2003 NCBFAA Annual Report

(Part II)

NVOCC Committee's Report
by Maurine Cecil

       Since inception of the committee, we have worked hard on the execution of the "Special Bill" procedures that finally took place on 1/10/04. While there was a bit of confusion following the implementation, we feel the long-term effects will improve flow of cargo as it was prior to the 24-hour rule. We did our best to protect the interests of the NVOCC’s that have spent quite a bit of money, time and effort on AMS while working to improve movement of freight. 
       We have found that this is the opportunity for the NCBFAA NVOCC committee to really establish ourselves. We would like to use this opportunity to show non-members the value of belonging to this prestigious group.
Our committee has also discussed the problem of co-loaders refusing cargo overseas unless the master NVO can transmit the data to AMS. This would be against the rules set forth for an NVOCC to be a part of AMS. Unfortunately, automated NVOs that run into this type of problem have no mechanism in place to resolve the issue, so the committee intends to address this with CBP.
       A US-China maritime agreement was put into effect, and one aspect of this was to grant special permission for US NVOCCs to avoid having to place approximately $100,000 as security deposits in Chinese banks. The NCBFAA was instrumental to obtaining this relief, having filed petitions with both the FMC and the Chinese governments urging that they adopt a system of reciprocity to avoid unduly burdening US NVOCCS. More recently, the NCBFAA filed a petition with the FMC requesting that it implement the US-China agreement by establishing a regulation permitting US NVOCCs to have bond riders that would satisfy the PRC requirement. The FMC has now just initiated a rulemaking that would accomplish that result.
       We have worked quite a bit on the tariff filing exemption issue and have recently filed a joint statement of common principles to the FMC (along with The National Industrial Transportation League and The Transportation Intermediaries Association. In addition, we filed the NCBFAA’s reply comments to the opposition to the tariff exemption that had been submitted by the carriers. There will be a panel on this at the upcoming conference.

NCBFAA Educational Institute Report
by Marie Armelagos & Jan Fields

       In April of 2003, the NCBFAA Educational Institute (NEI) began offering its Third Thursday Audio Seminar Series, a new educational series combining teleconferencing with a computer based presentation to provide courses to help NCBFAA members and others improve their understanding of international trade topics and gain knowledge of import/export regulations. The series covered topics such as Incoterms, Customs Notices, C-TPAT, and the 24-Hour Rule. The seminars have been widely accepted and taken advantage of by over 750 participants thus far. Discounted rates are offered to members of the Association. In 2004, we plan to offer the program quarterly.
       To encourage professionalism in the transportation logistics services industry, the NEI will sponsor a new Professional Membership for individuals. Until now, the NCBFAA had limited membership to corporations, partnerships, and sole owner companies; however, individual Professional Memberships will now be available to importers and exporters. Professional members will receive valuable savings on all NEI educational programs and seminars, which include distance learning, publications, on-site training classes, and certification courses.
       Another addition to the NEI curriculum is the CHB Test Prep "Boot Camp" Course designed to help prepare for and pass the U.S. Customs Broker licensing examination by covering how and what to study. The course allows for questions, guidance and ample examples of actual test questions, as well as real examples for classifying merchandise. An alternative to this four-day course is a Customs Brokers Exam Correspondence Course, also offered by the NEI.
       We are upgrading the Certified Ocean Forwarder (COF) study courses and exam to encourage additional participation. The technical assessments are designed to provide individuals with a systematic training program toward the ultimate goal of becoming a full fledged Ocean Transportation Intermediary. 
NEI has become quite active in educating government agencies associated with our industry. We have hosted Seminars for Federal Maritime Commission, Census and CBP on the functions of an Ocean Transportation Intermediary. We have also held audio conferences for our association membership to host their local Customs teams desiring education on the daily activities of a typical broker. The work of the NEI is showcased as part of our regular participation as an exhibitor in the Department of Commerce’s U.S. Export Pavilion, which it displays at trade shows throughout the United States.

Drawback Committee Report
by Frank McCarthy & Michael V. Cerney

       During 2003, the Drawback Committee addressed two very significant issues. The first was the attempt by the United States Trade Representative to include drawback and duty deferral limitations in various bilateral and multilateral free trade agreements that were under consideration. The second was the ongoing efforts to incorporate drawback into the framework of the new Automated Commercial Environment. 
       At the close of 2002, the USTR included a new type of drawback limitation in the U.S.-Chile Free Trade Agreement. Those involved in drawback are all too familiar with the devastating effects of the drawback limitations in the NAFTA Agreement. The new limitation in the US-Chile agreement completely phased out manufacturing drawback by 2015 for exports to Chile. The implementing legislation originally proposed by Treasury was even more restrictive. However, members of the committee along with interested industry participants worked with House and Senate staff to ensure that the language in the legislation was true to the agreement. Nevertheless, the US-Chile FTA did restrict drawback and USTR staff made it clear that such limitations would be included in future FTAs being negotiated. 
       The limitations put into the U.S.-Chile FTA acted as a "wake-up call" for many in industry using duty drawback. In early 2003, committee members were able to garner support from a large cross-section of companies and industry groups to challenge the USTR's position on duty drawback in FTAs. This coalition came at the right time as the USTR was embarking on negotiations for free trade agreements with, among others, Australia, Morocco, the CAFTA countries, and ultimately the countries involved in the Free Trade Area of the Americas. Committee members and other members of the coalition met numerous times with representatives from the USTR, Commerce, Treasury and staff from the House Ways and Means Committee as well as the Senate Finance Committee. This effort ultimately resulted in the USTR issuing a Federal Register Notice seeking comments from the public on drawback limitations in FTAs. The response to that notice was resoundingly in favor of keeping drawback in FTAs. 
       Committee members attended the Government Affairs Conference and were successful in getting meetings with congressional staff, members of the House and committee staff. We all felt that our issue was well received on The Hill and resulted on more pressure on the USTR to change its position. 
       Late in 2003 our efforts were rewarded with the announcement that the CAFTA FTA would not include drawback limitations. We also understand that the Australia FTA does not include drawback limitations. We are continuing to monitor the upcoming FTA negotiations but are hopeful that this signals a change in the USTR's position on drawback.
       The other issue addressed by the committee in 2003 was the incorporation of drawback into ACE. Certain members of the committee are also members of the TSN and the TSN Drawback Subcommittee. The TSN Drawback Subcommittee has been exploring with CBP the possibility of a major overhaul of the drawback law to make it more compatible with ACE. The changes discussed include eliminating some of the complexity of the current drawback law by basing drawback on HTS number. That would allow drawback to be tracked more easily in the ACE system. It would also make drawback more accessible for exporters who are often hampered by the regulatory limitations associated with the drawback law. Members of the committee have spent significant time negotiating with CBP on these possible changes and communicating the possible changes with others interested in drawback. The committee members anticipate this effort continuing over the next two years until a new drawback law is drafted, passed and regulations are issued.

Membership Committee's Report
by William App, Jr.

       Throughout 2003, the NCBFAA spent a significant amount of time attending to membership growth and those efforts paid off handsomely as is evident from the membership statistic chart which shows that total membership reached a four-year high of 726 members. This includes 616 regular Members, 83 Affiliate Members and 27 Associate Members. Membership is the key to NCBFAA success for a number of reasons.
       More members ensure a greater pool of talented individuals to draw from for our Committees and Boards. In addition, the more perspectives our divergent members bring to our policy discussions the more likely are we to get it right.
       More members give us a stronger hand in negotiations with federal and state regulators as well as Congress. Strength in numbers should never be underestimated especially in the political world where much of the Associations work is done.
       More members mean more financial resources for the Association to use as it represents the interests of the transportation logistics industry. So to our new members welcome to the NCBFAA, to our old members thank you for your loyalty and support, and to non-members who may be reading this, think about joining the one Association that best represents your interests.
       Where are these new faces coming from? A number of them belonged to one of our Affiliate Associations and when they learned about the great work NCBFAA does on their behalf decided to support both their local and national group. Some saw the work we did on forwarder and customs broker issues and decided to become involved in those efforts by joining the NBCFAA. Several resulted from NBCFAA staff contacts with newly registered forwarders and licensed customs brokers.
       In the coming year, we fully intend to follow up on last year’s successes with a number of membership initiatives. As noted elsewhere in this Annual Report, the NCBFAA is working closely with the federal agencies in the Department of Commerce to support their Trade Pavilion which provides the Association with an excellent opportunity to interact with the import/export community and to demonstrate for them how effectively the NCBFAA works on their behalf. 
       We will continue working closely with the NCBFAA Shippers Association (NCBFAASA), marketing it to prospects as one of the many benefits of membership. The NCBFAASA has helped to mitigate Ocean Shipping Reform Act's adverse competitive effect on "ocean transportation intermediaries." However, to avail themselves of the benefits of NCBFAASA membership, forwarders and NVO's "ocean transportation intermediaries" must first join the NCBFAA to be eligible for the benefits of the NCBFAASA.
       We truly believe that it is vital that as many members of the international trade community belong to and participate in the work of the NCBFAA. Numbers can and do make a difference in the battles we wage on behalf of our industry. And the more voices we can raise in support of our issues the more likely are we to be victorious at the end of the debate.
       In closing, let me say that I appreciate the input and comments from the membership. I always appreciate members who take the time to constructively comment. I urge you to stay involved if you are, get involved if you are not and grab a non-member colleague to consider joining, too!

Legislative Committee’s Report
by James Mooring

       First, let me say that, on this my last term as Committee chairman, I greatly appreciate the support that I have received over the years. The members of NCBFAA are a powerful legislative force and you are to be congratulated for the strength of your collective voice. 
       The Legislative Advocacy Committee’s most important responsibility is to sponsor NCBFAA’s Annual Government Affairs Conference (the "GAC"). More than any other program, the GAC grabs the attention of Capitol Hill and convinces lawmakers about the power of our industry.
       The 2003 program focused on the newly dominant role that security is playing in international trade; but also included discussion about the commercial issues that are at the core of our business. Customs and Border Protection (CBP) Commissioner Rob Bonner headlined a luncheon that also featured Federal Maritime Commission (FMC) Chairman Steve Blust. Speaking too was Department of Homeland Security (DHS) Assistant Secretary for Border and Transportation Security Policy and Planning Stewart Verdery. Later, his key assistant, John McGowan, reinforced Verdery’s message on the importance of commercial trade. Other speakers represented Census, CBP on ACE development, and NVOCCs on the FMC tariff filing petitions.
       A major attraction to the Washington GAC is intensive sessions with the FMC and Customs. This year was no exception and, overall, the substance of these sessions drew accolades from those attending. Finally, of course, members also trekked to Capitol Hill where they lobbied for broker bankruptcy reform and NCBFAA’s FMC petition. Capping it off was the Capitol Hill reception for Members of Congress.
       Year after year, the GAC provides association members with their best insights into emerging developments within the government. Plus, it provides us with the opportunity to impact on policy ¾ by lobbying Congress and discussing our issues with the regulatory agencies. It is your best bargain for preserving the profitability of your business.
       Don’t miss the next GAC on September 19-21, 2004 in Washington, D.C.

Political Action Committee Report
by Paul Wegener

       2003 was a quiet year for NCBFAA’s PAC — it was an off-year and there were no elections, we made only 9 contributions, and donations amounted to just over $6,000.00. We simply must do better in 2004!
       The PAC is a crucial element of our industry’s government affairs program. Its function is basic: keep our friends and allies in Congress — re-elect those whose support of broker-forwarder-NVO issues makes NCBFAA the most powerful organization of its kind. And, indeed we have friends.
       In 2003, the PAC sponsored a breakfast fundraiser for Representative Ernest Istook of Oklahoma. He is the Congressman who chaired the Appropriations Subcommittee and led the fight for ACE modernization. He also worked with NCBFAA to maintain Congressional jurisdictions over Customs.
       Another supporter who received PAC endorsement was Senator Lindsey Graham of South Carolina. He sponsors our bankruptcy bill and worked to win bipartisan support through the involvement of Senator Dick Durbin (D-IL) and Rep. Henry Brown (R-SC), our primary sponsor in the House. This bill would protect brokers who advance duties and fees for clients who end up in bankruptcy. NCBFAA must line up with Senator Graham politically and ensure his re-election if we are to win this fight.
       NCBFAA will only be as strong on Capitol Hill as its government relations program. Our PAC is key to that and can only succeed if it has the support of our membership. Now, there is an election underway for 100 percent of the House and a third of the Senate. Our industry must play a role if we are to maintain our position of importance in the Congress.

International Committee Report
by Arthur Litman

       We brokers and forwarders in the United States are not the only ones to be affected by the refocus of governmental agencies onto security. In response to such major U.S. initiatives as Container Security Initiative (CSI), 24-Hour Rule/Advanced Cargo Information (ACI) and C-TPAT, many governments around the world have taken up the banner of security and, either on their own or through the World Customs Organization, begun the development of their own programs.
       At the WCO the Task Force on Security and Facilitation has been very active. It is made up of industry representatives and representatives from the various Customs organizations. The goal is to develop one global set of security recommendations that balance enforcement and trade interests. The NCBFAA has had input into this process as members of the International Federation of Customs Brokers Associations (IFCBA). Kiko Zuniga and Art Litman traveled to Brussels early last year to participate in some of the deliberations as IFCBA representatives.
       In April the fourth and final meeting of Task Force will take place. Its recommendations will come before the full body in June. The focus has been the exchange of data for security purposes between the Customs services of the WCO member countries. The draft plan uses many of the concepts developed here: C -TPAT, ACI, and CSI. For example, the inclusion of Known Shipper is familiar to us as a part of FAST. New concepts are also being developed, such as the Unique Consignment Reference. We will be present for this last meeting.
       The WCO is also expected to put forward its convention on the data model this June. The IFCBA was active when the G-7 countries were developing these uniform data and data definitions. The recommendations are now set for Customs and include support for the concept of the authorized trader and service provider. Future work will focus on requirements for other governmental departments.
       There has also been some discussion at the WCO level of a "single window." This is similar to our ITDS.
       The IFCBA was quite active in a number of areas in the last year. In addition to WCO participation, the organization is focused on bringing many of the diverse regional interests in customs brokerage together for discussion of issues affecting the industry globally. There is a great deal of information flowing from the groups:
       IFCBA members in the 10 countries that will be joining the EU this year will face a loss of business. Our director from Hungary pointed out that 80% of the business was with the EU and will no longer exist. It is estimated that as many as 10,000 employees of these firms will be out of jobs come May 1.
Canada, our largest trading partner, is developing its new Department of Public Safety and Emergency Preparedness. This is not a duplication of our Department of Homeland Security, but a slightly different action that is expected to separate the border policing functions from the more traditional revenue ones. Canada’s Partners in Protection is a similar program to C-TPAT. Not to leave out the more traditional aspects of Customs administration, the Canadian AMPS penalty scheme actually, in some respects, outdoes ours.
        Australia has seen some difficult times recently. Its new Customs automation system, CMR, is now at $220 million and counting – way beyond the $35M projection. Their parliament is looking closely at this now. The good news, Australia projects that there will be a shortage of qualified customs brokers by 2007!
Every two years the IFCBA has a World Conference. We are fortunate this year that the Conference will be held close-by in Mexico. The 2004 World Conference will be in Xcaret at the Grand Xcaret by Occidental – just one hour from Cancun Airport. The Conference will begin Friday, May 21 and go for four days. Every member of the NCBFAA is entitled to attend at the member rates. The opportunity for international networking and to share information and experiences with others is unique – not to mention the warm, beautiful environment. For further information, see the IFCBA web site at www.ifcba.org or give Art Litman a call at (310) 725-4750.


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