The State of Trade... sharing per Baker and McKenzie

STATE OF THE TRADE INCREASED TRADE ENFORCEMENT ON THE HORIZON BY TED MURPHY, PARTNER BAKER & MCKENZIE, LLC

U.S. Customs and Border Protection Commissioner R. Gil Kerlikowske spoke at the U.S. Chamber of Commerce earlier this week and his remarks contained a number of interesting points, particularly

with regard to increased trade enforcement. The Commissioner’s remarks were entitled “The State of Trade: Commissioner’s First Year and Look

Ahead” and contain the usual bevy of statistics (e.g., in FY2014, CBP cleared $2.5 trillion in imports,

$1.6 trillion in exports, processed approx. 26 million cargo containers, etc.). The remarks also tout

CBP’s efforts to modernize and streamline the import/export process. The remarks are worth a quick

read (copy available here) One of the comments of particular note was the reference to CBP’s “trusted trader” programs. As you

know, CBP is merging the C-TPAT and ISA programs into a single program. This will save CBP

resources, as well as align the U.S. program more closely with other countries’ AEO programs (which

generally include both supply chain security and trade compliance already). Importers who participate in

C-TPAT, or in C-TPAT and ISA should be aware of (and be tracking) this development. Since neither

program is governed by statute or regulation, CBP is free to modify the rules regarding participation at

any time and without any advance warning. Given CBP’s history of actually doing so, participants should

be expecting changes sometime in 2015.

Another comment of interest related to the agreements reached with Canada and Mexico,respectively,

on supply chain issues. The agreement with Mexico provides reciprocity between the C-TPAT program

and Mexico’s NEEC program. This agreement could help expedite shipments both ways across the

border. Similarly, the agreement with Canada holds the promise of expediting shipments, by allowing all

clearance-related checks to occur in the country of export (i.e., clearing the goods for import before they

actually get to the border). While the ‘devil is in the details,’ these are potentially significant

developments.

Finally, the comments touch on trade enforcement issues. As you know, CBP does not publish

individual commercial penalties and stopped regularly publishing annual trade enforcement

statistics a couple of years ago. As a result, it was somewhat surprising to learn that trade penalty

assessments increased 140% between FY2011 and FY2014. According to the Commissioner, CBP

issued $385.4 million in penalties in FY2011 and $925.9 million in penalties in FY2014 (interestingly,

he does not mention how much of either amount CBP actually collected). He also specifically

mentioned increased collection/enforcement of antidumping & countervailing duty orders. Given

Commissioner Kerlikowske’s enforcement background, and the fact he specifically mentioned it in his

brief remarks to the Chamber, it means that we are likely to see this upward enforcement trend continue

for the foreseeable future.