| Port and Air Security Legislation
Both Houses of Congress are considering important customs and homeland security legislation that bears directly on international trade. The House has passed HR 4954, a bill to require the Department of Homeland Security (DHS) to conduct better security planning and to address criticisms of its implementation of customs and transportation programs. Soon, the House Committee on Ways and Means will draft reauthorizing legislation for Customs and Border Protection (CBP) that will touch upon many of these issues.
In the Senate, a bill referred to as "Collins-Murray" has captured a great deal of attention. That bill, S 2459, represents a Senate committee version of planning and implementation direction to DHS and CBP. At the same time, another committee of jurisdiction — Senate Commerce — has drafted a comparable bill (S 1052) and engaged in extended negotiations with Collins-Murray legislators. Finally, in July, the Senate Finance Committee introduced its own version of CBP re-authorization (S 3658), providing yet another perspective on these issues.
How will these bills be reconciled if we are to have new air and seaport security legislation this year? Where do customs brokers, freight forwarders, NVOCCs and air cargo forwarders have specific expertise and ideas that can help resolve this spate of legislation? Following are NCBFAA’s areas of special focus:
CBP’s Automated Targeting System (ATS) reviews data on cargo bound for the U.S. and assigns risk so that Customs can examine containers where the risk is highest. Everyone agrees that ATS can be improved by capturing additional limited information about the supply chain. This will add more certainty and confidence to the risk analysis process. These data elements must be limited, however, to only those that can be provided at the time required by the party being held responsible by government, and are absolutely necessary to homeland security.
100 percent physical inspection of all air and sea cargo is not possible without bringing commerce to a halt. It should be recognized that 100 percent of all cargo does in fact undergo security screening to identify which cargo should be subject to further inspection. This layered approach to screening is the right solution in that, through multiple steps, we can isolate cargo for inspection that poses the most risk.
The International Trade Data System (ITDS) is a critical commercial and security conscious opportunity — a single-window for data required by all federal agencies with responsibilities for clearing cargo. While ITDS will become a part of CBP’s new Automated Commercial Environment (ACE), participation by all necessary agencies is lagging. NCBFAA supports making OMB responsible for achieving 100 percent participation by those agencies in order to complete ITDS and ACE by 2010.
The Customs-Trade Partnership Against Terrorism (CTPAT) has demonstrated unprecedented cooperation between business and government. Its success is due to its voluntary versus regulatorynature. While the program needs to be improved – through adequate resourcing and new policy refinements – it should not become a mandatory government regulatory program.
Homeland security programs need to be attentive to the unique nature of small and medium-sized businesses. Customs brokers and forwarders represent most of these companies that engage in trade. One size does not fit all; in fact, security programs can require resources unavailable to smaller companies. This requires policymakers and government to be flexible and innovative without sacrificing security.
NCBFAA has joined a broad based coalition from the private sector to advocate on these and other security measures. We strongly support passage of legislation that maintains the proper balance between securing the homeland and maintaining the flow of trade. We believe that this goal is achievable in the 109th Congress.
Renew GSP Now!
The Generalized System of Preferences (GSP) is a valuable trade preference program designed to promote economic growth in the developing world and relied upon by US companies as a competitive source for components and raw materials. For 30 years, the program has enjoyed strong, bipartisan support in Congress and the Administration.
As customs brokers, we handle the myriad details involved in importing goods into the US – from paying duties and fees owed to Customs and Border Protection
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(CBP) to filing entry documents to arranging for transportation. In this role, we know first-hand how important GSP is for US companies.
GSP will expire at the end of 2006. Congressional action now is crucial.
U.S. Competitiveness: For many small US companies, GSP -- with its duty-free treatment for production inputs from developing countries -- is the single element that allows them to remain competitive and profitable in tight markets. Failure to renew the program now will result in the immediate imposition of duties on January 1. Even if Congress eventually renews it retroactively at a later date, the cash flow burden for many companies is simply unmanageable, especially given the uncertainty as to when renewal would actually occur.
Avoid Wasteful Administrative Burdens: Allowing the program to lapse also creates administrative burdens for both business and CBP, since entries must be individually flagged so that duties collected can later be refunded when the program is renewed. This is a time-consuming, nonproductive exercise that can be easily avoided by passing GSP before it expires.
No Major Revisions: We encourage Congress to renew GSP without making major changes to the program. At this point, a lengthy debate over substantive revisions would only serve to delay renewal. Whatever specific changes are made or not made are less important than that renewal occurs on time.
The Larger Developing Countries: Brazil and India remain important beneficiaries of the GSP program. Some suggest that these larger developing countries be removed from the program so that smaller countries will receive greater benefits under the program. Others want to send a signal to these countries, holding them responsible for the missed deadlines of the Doha Round – a move that that is both unproductive and counterproductive. We urge Congress not to remove these countries from the GSP program. The detrimental impact on US companies would be significant as duties are suddenly reimposed. Nor does it follow that US businesses will switch their supplier from a large GSP beneficiary country to a smaller one, since the least developed countries often lack the production capability and infrastructure to serve as an alternative supplier. Both Brazil and India are essential to GSP and should remain in the program.
NCBFAA Supports The Drawback Reform Proposal
Over the past four years, NCBFAA members, other trade organizations and US Customs and Border Protection (CBP) have worked together to develop a Duty Drawback law for the 21st Century. Drawback is the only WTO-legal export incentive program, providing US companies with a refund of 99 percent of the Customs duties paid on imported goods that are then exported or used to manufacture finished goods for export. Our major trading partners all provide a similar incentive program to their own companies.
The current drawback statute (19 U.S.C. §1313) is difficult for CBP to administer and is so complex that many US companies do not take advantage of this important benefit. Furthermore, US exporters face a cumbersome, paper-based drawback system that is simply not capable of taking advantage of automation advancements offered by the ACE computer system.
CBP and trade representatives have reached an historic compromise in developing a new statute that is (1) simpler for CBP to administer (2) easier for US companies to understand and (3) more accessible so exporters of all sizes may use this important program to make their companies more competitive in the world marketplace.
The new law is modeled on the successful simplification of petroleum drawback under the current 19 U.S.C. §1313(p). Drawback is made simpler by raising the focus of the drawback claim to the HTSUS code applied to those products at the time of import and export. Products and components of the same 8-digit HTS code would now be considered identical. Drawback would thus be based upon the harmonized code reported to CBP at the time of import and to Census in the Automated Export filing at the time of export, data elements that are understood by both the trade and CBP.
NCBFAA fully supports this reform proposal developed by both government and the private sector. It truly represents a benefit to CBP and for every company that exports goods from the United States. The result will be an expansion of export job growth in the United States and an enhancement of the competitive position of all US companies seeking to sell to the global market.
We ask that you discuss your support for this legislation with members of the House Ways and Means and Senate Finance Committees. There is ample time to complete passage of drawback legislation this year.
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