Acting Commissioner’s Comments
Bilateral North America RelationsActing Commissioner McAleenan opened with remarks on CBP’s new initiatives and engagements. This included bilateral engagements with border management agencies in Mexico and Canada. CBP was preparing to sign an agreement with the Mexican customs service, Servicio de Administración Tributaria (SAT), for unified cargo processing and preclearance of certain truck traffic at the border. In the rail environment, he discussed speeding up the cross-border inspection process by shifting more of the rail car scanning and inspection processes away from border crossings and to the rail yards.
He also discussed reducing trade barriers with Canada, further instituting pre-inspection programs, and speeding up trade facilitation. Eventually, the U.S. may be able to harmonize its single window trade processing with Mexico and/or Canada, though technology and policy hurdles remain.
He discussed other topics such as:
- CBP sharing information on intellectual property rights violations with rights holders to improve enforcement, as part of the Trade Enforcement and Trade Facilitation Act of 2015 (TFTEA)
- CBP ramping up enforcement to effectively levy and collect antidumping and countervailing duties (ADCVD), an emphasis of a Presidential Executive Order.
- CBP efforts to improve high risk bonding processes to better manage cargo risk.
- Finalizing the Air Cargo Advance Screening (ACAS) program as an official regulation. ACAS allows CBP to receive air cargo data from carriers earlier in the process to conduct better targeting.
- Combatting the trafficking of illegal, and sometimes very harmful, narcotics in the mail has been a significant challenge with the increase in e-commerce. CBP is challenged to detect certain deadly synthetic drugs without opening packages.
- Risk management and detection methods in this area need to be enhanced.
- Concerning e-commerce, CBP should engage with international partners to obtain the right data, at earlier points in the shipping process.
North American Free Trade Agreement
He expressed hope that CBP would be more involved in the upcoming renegotiations on NAFTA, given the current Administration’s emphasis on trade enforcement. He explained that DHS Secretary Kelly and the Mexican Foreign Secretary, Luis Videgaray, had established a positive working relationship, as had McAleenan with SAT Administrator General, Ricardo Treviño. These relationships should potentially help for a smoother bilateral engagement during and after the ‘new NAFTA’ is renegotiated later this year.
The TFTEA increased the U.S. import de minimis to $800, which has contributed to further growth in e-commerce. However, Mexico and Canada still have a much lower de minimis, which has not reciprocated benefits to U.S.-based e-commerce businesses selling in those countries. Perhaps this can be addressed during the renegotiations.
Automated Commercial Environment
The Acting Commissioner also recognized progress being made on the Automated Commercial Environment (ACE), but encouraged the trade community to continue providing user-feedback so that kinks may be worked out. The Border Interagency Executive Council (BIEC), of which CBP is a key member, would continue supporting ACE and its role in facilitating the U.S. Single Window.
‘Prioritizing American Prosperity’ Panel
This opening panel, moderated by Executive Assistant Commissioner (EAC) Smith, discussed CBP’s trade priorities and how the Agency can work with the trade industry to enforce and facilitate legitimate trade. Panelists included Executive Directors from the Office of International Trade, Troy Riley (Commercial Targeting & Enforcement) and John Leonard (Trade Policy and Planning). From the private sector, Jerry Cook (Hanes) and Eric Miller (Rideau Potomac Strategy), also joined the panel.
‘Trade Transformation 2.0’
Panelists discussed the evolution of CBP’s ‘Trade Transformation’ efforts and how to best handle the next wave of challenges and opportunities, such as the increasing volume of e-commerce, implementing the Trade Facilitation and Trade Enforcement Act (TFTEA), and implementing 2017 Executive Orders on trade enforcement. It was discussed that CBP needed to strategically use data to refine its focus on enforcement; work with legitimate traders to identify violators; and continuously enhance its knowledge of the complexities and interconnectedness of the supply chain.
Implementing the Trade Facilitation and Trade Enforcement Act
Increased De Minimis
Mr. Leonard mentioned that the raising of the de minimis to $800 was key in allowing CBP to release allowable cargo more expeditiously, but also posed a challenge to CBP in allowing the Agency less knowledge about the contents of that cargo, a challenge that would have to be balanced.
Enforce and Protect Act
Mr. Riley discussed the EAPA and how it establishes procedures for submitting and investigating ADCVD allegations, as well as CBP’s responsibility in tracking and reporting allegations of evasion from receipt, vetting and enforcement, to final disposition. Mr. Riley acknowledged that most of the currently uncollected $2 Billion in ADCVD would not ultimately get collected for various reasons out of CBP’s control, such as assessed companies going out of business or having been created as shell companies for nefarious purposes.
Combatting Forced Labor
Mr. Riley also discussed CBP’s efforts to crackdown on the import of goods made with forced labor and how this was an area where private sector collaboration was critical in rooting out violators.
Coordinating with Other Government and Industry Stakeholders
Mr. Riley referenced how CBP was working with its Commercial Operations Advisory Committee (COAC), the Department of Commerce, the Treasury Department, and U.S. Trade Representative on enforcement areas such as intellectual property rights infringements and ADCVD.
Risk Assessment, Predictive Analytics, and Unique Identifiers
Panelists discussed that, to combat dumping and other violations:
- Bonds need to be set appropriately,
- Quantitative risk assessments must be conducted along with predictive analytics to identify high risk cargo,
- ACE portal capabilities need to be leveraged to feed data into risk assessment models.
- Additionally, it was stated that unique identifiers were needed to track trade entities and their cargo through the supply chain in order to conduct better risk management and facilitate Mutual Recognition Agreements (MRAs) between trading partners’ trusted trader programs.
Border Interagency Executive Council (BIEC) Vision Panel
Deputy EAC for the Office of International Trade, Cynthia Whittenburg, moderated the BIEC panel that featured a representative from the Retail Industry Leaders Association (RILA), and representatives from the Departments of Agriculture and Commerce.
Risk Management through Interagency Collaboration
The Panel primarily focused on risk management:
- USDA discussed how it is using ACE data to perform quicker inspection and release processes.
- RILA stated that other agencies with equities in trade at the border could learn lessons from CBP in targeting efficiency.
- Commerce discussed how advancing the interagency Single Window initiative could ensure regulations were met with efficiency for the private sector, particularly as the new E-commerce environment demands faster processes from the government.
- RILA rep criticized budget cuts to Commerce in the areas of data collection, as it is critically needed for efficient risk management and enforcement.
Advancing ACE/Single Window
DEAC Whittenburg discussed how the BIEC will continue to promote ACE as the U.S. Single Window platform and work to obtain the appropriate funding.
‘Driving Global Innovation’ Panel
This panel featured CBP representatives from the Offices of International Trade, Information & Technology, and the Cargo Targeting Center in Field Operations, as well as DHS Science & Technology, and a private sector representative. Panelists discussed how new technology could be used to manage risk in the trade environment and how DHS was partnering with small technology businesses to cultivate innovative ideas to improve operations at CBP and other DHS agencies.
CBP panelists discussed continued efforts to refine the cargo targeting process; including the use of machine learning and better mapping of trade data to improve anomaly detection; merging passenger and cargo targeting to identify bad actors through improved data aggregation and entity resolution while minimizing false positives. Another area where progress is being sought is how to share more information with industry in order to help identify violations without breaching any lines of security or confidentiality. A Common Application Framework, or common viewer, would allow for the graphic user-interface of all targeting screens, passenger and cargo, to be transferrable and potentially mobile between Officers.
Port Operations of the Future
Panelists discussed how port operations in the future will become more automated and how the growth of e-commerce and air cargo traffic has already shifted a degree of focus away from the Panama Canal expansion and traditional container shipping. The “CBP Officer of the Future” was described as multidisciplinary and able to be flexible as agency needs adapt to modernization.
There was also discussion of blockchain technology and its applications to DHS. Blockchain began as a method of verifying bitcoin transactions and peer-to-peer data exchanges, but is now being considered as a method of validation for other types of data exchanges, such as trade data through the supply chain. The more the private sector considers adopting blockchain, the faster the government will need to get on board.
‘Commercial Operations Advisory Committee (COAC)’ Panel
The COAC panel brought together representatives of the industry who serve on CBP’s COAC, providing advice to the Agency on an ongoing basis. Valerie Neuhart, CBP’s Acting Director of the Office of Trade Relations, served as moderator. Discussion included the ongoing efforts of the various committees and subcommittees, addressing issues such as trade enforcement & revenue, forced labor, intellectual property rights, trusted trader programs, and interacting with Participating Government Agencies (PGAs). Achievements of the public-private collaboration between CBP and the COAC were noted, such as progress on the Automated Commercial Environment (ACE), export process mapping, and progress on the Air Cargo Advance Screening (ACAS) program.
Enforce and Protect Act (EAPA) Panel
The EAPA Panel was led by Troy Riley, Executive Director, CBP Commercial Targeting & Enforcement. It included other members of the CBP Office of International Trade’s enforcement team and a private sector attorney. EAPA allows for a new authority for CBP in investigating dumping/countervailing allegations. It allows for CBP to take a greater role in gathering data related to an allegation and to coordinate between CBP Commercial Targeting and Regulatory Audit offices and with ICE and the Commerce Department.
Panelists discussed an example case of wire hangers that had been made in China, transshipped through Thailand, and misclassified and undervalued upon entry into the U.S. CBP conducted an onsite investigation in Thailand to determine it could not have been the site of production as claimed. Aside from holding the potential violators accountable, the EAPA also helps create transparency on the side of the alleger, in order to minimize false claims made in harassment of a competitor.
Narcotics and IPR Challenges
The e-commerce panel was led by Mike Walsh, CBP Director or IPR & E-Commerce Division. It also included personnel from the CBP Offices of International Trade and Field Operations as well as trade industry members, including from FedEx Express. Panelists discussed the challenges presented by the rapid growth of e-commerce and express consignment air cargo traffic. While tremendously positive for certain business sectors and consumers, this has also led to growth in the smuggling of opiods, such as synthetic fentanyl, a derivative of the highly addictive painkiller that has led to many overdose deaths.
Counterfeit goods shipped via express consignment that violate IPR laws are also difficult for CBP to detect among millions of small packages. It was noted by a member of the U.S. Chamber of Commerce that 97% of online prescription website vendors had sold fraudulent prescriptions at one point.
Data Availability Challenges
The lack of data available on express consignment air cargo to be vetted within a short time frame by CBP targeting personnel poses significant challenges. The recent increase to an $800 de minimis, the threshold for filing an informal shipment, which means submitting less data and paying less duties, while aiding the growth of e-commerce, has also challenged CBP’s ability to screen cargo.
It was discussed that CBP could use more resources for inspections, perhaps with more postal mail flowing to central examination stations in the U.S. where CBP could concentrate resources. Further coordination with other government agencies has begun to take place as they are able to access more data via ACE as the Single Window. CBP is also issuing more public information on e-commerce compliance. The Agency continues to expend resources to enhance its e-commerce enforcement and intends to release an E-Commerce Strategy in the summer/fall of 2017.
Centers of Excellence and Expertise
CBP Representatives from all ten CEEs around the U.S. were on hand to discuss ongoing operations and initiatives of the Centers with industry attendees. Areas of discussion included:
- Creating a compliant trader profile to identify anomalies against.
- Communication with industry and amongst CBP trade specialists across the U.S.
- Free Trade Agreement and Classification verifications.
- Improving consistent National Account Management processes across all ports of entry.
- Bidirectional education and training for CBP import specialists to learn from the trade community and vice versa.