Evolution of Food Safety Legislation

Background:  When the House Energy and Commerce Committee unveiled Food Safety legislation in early summer, customs brokers were alarmed by the unrealistic and debilitating provisions aimed at customs brokers. These included unprecedented exposure to civil penalties of up to $250,000 for inadvertent mistakes and an annual registration fee of $500. The legislation essentially required customs brokers to guarantee the accuracy and validity of the entire supply chain.
      Over the summer months, NCBFAA and hundreds of individual customs brokers and the affiliated associations flooded House members with letters, emails and phone calls. As the bill moved through the Subcommittee and the full Committee, small modifications to the broker provisions occurred, yet the most objectionable features of the bill remained, prompting yet another wave of protests from customs brokers nationwide.
Current Legislation: Just before the August recess, the House approved a modified Food Safety bill that represented a significant accomplishment for customs brokers. Thanks to unrelenting and strenuous objections from customs brokers and the strong leadership of House Ways and Means Trade Subcommittee Chairman Sander Levin (D-MI) and Ranking Minority Member Dave Camp (R-MI) in last minute negotiations with the House Energy and Commerce Committee, the final bill contained the following improvements:

• NO CIVIL PENALTIES! Specifically exempts customs brokers from the onerous civil penalty provisions (up to $250,000 for inadvertent violations and $500,000 for knowing violations).
• NO REGISTRATION FEE: Customs brokers will not be subject to the $500 annual registration fee for importers and food facilities.
• MINIMAL REGISTRATION : Although a customs broker processing food imports will be required to register with FDA, the purpose is limited to providing an appropriate unique facility identifying number. There are protections to limit cancellation of a registration to instances when the registration has not been updated or contains false, incomplete or inaccurate information. And, this can only occur after notice and the opportunity to update or correct the registration is provided.

Background: The National Customs Brokers and Forwarders Association of America strongly supports passage of a strong customs reauthorization bill that provides firm direction to revitalize CBP’s commercial trade facilitation and enforcement function. Much attention has been given in recent years to CBP’s national security mission. Now is the time to rebalance the agency’s focus so that the nation’s economic security is likewise protected. We urge Congress to include the following elements in customs reauthorization legislation:: Passage of a reauthorization bill for Customs and Border Protection (CBP) has not occurred since the agency was moved to the Department of Homeland Security (DHS) in 2002, although the committees of jurisdiction -- the House Ways and Means Committee and the Senate Finance Committee – have worked hard to develop customs authorization legislation over the past several years.
Current Legislation: In the 111^th Congress, the House, Ways and Means Committee Chairman Charles Rangel (D-NY) and Trade Subcommittee Chairman Sander Levin (D-MI) introduced H.R. 496, the Trade Enforcement Act, that authorizes funding to strengthen CBP’s trade enforcement functions. A portion of this bill will provide the framework for a stand-alone House CBP reauthorization bill this year.
        In the Senate, Finance Committee Chairman Max Baucus (D-MT) and Ranking Member Charles Grassley (R-IA) recently introduced S. 1631, the Customs Facilitation and Trade Enforcement Reauthorization Act of 2009. The bill is intended to further streamline trade processes and provide the tools and resources for CBP to make customs facilitation and trade enforcement a priority again. Key features of the bill include:

• Creates new high-level positions at CBP devoted exclusively to trade;
• Authorizes funding for automated systems to expedite import processing;
• Provides trade facilitation benefits for importers and others engaged in international trade with a history of complying with U.S. customs and trade laws;
• Strengthens CBP’s ability to identify and seize goods that violate intellectual property, health and safety, or other trade laws;
• Requires CBP to engage in more robust consultation with Congress and the private sector before taking significant actions.

NCBFAA Position

• Restore CBP Focus On Commercial Function : While NCBFAA strongly supports CBP’s attention to our homeland security, there needs to be renewed focus on commercial operations and trade facilitation. This applies to management attention, policy development and resourcing.
• Resourcing: Reprioritizing CBP’s commercial trade function means having sufficient numbers of import specialists and other personnel at the border, staff attorneys at Office of Regulation and Rulings and a management structure that supports efficient trade facilitation and effective trade enforcement.
• Intensify Efforts To Complete the Automated Commercial Environment (ACE): ACE was designed to be a sophisticated, state-of-the-art system consolidating and automating border processing. ACE is an integral part of CBP’s trade facilitation and border security strategy. The functions of ACE that are in place have drawn mixed reviews. Customs brokers would focus ACE priorities on CBP’s basic responsibility to process entries. Now, funding shortfalls have caused delays, stretching the original deadlines to 2012 and beyond. Completion of ACE should be the highest priority.
• Modernize Duty Drawback Program: Duty-drawback is a program important to U.S. competitiveness, allowing exporters to reclaim duties paid on imported products used to produce products that are exported. A CBP reauthorization bill should include provisions to streamline and simplify the program, including automation of the claims process, to reduce the cumbersome and overly complex system that currently exists.

July 14, 2009

The Honorable Peter A. DeFazio
Chairman, Subcommittee on Highways and Transit
House Transportation and Infrastructure Committee
U.S. House of Representatives
Washington, D.C. 20515

Dear Chairman DeFazio:

        The National Customs Brokers and Forwarders Association of America (NCBFAA) wishes to express our strong opposition to HR 2355, the Making Opportunities Via Efficient and More Effective National Transportation Act of 2009 (the MOVEMENT Act). The legislation would more than triple the existing Harbor Maintenance tax on cargo shipped into the U.S. in order to fund highway, rail and port projects. We think this would be harmful to economies that rely on trade, including Oregon’s.
        NCBFAA represents licensed customs brokers and freight forwarders located at virtually every port throughout the country.
        HR 2355 ignores the fact that the existing Harbor Maintenance Tax, which is used primarily to fund harbor maintenance and dredging projects performed by the U.S. Army Corps of Engineers, already reaps approximately $1.3 billion per year. Even though there is a large and growing surplus of more than $5 billion in the Harbor Maintenance Trust Fund, this legislation seeks to substantially increase the tax. With no cap on the total fee for any single shipment, higher value products would bear a disproportionate brunt of the increased tax. This misalignment between the fees paid and the services for which they are charged would further undermine the legitimacy of this so-called "user fee."
        There is no denying the very real infrastructure needs throughout the country and the consequent strain on state and local budgets. Yet, Congress must resist the temptation to slap just one more container fee or tax at the border. The fact is: U.S. importers of cargo already pay significant and ever-increasing fees on cargo. To begin with, there is the existing Harbor Maintenance Fee, the Merchandise Processing Fee, the Agriculture Quarantine Inspection Fee, to name just three. And there are more proposed fees in the pipeline – food safety registration fees, a carbon tax at the border, and the list goes on.
        Any one fee may seem innocuous in and of itself. Yet, the cumulative effect of this proliferation of fees creates a dampening impact on trade in the best of times. Now, as U.S. companies face the most serious recession of our time, these fees amount to a stifling tax on the components and materials needed to produce a finished product. Adding cost upon cost to the supply chain is not a way to revive U.S. businesses and the economy. We live in a global economy. It is simplistic and naïve to think we can emerge from this recession while taxing the flow of cargo at the border.
        Trade at the nation’s ports suffered dramatically in the past year – a 30% to 40% drop in many locations. This has cost jobs, forced business to close and transporters to stop moving. Now is not the time for an increased tax on containers or cargo.
        Thank you for your consideration of NCBFAA’s views.

Sincerely,
Mary Jo Muoio
President

Export Control Improvement Act (H.R. 3515)

Background: On July 31, Reps. Sherman (D-CA), Manzullo (R-IL) and Smith (D-WA) introduced legislation, a portion of which would make a number of changes in the Automated Export System (AES). H.R. 3515 is the product of co-operative efforts among the bill’s sponsors, NCBFAA, and the Bureau of the Census. The bill is not perfect; it needs additional change; but it will go a long way to improve the professionalism of third party filing and the user friendliness of AES.

Current Legislation: The following are provisions of most interest to AES filers. The bill creates a "registration" program for third party filers. Individuals and corporations can qualify. Specific provisions include::

• Must be U.S. citizens, permanent residents of the U.S., or U.S. nationals living in territories or possessions
• May be required to pass a related examination administered by Census
• Must meet normal standards of fitness and character
• FMC license holders are "grandfathered"
• Will require continuing education requirements
• Registrations extend for up to 3 years and are renewable
• Registrations can be revoked, suspended or denied for violation of Census regulations subject to explicit due process requirements

    - AES must include prompts that alert the filer if the country of destination of the exported goods, or if the export control information would result in a violation of U.S. law. This must be kept updated on an ongoing basis.

    - Provisions related to the sharing of export information with other Governments were deleted from the bill. [NCBFAA has expressed concerns about weakening Census’ ability to maintain the confidentiality of export data. We therefore support current US policy – which this deletion in the bill accomplished.]

NCBFAA Position: The bill still needs further improvement however. NCBFAA has engaged in extensive discussion, through Rep. Manzullo, on specific provisions in the bill. Here are our remaining priorities: 

• Tailor provisions relating to revocation of a registration so that they "track" similar provisions in customs law. For example, repetitive technical errors should clearly not be grounds for losing one’s registration.
• As a matter of fairness, "grandfathering" for those holding an FMC license should not apply beyond the initial registration. All registrants should be subject to continuing education requirements, for example.