On February 5, 2020, the Federal Register published Executive Order 13904 of January 31, 2020 – Ensuring Safe and Lawful E-Commerce for United States Consumers, Businesses, Government Supply Chains, and Intellectual Property Rights Holders. The Executive Order (EO) states that e-commerce, including transactions involving smaller express-carrier or international mail packages, is being exploited by traffickers to introduce contraband into the United States, and by foreign exporters and United States importers to avoid applicable customs duties, taxes, and fees. The EO establishes a policy of protecting consumers, intellectual property rights (IPR) holders, businesses, and workers from counterfeit goods, narcotics (including synthetic opioids such as fentanyl), and other contraband now being introduced into the United States as a result of the recent growth in e-commerce as well as protecting the revenue of the United States from individuals and entities who evade customs duties, taxes, and fees.

The EO states that it is the policy of the US:

  • to refer to US Customs and Border Protection (CBP) any person who knowingly, or with gross negligence, imports, or facilitates the importation of, merchandise into the United States in material violation of Federal law evidences conduct of so serious and compelling a nature for a determination whether such conduct affects that person’s present responsibility to participate in transactions with the Federal Government;
  • to consider all appropriate actions that it can take to ensure that persons that CBP suspends or debars are excluded from participating in the importation of merchandise into the United States;
  • that express consignment operators, carriers, hub facilities, international posts, customs brokers, and other entities, including e-commerce platform operators, should not facilitate importation involving persons who are suspended or debarred by CBP;
  • that parcels containing contraband be kept outside of the United States to the greatest extent possible and that all parties who participate in the introduction or attempted introduction of such parcels into the United States be held accountable under the laws of the United States;

The EO requires the Secretary of Homeland Security (the Secretary)

  • to issue a notice of proposed rulemaking to establish criteria importers must meet in order to obtain an importer of record number, which shall provide that any person debarred or suspended by CBP for lack of present responsibility for reasons related to importation or trade shall be ineligible to obtain an importer of record number for the duration of such person’s suspension or debarment by CBP;
  • through the Commissioner of CBP, to take steps to ensure that, within 60 days of the publication in the System for Award Management by CBP of the name of any debarred or suspended person, express consignment operators, carriers, hub facilities, and licensed customs brokers notify CBP of any attempt, of which they know or have reason to believe, by any persons who may not obtain an importer of record number based on any criteria established by the Secretary, to re-establish business activity requiring an importer of record number through a different name or address associated with the debarred or suspended person;.
  • through the Commissioner of CBP, to consider appropriate measures, consistent with applicable law, to ensure that express consignment operators, carriers, hub facilities, and licensed customs brokers cease to facilitate business activity that requires an importer of record number by any person who may not obtain an importer of record number, as provided by any criteria established by the Secretary. Depending on the criteria established, such consideration shall include whether CBP may take any of the following measures: limiting an express consignment operator’s, carrier’s, or hub facility’s participation in any CBP trusted trader programs; taking appropriate action with regard to an express consignment operator’s, carrier’s, or hub facility’s operating privileges; or suspending or revoking a customs broker’s license.

The EO also addresses the use of the international postal network, by requesting the US Postal Service (USPS) to make the policy set forth in the EO known to the international postal network and to make all reasonable efforts to include provisions regarding any criteria for participating in the importer of record program established under the EO in any new contractual instruments it executes with international posts. In addition, the EO requires the Secretary (through CBP) in consultation with the United States Trade Representative, to develop an International Mail Non-Compliance metric and require quarterly reports, then prioritize targeted inspection of imports into the United States from any international post that for two or more consecutive quarters is deemed a non-compliant international post. If permitted by law, the responses to continued listing increases with 6 and 8 quarters may include requiring additional information, up to preventing the importation into the United States of shipments dispatched from such posts, regardless of whether additional information required by CBP is provided.

On a periodic basis, and consistent with Federal law and executive branch policy reflecting non-disclosure of sensitive information, the Secretary, through the Commissioner of CBP and the Director of United States Immigration and Customs Enforcement (ICE), is required publish information about seizures arising in the international mail and express consignment environments that involve intellectual property rights violations, illegal drugs and other contraband, incorrect country of origin, under-valuation, or other violations of law of particular concern. In determining which information to publish, the Secretary shall give greatest consideration to repeat offenses affecting priority trade issues as defined in 19 U.S.C. 4322. The Attorney General is also required to assign appropriate resources to ensure that Federal prosecutors accord a high priority to prosecuting offenses related to import violations as described in the EO.

Finally, with 210 days of the date of the EO, he Secretary in coordination with the heads of other appropriate executive departments and agencies, is required to submit a report to the President on whether the fees collected by CBP are currently set at a sufficient level to reimburse the Federal Government’s costs associated with processing, inspecting, and collecting duties, taxes, and fees for parcels and providing recommendations regarding fee adjustments.