US Customs and Border Protection (CBP) is changing how it handles the import process for certain key industries, including pharmaceuticals and electronics and, soon, automotive, aerospace, petroleum, agriculture, metals, textiles, and others. These changes mean that import shipments in these industries will be reviewed by CBP personnel with a higher level of industry-specific expertise than the average local port official. While CBP promises that this change will speed clearance and provide additional service to importers, it also means more knowledgeable CBP personnel will to be able to spot issues, ask questions, and initiate enforcement actions. Particularly for products in these industries, and especially while these CBP changes are just beginning, importers should consider tightening up internal compliance review procedures in order to find and eliminate errors before CBP does.
CBP has announced, in the interests of modernizing import processing, that the agency is opening nine industry-specific Centers of Excellence and Expertise (CEE). The centers will be made up of CBP personnel with expertise in certain specific industries. CBP’s stated goals for the CEE program are to lower the trade community’s cost of business by providing one-stop processing and increased consistency and predictability, and also to enhance enforcement. CBP explains that revenue collection will continue to be carried out at the ports of entry, but the centers will perform “validation activities, protests, post entry amendment/ post summary correction reviews, and prior disclosure validations for the trusted partners” in each industry. When CBP states that the CEE review will apply to “trusted partners” this means importers that are Customs-Trade Partnership Against Terrorism (C-TPAT) certified or enrolled in the Importer Self-Assessment (ISA) program.
The centers will serve to link together personnel from across CBP with industry-specific knowledge. Although the CEEs exist virtually, the centers are coordinated out of cities relevant to the trade community. Centers are open now for Electronics (coordinated in Los Angeles) and Pharmaceuticals, Health & Chemicals (coordinated in New York). By the end of Fiscal Year 2012, centers for Automotive & Aerospace (coordinated in Detroit) and Petroleum, Natural gas & Minerals (coordinated in Houston) will be open. In Fiscal Year 2013 CBP expects to establish five more centers focusing on (1) Agriculture & Prepared Products; (2) Base Metals & Machinery; (3) Consumer Products & Mass Merchandising; (4) Industrial & Manufacturing Materials; and (5) Textiles, Wearing Apparel & Footwear – bringing the total number of CEEs to nine. CBP is currently accepting applications to participate in a three-year general test to develop the CEEs. The test program will transfer broad decision-making authority that currently rests in the Port Directors to the Directors of the Electronics; Pharmaceuticals, Health & Chemicals; Automotive & Aerospace; and Petroleum, Natural Gas & Minerals CEEs. The required entry documents and certain revenue-related functions, such as requests for computed value information, waivers of invoice requirements, issuances of all Requests for Information and Notices of Action, extensions and suspensions of liquidations, and reviewing and acting on protests will be performed by the CEE Director rather than the Port Director. Eligible importers will have the opportunity to apply for the CEE that represents the industry that comprises the highest percentage of its entries, even if the full range of goods it imports could conceivably fit under several industries. Each importer will have an account manager to act as a point of contact for any and all issues that arise during the import process.
The CEE program is another step in CBP’s ongoing commitment to risk segmentation, streamlining the import process for trusted importers while simultaneously increasing enforcement scrutiny of shipments deemed higher risk. CBP believes this will lead to a more efficient use of agency resources and better enforcement results. CBP states that the CEE program seeks to “focus resources on high-risk shipments and importers that may pose a danger to US border security, harm the health and safety of consumers, or violate US trade laws and intellectual property rights critical to our nation’s economic competitiveness.” At the same time, CBP trusted partners should see a reduction in transaction costs, “greater transparency and uniformity of action within a given industry,” and increased agency expertise.
The CEE project has different potential impacts for different types of importers. First, for importers that are not yet “trusted partners” as members of C-TPAT or ISA, the CEE program shows that CBP continues to look for ways to free up and focus enforcement resources on these non-member companies. For companies that have been wondering whether to join one or both of these programs, the incentives to do so have been steadily increasing and the CEE program is another step in that progression. Second, for a company that is already a “trusted member” in one of these programs, and for especially importers of products in the industries listed above, one can expect to see a subtle but important difference in the scrutiny received. Such companies will be increasingly less likely to receive broad, unfocused requests for information for general background information to help the port official understand the imported goods. Instead, CEE experts are more likely to spot inconsistencies among the various import documents associated with a shipment or series of shipments, finer distinctions for classification, unlikely countries of origin or unusual values or sales terms. Companies should not assume that their “trusted partner” status would prevent a CEE expert from taking the position, “well, anyone with real experience in the industry should know that…” In essence, the CEE concentration of expertise could raise the compliance bar. Companies should consider whether existing internal compliance review procedures consider the “finer points” and also involve a holistic view of the transaction – to seek out internal inconsistencies across all the relevant documents – before a CBP official in a CEE finds them.