Trade Advocates Eye Kerlikowske With Hope

Trade Advocates Eye Kerlikowske With Hope

Gil Kerlikowske oversees the largest U.S. law enforcement agency and the second-largest revenue-collecting source in the federal government. But although the newly appointed commissioner of U.S. Customs and Border Protection brings four decades of law enforcement and drug policy experience to the job, he had little experience in international affairs before being sworn into office in March.

Kerlikowske served as director of the White House Office of National Drug Control Policy, and also served nine years as Seattle’s chief of police. How quickly could he get up to speed in his new post? And what kind of challenges will he face in the waning months of the Obama administration?

Kerlikowske’s lack of trade-related experience isn’t lost on some members of the U.S. international trade community, said Marianne Rowden, president of the American Association of Exporters and Importers. She said there was some initial skepticism about his inexperience in customs-related issues.

But Kerlikowske has won over his new audience in his first few weeks as Customs’ boss, she said. “We were impressed that he was not flanked by loads of staff members,” and that he showed confidence in dealing with people, Rowden said. “He was in a true listening mood,” focusing on ferreting out the genuine concerns of the trade community, rather than giving them mere lip service. “He has shown a quiet confidence,” Rowden added, along with considerable knowledge of the many issues and initiatives in which Customs is involved. “There is less skepticism about him now. He has done a very good job of being proactive.”

Susan Kohn Ross, an international trade attorney at Mitchell Silberberg & Knupp in Los Angeles, agreed that Kerlikowske has gotten off to a positive start. “He has been in office for [only about] two months, and has been on the speaking and listening tour, where he seems like a good guy” to the various members of the trade community who have discussed their needs with him. However, “he will be able to do this for only another month or so,” before getting down to tackling the menu of issues piling up on his plate.

Kristin Isabelli, director for customs and trade facilitation at the United States Council for International Business, said the USCIB and its members have an ambitious customs policy agenda this year.

How so? Rob Mulligan, senior vice president at the USCIB, said the key goals of the trade community’s agenda this year include reaching bipartisan agreement on Trade Promotion Authority legislation (also known as “fast track” authorization for free trade agreements); completing the Trans-Pacific Partnership negotiations with nearly a dozen countries in the Asia-Pacific region; finalizing agreement on expansion of the Information Technology Agreement; and making significant progress on the Trans-Atlantic Trade and Investment Partnership, which would open new markets for U.S. shippers in the European Union.

Trade Promotion Authority, which expired in 2007, would prevent U.S. lawmakers from filibustering or amending trade deals such as the TPP and TTIP and force them into a strict aye or nay vote.

Isabelli said the USCIB also hopes to work closely with Kerlikowske and his Customs staff on such challenging initiatives as the “One U.S. Government at the Border”; the Centers of Excellence and Expertise; the Customs-Trade Partnership Against Terrorism program; and full implementation of the Automated Commercial Environment, or ACE.

Shortly after Kerlikowske was sworn in as commissioner, Senate Finance Committee Chairman Max Baucus, D-Montana, and Sen. Orrin Hatch, R-Utah, introduced legislation to strengthen the trade facilitation and enforcement efforts of Customs and U.S. Immigration and Customs Enforcement. The bill not only reauthorizes CBP and ICE, but also provides new tools and high-level trade positions to bolster the agencies’ trade-related efforts.

How much can the Obama administration be expected to achieve when the president has limited political capital to spend and Congress is perpetually gridlocked? For many in the trade community, the absence of Trade Promotion Authority is particularly irritating, despite the lack of attention TPA attracts in the media.

“The U.S. has really hurt itself by not having the TPA,” Rowden said, because U.S. negotiators can’t negotiate critically important trade issues in public. The absence of TPA has made it easier for Japan to play a key role in delaying the completion of TPP negotiations, once anticipated by the end of 2013, she added. “So long as we are without the TPA, we cannot open the kimono” and see what Japan has been offering in its negotiations for the TPP deal, Rowden said. “Having Japan in the TPP makes it all the more valuable. But we have hamstrung ourselves” by not granting fast track authority to U.S. trade negotiators.

Ross argued that TPA is one of those knotty issues most people in the trade community agree is a necessity, but that many people with less experience in international trade “cannot fathom why it is so important.” Nevertheless, she said, because trade unionists who oppose TPA support the Democrats, winning approval for TPA in the current crisis “is as unlikely as an icicle in a very warm place.”

Rowden criticized Obama for “not doing the heavy lifting” required to build public support for the TPP. “The president has got to lead by actions as well as by words. You have to be willing to provide the political cover for the Democrats so they can confidently vote” for the TPP. Although Obama made his case for the TPP in his State of the Union address, he failed to follow through by pressing his case in the weeks thereafter, probably because of concerns that some Democrats fearful about the popularity of the TPP don’t want to be viewed as its supporters.

However, Rowden said, “You don’t just make the case [for the TPP] and expect everyone to roll over. You have to do it consistently.” Is Obama willing to spend some of his remaining political capital in support of the TPP? “He has the rhetorical skills to do that,” but he is not acting to use them, she said.

Beyond the fate of the TPP and other new trade agreements, Ross is concerned that many Customs disputes that otherwise would have been treated as a civil violation in the past — and therefore subjected to fines — now are treated as criminal prosecutions. In addition, many of those who are retiring from Customs are taking with them their wealth of experience. The Customs Centers of Excellence are an effort to formalize the transfer of institutional knowledge. 

Although Congress is giving the CBP the resources it needs for its teams of on-the-ground inspectors, Customs isn’t getting the resources it needs in areas far from the front lines, Ross said. “Because of a shortage of [these kinds of] experienced workers, getting any kind of answer from headquarters takes too long,” she said. “The Office of Regulations and Rulings needs a massive influx of paralegals in order to process cases for fines, penalties and forfeitures — and this [shortage of specialized legal staff] is crippling the industry.

“They are not getting the resources they need,” she added. For example, any decision that involves consideration of intellectual property rights takes a long time to get resolved, she said. 

More broadly, Ross noted the challenges facing CBP under Kerlikowske will depend more on “outside influences beyond the traditional factors” that have had the most impact on Customs. These include the growing complexities of cybersecurity, “which has become a horrible issue for everyone.”

In addition, the whistleblower provisions of the Dodd Frank Act, enacted in 2011, are “causing a lot of companies to get under review,” Ross said. Section 922 of Dodd-Frank provides that the U.S. Securities and Exchange Commission will pay awards to eligible whistleblowers who voluntarily provide the SEC with “original information that leads to a successful enforcement action yielding monetary sanctions of over $1 million,” according to the SEC.

Overshadowing all of these issues is the uncertain fate of those two highly promising trade and investment pacts, the TTIP and the TTP. Congress has become so dysfunctional that the trade community can’t count on winning approval for any trade-generating legislative measures, no matter how productive their impact might seem to the trade community.

Although Ross is hopeful the TPP will be enacted, she and many of her colleagues are skeptical about its prospects under the current administration.

For now, she added, “the U.S. is getting its clock cleaned” because shippers in many other industrialized countries have moved into promising new markets, aided by trade preferences written into their most recent bilateral and regional free trade agreements, while the U.S. has yet to forge pacts with many of those markets. Even “Mexico has more FTAs than the U.S.,” she noted.

Despite the absence of the TPP, Mexico has free trade pacts with 45 foreign countries that collectively produce 61 percent of the world’s GDP, according to ProMexico, its trade and investment agency.

“We [in the U.S.] are losing ground,” Ross said, “and having lost it, it will be very difficult to regain.”  

Contact Alan M. Field at alanfield0@gmail.com.