U.S. Customs and Border Protection: A Boon for Importers

It doesn’t take much to recognize the benefits that U.S. Customs and Border Protection’s new Centers for Expertise and Excellence offer to importers frustrated with fragmented ports of entries. I say fragmented because, by nature, ports of entries fragment knowledge, experience, and CBP’s relationship with importers. An importer of petroleum-based chemicals seeking entry through Miami may find their entry documents and products inspected by a CBP officer who has little knowledge of their products, is unable to fully comprehend their product descriptions, and is unduly skeptical of the importer’s entry documents and classifications. That same importer, importing through Houston, may find a CBP officer with a strong knowledge of petroleum chemicals, who totally comprehends the importer’s product descriptions, and agrees with the importer on their filings and classifications. A different place, a different inspector, a different outcome – that is fragmentation.

Putting Together All the Pieces

CBP is now promising to put the pieces together through these Centers or “CEEs”. Centers are offices staffed by CBP personnel who specialize in processing all validation activities, protests, post-entry amendments, and post-entry correction reviews for specific industries. These centers are scattered about various locations in the U.S. depending on the industry they specialize in. For instance, the Center for Electronics is based in Los Angeles and the Center for Petroleum, Natural Gas & Minerals is based in Houston. Importers are assigned to a center based on their industry and file most of their entry and post-entry documents with their assigned center. But centers are not only there to process filings. They also serve as a place for importers or businesses to engage CBP with their questions and concerns. Thus, CBP hopes that centers will promote “bi-directional education” and improve the relationship between CBP and importers. Currently, participation in the CEE program is voluntary and CBP gives priority to applicants who participate in the Importer Self-Assessment or the Customs-Trade Partnership Against Terrorism Programs. However, CBP does not envision the program staying this way. Over the next five years, the agency plans to phase in mandatory participation for importers whose primary imports fall under one of the center’s dedicated industries. This is why it doesn’t hurt for importers to learn what they can about centers and join while membership is still voluntary.

CEE Response Positive

While major procedural and regulatory overhauls tend to rattle businesses, importers can take comfort in the fact that current participants in the CEE program have overwhelmingly rated their experiences as positive. In a recent survey of the trade community, 75 percent of participants indicated that they were very satisfied with their membership in a center, 96 percent indicated that their center helped them resolve issues they had with CBP, and more than 50 percent said they benefited from fast shipment delay resolutions, direct contact with CBP, and more clarity on CBP requirements. But, the participants are not the only ones benefiting. While centers can only process the filings of participants, this does not prevent them from fielding questions from other importers. The same survey showed that many non-participants have used centers to answer questions ranging in subject from C-TPAT procedure to CF-28s and cargo holds and these non-participants seemed to be satisfied with the center’s assistance.

Despite the positive feedback, the expanding role of centers also means that importers will need to change some of their processes since most of the filings that would traditionally be filed with ports of entry will now be conducted with centers. Currently, centers have taken over the following responsibilities for their  participants:

• processing entry summaries
• summary rejections and cancellations
• Census rejects
• issuance of Request for Information and Notice of Action
• anti-dumping/countervailing duty entries
• post-Summary adjustments
• internal advice request
• protests and petitions
• drawback
• prior disclosures (optional)

Of course, ports of entry still have a role to play. After all, it will be the port that your products are entering through, not the center. Responsibilities maintained by the ports of entry are:

• revenue collection
• quota
• Temporary Importations under Bond
• liquidation (processed at center and posted at port of entry)
• reconciliation entries
• prior disclosures (optional)

Despite this shift in responsibilities from ports of entry to centers, the effect on importer’s processes is minimal. This is because most documents will continue to be filed through either the Automated Commercial System or Automated Commercial Environment, and since most importers already make their filings through ACS and ACE, importers will not have to change their filing habits. This is not to say that there will not be any changes that importers find inconveniencing. One process that might frustrate importers is the system for revenue collection. Since ports of entry will maintain responsibility over revenue collection while centers process entry summaries, importers will have to both file their entry summary with their center and send a copy of it along with a check to the port of entry. Despite small hitches like this, in general centers seem to provide more convenience than headaches.

Originally, CBP created four centers, but on April 4, the agency announced in the Federal Register six additional centers which would be phased in over the course of the spring and summer of 2013. Currently, there are seven centers with three more expected by the end of 2013. Those already in place are:

• The Electronics Center, Los Angeles
• The Pharmaceuticals, Health & Chemicals Center, New York City
• The Automotive & Aerospace Center, Detroit
• The Petroleum, Natural Gas & Minerals Center, Houston
• The Base Metals Center, Chicago
• The Industrial & Manufacturing Materials Center, Buffalo
• The Machinery Center, Laredo

Throughout the summer we should expect to see three more centers created:

• The Agriculture &Prepared Products Center, Miami
• The Apparel, Footwear & Textiles Center, San Francisco
• The Consumer Products & Mass Merchandising Center, Atlanta

In addition to the April 4 Federal Register Notice, CBP published a document titled “Centers of Excellence and Expertise Test Guidelines,” detailing the responsibilities and procedures for participating accounts. This document breaks down the responsibilities of the center, the port, and the importers and is a great reference on how centers will actually work.

As their numbers increase, centers will also see their responsibilities grow. This is because CBP plans to transfer all port-of-entry responsibilities to the centers, including revenue collection. This is mostly good news for importers, as centers promise a whole lot without demanding much in return. Importers will benefit from having most of their filings managed by people who understand their industry and understand their “account.” CBP hopes that the closer working relationship that centers will create between CBP and importers should also support mutual trust and cooperation, and given the recent positive feedback from participants, CBP is probably right.

By: Adrienne Braumiller, Partner