Commissioner Hosts Inaugural Meeting of Newly Renamed Trade Advisory Committee in D.C.
The name changed, but it was business as usual when the Commercial Customs Operations Advisory Committee, known as COAC, convened April 27 in Washington, D.C. It was the trade group’s first meeting since new legislation, signed by President Obama on February 24, renamed the advisory committee and gave U.S. Customs and Border Protection authority to carry out its mission, strengthening its trade enforcement at the nation’s ports and borders.
“I couldn’t have been more thrilled to go to the Oval Office and watch the president sign the Trade Facilitation and Trade Enforcement Act of 2015,” said CBP Commissioner R. Gil Kerlikowske, who co-chaired the meeting. “CBP was established in 2003, but to actually be authorized and have all of our authorities in one location and not scattered among the Treasury or the Immigration and Naturalization Act, and then to essentially have COAC enshrined in the law makes a big difference. It shows everyone how important trade is to the economy of the United States.”
The Commissioner also talked about strengthening CBP’s enforcement capabilities and working with the trade community to accomplish this goal. “We recognize that all of you are playing by the rules and doing your due diligence with contractors, subcontractors, et cetera, and we appreciate that. We don’t want hiccups and glitches in the global supply chain,” he said. “We want to do our enforcement and we want to keep you as partners in all of this.”
One enforcement success Commissioner Kerlikowske highlighted was an increase in intellectual property rights seizures. “We recently released a set of enforcement statistics showing a 25 percent increase in seized counterfeit goods,” he said. “There’s still a lot of work to be done, but nearly 29,000 IPR seizures were made in fiscal year 2015, with an approximate value of $1.35 billion MRSP [manufacturer’s suggested retail price],” he said, adding that “IPR seizures involving products that pose health and safety risks including batteries, automotive parts, bearings, cigarettes, pharmaceuticals and consumer electronics also increased.”
The Commissioner also shared statistics showing the significant progress the trade community has made using CBP’s cargo processing system, the Automated Commercial Environment, or ACE, to file shipping transactions. “As of today, 75.5 percent of all shipments that are coming into the U.S. are electronically filed in ACE,” he said, noting that almost 98 percent of entry summaries, which are reported within 10 days of goods entering the country and include duties, taxes and fees, were also filed in ACE. “There are a lot of folks out there though who haven’t been as involved and we want to encourage them in every way we can to participate. This includes smaller companies. The more they participate and use ACE, rather than waiting until the deadline at the end of the year, the more helpful it will be.”
Under an executive order signed by President Obama, a government-wide, “single window” cargo processing system that will expedite the flow of U.S. imports and exports must be completed by December 2016. The single window will allow businesses to electronically transmit trade data required by the U.S. government to import and export cargo. The automated shipment data will enable government agencies to make near real-time decisions, which will reduce costs for businesses and the government. Completion of the single window entails shifting from an old cargo processing system to the new ACE system.
COAC members praised the new legislation. “We’ve been very excited with the passage of the customs reauthorization bill. It gives the COAC a place in the trade landscape, which we believe can help greatly,” said Vince Iacopella, one of the advisory committee’s co-chairs and the executive vice president and president of the West Coast region of The Janel Group, a logistics and customs brokerage firm.
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. Committee members proposed recommendations and discussed concerns about current policies and regulations. For example, after years of studying ways of bringing customs broker regulations into a 21st century commercial environment that aligns with current technology, the COAC presented 37 recommendations.
“The customs broker’s license has value,” said Iocapella, “It has value to CBP, to the importing community, and the U.S. consumer. We file 97 percent of the data that CBP uses for trade enforcement and trade facilitation, so we feel that we are partners in the mission to keep food safe, to keep products safe,” he said. “In this modernization process, there is a realization that we don’t want the value of that license being diminished.”
One of the key presenters from the COAC’s Trade Modernization Subcommittee, Cynthia Allen, a customs broker and founder of consulting firm Trade Force Multiplier, explained that the COAC members did not have 100 percent agreement on some of the recommendations. “There were some concerns by a few that this will radically change the industry if the recommendations are adopted by CBP,” said Allen. However, she added, “change is necessary to move any industry forward…It is time to remove the constraints of past regulations that allowed advances at the time they were implemented, but now limit our ability to move forward in a reinvented presence.”
COAC member Adam Salerno, the executive director of global supply chain and trade facilitation at the U.S. Chamber of Commerce, voiced concerns about a recommendation that would potentially allow brokers to store customer data outside the U.S. “We see this as an issue that pertains to [storing data in] the cloud. Unless the cloud is hovering above the United States, it could put otherwise law-abiding companies in violation of the law. We recognize the need clearly for customs to have access to this data. There’s no debate there, but if you, in fact, had 220 countries and territories all forcing data localization, there would be major cyber security risks and major costs for companies to have localized data warehouses.”
The Centers of Excellence and Expertise, another CBP trade initiative, was also discussed. The 10 industry-specific centers, which were designed to increase uniformity at the U.S. ports of entry, were also included in the new trade legislation. In March, all 10 centers became fully operational.
“Six of the 10 centers just became operationally expanded in late March, and already we’re seeing targeted enforcement efforts in the areas of antidumping/countervailing duties and IPR as well as setting forth facilitative efforts for legitimate trade,” said Susan Thomas, the acting director of CBP’s trade operations division, who is overseeing the implementation of the centers. “We’ve built a strong framework and foundation from which we’ll continue to mature the centers, but we still have a lot of work and we recognize that.”
Nonetheless, the Centers of Excellence and Expertise have already developed a fan base. “We are so supportive of the centers and what they’ve been able to do for us so far,” said COAC member Heidi Bray, the U.S. customs compliance manager for automobile manufacturer Fiat Chrysler. “The centers have been a real success story for us. I would just like to say, ‘Thank you, and expand them as quickly and as much as possible.’”
The next COAC meeting is scheduled for July 2016.