In 2011, US Customs and Border Protection (CBP) rolled out several new pilot programs aimed at modernizing the customs entry process. These programs have the potential to facilitate trade and improve CBP’s ability to identify and address high-risk imports. However, many importers may not benefit from these programs based on strict eligibility requirements imposed by CBP. Importers are advised to monitor the implementation of these programs and consider whether to incur the requisite costs to benefit from these programs.

The two most significant new trade programs are Simplified Entry (SE) and Centers of Excellence and Expertise (CEE). CBP announced SE as a pilot program in December 2011. The main goal of SE is to expedite cargo release and to avoid or reduce delays at the port of entry. Under this pilot program, which is currently limited to air cargo, participants submit streamlined data to CBP earlier than currently required, which allows CBP to review the data and “release” cargo prior its arrival at the port of entry. CBP believes that the program will lead to significant efficiencies for both importers and CBP while enhancing security with more accurate information provided earlier in the process. CBP anticipates expanding this pilot program to ocean and truck cargo, and also has discussed an extension of the program to “Simplified Summary,” which would allow for a periodic summary filing and payment settlement over a “business month” period, versus the current process of accounting by transaction.

With the CEE program, CBP is seeking to create a unified point of contact to process entries for importers in a specific industry. Currently, most imports are processed by CBP import specialists at the port where the merchandise is entered. This approach leads to concerns over port uniformity and whether CBP port officials possess the requisite expertise to process entries covering the full range of products imported into a port of entry. The CEEs, which recently graduated from pilot program to permanent centers covering the pharmaceutical and electronics industries, are intended to handle a range of post-entry activities, including validation activities, protests and post-entry amendment/post summary correction reviews, and prior disclosure validations. CBP intends to staff CEEs with officials that possess industry expertise. The CEE would also partner with other government agencies that impose import requirements for the industry covered by the CEE. CBP is planning to establish CEEs for additional industries covering virtually all product sectors in the next several years.

The SE and CEE programs are well intended and present significant opportunities to modernize and improve processes that have evolved little over since the Customs Modernization Act. However, as these programs are currently structured, there is some question as to whether many in the trade would ever benefit from these programs. This is because the primary benefits are currently limited to CBP’s trusted partners. Specifically, the SE pilot participants must be certified (i.e., Tier 2 or 3) members of Customs-Trade Partnership Against Terrorism (C-TPAT), while the eventual rollout of “Simplified Summary” may be limited to members of the Importer Self-Assessment (ISA) program. In addition, the CEE post-entry services described above are provided only to C-TPAT and ISA members. While CBP has indicated that the CEEs can serve as a resource to the broader trade community, only trusted partners will have their entries processed and reviewed by a team that has dedicated experience and knowledge in that industry.

CBP has sought to increase participation in the trusted partner programs of C-TPAT and ISA by offering certain benefits, including improved import processing times and reduced audit risk. However, many importers consider these benefits to be insufficient to incur the costs of becoming C-TPAT and ISA members. With the introduction of SE and CEE, importers are advised to follow the implementation and expansion of these programs and continue to assess whether the benefits of these new programs are worth the costs of becoming a CBP trusted partner.  

On a broader note, the eligibility requirements for SE and CEE raises the question of whether it is appropriate to effectively develop two entry processes – one for trusted partners and one for all other importers. To the extent that a government agency is investing considerable public resources in modernizing import systems and processes, is it fair for the benefits to be limited to only those who participate in wholly voluntary programs? Why should any importer have to delay submission of redundant data if CBP has developed a system for identifying high-risk shipments with less data submitted earlier in the import transaction? A large number of importers are not “trusted partners,” not because they present significant security and/or compliance risks, but because they have limited resources available to meet C-TPAT and ISA requirements. This resource concern is of particular relevance to small- and medium-sized importers. As the SE and CEE programs continue to take shape in 2012, it will be important for importers to track and influence eligibility requirements as appropriate and continue to evaluate whether these programs can be beneficial.

Should you have any questions regarding this Alert, please contact members of Arent Fox’s International Trade Group, or the Arent Fox attorney who handles your matters.