Few industries can match the repetitive practices of automobile importers. “We use the same carriers. We ship to the same destinations. Our partners in the supply chain don’t change frequently,” said Diane DeJarnett, customs and trade compliance manager at Toyota.
Why then, DeJarnett asked top officials at Customs and Border Protection, do Customs inspectors treat every automobile and auto parts import as if it’s a new shipment?
DeJarnett and hundreds of other importers and customs brokers attending Customs’ first West Coast Trade Symposium in Long Beach on May 10 received some good news. The agency’s Centers of Excellence and Expertise program is expanding, with a Detroit-based CEE geared toward the auto industry, Acting Customs Commissioner David Aguilar announced.
CEEs are a relatively new initiative designed to bring uniformity to Customs’ handling of major product imports. The agency locates its commodity-specific experts at the centers, where they share their expertise with private sector experts.
The goal of the centers, as evidenced by the first two CEEs in New York and Long Beach, is for government agency experts to share their knowledge about clearing the products of a particular industry with experts in that industry. The centers also welcome experts from the private sector who educate Customs on how their supply chains operate. The goal is a seamless processing of documentation and uniform cargo clearance practices.
Tinesha Cherry, Customs’ assistant director in the Detroit Office of Field Operations, said the automobile CEE will be a welcome break from the past for an industry that operates in a just-in-time environment. Today, if the same shipment were to enter the country through 30 ports, the importer would likely find Customs processes the shipment and clears it for entry 30 ways. Customs’ goal is to treat the same type of shipment in the same way no matter where it enters the country, Cherry said.
Customs last year opened its first two CEEs. The New York center handles pharmaceuticals, and the Long Beach center focuses on electronics. In addition to the center that will be established in Detroit, Aguilar announced a center devoted to the petroleum industry would be opened in Houston.
CEEs evolve from an effort in recent years to bring uniformity to the more than 300 seaports, airports and border crossings through which imports enter the country. CEEs are built upon Customs’ account management system in which large companies are treated as a single account, each with their own Customs manager.
The CEEs will take this account management mentality and extend it to an entire industry. The centers will start with the largest importers, those Customs considers to be its “trusted partners.” These companies are certified as members of the Customs-Trade Partnership Against Terrorism and the Importer Self-Assessment program. As the centers mature, they will include small and midsize companies as well.
Aguilar wants the CEEs to “co-create” programs that bring uniformity to each industry through the sharing of information. But Customs, he emphasized, would set the direction and make the final decisions as it carries out its primary mission of enforcement. The agency, after all, is first and foremost a regulatory agency, Aguilar said.
The “trusted partners” in the trade community will help Customs carry out its regulatory responsibilities by educating the agency about how the supply chain functions from origin to destination, said Anne Maricich, Customs’ assistant director in the Los Angeles Office of Field Operations. Customs in Long Beach, for example, is learning where the electronics industry’s supply chain import hurdles are, where counterfeit products are sourced and how they enter the U.S.
In the process, Customs is developing strategies for quickly clearing low-risk shipments so it can focus on the high-risk cargo. In that respect, Maricich said, maybe Customs has been inspecting too many shipments from trusted partners than warranted by the level of risk they represent.
Even a few unnecessary inspections can cost an importer thousands of dollars. Aguilar said Customs must revisit its inspection policy. If Customs’ enforcement requirements guide random inspections, they are useful, but if inspections are carried out simply to achieve a numerical statistic, that’s bad for Customs and it’s bad for the trade community, Aguilar said.
Petroleum product imports likewise are pretty straightforward. “In many ways, we’re not that complex an industry,” said Stephen Comstock, manager of tax policy at the American Petroleum Institute. Oil companies are interested in learning from Customs how its new CEE in Houston will take shape.
Lynn Fallik, Customs’ assistant director in the Houston Office of Field Operations, said the CEE there will “start small” as its petroleum experts hold town hall meetings and learn more about how the industry’s supply chains operate. Other government agencies that also regulate the petroleum industry may be included.
Government regulation is a complex process in which many disciplines are interwoven. Brenda Smith, Customs’ executive director of trade policy and programs in the Office of International Trade, said Customs has some 85 skill sets such as import specialists, export specialists, national import specialists and so forth.
Regulating the private sector is also complex, because each industry has its own unique operations and processes, she said. Nevertheless, establishing a uniform regulatory model for each industry is an achievable goal, Smith said.
Customs has identified nine large industry sectors and intends to establish nine CEEs. Customs will locate each center where it makes sense for that particular commodity. If import volumes were the only criterion, probably seven of the nine CEEs would be located in New York or Los Angeles, Smith said, but Customs will look as well at where the biggest concentration of importers is and where corporate decisions are made.
Cherry anticipates the Detroit center will evolve slowly from today’s pre-operational phase as Customs provides outreach to the trade. The CEE will start with a small group of companies, Cherry said, but as it matures, it will open up to the entire industry.