NCBFAA President Testifies Before House of Representatives

Washington, DC: In her first visit to the Hill as President, the National Customs Brokers & Forwarders Association of America, Inc. NCBFAA President Mary Jo Muoio testified today before the House Ways and Means Committee as part of its review of the operation of customs and trade functions in the federal government.
        Ms. Muoio made five points in her statement.

1. CBP’s attention to commercial operations is greatly reduced and resourcing is inadequate.
2. CBP’s approach to security and commercial operations disadvantages small and medium-sized businesses.
3. Customs has demonstrated outstanding leadership and vision in the development of security programs, but there is room for improvement.
4. CBP is successfully working with the trade community to develop the Automated Commercial Environment (ACE).
5. Customs has joined with the trade community in modernizing drawback. A compromise between the two parties is now ready to be considered by Congress.

        Expanding on her first point, she noted that CBP’s attention to commercial operations is greatly reduced and resourcing is inadequate. "Despite its promise, the truth is that CBP is not balancing its twin responsibilities of security and commercial operations," she said.
        For example, efforts at approving C-TPAT evaluations left other areas wanting with the result that "[T]he attention of CBP to its trade mission has rapidly diminished as it gives priority to security programs." 
        "Congress must insist that CBP dedicate sufficient personnel to conduct its commercial trade mission," she concludes. "Congress should set a floor for import specialists and other commercial operations personnel, fencing off these assets from diversion elsewhere within Customs." 
        On her second point, NCBFAA president Muoio pointed out that whenever CBP economizes on staff or focuses on a specific industry segment, the smaller firms get short-changed. Noting that the vast majority of those on customs brokers and forwarders client lists are small businesses,  Muoio suggested that CBP make more effort to pay heed to their needs. She recommended that CBP be mindful of these smaller firms when constructing C-TPAT and its three tiers.  "Our answer. . . . is for Congress to insist that Customs develop separate and independent strategies for incorporating small and medium-sized businesses into its programs, " she said. "When they control almost 70% of our imports, smaller firms must become part of the equation."
        Although Customs has demonstrated outstanding leadership and vision in the development of security programs, she pointed out that there is room for improvement, especially as it concerns three areas: C-TPAT, Automated Targeting System, and export data. In Ms. Muoio’s view, C-TPAT is evolving and "membership in C-TPAT has become an obligatory element of doing international business." Calls for this program to be subject to notice-and-comment regulation should be ignored and "Congress should resist efforts to put C-TPAT in the straight-jacket of federal regulation," she said.
        Using risk analysis and targeting to determine which containers require further scrutiny is an effective way to allocate scarce resources but requiring excessive data without rock solid guarantees of confidentiality creates flaws in the Automated Targeting System (ATS).
        "CBP and some others have exhibited the inclination to require vast amounts of data, without rhyme or reason, without regard for the costs to its providers from the private sector, and without any guarantee of confidentiality for competition-sensitive information," she said. "Instead, CBP must be held into account to determine exactly what information it needs for ATS and provide a reliable, secure path for its transmission."
        Finally, she noted CBP recently declined to approve long-awaited AES regulations until Census agreed to provide sensitive export data to overseas governments, even though Census feels bound by statutory constraints requiring it to protect the export information that it collects for statistical purposes  "NCBFAA feels strongly that the wholesale delivery of export information to foreign nations runs counter to our international trade interests," Ms. Muoio insisted. "At a time when we are struggling with trade deficits, the United States should not be undermining the competitive standing of the very exporters that must bring these statistics more into balance."
        In her testimony, Ms. Muoio called on Congress to aid CBP in its efforts to develop ACE by persuading other federal regulatory agencies to participate in the International Trade Data System (ITDS). To encourage the broadest possible participation by the industry, CBP will expedite processing but for it to be effective all those agencies involved in importing will have to buy in to the program. "In other words, CBP can clear products quickly for C-TPAT members," she pointed out, "but the entire shipment can be brought to a dead stop if it is not cleared by FDA or USDA."
         " Since CBP (and, therefore, the Department of Homeland Security) has no authority over agencies in other departments, the NCBFAA believes that the Office of Management and Budget, which has previously had a significant role in federal data management, has the capability to overcome this "stovepipe" problem. "We believe that Congress should designate OMB as chair of the multi-agency board that directs the ITDS project. And, in consultation with other departments, OMB should evaluate what agencies are necessary to the success of ACE and direct, on a phased-in basis, the participation of those still uninvolved in ITDS."  "Adequate resourcing must be made available to these agencies to absorb the costs of ‘connecting’ to ACE, and all agencies that are involved in the cargo clearance process must be ready to participate in time for the completion of ACE in 2010," she continued, "ITDS has profound security and commercial benefits for America."
        In conclusion, she noted that Customs has joined with the trade community in modernizing drawback but that current law is cumbersome, record–intensive, and demanding on Customs, which must administer the law and ensure that revenues are protected. Because modernization will substantially reduce the intensive management and accounting of drawback claims CBP personnel can be shifted to other commercial areas. For this to happen, she noted, Congress must "make the technical changes to customs law necessitated by drawback modernization, preferably in this year’s customs authorization legislation."
        Headquartered in Washington, DC, the NCBFAA represents nearly 800 member companies with 100,000 employees in international trade - the nation's leading freight forwarders, customs brokers, ocean transportation intermediaries (OTIs), NVOCCs and air cargo agents, serving more than 250,000 importers and exporters. Established in 1897 in New York, NCBFAA is the effective national voice of the industry. Through its various committees, counsel and representatives, the Association maintains a close watch over legislative and regulatory issues that affect its members. It keeps them informed of these and other related issues through its weekly Monday Morning eBriefing, NCBFAA Quarterly Bulletin, and various meetings and conferences throughout the year.