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NCBFAA In the News 

Industry Wary of Enforcement Provisions in Customs Bill, Though Facilitation Bill to Follow

Dec, 12, 2023 | Mara Lee

12 Dec 2023 by Mara Lee/ Warren News 

National Customs Brokers and Forwarders Association of America President J.D. Gonzalez said the trade group thinks the Customs Modernization Act is heavily focused on enforcement, and the group is "a little disappointed" that some of the items that NCBFAA talked about with Sen. Bill Cassidy, R-La., didn't find their way into this bill.

Cassidy said in a news release announcing the bill that he is committed to introducing a bipartisan trade facilitation framework in 2024.

Gonzalez said NCBFAA is looking forward to seeing what that bill holds, and hopes that it addresses the issues of partner government agencies that are not fully integrated into ACE, and that if an import is released by CBP, it's not later called back by another agency.

He said this bill is largely what CBP was initially asking for in the 21st Century Customs Framework.

National Foreign Trade Council's John Pickel, senior director for international supply chain policy, agreed with that assessment. He also said the bill is more specific than the initial discussion draft Cassidy released, and is informed by the 21st Century Customs Framework that came out of the Commercial Customs Operations Advisory Committee (COAC). Pickel said NFTC staff are still digging into the nuances of the 65-page bill -- the text was only released on Dec. 11 -- but added: "I don’t think there are any big surprises."

Gonzalez said he's concerned that because the facilitation side is being handled separately, the Customs Modernization Act, which is mostly a compilation of CBP's requests, could pass, and the facilitation bill could fail in "this political climate." The political climate is focused on being tough on China, he said.

Underscoring that point, Senate Finance Committee Chairman Ron Wyden, D-Ore., said he looks forward to working with Cassidy and his co-sponsor, Sen. Sheldon Whitehouse, D-R.I., on customs modernization, calling them "smart, savvy legislators who understand this is a unique period of time. Every piece of legislation goes through a prism of what we can do to make our country more competitive with China ... ."

Whitehouse, in an interview at the Capitol, said trade interests are "welcome to make their views known," and said he expects there will be a hearing on the proposal.

Pickel said that while this bill "is obviously very enforcement heavy," the fact that Cassidy is working on another bill, and that both will go through the committee process should be kept in mind. The bill as introduced isn't what will become law, he said.

He's not concerned trade facilitation will be neglected. He said from his discussions with staffers of the senators working on that bill, he thinks it will be introduced relatively early in 2024. "Having dealt with the Finance Committee in a number of different capacities, I would say that they're always very, very attuned to the need to have two sides of the same coin -- effective, efficient enforcement, but also to have robust trade facilitation measures as well." Pickel worked for CBP in congressional affairs during the drafting of the Trade Facilitation and Trade Enforcement Act of 2015.

Whitehouse highlighted changes in CBP's ability to share information about counterfeit goods as the most critical aspect of the bill. That is a change the Hill has sought for many years -- Pickel said for about 10 years, and added: "It makes a lot of sense."

Whitehouse said non-disclosure of trade information "can be used to facilitate extremely bad behavior, including international money laundering." Counterfeit sales "is one of the mechanisms" of that money laundering, he said.

One of the elements in the bill that didn't come from the 21CCF effort is public disclosure of air, rail and truck manifests. Ocean manifests are already public, and researchers frequently use them to track inputs from Xinjiang or sanctions evasion. Pickel said even though this was not from 21CCF, it also wasn't a surprise, since Cassidy and Whitehouse had recently introduced a stand-alone manifest disclosure bill.

Pickel said that while non-governmental organizations argue that making air cargo manifests public will be very helpful to investigating ties to forced labor, the fact that air cargo is more likely to be shipped to someone's home means there need to be discussions "about how to appropriately protect personally identifiable information. Air Cargo might need some guardrails to safeguard that information."

Because ocean manifests are transmitted a longer time ahead of arrival, they have more time to scrub information, such as when private information was put in the wrong data field.

Gonzalez said he thought it was feasible to make air and rail manifests public, but said that truck manifests may not be, because those companies don't rely as heavily on automation.

Whitehouse said he believes public release of manifests from all modes of transportation will help root out goods made with forced labor "because it allows many more eyeballs on the problem. It has the same potential as crowdsourcing does, of providing more attention than the limited resources of law enforcement are able to."

Pickel said the Customs Modernization Act's changes to record-keeping requirements are something NFTC is polling its members about. He said he's not sure CBP and the trade are on the same page on what the right data to retain is, and what the right retention period is.

The bill explicitly gives CBP authority to take regulatory action it's already working on, to lay out what advance data is needed for informal entries and for de minimis entries.

"It’s something that the industry has been working very closely with them on," Pickel said. He said the information required for those entries could have an impact on how fast packages can travel between exporter and purchaser, and the transaction costs for these types of packages.

He said he doesn't think the bill will change CBP's course on the regulation, but it does note "that information being required should serve a well-defined government need."

The areas of the bill that NCBFAA is most troubled by are the removal of the gross negligence standard, and the end of an administrative process for prosecuting customs fraud, instead starting prosecution in court.

PIckel said the removal of the gross negligence standard was done to align with the False Claims Act, used to conduct criminal prosecutions. There may be other implications, he granted, and NFTC would want to make sure "it's not, in effect, sort of over-applying [the] fraud [standard] just because there's no gross negligence standard.

Both Gonzalez and Pickel identified PGA integration and the end of conditional releases by PGAs as the No. 1 trade facilitation priority for importers.

"Redelivery is tremendously frustrating and expensive for the trade community," Pickel said. Businesses hope that when CBP officials say "something is cleared for release, it's actually cleared for release."

Some observers of Congress have said a customs modernization bill cannot pass in an election year, while others have said because it's noncontroversial, it could get done in 2024. When asked about the bill's prospects next year, Whitehouse replied, "I hate to predict those things, but it's bipartisan, it's needed, and it will help with our national security as well as our trade security, so I think there are solid reasons for optimism."

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