Role of the Broker~Role of the Broker~Regulatory RevisionRegulatory Revision

Commercial Operations Advisory Committee

Subcommittee on Trade Facilitation

August 18, 2011

The Trade Integrated Planning and Coordination Cell (TIPCC) was established by Commissioner Bersin on June 29, 2010, to review the activities which support CBP’s trade mission and contribute to the nation’s economic security. As part of creating a 21st century vision, the TIPCC generated ideas to transform the role of the broker to modernize and facilitate legitimate trade.

The Role of the Broker-Broker Regulatory Revision Workgroup was established January 2011 by CBP in partnership with the National Customs Brokers and Fowarders Association of America (NCBFAA) to work collaboratively to develop solutions to meet the challenges of 21st Century commerce as it relates to their vital role, exploring the following major topics:

Role of the Broker~Role of the Broker~Regulatory RevisionRegulatory Revision

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Expanded broker role Regulatory modernization

Broker responsibilities Penalty regime/

Professionalism disciplinary actions

The Workgroup will propose concepts that will:

Expand the role of the broker to meet the challenges of 21st Century global trade

Ensure licenses brokers exercise due diligence in conducting customs business

Increase the value of a customs broker license Leverage broker relationships to extend the opportunity for small

and medium enterprises to be recognized as trusted partners

GoalsGoals

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Continuing education requirement to maintain active license

4. Modernization Discontinue Triennial reporting –

replace with automated annual status reporting

Allow upload of employee data into ACE

Provide for reporting of continuing education reporting

5. Penalty Regime Revise statute language to allow

for immediate suspension of license (threats to national security), pending review of case, with due process

Focus on bad actor’s license rather than filer code remediation

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Highlights of Proposed OptionsHighlights of Proposed Options1. Expanded Role “Pre-certification” of C-TPAT

applicants” Pre-application support for ISA

applicants

2. Broker Responsibilities Establish requirement for

importers to present bona fides Require broker to obtain evidence Broker must receive POA directly

from importer Customs business is to be

conducted within the U.S. Customs Territory

3. Professionalism Apprentice prerequisite for broker

license

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Expanded Broker RoleExpanded Broker RoleKey Considerations Key Challenges

Pre-certification of applicants for C-TPAT

Fast-track of importer’s application Allows CBP resources to be

redeployed Additional touch points (expanding

pool of applicants) Expands business potential

Complements other business services

Expands career paths and competencies for brokerage

Reduces costs to CBP

Lack of tangible benefits for applicant Push back from existing service

providers Technology adjustments and enhancements

Cost resistance Longer sales cycle SAFE Ports Act

Pre-application support for ISA applicants

Leverages existing relationship with clients

Potential for ongoing assistance with importers in meeting program requirements

Facilitates reducing the “haystack”

Lack of tangible benefits for applicant Cost resistance Visibility into importers’ compliance

may result in possible conflict – client v. government

Direct competition with CBP services provided

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Broker ResponsibilitiesBroker ResponsibilitiesKey Considerations Key Challenges

More robust importer validation

Establish requirement for importers to present bona fides

Requires broker to obtain evidence of bona fides

Shared responsibility for validating importers’ identify

Strengthens the standard to fix accountability to true party of interest

Should reduce incidents of identify theft

Increased requirements upon importers

Statutory and regulatory changes needed

Resistance to shared responsibility

Customs business and power of attorney (POA)

Broker must receive POA directly from importer to perform customs business on behalf of importer

Increased broker visibility to client Reduces surety risk Customs business is to be

conducted within the U.S. Customs Territory

Freight forwarders will not be able to serve as a POA conduit for customs business

May impact off-shore operations

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ProfessionalismProfessionalismKey Considerations Key Challenges

Enhance customhouse broker licensing criteria

Introduction of “apprenticeship” prerequisite

Continuing education requirement to maintain active license

Increased value of license Higher quality of work products Better educated practitioner Overall increased professionalism

from which the trade community and CBP should benefit

Bandwidth to implement apprenticeship

Resistance from non-practicing customshouse broker

Regulatory change required Automated means to report

requirements have been met Creation of an oversight body for

continuing education administration

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ModernizationModernizationKey Considerations Key Challenges

Discontinue Triennial reporting

Replaced with automated annual status reporting

Allow at will upload of employee data into ACE – minimizes brokers’ administrative burden

Clarify which employees must be reported

Collect only minimal employee data that CBP actively uses

Link continuing education reporting with annual reporting

Leverage ACE portal functionality Efficient/accurate collection of

broker information Establish new definitions of “active”

and “inactive “status

Establishing new fee structure Statutory and regulatory change

required Change requirement for existing ACE

Portal ($$$) Annual requirement to report

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Modernization Modernization (continued)(continued)

Key Considerations Key Challenges

Permitting Scheme

Modernize permit framework to allow for alternative qualification acquisition

Rational approach for providing responsible supervision and control

Reduce reliance on waiver process Equal access via transparency of

alternate qualification criteria Allow for greater flexibility in broker

planning Eliminate unnecessary costs

Administrative fee structure Regulatory change needed Industry resistance CBP resistance Length of time to receive approval for

alternative qualification

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Penalty Regime/Disciplinary ActionsPenalty Regime/Disciplinary ActionsKey Considerations Key Challenges

Revise 19 U.S.C. 1641 language

Provide for immediate suspension of license (threats to national security), pending review of case

Provide due process provision Focus on bad actor’s license

revocation rather than filer code remediation

Establishing expedited process for suspension with due process

Resistance from brokers

Brief the Commercial Operations Advisory Committee (COAC) on proposed concepts developed, to-date, in mid-August 2011

Continue consultations with CBP stakeholders Finalize proposal to present to Commissioner Bersin in October 2011

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Next StepsNext Steps

Contact Information:Cynthia F. WhittenburgDirector, Trade Facilitation and AdministrationOffice of International Tradecynthia.whittenburg@dhs.gov