been in a regulatory position for more than 20 years and it’s important to be educated and keep up with what Customs is doing.”
Little and her colleague, Donna Hamman, Talbots’ manager of trade compliance, were anxious to come to the event after being isolated for so long during the pandemic. “I think the pandemic really put people in our industry at a disadvantage because we didn’t get any training. Everything was virtual,” said Little. “After two years, it’s time to get out and see what’s been going on down in Washington and what’s happening in our business.”
“We wanted to find out about the changes in the broker regulations to make sure that we’re up-to-date,” said Hamman. “We also wanted to find out about UFLPA, the forced labor legislation. We work with women’s clothing so we have a lot of products made with cotton and it’s important to keep up.” Hamman explained that she and Little audit the overseas factories in their supply chain. “Periodically, we’ll check a company we work with and go in and do a full audit that includes forced labor. We want to make sure that the factories are doing what they say they are doing,” said Hamman. “We’re constantly watching our supply chain. Talbots is a socially responsible company and we don’t have anything to do with forced labor or any illegal activities.”
Little also found the breakout session on the 21st Century Customs Framework interesting. “That legislation is hopefully going to be passed this year. It’s really going to impact trade, depending on what way it goes,” said Little. “A lot has changed in 30 years and the laws need to catch up. The rules and regulations are archaic.” Hamman agreed. “It’s important that we keep the goods moving to get to the stores," she said. “If we don’t have merchandise in the stores, customers have nothing to buy.”
Elizabeth Hill, the office manager and CTPAT coordinator for customs brokerage firm, John S. James Co., in Savannah, Georgia, came to the trade summit to find out what’s new with CBP’s supply chain security program. “CTPAT is very important for our business as most of our clients are CTPAT certified companies,” said Hill. “They have the requirement in their profiles to use a CTPAT broker. But we also applaud CBP’s mission to keep our borders and supply chain secure.”
“Everything in our world is dependent on international trade. We source and supply goods all over the world and the world is an uncertain place because there are bad actors who want to do harm to the American people. So, securing the supply chain for everything from food to pharmaceuticals to our building materials is essential for the safety and security of our country,” said Hill. “I came here hoping to gain insight on how we can participate in the mission to prevent cyberattacks from disrupting not only our business line and our company, but also the supply chain.”
Rodrigo Alvarez, the operation manager for Kepix, a U.S. company based in Miami that imports food from Central America, had attended a CTPAT conference prior to the pandemic, but had never been to CBP’s trade summit event. “Over the last few years, we’ve had a lot of growth in our company and the customs aspects have become more complex, so I wanted to make sure we were getting all the information we needed to be compliant,” said Alvarez, a Guatemalan citizen who was aware that Guatemala was in the process of working towards obtaining an MRA with the U.S., but didn’t realize the bilateral arrangement was actually going to be signed at the summit. “To my great surprise, I was there for an historical moment for Guatemala, for my country. It was astonishing. I really couldn’t believe it was happening.”
Alvarez said the MRA will be significant for his company. “As an importer, we run into all sorts of challenges and things that we have to surmount, but this MRA, this mutual recognition arrangement, is going to help us. It will help expedite trade and help people in both countries.”
For Alvarez, coming to the summit was extremely worthwhile. “It was more than I expected. I wanted to come here just to learn and do some networking,” said Alvarez. “But I actually got to meet the highest level customs officials from Guatemala. Maybe I thought it would be possible to meet these authorities 20 years from now, when I had more experience and knew more people, but it was incredible. It was truly a once in a lifetime experience.”