With 2009 soon coming to an end, U.S. Customs and Border Protection (CBP) last week hosted its annual Trade Symposium, titled “A Decade of Progress Through Partnership.” The event marked the 10-year anniversary of CBP hosting the annual Trade Symposium – originally designed to provide a forum for CBP and the trade to ensure the agency was being responsive to the issues of the trade community.

The 2009 Symposium provided some firsts, demonstrating that perhaps we can expect more changes from CBP. This year, for the first time, the Symposium was held at the Washington, D.C., Convention Center, allowing more registrants to attend as compared to prior years at the Ronald Reagan Building. Additionally, CBP provided the option to participate in the event via live webcast for a small fee – a welcome alternative during tough economic times. Furthermore, CBP created a trade team early in the process to provide input regarding the agenda – both topics and content. As a result, key areas of interest for the trade were included to a large degree in the symposium content.

The following is a general overview of some key topics covered during the three-day event.

Leadership Changes

After 33 years of Federal service, Acting CBP Commissioner Jayson (Jay) Ahern will be retiring at the end of 2009. Ahern was named Acting Commissioner following the retirement of Commissioner W. Ralph Basham in February 2009.

Alan D. Bersin, currently the Assistant Secretary for International Affairs for the Department of Homeland Security and Special Representative for Border Affairs, has been appointed by Secretary Napolitano as the next CBP Commissioner. To date, however, there has been no hearing scheduled by the Senate to act on this appointment. With this in mind, both the trade community and CBP will likely enter 2010 without key leadership in place. The impact of this on day-to-day activities at CBP, or more importantly long-term strategic planning, has yet to be seen.

Importer Security Filing (ISF)

With enforcement beginning on January 26, 2010, ISF was a hot topic of conversation both at the general session and during the breakout meetings. For those who still think there is a chance that enforcement will be delayed – it is time to face reality. CBP has no intention of delaying enforcement.

On a positive note, CBP does plan to take an Informed Compliance approach, much like it did with the 24-Hour Rule. This will include initial use of the least punitive measures, including issuing warning letters, increasing the number of examinations and, where appropriate, withholding cargo release. “Do Not Load” (DNL) directives will only be used in the most serious cases, at least for now. CBP indicated that it is far more interested in receiving data from the ISF than holding cargo or pursuing liquidated damages.

That being said, importers should note that although they may not incur $5,000 per violation in liquidated damages, the cost of delay of cargo due to increased exams and/ or withholding release can quickly exceed the maximum $5,000 per violation monetary penalty.

To ensure a consistent approach in the handling of violations, CBP will be centralizing the management of all ISF penalties through Headquarters (HQ) for the first year. The ports will initiate any penalty, but will then forward to HQ for review and handling.

Progress Reports are reflecting some new information starting this month. In addition to measuring timeliness against the first bill of lading filing date in AMS, the reports will now show timeliness as measured against the vessel departure date minus 24 hours. This is not an indication that CBP has changed the metric with respect to the timeliness issue, only that the reports will now reflect the additional indicator that CBP is using to determine timeliness of the ISF.

State of the Border

This year’s symposium featured a panel with Customs officials from the U.S., Mexico and Canada to discuss a variety of issues surrounding our shared borders. The following are some of the highlights of that discussion:

  • All three countries stressed the importance of harmonization of customs processes and the single window concept. This is consistent with the WCO “Customs in the 21st Century” and although each customs administration is at a different stage, all three countries are devoting resources to this goal (Mexico will begin work in 2010). This harmonization should extend to all facets – including advance data requirements (e.g., 10+2 and eManifest).
  • Based on the challenges that Mexico faces with respect to corruption, the topic of reform is one its top priorities. This includes changes in how hiring is conducted, on-going follow-up on employees, and ensuring salaries and incentives exist to keep personnel “clean.” Additionally, Mexico is working with the World Bank on a four-to-five-year project that includes a review of the complete trade process. This is expected to result in changes in the customs laws, regulations and handling of human capital.
  • Further harmonization of partnership programs such as C-TPAT and PIP are needed and are being addressed. Although a mutual recognition agreement has been signed between Canada and the U.S., dual application processes still exist, and both countries are committed to making progress in this area in 2010. Mexico will be initiating a pilot program in 2010 for its own Authorized Economic Operator (AEO) program.
  • All three countries emphasized the need for improving risk management, more efficient use of resources and enhancements to infrastructure to prevent further “thickening of the border.”

The Ruling Process

Lack of timely processing of ruling requests has been an on-going complaint from the trade for some time, and the breakout session on the ruling process provided some insight into current processing times and plans for improvement. There were 6,821 prospective rulings submitted in 2009. New York rulings should be issued in 30 days; currently they are averaging 22 days for manually filed rulings and 19 to 25 days for E-rulings. Some importers have reported receiving a decision on E-rulings in as little as five days. Headquarters rulings should be issued in 90 days. Despite these figures, there still exists a tremendous backlog of requests yet to be addressed. One way that the Office of Regulations and Rulings (OR&R) will be addressing the backlog will be by undertaking a “blitz” over the next four to six months to reduce the number of stale ruling requests outstanding.

Miscellaneous Points of Interest

Although not all of the following subjects warranted a specific panel discussion or breakout session, there was a consistent thread noted throughout the symposium touching on these topics.

  • Small and mid-size enterprises (SME) are more prominent in discussions with respect to modernization and trade facilitation. This was apparent in the panel on modernization where CBP specifically stated it is looking at ways to better engage the SMEs. The Office of Trade Relations has been more active in this regard. Options for SMEs require simplification, however, and the current state of the regulatory environment is anything but simple. CBP is open to options, but cost will be a consideration. SMEs were also clearly a concern with respect to trade facilitation. CBP unmistakably indicated that partnership programs and future approaches such as account-based management must be accessible to SMEs.
  • The concept of account-based management is alive and well. CBP has clearly indicated that it will be moving away from transactional processing and looking for a more holistic approach. This process will require substantial investment of funds and resources as well as addressing potential statutory restrictions currently in place. As CBP moves forward in this area, however, Acting Commissioner Ahern noted that “CBP does not want to give large companies a monopoly on Account Managers and leave out the SMEs.” This line of thinking could suggest some unwelcome changes for large importers in the future.
  • Tom Winkowski, Assistant Commissioner, Office of Field Operations, also clearly stated that “the days of security and compliance being separate are long gone.” This could open the door for traditional security data being used for compliance purposes. With this in mind, importers can expect a further blurring of the lines when it comes to safety, security and compliance. As we close out 2009 and head into a new year, we can expect some changes from CBP in the coming decade. What strategy will be unveiled with the appointment of a new CBP Commissioner is yet to be seen, but it appears that 2010 will be anything but routine.