Originally published by the Journal of Commerce in February 2012
In recent weeks there have been several meetings in the Los Angeles area at which local and Headquarters Customs and Border Protection (CBP) senior managers have given presentations about the priorities for the agency in the current fiscal year. Despite the fact CBP will function for at least a year without a permanent head (and perhaps longer depending on the outcome of the upcoming Presidential election), the agency will move forward under the capable leadership of Acting Commissioner David Aguilar with the following priorities:
1) Consistency, harmonization and uniformity – whether dealing with the trade community or partner government agencies, CBP wants to continue to heighten its efforts to be more consistent with the decisions being made by the ports, harmonize those decisions and act uniformly to the extent reasonably possible;
2) Modernization – encompasses development of the remaining ACE portals and programs, including getting the remaining program drops completed, especially problems resolution; also on the agenda is to become electronic with the Court of International Trade which means developing a portal for attorneys and other interested parties to be able to interface with; plus, while paper copies of notices of liquidation have been eliminated, the official notice of liquidation is still antiquated – by regulation, it is a paper list posted at the customhouse where the entry was filed; CBP wants to update this process so the notices can be posted on www.cbp.gov. As such, not only does modernization include completing computer programming and upgrades, but also updating CBP policies and procedures;
3) Co-creation of trade programs with stakeholders – this topic begins with more outreach to stakeholders; additionally, one of the questions under discussion is how does CBP define a trusted trader – does it mean a validated C-TPAT member, or must one also be an ISA member? If an ISA member, what additional benefits could or should accrue? Similarly, in rolling out the Centers for Excellence and Expertise (CEE), CBP is meeting with and seeking input from trading partners so it can better educate its staff as to current business practices, with one goal being to make the program as successful as possible; also part of this topic is expanding C-TPAT to include exporters;
4) Continued trade enforcement – this means enforcement focused primarily, but not exclusively, on the primary focus issues, most often mentioned are antidumping, intellectual property rights – IPR of course overlaps with trade program co-creation – and revenue collection; CBP also wants to increases its knowledge base, which we can expect translates into increased free trade agreement verifications, and added focus on textiles, import safety, IPR, agriculture and personal effects, soft wood packing materials, fresh cut flowers, bulk currency, weapons, and unlicensed technology.
5) Education – CBP recognizes it learns a lot from its C-TPAT members about supply chain security measures, but wants to learn more from industry about brand protection techniques and counterfeiting trends; here should also be added gaining a better understanding about other segments of the trade community, such as customs brokers, ocean and air carriers, railroads, truckers and warehouses; also part of this discussion is successor planning and mentoring within the agency;
As CBP moves forward, it will continue to segment risk. The agency has long been challenged to do more with limited resources. This plays itself out in the risk management area by CBP spending much in the way of resources to develop programs that benefit large companies, but are simply not viable for smaller companies due to less money and smaller staffs. As such, in its own way, CBP is developing the haves and have nots – or to borrow a phrase from the recent Occupy movement – the 1% and the 99%. The 1% are the large companies which get benefits like C-TPAT and ISA, (we have to wait and see if simplified entry really works for smaller companies, but there is no doubt it helps the big ones), and so their cargo moves more cost effectively and smoothly through the supply chain. Because they typically cannot afford the cost and do not have the economic leverage over their business partners to gain entry into C-TPAT or ISA, smaller companies are automatically lumped into the higher risk category and so end up with more inspections, higher cost and more delays.
Another topic being mentioned for the coming year is shifting enforcement from parking tickets to meaningful cases, especially as relates to penalties. So, for example, are there alternatives to imposing a penalty or seizing goods? Should a first timer be treated the same as a repeat offender? What statutory or regulatory changes will be needed to implement these revisions?
In the context of the CEE, here is how segmenting the risk works as a practical matter. The trade is being told there are less than 100 companies which account for about half the $346 billion worth of electronics being imported yearly. Almost all of them are C-TPAT and ISA and each imports more than $10 million worth of goods yearly. In the group importing between $1 million and $10 million, those companies account for about 42% of the electronics imported and are generally compliant, but do from time-to-time have issues. That leaves 6% of the electronics imported in the hands of approximately 51,000 companies and their violations are “off the charts.” So, is CBP better off spending its resources helping the big guys or the little guys? What more could be done to help the small and medium sized companies?