Originally published by the Journal of Commerce, December 2016.
Even prior to the election, it was clear the U.S. is a country divided. We are now several weeks removed from the election and the shame of the situation is not one so-called political leader has made any statements which give hope of uniting the country. We have sore winners and sore losers, and not much else! Given that circumstance, the more remarkable feat is it took the highest ranking civil servant at Customs and Border Protection (CBP) to deliver recent remarks which provide the first sounds of any hope the country will be able to move forward on any front in something approaching a united fashion.
During his lunch remarks at the CBP Trade Symposium on December 2, Deputy Commissioner Kevin McAleenan reinforced trade facilitation and security as the continuing twin missions of CBP (to no one’s surprise) and divided his remarks into three topics: change, opportunity and continuity. Under the topic of opportunity, Mr. McAleenan noted CBP continues to seek to harmonize single window (the mechanism and the standards), deal with data sharing with other governments in ways that retain confidentiality, and create single unique identifiers for accounts and products.
In the context of change, based on the Trade Facilitate and Trade Enforcement Act (“TFTEA”) , Mr. McAleenan pointed out enforcement remains a high priority. Others priorities include antidumping/countervailing duty, forced labor and intellectual property protection. In other words, CBP will continue to focus in areas that present the highest risk (again a surprise to no one). Another challenge for CBP is e-commerce which requires a speed and service level never before necessary for other forms of business. The challenge with e-commerce is both illicit commodities and abuse of the di minimis rules (where shipment values are lowered so as to avoid the more formal reporting required of “regular” imports and exports). According to the Dept. of Commerce, 98% of those conducting e-commerce are small and medium sized companies, so the challenge is significant and those users have less familiarity with the rules, and even less time to spend learning them.
Another significant challenge for CBP is technology. Not just single window (and the open question of what are the next features for ACE when this development cycle is concluded?), but also better coordination with partner government agencies and the Border Interagency Executive Council (“BIEC”). While TFTEA caused ACE to be enacted into law, the BIEC remains a creation of executive order. Will it survive into the new administration, and if not, what vehicle will be available to allow the heads of the relevant agencies to regularly meet and coordinate their agencies’ efforts?
In terms of continuity, CBP learned long ago the best route to success is to work closely with its trade partners, and so the agency intends partnerships to remain strong. The bottom line message from Mr. McAleenan was CBP acknowledges it needs to continue to move trade through the supply chain so the U.S. can remain competitive.
While Mr. McAleenan’s comments certainly provide a framework for moving forward in a more unified manner, we just do not know what the future holds! In the past, CBP has had limited flexibility to add staff in those areas where it is the most needed. Congress has historically mandated the additional staffing be for border enforcement staff (and one understands the focus), whereas importers and exporters will tell you the staffing is needed most for so to speak backroom support staff and training for CBP staff at many different levels. To be fair, CBP enforces the law on behalf of 40+ agencies and in many cases the current decision-making process is simply too cumbersome and time-consuming. Even so, there are all too many times that CBP’s own staff has difficulty understanding the agency’s regulations and how to properly enforce them. Another area where CBP needs help is with the Centers of Excellence and Expertise (“CEE”). For the most part, the CEEs are still new and learning how to operate. Some have done well to mature and others are still in their infancy and still learning how the trade they regulate works and with whom to deal externally. The definition of trusted trader has also still not be finalized.
The reality is we simply do not know what will be the priorities of the new administration, and how those priorities will impact CBP’s mission and budget. Certainly, it is reasonable to expect a focus on immigration, and volumes can be written on that topic! At the same time, those in the new administration surely understand the importance of trade continuing to move through the supply chain in a compliant and expedited manner? However, we’ll just have to wait and see if that lesson was learned either in business or the military (the two primary sources of the announced cabinet members). If not, to paraphrase a line from Betty Davis’ character in All About Eve©: “Fasten your seatbelts. It’s going to be a bumpy [ride]”!