Customs and Border Protec-tion is putting a new face on trade compliance. The agency hopes to recruit qualified importers for the Importer Self-Assessment program, in which Customs allows qualified importers to perform compliance oversight on themselves instead of Customs doing the work itself. The idea is to free up resources for other Customs missions such as anti-terrorism. The ISA program started nearly two years ago, but it has been overshadowed by the agency's intensive focus on anti-terrorism. Since its launch, only 22 importers have joined.
Joe Rees, who became ISA director in late March, hopes he can raise the program's profile. "We're about to add four more (companies). My goal is to bring in eight to 10 companies a month," Rees said. Previously ISA and Focused Assessment, Customs' traditional compliance-auditing program, had been under the same regulatory audit program in the Office of Strategic Trade. ISA is now on its own, and Rees wants to redefine its mission.
"I'm trying to draw a bright line between ISA and Focused Assessment, to remove any confusion between the two," Rees said. "ISA is a trade facilitation program. Focused Assessment is a compliance program. We want to recruit trade-compliant companies to preserve Customs resources at the border."
In other words, Customs would like to draw the lowest-risk importers into ISA. Customs gives those importers high marks, when it comes to obeying the law in areas such as valuation or classification of goods, or complying with international agreements or quotas. Under the program, importers assess their own compliance record, and report annually to Customs. No Customs auditors come knocking. Importers must be members of the Customs-Trade Partnership Against Terrorism (C-TPAT) and have a strong compliance record.
"These are trusted partners - the best of the best," said Matt Krimski, director of field oversight in Customs' Office of Strategic Trade. Krimski and Rees said that ISA fulfills the promise of the Customs Modernization Act of 1993: Customs trusts importers to do their job with minimal interference from government.
ISA and Focused Assessment are the descendants of Customs' compliance audit program, which it launched in 1996, and that's not a fond memory for some of the trade community. "CAT" audits - from Compliance Assessment Teams - became infamous among importers and customs brokers. Customs attempted comprehensive compliance audits, and auditors ended up residing for years at the offices of major importers, which incurred huge costs to support the audit. Krimski said that focused assessments today are aimed at examining and correcting specific problems an importer might have. The intent is to get Customs auditors in and out of a company with minimal intrusion.
ISA participants are taken out of the pool of potential targets for Focused Assessment, one immediate benefit of the program. That has been a problem in the past. Rees said that when some companies got wind that they were due for a Focused Assessment, they would immediately opt for ISA. No more, he said. ISA and C-TPAT got under way about the same time in 2002, and companies were allowed to apply for both simultaneously. Under a new policy, importers have to be C-TPAT-certified before they can apply for ISA. The good news: The revitalized ISA promises to act on importers' applications in 90 days, where applications took a year or more.
Rees said that one of the lessons Customs learned from the old CAT program was the role of internal controls in compliance. Companies that have good internal controls tend to score higher on audits than companies that do not. "We've gone from testing everything to looking at their internal controls," he said. What is good internal control? "It starts with a good organization. You have a compliance officer, you have training, and you have a commitment by management to customs compliance.
"The customs office tends to be part of the general counsel's office, or tax division or an office like that. Those employees are used to compliance issues. They'll make sure the company is legally correct. Put it under that office, and it tends to work very, very well."
Customs estimates there are 735,000 importers in the U.S., but only 3,000 companies account for 70 percent of all imports. That leaves plenty of candidates for ISA, but there is a debate among importers whether ISA is worth the effort. Should an importer expend the time and money to self-audit, and keep Customs away? Or should it let Customs do the work at government expense?
Frank Kelly, vice president for compliance and international trade with Liz Claiborne Inc. in North Bergen, N.J., is skeptical. The company is a C-TPAT member and completed a compliance assessment audit, but Kelly said he is undecided whether to go join ISA. "You get to do a lot more work, but I don't see any benefit."
Rees said ISA will begin to fulfill one of its first promises: giving benefits to importing industries that are tailored to their specific needs. For textile importers, Customs is considering the way it will handle country-of-origin issues. Under current procedures, inspectors detain goods at the dock until they complete an origin investigation. If the plan is approved, Rees said ISA importers will have their goods released, and will follow up with documentation to settle any origin questions that the agency might have.
Detention is an industry-wide problem, Kelly said, but so far Customs has made no promises. It's in the works, Rees said. Similar benefit packages are being prepared for petroleum and aerospace industries.
As Customs puts a new face on ISA, part of that will be Rees himself. Former Commissioner Raymond Kelly appointed Rees to be Customs' last ombudsman. When Robert C. Bonner took office in 2001, he abolished the position, and rolled the ombudsman's duties into the new Office of Trade Relations. Since then, Rees has worked on various strategic trade projects, including the Container Security Initiative.
"ISA doesn't have the panache that I'd like," Rees said. "As the former trade ombudsman, the trade knows me as a trade-friendly guy. I really believe this is good, not for only the trade, but for Customs. The less time we spend with the importers that are compliant, the more time we have for people we don't know much about."