Maximizing Intelligent Enforcement: Second in a Four-Part Series on U.S. CBP Priorities

The road for global trade opportunity, security and compliance during the next four years will consist of four distinct lanes, while United States Custom and Border Protection (CBP) policies will serve as the “guardrails,” said Brenda Smith, Executive Assistant Commissioner for CBP’s Office of Trade, told attendees of the East Coast Trade Symposium in December 2017.  

The four lanes comprising CBP’s trade strategy include:

  • Intelligent Enforcement--which calls on CBP to integrate its resources across the US government and apply them to enforcing trade laws and regulations, including both Intellectual Property Rights (IPR) and forced labor.
  • Next Generation Facilitation--which looks at opportunities for deregulation and new business models, or what the CBP is calling a move toward an updated 1993 Customs Modernization Act, or “Mod Act 2.0.”
  • Resource Optimization--which focuses the agency’s attention on getting the best value for the U.S. dollar, and determining what level of resources CBP needs and the willingness of its stakeholders to invest in the agency
  • Secure Trade Lanes--prioritizing CBP’s effort to protect against high-risk goods moving into and out of the U.S. Click Here for Part One of the CBP’s Future Four Lane Priorities. 

Smith’s address and panel discussions at the East Coast Symposium highlighted Intelligent Enforcement--with a strong focus on IPR, as well as forced labor used in manufacturing goods and Anti-Dumping/Countervailing Duties (AD/CVD).

Recent modifications to The Trade Facilitation and Trade Enforcement Act (TFTEA) of 2015, have given CBP new authority to take on “complex and often deeply hidden methods of illicit trade,” including evading AC/CVD or using forced labor in the manufacturing supply chain, Smith said.

She recommended that stronger enforcement include an integration of resources, authorities and knowledge across the U.S. government, including working closer with sister agency Immigration and Customs Enforcement (ICE), as well as the U.S. Justice Department and using U.S. Treasury Department sanctions to pursue violators.

 

Enforcing Counterfeit Goods Violations

During the first half of 2017, CBP seized more than $14 million in counterfeit goods. As a result of four operations conducted at five ports, the federal agency seized 821 shipments of counterfeit goods. Top counterfeit goods this past year included apparel/accessories, handbags/wallets, footwear and consumer electronics.

According to CBP statements last year, enforcement has become “multi-layered.” In addition to seizing goods at U.S. borders, a broader strategy discussed at the symposium includes expanding the border through post-import audits of companies that have been caught bringing fake goods into the U.S., collaboration with trading partners, and partnering with industry and other federal agencies. The theft of IPR and trade in fake goods threatens America’s economic vitality and national security, and the American people’s health and safety. Trade in these illicit goods funds criminal activities and organized crime.

 

Collaborating on Due Diligence and Forced Labor

Around the world, there are 151 million children ages 5 to 17 in child labor, according to a 2012 to 2016 trend survey released by the International Labour Organization. One in five children in Africa is involved in child labor, making it the region where the risk of child labor is greatest, followed by Asia and the Pacific.

Elevating forced labor--including child labor--to a high-level CBP focus includes encouraging  stakeholders in U.S. trade to closely examine supply chains to ensure goods imported into the U.S. are not mined, produced or manufactured, wholly or in part, with prohibited forms of labor, i.e., slave, convict, indentured, forced or indentured child labor.

As part of the symposium, U.S. Department of Homeland Security (DHS) Deputy Secretary Elaine Duke, in her last speech as acting secretary, emphasized that DHS is committed to helping end forced labor. “Forced labor is one of the most complex supply chain issues facing the global economy,” said Duke. “The news is full of stories about devastating conditions faced by people in forced labor including children…forced to work in sweat shops with dangerous conditions—forced labor is a form of modern day slavery,” she said.

In August 2017, in the wake of the passage of the “Countering America’s Adversaries through Sanctions Act”-- CBP advised trade stakeholders to develop broader supply chain strategies regarding forced labor risks. While TFTEA has already raised the stakes on forced labor by eliminating the consumptive demand exception, this Act takes it a step further.

The statute now specifies that merchandise made by North Korean laborers, regardless of location, is presumed to be made with forced labor, and subject to an import ban, unless the importer can demonstrate “by clear and convincing evidence” that North Korea forced labor was not involved in the production of the merchandise. No official guidance has been provided to use in determining whether North Korean laborers may be present in a given supply chain. The risk of North Korean labor appears to be especially high in northeastern China, but North Korean laborers are known to be working in more than a dozen industries across more than 40 countries.

Where CBP finds such evidence of North Korean labor, the agency will deny entry, which may include seizure of the merchandise, and refer the issue to ICE/DHS with a request to initiate a criminal investigation for violation of U.S. law.

 

Empowering AD/CVD Investigations

The changes to the TFTEA under the Enforce and Protect Act (EAPA) provision also created a new AD/CVD enforcement body within CBP that is authorized to investigate claims by any means possible, including new investigatory powers to demand information from foreign suppliers suspected of violating or evading AD/CVD orders.

EAPA provides both domestic producers of goods a new mechanism to formally petition CBP to investigate suspected AD/CVD evasion. Within 15 days of a formally filed “request for investigation”, CBP will initiate an investigation of the allegation. CBP will then have 300 days to complete the investigation and make a determination. U.S. AD/CVD investigations are typically prompted by a company or industry group filing a petition alleging harm from imports being sold below market value (or subsidized). As of May 2015, $2.3 billion in AD/CVD owed to the U.S. government remains uncollected. Enforcement of AD/CVD trade law has been a priority of the White House administration as can be confirmed by an Executive Order issued March 31, 2017, which aims to close this gap by requiring CBP to step up  enforcement, while also instructing the agency to require additional customs bonds at time of importation. From Jan. 20 through Oct. 19, 2017, the Department of Commerce initiated 73 AD and CVD investigations--a 52 percent increase from 2016. 

With more domestic parties expected to petition to initiate EAPA investigations, CBP has increased its investigations of potential evasion of AD/CVD orders. EAPA allows CBP to lead AD/CVD evasion investigations (as opposed to DOC) in an effort to increase enforcement efforts.

U.S. importers will need to pay increased attention to compliance policies and procedures to avoid triggering increased customs bond requirements and further mitigate the risks of customs violations.

 

Solutions from Integration Point

The Integration Point Global Trade Content solution is a comprehensive collection of global trade regulations and regulatory knowledge for more than 200 countries and territories, which organizes and maintains updated customs data from around the globe, regardless of location or language. In addition to management of Harmonized Tariff Schedules, Denied Party & Embargoed Countries Lists, Supply Chain Compliance tools, GTC oversees Main, Preferential, WTO and AD/CVD Rates.

With Integration Point Trade Analyzer and Global Content solutions, global traders get the best of both worlds. In a single screen, exporters and importers can quickly compare the risk of doing business with specific countries and compliance criteria, as well as research new strategic trade lanes for duty savings and risk avoidance.

Integration Point Supply Chain Compliance solution also conducts vulnerability assessments of business partners, mapping cargo flow and conducting threat assessments. The solution focuses on other areas of risk such as product safety and corporate social responsibility, specifically traders suspected of goods produced by forced labor.

Check back soon for Part 3: Resource Optimization, CBP Identifies Four Key Components for Future Trade Growth.

 

U.S. Customs and Border Protection (CBP) has announced the agency is postponing initial implementation of changes to its in-bond regulations for several months--after it had planned to end a flexible enforcement period on Feb. 25, 2018.

The original date of the new regulations was Nov. 27, 2017. CBP’s announcement extends the period of leniency. 

The agency is also indefinitely postponing the implementation of a provision in the Nov. 27, 2018, final in-bond rule to require the inclusion of the six-digit HTS number on Immediate Transportation (IT) in-bond transportation entries. IT entries allow merchandise, upon U.S. arrival, to be transported to another U.S. port, where a subsequent entry will be filed.

On July 2, 2018, CBP will no longer accept paper CBP Form 7512 (Transportation Entry and Manifest of Goods Subject to CBP Inspection and Permit), according to the announcement.

On Aug. 6, 2018, electronic reporting of all transactions will be mandatory for carriers, and CBP will not accept paper copies of CBP Form 7512 for arrival and export functionality.

Also on that date, electronic reporting of bonded cargo location and of diversion to a port “other than reported on the original in-bond” will be required. The Automated Commercial Environment will reject arrival if neither of these reports is performed, CBP said.

Source: American Shipper

All trucking companies in Mexico must have a commercial certification-Socio Commercial Certificado--and working in coordination with an Operador Económico Autorizado (OEA)-certified company by December 31, 2017, in order to be able to continue using fast access lanes when crossing the border.

The Customs Trade Partnership Against Terrorism (CTPAT) program has encouraged the exchange of data with Mexico’s Authorized Economic Operator (AEO) program also known as OEA (AEO/OEA), formerly known as the New Scheme of Certified Companies (Nuevo Esquema de Empresas Certificadas (NEEC). The process entails a two-step process to enable OEA Mexico to grant preferential benefits to CTPAT companies who export cargo into Mexico. Certification is encouraged to strengthen supply chain security and to promote the competitiveness of various foreign trade players within Mexico.

For businesses that did not obtain commercial certification by year’s end, they can do so quickly and efficiently in 2018 using Integration Point Supply Chain Compliance solution.

Finding a Solution

Integration Point Supply Chain Compliance product not only provides organizations the ability to validate the security of their supply chain but also improves supply chain visibility.

Companies search to find the most cost-efficient sourcing for products and raw materials. This requires a full assessment of costs including duty rates and rules of eligibility for preferential treatment. Manually navigating assessments can take days--and once information is collected, analyzed and shared, data could already be out-of-date.

The Integration Point Supply Chain Compliance solution assists in collecting information required for any compliance certification or regulation, enforcing safety standards for product safety, and providing the framework for building a corporate social and environmental responsibility (SER) program.