Written by Laurie Arnold, NCBFAA Secretary
The June 3 Executive Order (EO) 14411 established a new framework intended to strengthen supply chain security, improve importer accountability, and enhance U.S. Customs and Border Protection’s (CBP) ability to identify and address non-compliant trade activity. A central component of the EO is the increased responsibility assigned to Customs Trade Partnership Against Terrorism (CTPAT) validated customs brokers when representing foreign Importers of Record (IORs). In the months ahead, customs brokers, importers, CBP, and industry organizations such the American Association of Exporters and Importers (AAEI) and the National Customs Brokers and Forwarders Association of America (NCBFAA) will need to work collaboratively to ensure the new framework enhances supply chain security and importer accountability while remaining practical and achievable for legitimate trade participants.
The EO represents a significant shift in the customs brokerage landscape and will have far-reaching implications for CTPAT validated customs brokers (CVCBs) and foreign Importers of Record (FOIRs). The challenge for the industry today is that while the EO outlines the government’s intentions, many of the specific implementation details, documentation requirements, and compliance expectations are still under development. As a result, customs brokers and foreign importers should begin preparing now, while recognizing that additional CBP guidance is needed.
FIORs will be required to obtain validation through the CTPAT program or utilize a licensed CVCB for customs entry filing activities. This requirement is intended to ensure that foreign importers are subject to a level of scrutiny and accountability comparable to U.S.-based importers.
One of the most significant changes introduced by the EO is the requirement for CVCBs to conduct enhanced due diligence on foreign importer clients. CBP has indicated that customs brokers will be expected to perform a comprehensive review of foreign IORs before conducting customs business on their behalf. These expectations represent a substantial expansion of current importer onboarding procedures and may require customs brokers to implement more formal client qualification and risk assessment processes. Customs brokers will be looking for additional documentation from the FIOR, such as articles of incorporation, business registrations, tax identification, and evidence of legal authority to transact business. The FIOR will need to provide full ownership and corporate structure information, along with financial and details of previous trade activity, with documentation indicating how the FIOR reached HTS, valuation, and origin determinations.
CBP also introduced the concept that importers must remain in “good standing” with the agency. If a FIOR loses its “good standing,” it may be prohibited from importing goods into the U.S. or from appointing a customs broker to act on its behalf. CBP currently has not fully defined what determines “good standing.”
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