Role of the Broker - Regulatory Revision

2011-09-28T18:23:00Z

Welcome to the CRCBFA websites first blog. We thought that this would be a great opportunity for those in the international trade community, specifically customs brokers, to voice their opinions on the proposed 19 CFR Part 111 re-write that has been in discussion between CBP and NCBFAA since January 2011 in what is called “The Role of the Broker-Broker Regulatory Revision Workgroup”.

This group was created to develop solutions to meet the challenges of 21^st century commerce as it relates to our trade. There are five major topics that have been the focus of this group.

- Expanded Broker Role

- Broker Responsibility

- Professionalism

- Regulatory Modernization

- Penalty Regime / Disciplinary Actions

In this blog, our intention is to put the issues out there as the facts that are known and let the community discuss the points as there are many different opinions on each topic. The changes to these five topics have already been discussed at length between CBP and the NCBFAA and proposals have been made. We may begin to see official requests for comments from CBP on C-TPAT and ISA changes as soon as the 1^st fiscal quarter of next year.

1.) EXPANDED BROKER ROLE

There are two key issues that are on the table, pre-certification of applicants for C-TPAT and pre-application support for ISA applicants. During a recent webinar by CBP, not much time was spent on this issue.

The key considerations concerning C-TPAT were to fast-track the importer’s applications, allow CBP resources to be redeployed, expand business potential and reduce cost to CBP. The key challenges were that the pre-certification has a lack of benefits for the applicant, push back from existing service providers, cost resistance and the SAFE Ports Act.

The key considerations for ISA were to leverage existing relationships with clients, ongoing assistance with importers in meeting program requirements and to help reduce the “haystack”. The challenges here would also be that there is a lack of tangible benefits for the applicant, cost resistance, visibility into importers compliance may result in a possible conflict (client vs. government) and it would also be a direct competition with CBP services already provided.

2.) BROKER RESPONSIBILITY

The key issues on the table are importer validation, customs business and power of attorney. These are industry changing topics that should not be ignored.

The enhanced importer validation would establish requirements for importers to present bona fides. In turn the broker would be required to obtain evidence of bona fides. This would be a shared responsibility between importer and broker to validate the importers’ identity. This helps to reduce incidents of identity theft as well as confirm legitimacy of importers. The challenges would be an increased requirement on the importers as well as resistance to the shared responsibility.

The customs business issue is basically stating that customs business is to be conducted within the U.S. Customs Territory, although this will have a direct impact with off-shore operations.

The power of attorney topic would change the way POAs are handled within the industry. It would no longer allow a broker to obtain a POA from a 3^rd party via sub-POAs but would require the POA to be received directly from the importer to conduct customs business on behalf of the importer. This would increase the broker visibility to the importer as well as give the broker direct contact with the importer of record.

3.) PROFESSIONALISM

This topic deals solely with the licensing requirements for customs brokers. It would enhance the licensing criteria as well as add value to the license. The proposals on the table are broker apprenticeship, continued education and examination requirements.

The introduction of an apprenticeship prerequisite for customs broker licensing is thought to give a better knowledge base and experience to newly licensed brokers. It would require an apprentice to work in a customs brokerage environment for an undetermined amount of time before being able to take the broker exam.

The exam itself has also been revisited with discussions of changing from multiple-choice to a more “entry process and regulations” focused written exam that provides for more real working knowledge of the industry.

The NCBFAA/NEI has proposed a new continued education regulation that would be required to keep a customs broker license active. This would keep customs broker licenses consistent with other federal/state licensed professions. It would enhance the professionalism in the industry while keeping the knowledge of the customs broker industry up to date. Although, there are a number of concerns that have been raised on what entity would be responsible for implementation and oversight of the program. The NCBFAA/NEI currently has the CCS program that requires 20 continuing education points per year to keep CCS designation active. Although many of the CCS point courses have enrollment fees, CBP has made a point of saying that there should be sufficient free opportunities as well.

4.) REGULATORY MODERNIZATION

There are a few changes proposed that would move from manually submitted to automated processes through the ACE portal. One major change would be to discontinue the current tri-annual reporting method to an automated annual report through ACE. The hope is that this would keep the reporting current and efficient. CBP thinks that a yearly automated reporting system through ACE would also help save money due to not having to send as many reminders out to the licensed brokers that may not have remembered to file the tri-annual report.

The ACE portal would also be used to upload employee data directly to CBP rather than in writing which would minimize the administrative burden on brokers. CBP also proposes to eliminate the requirement for the date and place of birth of employees. There is also discussion about the clarification of what an “employee” as it pertains to customs business. A possible change in language to the definition as noted in 19 CFR Part 111 would read as:

“Employee” means a person who meets common law definition of

employee and is in the service of a customs broker whose regular or

ancillary duties performed in the course of such employments fall

within the definition of customs business as set out in this part.

There is also discussion about adding a new license status of in-active. This would be for brokers that are not currently conducting customs business but would like to keep the license from being revoked due to not participating in the proposed continued education requirement, although they would still be required to file the proposed annual status report.

The current permit system is being looked at to modernize it to allow for alternative qualification for permits. There are a few different models being looked at but it seems to be leaning towards consolidating the current permit districts into larger permit regions. This is said to help reduce the reliance on the waiver process and annual renewal requests. There is also discussion concerning a new contract system. This would entail the customs broker presenting a contract to CBP outlining the supervision and control processes used. These contracts would not require an annual renewal request. The contracts would also be published as public record so that others could follow and give greater flexibility to brokers.

5.) PENALTY REGIME

CBP is considering changes to 19 USC 1641 language to provide for “swift action by CBP” for the immediate suspension of customs broker licenses of willful violators (threats to national security). NCBFFA has made it clear to CBP that they must be aware of broker’s rights and also provide a due process provision.

CBP is also looking at focusing on a “bad actor’s” license revocation rather than filer code remediation.

Possible changes to 19 CFR 142.3a(d) would be to exclude the word “broker”.

“(d) Misuse of the Entry Filer code. The Asst. Commissioner…may

refuse to allow use of an assigned entry filer code if it is misused

by the importer or broker.”

Possible changes to 19 CFR 111.37 would include the “filer code”.

“Misuse of license or permit. A broker must not allow his license,

permit, filer code or name to be used by or for any unlicensed

person (including a broker whose license or permit is under

suspension)…”

It is very important that we make our voices heard as our input is going to shape the future of our industry.

Role of the Broker- Regulatory Revision

Role of the Broker - Regulatory Revision