Customs modernizing de minimis

Entry type 86 will be integrated into the Automated Broker Interface early next year.    U.S. Customs and Border Protection plans to roll out entry type 86 in the Automated Broker Interface (ABI) for de minimis shipments involving partner government agencies (PGAs) in early 2019.
   CBP Executive Director for Trade Policy and Programs John Leonard said Tuesday during the agency’s 2018 Trade Symposium in Atlanta that an official announcement is planned for late this fall.
   “This vehicle would allow for an ABI … transaction that would give us certain information on a small package-type of shipment,” he said. “Of course, it’s de minimis, [Section] 321, so it’s no duties, no fees, no bond required. Like most of the prototypes that we work on, we will take baby steps. We will test this first, implement and amend.”
   In cases in which goods don’t have any PGA requirements, CBP’s current plan is to continue clearing those de minimis shipments based on their manifest, but the agency has the authority to require a more formal entry if deemed necessary, Leonard said.
   Leonard said CBP has the funds to program Section 321 entries in the Automated Commercial Environment (ACE) as part of a $30 million spending package included in fiscal year 2018 appropriations legislation.
   Both he and CBP Executive Assistant Commissioner for Trade Brenda Smith said during the conference that programming for Section 321 shipments is currently CBP’s No. 1 priority for ACE.
   Government officials are discussing how to roll out ACE Section 321 filing, Leonard said, adding that an interim final rule and National Customs Automation Program prototype both are options.
   Such prototypes are authorized by the Customs Modernization Act of 1993, which allows the CBP commissioner to conduct tests to evaluate the effectiveness of new technology or operational procedures regarding the processing of passengers, vessels or merchandise.
   Notice of such tests must be published in the Federal Register no less than 30 days prior to implementing the test and must invite public comments as well as inform interested members of the public of eligibility criteria for voluntary participation in the test and the basis for selecting participants.
   For Section 321 ACE entries, CBP is considering requiring the shipper, unique identifier, consignee, country of origin, quantity, retail value, 10-digit Harmonized Tariff Schedule number and the importer of record (IOR) number, Leonard said, adding the IOR number could be optional but tied in with some sort of trusted trader concept.
   “These are not set in stone by any means, but these are some of the areas we’re looking at,” he said.
   For CBP, the biggest challenge associated with the Trade Facilitation and Trade Enforcement Act’s raise of the de minimis level from $200 to $800 was an increased workload, Jim Swanson, director of Cargo Security and Controls in CBP’s Cargo and Conveyance Security division, said during the conference.
   Before the de minimis raise, the number of shipments and staff remained essentially constant in international mail facilities, some of which are 20 to 40 years old, Swanson said.
   “Suddenly [shipment volume] doubled and doubled again, and now we’re sitting here with a very manual process,” he said. “How do we process foreign mail with a limited number of people looking at it and tools that were not quite up to the task? So we’ve spent an awful lot of time working with automation tools, working on processing tools, high-speed systems and other things that bring mail into the 21st century, hopefully in the processing side, while making sure we’re staffed correctly.”
   The U.S. government is seeing some “real enforcement challenges” in the international mail environment, including with respect to opioids, other narcotics and “security issues,” in part, because of the “openness” of global mail movement based on international treaties, Swanson said.
   CBP also is seeing more small package air shipments and some new business models since the de minimis raise, he said.
   Some of the new business models are emerging in the trucking environment, Swanson said.
   “Nontraditional business partners are going out and soliciting business, oftentimes at street corners, and literally … loading stuff right on a truck, bringing it across the border and actually under the provisions that we put in mandatory truck manifest, doing paper transactions with us when they arrive,” he said. “So that was a significant challenge: How do we deal with this sudden influx of shipments that we have to manually process?”
   While there potentially could be hundreds of millions of new importers following the de minimis raise, CBP also is dealing with several new intermediaries named parties to de minimis transactions, and the agency is working to learn more about them and their transactional roles, Swanson said.
   “What level of participation do they have? What responsibility do they have? Are they facilitators to the importation, and what legal requirements do they face going forward?” Swanson said. “It’s a significant challenge, and quite frankly, one we’re still hashing out. It’s going to take a while to get through all of that, but we’re starting to get a handle on it.”
   CBP is seeing the emerging pattern of “significant undervaluation” in connection with the de minimis raise “to the level that we would consider to be significant fraud — people declaring very small amounts, and the actual value is very high,” he said.
   Important to note is that CBP uses foreign retail value for valuation purposes in de minimis clearances, not the customs value it uses for other importations, Swanson said.
   Using the foreign retail value, it is “pretty easy” for CBP to figure out “when we see the product, [to] determine whether or not the product is worth $50 or worth $50,000,” he said. “Trust me, we’ve seen that and worse.”
   CBP is seeing e-commerce shipments “of every stripe and in every mode,” impacting the agency’s trade operations at seaports, land border ports, airports, express hubs and international mail facilities, CBP Executive Director for Cargo and Conveyance Security Thomas Overacker said during the conference.
   Overacker added that the current situation exemplifies the work that CBP must do to grasp emerging business models in the de minimis environment.