By Mary Jo Muoio
As with all enterprises, associations have a core purpose for being that governs the activities they undertake. We all belong to an organization focused exclusively on its members and their businesses. This focus is captured by the tagline "NCBFAA-Clearing The Way For Trade." The National Customs Brokers and Forwarders Association of America works to foster a healthy environment for our businesses and our industries. In fact, all the activity the Association engages in is primarily geared to its single core purpose of clearing the way for trade. Whether trying to remove impediments to trade, mitigating misguided rulemaking, lobbying lawmakers, creating education and business tools, or any of its other endeavors, the Association’s guiding focus is always on clearing the way for trade—indeed clearing the way for our businesses to prosper. Throughout 2008, we had many opportunities to pursue this goal.
Interacting with, and reacting, to the actions of the trade regulatory agencies always consumes much of our time and efforts - but 2008 was exceptionally active. The Importer Security Filing or 10+2 is a case in point. The NCBFAA has been engaged with this significant measure from day one trying to mold its final form into one that provides improved security for the country and provides opportunity for all segments of our membership. Represented by our Customs Counsel Alan Klestadt and our very active Customs Committee the NCBFAA met with CBP, filed substantial comments, visited Congress, coordinated with other trade associations, and informed our members on the measure. We continue to meet with the regulatory staffs charged with implementing the measure. Before and after it became effective, we offered our own webinars and participated in other programs. We also produced how-to kits intended to facilitate use of the rule by our members--customs brokers, forwarders and NVOCCs.
Another controversial and challenging issue that confronted us last year was the evolving 100 percent inspection mandate of the Transportation Security Administration (TSA) for air cargo on passenger airlines. The implications of this mandate to our members are not insignificant. Seeking an affordable option and led by our Transportation Counsel Ed Greenberg and Air Freight Subcommittee, we worked with other industry groups and the TSA to develop the concept of a Certified Cargo Screening Facility (CCSF) that will act like a "car-wash" with unscreened cargo going in one door and properly screened cargo coming out the other. This approach is not a panacea for this very complex challenge, but we believe it will help our smaller capitalized member firms stay in the game by permitting them to share the cost of compliance or outsource the screening function.
Learning last summer about amendments to the Lacey Act, Association counsel and volunteers worked feverishly to mitigate the impact of these measures. Intended to protect endangered plant species, this rulemaking came close to endangering something else--our paperless clearance and remote location filing systems by requiring a paper declaration. Through hard work we successfully contributed to the phased-in automated declaration requirement.
Being based in DC allows the NCBFAA to represent our members’ interests before Congress either by testifying directly or advising Congressional staff of the ramifications of the bills and laws they draft and amend. It is said that "the devil is in the details" and that is never truer than when Congress rushes to right a perceived wrong without first deliberating the consequences of its actions. That is where our constant monitoring and review of its activity pays off. Our ‘man on the hill’ Jon Kent has been instrumental in divining Congress for proposals with potential to impact our businesses. For example, as a result of this vigilance, we initiated efforts that eviscerated a Consumer Products Safety Commission (CPSC) legislative provision that would have stripped customs brokers of their licenses for importations of toys and other products that violate CPSC rules. I vividly remember receiving a call on my cell from Jon about this alarming development. Ironically, I was in a toy store at the time.
In this way, we confront, on your behalf, those issues and challenges that affect the business environment in which you serve your clients. Eliminating or reducing the obstacles that impede your ability to efficiently conduct business is one way that your Associationclears the way for trade.
Another way we accomplish our purpose is through the NCBFAA Educational Institute (NEI). It is one thing to have a level, navigable playing field but, unless you know the rules of the game, it is virtually impossible for you to enjoy success. You and your staff must know the requirements of the trade and know them well. In simpler times, one could learn the ropes on-the-job, and though OTJ training is still useful, business today demands better alternatives. To meet these demands Ms. Cindy Allen, an experienced customs broker and CCS and long-time NCBFAA volunteer, joined the NEI to direct all education-oriented activities of the Association.
NEI offers the membership and others a full program of certifications and knowledge-based opportunities. Throughout 2008, our NEI programs met with great success. We have also significantly upgraded the delivery of our Certified Customs Specialist (CCS) course by converting it to an on-line process. Through the auspices of our partners in the Canadian Society of Customs Brokers (CSCB), we were able to add our course to their existing CCS platform. The flexibility and scalability that this provides our program takes it to an exciting new level that we believe will attract an entirely new generation of logistics professionals.
With a growing field of Certified Customs Specialists, the NCBFAA has met their need for a wealth of opportunities to accrue the required continuing education units. The Association offers six free case studies so individuals can earn their annual CEU points at no cost. In addition the NCBFAA offers numerous minimally priced webinars. These offerings are all part of the Association’s commitment to this excellent program and to facilitating participation by industry professionals in this worthwhile credential program. The NCBFAA also reviews and accredits a long list of educational opportunities sponsored by other organizations making continuing education accessible to all.
Although our initial foray into education focused on the customs side, it was always our intent to include an export component to our stable of educational products. In 2008, we did just that with the launch of our Certified Export Specialist (CES) course. Administered by our good friends at GISTNet, the CES certification program is designed to help trade professionals involved in the export industry to become competent and knowledgeable in current export regulations. The coursework is varied and wide-ranging, encompassing all aspects of the trade and challenges individuals to be the best at their craft.
Currently the CES offers two roads to grandfathering. One allows all those who earned the NCBFAA Certified Ocean Forwarder (COF) certification to become a CES with payment of a registration fee. Alternatively, experienced export personnel may become a CES, provided they have a minimum of 10 years experience with an OTI (Freight Forwarder, NVOCC) or an exporter; submit an application form with company name, contact name and email/phone number for verification along with dates of employment; hold a management position within their current company; provide certification on company letterhead by an officer of the company verifying position/title of applicant; and, pass a required knowledge exam.
As with the customs program, the CES program requires annual earning of 20 CEU points for an individual to remain certified. This is not a one-time credential but an on-going commitment to knowledge.
The true measure of the success of these programs is the public recognition they receive. From Congress to Customs to Census, we have had positive endorsements of the programs. Importer bid packages have begun to ask for the number of CCS’s employed. Seminar attendees are asking if programs are CEU recognized by the NCBFAA. Individual resumes and business cards now proudly display the CCS designation. There truly is a need in the industry and the NCBFAA is filling it.
As you read this Annual Report and other NCBFAA publications throughout the year, I hope you are struck by the volume and scope of projects and issues your Association engages in and influences on your behalf. Its successes are your successes and are only achieved because you continue to support its work with your time and funding. It is the strength that each of you brings to the Association that makes it possible to overcome the challenges all of us face. As I enter the final year of my NCBFAA Presidency I want you to know that I continue to be at your service and will continue to work to the best of my ability to pursue our common interests and common goals. Thank you all for this wonderful opportunity you have afforded me to serve you and our industry. No matter what the challenges are you can be sure that the NCBFAA will continue to clear the way for trade for our businesses.
By Federico "Kiko" Zuniga
In my role as former NCBFAA President and current NCBFAA Chairman, I have endeavored to establish an effective international presence for the Association. Supporting that effort is my work with the International Federation of Customs Brokers Associations (IFCBA) Board of Directors, which I have served on since 2003 and to which I was elected Chairman in 2008.
With its Secretariat in Ottawa, Canada, the IFCBA represents the views of customs brokers on an international basis. IFCBA provides its members with up-to-date knowledge about international trade and Customs' matters, via e-mail and its web site, where articles of interest are posted. IFCBA annual Board of Directors meetings and biannual international conferences provide excellent opportunities for members to learn about the very latest thinking on Customs-related issues from an international perspective.
Because it is an international organization, the IFCBA provides me with an excellent platform for insuring that the NCBFAA members’ perspective on international commerce is shared with our trading partners. This opportunity to influence IFCBA deliberations ensures that our membership’s voice is, at least, heard on the global stage and is in fact, more often than not, heeded.
Along with the IFCBA, we remain actively involved in the North American Customs Brokers Alliance (NACBA), which includes the NCBFAA, the Canadian Society of Customs Brokers (CSCB) and the Confederacion de Asociaciones de Agentes Aduanales de la Republica Mexicana (CAAAREM). NACBA draws on the unique expertise and market presence of brokers in all three countries to help importers, exporters, and governments address customs issues in the largest single free trade market in the world.
As part of its charter, NACBA relies on data collection, control and disposition to secure the supply chain against external threats and harmful exploitation. The steps the group takes to accomplish these ends include working toward the specification, standardization and streamlining of datasets in existing and new commercial data channels; developing strategies and methods to defend and protect the supply chain; and increasing the value added by the customs brokerage community. To achieve its goal, it must leverage the experience and expertise of its constituencies and cooperatively engage the governments of its three member countries that are also active in IFCBA.
Further to these efforts, I have been actively participating in the Congresses and meetings organized by International Federation of Freight Forwarders Associations (FIATA), the largest non-governmental organization in the field of transportation with worldwide influence. The educational and informational opportunities available at these venues are invaluable in confronting the daunting challenges our industry’s practitioners, both here and abroad, face every day.
I firmly believe that cross-border trading is key to a peaceful and prosperous world and that, despite the current economic uncertainty, continuing our efforts to grow international trade and cooperation is our best path to success in the future.
Executive Vice President’s Report
By barbara reilly
When reviewing 2008, the one theme running through the year for me was the abundant amount of voluntary activity undertaken on behalf of the NCBFAA membership. The spirit of American volunteerism is exceptional in this organization, and many of our members give generously of their time and talent to their local, state and national associations. As all of you know, associations are reservoirs of volunteerism, providing the infrastructure as well as opportunities for us to help build and serve our industries and communities, while making a difference in everyone’s professional life. Those who volunteer have remained the most vital part of NCBFAA for more than a century, and given the burgeoning grassroots participation of Affiliated Associations, it seems they will continue to do so.
Many of the accomplishments of these volunteers are evident in the Reports included in these pages. Throughout the year, their tireless efforts on behalf of our industry have created savings and mitigated the adverse impact of numerous regulatory initiatives. Among their numerous successes, they:
- Engaged in efforts that are helping to mitigate the impact of the Lacey Act Amendments to protect old growth forests by requiring a new paper import declaration containing precise sourcing information.
- Persuaded the FDA not to close seven of its 13 labs following NCBFAA Congressional lobbying.
- Participated in ongoing discussions and strategy sessions regarding the development and implementation of ACE.
- Engaged as an ongoing liaison between TSA and our IAC members in regards to the Certified Cargo Screening Program (CSSP).
- Initiated efforts that eviscerated a CPSC legislative provision that would have stripped customs brokers of their licenses for importations that violate CPSC rules.
- Performed ongoing work to improve efforts at meeting the challenges faced by importers, customs brokers and carriers through the NCBFAA’s Joint Ocean Carriers and Ocean Carriers Best Practices Committee.
- Expanded the NCBFAA Educational Institute programs to include the Certified Export Specialist (CES) certification.
- Increased NCBFAA membership to a 112-year all-time high.
The benefits generated by this voluntary activity are among the major reasons why membership in the NCBFAA is so vital. Without the financial support of our loyal members, we would find it hard to field these teams of activists, who, though they don’t get paid for their work still incur logistic and other expenses that have to be paid. The work of these dedicated professionals improves our industry not only for our members but also for non-members. So if you are a member reading this, thank you for your support and confidence in your Association. And if you know a non-member, I hope you have an opportunity to convince them to recognize the value that membership in this Association brings to our industry at large and how important everyone’s participation in this work is.
It is indeed a privilege for us to work with these visionary Leaders whether they are the President, Officers, Board of Directors, Committee Chairs, Committee members, or the wise Senior Counsel and Honorary Members. Along with these volunteers, and many more unnamed industry leaders who have also had a quiet leadership role in the NCBFAA throughout the years, they all join together playing a significant role in the industry’s future, as we continue to face the day to day challenges of evolving policies, procedures, economies and technologies. Our learned counsel would be hard pressed to accomplish the work that they do, without the support of you, the members, who indirectly give them the ability to focus on important industry issues and carry the NCBFAA banner from the Committee Meetings to the offices of the federal regulatory agencies and Capitol Hill.
So on behalf of your NCBFAA Team (barbara, Cindy, Drenda, Kim, Kimberly, Jeff, Maria, Olu, Regina, and Tom), thank you sincerely for your continuing support.
By Geoffrey C. Powell
NCBFAA ended 2008 approximately $80,000 ahead of our budget. The three revenue bases of our organization, the Annual Conference, Membership and the NCBFAA Educational Institute (NEI) all met their respective net revenue figures for 2008. In short, the NCBFAA’s overall financial picture is strong and bright for our continued work on behalf of our industry.
The NEI not only met its aggressive revenue expectations, but also was approximately $60,000 below its budgeted expense. The NEI made some personnel changes in 2008, but much of the credit for the success of the NEI is due to the strong commitment of the NEI Chair, Darrell Sekin, who has spent an inordinate amount of his own time to ensure the success of this Institute. The NEI courses continue to grow, not only through our local associations, but also through other organizations, and continue to educate our growing NEI membership. 2008 saw our investment increase in the Webinar Program, which has proven to facilitate our teaching and we expect these programs to continue to grow. In 2009, under our new Director, Cindy Allen, the NEI has an aggressive plan in place to educate our industry, which provides a very positive income stream for our organization.
The membership within our organization grows every month through the hard efforts of our Membership Chair, Bruce Goodwin in conjunction with our fine staff in Washington DC. The Membership grew in 2008 by approximately 10 percent, and the committee also exceeded its budget. Although consolidations of companies can have a negative impact on NCBFAA’s revenue stream, the membership committee has started off 2009 with record new membership and the 2009 strategic plan will continue to keep the NCBFAA a very strong association.
Our Annual Conference will always continue to be the best time spent learning about new issues that affect your business, seeing old friends and meeting new ones. Our association is dependent on the revenue generated from this annual event to continue its important work in representing its members. The 2008 Annual Conference, held at Walt Disney World in Orlando, Florida, was a very successful event. The net revenue figures were the best in the last few years, while Chairman Pancho Averill wanted to ensure that all the members of this organization were treated to a truly first class event and made sure that there was no expense spared. Compliments go out to our Washington staff, barbara reilly and Kim O’Beirne for their work with Chairman Averill in continuing to balance monitoring the expenses and providing a first class affair.
The Government Affairs Conference held this past year in Washington was the highest revenue-producing Government Affairs Conference the association has ever enjoyed and congratulations go out to Lee Connor, Jon Kent, our Washington representative and our Washington staff for making this such a successful event. The success is defined not only in how our congressional representatives view the importance of the NCBFAA, but is also measured in the financial return to our association to become stronger and more respected in Washington
NCBFAA has been very busy this year continuing to work on the many issues that affect us all, such as Tariff Filing, The Lacey Amendment, Importer Security Filing (10+2), the Consumer Product Safety Commission Act, and Import Safety, to name a few. In 2007 we changed the budgeting process to ensure that all the committees working on your behalf are properly funded, yet properly managed. The 2008 and 2009 budgets were created by the chairs of each standing committee, the Forwarding Committee, the Customs Committee, the Airfreight Committee, the Ocean Carrier Best Practices Committee, the Affiliated Presidents Network, the Regulatory Affairs Committee, the NVOCC Committee, to name a few. It was our belief that, by creating a more detailed budget, we can better control and manage the expenses of the NCBFAA on your behalf. I am happy to report that each committee has been closely scrutinizing all the expenses for their respective committee to ensure your investment is getting the maximum return. In addition, as the NCBFAA has developed close partnerships with other world organizations such as FIATA, IFCBA, JIG, AAEI and NACBA, we have budgeted for a number of our dedicated members to devote their time and energy to ensure that the NCBFAA remains an organization respected throughout the world.
I have to acknowledge the professional work that our accountant, Kim Murphy, has brought to this association. Accounting is a complex discipline, but as the Committee Chairs will attest, Kim has done a fantastic job of properly monitoring and allocating expenses.
2009 will be a financially challenging year for the NCBFAA. The Trade, all the government organizations and Congress rely upon the NCBFAA for our expertise in shaping and directing the important issues we will need to address in 2009 to not only better our industry, but to keep America secure.
In the last report, I included the below statement, that I think is still very appropriate for 2009:
The Budget Committee will:
- Closely scrutinize all expense accounts;
- Monitor more closely all spending against the budget and report any discrepancies;
- Continue to make suggestions on how to improve the finances to the Board through the Executive Committee;
- Work with all parties to explore ways of spending our limited funds to the best benefit of the association.
The Board of Directors should:
- Support the work of the association and its committees by actively working with the committees and encouraging firms to attend the seminars and conferences of the association;
- Actively solicit new members and sponsors for the Annual Conferences;
- Actively support and encourage a positive PR effort on behalf of the association;
- Listen carefully to financial suggestions and act in the best interest of all members.
Our Washington staff should:
- Carefully monitor expenditures, making sure that they are properly approved and coded;
- Monitor administrative expenses and make suggestions for possible savings;
- Pursue possible alternative sources such as grant money and reductions in expenses, including the use of interns.
This year will present a real challenge to all of us. Our Annual Conference Committee is working hard to make sure that this is the most successful conference ever. We face a year of Government agencies promulgating new regulations based on the laws passed last year. Furthermore, we need to make sure our industry can successfully operate under the new Homeland Security Department. The CCS program and NEI will go into high gear. The bottom line is that there are going to be increased demands on us to spend money even more wisely to represent the interests of our members. We all need to help make sure that the money is there to be spent and that it continues to be spent to benefit our members.
Washington Representative’s Report
By Jon Kent
Like so many other things in 2008, the task for NCBFAA in the realm of government can best be characterized as negotiating difficult challenges rather than inspiring great results. It was a tough year.
First and foremost on everyone’s mind was "10+2." It is a new security requirement that would rely on brokers to file 10 new data elements, in most instances 24 hours before lading on a vessel overseas. 10+2 was all-consuming for CBP and drew mixed reactions from within NCBFAA. In the rulemaking comment period, NCBFAA argued that the filing of this data amounted to "customs business" and offered many other positive suggestions for improving implementation. In the end, as we prepare to implement a concept initiated in the SAFE Ports Act, the Association witnessed many compromises by CBP but not on customs business – though it will most assuredly be brokers who perform the vast majority of the filings.
Another momentous event occurred in the passing of the 2008 Farm Bill. Hidden within its hundreds of pages are the First Sale Rule and, worst yet, revisions to the Lacey Act which require a new declaration – and such data as the genus and species of merchandise derived from wood and plant products. Efforts by the Association, which assumed a key leadership role in the private sector response to implementing the legislation, resulted in a number of successes. Required filings will indeed be electronic. A phased-in enforcement will be stretched out long enough for regulators and legislators to refine the scope of products to be included in the declaration. And, details such as liability will be the subject of on-going negotiations between Congress, regulators and a trade work group that includes NCBFAA.
Of the same ilk and perhaps a harbinger of trade issues to come was the Consumer Product Safety Improvement Act. At first, the draft legislation would have revoked customs broker licenses for violations of the Act. This, however, was removed through the intervention of NCBFAA. The legislation, as passed, did however create new liabilities and responsibilities for importers – not aimed at the importation process, but rather at the safety of the products being imported. Similar legislation is expected for FDA-regulated products in the coming year.
Also, landing with a thud were the free trade agreement initiatives promoted by the outgoing Bush Administration. Peru, Panama and Korea were left behind by the Congress, which objected to labor and environmental provisions. The future of these agreements is in doubt, as the incoming Obama Administration considers whether to renegotiate those provisions or simply jettison the concept of expanding FTAs.
Finally, very challenging for the Association in 2008 were new steps towards toughening up homeland security. In the air forwarding industry, we were faced early in the year with the pronouncement by TSA that forwarders will, of necessity, be engaged in screening prior to arrival at the airports. Air forwarders will face dramatic new costs in fielding the necessary technology, a particular concern for small- and medium-sized businesses. In the ocean environment, CBP stepped up to defend the concept of risk-based screening when it observed that the 100 percent screening pilot was not going to yield an acceptable solution. The jury is still out, as the Obama Administration takes charge of the Department of Homeland Security and will be required to revisit these positions. It is plain that, despite the tough year that lay behind us, more remains to demand our time and attention in 2009. Your Association has been at the forefront on these issues, solving or at least ameliorating the most difficult, and poised to create opportunities for you in the future.
Legislative Affairs Committee Report
Customs Committee Report
By Lee Connor
Once again the Legislative Affairs Committee's main activity was to organize the annual Government Affairs Conference in Washington. This year's conference was the most well attended GAC in a decade. This reflected a growing realization among our members that we must make our voice heard on Capitol Hill.
Supply chain security was a major focus of the conference as expected. Against the backdrop of a Congressional proposal to radically alter the importation of food products, NCBAA members presented a very detailed position paper, which was well received by most members of Congress we visited. Some of the draconian measures in the Dingell draft bill included restricting the number of ports through which food imports could enter, a massive increase in penalty risks for brokers and onerous user fees that could have placed an unfair burden on certain commodities and industries. Although this will be an ongoing battle, NCBFAA's lobbying efforts were very timely on this issue.
We also requested members of Congress to take a hard look at the proposed Global Trade Data Exchange concept. NCBFAA members presented our strong support for making the collection of trade data statistics as efficient and accurate as possible but also raised some very pertinent questions about how commercially sensitive data is collected, controlled and protected. Many of our congressional members agreed to contact the Department of Homeland Security and raise some of these same questions.
The GAC program also included a variety of speakers and panelists that brought attendees up to date on issues like the status of 10 + 2, ACE, the implementation of new TSA rules for Indirect Air Carriers and the requirements for 100 percent cargo screening. We heard from top officials at CBP, DHS, FMC, TSA as well as Congressional staffers. Much was learned and accomplished in an action packed two and a half days and, most importantly, NCBFAA further enhanced its presence and visibility on the Hill.
Many thanks go to our president, Mary Jo Muoio, Washington representative Jon Kent, Peter Powell and Ed Greenberg for their support and work to make the conference productive. I also wish to thank barb reilly and the NCBFAA staff for their tireless efforts to ensure the conference was a success. Finally, a huge thanks to all those members who contributed ideas and time serving on panels and, most importantly, those members who took the time and effort to be there, march on the Hill and make our views known to over 75 members of Congress. Great job! I look forward to seeing all of you (plus a few more) back in DC for the Government Affairs Conference in September '09. It will be well worth it for our industry, your customers and your business.
By Ken Bargteil
Prologue: The challenges, pace, and complexity of Customs Committee work all advanced in 2008. The issues confronted and solutions accomplished required the full measure of expertise that this group of volunteers brings to the table. Members of this committee represent the high level of experience and knowledge of the NCBFAA membership, and the Customs Committee draws on their expertise to address the intricacies of international trade. Their hard work accords our Association the credibility needed to serve as the voice of the industry in these matters.
Importer Security Filing: With publication of the Notice of Proposed Rulemaking regarding the Importer Security Filing and Additional Carrier Requirements ("10+2") on January 2, 2008, and the Interim Final Rule on November 25, 2008, the NCBFAA Customs Committee was confronted with a major CBP initiative in 2008 that is certain to have a wide-ranging impact on the NCBFAA and the trade. For its part, the NCBFAA Customs Committee undertook extensive deliberative and educational efforts to address this measure, which the Committee views as enhancing the Automated Targeting System (ATS) and ultimately the security of our nation. After a thorough analysis of the NPRM, the Customs Committee played the leading role in drafting detailed NCBFAA comments filed with CBP, highlighting suggestions to improve the measure’s effectiveness without compromising the ability of our members to provide for our clients’ needs.
The Committee Chairman formed an ad hoc "10+2" Subcommittee tasked with monitoring the rule’s progress as it made its way through the federal agencies, delivering a series of webinar presentations to bring members and others up to speed on its requirements, and publishing special How-To "tool kits", ordered through the NCBFAA website to facilitate implementation of the new regulations within our community. This aggressive outreach mission continues, including regular information "blasts" to our membership. The Customs Committee and its "10 + 2" Subcommittee are also working on defining ISF bonding, including single transaction bond functionality, and other operational considerations. The alacrity with which CBP embraced the Customs Committee’s offer for regular collaboration with the agency’s Office of International Trade, Office of Field Operations and the "10 + 2" Team gives evidence of the success with which our efforts over the last ten years have met to establish our Association as the preeminent trade organ for regulatory, process and, most important, practical knowledge in matters relating to the supply chain.
Broker Self Assessment: This program, anticipated to roll out in the spring of 2009, will be voluntary and sufficiently flexible to accommodate every size, business profile and market space represented in the wide ranging NCBFAA membership. Implementation will take all of these factors into account. The underlying program is expected to be analogous to the ISO program in that it would include self described and effected elements of process management, such as statement of auditing standards, bases for risk assessment, and specification of control activities. While at year-end, some misgivings remained on particular questions, we are confident that CBP will work with NCBFAA to create a program to recognize, formalize and reward customs broker efforts to achieve and maintain high levels of compliance.
The "Farm Bill": Clearly a principal focus of the Customs Committee during the second half of 2008 was the many splendid sections of the Food, Conservation and Energy Act of 2008, also know as the "Farm Bill." The manifold difficulties that this piece of legislation would present our Customs Committee was perhaps foreshadowed by the manner in which it was enacted; it was the only bill in memory to have been passed twice in Congress by override of a Presidential veto. That peculiarity resulted in delayed implementation of the "Softwood Lumber" provisions in Section 3301, a surprise effective date for the "First Sale Rule" reporting requirement in Section 15422; this requirement was advanced from the expected date of September 16 to August 20, and created uncertainty regarding the correct effective date for the Lacey Act Amendments in Section 8204. It is not overstatement to claim that the NCBFAA Customs Committee was the instrumental trade group for averting "train wrecks" for both the "First Sale" and "Lacey Act Amendments" implementation. Largely through the quick action and continuing efforts of the Customs Committee a coalition was timely formed that resolved the reporting for "First Sale" to the simplest and least burdensome usage possible, and not only delayed enforcement of the "Lacey Act Amendments" until April 1, 2009, when an automated declaration will be made available for that purpose, but also scaled back the scope of reporting to "bite-sized" parts of the HTSUS, aggregating over a period of months.
While the Northern Border Customs Broker Association took the lead for sensible and manageable implementation of the "Softwood Lumber" provisions, through its Vice-Chairperson, the Customs Committee lent support and kept itself informed as work on the project progressed.
The final principal focus of the Customs Committee in 2008 was the Consumer Product Safety Improvements Act of 2008. This sweeping legislation, a cornerstone of the larger Bush Administration initiative to address emerging risks to public health and safety that obtained widespread press attention, and heightened public concern over Import Product Safety, fell upon the shoulders of the very small and under funded Consumer Product Safety Commission like a "ton of bricks." As with many legislative mandates, the law allows little "wiggle room" to the administrative agency charged with its implementation and enforcement. In this case, the NCBFAA Customs Committee extended its reach to the federal government to engage with the CPSC as well as CBP, and was once again persuasive in our insistence on an automated solution for the certification requirements imposed by the statute. The Customs Committee’s efforts were likewise effective in scaling back the certifying parties, but most important, a new liaison, engagement and recognition were achieved.
Other Matters: While it is sometimes difficult to tie an outcome to the strategy and efforts made in connection with a particular challenge, there is little doubt that the Customs Committee’s intervention on legislation proposed by CBP to authorize the CBP Assistant Commissioner to summarily revoke a customs broker license lead to the ultimate demise in 2008 of that threat to due process. During 2008 the Customs Committee successfully pressed CBP to promulgate an FRN detailing enforcement for Section 1701 of the Implementing Recommendations of the 9/11 Commission Act of 2007 that required the universal use of container security seals, which meet meeting the International Organization for Standardization Publicly Available Specification 17712, by October 15, 2008. The important role of our Customs Committee for disseminating information to NCBFAA membership was put in play as enforcement of the Debt Collections Improvement Act (cit. P.L. 104-134 April 26, 1996) requirement for a Taxpayer Identification Number on all checks received by the government spread across CBP field offices. The Customs Committee also continued its campaign to require that CBP modernize regulatory provisions to keep pace with the practice of customs brokerage as it does so for customs’ own business process. The Committee’s long-standing efforts to update the recordkeeping regulations were stepped up in 2008.
Summary: Although many of the details and activities that might have comprised this Annual Report of the NCBFAA Customs Committee do not appear above, the value of this Committee to our Association and the larger trade community isn’t contained in agendas and reports; instead, it is manifest in the vitality, profitability and longevity of our professional practice and member firms, and results from the involvement of the many volunteers who joined the writer throughout the previous year to achieve our common goals. It is the spirit of volunteerism and through the tireless efforts of dedicated individuals that the report is intended to recall and celebrate. The message herein is that the reader can only appreciate this value by remaining attuned to the challenges ahead and becoming involved in the work that goes into finding solutions. This report should open windows onto that landscape; it is for you to step through the door and join in the mission.
Large Broker & Forwarder Subcommittee Report
By Leman G. (Chip) Bown, Jr.
As a subcommittee of the Customs Committee, the Large Broker & Forwarder Committee (LB&F) focuses on the impact of Customs and Border Protection (CBP), Federal Maritime Commission (FMC) and other government agency directives, actions, initiatives and legislation on large corporations. As such, LB&F is charged with the identification of issues and their elevation to the Customs Committee.
In 2008, the LB&F Sub-Committee convened, via conference call and in person. The main topics were the Importer Security Filing (10+2); the Interagency Working Group report to the President, "Action Plan for Import Safety;" 1641 Amendments; the Food, Conservation and Energy Act of 2008 (affecting softwood lumber, the first sale rule, and the Lacey Act; ACE ESAR II and delays with the ACE system, the Consumer Product Safety Improvement Act of 2008; and Broker Self Assessment.
Issues Identified for Furtherance by the Customs Committee
LB&F escalated specific concerns and issues with the Lacey Act and ACE PMS to the Customs Committee.
A primary focus was development of a Broker Self Assessment program in conjunction with CBP. A committee comprised of various volunteers from across NCBFAA was formed. The proposed program was developed through a series of committee conference calls. Face-to-face meetings with committee representatives and CBP officials were conducted to formalize proposals.
As of this writing (February 2009) the program has been agreed to, in principle, by CBP, and is being presented to Assistant Commissioner Dan Baldwin. The next step is expected to be a Federal Register announcement of the program, and solicitation of participants. This program should be launched in mid-2009.
Ad Hoc Security Committee Report
By William Evans
The Security Committee continues to participate in the Center for Disease Controls, Quarantine and Border Health Services, Training and Communications Needs Workgroup. CDC personnel, as well as their consultant RTI International, visited Committee-recommended NCBFAA members located on the Northern Border, in Baltimore and in Norfolk, to assess on site the needs of our industry as they relate to training, education, and communications in areas of public health. In addition to NCBFAA, the workgroup consists of CBP, Fish and Wildlife Service, TSA, Department of Agriculture, Airlines Association, In-Flight Medical Services, IATA and the Cruise Lines Association.
This group is scheduled to hold its final meeting at the end of March 2009 and CDC will publish its report in June 2009, which we will post on the NCBFAA Website.
For its part, the Security Committee convened four meetings in 2008.
Carrier Best Practices Committee Report
By John Hyatt and Daniel Meylor
During 2008 the Carrier Best Practices Committee of the NCBFAA continued to actively engage the carriers with issues that affect our import/export clients and us in the effort to service those clients. The Committee has finally developed a mission statement, which is herewith reproduced:
The Joint Carriers and NCBFAA [National Customs Brokers & Forwarders Association of America] Carrier Best Practices Committee was formed to help carriers, Customs brokers, forwarders and NVOCCs understand how their roles and practices affect the service to their mutual customers. The goal of the committee is to establish non-binding best practices for the members of the ocean transportation industry in order to facilitate efficient operations and help international trade flourish.
In the past the Committee had developed a Door Delivery Position Paper that could be used by members at their discretion. The Committee has also developed some generally agreed procedures on the handling of overweight containers. In the past year with the flurry of new Federal mandates the Committee has worked with participating carriers to attempt to make the new realities as painless as possible. Although it was agreed that because there was a significant time delay between issuance of an overseas booking number and the actual B/L and due to the narrow time frame with filing ISFs under the 10+2 mandate, having the booking number stand for the eventual B/L seemed to solve the problem.
But unfortunately, the practice is not uniform between all carriers. Issues such as "ghost bookings" which never materialize and hamper the outward dispatch of real cargoes was addressed and solutions were proposed, such as transference of booking rights. New mandates under electronic AES filings and issues with exempt cargoes not requiring an ITN were also addressed. The "Clean Truck" program at the ports of Los Angles/Long Beach which finally came into effect on February 18, 2009 (after several legal challenges,) will be a front burner issue for the new year as only cargo interests or their legal representatives can "claim" containers discharged even on THRU B/Ls to inland points, when such containers would be normally exempt because of a direct on dock rail transfer.
This and many other issues on the horizon such as rationalization of carrier services during the economic downturn should make 2009 and interesting year for us all.
Freight Forwarding/NVOCC Report
By William App, Jr., and Joseph Meunier
The past year has been extremely busy, as the Forwarding and NVOCC Committees have both dealt with a number of issues that arose from governmental initiatives and separately made strides in streamlining, modernizing and/or easing other regulatory burdens that threaten to unduly burden the numbers of the Association.
One significant effort that the Committees undertook was to file another petition with the Federal Maritime Commission seeking to eliminate the need for NVOCCs to publish their rate tariffs. In filing that petition, the Association argued that the industry had changed, that tariffs no longer served any valid public purpose, that the FMC had ample authority to grant the exemption, and that there was no valid reason for NVOCCs to continue to bear the substantial costs associated with tariff publication.
As part of its consensus building process, the Association met with a number of other organizations, including the National Industrial Transportation League, and government agencies, such as the U.S. Department of Transportation, in order to obtain their support. In addition, the Association met with representatives of the steamship lines in the hopes that they would, on this occasion, not oppose the NCBFAA’s petition. Although the FMC has not yet acted on the petition, the NCBFAA’s efforts to build a consensus were extremely successful. Unlike the situation several years ago, on this occasion NVOCCs spoke as a unified industry and every commenting NVOCC supported the initiative. That was also the case as to all the various other organizations and governmental agencies that submitted their own comments. Indeed, the only parties that opposed the petition were three tariff-publishing companies, each of whom was obviously concerned about the loss of revenues. Consequently, the Association hopes that the FMC will agree and grant the relief.
We reported, last year, that the state of Texas had imposed a gross receipt tax on companies doing business in that state, whether or not they had offices there. As the Texas tax specifically declined to permit forwarders, NVOCCs and brokers from deducting so-called pass-through revenues (i.e., monies advanced to Customs for duties or to carriers for freight charges), the tax would have a significantly adverse effect on many or most intermediaries and brokers doing business in that state. While the Texas authorities have not yet changed their position, the Committees did develop a position and mechanism by which affected parties would likely be able to minimize the amount of tax that would be applicable. And, of course, there is still hope that the Texas authorities will reverse their position on this issue.
The Committees spent a great deal of time addressing the issues raised by the efforts of the Ports of Long Beach and Los Angeles to enact new container fees that are nominally intended to reduce pollution in the port areas – the so-called "Green Trucks" initiative. As was the case last year, the Committee members met with the FMC Commissioners and other agency officials to explain why the agency should intervene to challenge these actions, and the FMC has taken virtually unprecedented steps to challenge the action of the courts both at the FMC (where the ports sought antitrust immunity for the purpose of collectively establishing such charges) and in the courts. As of the date this report went to press, those litigation efforts were continuing.
The Committees also continue to meet with Congressman Manzullo concerning a possible legislative effort relating to the submission of shipper export data through the Automated Export System (AES). As we reported last year, Congressman Manzullo proposed that all AES filers be licensed and that the government take over the responsibility to ensure that export restrictions that might exist at any time be built directly into the AES system. We have continued to work with Congressman Manzullo and other congressional leaders, as well as the various involved governmental agencies, in the hopes of both shaping the legislation in the most favorable manner possible and to get it enacted.
The NVOCC Committee continued to work closely with the Customs Committee in responding to U.S. Customs and Border Protection’s 10+2 initiative. We helped draft the NCBFAA’s response to CBP’s proposed rules and have continued to work, now that the final rules are out, to clarify questions and make the procedures workable.
Members of the Committees have continued to work with the Carrier Best Practices Committee, which involves members of both the Association and the steamship line and rail industries, with the goal of eliminating as many operational problems that arise from regulatory initiatives and carrier business practices as possible. Among the issues discussed during the past year have been implementation of mandatory AES, ACE Ocean E-Manifest, Overweight Container requirements, 10+2 ISF requiring B/L number at time of booking, inconsistent accessorial fees, CAAP (Clean Air Action Plan), reduction of booking lead times, Long Beach/CA ports’ Green Truck initiatives and related California legislation, earlier arrival notices, bill of lading amendments and more flexibility on detention/demurrage/per diem issues.. These efforts continue to achieve positive results both in increasing efficiency and reducing the incidence of inappropriate and unnecessary claims that the carriers have previously made against NVOCCs and brokers for issues such as demurrage and detention charges.
In addition, the NVOCC Committee has been keeping the membership informed of its efforts both through the routine publications that come out at least weekly as well as through the use of webinars. In that regard, that Committee held webinars in August and October that related to the various issues on its agenda, both of which included a very productive Q&A session between the members and the moderators.
The Forwarding Committee has continued to monitor the various U.S. and foreign government investigations of airlines and forwarders with respect to antitrust issues that arise out of the movement of ocean and air cargo. As part of this, the Committee has provided the membership with guidance concerning the possible participation of air forwarders in the settlement of the civil class action suit that is pending against Lufthansa. The Committee expects to be in a position to provide similar advice over the coming year as other airlines enter into settlements of the numerous class action suits that are still pending.
The Forwarding Committee worked closely with the NCBFAA Educational Institute to develop and nurture an extensive Certified Export Specialist certification program. The online course, which began in October of 2008, is geared towards freight forwarders and NVOCCs with complete coverage of required knowledge in these fields. The CES program has been praised as one of the most comprehensive programs available in our industry. The course class will complete this year and testing for those qualified to grandfather as a CES will begin in April 2009. For more information, please see the NEI report.
inally, the Committees also had the opportunity to meet with President Obama’s transition team in late November 2008 in order to discuss the Association’s views about the future of maritime regulation. Among the points that we made were the following:
- The FMC’s internal policy guidelines should be amended so as to provide advice or policy changes through rulemaking or other administrative proceedings, rather than through ad hoc enforcement actions;
- The FMC’s Alternative Dispute Resolution Office should be expanded and given additional authority to resolve disputes;
- The monetary penalty for violations in which there have been no significant adverse consequences should be substantially reduced;
- The FMC itself should either administratively remove burdensome and inefficient regulatory requirements (such as NVOCC tariff publication) or seek appropriate statutory authority from Congress as may be necessary;
- The basis on which any antitrust immunity can be given to the steamship lines and ports should be substantially limited.
The Committees look forward to continuing their work during 2009 and invite all members either to directly participate in their activities or to take advantage of the opportunity to raise any issues that appear to be of general industry concern.
Air Freight Subcommittee Report
By Scott Case
The Air Freight Subcommittee is grateful for the support that we have received from the Executive Committee, the Board of Directors and our Transportation and Legal Counsels over the course of this past year. As of this writing and in advance of the 2009 Annual Conference, the global economy has contracted significantly.
While we feel the issues we report are repetitive in nature, the ongoing evolution of regulation in the arena of cargo security is what consumes our time, energy and resources.
In 2009, Indirect Air Carriers (IACs) have had to deploy new cargo security programs. The changes to these programs are the first in a number of years and sought to improve on the patchwork of directives, which had been put into place. This new program seeks to work in conjunction with the other parties who are also regulated by TSA through their programs and harmonize the intersection points.
Under a law passed by Congress, 50 percent of cargo on board passenger aircraft needed to be screened at a level commensurate with baggage as of February 1, 2009. The level jumps to fully 100 percent in August 2010. To meet this threshold, TSA has had to engage the private sector to participate and shoulder a portion of the screening burden from the air carriers. Thus was born the Certified Cargo Screening Program (CCSP).
TSA’s thought is that engaging with the largest IACs who tender ULD cargo to the airlines, and having cargo screened prior to buildup at their warehouse, would reduce the workload for the airlines when the target dates arrived. This cargo must also be screened at the piece level, meaning that under most circumstances, cargo tendered, skidded or banded would need to be unpacked and screened at the lowest possible level.
A pilot program was announced which provided funding to large companies to underwrite a portion of the expenses to acquire and test this technology in their companies. Your association fought hard with TSA and engaged several government resources including the Small Business Administration to seek participation for small and medium sized companies. While we were unable to make headway in adding funds to the program for additional participants, we made our point and TSA is considering the size and available resources of most IACs into consideration as they move forward.
Private companies or groups of companies who are not IACs now have the opportunity to become a Certified Cargo Screening Facility (CCSF). Think of this as a "car-wash" approach wherein unscreened cargo comes in one door and properly screened cargo goes out the other. While simple in theory, this approach requires a significant investment of time and capital to operate. The technology list of eligible equipment only contains "recommended" items but nothing is mandated. This elevates the risk that if a threat vector changes and renders the technology obsolete, there is another costly round of new technology acquisition and deployment that must take place.
The cost for acquisition also must account for maintenance (think of service contracts on printers, copiers, etc.) as well as consumables. Finally, there must be properly trained staff to operate the machines and pass the necessary security screening thresholds.
There are external groups who believe that this should be the responsibility of the government and are seeking legislation to make the government responsible for cargo screening as they are for passenger baggage. Unlike passenger baggage, cargo comes in far more shapes, sizes, types and densities than luggage and no single technology exists that works for everything. Screening boxes of consumer electronics is different than screening boxes of live animals or perishable farm produce or drums of chemicals. It is this misunderstanding of the "magic box" concept that has proven difficult for the industry to articulate and convey to the traveling public, especially in light of strong statements made by some Members of Congress.
And while the government could not have foreseen it, the biggest factor is that this is adding cost to the supply chain at a time when rates and volumes are, for the moment, in decline. There are those who argue that security should come at any cost. However, at some point, does the amount of cost added to a product render it no longer suitable for transport by air? Does it move to another modality, such as truck, or do people look at integrators as a way to avoid the need for security because it’s not as regulated? Much as Customs balances the twin pillars of security and trade so must their sister agency TSA evaluate the realities as well.
Under the new Administration everyone is waiting to see what signals are sent about how security should look and how much funding should be available to the private sector for it. Certainly we hope to find some way to assist our members in acquiring the technology necessary to compete against larger enterprises and maintain a secure supply chain. We also hope for further collaboration and cooperation between CBP and TSA. While both reside under the umbrella of DHS, there have been some glaring examples of stove piping that are counterproductive to both agencies’ overall missions.
Looking forward, your Air Freight Subcommittee looks to continue our engagement with TSA and through the Secure Alliance for Forwarding Endeavors (SAFE) partnership with the Airforwarders Association. We are committed to insuring that the requirements of cargo security do not cause undue hardship and create an unequal playing field among service providers. At all times we welcome the feedback, membership and participation of our members and if someone feels that they have something to contribute to the committee and would like to participate on an ongoing basis, please contact NCBFAA staff with your interest and we will reach out to you immediately.
Membership Committee Report
By Bruce Goodwin
Throughout 2008, the NCBFAA was constantly working towards increasing our membership and because of the tireless effort of our executive committee, board of directors, membership and Washington DC office, we have experienced the best year in the Association’s history. Our numbers jumped nearly 13 percent from 757 this time in 2007/08 to 854, to-date, for 2008/09. We are always striving to increase membership and keep retention of existing members at a maximum.
2009 has been a year that we haven’t seen since the "MOD Act" years. We have had the First Sale Rule, the Lacey Act, 10 + 2 and new AES regulations. Our lobbying efforts have persuaded FDA not to consolidate by closing labs nationally, are involved in dialog regarding the Customs Reauthorization Bill, influenced discussions regarding the need and form of any amendment to 1641 related to customs broker license suspension or revocation and also worked to secure renewal of GSP. Our Executive committee and Association committees spend numerous volunteer hours away from their businesses to testify before various congressional committees/sub committees, CBP and other government agencies. We have created a bond between TSA and IAC members so that we are invited to "sit at the table" on matters of cargo security. We are also still working hard on seeking exemptions for NVOCCs from publishing tariffs. Through all of this, we have created and expanded the NEI with the CCS & CES programs. It is Membership and membership dollars that fuel this NCBFAA train.
In the upcoming year, as it is every year, it is our goal to surpass last year’s membership increase. We intend to show companies that are not currently members, why they need to join and that, in this difficult economic climate, the value received from membership far outweighs the cost. The way we do business is forever changing and it is vital that members of the international logistics community belong to an Association that is going to work on their behalf.
The NCBFAA appreciates all of your efforts, all of your input and all of your comments. As we always say:
"Stay Involved If You Already Are And
Get Involved If You're Not Yet Involved"
NCBFAA Educational Institute Report
By Darrell Sekin
2008 was a challenging but fruitful year for the NCBFAA Educational Institute (NEI). We operated for vital part of the year without an NEI Director, but are happy to report that in December of 2008 Ms. Cindy Allen, a licensed customs broker and one of our own active members has joined us as the new NEI Director. Despite the setbacks incurred over the year, we were able to accomplish several key deliverables through the hard work of the NEI committee volunteers.
The NEI was able in 2008 to launch the first Certified Export Specialist (CES) course. The CES course is an on-line course designed for those who have been in the export field for over one year. We anticipate that this will become a valuable education tool for the association for years to come, and fully expect the course to become the premier online export educational program for the entire trade community. We currently have 120 students enrolled in the CES course.
Another significant accomplishment was the successful transition of our current Certified Customs Specialist (CCS) course to an on-line course offering. Our valuable partners in the Canadian Society of Customs Brokers (CSCB) assisted us with the transition on-line onto their existing CCS platform. This enables the NEI to more easily keep our content fresh and to produce a better product with up to date technology for our students. The first CCS on-line course kicked off on January 5, 2009. We currently have a little over 200 students enrolled in the CCS course.
We have had great success in 2008 with our webinars and case studies. We were very fortunate to have dedicated volunteers Art Litman and Bob Perkins prepare the case studies and quiz material on behalf of the NEI, a role that they have agreed to continue in 2009. Many satisfactory comments on the case studies were received and we look forward to continued success with this program.
With Cindy as its director, the NEI is now poised to be a significant provider of education for the import and export communities and expected to contribute significantly to the NCBFAA bottom line.
With two premier online courses established, the NEI has focused on the establishment of valuable webinars in the Third Thursday program focused on import topics, our soon to be announced First Thursday program to focus on export issues, and the continued delivery of hot topic webinars as needed based on regulatory issues. Due to the importance of our counsel, especially in the times of swift regulatory challenges, and the value of access to these important resources for our members, the NEI is announcing at the annual conference a quarterly member’s only webinar – the NCBFAA Attorney Advantage. Featuring Alan Klestadt, Ed Greenberg, and Jon Kent this webinar will allow the membership to be updated on the important work that these dedicated resources perform for the association on a daily basis.
A key component of the NEI is the continued outreach to our membership and beyond regarding the importance of training in this uncertain economy. In 2009 the NEI will be reaching out to other associations to partner in educational efforts. These partnerships will allow the NCBFA to highlight the importance of our member’s services in the supply chain and generate additional revenue for the NEI to support continued efforts.
The NEI and its staff are continually thankful for the support and contributions of the NEI committee and the dedicated volunteers who have ensured its success through multiple transitions.
Drawback Committee Report
By Michael V. Cerny
During 2008, the Drawback Committee continued to work with CBP and industry leaders through the Trade Support Network to revise drawback statutes and regulations in an effort to streamline drawback procedures under the new Automated Commercial Environment. Over the past six years, members of the Drawback Committee have been actively involved with the Customs Trade Support Network. The TSN Drawback Subcommittee developed a consensus drawback reform statute raising drawback claims to the entry summary line item level similar to the way that petroleum drawback is done under 19 USC 1313(p). Under the proposed law, products and components of the same 8-digit HTS code would now be considered identical. The proposed law would also greatly promote automation and enhance the ability of drawback to take advantage of developments available in ACE.
During 2008, members of the committee worked with Jon Kent and staff at the House Ways & Means Committee addressing the language of an existing bill in the House, as well as consulting with Senate Finance on a similar, proposed measure in the Senate. Unfortunately, Washington’s focus on the financial crisis resulted in little movement on most trade legislation, including the drawback bill. The committee is encouraged by the continued enthusiasm for this legislation in both Senate Finance and House Ways & Means, as well as with Customs. We expect a renewed effort to pass this legislation. The committee will continue to work with Mr. Kent, Customs and congressional staff towards passage of this legislation in the new Congress.
The goal of the committee will be to continue our leadership on drawback issues, to keep our members informed of proposed changes, and to solicit comments from our members regarding important developments. The Drawback Committee members and its Chairman remain available to discuss these issues, or any other issue related to drawback, with interested members of NCBFAA. All members of NCBFAA with interest in drawback are encouraged to attend our meetings and conference calls.