President’s Report
By Jeffrey Coppersmith

       The second year as President of NCBFAA, turned out to be even more exciting than my first. Many challenges remained, however with a year of experience under my belt I was able to act on, rather than react to, the changes occurring with international trade. During my term, I was amazed by the number of members who tirelessly give their time and energy to ensure our industry and our way of conducting business are protected. We all must continue to be vigilant, involved and vocal. Changes are inevitable, but our experienced members know what works for them and what doesn’t. As your President, I strove to protect you when I could from the increasing demands the government agencies want to burden you with.
        When I began my term, I had a number of goals, and a vision of what the NCBFAA would be like at the end of my two years. While I did not achieve all of my goals, most were accomplished, and I feel confident that we are heading in the right direction.
        Recognition: The NCBFAA is recognized as the voice for the broker and forwarder industry, and that recognition has grown significantly. When CBP wanted to work on the rewrite of the CFR19 111 regulations, they turned to us. A Subcommittee was put together under the guidance of Ken Bargteil, and with CBP they worked out the road map to how we are going to be regulated. When the FDA was working on the future of their systems, Roger Clarke and his RAC Committee worked hand in hand with Dominic Veneziano to try to achieve the compromise that would best secure the FDA and the trade. Chairman William App, with his Transportation Committee, made progress with the FMC, which resulted in eliminating tariff filing. Unfortunately, someone at the FMC tossed in a curve ball, and now only US based NVOCC’s are not required to file. Our Transportation Counsel Edward Greenberg assures me that should be corrected soon. Let’s hope so! The government is instituting ACAS, Air Carrier Advanced Screening, and this will affect all inbound freight. Donna Mullins, along with other members, is involved with Mr. Kent on this issue. We are participating with CBP to ensure we have a voice in the final regulations.
        CBP has been working with the NEI to develop a training program that would train brokers, and CBP personnel. From the top leaders to the rank and file officers, Acting Commissioner Aguilar is focused on education, and is looking to the NCBFAA to provide it. I can proudly say, our Association is leading as "the voice" for the industry, a title that is well deserved.
        Membership: Bruce Goodwin worked diligently to increase membership. Due to economic times and member companies being acquired by other member companies, we were unable to hit that 1,000-member mark. I’ll leave that magic number up to the new President and officers.
        Participation: I am unaware of any panel, Committee or program that the NCBFAA was not a critical part of. We had members on Simplified Entry, Trade Intelligence, Beyond the Border, ACE Vendor Conference, and Role of the Broker, ACS, E Bond, FDA Automation, TSN, and COAC. COAC has 7 participating brokers, 6 of whom are members of NCBFAA.
        We are involved with FIATA, ICPA, IWPA, and IFCBA. In addition, we have members involved with TIA as well as AAEI. Paulette Kolba is the go to person for the Department of Commerce. I have personally hosted the Chairman of the Federal Maritime Commission at my office. I have always said, to have a say you must be involved. I want to personally thank all of the many involved members who do participate on behalf of the NCBFAA. I recognize the personal sacrifice that comes with your service to our industry and our Association. All of you are making a difference. If you would like to help and get involved, please contact an Officer or one of the Committee chairs. We always need and appreciate new people who wish to participate on any level.
        Conferences: I felt it was extremely valuable for me to attend and represent the NCBFAA at as many events or conferences that I possibly could. Doing so led me on a journey around the country. I spent more than 80 days last year alone, on the road as your representative for NCBFAA and COAC. Many trips to Washington D.C., but in addition to that I was privileged to be invited and to be able to attend a few local Association conferences. New Orleans, Chicago, and South Padre Island, Texas welcomed me. The Chicago Association has been kind enough to invite me to attend their annual Christmas party, and I enjoyed their hospitality each time. It has been a pleasure to meet new people and learn about their concerns, and also hear about how much they feel supported by the NCBFAA. Our education programs have reached many, and benefited the individuals who have participated. I find myself asking the individuals I meet, if they are CCS or CES certified, and gladly most of them are!
        Many of you may not be aware of a recent challenge that presented itself. CBP came to us and asked if we could put together an ACE Software Vendor Conference, and do it in 30 days. Talk about last minute! The NCBFAA staff stepped up in the midst of preparing for our Annual Conference. A BIG thanks to Amy Magnus who hosted the event, and to all of the NCBFAA staff who again exceeded expectations. Well done!
        NEI: One of my initial challenges when I became your President was the leadership of NEI. NEI Director Cindy Allen left to join CBP and lead the ACE development. Brian Barber replaced her and continued the development of CCS, CES and other educational programs. Brian did an excellent job, and with assistance from Cecelia Ferrera, the programs and webinars were a great success. As they say, SHIFT happens. Lo and behold, Brian gave notice, and once again the search began for a replacement.
        After much discussion and consideration by the officers and me, the position was offered to Kiko Zuniga, one of the original people who envisioned an education program for our industry. Kiko Zuniga, past NCBFAA President, past member of COAC, past President of IFCBA, past Custom’s Committee Chairman, and former member of TSN, applied for the position. I am so happy to say that Kiko Zuniga on the job as NEI Director, and he has opened an office in San Antonio, with Cecelia manning the desk in Washington DC. The NEI is on a steady growth path again, and they are currently working with CBP to produce a training program for CBP management, as well as the rank and file. Our seminars and webinars are very well attended, and Kiko has been reaching out to bring in importers and exporters for certification. The programs continue to be a vital part of educating individuals in our industry. Kiko has big, big plans for the future of NEI, and I am so pleased that we are having him lead the way.
        Conclusion: My focus these past two years was to ensure and secure a solid foundation for the future of the NCBFAA. During my term, the Association has gained financial security, with a yearend surplus, something we have struggled to accomplish in years past. I have achieved my goal of bringing in new blood, and new potential leaders. Outgoing chairs have mentored these new leaders, so they are more equipped to assume their new roles. Our reputation with Customs and other government agencies is strong, and we are a respected voice for the industry. The future is bright and the Association is solid. Together our members can face the challenges, and overcome the obstacles that are put in our path.
        There are a number of people I wish to thank for supporting me during my Presidency. First and foremost, barbara reilly and the outstanding NCBFAA staff who make things happen every day. Their contributions made doing my job well, possible. They are the ones who make the conference look easy, and we all owe them a great deal of thanks. My gratitude extends to the Committee Chairs for all the hours they donate to the Association, and to the countless volunteers in our Association that attend meetings and seminars, representing the NCBFAA, and ensuring our voice is heard. A special thanks to Amy Magnus, who has been a blessing to me and deserves individual recognition for all she has done this past year. Jan Fields, thank you for your constant guidance and support of the NEI, regardless of who the director is. And Jan, thanks for teaching me that you should always have a plan B.
        Mary Peglow, thank you for leading a very successful GAC and for all of your support. Rene Romero, mi amigo, you have shined as Annual Conference Chair and I thank you sincerely for putting on two outstanding conferences. Thanks to my fellow officers, leading the Association has been a group effort, and your contributions are greatly appreciated. To our three great counsels, thanks for keeping us out of trouble and helping us say what we want in a way that we should. I quickly learned from Customs Counsel Alan Klestadt, when I should speak, and when I should just listen. And special thanks to Legislative Representative Jon Kent, whose weekly phone call was a big part of my knowledge base and helped me see things clearly.
        Finally, a special thank you to my wife, Roberta, whose constant support and understanding allowed me to be the best President I could be.Thank you for the opportunity to serve as President of the NCBFAA. It has been a journey that I will always reflect on as a special time in my life. One filled with many wonderful memories.

Vice President’s Report
By Darrell Sekin, Jr.
       2011 was a busy year for NCBFAA activity. In my role on the Customs Committee I was involved in the quarterly Customs Committee meetings with Customs and the monthly teleconference Committee calls. The Customs Committee, like our other Committees, is a dedicated group of volunteers represented by all walks of the industry from the smallest of our firms to the largest multi-nationals of our group. While sometimes our interests or approaches might diverge, the members of this Committee work hard for the overall betterment of the industry. The Committee, ably led by Ken Bargteil, has worked on issues involving ACE, record keeping, ISF, RLF, broker regulations and entry simplification to name just a few. Through a Subcommittee of the Customs Committee I have been able to work on the Broker Regulation Re-Write. This has been a yearlong project with the Subcommittee meeting twice in Baltimore, MD for 2-day sessions with CBP working on a review of, and possible revisions, to Part 111 of the Customs Regulations. While there are different things that CBP and we initially looked to get from the re-write of 111, there are actually many more things of common benefit to both of us that we were able to agree on, i.e., continuing education for brokers and working on methods by which brokers can substantiate the validity of the importers with whom they are dealing.
        Another issue that we dealt with was the filing of the annual and triennial reports and the frustrations we all go through with that. It turns out that CBP is also not necessarily so thrilled with the handling of those reports either. Hopefully we will get some positive change in that area. Our overall goal is to improve the professional standing of the licensed customs broker. There were no sacred issues that were not touched simply because they had been in place for decades. Instead, the entire scope of 111 was put under the microscope and examined for ways it could be improved.
        Another area of my involvement was with the Regulatory Affairs Committee. This is another very active Committee, chaired by Roger Clarke. The Committee has been particularly crucial in dealing with the new FDA regulations and the effect of those regulations on the industry. We feel that FDA has it wrong on the issue of posting filer evaluations on-line and will continue working on that issue.
        Another Committee that I have worked with as Vice President of the Association is the APN (Affiliated Presidents Network). Scott Larson has done a yeoman’s job of running this Committee. This very important Committee brings together all of the presidents of the local Associations across the country so that they, and in turn their membership, is kept in the loop on important industry issues.
        A significant endeavor I have been involved in this year is with the "Simplified Entry" and "Simplified Entry Summary" projects. This is a CBP initiated project to help establish a simplified entry system for "trusted" importers (ISA, CTPAT Tier 3). The hope is to create a simpler method for CBP to collect monies rather than on a transactional basis and to possibly find a method where these "trusted" importers, who are the very top tier of largest importers, can realize some reduction in the MPF fees they pay to the government.
        I have enjoyed the opportunity to serve as Vice President of NCBFAA this past year and appreciate the trust you have placed in me.

Executive Vice President’s Report
By barbara reilly
       The NCBFAA By-Laws set forth the objectives of the Association, which are to:

  • Promote the common business interests of Customs Brokers, Ocean Transportation Intermediaries (OTIs), which includes Ocean Freight Forwarders and Non-Vessel Operating Common Carriers, and Indirect Air Carriers (IACs)
  • Encourage the maintenance of professionalism within our industry
  • Maintain a standard of integrity and efficiency that will protect clients and the Government in the fair, reasonable and equitable administration of import and export laws and regulations
  • Develop acquaintance and good fellowship among the members.

        How does your Association accomplish these objectives? You will find your answer as you read through this Annual Report and are struck by the number and diversity of activities described throughout this publication. Regardless of what segment of the industry you call your own, you will find all facets of it being addressed by one or more of the NCBFAA’s volunteer operations.
        With 115 years of service to the transportation logistics industry, the NCBFAA and its legacy organizations have sought to promote the common business interests of its membership. To do this, it has a member elected Board of Directors chosen from each of nine geographic areas to insure that it is national in scope and fully representative of our industry. During its regular meetings, this Board will consider the most pressing and challenging issues that are presented to it by a network of volunteer Committees, each of which has special expertise in some aspect of the industry.
        Following debate and deliberation, the Board decides how best to proceed in addressing the issues raised. It will direct the staff and its Committees to execute its wishes on behalf of the membership at large. In this way the policies adopted, the positions taken, the negotiations entered into, the actions undertaken, in short the work of the Association, most effectively reflect member aspirations and expectations.
        Locally, the Association maintains a close working relationship with the regional Associations around the country. With its Affiliate Presidents Network (APN), the NCBFAA reaches out to assist with information dissemination, membership development, governance training, and issue resolution. This partnership between the National and these regional groups also operates to promote common business interests.
        Furthering industry professionalism is a foundational principle of the Association and motivates much of NCBFAA’s activity. The Association provides many venues to accomplish this metric. For one, the Association, through its Committees, monitors regulatory developments within the many Federal agencies that exercise oversight of the industry. These insights are then shared with the membership so that it is prepared to, or, in fact, does, adjust its business practices, if necessary, to accommodate any rule or policy changes.
        For another, NCBFAA counsels, Customs, Legislative, and Transportation, are on call to respond to member questions within their area of expertise if pertaining to a national issue. Armed with these answers, members may be able to avoid situations that could be costly to their bottom lines and reputations.
        In addition, the Association’s Educational Institute provides the industry with the Certified Customs Specialist (CCS) and Certified Export Specialist (CES) certifications as well as access to extensive industry educational material. Both certification courses offer participants an in-depth opportunity to enhance their knowledge of this industry and provide them with a solid credential that reflects in the professionalism they bring to their firm and to the client service they render.
        Protecting our standard of integrity and efficiency is accomplished through our membership process. No firm becomes a Regular member without first being proposed by one Regular Member and seconded by another Regular Member. These nominating Member firms must then furnish information regarding the standing and character of the applicant to the Board of Directors, which then votes to accept or reject the applicant.
        As a member, the firm must comply with all directives of the Government agency that licenses or regulates the member. The Association will censure, suspend or expel any member subject to denial, suspension or revocation of its Government license; that is guilty of a federal or state law violation involving moral turpitude, that no longer meets its original membership qualifications; or that knowingly falsifies information to the Association.
        This membership gate keeping process enables the NCBFAA to provide those participating in the transportation logistics business, either as practitioner or client, with confidence that, if any of the parties to the transaction are NCBFAA members, representatives have vetted their credentials with a vested interest in the integrity of those doing business in this industry.
        Remember to give serious thought to becoming involved in the governance of the organization through the various Committees, and if you already play a role, keep looking for more industry colleagues to mentor and get them involved, too. The ability to participate in 12 hours of industry exchange and networking during a Board and Committee Meeting day is unprecedented, while sharing the appropriate targeted information discussed. An organization is only as strong as the grass roots level volunteers, emerging leaders, and Association staff. We know you have other commitments and often the work of the national Association must fall into the low priority pile no matter how dedicated you may be, so we sincerely appreciate all that you contribute.
        And finally, working to support the specific policies, goals and mission statement of all of these dedicated volunteers is the Headquarters office. They handle the day to day arrangements for communication, education and other venues where all this activity takes place on behalf of the members, so I would be remiss if I did not thank those on the Team who make these goals a reality and carry out the work of the Board. Those are my colleagues Kim, Tom, Drenda, Kimberly, Ceci, Trish, Daniel, Porter, Jeff in Chicago and our newest member of the NEI Team, Kiko in San Antonio - and collectively reflect almost 70 years of NCBFAA experience serving you, our members. As we proceed into our 115th birthday celebration of the NCBFAA, we thank you for that privilege, and encourage you to stop by the NCBFAA office on your next visit to your nation’s capital.
        As a member, it's YOUR office, too!

Treasurer’s Report
By Geoffrey C. Powell
       NCBFAA ended 2011 ahead of our budget! The NEI was off on the budget by less than 1 percent, whereas membership dues and 2011 new membership projections were off by 1.6 percent. The Annual Conference net revenues, through very strong efforts of the Annual Conference Committee and Washington staff, were over its budgeted revenue by 5.5 percent, which made up for the shortfall in the other two revenue streams. Considering the 2011 economy is still coming off of one of the toughest economic periods that anyone can remember, the NCBFAA’s overall financial picture is strong and bright for our continued work on behalf of our industry.
        The mission of the NCBFAA is to work on your behalf on many of the ever-changing issues that affect our industry and our members. As the membership is aware, there is a cost associated with these efforts. Between 2006 and 2008, the NCBFAA ran a moderate deficit balance at the end of the year with the full knowledge of the Officers and Board of Directors, understanding that certain critical issues require adequate funding resources to attack the issue. The Officers and Board of Directors spent countless hours working together to determine the best path forward to come up with a fiscally responsible plan for the NCBFAA. In 2011, it determined that it was in the best interest of the NCBFAA to begin a legal defense fund to ensure there are reserves built up to address major issues that impact our industry. On behalf of all the Officers and the Board of Directors of the NCBFAA, I would like to thank each member for their acceptance of this critical fund for the NCBFAA to continue its efforts to work on your behalf every day. I am very pleased to report that in 2011 the NCBFAA again showed a positive net result and are very excited about 2012 and beyond.
        Although the NEI did not meet its aggressive revenue expectations in 2011, it did take action to reduce its expenses by coming in below its budgeted expense. The NEI had some personnel changes in 2011, where Brian Barber, our former NEI Director went back to the operational side of the industry. Although this could have been very detrimental to the NEI, our new Director, Federico (Kiko) Zuniga has stepped up and continued the strategic initiatives and financial growth we have been accustomed to over the last few years with the NEI. The NEI courses continue to grow, not only through our local Associations, but also through other organizations. The NEI continues to educate our growing NEI membership in the multi-topic Webinar Programs, which has proven to facilitate our teaching and yielded very positive results. In 2012, Kiko Zuniga, working closely with the NEI Chair, Jan Fields, is budgeting continued growth for the NEI.
        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 D.C. The revenue from Membership Dues is currently the largest percentage of revenues for the Association, and therefore is critical to the financial strength of our Association. Jeff Short is devoting 100 percent of his time to membership development, which has proven to yield great results for the Association in the past. As Jeff multi-tasks for the Association, some of Jeff’s other responsibilities will be assigned to other capable staff members so the Association can continue it positive revenue stream from membership growth.
        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 friends. Our Association is very dependent on the revenue generated from this annual event to continue its very important work in representing its members. The 2011 Annual Conference held at Sheraton Wild Horse Pass in Chandler, Arizona, was a very successful event, not only in the first class facilities, sessions, member attendance and total experience, but financially as well for the Association. Chairman Rene Romero 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 Romero in continuing to monitor the expense, yet not to the detriment of providing a first class affair.
        In 2007 we changed the budgeting process to ensure that all the Committees working on your behalf are properly funded, yet properly managed, which we believe has been a very effective means to manage our budget. It has been 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 accounting manager, Kim Murphy, has brought to this Association. The accounting can be very complex, but as the Committee Chairs will attest, Kim has done a fantastic job of properly monitoring and allocating expenses, but she also continues to be a great asset for any and all questions regarding our finances.
        Although the economy now is faring better than at this time last year, 2012 will continue to require us to monitor revenues and expenses closely. 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 2012 to not only better our industry, but also to keep America secure.
        In the last report, I included the below statement, that I think is still very appropriate for 2012:

  • 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 expenditures are properly approved and coded to the proper account
    • Monitor administrative expenses and make suggestions for possible savings in these expenditures
    • Pursue possible alternative sources such as grant money and reductions in expenses such as the use of interns.

        The year 2012 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, CES 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 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 is spent to benefit our members.

Customs Committee Report
By Ken Bargteil
       In the preamble to this Tenth Annual Report of the current Chairman’s tenure it seems fitting to begin by recognizing that the success of this Committee reflects the dedicated work of Customs Counsel, Alan Klestadt; D.C. Counsel, Jon Kent; the Vice Chairman, Daniel (Dan) Meylor; Committee members: Amy Magnus (ACE Champion), Charles Riley, Myra Reynolds (Antidumping Subcommittee Chairwoman), Joe Trulik (Truck eManifest Co-Chairman), Gary Ryan, Jerry Becnel, Neto Roser (Truck eManifest Co-Chairman); Senior Advisors: Harold Brauner, Arthur (Art) Litman, Michael (Mike) Dugan, Federico (Kiko) Zuniga, John Peterson, Darrell Sekin; (Sub)Committee, Task Group and Work Group Chairs: Fred Klemashevich (Automation Committee), Melzie Wilson and John Hyatt (Ocean Carrier Best Practices Committee), Michelle Maslow (CESAC), Maryanne Comstock (COOP Subcommittee), Michael Cerny (Drawback Committee), Tom Molloy (ISF Subcommittee), Lehman (Chip) Bown (Large Broker and Forwarder Committee), and ex-Officio: Jeff Coppersmith and Mary Jo Muoio. It is noteworthy that the above group includes five (5) past Presidents, our current Association President, and the presumptive next President of NCBFAA.
        These individuals along with the many unnamed volunteers who support the work of this Committee, and Board of Directors, who as the representative governors of NCBFAA provide the funding necessary to carry on this work from dues and other revenues ultimately derived from the membership and supporters of NCBFAA are the necessary elements for advancing the agenda and serving the interests of our members. For the reliable and unremitting contribution of all those who have shared in the efforts described here and in previous reports of this Chairman, you have my gratitude and regard.
        NCBFAA Customs Committee activity in 2011 was focused in three principal areas: the revisiting of regulations central to customs brokerage, the future role of customs brokers, and the reformulation of an ACE Strategy. To collaborate in preliminary discussions with the CBP engagement group lead by Brenda Smith, Executive Director of the Office of Trade Policy and Programs, the Chairman constituted and headed-up the Part 111 Rewrite Core Committee, including Dan Meylor, Mary Jo Muoio, Darrell Sekin, Amy Magnus, Chip Bown, Norman (Norm) Schenk and Alan Klestadt. Preparatory meetings of the Core Committee began on October 29, 2010, and on invitation from CBP, the initial collaborative meeting began on February 9, 2011.
        These meetings resolved on September 20, 2011, and were discussed as part of the agenda for the regular Customs Committee meeting held in connection with the Government Affairs Conference on September 21. A follow-up meeting to inform the rulemaking process was held with the Executive Director for the Office of Regulations & Rulings, Sandra Bell and her team on November 3, 2011. Representing the Core Committee were the Customs Committee Chairman, Customs Counsel and the NCBFAA Board of Directors Chairwoman. It was learned at that meeting that the package with approval from the Commissioner’s Office had not yet been received and that the Office of Field Organization would have to be consulted prior to drafting of an NPRM. There was agreement that NCBFAA would be notified to re-engage with OR&R at the appropriate time.
        In preparation for the meeting with OR&R, a brief, paraphrased below, was drafted:

  1. The professionalism and competency of customs brokers being of paramount importance to CBP, the NCBFAA and the larger trade community who rely on these qualities in the customs brokers they engage and/or depend upon to facilitate legitimate trade, it is necessary to predicate perpetuation of the license on a universal continuing education program whereby the licensee is obliged to attain and timely report to CBP for the minimum bi-annual continuing education requirement.
  2. Providing a dual path for licensed customs brokers that recognizes inherent differences in the current business environment and applies different criteria for the benefit of the importing community. While both professional paths begin with the same application process, require a passing grade on the customs broker licensing examination, and being found to be of good moral character through a government background investigation, for those successful candidates who will qualify for a permit to transact customs business for the importing public there will be the additional requirement for a period of employment in a customs brokerage during which practical experience must be acquired for operating as a practitioner of customs business.
  3. To qualify for additional permits a second means by which to ensure responsible supervision and control will be created based on an agreed upon action plan which would be made public and be similar in concept to a drawback contract. The contract will specify the conditions and provisions by which responsible supervision and the customs broker will provide control. The contract must be approved and accepted by CBP.
            Upon acceptance, CBP will publish the contract in the Customs Bulletin, or other publicly available publication and any customs broker who is able to duplicate the conditions and provisions specified in the contract may file that contract with CBP and on finding by CBP that the applicant is capable and can reasonably be expected to comply with the terms of the contract, CBP will grant the permit.
            CBP may publish general contracts, as is done for manufacturing drawback, and for this purpose (see 19 CFR Appendix A to Part 191-General Manufacturing Drawback Rulings). This alternative means for permit qualification will not substantively change the existing terms of 111.19(d), but will be added as new Subpart 111.19(d)(2) and existing 111.19(d)(2) will become 111.19(d)(3).
  4. Requiring the importer of record to establish their bona fides by providing to the customs broker who is authorized to transact customs business on their behalf official documents recording their identity and registration, and requiring the customs broker to collect and safe keep those documents pursuant to the customs broker’s recordkeeping requirement in Part 111.
  5. Limiting employee reporting to only those who have been authorized to transact customs business and/or sign customs documents per 19 CFR 111.2(a)(2)(ii)(A), and replacing the reporting requirements in 111.28 – Responsible Supervision, Subpart (b) and 111.30 – (Triennial) Status Report, Subpart (d) with a biannual electronic employee list update/replace in the ACE broker portal.
            Individually licensed customs brokers who fail to report will have their license suspended followed by revocation if upon notification the customs broker fails to remedy the circumstances giving rise to suspension [see 19 CFR 111.30(d)(4)].
  6. Elimination of 111.36 – Relations with unlicensed persons, Subparts (a), (b), (c)(1) and (c)(2), as well as the right of a forwarder to grant power of attorney on behalf of an importer. The duty of a customs broker to preserve its right and capability for direct communication with the importer will not change.
  7. Customs brokers will be excluded from the class of filers subject to the provisions of 19 CFR 142.3a(d), and the consequences for misuse of a filer code will be aligned with misuse of a customs broker license or permit by inclusion in 111.37. Changes to 19 CFR 111.37 will include deletion of the phrase, "… solicitation, promotion or …"
  8. The regulatory definition of customs business in 19 CFR 111.1 will be amended to require that customs business is conducted within the customs territory of the US.
  9. CBP continues to press the matter of their inadequate authority to quickly neutralize a customs broker implicated in a conspiracy that endangers public health, safety or security by means of the customs broker’s licensed activities. While CBP recognizes that any action against a customs broker’s license, permit or filer code requires due process, they believe that an expedited process is needed when public health, safety or security is at risk.

        In the 10 years of this Chairman’s tenure we have seen tremendous change wash over our trade with the speed and power of a tsunami. What we have not seen is the devastation left behind by such unrelenting and powerful forces. Of course the tragic events of September 11, 2001, precipitated the first wave front of changes that addressed a new awareness of vulnerability to terrorism. The list of program, rushed into existence required that we provide for new and early filings lead by the Prior Notice and culminating with the ISF. In every case the NCBFAA was in front and up to the challenge. Of no less challenge were the successive ACE roll-outs, not the least of which was eManifest for truck. The Customs Committee responded with its eManifest Subcommittee that slowly, tenaciously worked through the multitude of difficulties attendant to that implementation. The theme running through these potential "train wrecks" is one of perseverance and ultimate rewards for our membership.
        Our challenge in 2011 was more direct in nature and was presented to us by the Commissioner himself. It was called a Grand Bargain and asked that customs brokers align with the Commissioner’s priorities as a force multiplier and for reducing the cost of clearing goods through Customs. It was principally through the NCBFAA Leadership, the Core Committee and the Customs Committee that these challenges were addressed. As with PN and ISF our response looked to turn the dialogue from changing the role of the customs broker to expanding our role, and with an eye to new business opportunities. That is to say, by responding to a vocalized need by bringing the answering value. We explored with CBP the possibility that customs brokers might act as a force multiplier in the Commissioner’s goal to increase participation in C-TPAT to 40,000 through customs broker pre-certification of importers and for delivery of a parallel ISA program to importers that CBP lacks the resources to engage.
        By June 2011, was becoming clear that the perceived gains made by NCBFAA Customs Committee through it Ace Strategy Task Group (ASTG) had been significantly eroded by events and an insistent call from influential stakeholders to their particular agendas. There was concern that once again ACE development would become derailed, at best delaying essential functionality, and at worst putting it at risk. The Chairman reconvened the ASTG on July 25 and 26, wherein a new strategy emerged. It was decided that, for reason later memorialized in its Third White Paper, NCBFAA members should be encouraged to begin transitioning into ACE now. Rather than reiterate the business case here, better to save the ink and paper and refer the reader to Transitioning to ACE Now!, easily found on the NCBFFA home page. Suffice to say here, the conversation began with the recognition that ACE is not going away.
        Recognizing that such a dramatic change in strategy demanded a business case and member support, the Customs Committee presented to, and the NCBFAA Board of Directors approved, publication of the above-mentioned White Paper, and principally through its Automation Subcommittee, a companion "How To" toolkit. In conjunction with its NEI, NCBFAA will continue to present webinars and learning opportunities to better prepare our members for this transition.
        Once launched on this path, it was at first disconcerting to see the emergence of Entry Simplification, which was initially viewed as proof that our concern about ACE derailment had manifested. After much debate and word of creative adaptation in the ACE Business Office, it was decided in the ASTG, and later endorsed by the larger Customs Committee, that Entry Simplification would be the first, and possibly indispensable, phase of cargo release. The Customs Committee’s single reservation being that any pilot must be short lived and the program given the greatest accessibility possible.
        The Customs Committee throughout 2011 dealt with many other agenda items, member issues and concerns, both transitory and persistent. Many of those matters were addressed on Customs Committee agendas, which can also be found on the NCBFAA website in the members only section; others were taken-up on the monthly Customs Committee teleconference calls, so ably chaired by Vice-Chairman Dan Meylor. Yet others were, as mentioned above, played out in Subcommittees, Task and Work Groups of the Customs Committee. It was a team effort, some of which is described below in reports offered by the Chairs for some of those Committees. Many other routine issues were dealt with quickly and efficiently by the Chairman, Vice-Chairman and Customs Counsel in direct dialogue with the appropriate CBP official.

Drawback Committee Report
By Michael V. Cerny
       The primary focus of the Drawback Committee over the last year has been tackling a number of uniformity and process issues observed by members filing claims at the four remaining Customs Drawback Centers. The geographical diversity of our Committee, and the other NCBFAA members regularly participating in our meetings, has provided us with a unique opportunity to compare procedures at the different filing locations
        Specifically, our members have observed differences in requirements for privilege applications between centers, the time given to provide responses to requests for information, how proof of export requirements are applied, and a number of other issues. We are continuing to monitor Customs Headquarters ruling process, and in particular the time that it takes rulings to be issued. We are also reviewing with Customs a new internal compliance review that is based upon post-liquidation analysis of specific claims. While the audit is meant to be a review of Customs own compliance in response to Inspector General criticisms, it has resulted in post-liquidation requests to filers for significant information.
        We established a subcommittee to address proof of export issues and propose a more rational approach to Customs. The subcommittee is looking at alternative documentation and how modern technologies and processes should change the type of support that Customs requires to meet this essential drawback requirement. We have presented some specific proposals to Customs and hope to see some movement over the coming year.
        Members of our Committee have met on a number of occasions with personnel from Customs Headquarters advocating ideas for streamlining and modernizing the drawback process. This has included discussions regarding the development of ACE and ACE’s impact on drawback. Many members of our Committee are engaged with Customs on a number of fronts, including various Committees in the Trade Support Network, concerning the development of ACE. For filers of consumption entries, the transition to ACE is imminent. By contrast, for drawback filers, there is nothing in ACE right now to which drawback filers can transition and any future process is still being developed. We are working closely with Customs to shape how this future process will look, and to find ways to enhance functionality to the benefit of our members, the trade, and Customs. We anticipate working on the ACE development of a truly electronic drawback summary that will be transmitted via ABI in ACE, possibly with the use of document imaging for submission of backup documentation.
        Finally, we are continuing to monitor the activities in Congress to reform the drawback process through legislation. Legislation pending in the last Congress as part of the Customs Reauthorization bill slipped away at the end of 2010 due largely to politics and the focus on other legislative priorities. We have seen more activity of late and our Committee is actively engaged on the Hill with the relevant Congressional Committees in discussing and proposing ideas and statutory language. Many thanks to NCBFAA’s Legislative Representative, Jon Kent, for his hard work ensuring our voices are heard on Capitol Hill. We will continue to fight for statutory language that is acceptable and beneficial for our membership.

Business Resumption/Disaster Recovery Plan
By Mary Ann Comstock
       In September 2010, the Customs Committee Chair Ken Bargteil appointed Mary Jo Muoio and Mary Ann Comstock to Co-Chair a "Disaster Recovery" Subcommittee of the Customs Committee. The Subcommittee, comprised of 18 NCBFAA members, representing all areas of our Association, has been meeting via teleconference to develop a Business Resumption template for use by NCBFAA members. We anticipate our members will engage CBP, port authorities, other Government agencies as well as local, state and federal government representatives and work with them to develop local Business Resumption/Disaster Recovery plans. CBP HQ has hosted several Business Resumption exercises around the country, and has expressed their interest in working with the trade on a local level.
       So what do we mean by Business Resumption Planning? The objective is to establish a workable operating plan to be used during severe emergency situations that disrupt the flow of trade. This can be a natural disaster – flood, hurricane, earthquake, blizzard, fire … or it could be a manmade disaster like a terrorist attack or a significant infrastructure failure.
       The key is advanced planning – you have to have the plan in place, ready to effectively respond to the emergency at hand. It cannot be a file on your computer –what if the power is out? What if you can’t get to the office? Should you keep a copy of the plan at home? Once developed, the plan must be regularly reviewed to ensure it is fresh, executable and up to date. It’s very important to think about these things in the planning process. We recommend you participate in a table top exercise in your local port – the exercise is useful to identify gaps in any developed plan and more importantly gets all of the stakeholders working together.
       Communication is the main element of the plan, followed by coordination between all parties involved in the potential disaster. Clearly one of the goals in any disaster encompassing a Port of Entry is to restore cargo processing. It is important to remember that there will be a methodical procedure in restoring trade flows following a major disruption of the supply chain. A list of key contacts should be maintained and updated regularly. A port’s contingency plan should be realistic, and well known and practiced, so when disaster strikes, an orderly transition to the contingency plan can occur.
       The Business Resumption (Disaster Recovery) template will be made available to the NCBFAA membership.
       On behalf of the Subcommittee members, thank you for the opportunity to assist in developing this template. We hope the template is a useful tool and we are happy to answer any questions our members have about getting started on a local business resumption plan in your port(s) of entry.

Legislative Representative’s Report
By Jon Kent
       2011 will go down as a year when little was accomplished, but a great deal was attempted. For Congress, it was a year on the sidelines (with but one exception); for the regulatory agencies, particularly Customs, it was a year of high energy and singular engagement. In many cases, however, a failure of the government to act was not a bad thing; in others, it was frustrating and a little maddening.
       As to the Congress, its high moment was passage of the free trade agreements for South Korea, Panama and Colombia. Accompanying this was quite a little drama, but not of the substantive kind: the operative question was who would go first and how Trade Adjustment Assistance would be handled. NCBFAA supported the legislative push to passage, but had its eyes fixed on the Generalized System of Preferences (GSP) whose renewal had been long awaited.
       But looking at what it did not accomplish, the list is endless. Congress did NOT introduce or move Customs Reauthorization legislation, which should have included drawback reform or renewal of CBP emphasis on commercial operations. It did NOT pass a miscellaneous trade bill. It did NOT pass adequate ACE funding, sufficient to fund "release" and then to complete core processing functions. It did NOT introduce carrier anti-trust legislation, nor did it address elimination of tariff filing. It did NOT move forward with Motor Carrier legislation that would have further regulated, penalized and bonded IACs and customs brokers (in this case, the lack of movement was a good thing!). It did NOT confirm Alan Bersin, thereby forcing his resignation as CBP Commissioner at the end of the year.
       This compelled us to go elsewhere to advance NCBFAA’s agenda. Alan Bersin’s initiatives at CBP rolled out one after another – Centers of Excellence, 111 revisions, simplified entry, renewed emphasis on commercial enforcement, international air cargo screening, and on and on. With a strong customs broker presence on the COAC, which became the forum for evolving many of these proposals, the strong voice of our industry was heard everywhere. At the FDA, passage of food safety legislation during the previous year led to unprecedented interest within the agency of transactional issues and the role of the broker. This was new ground for FDA, leading to major issues involving broker performance and the application of fees. Our other federal agencies of focus – FMC and TSA, to name two – also demanded our full time and attention.
       As the year ended with another lengthy Association conference call, it is clear that we are embarked on unprecedented high activity, forcing us to the impossible task of being everywhere that decisions about our future are made. Yet your Association can report that the energy and commitment to this challenge are there within your leadership. As always, we will keep you informed every step of the way.

PAC Annual Report
By Jon Kent
       NCBFAA had unprecedented success this year as donations to the PAC increased and campaign support to Congress also increased proportionately. None of this could have been possible without the hard work of our volunteer fundraisers at the Annual Conference and at the Government Affairs Conference.
       Contributions from qualifying members of the Association amounted to $17,411, or approximately 10 percent higher than 2010. This is the highest level in the history of the PAC. Kudos go to Kathy Murray (American Cargo Express, Inc.), the Chairperson of NCBFAA PAC, who received outstanding support from Mary Peglow (Mid-America Overseas, Inc.), the Chairperson of the Government Affairs Conference and a leader of our government affairs efforts. Their leadership helped develop a cadre of PAC volunteers at our meetings who were relentless in spreading the word about the PAC’s good work. Those volunteers included:

  • Anne Marie Bush, Bellevue, WA – A.M. Bush Inc. dba Veritrade International
  • Kathy Carlton, Ft Lauderdale, FL - K. Carlton International, Inc.
  • Leah Ellis, Houston, TX - JAS Forwarding USA, Inc.
  • Michelle Francis, Chelsea, MA - Magic Custom Brokers, Inc.
  • Lisa Gingerich, Chicago, IL - Coppersmith, Inc. Global Logistics
  • Michelle Maslow, NY - Brauner International Corp.
  • Julie Moore – Houston, TX - Rulewave, Inc.
  • Donna Mullins, Atlanta, GA - CV International, Inc.
  • Kathy Wilkins, Dallas, TX - Alliance Operating Services

       Contributions to candidates for Congress are made upon the recommendation of Jon Kent, NCBFAA Legislative Representative, and then approval by the PAC Board of Governors, which includes: Kathy Murray, Jeff Coppersmith and Peter Powell, Sr. In 2011, contributions amounted to $17,500. This too was an all-time high! The recipients included 9 Republicans and 6 Democrats, 4 who were candidates for the Senate and 11 who were candidates for the House of Representatives. The PAC donates to candidates who have shown strong allegiance to the interests of brokers.
       NCBFAA is grateful to our volunteers, the Association leadership, and contributing members of the Association whose strong support of the PAC has given customs brokers, NVOCCs, ocean freight forwarders and indirect air carriers unquestioned political strength in Washington.

Freight Forwarding/NVOCC Report
By William App, Jr.
       Following up on the membership’s ratification of a recommendation by the Board, the Forwarding and NVOCC Committees were combined into a single Transportation Committee at the last Annual Meeting. At the same time, the Transportation Committee, which I chair, created three new subcommittees—the Forwarding, NVOCC and Air Freight subcommittees chaired by Melzana Wilson, Richard Roche and Donna Mullins, respectively - and all were extraordinarily active during this past year. Those efforts enable us to report on a number of important, successful outcomes that will substantially benefit the forwarding industry.
       The first issue, which is of vital importance to the NVOCC members, relates to the Association’s continuing efforts to obtain a broad exemption of NVOCC rate tariffs. In its decision last year that did issue the exemption, the FMC took a major step forward in reducing the cost, burden and regulatory risk involved in having to memorialize negotiated rates in NVOCC tariffs. Unfortunately, that decision was somewhat limited in two respects. First, the exemption was not currently applicable to foreign-based NVOCCs, even if they are properly registered and bonded with the Commission. Secondly, the exemption still contained several regulatory impediments to broad use by the industry. For example, the exemption regulation requires that shippers provide a written notice of acceptance of a rate proposal from NVOs, which is not consistent with how much NVOCC traffic is handled (i.e., shippers often merely tender their cargo, rather than first confirming their intent to do so in writing). Similarly, the exemption regulation precludes putting surcharges, credit terms and other aspects of an NVOCC service arrangement into the exempt rate quote. Accordingly, the Association continued its push for a broader exemption.
       Initially, the Association, acting through counsel, sent a letter to each of the Commissioners both thanking them for supporting the NCBFAA’s petition for the rate tariff exemption, but then pointing out the additional issues that still needed to be resolved before the benefits of the exemption could be realized by the NVOCC industry as a whole. Thereafter, FMC Commissioner Michael Khoury attended the NCBFAA’s Government Affairs Conference, and met with members of the NVOCC Committee to better understand why so few NVOCCs had taken advantage of the exemption. Largely as a result of those efforts, on December 20, 2011, the FMC opened a new proceeding (Docket 11-22) by issuing a Notice of Inquiry seeking comments concerning ways to make the exemption more useful and whether the exemption should be extended to foreign, registered NVOCCs. Consistent with that notice, the NVO Committee, and numerous NVOCCs did file comments urging that the Commission broaden the exemption to:

  • Make the exemption available to lawful, properly registered/ bonded foreign-based NVOCCs;
  • Eliminate the limitation against including surcharges and GRIs in rate quotes;
  • Eliminate the limitation against including special items such as credit, minimum quantities, penalty provisions and other economic terms in rate quotes;
  • Eliminate the restriction against amending rate quotes; and
  • Ease the currently burdensome record keeping requirements.

       In a related vein, the FMC issued a notice in November 2011, seeking comments from the shipping public on how to improve the agency’s existing regulations. In response, the NCBFAA filed comments suggesting that the FMC reconsider its approach to three significant ways in which its regulations affect NVOCCs and forwarders. First, the Association took the opportunity to point out the need to run the rate tariff exemption for NVOCCs. Second, the Association indicated that the regulations pertaining to NVOCC service arrangements were so burdensome that they were also of little use to the industry; the NCBFAA accordingly suggested that the agency eliminate the need for NVOs to file these contracts with the agency or publish the so-called "essential terms" of these agreements. In addition, the NCBFAA proposed that the Commission both streamline the existing licensing process and emphasize the competence and expertise of applicants as part of its review process. In that regard, the NCBFAA has suggested that the Commission adopt some form of competency standards that were akin to the Association’s Certified Export Specialist Program to improve the professionalism and image of the industry.
       In January 2012, the US/People’s Republic of China Maritime Bilateral Treaty came up for renegotiation. As part of that process, the PRC was seeking agreement by the US to modify the FMC supplemental bond from $21,000 to $50,000 for all US-licensed NVOCCs that are registering their bills of lading in China due to the currency fluctuation between the dollar and RMB. After the FMC sought comment about the PRC request, the Association replied that it had no objection to an increase in the dollar value of the supplemental bond, but that the Association felt that the entire amount of an NVOCC bond (including those for its branch offices) should be included in determining the amount of any supplemental bond required. Acting on that, the FMC then issued a Notice of Proposed Rulemaking that proposed to adopt the NCBFAA’s position and comments responding to the NPRM were filed by the NCBFAA and various NVOCCs earlier this year.
       The FMC then invited General Counsel Greenberg to participate as a member of the US delegation during the bilateral negotiations, all of which appeared to proceed rather smoothly. As of this date, the FMC has not issued a final rule on the PRC supplemental bond issue, but the members of the PRC delegation did not seem greatly concerned about the FMC’s proposed rule.
       In April 2011, the FMC issued its own report concerning its Fact-Finding Investigation No. 27 entitled, Potentially Unlawful, Unfair or Deceptive Ocean Transportation Practices Relating to the Movement of Household Goods. Following up on that investigation, the FMC invited members of the Committee and counsel to meet to discuss the possibility of developing a set of best practices for the handling of household goods that might help reduce the incidents of complaints in this industry. That meeting was helpful, and focused attention on the fact that there was no significant problem in the household goods business that is handled for corporations and moving companies. Instead, the primary issues that generated the most complaints related to the so-called barrel trade, in which individual shippers send their personal effects in sealed barrels from the US either to the Caribbean, South America or Africa. The Association’s representatives offered a number of suggestions on issues that might help to bring the "barrel" forwarders into more significant compliance with the FMC’s regulations and adopt better consumer practices.
       Another issue that the Committee took up was the matter of assessment of demurrage and detention charges by the carriers and ports when cargo was being held for Customs and other agency inspections. During the Committee’s meetings, a number of complaints have been raised addressing this problem, especially given the length of time that some of these holds are in place for reasons that are not the fault of either the NVO or its customer. The Committee has raised this issue with one of the FMC Commissioners, who has taken an interest in the matter and requested further information. To that end the Committee polled the Association’s members to get better information concerning the identity of the ports and carriers that have been involved in assessing these charges, and will be presenting this information to the Commission.
       During the fall, the steamship lines filed an amendment to their antitrust-approved agreement relating to the Consolidated Chassis Management Pool Agreement. The amendment was one of the steps being taken by the carriers as they seek to transfer the responsibility of providing container chassis from themselves to NVOCCs and shippers. While the proposed amendments were being considered by the FMC, the US Department of Justice Antitrust Division sought the assistance of the Transportation Committee to better understand how chassis pools operate, the degree of competition that exists between truckers and the pools, and the possible service/cost issues that could arise if the FMC approved the amendments. Ultimately, the Antitrust Division did file comments with the Commission and, although the Commission approved the amendments, it required that the carriers modify the proposal so as to alleviate the more trade-restrictive aspects of the proposal.
       Another significant effort made by the Committee related to working with Legislative Representative Jon Kent on several issues. One of the more significant of those issues related to the so-called motor carrier bill, in which there was draft language that could have required customs brokers and forwarders to obtain a property broker license from DOT and post a $100,000 bond to the extent they were at all engaged in arranging for the movement of cargo from or to the various airports and ports. After working with Congressional House and Senate staff, the Association was able to obtain language in the draft legislation that, if the bill is enacted, would eliminate the licensing/ bonding problem.
       Members of the Committee have continued to work with the Carrier Best Practices Committee, which involved members of both the NCBFAA and the steamship and rail industries. These meetings have a goal of eliminating as many operational problems that arise from regulatory initiatives and carrier business practices as possible. These efforts have continued to achieve positive results both in increasing efficiency and reducing the incidents of inappropriate and unnecessary claims that the carriers previously submitted against NVOCCs and brokers for issues such as demurrage and detention charges.

Regulatory Agencies Committee Report
By Roger Clarke
       The past year saw new Congressional legislation expanding and giving many of the regulatory agencies more enforcement authority over imports. Some of this legislation not only has given some agencies more regulatory authority but also altered and redirected the agencies’ core mandate. Two such pieces of legislation were the Food Safety Modernization Act (FSMA) and the Lacey Act Amendments. The RAC felt these two new pieces of legislation, along with the Food and Drug Administration Transparency Initiative would have the highest impact on our membership.
       The Committee efforts were directed mostly towards the various published FDA FSMA regulations and proposed FDA Transparency plans. The Committee continued with its monthly phone conference calls. We were very fortunate to have members of both the FDA Division of Import Operations and Prior Notice Center participate and engage in open conversations on many of these calls. The NCBFAA has continued its excellent relationship with FDA. The RAC continues working on programs for better understanding and education, and to meet future challenges facing both the agency and trade. Following is an outline of the 2011 RAC challenges, accomplishments, projects, and open issues:
       PREDICT and ITACS: These two automation and risk management programs give FDA a better resource for receiving, analyzing, and transmitting data. The Committee worked with FDA on issues arising with PREDICT as it was implemented at various ports. FDA completed the PREDICT implementation nationally in December 2011. The Committee will continue to follow the effectiveness of the program and address with FDA any anomalies, which may arise. The Committee also worked with FDA on the ITACS information system. Several Committee members volunteered as beta test sites feeding back to FDA information on various issues in both verbal and written formats. The schedule calls for ITACS implementation nationally on March 15, 2012.
       Isolating and improving FDA communications: The RAC developed a questionnaire on preferred trade communications and effective systems now being used at the port level. The APNs were asked to canvass their Associations and return the survey. The Committee confirmed that electronic e-mail communications was the preferred and most effective way to communicate with FDA.
       APHIS Published an ANPR expansion of the Revised Lacy Act Provisions: The Committee reviewed the published changes and possible impact of our industry. The Committee determined the new requirements related mostly to additional importer requirements and any comments would be better addressed by other trade associations.
       FDA Binding Ruling Proposal: The RAC developed and sent a formal written proposal to FDA outlining a procedure and requesting a binding ruling system structured similar to the procedure now being used by CBP. The proposal is still in the review process and is now being reviewed by the FDA legal office. At FDA’s request a small RAC subcommittee has been formed to continue direct talks the FDA with the working group reviewing our proposal. The Committee does have support within the agency to move forward with this project and it is hoped for approval in the near future.
       FDA Transparency Initiative: Improving Transparency to Regulated Industry-Five Draft Proposals Docket 2009-N-0247: The RAC reviewed the five proposals and developed a four page written comment response to the proposals. The primary concern to the Committee was Draft Proposal# 4 which addressed the FDA evaluation for importers and third party filers. The Committee comments attempted to point out the true responsibility of the filer and that of the parties furnishing shipment information. It was also pointed out that no formal filer guidelines were being used causing serious inconsistencies in the review process. Our response pointed out that no formal due process procedure is in place and the agency is lacking in furnishing any error notification at the time of data presentation. The Committees written comments supported other draft proposals addressing education, outreach, and to furnish better means for the trade to understand FDA requirements and meet their regulatory responsibility. The Committee continued open discussions with FDA on the responsibilities of the filer and lack of a proper evaluation process.
       Posting of filer review results on the FDA website: During subsequent Committee discussions with Captain Domenic Veneziano, FDA Director of Import Operations and Policy, it was conveyed that after reviewing the comments presented, the agency planned to move forward with filer evaluation web posting. FDA feels filer review posting is in compliance with President Obama and FDA Commissioner Hamburg’s desire for more government transparency. The consensus of the Committee and many comments received from members was the proposed web posting exceeded the agencies legal authority and was unfair without proper guidelines and due process in place. The RAC asked for assistance from NCBFAA Customs Counsel Alan Klestadt to develop a formal protest to be filed with the Commissioners. With the RAC help he wrote and delivered to the Commissioner’s office a very compelling letter stating not only legal issues but also again stating the NCBFAA position that web posting should not take place.
       Unfortunately upon review the agency rejected the NCBFAA letter and has proceeded in posting filer evaluation on the FDA website. While unsuccessful in preventing the posting the Committee did accomplish conveying the seriousness of this action, which helped to mitigate the impact by:

  1. Evaluation listing by generic category rather than by specific score.
    • Paperless – Satisfactory evaluation result; FDA has determined that electronic filing is appropriate.
    • Corrective Action Plan – Based on the filer’s error rate, FDA has determined that continued electronic filing is appropriate, but FDA has requested a corrective action plan.
    • Dual-Mode Filer – The filer has been returned to Dual Mode (electronic and paper submissions) after FDA found repeated failures to successfully execute a Corrective Action Plan for improving the quality of the data being submitted.
    • New Filer – FDA has insufficient information to determine whether electronic filing, alone, is sufficient; FDA requires both electronic and paper submissions.
    • Inactive – The most recent evaluation determined that the firm is either out of business or inactive in FDA commodities.
  2. Commitment to develop filer review guidelines for uniform evaluations and bring in the NCBFAA for review and comment prior to publication. Specific NCBFAA issues will be discussed at this time.
  3. A due process procedure for challenging evaluation finding
  4. Web posting updating on monthly bases for any corrective action and subsequent review findings

       The Committee will continue working with FDA to insure that a fair and equable process is put in place for future file review and issue mitigation.
       Additional financial responsibility for the Bioterrorism Act (BTA) foreign facility US Agent: The Food Safety Modernization Act specifically states that any costs and fees incurred by FDA in re-inspection of a foreign facility will be the responsibility of the declared facility US Agent. FDA notified the RAC that they were moving forward with expanding this additional financial responsibility to the declared US Agent under the BTA without any concurrence by the current agent. FDA published a NPRM, which included re-inspection financial responsibilities. The RAC asked Legislative Representative Jon Kent and his staff for assistance in addressing this policy. With the help of the RAC, he and his staff developed the NCBFAA response with a four-page comment document to the NPRM.
       The Committee conducted extensive discussion with various FDA officials regarding the process of obtaining a listing of facilities that a current BTA US Agent represents. Any firm can request to be removed from the US Agent status but FDA has not furnished formal direction on the exact procedure or how foreign facilities will be notified so as to not interrupt international trade and supply chain flow. The financial responsibility for current US Agents may be a mute issue as under FSMA all facilities must reregister in the later part of 2012. At the current FDA initial inspection rate it is unlikely any re-inspections would take place prior to facility re-registration. The Committee will continue discussion with FDA to help develop a positive US Agent acceptance procedure.
       The NCBFAA and its RAC faced many challenging issues from agencies beyond CBP. The FSMA presented the greatest impact on our membership and required the greatest concentration by the RAC. This legislation will continue to be a major consideration of the RAC as FDA develops many more regulations and policies. While the RAC did not succeed in all of our efforts we have developed a respect that our Association is a great source of knowledge and can help government agencies better meet their goals.
       As RAC Chairman, I would like to thank the Committee members for their dedication and hard work in addressing last year’s challenges. I would also like to thank the NCBFAA Executive Committee, staff, and Counsels for the support of, and input to, the RAC.

NCBFAA Educational Institute Report
By Jan Fields, NEI Chair and Federico "Kiko" Zuniga, NEI Director
       With the installation of Federico "Kiko" Zuniga as Director in 2011, the NCBFAA Educational Institute (NEI) has moved to the next level of product delivery and program implementation. With his background not only as a business owner in our industry but also as a previous NCBFAA President and the pioneer whose vision originally led us to develop the NEI’s certification programs, we have a manager in place who is perfectly suited to move the NCBFAA’s educational program forward. Each of our previous NEI directors offered their own unique perspective to the educational program and we have been fortunate to be able to capitalize on their expertise and style while continuing to provide educational opportunities to our members.
       As all successful business operations have shown, the key to continuing success is planning for the future and the NEI is no different. To ensure that our efforts meet and surpass the needs of the membership and the industry at large, the NEI in 2011 developed a five-year strategic plan that is summarized below.
       NEI’s Mission: To instill professionalism in the individuals who participate in international trade.
       The Goal of the NEI is to instill professionalism in the industry, as well as become the leading organization for training individuals involved in international trade, whether service providers, importers or exporters.
       As the national organization representing global trade professionals, the NCBFAA, through the NEI, strives to provide Customs Brokers and Forwarders and their employees with the knowledge and skills necessary to maintain high standards of professional development to compete in the job market and advance their careers.
       We equally strive to provide specialized courses for the adult learner interested in pursuing a career where customs and forwarding knowledge are essential for adhering to the government requirements associated with international trade. Our specialist designations have both personal and professional recognition.
       Ultimately, we are making every effort to have the Certified Customs Specialist (CCS) and Certified Export Specialist (CES) designations become a standard in the customs and forwarding marketplace, recognized and demanded, by those who use brokerage and forwarding services throughout the country.
       NEI’s main goal during 2012 is to build more stability and trust in the program, while Year 2 will focus on expanding our membership and offerings. Years 3 thru 5 will be used to complete what has been started.
       Our efforts will focus on providing a better and more reliable product to our existing membership, reducing the reliance on volunteers for the course content, and bringing the course material and case study development in house.
       Action items include:

  1. Update the existing Certified Customs Specialist Course
    • Consider Customs experts to review and update the existing course material.
  2. Timely Case Studies
    • Post and have available at least one free CCS Case study for the NEI membership every two months.
    • Post and have available at least one free CES Case study for the NEI membership every two months
  3. More structured format on case studies.
    • We will attempt to have a more structured format when possible, allowing the membership to become more comfortable with the process.
    • Reliable Webinars
  4. Have more contact with participants of the NEI Program.
    • Become more responsive to concerns of our membership.
    • Implement a questionnaire to our NEI members on ideas to better serve the membership.
    • Establish new forms of communication though the use of Social Networks, giving members a platform for discussion on pertinent trade issues.
  5. Have a better marketing strategy (increase our name recognition).
    • Redesign logo and implement a new marketing plan to better target our audience
    • Design a foldable flyer to give out at conferences
    • Design an interactive display for conferences, illustrating sample questions from the course study.
    • Strengthen our working relationship with the Canadian Society of Customs Brokers and other like organizations providing educational opportunities.
  6. Begin to find ways to have a greater participation with the Affiliated Associations
    • National presentations being held around the country with the assistance of the local Affiliated Associations.
  7. Have a stronger effort to attract the importing and exporting community.
    • More communication with trade associations which represent the importing and exporting community
  8. Begin discussions with other organization about specialize designations.
    • AFA (designation for individuals in Air Freight Forwarding)
    • ICPA (designation for International Trade Company Compliance Managers)
    • Importers and Exporters (a scaled down designation for a greater audience of Importers and Exporters)
  9. Finally gain the recognition of our program from CBP, FDA, Commerce, BIS, Census, and various government agencies involved in promoting and facilitating trade.
    • Continue to have dialogue with CBP encouraging them to review as well as participate in our program.
    • Promote the benefits of our programs

Long term Goals:

  • Design an independent website for NEI linked to IFCBA & NCBFAA and Affiliated Associations around the country allowing our members a forum to interact with each other.
  • The NEI would be the leading source of information for the exporting & importing community.
  • Generate useful tools for in house training for companies involved in international trade.
  • Annual increase of net membership by 10 percent or more.
  • Increase the retention rate of our membership.

Affiliated Presidents Network Report
By Scott Larson
       The APN is comprised of local Broker and Forwarder Associations represented by each Association’s elected President. Currently the APN has (28) active Associations:

  • International Freight Forwarders & Customs House Brokers Association of Atlanta
  • Baltimore Customs Broker & Forwarders Association
  • Boston Customs Brokers & Freight Forwarders Association
  • Brownsville Licensed Customs Brokers Association
  • Customs Brokers & Freight Forwarders Association of Charleston, S. C., Inc.
  • International Freight Forwarders and Customs Brokers Association of Charlotte
  • Chicago Customs Brokers and Forwarders Association
  • Colorado Customs Brokers Association
  • Columbia River Customs Brokers and Forwarders Association
  • Detroit Customs Brokers & Forwarders Association
  • Florida Customs Brokers & Forwarders Association, Inc.
  • Houston Customhouse Brokers & Freight Forwarders Association
  • J.F.K. Airport Customs Brokers and Freight Forwarders Association, Inc.
  • Laredo Licensed U.S. Customs Brokers Association, Inc.
  • Los Angeles Custom Brokers & Freight Forwarders Association, Inc.
  • International Freight Forwarders and Custom Brokers Association New Orleans
  • New York/New Jersey Foreign Freight Forwarders & Brokers Association
  • Nogales Customs Brokers Association
  • North Texas Customs Brokers and Freight Forwarders Association
  • Northern Border Customs Brokers Association, Inc.
  • Customs Brokers & Forwarders Association of Northern California
  • Philadelphia Customs Brokers & Forwarders Association
  • San Diego Customs Brokers Association
  • Independent Freight Forwarders & Custom Brokers Association of Savannah, Inc.
  • Customs Brokers and International Freight Forwarders of VA
  • Washington Customs Brokers and Freight Forwarders Association
  • Customs Brokers & International Freight Forwarders Association of Washington State
  • West Texas/New Mexico Customs Brokers Association

       The APN Committee meets monthly via teleconference to discuss a variety of port issues, association management, and to provide support for NCBFAA Committees. We host formal meetings in conjunction with the Annual Conference and during the Government Affairs Conference. During our Annual Conference meeting in April 2011, Katharine Meyer from GKG Law addressed the APNs on such topics as indemnification, confidentiality and nondisclosure agreements, conflict of interest policy and procedures and documentation retention policies. Throughout the year we worked on the development of an "APN Best Practices Guide" that outlines guidelines and polices that should be adopted at the local level.
       At our GAC meeting the APNs were provided a disk full of resources to help them run their local Associations and management tips. We also kicked off a new development of an RLF resources center. The APN will have the ability to reach out to their local members and service providers enabling them to advertise their services through the APN page within NCBFAA. This will provide all NCBFAA members an opportunity to locate local services such as trucking, warehousing, crating, Customs Brokers, Attorney’s, hazmat handles’ etc. when conducting an RLF entry.
       The APNs are a vital resource to the various NCBFAA Committees. Our mission is "The APN facilitates the sharing of information, communication and common issues among local Associations and NCBFAA." If you’re a member of your local Association we appreciate the support. If your local offices are not members of the local APN Association, please consider supporting their efforts and join. In addition to membership we are always looking for good active volunteers!

Carrier Best Practice Committee Report
By John T. Hyatt and Melzie Wilson
       We are now entering our seventh year of meeting quarterly, discussing issues that impact brokers’, forwarders’ and carriers’ service to their mutual clients.
       This past year the Committee held only one meeting at New Orleans, June 10th. But nonetheless, it covered a wide range of issues. Growth projections were broadcast to be flat, concern about more capacity coming on stream, especially with launch of the mega ships. A slowly recovering world economy is going to be a determinant in adding new capacity or pulling back on ship orders. The inter-Asia/Asia-Europe trade remained about the same, year-to-year. At the same time more demand for containerized freight that previously moved via bulk/break-bulk has surfaced, a driver, no doubt, of the continuing shortage in unique containers, i.e., flat racks, open tops, and high cubes.
       Although there was concern for disruption in the US/Europe trades following the January 1st implementation of the EU version of the 24-hour rule, it proved to some extent, a non-issue (although NO DOCS-NO LOAD, problematical). However, the Committee is still addressing carrier requirements for a power of attorney on broker-endorsed B/Ls, and how such data is stored, increasing concern with identity theft.
       Looking into 2012, we will be watching very closely the CBP ACE e-Manifest pilot, which was launched on November 28, 2011, three carriers participating (APL, OOCL, Wallenius Lines). Decommissioning of ACS/AMS over a six-month period is anticipated following successful testing. However, major technical issues affecting carriers, brokers and importers have surfaced, and may push back the transition. Additionally, full enforcement for non-filed ISFs may see a speedier use of GO just to clear these cargoes out of terminals. NCBFAA will continue to interface with the carrier community to address these ongoing issues.
       Carrier participation has included American President Lines (APL); China Ocean Shipping Company (COSCO); Compañia Sud Americana de Vapores (CSAV); Compagnie Générale Maritime (CMA-CGM); Evergreen Line; Hanjin Container Line; Hapag Lloyd; Hyundai Merchant Marine; A. P. Moller-Maersk Line; Mediterranean Shipping Company (MSC); Mitsui OSK (MOL); Nippon Yusen Kaisha (NYK Line); Orient Overseas Container Line (OOCL); Wan Hai Line; and Zim Container Line.

Nominating Committee Report
By Scott Larson
        The nominating Committee is comprised of one representative from the nine NCBFAA regional

  • Area 1 Jake Holzscheiter, A. N. Deringer, Inc., St. Albans, VT
  • Area 2 Matthew Brauner, Brauner International Corp., Jersey City, NJ
  • Area 3 Peter Powell, Sr. C.H. Powell Company, Canton, MA
  • Area 4 Lee Hardeman, Lee Hardeman Customs Broker, Inc., Forest Park, GA
  • Area 5 Scott Larson, MOL Logistics (USA) Inc., Elk Grove Village, IL
  • Area 6 Jack Hubbard, TLR - Total Logistics Resource, Inc., Portland, OR
  • Area 7 Kathy Murray, American Cargo Express Inc., Elizabeth, NJ
  • Area 8 Rodolfo Delgado, Rodel International. M.D.H. Laboratories, Inc., Laredo, TX
  • Area 9 Maurine Cecil, Western Overseas Corporation, Long Beach, CA

       The Nominating Committee reviewed and developed a slate of officers for the 2012-2013 terms, i.e., President, Vice President, Treasurer and Secretary. The Nominating Committee conducted an extensive review of the current leadership, their goals, contributions and successes. During its review the Nominating Committee always referred back to its basic credence, "What is best for the future of NCBFAA and how will our members be best served."
       Committee meetings took place over several months as it narrowed down the selection of candidates. Prior to determining the final slate of candidates, a Committee member interviewed each individual to verify their ability and willingness to serve, their intentions and desires going forward and qualifications for the position.
       The Nominating Committee is confident that the slate of officers it has presented will serve the NCBFAA and its members proudly.

By-Laws Committee Report
By Lee Hardeman
       At the request of the President and Freight Forwarding Committee Chair, we drafted wording that would roll the Freight Forwarding Committee and the NVOCC Committee into a single Transportation Committee. The purpose was to allow for better coordination of efforts in these areas. The change was approved during the NCBFAA Annual Meeting at the 2011 Annual Conference.

Counsel Review Committee Report
By Lee Hardeman
        The Counsel Review Committee undertakes a review of one of our three counsels each year so that each counsel is reviewed every three years. We established approximately 25 criteria for each position in 2003, and we have refined those over the years. In 2010, we undertook to review Transportation/General Counsel. This was concluded in Q1 of 2011. We are scheduled to undertake review of our Legislative Representative later this year.

Membership Committee Report
By Bruce Goodwin
        The success of any organization lies within its membership. This is even more so with the NCBFAA, as we rely heavily on the membership to help this organization grow. As I have stressed these seven years as Membership Committee Chairman, it is incumbent upon all of us to be the "sales department" for this Association.
       As in 2009, we are facing another economic downturn that has all companies reevaluating their priorities as to where their hard earned money is to be spent. In a lot of cases, Association membership is not high on the priority list. Even though we have had success in getting new members, we have had the ever-increasing amount of members merging with other members, thus loosing membership numbers and membership dollars. We have also seen an increase of the category above of companies just giving up their membership, hopefully just until the economy rebounds. Being the voice of the Association, we have to shout the praises of the NCBFAA at all functions sharing the benefits of NCBFAA membership, whether it having a voice in Washington DC, being alerted about industry updates via the Monday Morning eBriefing, the Who’s Who Annual Membership Directory, our NEI and the continued expansion of that program.
       Continuing education is of the up most importance in our industry. The NEI expansion encourages and facilitates professionalism in our industry. This shows CBP that we are serious about our profession and that we keep current with all the changes that are done daily by CBP and the other related government agencies. Along with the existing NEI programs CCS and CES, the NCBFAA offers webinar seminars open to members and non-members, to further keep employees current within our industry.
       In closing, I want to thank my Committee members for their input and guidance. I appreciate the comments and help from the membership. Thank you to the members that brought in new members this year; ask them to never stop praising the glories of our Association and convincing companies why they should be members. I want to thank barbara reilly, her Washington DC staff and especially Jeff Short in their continuing work to better our Association.

Air Freight Subcommittee Report
By Donna Mullins
       My how time flies (pun intended)…I joined the A/F Subcommittee as Chair in January 2011 but it seems like just yesterday we geared up to tackle air freight issues with our membership and right out of the gate we were flooded with inquires.
       The first issue brought to the Committee was "TSA on IAC procedures." We worked together with Committee members to solidify a strategy for review with TSA of the actual implication of 49 CFR 1540, Section 203 and the IACSSP. With the help of Legislative Representative Jon Kent, a meeting was set with TSA and NCBFAA Committee Members discussed the concerns (information is SSI and may not be shared with the general public).
       We worked closely with TSA and the industry to deliver a dynamic and informative presentation at the NCBFAA 2011 Annual Conference – Moving Secured Cargo in an Unsecured World.
       The Lithium Battery continues to be discussed with regard to regulations and we learned on February 10, the ICAO Dangerous Goods Panel approved significant changes to the lithium battery provisions in the ICAO Technical Instructions governing the transport of excepted lithium ion and lithium metal batteries shipped by air. These changes go into effect on January 1, 2013.
       In April 2009, IATA introduced us to the IATA e-freight initiative. We received follow up concerns this year and are addressing those within the Committee and also including the NCBFAA Customs Committee for input. A list of current US airports now involved with e-freight:
       US destined cargo: ANC, ATL, BWI, DFW, DTW, EWR, IAD, IAH, JFK, LAX, MIA, MSP, ORD, PDX, SEA, SFO. US originating cargo: JFK, ORD
       TSA and IAC issues continued to develop over the year and we are aggressively trying to address those concerns where results can be shared if the member is an IAC and/or has an NDA on file with NCBFAA.
       The TSA issued an emergency amendment to security measures which took effect on March 10, 2011. This disrupted inbound cargo for a few days. We received information from several air carriers with regard to this new measure and they took immediate actions to comply and keep commerce moving.
       Also in 2011, CBP and TSA developed the ACAS (Air Cargo Advanced Screening) Pilot. Committee members have joined several conference calls and meetings to ensure the voice of the forwarder is being heard in the development of the process and regulations. This is the first true joint venture pilot with the two agencies. Minutes from the recent ACAS meeting in Chicago, IL can be found in the members’ only section of the NCBFAA website.
       Air Freight Committee chair joined the 3PL Policy Forum hosted by TIA and AFA. Discussions included FMCSA Regulatory Issues; Air Cargo Security; CBP/C-TPAT/Air Cargo Screening; Lithium Battery Issue; Transportation Security; Highway Reauthorization Bill; & Independent Contractor/Employee Issue. A full report was submitted to the Committee and NCBFAA for the members’ only section of the NCBFAA website.
       The Air Freight Subcommittee is currently addressing cargo handlers and payment of airline TSC. We are requesting comments now for issues, concerns, etc. to facilitate an action plan. Last year we had the re-establishment of the Aviation Security Advisory Committee (ASAC). AfA is a member and NCBFAA holds an alternate spot. Air Freight Subcommittee, with assistance of Jon Kent, prepared comment on Docket No. APHIS-2009-0018.
       NCBFAA is proud to be a recognized stakeholder in the TSA Transportation Sector Security Risk Assessment (TSSRA). A/F Committee Chair, Donna Mullins, went Washington, DC October 2011, along with Legislative Representative Jon Kent to represent NCBFAA. Information that is not SSI was being posted.
       The Air Freight Subcommittee had new members join this year and we are almost to a full Committee representing all Nine Areas of the NCBFAA. If you are interested in participating on the Committee, please let us know.


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