With the 2012 departure of Customs Commissioner Alan Bersin, acting Commissioner David Aguilar will face plenty of thorny issues in 2013. Jon Kent, chief lobbyist for the National Customs Brokers and Forwarders Association of America, said Bersin righted the ship and provided “a menu of affirmative issues,” but that “none of those issues are easy” to resolve.
Attorney Susan Kohn Ross, chair of the International Trade Practice at Mitchell Silberberg & Knupp in Los Angeles, said it could take another year before the Obama administration formally nominates a new commissioner, because the priorities of the administration and Congress will be to avoid falling off the fiscal cliff in early 2013. Ross and Kent believe Aguilar has done an excellent job, but the agency will operate at a disadvantage compared to other agencies until a new commissioner is named, Ross said.
“Even if the fiscal cliff is not realized, there are going to be cutbacks,” Ross said. “There are things that a political appointee can do that no career civil servant (such as Aguilar) can do, in order to fight tooth and nail for the agency.”
When it comes to customs modernization, the biggest issue on the table is implementation of the Automated Commercial Environment, the electronic system Customs is developing to automate and consolidate border processing. ACE will be the centralized access point that connects Customs, the trade community and other government agencies. Begun in 2001 as a replacement for the Automated Commercial System, ACE will further streamline business processes, facilitate growth in trade, ensure cargo security, and provide the tools to monitor the movement of individuals and materials into and out of the country.
Full implementation of the ACE system remains years behind schedule, however, and its budget has expanded from $1.4 billion to more than $3 billion. The Obama administration’s fiscal 2013 budget proposal calls for $140 million for ACE operation and maintenance, but there isn’t any money available to expand the program to the point where it is fully operational.
“ACE is short of money,” Kent said, “so people are looking for other places where they may find the funds.”
Although U.S. importers can file most kinds of data to Customs via the ACE platform, the “release” functionality — which qualifies the goods for delivery — is missing, Ross said. “You can only get ‘release’ in ACS, so many importers don’t use ACE, and Congress cannot afford to maintain both ACE and ACS.”
Kent adds, “Not too many people are participating in ACE, because it is a bridge halfway across the river.”
A second major focus for 2013 will be the emergence of Customs’ Centers for Expertise and Excellence. These industry-specific centers will pit Customs experts in a particular product together with supply chain experts from the private sector to develop processes that expedite cargo flow while providing Customs with the data it needs to assess risk. The first CEEs are running in the pharmaceutical sector (New York) and electronics (Long Beach, Calif.). Customs is developing a center in Detroit for autos and one in Houston for the petroleum industry. The agency eventually will establish nine industry-specific CEEs.
“Everyone agrees that it is a great idea,” Ross said, because the centers will allow Customs experts to address, through electronic media such as e-mail, Skype and video-conferencing, the troublesome cases that require specialized knowledge not available at every port around the country. “It only gets to a CEE if there is a hurdle” that requires specialized expertise, she said.
Nevertheless, “there is a lot of concern about how this (system of CEEs) will actually work,” Ross said. “If you are a large importer, it works very well through the benefit of the centralized entry process (through a CEE). And if you have two ports where Customs gives you different opinions, you can ask the CEE to mediate. But how do you deal with small and midsize importers who will not go through the aggravation” to be qualified for the Importer Self-Assessment program or the Customs-Trade Partnership Against Terrorism, which establish criteria that qualify importers as trusted traders. Although there are some 50,000 importers whose shipments are valued at less than $1 million a year, Customs wants to see a larger number of such trusted traders benefiting from these CEEs.
Another critical issue will be how to deal with the theft of intellectual property rights, Ross said. “It is a huge concern, with counterfeit chips getting into the military supply chain,” for example. “It is a conundrum for industry.”
Although Customs asks importers to establish that they are the legitimate licensees for those imports, it’s harder for small importers — which have fewer resources, and don’t have their own trademarks — to establish that fact, Ross said. To minimize the risks of importers, some in the trade community are pushing Customs to develop a code of best practices the agency would recommend to IPR holders as well as to those companies that import goods that have third-party copyrights and trademarks.
Contact Alan Field at email@example.com.