CUSTOMS AND BORDER PROTECTION REAUTHORIZATION LEGISLATION
The National Customs Brokers and Forwarders Association of America, Inc. (NCBFAA) looks forward to the introduction of legislation authorizing Customs and Border Protection (CBP). Although legislation had been expected in previous Congresses, the House Ways and Means Committee and the Senate Finance Committee have dedicated significant staff time to generating a bill addressing the high priority issues that commercial trade operations demand. Although neither a House nor Senate bill has been introduced, legislation is anticipated during the closing months of the 112th Congress. NCBFAA has worked closely with the committees, both as a resource and advocate.
Following are a number of issues that customs brokers would like to see addressed in the upcoming CBP legislation:
- Role of the Broker. The customs broker’s role in facilitating trade has constantly evolved since the early days of the Customs Service in the late 1700s. In fact, since the last time that Congress addressed the role of the broker in the mid-80s, the profession has advanced light years from the hand-written customs entry. An update requires the customs broker to assume more responsibility in the processing of entries; in educating themselves, the importer and the public; in maintaining the highest standards of competency and integrity; and in being a “force multiplier” in its partnership with CBP.
- Drawback Modernization. “Drawback” is an incentive to export by crediting exporters with the import duties that they have paid for those products or their components. Thus, duty paid on an import is almost entirely rebated once the goods are exported. The process, however, has become hopelessly complex, time-consuming and resource-intensive for exporters and for CBP. Legislation is needed to simplify and modernize these processes.
- ACE. Automation is the foundation of the modern customs service. The Automated Commercial Environment (ACE) is required to replace a 30-year old system so that entries can be processed, revenue can be collected, other agency regulatory requirements can be met, and merchandise that threatens our economic and physical health and safety can be interdicted. Architects of the new system must be attentive first to standing up the remaining core functions necessary for the processing of a commercial entry. America’s customs brokerage industry and our clients in the trade community rely on its speedy deployment.
- Anti-dumping/Countervailing Duties. Congress has recently been concerned about these duties at two levels: first, for several reasons, including fraud, revenues have been under-reported and under-collected; and, second, importers are unable to forecast their exposure at the time of importation and may find many months later that they have significantly higher duties than they may have contemplated. CBP is imposing a single transaction bond requirement that often proves unfair and/or costly to the private sector parties involved in the transaction. Short of a comprehensive overhaul, ADD/CVD procedures require legislative attention to make them more equitable, more transparent, and more effective.
NCBFAA supports introduction of customs reauthorization legislation addressing these and other issues. We think that a well-crafted bill can make an important contribution to the day-to-day operations of the agency.
Capitol Hill Topic of Discussion: Russia and PNTR
Russia Accedes to the WTO: On August 22, Russia became the 156th member of the World Trade Organization (WTO) after 18 years of negotiations over what reforms it must undertake before being allowed to join the WTO. Other WTO member countries are eager to reap the benefits of Russia’s new status, which includes lower import tariffs, better protection of intellectual property and investments and increased transparency. As the 9th largest economy with more than 140 million consumers, there are significant business opportunities in Russia. Infrastructure spending alone is expected to exceed $500 billion over the next five years.
The U.S. and Jackson-Vanik: Unless and until Congress acts, however, the U.S. is the one country that may not fully benefit from these export opportunities -- due to the Jackson-Vanik amendment, now a mostly symbolic remnant of the Cold War. For many years, Russia has been subject to the Jackson-Vanik amendment to the Trade Act of 1974, which was intended to press the Soviet Union to allow emigration of Soviet Jews and victims of religious persecution by denying Permanent Normal Trade Relations (PNTR) to Russia unless the President certifies annually that Russia is meeting the emigration requirements. Every President since 1992 has issued the certification.
Under WTO rules, all member countries must grant every other WTO member country unconditional Permanent Normal Trade Relations (alternately called “Most Favored Nation” status). Therefore, until the United States ends the Jackson-Vanik amendment for Russia, the U.S. is in clear violation of the WTO. As a result, Russia can deny the U.S. the tariff and non-tariff benefits that the 154 other WTO members enjoy.
What Needs To Be Done: Congress needs to approve a short and simple bill granting Permanent Normal Trade Relations (PNTR) to Russia. Contrary to a common misconception, this will not give any trade preferences to Russia. It simply removes the Jackson-Vanik restriction, with its annual certification process, from Russia. In doing so, it will ensure U.S. businesses can compete in the Russian market on the same footing with our European and Asian competitors.
Why Does It Matter: Russia is a promising export market. To delay PNTR for Russia puts the United States at a disadvantage in that market. For example, the Russian import tariff on light commercial vehicles immediately drops from 25% to 15%. Yet, U.S. automakers may not be able to receive the lower tariff if we fail to comply with WTO rules.
The Outlook: The House is expected to vote on PNTR for Russia as early as September 12.