On January 30th, U.S. Customs and Border Protection (CBP) published the Trade and Travel Report summarizing its current priorities, facilitation and enforcement efforts in Fiscal Year 2019 (FY2019). CBP fulfills the dual role of trade facilitation and revenue protection, and is the second largest source of revenue for the U.S. federal government. The agency enforces nearly 500 U.S. trade laws and regulations on behalf of 49 partner government agencies. U.S. importers in particular should be aware of CBP’s current trade compliance priorities and enforcement initiatives, and review their current operations to foster compliance and avoid potential liability for violations of the import laws and regulations. The following table provides highlights from the FY2019 report—

 

Import Summary and Duty Collection
  • CBP processed $2.7 trillion in imports, 35.5 million entries, more than 28.7 million cargo containers at U.S. ports of entry, and collected approximately $80.7 billion in duties, taxes, and other fees.
  • $71.9 billion in duties was collected, an increase of nearly 73% over Fiscal Year 2018. The increase was attributed to the duties on steel, aluminum, washing machines, washing machine parts, solar panels, and goods from China. Specifically, in FY 2019, CBP assessed—

·       Nearly $716 million in Section 201 duties;
·       More than $1.1 billion in Section 232 aluminum duties;
·       Nearly $4 billion in Section 232 steel duties; and,
·       More than $29 billion in Section 301 duties against Chinese-origin goods.

Increase in Binding Ruling Requests With the increase of additional duties, CBP saw an uptick in importers’ requests for binding rulings on the proper tariff classification, valuation and country of origin of their merchandise. The National Commodity Specialist Division issued 21% more rulings than in FY2018.
Antidumping and Countervailing Duty (AD/CVD) Enforcement

 

  • 503 AD/CVD orders were in effect in FY2019 (covering goods valued at $19 billion).
  • CBP began enforcing 33 new AD/CVD orders in FY2019.
  • CBP collected approximately $1.9 billion in AD/CVDs and levied monetary penalties totaling over $80.5 million on importers for fraud, gross negligence, and negligence of AD/CVD requirements.
  • CBP entry summary reviews were conducted that resulted in recovery of over $121.8 million in AD/CVD duties owed (an 86% increase over FY2018).
  • CBP audits of importers identified approximately $20.4 million in owed AD/CVD duties with $4.8 million collected to date.
  • CBP seized, with the assistance of U.S. Immigration and Customs Enforcement, shipments with a domestic value of more than $131,000 for AD/CVD violations.
AD/CVD Evasion CBP received and acted upon 78 e-Allegations concerning the evasion of AD/CVD orders originating from interagency referrals. In addition, through the Enforce and Protect Act The Enforce and Protect Act (EAPA) program, in which interested parties may electronically submit allegations of evasion of AD/CV orders, CBP received 38 new allegations, initiated 36 EAPA investigations, conducted 21 foreign onsite visits, and issued final determinations for 7 investigations.
Forced Labor
  • In FY2019, CBP increased its efforts to prevent the entry of forced labor-produced goods into the United States. CBP is currently enforcing 36 active withhold release orders and four active findings involving shipments of—

·       Seafood caught by a Republic of Vanuatu fishing vessel;
·       Garments produced in Xinjiang, China;
·       Disposable rubber gloves produced in Malaysia;
·       Gold mined in the eastern Democratic Republic of the Congo;
·       Rough-cut diamonds from Zimbabwe; and,
·       Bone black manufactured in Brazil.

CBP E-Commerce Strategy CBP processes over 600 million express consignment and international mail shipments stemming from e-commerce transactions each year, equating to approximately 1.8 million shipments a day. Adversaries seek to exploit this volume, presenting CBP with economic risks in the form of IPR infringement as well as safety risks from poor quality and untested consumer products. In FY2019, over 90% of IPR seizures were found in express and international mail shipments. As part of the agency’s E-Commerce Strategy, CBP—

  • Issued guidance requiring electronic manifests for trucks carrying shipments valued at $800 or less (which are commonly referred to as Section 321 shipments) that meet de minimis requirements to enter duty-free into the U.S.
  • Collaborated with the Commercial Customs Operations Advisory Committee (COAC) to finalize an e-commerce supply chain map, which identifies the various mode-specific routes ecommerce shipments take as they enter the U.S.
  • Launched an e-commerce data pilot pertaining to low-value shipments of $800 or less, in which the agency will test the utility of accepting advance data from e-commerce supply chain partners, including online marketplaces, to help identify the entity causing the shipment to move, the final recipient, and the contents of the package. The pilot’s participants includes Amazon, eBay, Zulily, FedEx, DHL, and UPS, as well as technology firm PreClear and logistics providers XB Fulfillment and BoxC Logistics.
  • Provided input to the World Customs Organization for the publication of its E-Commerce Package in August 2019, which includes an international Framework of Standards on cross-border e-commerce transactions.
IPR Enforcement Through the recordation of trademarks and copyrights by U.S. companies, CBP enforces their IPR at the border, detaining and seizing goods that are potentially infringing. As of September 30, 2019, CBP was enforcing 18,735 recorded copyrights and trademarks and seized 27,599 shipments with IPR violations.
Commercial Targeting and Analysis Center (CTAC) Efforts The Commercial Targeting and Analysis Center (CTAC), led by CBP, is comprised of multiple, co-located government agencies responsible for targeting and intercepting commercial shipments that pose a threat to the health and safety of Americans. Since 2010, more than 100,000 shipments of unsafe consumer and industrial goods, violative food and drug products, and other contraband have been targeted at ports nationwide and prevented from entering the U.S. commerce. During FY2019, CTAC facilitated efforts that led to 7,211 seizures of products, valued at nearly $35.2 million, posing health and safety risks to the American public. CTAC activities also resulted in 595 seizures involving wildlife trafficking violations and 22 seizures of illicit importations of cultural property.
Automated Commercial Environment (ACE) Modernization CBP’s efforts to simplify the Automated Commercial Environment (ACE), CBP’s cargo processing system, resulted in an estimated economic benefit of approximately $537 million for the trade community and $106 million for CBP in FY2019, an increase of 38% in savings for the trade community and 200% in savings for CBP over FY2018. ACE also reduced processing times by 690,000 hours for the trade community and 1,896,000 hours for CBP.
Blockchain Technology Innovation In September 2019, CBP launched its second proof of concept to test blockchain technology in an IPR scenario. The proof of concept used two new data elements: a legal entity identifier to verify corporations; and, a globally unique product identifier to authenticate products at the retail level. As part of the testing, members of the trade community verified that the licensing entities of imported goods (i.e., importer, manufacturer, or retailer) were legitimate. The test proved that CBP could facilitate legitimate trade by having the right holder attest to the validity of the licensing relationship. Another aspect of the pilot involved a consumer test, where CBP used mobile technology to verify branded products were legitimate. Using blockchain technology, companies were able to communicate directly with consumers on the validity of the product. In the future, a consumer could scan a product and receive an instantaneous determination on its legitimacy. All of the initial tests were successful and feedback from the government and trade participants was positive.
Use of Non-Intrusive Inspection (NII) Technology CBP law enforcement personnel use non-intrusive inspection systems (NII) and radiation detection equipment to inspect conveyances and vehicles for the presence of contraband and illicit radiological materials. The average NII examination of a cargo container takes approximately 8 minutes, while a physical inspection takes 120 minutes on average. The time saved using NII and radiation detection equipment saves CBP $1 billion in annual operations and saves industry $5.8 billion to $17.5 billion in costs due to delays. In FY2019—

  • CBP used 320 large-scale NII systems at land and sea ports of entry to perform approximately 6.6 million examinations resulting in 3,016 seizures and the interdiction of 316,203 pounds of narcotics, $3 million in undeclared U.S. currency, 1,655 weapons, and 200 undeclared passengers hidden within commercial cargo—more than 94% of these seizures and 98% of the total pounds of narcotics seized occurred by scanning approximately 15% of the commercial cargo and 1% of vehicles arriving at land ports of entry on the Southwest border.
  • In collaboration with the DHS Science and Technology Directorate, CBP conducted technology demonstrations focused on automating NII scanning at Southwest border land ports of entry. The NII technology was placed at high-throughput, drive-through pre-primary and primary lanes and data was transferred for analysis to officers at a remotely located command center. CBP also deployed presumptive testing instruments to the field to aid in the identification of illicit substances including fentanyl. At the end of FY2019, 315 systems were deployed, and an additional 75 units were procured with planned deployments scheduled throughout FY2020.
  • CBP used 1,350 radiation portal monitors to conduct over 140 million inspections at land, sea, and air ports of entry.
International Mail The U.S. Postal Service receives international mail from more than 190 countries. In FY2019, 63 countries provided advance electronic data to the U.S. Postal Service, which was then passed on to CBP. The advance data helps CBP expedite the flow of commerce because that data allows CBP to target only those shipments that are deemed high-risk. In FY2019, CBP received advance electronic data on 306 million international postal shipments (a 3% increase from the number of international postal shipments with advanced electronic data in FY2018). With nearly half a billion international mail shipments each year, the need for advance electronic data is critical for CBP. Having the data available frees up officers so they can focus on the highest risk shipments and facilitate the movement of goods.
Opioid Detection Challenge In February 2019, CBP launched the Opioid Detection Challenge, a global prize competition seeking new, innovative solutions to detect opioids being trafficked into the U.S.. The competition, which will award a total of $1.55 million in prize money, was a collaborative effort among CBP, the DHS Science and Technology Directorate, the Office of National Drug Control Policy, and the U.S. Postal Inspection Service. The Opioid Detection Challenge called upon innovators to submit novel plans for rapid, nonintrusive detection tools that will help find illicit opioids being sent through the international mail or express environments. A major goal of the competition was to create a system that can detect and identify narcotics within a package before a CBP officer opens it. The competition was part of a comprehensive government effort to stop the flow of illicit drugs coming into the U.S. and address the opioid addiction crisis. Winners will be announced in FY2020.
Historic Cargo Seizure On June 17, 2019, CBP officers at the Philadelphia seaport netted the largest cocaine seizure in the 230-year history of the U.S. Customs Service and CBP. Nearly 20 tons of cocaine were found in shipping containers aboard a Liberian-flagged container ship. The cocaine had an estimated street value of $1.3 billion. While conducting an at-sea joint examination aboard the vessel, authorities from CBP, HSI, and the U.S. Coast Guard detected anomalies in seven shipping containers. The boarding team escorted the ship to its berth in South Philadelphia and continued its inspection. After the 15 containers were unloaded from the vessel, CBP confirmed the presence of anomalies. A combined 15,582 bricks, containing 39,525 pounds of a white, powdery substance, tested positive for cocaine. CBP seized the cocaine as well as $56,330 found on the vessel, believed to be proceeds from illegal activity. HSI agents made six arrests and continued their investigation. The U.S. Attorney’s Office for the Eastern District of Pennsylvania began prosecuting the case in July 2019. The contents of the shipping containers included wine, coated paperboard, vegetable extracts, and dried nuts from Chile, carbon black from Colombia, and scrap metal batteries from United Arab Emirates. The ship made port calls to Chile, Peru, Panama, and the Bahamas before arriving in Philadelphia.
Customs Trade Partnership Against Terrorism (C-TPAT) The Customs Trade Partnership Against Terrorism (C-TPAT) is a voluntary public-private sector partnership program, which recognizes that CBP can provide the highest level of cargo security only through close cooperation with the principle stakeholders of the international supply chain such as importers, exporters, carriers, consolidators, licensed customs brokers, and manufacturers. Today, nearly 11,600 certified partners have been accepted into the program. In FY2019—

  • CBP completed the first major update of C-TPAT’s minimum security criteria in 17 years, and completed over 2,200 validations to certify that CTPAT members have implemented and followed the highest level of supply chain security measures. The vast majority of C-TPAT members (97.3%) remained in good standing, but the C-TPAT enforcement actions led to 96 suspensions and 120 removals from the program in FY2019.
  • C-TPAT enabled CBP officers to reallocate a larger portion of their time to examining high-risk cargo by reducing examination rates for C-TPAT members, saving members $70.2 million.
  • CBP saved almost $600,000 in travel expenses by accepting 338 Authorized Economic Operator certificates from foreign mutual recognition arrangement partners, nearly half of which came from CBP’s mutual recognition arrangement with Mexico.
  • CBP officially began transitioning the legacy Importer Self-Assessment (ISA) program into the newly created C-TPAT Trade Compliance Program, which will transform C-TPAT into an Authorized Economic Operator program that includes security and trade  compliance. This will align CBP more closely with other customs administrations throughout the world.
  • CBP launched the Advanced Qualified Unlading Approval (AQUA Lane) pilot program, which decreased time to market for imports arriving on sea vessels by increasing shipping expediency, ensuring predictability, and providing cost-savings for CTPAT members—C-TPAT members participating in the pilot saved nearly $99 million in total.
Agriculture Inspections CBP agriculture specialists examined agriculture imports for potential pests and diseases, incorrectly manifested and smuggled items, and prohibited animal products and byproducts. As part of their inspection process, CBP agriculture specialists examine wood packaging materials associated with cargo to search for wood boring insects such as Asian longhorned beetles. They also inspect containers and conveyances for hitchhiker pests such as Asian gypsy moths and exotic fruit flies as well as for contamination from prohibited weed seeds, food scrap, or soil. CBP agriculture specialists also are trained to identify and contain emerging and rapidly evolving biological threats that are dangerous to America. During FY 2019—

  • CBP agriculture specialists conducted more than 750,000 examinations on imported agriculture or agricultural-related commodities at the U.S. ports.
  • CBP’s examinations yielded 40,200 pests that are considered harmful to crops, vegetation, and the ecological environment.

The full report can be found at: https://www.cbp.gov/document/annual-report/cbp-trade-and-travel-fiscal-year-2019-report.

If you have any questions relating to CBP’s FY2019 Travel and Trade Report, CBP’s enforcement efforts, or other customs compliance-specific issues, please contact Melissa Proctor (melissa@millerproctorlaw.com) or Peggy Chaplin Louie (peggy@millerproctorlaw.com) at Miller Proctor Law PLLC (https://millerproctorlaw.com ).