Good News, Bad News as Customs Shifts Gears
The agency intends to improve trade facilitation, but enforcement could increase costs.
For businesses involved in international trade that have endured years of government emphasis on supply chain security, there may finally be a light at the end of the tunnel. The only problem--it could well be an oncoming train. Traders who have pushed U.S. Customs and Border Protection to do more on trade facilitation are getting their wish, but at the price of increased enforcement.
Since 9/11, U.S. Customs and Border Protection (CBP) has defined its core mission in terms of what it calls its "twin goals": preventing terrorists and their weapons from entering the country, and facilitating the flow of legitimate trade and travel. In reality, though, trade facilitation has taken a backseat to Customs' near singular focus on securing the international supply chain against a wide range of threats, which includes everything from bioterrorism to counterfeit shoes and handbags.
Businesses involved in the global marketplace, especially importers, have cooperated closely with CBP on security programs like the Customs-Trade Partnership Against Terrorism (C-TPAT) and the Container Security Initiative (CSI). These programs are officially voluntary, but they've become the de facto standard for doing business across borders.
Over the past year or two, however, the trade community has begun to push back. Influential advisory panels and industry organizations, quietly at first but more emphatically over time, told Customs that their members were spending millions of dollars to beef up security along their supply chains but weren't seeing many of the promised benefits, such as fewer cargo inspections and faster clearance of shipments entering the U.S.
Importers, customs brokers, steamship lines, truckers and others argued that they'd done everything to comply with Customs' tougher security rules but were losing money doing so. In addition, they pointed out, the price tag could grow exponentially in the face of new mandates from Congress, such as a requirement that all U.S.-bound cargo containers be scanned at foreign ports. It was time, they said, for Customs to do more to ease the cost burden on companies that obey the rules.
CBP, to its credit, has listened patiently to these complaints and appears ready to respond.
"We know we're going to have to focus more of our energies at trade enforcement and facilitation," Customs Commissioner Ralph Basham told an industry advisory committee in May.
As with the vast majority of government initiatives, however, it will likely be a while before specific details are worked out, much less put into place. Customs has begun developing a new trade strategy that puts an emphasis on facilitating legitimate trade and promoting compliance, and it hopes to use some of the methods and lessons learned from its security programs to accelerate the process. Officials said they'll be relying heavily on the trade community for input and know-how, as many of the agency's staff with experience and expertise in this area have left or retired in recent years. In other words, the private sector has an opportunity to influence government programs that will have a direct effect on their bottom lines.
Customs is moving to help in other ways as well. Senior officials have said the agency has no plans to scale back programs like C-TPAT and CSI; instead it's looking for ways to make the programs more enticing to those who participate, like adding benefits for companies that have adopted the highest standards and pursuing formal ties with similar programs being developed by other trading partners. Customs is also resisting efforts by Congress to tighten cargo security requirements further, arguing that the 100 percent scanning mandate is costly, technologically unfeasible and a tough diplomatic sell.
But there's always a catch, and in this case it's a big one. Customs officials from Commissioner Basham on down have made it clear that the agency is ramping up its efforts to enforce U.S. trade laws, which in some cases have fallen by the wayside amid the emphasis on supply-chain security.
Earlier this year, Customs specifically identified the areas where it plans to focus these efforts, many of which are already high in the public consciousness: anti-dumping and countervailing duties, penalties, textiles, import safety, intellectual property rights, agriculture and customs valuation. With enforcement actions already on the rise, it's imperative for traders to pay close attention to the regulatory and statutory requirements that apply to their goods. The costs of noncompliance--fines, seizures and delay or denial of entry, not to mention bad press and possible loss of business--are simply too high to do otherwise.
Global Business expert Tom Travis is a managing partner of Sandler, Travis & Rosenberg, P.A., a leading international trade and customs law firm. He also serves as the chairman of Sandler & Travis Trade Advisory Services. He is also the author of the Amazon.com bestseller Doing Business Anywhere: The Essential Guide to Going Global .