[Senate Hearing 114-625]
[From the U.S. Government Publishing Office]
S. Hrg. 114-625
OVERSIGHT OF THE U.S. CUSTOMS AND
BORDER PROTECTION AGENCY
=======================================================================
HEARING
before the
COMMITTEE ON FINANCE
UNITED STATES SENATE
ONE HUNDRED FOURTEENTH CONGRESS
SECOND SESSION
__________
MAY 11, 2016
__________
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COMMITTEE ON FINANCE
ORRIN G. HATCH, Utah, Chairman
CHUCK GRASSLEY, Iowa RON WYDEN, Oregon
MIKE CRAPO, Idaho CHARLES E. SCHUMER, New York
PAT ROBERTS, Kansas DEBBIE STABENOW, Michigan
MICHAEL B. ENZI, Wyoming MARIA CANTWELL, Washington
JOHN CORNYN, Texas BILL NELSON, Florida
JOHN THUNE, South Dakota ROBERT MENENDEZ, New Jersey
RICHARD BURR, North Carolina THOMAS R. CARPER, Delaware
JOHNNY ISAKSON, Georgia BENJAMIN L. CARDIN, Maryland
ROB PORTMAN, Ohio SHERROD BROWN, Ohio
PATRICK J. TOOMEY, Pennsylvania MICHAEL F. BENNET, Colorado
DANIEL COATS, Indiana ROBERT P. CASEY, Jr., Pennsylvania
DEAN HELLER, Nevada MARK R. WARNER, Virginia
TIM SCOTT, South Carolina
Chris Campbell, Staff Director
Joshua Sheinkman, Democratic Staff Director
(ii)
C O N T E N T S
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OPENING STATEMENTS
Page
Hatch, Hon. Orrin G., a U.S. Senator from Utah, chairman,
Committee on Finance........................................... 1
Wyden, Hon. Ron, a U.S. Senator from Oregon...................... 3
ADMINISTRATION WITNESS
Kerlikowske, Hon. R. Gil, Commissioner, Customs and Border
Protection, Department of Homeland Security, Washington, DC.... 6
ALPHABETICAL LISTING AND APPENDIX MATERIAL
Carper, Hon. Thomas R.:
Prepared statement of the National Treasury Employees Union.. 29
Hatch, Hon. Orrin G.:
Opening statement............................................ 1
Prepared statement........................................... 34
Kerlikowske, Hon. R. Gil:
Testimony.................................................... 6
Prepared statement........................................... 36
Responses to questions from committee members................ 43
Wyden, Hon. Ron:
Opening statement............................................ 3
Prepared statement........................................... 87
Communications
American Council of Life Insurers (ACLI)......................... 89
Express Association of America (EAA)............................. 90
(iii)
OVERSIGHT OF THE U.S. CUSTOMS AND BORDER PROTECTION AGENCY
----------
WEDNESDAY, MAY 11, 2016
U.S. Senate,
Committee on Finance,
Washington, DC.
The hearing was convened, pursuant to notice, at 10:05
a.m., in room SD-215, Dirksen Senate Office Building, Hon.
Orrin G. Hatch (chairman of the committee) presiding.
Present: Senators Grassley, Crapo, Cornyn, Isakson,
Portman, Heller, Wyden, Stabenow, Cantwell, Menendez, Carper,
Cardin, Brown, Bennet, and Casey.
Also present: Republican Staff: Chris Campbell, Staff
Director; Everett Eissenstat, Chief International Trade
Counsel; Douglas Petersen, International Trade Counsel; and
Andrew Rollo, Detailee. Democratic Staff: Elissa Alben, Senior
Trade and Competitiveness Counsel; Greta Peisch, International
Trade Counsel; and Jayme White, Chief Advisor for International
Competitiveness and Innovation.
OPENING STATEMENT OF HON. ORRIN G. HATCH, A U.S. SENATOR FROM
UTAH, CHAIRMAN, COMMITTEE ON FINANCE
The Chairman. The committee will come to order. I would
like to welcome everyone to our hearing this morning and
welcome the Honorable Gil Kerlikowske, the Commissioner of U.S.
Customs and Border Protection. The Commissioner last appeared
before this committee during his confirmation hearing in
January of 2014. A lot has happened since then, so we are happy
to have the Commissioner here again today.
The Finance Committee, and in fact the entire Congress, has
been extremely active on trade over the past year and a half.
Just last night, the Senate by unanimous consent passed the
American Manufacturing Competitiveness Act, a bipartisan,
bicameral bill that will provide tariff relief to American job
creators by establishing a reform process for the consideration
and passage of Miscellaneous Tariff Bills or MTBs.
Once it is signed into law, this legislation will allow
American manufacturers to lower their production costs on parts
that cannot be found in the United States. This is absolutely
essential if we want American companies to be able to compete
effectively in the 21st-century global marketplace.
Passage of the MTB bill is long overdue, and I am very
pleased that we have finally gotten it through Congress and
over to the President for his signature. Many members of the
committee--on both sides of the aisle--worked to get this bill
over the finish line. I want to commend everybody on the
committee, especially Senators Portman, Burr, and Toomey, for
their efforts, and others on the Democrat side as well,
especially the ranking member and others.
This MTB bill closely resembles legislation we reported out
of the Finance Committee last year. In fact, it was just about
a year ago that we began floor debate on several of our
committee's trade bills that all eventually became law. One of
those bills, the Trade Facilitation and Trade Enforcement Act
of 2015, commonly referred to as the Customs bill, was signed
into law on February 24th of this year.
The passage and signing of the Customs bill marked the end
of a legislative process that began almost 10 years ago and
underwent many, many iterations. With the law now in place, CBP
and other agencies have the tools necessary to ensure that
America is able to compete in the world economy while also
ensuring that our trading partners play by the rules.
As we all know, CBP has the dual responsibility of
facilitating legitimate trade and travel while also protecting
the United States from illicit goods and inadmissible people,
such as terrorists. This dual mission is vitally important to
ensuring the strength of our economy and the security of our
borders. The overarching goal of our Customs bill was to
facilitate the efficient movement of low-risk and compliant
goods to the marketplace while also allowing CBP to focus its
resources on goods that could do harm to the economic or
physical security of the United States.
To that end, I would like to take a few minutes to discuss
some specific ways that the recently passed law enhances and
modernizes the way CBP operates.
The new statute includes a number of elements that were
designed to help facilitate trade. For example, the law
requires CBP to consult with private-sector entities to
identify commercially significant and measurable trade benefits
for participants in public/private-sector partnership programs.
It also raises the de minimis level from $200 to $800 and
modernizes the duty drawback process.
In addition, the new law provides a number of new
enforcement tools. These tools include a new process at CBP,
with strict deadlines and judicial review, for dealing with
evasion of our antidumping and countervailing duties laws and a
significant expansion of CBP's authorities to protect
intellectual property rights at the border. Given the
importance of intellectual property to our economy, these new
authorities are long overdue, and they were among my top
priorities in crafting and passing the Customs bill.
On top of that, the law includes a codification of the
Centers of Excellence and Expertise, which, among other things,
ensures that the post-release process for goods coming into the
United States will be aligned by industry rather than the port
of entry where a shipment arrives. These Centers provide
tailored support to unique trading environments and eliminate
the need for importers to work with individuals at multiple
ports of entry that may slow down legitimate trade with
needless and duplicative inquiries. The Centers also allow CBP
to enforce our trade and Customs laws uniformly on a nationwide
basis and to prevent nefarious trade practices, including what
some have called ``port shopping.''
The new statute also provides the necessary authorization
and funding to fully implement the Automated Commercial
Environment, or ACE, and requires the completion of the
International Trade Data System, or ITDS, by the end of this
year. The completion of ACE and ITDS will allow for the
electronic submission of all import requirements through a
single window and process. Once fully implemented, this will
simplify and streamline the submission of import documents,
reducing the paperwork burden on the private sector and
ensuring that the CBP has the data it needs to identify high-
risk imports and importers.
Much has changed since 2003 when CBP was first established.
The new law is the first comprehensive authorization of the
agency since that time, and many of the improvements that CBP
has made internally over the years have been codified in the
statute, including increased coordination between the two
offices primarily responsible for trade facilitation and trade
enforcement, the Office of Trade and the Office of Field
Operations. We included this codification to address concerns
that many had expressed about CBP over the years, namely, that
its security mission could overshadow its trade mission.
There are many other significant provisions in this bill,
several of which were championed by members of this committee
on both sides. I hope we will have an opportunity to touch on
some of those in more detail today.
While most of us are pleased with these new changes in our
Customs laws, simply providing new tools and putting new
mandates in place will not, in and of itself, improve
conditions on the ground. As with the passage of any new law
dealing with any important government agency, congressional
oversight is going to be key to ensuring that the statute is
implemented in a manner that reflects our intent. That is why I
have requested Commissioner Kerlikowske to appear before the
committee today.
With passage of the Customs bill, the Commissioner has many
new authorities to implement. I am looking forward to hearing
about how the Commissioner intends to use these authorities as
well as a robust discussion of CBP's ongoing efforts to
facilitate trade and enforce our laws.
With that, I will now turn to Senator Wyden for any opening
remarks he would care to make.
[The prepared statement of Chairman Hatch appears in the
appendix.]
OPENING STATEMENT OF HON. RON WYDEN,
A U.S. SENATOR FROM OREGON
Senator Wyden. Thank you, Mr. Chairman.
Across the world, trade cheats are looking for any way they
can to break our trade laws and rip off American jobs. Customs
and Border Protection is often our number-one defense against
them. It is tasked with spotting the illegally dumped steel and
solar technology, the counterfeit chainsaws and computer chips,
before jobs are lost or economic damage is done.
Earlier this year, the Finance Committee spearheaded the
first big package of Customs legislation in decades as part of
the Trade Enforcement Act. Back when the last overhaul was
passed, our Customs agency was fighting a very different foe.
Suffice it to say, Gil Kerlikowske comes from the Pacific
Northwest and is an individual who has really reached out to
this committee. I very much have appreciated it. I remember
those days, because I was chair of the Trade Subcommittee here
at the Finance Committee.
Suffice it to say, those were days when it was a lot harder
for foreign companies to evade duties by concealing their
identities. Now the Internet makes it easier to move quickly
and stay hidden in the shadows. Blocking counterfeit products
from creeping into our market used to mean stopping the right
shipping container. Now counterfeit products are often tougher
to trace. They can be spread out in individual boxes shipped
straight to the doorsteps of American homes.
Since the last Customs overhaul, China shifted its unfair
trade practices into overdrive. And in many cases, the old
schemes to get past our trade laws and rip off American jobs
have taken on a new spin. So, in the wake of the Trade
Enforcement Act becoming law, this committee has an important
role to play in ensuring that Customs and Border Protection is
meeting the mark on its trade mission. This mission remains as
critical as ever, even with CBP now under the Department of
Homeland Security. It is all about focusing like a laser on
enforcing our trade laws, protecting American workers, and
defending our economy.
I have indicated that I have spoken with Gil Kerlikowske on
this issue and he has made it clear that he wants to make tough
enforcement--tough, aggressive, strong enforcement of our trade
laws--a top priority on his watch.
The early signals are, this focus is producing concrete
results. For example, our new legislation closed a truly
outrageous old loophole in U.S. trade law that allowed for
certain products made by slave or child labor to be imported to
this country. Now, Mr. Commissioner, throwing this loophole
into the trashcan was a priority for Senator Brown and me. The
reason why that was particularly offensive is you had a
doctrine known as consumptive demand where, basically,
economics trumped human rights.
To me, that is contrary to everything that the United
States stands for. So I have been very glad to see that we are
starting to see real action in terms of enforcing this trade
law. I know the agency has taken action to stop the imports of
soda ash and several other industrial products from two
companies that were alleged to be using forced labor. That is
not what our country is all about. That is why Senator Brown
and I pushed so hard for that legislation. We are glad to see
the agency moving to bring actions against these companies.
Now, the agency has a variety of other tools to fight
against the trade cheats, and our new Customs legislation added
to the kit. I will be especially interested in hearing about
CBP's plans to implement the ENFORCE Act, which gives the
agency 6 months to put in place procedures to ensure that
American workers are not injured by foreign products that are
evading our laws.
This has been particularly important because, on another
front, when I was chairman, we set up a sting operation to
catch people who were cheating. Basically, we were flooded with
requests from people who wanted to evade our trade remedy laws.
Finally, the agency has an important role to fight unfair
competition and job loss by cracking down on duty evasion and
bringing in revenue for taxpayers. CBP is also responsible for
keeping illegally harvested timber out of our market and for
protecting consumers from unsafe products. It is essential
that, in the fight against trade cheats, each of these
enforcement tools is fully implemented.
We tried in the Trade Enforcement Act to say that we were
really going to start a new day, Mr. Commissioner, a new day
where we would have what I call ``trade done right,'' and the
centerpiece of it is tougher and stronger and real enforcement
of the trade laws. Otherwise, in this trade debate, people say,
``I hear Congress is chasing a bunch of new trade deals and new
trade agreements. How about enforcing, first, the laws that are
on the books? You can talk to us about new trade laws in the
future after you have been serious and aggressive and strong
about enforcing the laws on the books.''
I have been pleased that you are sending a signal that that
is your top priority. We are glad to have you here, Mr.
Commissioner, and obviously, members feel strongly about these
issues. I look forward to our colleagues' comments.
The Chairman. Well, thank you Senator Wyden.
[The prepared statement of Senator Wyden appears in the
appendix.]
The Chairman. Once again, our witness today is U.S. Customs
and Border Protection Commissioner Gil Kerlikowske.
Mr. Kerlikowske was nominated to his current position by
President Obama, and was sworn in March 7, 2014 to this
position.
He oversees an annual budget of more than $12 billion and
manages more than 60,000 employees. Commissioner Kerlikowske's
role is to oversee the dual CBP mission of protecting national
security objectives and promoting economic prosperity and
security.
As Commissioner, he runs the largest Federal law
enforcement agency and the second-largest revenue-collecting
agency in the Federal Government. As the head of an agency with
such broad authorities and responsibilities, Mr. Kerlikowske
relies on the advice of experts in their respective areas while
making determinations on issues that could range from the
admissibility of a foreign traveler to the classification of
the newest smart phone.
Before his nomination to his current position, Mr.
Kerlikowske served as Director of the White House Office of
National Drug Control Policy. Prior to that, Mr. Kerlikowske
spent 4 decades serving in various law enforcement and drug
policy positions, including 9 years as Chief of Police for
Seattle, WA; Deputy Director for the U.S. Department of Justice
Office of Community Oriented Policing Services; Police
Commissioner of Buffalo, NY; and a lengthy career as a law
enforcement officer in the St. Petersburg, FL police
department.
Mr. Kerlikowske, we just want to welcome you to the
committee. We are glad to have you here. So, we welcome you
once again to the Finance Committee. Your full written
statement will be placed in the record. I would invite you to
summarize your testimony at this time.
STATEMENT OF HON. R. GIL KERLIKOWSKE, COMMISSIONER, CUSTOMS AND
BORDER PROTECTION, DEPARTMENT OF HOMELAND SECURITY, WASHINGTON,
DC
Commissioner Kerlikowske. Well, thank you, Chairman Hatch,
Ranking Member Wyden. It is an honor to be back with you and
the members of the committee.
In your opening statement and in the ranking member's
opening statement, you covered quite a bit of many of the
important things that I was going to mention. To say that it is
a bit intimidating with the knowledge level of trade and
intellectual property--I think Senator Portman, in his previous
life, has forgotten more about trade issues than I will
probably ever know.
It is important for me to have promised at the confirmation
hearing, in front of you several years ago, that as much as the
security issues were absolutely primary for me, the border
security issues, it was very clear that our economic security
was of critical importance also. I think there was great
concern expressed to members during the confirmation process
that, as a former police chief, I would solely be focused on
the border security issues and not recognize the importance of
the trade issues and our economic security.
I would like to tell you that I believe in the 2-plus years
that I have had the job, I have made every effort to make sure
that I am open to the trade community, that I recognize the
importance of trade, that I recognize the importance of
leveling the playing field.
I would also tell you that, certainly, enforcing 500 U.S.
trade laws for 47 Federal agencies, $2.4 trillion in imports,
$40 billion in fees that are collected, $26 million of truck,
rail, and sea cargo containers a year, and 328 ports of entry,
only help to explain not only the importance, by also the
complexity of this.
During the 2-plus years that I have had the job, I think
that trade transformation has been primary with me: how we will
work with, communicate, and cooperate with the private sector,
our other governmental agencies, and the consumers, has been
absolutely important.
You mentioned the Automated Commercial Environment or the
Single Window which we are on track to complete at the end of
this year, which will give all of those, not only partner
government agencies, but all of the importers and exporters a
view into where their property is and where things are. So it
streamlines and automates the process. We have already
implemented, I believe, seven of the eight key elements. It is
progressing well. That is, again, a result of the partnership.
Mr. Chairman, you mentioned the Centers of Excellence and
Expertise, so I will not belabor that, but all 10 are up and
running as of March of this year. It adds subject matter
expertise in a variety of commodities such as automotive,
electronics, pharmaceuticals, et cetera that, as you mentioned,
apply to all 328 ports of entry.
The act passed and signed into law is tremendously helpful
for us in many areas. I think that coming from an enforcement
background and being able to replicate enforcement priorities
and strategies throughout the 60,000 members of Customs and
Border Protection will only lead to a robust enforcement of the
variety of laws and a strong utilization of the tools that have
been provided.
On March 29th and April 13th, I issued what are called
withhold-release orders to two large shipments of chemical,
fiber, and potassium products, all as a result of the
reasonable suspicion standard that they were derived from
forced labor in China. In other words, they were not allowed to
be brought here to this country. You will see more of that.
We have established a trade enforcement taskforce. I wanted
to call it a SWAT team, but it is a trade enforcement taskforce
whose sole objectives will be to look for and identify
potential violations under that reasonable suspicion standard
and to be able to take the appropriate action that is needed as
well as pursue enforcement actions for anti-dumping violations.
We will continue to work closely with the members of this
committee and certainly with the staff. Having had the
experience of working with a number of members who are
currently in the President's Cabinet in my earlier position has
made relationships strong and powerful in this area.
So I appreciate the opportunity to be here.
The Chairman. Well, thank you so much.
[The prepared statement of Commissioner Kerlikowske appears
in the appendix.]
The Chairman. I think we will have some questions. I will
turn to Senator Grassley first, then Senator Wyden.
Senator Grassley. Mr. Director, earlier this year, the
Washington Times reported that you told the Border Patrol
agents to, quote, ``look for another job if their view is
different from those of the Obama administration.'' You
apparently made that comment in response to criticism by Border
Patrol agents of a new ``catch and release'' policy for agents
in the field.
In testimony before the House Judiciary Committee, Brandon
Judd, president of the National Border Patrol Council, claimed
that agents were told not to do the paperwork to initiate
removal proceedings before releasing unlawful border crossers.
I want to quote Mr. Judd: ``It has been so embarrassing that
DHS and the U.S. Attorney's Office have come up with a new
policy. Simply put, the policy makes mandatory the release
without an NTA of any person arrested by the Border Patrol for
being in the country illegally as long as they do not have a
previous felony arrest, conviction, or as long as they claim to
have been continuously in the United States since January 2014.
The operative word in this policy is `claim.' ''
Such a remark and such a policy sends a signal to the men
and women in the field protecting our borders that they are not
valued and that their mission to secure the homeland is not
taken seriously. So a very simple question: do you regret
telling the agents to find a new job if they do not like the
administration's immigration enforcement policies?
Commissioner Kerlikowske. I will be happy to answer that
question, but I would like to just for a second provide a
little bit of the context. For 14 years, I ran two of the
largest police departments in this country. Not every police
officer agreed with every administrative decision or decisions
that were made by Mayors and city council members.
If you were unable to follow the rules and the regulations
and the lawful and ethical authorities that were put forward--
if you were not able to do that, then you should not hold that
position. You should look for something else. That is exactly
the statement in that context that I would make to members of
the United States Border Patrol, who by the way, I believe
follow the rules, regulations, and laws as authoritatively as
possible.
During the 2-plus years that I have served in this
position, the United States Border Patrol has not had a
stronger supporter. So I would answer your question and say,
no, in the context I explained, I do not regret my statement.
Senator Grassley. Well, that is sad that you would not
regret that, because what they want to do is protect our
borders, and by this policy, they are not able to protect our
borders.
Back in November, I and House Chairman Goodlatte sent
Secretary Johnson a letter asking about aliens from countries
of concern, for example, Syria, Iraq, and Afghanistan, who have
been apprehended while attempting to cross the U.S. border. The
letter asked for information related to each such apprehension,
including whether the alien made a claim of asylum, whether the
alien was detained, and what, if any, relief from removal or
immigration benefit the alien was granted. It is unacceptable
that 4\1/2\ months have gone by and the department has not
answered. So let me ask you: have Syrians been apprehended at
the border in the last fiscal year? I can say the same things
for Iraqis or Afghanis, but have any been apprehended?
Commissioner Kerlikowske. Yes. There have been
apprehensions. I think at the end of each fiscal year, when I
take a look at the numbers, we apprehend people from well over
100 different countries. So you are correct, Senator.
Senator Grassley. Should we be concerned that terrorists
posing as refugees are potentially slipping across the border?
Commissioner Kerlikowske. I think we should be concerned
about anyone attempting to enter the country illegally, and
particularly from special interests countries where there could
be even greater concern that they could be a threat. That is
why we put into place many oversight mechanisms for the people
who are apprehended.
I know, Senator Grassley, that your letter is very
important to Secretary Johnson. It is also a bit complex,
because it does involve CBP, USCIS, and Immigration and Customs
Enforcement.
Senator Grassley. Whatever it takes--4 months. Do what you
can to get us an answer as soon as possible.
Commissioner Kerlikowske. I will.
Senator Grassley. My last question: in July 2015, the
Mexican drug lord, El Chapo, escaped from maximum security
prison. He was recaptured by Mexican police in January of this
year. El Chapo's daughter is a U.S. citizen, and she told the
Guardian newspaper that the drug lord visited at her California
residence twice in 2015, during the period that he was on the
run from police after escape.
Can you with 100-percent certainty say that these reports
are false and that El Chapo did not enter the United States
during the 7-month period after his escape from Mexican prison?
Commissioner Kerlikowske. I can say that we looked into
that very thoroughly. We had absolutely no piece of evidence
other than her anecdotal remark to a reporter that he had
entered the country, but I certainly cannot say with absolute
authority that no, that never happened. We just never found any
hint or scintilla of evidence that he ever did.
Senator Grassley. I assume you interviewed the daughter?
Commissioner Kerlikowske. I do not know whether the
daughter was interviewed by Customs and Border Protection. That
would actually be either through the FBI or through Immigration
and Customs Enforcement, but I will be happy to ask if that was
done.
Senator Grassley. Yes, and if it has not been done, that is
a sad comment.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator.
Senator Wyden?
Senator Wyden. Thank you, Mr. Chairman. Let us go to the
ENFORCE Act, if we could, Commissioner. This was a special
priority of mine. It was begun when I was chair of the
subcommittee. Many colleagues on both sides of the aisle worked
on this.
What I was just stunned by was just how brazen some of
these so-called ``trading partners'' have been with respect to
trying to get around our trade laws. In China, for example,
there were websites on how to avoid duties, how to avoid their
legal responsibilities, and offers to provide services to carry
this out.
So you had the website, and then people on top of that were
talking about how they could offer services. Basically, just
scofflaws thumbing their nose at U.S. trade law enforcement
because they knew they could get away with it, because too
often they would look at trade enforcement and there was not
any there.
So that is what we began pushing back on when we wrote the
law, and obviously, these past remedy laws were pretty much
useless in protecting American jobs, so we wanted to turn the
page and go to something different.
Why don't you begin today by describing how you are going
to implement the ENFORCE Act within the 180-day deadline. In
other words, this is going to be a special priority of mine and
of this committee. I think it would be very good if you would
kind of go step-by-step. Obviously, you are going to have to
have some conversations with the domestic industries directly
impacted by evasion, but if you would, tell us step-by-step how
you are going to implement the law.
Commissioner Kerlikowske. So one is, I have made it very
clear, and it has been very clear from not only this committee,
but also from the intent of Congress, that a much more
aggressive and assertive enforcement posture is needed within
Customs and Border Protection. Announcing the fact that we have
the Trade Remedy Law Enforcement Division, adding essentially a
SWAT team within Customs and Border Protection to look for
these violations, is important.
We will plan on issuing an interim final rule within that
180-day process. We have certainly heard quite a bit in my
meetings with nongovernmental organizations and the
stakeholders, some of whom are represented in this room, what
they hope and would like to see that would be possible to give
us a more forward-leaning posture when it comes to that
enforcement.
So the Trade Remedy Law Enforcement Division, the fact that
we are communicating a change in the way we go about looking
for these violations--too often I would see that we would
request or want a position paper issued by a nongovernmental
organization. I said, we do not need as much of a formal
position as just give us a tip. Just give us the information
and we will proceed with it, because not everyone is equipped
or has the finances within the private sector to do that.
So there are a host of duties that we have taken and a host
of outreach mechanisms that we have taken to make sure that we
are going to be doing the enforcement. I think our staff, my
staff, has heard more than 100 times--at least 100 times--that
we have to put points on the board. That means those withhold-
release orders, seizures, going after the money. And we can be
much more aggressive than, in fact, we have been in the past,
and we will be.
Senator Wyden. And the point is, because I think--I have
used that phrase, ``points on the board.'' The point is, you
are not going to bring thousands and thousands of tough
enforcement actions in the first 15 minutes. The point is to
try to bring a handful of really well-targeted enforcement
actions so that these rip-off artists say, it is a new day out
there, that you cannot just brazenly violate the trade laws and
expect to get away with it.
I have sensed that that is your take as well. I appreciate
it.
Up to now, the agency has used what is called the ``e-
Allegations'' system to accept allegations of evasion. How does
that system differ from ENFORCE as you see it?
Commissioner Kerlikowske. So the e-Allegations system has
been around for several years, and it allows more
sophisticated, more knowledgeable organizations or stakeholders
to give us the information electronically. I do not think that
is much different than when we would get tips in a police
department.
There was one, I think, primary problem with the e-
Allegations system, and that is that--going back to my law
enforcement experience--if your home was burglarized and we
took a report and then we never told you what happened, what we
were doing, what did the investigation produce, did we get your
property back--if we never closed the loop with you, you would
become very frustrated and maybe, perhaps, not report a crime
again.
I think that closing the loop with the people who provide
the e-Allegations within the constraints of the law that we
have to follow has been very important, and I think that the
trade community has heard that message, and we are going to do
a better job.
Senator Wyden. One last question, if I might, on the
implementation of the forced labor changes. As I indicated, I
thought that the previous loophole was just offensive to all
the values that the country stands for--this notion that
somehow economics trumps human rights and concern for people
who have been exploited in the past.
As I understand it, nongovernmental organizations, and
importers and others, are asking some questions as well on how
this is going to be implemented. I can tell you that at home,
in Oregon, I was particularly proud, because our chocolate
industry is stepping up. A company called Tony's Chocolonely--
it was Chocolonely because he was the only person at that time,
the only person in the chocolate industry, who was willing to
say, I am not going to condone these forced- and slave-labor
kind of practices. They are really stepping up.
But there are a lot of questions from the nongovernmental
organizations and importers on how you are going to implement
the provision. So if you would, your thoughts on that.
Commissioner Kerlikowske. Sure. Our standard of
``reasonable suspicion'' is, frankly, a relatively lower
moderate standard from the standard ``beyond and to the
exclusion of every reasonable doubt.'' So we can make that
decision, and of course, if that decision is incorrect--that in
fact it was not produced from derived labor, prison labor--
there can be an appeal. We are certainly willing to listen and
to go through the process of those appeals, but it is
absolutely critical that we go beyond waiting for a petition,
that we take the information that we need.
I think I was never more moved in this process than just a
couple of weeks ago when I issued the withhold/release orders.
Those came about from Mr. Harry Wu, who just recently passed
away, a renowned human rights activist and active in the
Pacific Northwest, who was so pleased and proud of our actions.
Senator Wyden. Thank you.
The Chairman. Thank you.
Senator Menendez?
Senator Menendez. Thank you, Mr. Chairman. Mr. Chairman,
the United States is the world's leader in trusted and
recognized brands, the ones in demand, the ones that command
the best prices and, therefore, the ones most vulnerable to
knockoffs. It is our hard-earned reputation as a global
economic and cultural leader that makes us a target. That makes
protecting that reputation and the investments that we put into
them so important.
That is why I know that my colleagues are as shocked as I
am by the latest report by the OECD showing that of nearly half
a trillion dollars in global trade that is made up of
counterfeited and pirated goods, the United States is the
biggest victim of all, accounting for fully 20 percent of the
knockoffs. Postal parcels are the top method of shipping these
fake goods, amounting for 62 percent of seizures over 2011-
2013, reflecting the growing importance of online commerce and
international trade and the ease of evading detection when
using small packages.
Now, this issue was first bought to my attention 2 years
ago by families and businesses in New Jersey hurt by
counterfeit prom and bridal dresses that they were tricked into
purchasing online. They looked at one and they thought it was
the same quality, but for far less money, and they purchased
it.
Now, I understand that online search engines, like Google,
bear some responsibility, as they seem to aid and abet these
counterfeiters by failing to police the use of copyright-
protected imagery in online ads. But CBP also has a duty to
prevent fake products from entering our market. Now, the OECD
has confirmed that counterfeit shipments are one of the biggest
issues confronting our Customs and border enforcement system
today.
That is why I am pleased that the Customs bill that we
passed included report language that I authored with you, Mr.
Chairman, to raise the enforcement priority for counterfeit
products, especially those that are marked as ``gifts'' to
evade Customs duties and detection.
Now, I have two samples here of packages which contain
counterfeit dresses sent to U.S. Customs. Both of them were
sent from a business address in Suzhou, China, and are clearly
marked as gifts. So the question, Commissioner, that I have for
you is, does a package marked as a gift that originates from a
business address in a country like China, which is documented
by CBP, the OECD, and other sources as being a major source of
counterfeits, trigger any red flags for our agents? What is the
typical screening process that these packages go through, and
can you share with us what specific steps CBP is taking to deal
with this in compliance with the report language issued by the
committee?
Commissioner Kerlikowske. Senator Menendez, I think you
have clearly hit on one of the most difficult challenges we
face right now with the absolute explosion of e-commerce. We
have personnel at DHL and personnel in our international mail
rooms, et cetera, but the volume and the flow are significant.
Unlike manifests on containers coming into the United
States, we do not get manifests on the shipping, on the port. I
would tell you that the expertise is more of an art, in fact,
than anything, but the expertise of the people whom we have
assigned to these locations, plus the cooperation we get from
the private sector and from the United States Postal Service,
has been very helpful.
So I could not tell you definitively that a package coming
from China will automatically be taken out and then looked at
or searched, but we do look at these things very carefully.
Every single day, we detect everything from club drugs to not
only the intellectual property rights violations as you just
mentioned, but a variety of other things, including counterfeit
identifications. More needs to be done though.
Senator Menendez. Let me ask you, Commissioner--I
appreciate that.
I assume we use algorithms in shipping to decide which
containers we are going to look at. We look at places and/or
companies that we know consistently are producing counterfeited
products and sending them as gifts. There must be some
technological ability to at least begin to narrow the window
and help us focus our agents' time in a way that is more
effective. I would like to work with you on this, because I
think it is incredibly important. We cannot afford to lose 20
percent of half a trillion dollars.
Commissioner Kerlikowske. Senator, I could not agree more.
Thank you, and algorithms, country of origin, addresses of the
shipper, who is the forwarder, if there is a broker involved--
and maybe with the de minimis we will see less of that. I look
forward to working with your staff on this.
Senator Menendez. Thank you.
One final thing, Mr. Chairman: I am glad to see that, by
unanimous consent, the MTBs were passed. But one of the things
that was not included in there and that I would like the
Commissioner to explain to members of the committee--CBP is
statutorily barred from refunding erroneous collected duties
from companies. So these are, in fact, companies that are told,
you have to pay this duty. They pay it dutifully, and then they
appeal. Then their appeals are upheld, and they say, yes, we
charged you the wrong tariff or the wrong duties. Does CBP have
any authority to right these wrongs without congressional
action?
Commissioner Kerlikowske. I think you caught me there,
Senator. When the chairman mentioned that a certain amount of
subject matter expertise exists far within CBP and not with me,
on this issue, I am going to ask you----
Senator Menendez. I see that you have subject matter
authority sitting behind you that suggests that maybe my
question is on point.
Commissioner Kerlikowske. Okay.
Senator Menendez. If that is the case, Mr. Chairman, I know
that we collectively as Republicans and Democrats alike
certainly want people to pay their fair taxes, but we do not
want them to pay that which they are not responsible for. And
when they do, and it is upheld that they have paid more than
they should, then we should have the wherewithal to find a
means--and I would hope to work with the chairman--to get these
people reimbursed.
I have companies in New Jersey that tell me, they paid as
they were told, but they knew that it was wrong. They appealed,
they won, but they cannot get reimbursed because they are
statutorily barred from doing so.
The Chairman. We have to work on that.
Senator Menendez. Thank you, Mr. Chairman.
The Chairman. Senator Carper, you are next.
Senator Carper. Thanks so much.
Commissioner, I want to thank you for your service.
The Chairman. Senator, excuse me. I am going to have to go
vote. Senator Brown will be next, then Senator Portman.
Senator Carper. All right--thank you. Thanks, Mr. Chairman.
Commissioner Kerlikowske, it is great to see you. Thank you
for your service in so many different ways. It is a pleasure to
work with you in my role--not just here, but also in the
Homeland Security Committee, which I serve as the senior
Democrat.
I want us to be helpful to you. You have a tough job, and
we want to make sure that we are being helpful to you and to
the folks you lead. I have some concern about what seems to be
some serious understaffing issues at CBP. Your own workforce
staffing model shows the agency is down by, I think, about
2,000 agents from what I understand you need. While Congress
has provided funding in the past to hire a number of new
officers, I understand that you have not been able to fill all
of these slots or keep pace with retirements. Could you just
take a minute and please discuss the challenges you face with
respect to hiring? I am just going to keep your answers very
short and crisp.
Commissioner Kerlikowske. Every law enforcement agency I
know, including Customs and Border Protection, is having some
variety of difficulty hiring--State and local level. We have
done a better job. You appropriated, Congress appropriated, for
2,000 people. We are about 750 below that total.
We have been working with members of Congress to include
looking at the ages that we can hire people, either at an older
age or letting them stay on longer. We have reduced the amount
of time that it takes to process someone from well over 360 to
400 days to about 160. We are going to move as aggressively as
we can to fill those positions.
Senator Carper. Thank you. I understand that there is a
statutory requirement to polygraph all applicants, and that
might be one source of significant delay. Is that the case? If
so, is there some adjustment called for?
Commissioner Kerlikowske. So we have been looking at and
have made some adjustments, not in the quality or reducing our
standards for hiring but, in fact, not taking as long on the
polygraph examination, which can be up to 8 hours when, in
fact, it would be someone whom we know we are not going to hire
after the first 15 minutes of conversation during the
polygraph, and we can move on to someone else.
So the polygraph is important----
Senator Carper. That is what my father would call ``good
common sense.''
Reimbursable service agreements--I understand that CBP has
a pilot program that allows private entities such as airport
authorities or others to reimburse CBP for the cost of
additional hours of CBP inspections. As I understand it, there
is growing demand for these agreements--more so than is allowed
under current law.
Could you just take a moment and discuss with us how these
programs work and whether, in your view, they should be
expanded? Again, just very briefly.
Commissioner Kerlikowske. They can pay for additional
services at land borders. As you know, in Philadelphia they pay
for additional agricultural inspectors' overtime to cover
produce coming in to make sure it is fresh. Unfortunately, we
are capped when it comes to the number of airports that can be
funded or apply for that or be accepted once a year. So we,
actually, would be very appreciative of moving forward to
having more of these organizations. As long as we are
transparent about how many people you get for how many hours
and how much it will cost, it seems that private business has
been very accepting of this and recognizes the need.
Senator Carper. Good. I am going to ask my staff to follow
up with your folks on that, please.
The third question I have relates to fees. In my view,
things that are worth having are worth paying for. That
includes inspection services by CBP, officers at ports of
entry. For a number of years, I have supported the
administration's proposal to raise, somewhat, the Customs fees
to help pay for CBP officers. I was upset when Congress, last
year, redirected some of the fee money as an offset for the
transportation bill. I thought that was shameful.
Do you agree that we should increase the fees, somewhat,
that have traditionally been dedicated to CBP, and keep those
fees reserved for that purpose, not for some other purpose?
What impact would that have on staffing?
Commissioner Kerlikowske. The President's budget request,
even at the time it added the additional 2,000 Customs and
Border Protection officers, also included funding for an
additional 2,300, as our workload staffing models showed. Those
2,300 would be paid for by fees, some of which have not been
elevated in many years. I think it would be helpful to have
that funding source go to Customs and Border Protection to
essentially pay for the services that we render.
Senator Carper. I have 20 seconds left. Just take those 20
seconds. Give us one other idea of something that we need to
do, we could do, under the legislative branch that would help
make your folks more productive, more effective.
Commissioner Kerlikowske. I think that the support for--we
are looking, for example, at radios and vehicles, et cetera.
Many of these things are not as well-funded as we are with
personnel. We need to invest in technology, and we need to
support the equipment that they need to do the job.
Senator Carper. Thank you again. Thanks for your
leadership.
Senator Brown. Mr. Kerlikowske, thank you for joining us.
Since the enactment of the Customs reauthorization, how many
additional full-time employees have you tasked with ensuring
that our ban on the importation of goods made with forced
labor, to which Senator Wyden referred, is fully enforced?
Commissioner Kerlikowske. We added an additional 24 people
to the taskforce to begin that targeting process, but we are
also, at our national targeting center, making sure that they
are as wary about these types of violations as they have been
about other types of things that could be harmful coming into
the country. So we are starting out with the 24 people working
through our targeting processes to enhance forced labor and
anti-dumping enforcement.
Senator Brown. Is it your goal to block all imports made
with forced labor from coming into the U.S.?
Commissioner Kerlikowske. Yes.
Senator Brown. How do you plan to achieve that other than
the number of employees? Talk that through briefly, please.
Commissioner Kerlikowske. I think the history is, and
certainly the outreach that not only we have done, but the
outreach that the nongovernmental organizations have made to me
as you know--and we very much appreciate you setting up a
meeting here in the future with these organizations. They have,
essentially, the boots on the ground in these foreign countries
where they are incredibly knowledgeable about things that could
be made with forced labor.
We need their information. We need to be able to get back
to them that we have acted upon their information, because that
exchange is going to be critical. I think that is going to be
important.
The other part is that we just received authorization for
nine additional foreign government attaches funded through the
State Department. So the more people that we have overseas to
learn about this information, the better we will be able to
target.
Senator Brown. Does that suggest, Mr. Kerlikowske, that you
will self-initiate investigations into whether imports are made
with forced labor, because CBP has never done that before. Do
you plan to do that?
Commissioner Kerlikowske. I do plan to do that. The
response has always been that we want a petition, that we will
assist in the petition to make sure that it meets all of the
requirements. I want us to be leaning much more forward, and
where we get information, we should be able to follow it up,
and we should be able to utilize other investigative resources
within the Department of Homeland Security and throughout the
Federal Government to move aggressively on these, not just wait
for the petition.
Senator Brown. That is so important. This will not be done
well without self-initiation. So thank you very much for your
assertion there.
One other issue I want to talk about is--in your
estimation, what percentage of steel imports coming into the
U.S. are evading antidumping or countervailing duties?
Commissioner Kerlikowske. I cannot answer. I do not know
the percentage, but I know that whether it is through live
entry, or
single-transaction bonds, or a variety of other mechanisms that
we are utilizing right now, steel is at the top of the priority
list. That was made clear to me last week in Salt Lake City, at
the American Iron and Steel Institute Conference, by all of the
members there.
Senator Brown. It is very important to see what CBP can do
to get that percentage down to zero. We know the number of jobs
lost all over the--particularly the industrial Midwest, but
throughout our economy, because of illegal dumping of steel.
Commissioner Kerlikowske. And we are working with too, the
United Kingdom and their issues with steel, the government of
Mexico, the government of Canada, and also the government of
Australia.
Senator Brown. Thank you, and thank you for your work in
your previous job too in my State and elsewhere. Thank you so
much, Mr. Kerlikowske.
Commissioner Kerlikowske. Thank you.
Senator Portman [presiding]. Thank you, Senator Brown. And
Senator Brown, thanks for your work on the slave labor import
issue that is a part of this Customs bill, but also Senator
Brown just talked about the steel side. Let me just make a
specific point here.
Senator Brown and I have worked on some cases together,
including one that has to do with tubular product, called OCTG,
Oil Country Tubular Goods. Companies in Ohio, like U.S. Steel,
were very happy when we won a case that Senator Brown and I
both supported, and we were able to put in place some relief.
Now they are seeing evidence of fraud, circumvention,
numerous Chinese websites actively promoting their ability to
evade this specific tariff that is in place by falsifying the
country of origin of
Chinese-made pipe product. So it is happening right now as we
talk.
One of the things that we got into this legislation, as you
know--I know Senator Brown supports it strongly as well--is the
ENFORCE Act. I have been a supporter of the ENFORCE Act
because, even when we are successful in these cases, if there
is evasion, it still does not help the workers we represent. So
Senator Brown and I got legislation through called the Level
the Playing Field Act. It changes the way you deal with
antidumping and countervailing duty cases, as you know. The
Commerce Department, ITA, and ITC are now being asked to
implement that. We are aggressively pursuing their
implementation of that.
That will help. It gets relief faster. It is more
meaningful relief--shut down the business and fire people in
order to get the relief you need--but it does not help if you
do not have the ENFORCE Act enforced as well. The ENFORCE Act
will keep people from evading that countervailing duty, duty,
or antidumping duty by going to another country.
I will give you another example. There are some folks at
Pennex Aluminum in Leetonia, OH. Again, we helped them to win a
countervailing duty case and an antidumping case against unfair
Chinese aluminum exports. By the way, it allowed them to create
more jobs and to invest $38 million in their plant. So this is
a relatively small aluminum plant in Ohio that was able to
benefit directly.
Now they have a new concern. The Chinese aluminum producers
are evading Customs duties by shipping their products through
different countries, under different names.
American Spring Wire employs 250 people in Bedford Heights,
OH and can tell the same story. American Spring Wire was a
successful petitioner in a trade case against China, and won
significant duties on imports of steel wire from China. Chinese
traders circumvented the orders by transshipping the wire
through Malaysia. Imports from Malaysia, Mr. Commissioner, were
nonexistent in 2008, like none. They increased to 4.7 million
pounds in 2009, and then surged to 32.8 million pounds in 2010,
while imports from China, by the way--because of the orders
that were in place--declined.
So this is happening, and these duty evaders are becoming
more brazen every day. Just yesterday I received an e-mail from
a group that specializes in duty evasion. Someone had passed it
along to my office. The e-mail explains how the company, this
duty evasion company, provides a professional trading solution
to help Chinese exporters sneak their products past you, past
the U.S. Customs Service, by routing them through Malaysia.
So I am very concerned about this issue, because we can
have great successes on the law, and yet they can evade. I
guess one question I would ask of you is, we have given you the
tools now, and specifically, CBP has the tools now to
strengthen their investigations, to make it a de facto case,
rather than having to prove intent. We have given you the tools
you need. Are you putting them in place? I am told that last
month some of your senior officials said that you do not expect
to meet the deadline for implementing these regulations. I hope
that is not true. Can you comment on that today? Are you guys
going to meet the deadlines? Are we moving ahead with these
regulations?
Commissioner Kerlikowske. There are a number of deadlines
that were included in the passage of the law. It is our
intent--although there are several that are very challenging
for quickly working and putting together--but it is my intent
that we will meet those deadlines, including an interim final
rule on the issue that was discussed earlier. So we would like
to do that.
Regardless of, right now, the importance on the rulemaking,
our posture to do the enforcement and listen to, whether it is
the wire companies in Alabama or Ohio, is very critical to us
because of the transshipment issue. So we need to be more
aggressive. We need to have better outreach, and we need to be
able to take those tips and that information and move forward
on the transshipment which we see.
This is frustrating to me, as I know it is to you and the
people you represent.
Senator Portman. Yes, again, we are facing a real crisis in
Ohio right now on steel. We know that there is over-capacity
overseas. It is being dumped in America. We have been winning
cases. Foreign steel imports have now taken a record 29 percent
of the U.S. market share. That was 2015 numbers. We believe it
is higher in 2016. We have had 13,500 layoffs in the last year,
over 1,000 layoffs in Ohio alone, of steel workers.
Outside of this effort to enforce the ENFORCE Act which we
talked about today, what else have you been doing that could
help the administration to address this steel import crisis,
and is there coordination between what you are doing and what
Commerce at ITA and what the ITC is doing?
Commissioner Kerlikowske. I have now attended a number of
meetings with Secretary Pritzker, Secretary Lew, and a number
of others. I worked closely with Ambassador Froman before he
became the USTR. So the coordination and the fact that we have
embedded over at USTR someone from Customs and Border
Protection all ensure, I think, better coordination.
Also, very much, along with the President's Economic
Advisor, Mr. Zients, we are very much onboard with our role in
the enforcement side of this and moving as aggressively as we
can as an organization to do the enforcement. Also as the
ranking member had said, to send a message to those who would
evade and also, of course, to send a message to the
stakeholders, to the people who are most impacted and affected
by this: (1) we are listening to them; (2) we are going to take
their information; and (3) we are going to get back to them
with what we found and what we are going to be doing to up the
game when it comes to enforcement.
Senator Portman. We need to see some of those actions. We
need to see, as you say, that message being sent by actual
successes and blocking what we know is going on. And I will
provide you with this e-mail I received yesterday as just one
example of what is happening in the real world. You are an
enforcement guy. We expect you to enforce it strongly.
By the way, Senator Brown, I missed you in Cleveland at our
hearing, which was very sobering, about the prescription drug
and heroine epidemic.
Senator Casey?
Senator Casey. Thanks very much.
Commissioner, thank you for your testimony and for your
public service, which did not just start with this job. I know
you have been in law enforcement a long time. We appreciate
that.
I want to raise two basic issues with you, one that will
focus on a question, the other is a brief statement, and I will
follow it up more in writing.
One of the biggest challenges we have specifically, as it
relates to ISIS but also counterterrorism generally, is cutting
off financing, shutting down their money. We took a good step
in the right direction recently when the President signed into
law a bill that I introduced in the Senate, the so-called
``Protect and Preserve International Cultural Property Act.''
Basically, the core of it is restricting the import of
cultural artifacts that have been illicitly or illegally
smuggled out of Syria. When they do that, they create a revenue
stream.
So that is a good step in the right direction. The
administration, as you know, has taken a lot of steps to shut
down financing, but we have to be dogged and vigilant on this
because, if we do that, it is almost as important as any other
part of our strategy. Part of your work will involve
implementation of import restrictions as it relates to this. So
I just urge you to do a couple of things.
Number one, keep working on accelerating the training for
your officers; number two, make sure you are sharing
information and best practices as appropriate in this area and
then partnering with nations on the front line. We have a lot
of work to do on this. What I will do is follow up with a
question for the record.
The second issue is one that you have heard about already
from both Ohio Senators and maybe others whom I missed. It is
unfair, illegal competition from countries like China. In the
case of China, they have engaged in state-sponsored, cyber-
enabled economic espionage--so, a higher sophistication of
unfair competition.
In 2015, there were over 12,000 steel industry layoffs
announced. In 2014, steel imports to the U.S. increased by 36
percent. Some of these numbers, I know you have heard. Then
there is this transshipment issue which was raised before:
Chinese manufacturers and distributors engaging in this
transshipment of steel to the U.S. through third parties,
whether it is Malaysia or Vietnam.
I guess I would ask you, in light of existing authority, is
there more that you need to be able to counteract that, more by
way of authority, or more by way of tools or dollars?
Commissioner Kerlikowske. I think at this point we are very
engaged in making sure that we meet the deadlines of the
authority that we have been given, but at the same time, we
want to make the changes within the organization to look at
that culture of being, frankly, much more aggressive or much
more assertive on the investigative standpoint, using the
authority of, essentially, reasonable suspicion to make that
withhold/release order.
I have made it clear that I would rather err on the side of
issuing that order. Then in fact, if it was not as a result of
derived goods, or antidumping, or countervailing duty issues,
that they could very much appeal that and that would be
satisfied. But I think the message that we are going to be
using those authorities more assertively will send a powerful
message to those who would violate our trade laws.
Senator Casey. I think it is critical. We know that in a
State like Pennsylvania--it is true of Ohio and a number of
other States that are directly affected by this--you have folks
who have worked their whole lives, developed a highly skilled
workforce--and in the case of an individual--skills they have
developed to make steel, to out-produce the world, to out-
innovate the world, and just when they are prepared to do that,
that is when the unlevel playing field emerges and they get
undercut in the most pernicious way imaginable.
So just like I have continued to challenge folks like you
on homeland security and shutting off financing, we ask you as
well to be determined and vigilant on this issue of just
insisting that China and countries like it play by the rules. I
think that it is that simple. We may have a follow-up question
on that as well. I will make sure that we get the first issue
to you in writing.
Thanks very much.
Commissioner Kerlikowske. Thank you, Senator.
Senator Portman. Thank you, Senator Casey. I appreciate you
raising the issue of Ohio and Pennsylvania and the fact that we
are looking for a level playing field. If we have that, we will
be okay. But that means that, on the front lines, we have to
continue to not just enforce current law, but enforce this new
law, what we gave you in the new tools.
Senator Isakson?
Senator Isakson. Thank you very much, Senator Portman.
Commissioner, first of all, Georgia, my home State, has the
largest, busiest airport in the world, Hartsfield-Jackson,
which just announced last week an expansion to a sixth runway
which will increase the freight import coming into Hartsfield-
Jackson alone by 15 percent.
We have the Port of Brunswick and the Port of Savannah. The
Port of Brunswick is where most of the automobiles imported
into the United States come through. The Port of Savannah has
gone up by 52 percent in capacity since 2007 and is getting
ready to go up another 33 percent because of the deepening of
the harbor and the channel to 47 feet.
While both ports give you high marks for the work that you
have done, there is a serious question with regard to capacity.
In Savannah, since 2007, while we have had an increase of 52
percent of containers coming through, the level of CBP
employees has stayed the same or actually dropped slightly,
number one.
Number two, in comparison to other ports, we have about the
same number of personnel as the Port of Charleston with 1.9
million containers, rather than 3.7 in Savannah, and
Jacksonville with 926,000 containers, rather than our 3.7
million.
My point is, it appears the capacity is heavily limited
because of the number of personnel vis-a-vis the work that is
being done. Can you comment on that?
Commissioner Kerlikowske. Sure. We do a workload staffing
model when it comes to, particularly, the airports and to the
seaports. The workload staffing model is based upon what
exists.
Although there are a number of ports--Charleston, Newark,
and others--that are also doing the deepening, there are
certainly some questions right now about capacity, for shipping
to continue on at the level that it has been, given the
widening of the Panama Canal.
So we will look at that, and I will go back and talk with
our staff about the numbers of people, because I know Savannah
and the U.S. Attorney just recently had one of the largest
settlements of, I think, over $15 million for furniture
imported from China that was violating duties. So I know that
it is an aggressive team down there, but if they do not meet
the need to get that cargo in expeditiously and safely, then I
will certainly get back to you.
Senator Isakson. My question certainly is not quality of
work. I have flown to the outer market with the Coastguard. I
have seen the known shipper problem being worked. I have seen
CBP people working. Our issue is only capacity, not the
question of the quality of work.
The second question is this. We have heard testimony from
the State Department that they revoked 9,500 visas since 2001
for foreign nationals coming into the United States, but we do
not have a good exit strategy--I mean, a biometric exit visa
process. The US-VISIT program does a good job coming in, but on
exit from the country, what are we doing on biometric exit?
Commissioner Kerlikowske. So biometric exit right now--I
think we need to move a section in front of the bill right now
that does the technology on biometric exit which exists in a
different part of DHS to put it under my authority, because I
need those tools and I need that equipment in order to move
forward with biometric exit.
We very much appreciate what Hartsfield-Jackson Airport
did, being a test site for some of the new handheld detectors,
because as you know, none of the airports is designed to have a
facility or a location where we can easily check people with
some type of biometrics: iris scan, facial recognition,
portable fingerprint readers. None of those is designed to hold
people. We want to make sure they are getting moved through
quickly, but I think the technology is going to be the game-
changer, and the experiments at Hartsfield-Jackson will be a
big help.
Senator Isakson. Well, the people at Hartsfield-Jackson
appreciated being focused on by your agency, and we appreciate
that. I can personally testify, watching the VISIT program work
on those coming into the country, that biometrically secure
visa on entry is a perfect program and a great way for us to
satisfy the American people. We are doing everything we can do
to reduce the number of bad actors getting into the United
States of America.
Thank you for the work you do.
Commissioner Kerlikowske. Thanks, Senator.
Senator Portman. Senator Cantwell?
Senator Cantwell. Commissioner Kerlikowske, great to see
you. I too want to echo and thank you for all of your service
in this administration and in the Northwest as well. So great
to see you.
One of the things that you, I am sure, understand is that
Senator Collins and I gave U.S. Department of Homeland Security
the authority to expand preclearance overseas. One of the
things that we are doing is, obviously, moving our borders to
those overseas airports so that we can do the kind of checking
on preclearance before people get to the United States--so
places like Turkey, Belgium, the U.K.
So I do not know if you have an update about how that
process is going and what airports you think that we really
need to target. I know you mentioned the need for more
technology, so I wanted to give you a chance to talk about what
those needs are.
Commissioner Kerlikowske. I would tell you that the
expansion of preclearance is one that is very much appreciated,
and I know even with Senator Isakson. During the time that
preclearance was being considered in Abu Dhabi, that was
important: for us to be able to go back and to make sure that
as Congress and the law states, there must be American flag
carriers at these locations. That is tremendously important
from an economic viewpoint, but also from the fact that we
received great cooperation with these American flag carriers.
We are in negotiation with ten airports in nine countries.
Secretary Johnson could not have a higher priority than
preclearance. I believe by the end of this year that we will
have two, if not three, countries signed on to preclearance.
They certainly will not implement until, at least, the
following year, but to sign those agreements pushing our
borders out is helpful not only for the issue of security, but
it is also helpful for the fact that those planes can then land
as, essentially, a domestic flight.
We are working very closely with Sea-Tac Airport as they
design their new international terminal. What will the
international terminal look like? This is the technology answer
to your question. Will all of this space be needed? Will there
be booths needed, or can more be done with mobile platforms?
Can more be done with smaller amounts of equipment in order to
clear people coming in through Customs?
The design that we are doing with Sea-Tac is probably going
to be one of those international terminals of the future. I
think the technology--mobile passport control, global entry,
automated passport control kiosks--those are the kinds of
things that not only improve our safety and security, but they
also improve people moving through more expeditiously.
Senator Cantwell. I am sure you have seen the news that
Sea-Tac has record growth, so we have had lots of issues about
moving people. We are all for technology, and we are all for
making sure that we are doing a better job at these overseas
airports and making them more secure. Any thoughts on how that
technology helps us?
Commissioner Kerlikowske. The facial comparison is one. As
you know, a Customs officer now looks at a very small picture--
the photograph on the passport--and compares it to the person.
That picture can be up to 10 years old. It is not always easy
to make sure that the person in the picture is the person in
front of you.
So at both Dulles Airport and also at JFK, we are doing
experiments with facial comparison. It looks at the biometric
chip. The person standing in front of the camera is compared to
that biometric chip, and it gives us a percentage of how
accurate that is. I can tell you that the accuracy with the
electronic system far exceeds the accuracy of the human system.
Senator Cantwell. Do you think we could get standardization
with other countries on a biometric that is a retinal and
fingerprint biometric standard?
Commissioner Kerlikowske. I do not know. I will be headed
overseas in another week and a half, and part of the
discussions will be around information sharing.
As you know, the EU just passed PNR: Passenger Name Record.
So working together to share that information will be helpful,
but I think the long-term future for safety and security of not
just our country, but others, will be in that recognition of
using biometrics that are interoperable.
Senator Cantwell. I think you were still in the Northwest
when we had the Ressam case where somebody cooked up an
identity and went to three different countries before he came
loaded with explosives to our Port Angeles, so to me getting
standardization on those biometrics that are certain
technologies, I think is very, very important, so thank you.
Senator Portman. Thank you, Senator Cantwell.
Senator Stabenow?
Senator Stabenow. Thank you very much, Mr. Chairman.
Welcome, Commissioner. I appreciate your being here today
and, of course, representing Michigan, what you do is very
important to us in a variety of ways.
I wanted to speak specifically about things related to the
auto industry. I hear more and more from auto parts
manufacturers in Michigan about a rapidly growing trend in the
importation of counterfeit auto parts. Counterfeit auto parts
not only damage a brand's reputation, as you know--I have had
very specific examples in Michigan where this has happened--but
they pose serious safety risks to unsuspecting customers.
The Federal Trade Commission estimates that counterfeit
auto parts cost the industry about $12 billion a year in lost
sales, including $3 billion in the U.S. alone. The FTC also
estimates that the use of counterfeit parts has resulted in as
many as 250,000 fewer manufacturing jobs.
So this is very serious for us. I was wondering if you
could talk about what the CBP is doing to address the issue,
and what can we do in Congress that would be helpful?
Commissioner Kerlikowske. Thank you, Senator. As you know,
Secretary Johnson, I think, has made three trips to the Detroit
and Port Huron areas. I think I have been up there three or
four times.
Recently, your staff was able to attend a town hall with
the stakeholders in Detroit as we talked about the work of CBP
and the city and also working closely with them. Because of the
law that you have passed and the President signed, our
commercial advisory, our stakeholders, are now enshrined in
that law as a part of that.
So we have several auto manufacturing organizations that
are a part of that. They meet four times a year with me to talk
about what are the critical and important issues. I have also
heard from Congressman Levin and others on this, saying that
they want to see what enforcement action we are going to take.
So getting that information, being able to make sure that
brake pads, and airbags, and other things that could be
incredibly dangerous and are counterfeit, are not being allowed
to be a part of this--that information comes from the people
who are closest to the ground. I am sure I will be back before
the end of this year, in Michigan. I think I am scheduled,
actually, for another visit in September. I will make sure that
I am reaching out to those manufacturers.
Senator Stabenow. Do you feel like you are getting
information in a timely way? Are you getting specific
information, actionable information, that you can do something
about?
Commissioner Kerlikowske. So I think that the information
that we get is helpful, and it is often quite timely. Then
there becomes a definitional problem of ``actionable.'' Almost
like ``actionable intelligence.''
The problem for us has been that we were not as good about
getting back to who provided the information and telling them
that this was helpful. It is a lead, but right now it is not
enough for us to move on. When they do not hear anything back,
I think they get frustrated like, well, it just went into a
black hole and nobody did anything with it.
So I have made a concerted effort to make sure that our
folks are getting back to the people who have made those
complaints to let them know what we did with it. They deserve
that.
Senator Stabenow. Okay. Thank you. Finally, one other
question. You mentioned Port Huron. By any measure, border
crossings through Detroit are some of the busiest in the
country, the busiest one in Detroit, Detroit-Windsor.
I am pleased that we have the work going on now with the
Gordie Howe International Bridge and our partners with Canada.
This is going to be very important. However, Port Huron is also
the third busiest crossing on the northern border in terms of
value and shipments.
Despite the critical importance of the bridge to the
economy, the U.S. Customs plaza at the site is woefully
inadequate to manage this high level of traffic. This is
something I have worked on for years. We actually had dollars
in the budget at one point to move forward, and then dollars
got redirected.
So an expansion of the plaza has been planned for over a
decade. Unfortunately, the community has also been left hanging
because plans started, land was acquired, and then everything
stopped.
There are a number of planned Customs projects, I know,
across the country, but what is being done to address the
backlog, and will you commit to working with me to make the
Blue Water Bridge Customs plaza a priority?
Commissioner Kerlikowske. I know that when Secretary
Johnson was up there for the visit to the Blue Water Bridge, he
also was asked and committed to making this a priority. As you
know, whether it is the Peace Bridge in New York, or a number
of other locations, some of our Customs infrastructure is in
need of upgrading. If we are going to be able to move people
and cargo through expeditiously, those locations need to be
improved upon.
I do not know the exact status right now of the facility at
Port Huron, but I will be happy to get back to your staff on
that. I would commit to you that I would be very engaged in
trying to get this done. I was born in St. Joe, so maybe that
helps.
Senator Stabenow. Okay. And just finally, what can we do to
help? What should Congress be doing to alleviate this backlog?
Commissioner Kerlikowske. I think that looking at our
infrastructure--and also it was mentioned earlier in a
question--we need to make sure that we are not just investing
in people or boots on the ground, but that we are investing in
technology and that we are investing in some of the equipment
that just has a life cycle or a lifespan that makes it
difficult to utilize. So infrastructure, technology, and
frankly, R&D in those areas, are as important in the long run.
Our wait times, by the way, in international airports are
down for people coming into this country, people clearing
Customs. They would not be down if it was not for that infusion
of technology.
Senator Stabenow. Thank you.
Senator Portman. Thank you, Senator Stabenow.
Senator Carper?
Senator Carper. Mr. Chairman, how are you?
Senator Portman. I am well, thank you. I am glad you are
back with us. Senator Carper was here previously to hear
testimony.
Senator Carper. Mr. Chairman, I would like to make a
unanimous consent request for testimony for the record from the
National Treasury Employees Union, which raises some important
concerns about CBP funding and staffing levels--I would just
ask unanimous consent, if there is no objection, that this be
made a part of the record.
Senator Portman. Without objection.
[The statement appears in the appendix on p. 29.]
Senator Carper. Thanks very much.
I just could not get enough. I just wanted to come back and
ask a couple of follow-up questions.
The last question is going to be--I wanted to come back to
the thing I just touched on before I had to run and vote. That
is, what can we be doing? What can we be doing to be better
partners with CBP and the Department of Homeland Security,
folks who are a part of your team?
I want to talk a little bit with you about opioids and
synthetic drugs, something that our chair has more than a
little bit of interest in, and so do I. I think we all do. The
Homeland Security and Governmental Affairs Committee has had a
number of hearings on the devastating impact of opioids and
synthetic drugs on our communities. Many of these drugs are
entering the U.S. from other countries, including through the
U.S. mail.
Can you discuss with us the challenges that CBP faces in
trying to identify and intercept these shipments?
Commissioner Kerlikowske. The e-commerce issues coming in
through the United States Postal Service, international mail,
or through the express carriers, the explosion of e-commerce,
has made this a huge challenge. We do not see as much at all
when it comes to the opioids because, quite frankly, they are
manufactured here or they are shipped here quite legally,
because they are legal drugs.
I think Senator Portman and others--we could not be more
familiar with the devastation that the opioids have caused.
When I traveled with the Senator to the southern tier of Ohio
in Appalachia, it was pretty devastating in some very poor
communities.
So the e-commerce and the search for counterfeit goods, for
illegal drugs--we often see the club drugs people attempt to
bring in through those locations. I think that has been the
greatest challenge. I think we are going to have to do a lot
more in the future.
After the Yemen printer cartridge attempt, changes were
made when it came to air commerce packages coming in, but I
think we are going to have to look at a variety of other
mechanisms and work closely. By the way, DHL, FedEx, and UPS
are incredibly great partners. Our people are located in their
facilities, et cetera. I think we will have to do more with the
United States Postal Service on these issues, because the
challenge in the explosion of
e-commerce is going to also increase that potential.
Senator Carper. Okay. Thank you. As you know, one of the
things I focus on, as does Senator Portman--we like to focus
not just on the symptoms of problems, but root causes. My view
is, we need a national policy. Whoever is our next President, I
think, should lead it. Just like we are going to have a
moonshot with respect to cancer and trying to defeat cancer, we
need something, I think, similar to that with national
leadership with a lot of participation up and down the line,
not just State, local, and Federal Government, but all kinds of
nonprofits, the medical community, and so forth.
Just give us a thought on a root cause. If you were in our
shoes trying to do something on the root-cause side with
respect to this epidemic of opioid and synthetic drugs, heroine
abuse, what might be something we should be doing on the root-
cause side?
Commissioner Kerlikowske. Well, I think everything is
moving in the right direction. I think the CDC is looking at
the mandating of training for doctors. We work with the
hospitals to look at the accreditation process where the bar
of--by saying that a patient must leave and that they are pain-
free is a bar that is a bit unreasonable, and, in my opinion,
led to over-prescribing of opioids.
I think that that spiral and the national attention--I
think your hearing was the fourth hearing. From Phoenix to New
Hampshire, et cetera, and Milwaukee, it is an epidemic on both
heroine and opioid prescription drugs that is significant.
I think it will only be reversed, not through interdiction
and not through enforcement, but only be reversed through
prevention programs, including a very robust effort by the
educational community.
Senator Carper. All right. Thanks. I have 5 seconds left.
Just give us one good takeaway in terms of something we can
do--you can repeat something you have already said--something
we can do in the Congress to help enable you and your team.
Commissioner Kerlikowske. Senator Stabenow beat you to that
question, but I would say that research and development, the
technology issues, and then supporting the infrastructure, all
of the things that just are not boots on the ground, but are
the things that support the boots on the ground and make them
better and more efficient.
Senator Carper. I call those force multipliers.
Commissioner Kerlikowske. Those are key. Thank you.
Senator Carper. Great. Thanks again for the leadership.
Thanks for joining us today.
Commissioner Kerlikowske. Thank you.
Senator Portman. Thank you, Senator Carper. Senator Carper
consistently talks about the root causes regardless of the
issue. With regard to opioids, I would just say as we are
having this hearing today, as you know, the House is
considering legislation that is not as comprehensive as the
legislation that passed the United States Senate on March 10th.
One of the issues that needs to be strengthened, in my view, is
on the prevention side, as you said; specifically, this issue
of an awareness campaign as to the link between the
prescription drugs, the narcotic pain pills, and the current
heroine and prescription drug epidemic.
Four of five heroin addicts who will overdose today--and
one is dying every 12 minutes on average--will have started
with prescription drugs, as you know from your previous
experience. I appreciate your coming to southern Ohio--and we
were seeing the tip of the iceberg. It turned out it has only
grown since then. Although the pill mills have been largely
shut down in that part of the country thanks to some of the
work you helped me to do to get at the high-intensity drug
trafficking area there in Adams County and Scioto County, the
heroin has come in as a less-expensive, more-accessible
alternative. The results are devastating, as you know.
We did have a hearing on this, and we learned that one of
the unfortunate realities is that fentanyl, which as you know
is a synthetic heroin sometimes 50 times stronger, is being
laced with heroin and is causing increasing deaths,
particularly in my State of Ohio. We may lead the Nation in
fentanyl overdoses, which is tragic, but it is coming in from
China, primarily, and by the mail as you indicated, often to
the United States, and is then being transshipped to Mexico and
then brought back in in combination with, sometimes, heroin
made to look like a prescription drug.
That is precisely what is happening in my home State. It is
something where we need to do more, as you said. I wonder if
you could elaborate a little more on that in terms of what you
could do at Customs and Border Protection to be able to stop
this influx of heroin over the border.
We believe that the vast majority is coming over the
border, specifically with regard to fentanyl, which is again
the synthetic which, as you say, is often in the U.S. mail
system. What more could you do and what resources do you need
to be able to do a better job of keeping this poison from
coming into our country?
Commissioner Kerlikowske. I think the fentanyl issue is one
that is really--we are only seeing, I understand, the tip of
the iceberg, as you know from State Medical Examiner
information. Oftentimes overdoses are not always tested for
fentanyl. So we do not always know whether it was an opioid
prescription drug, whether it was heroin, or whether it was
fentanyl, because of the testing. We do not have preliminary
test kits for fentanyl like we do for heroin or cocaine. So
that makes it a little bit difficult.
The other great concern is the incredible danger to
somebody who actually comes across the fentanyl, like one of
our Customs and Border Protection officers, because of the
absorption through the skin which can lead to fatalities. We
also do not know about the legitimate fentanyl that is used as
pain killers in hospitals, nursing homes, et cetera, how much
is the diversion coming from them, but I think that it is very
safe to say that the vast majority of the fentanyl is coming
into the United States across our borders, not the diversion
from hospitals, although that could be a source.
So I think we need test kits. I think we need better
information, but I also think that we need negotiation with the
countries where it is being produced. We saw some success a
couple of years ago on the synthetic drugs that were coming in
from China and then being sprayed on grass and other things to
be smoked that caused pretty significant devastation.
China did assist us in reducing that problem by doing a
better job of export control. I think we are going to need
that, clearly, when it comes to fentanyl.
Senator Portman. Are you doing that currently with regard
to your relationship with these countries, whether it is China
or other countries that are the source of some of these
synthetic drugs that are being shipped across continents? Are
you currently engaged in that?
Commissioner Kerlikowske. I am not, and CBP is not as much
as the Department of State and the INL, but our attaches in the
other countries know that this is a significant issue. So that
whole-of-government approach on dealing with this--which was
somewhat successful on synthetics--may provide some
opportunities.
I will be talking with the Department of State INL and will
be happy to share back with you exactly what is going on.
Senator Portman. I would appreciate that. I do think, given
your background on the issue of substance abuse and your
background in law enforcement, that you have a particular
strength here, and CBP has a particular expertise, to be able
to partner with some of these countries as compared to INL,
frankly. So I would hope you would get personally engaged, and
if you could give me some indication of what they are doing
currently and how you all could be more involved, I think that
would be very helpful.
We have a crisis. It is an epidemic, and it is something
that requires all hands on deck. I think CBP has a huge role to
play. Having said that, as you say, prevention, treatment,
recovery, also need to be strengthened, which is what this
legislation that passed the Senate provides, and the
legislation passing the House today. There will be several
bills that will be helpful.
We would appreciate your continued advocacy within the
administration for getting something done on this issue so that
Congress can be a better partner with State and local
governments and the nonprofits that are out there fighting this
fight every single day.
Thank you, Mr. Commissioner, for being here today. I
appreciate everybody's participation in the hearing. As we all
made clear today when talking about this Customs bill, this was
an important bipartisan accomplishment.
I talked a lot about the ENFORCE Act today and the need for
us to administer that well. We hope that this committee will
continue to work together on a bipartisan basis to make sure
that the oversight is done properly and make sure that the bill
is implemented as intended.
I would ask that Senators submit any questions for the
record by Wednesday, May 25, 2016. With that, this hearing is
adjourned.
[Whereupon, at 11:40 p.m., the hearing was concluded.]
A P P E N D I X
Additional Material Submitted for the Record
----------
Submitted by Hon. Thomas R. Carper
Statement of Anthony M. Reardon
National President
National Treasury Employees Union
``Keeping Pace With Trade, Travel, and Security:
How Does Customs and Border Protection Prioritize
and Improve Staffing and Infrastructure?''
Before the House Committee on Homeland Security
Subcommittee on Border and Maritime Security
April 19, 2016
Chairman McSally, Ranking Member Vela, distinguished members of the
subcommittee; thank you for the opportunity to provide this testimony.
As President of the National Treasury Employees Union (NTEU), I have
the honor of leading a union that represents over 25,000 Customs and
Border Protection (CBP) Officers and trade enforcement specialists
stationed at 328 land, sea, and air ports of entry across the United
States (U.S.) and 16 Preclearance stations currently at Ireland, the
Caribbean, Canada and United Arab Emirates airports.
NTEU supports the Administration's Fiscal Year (FY) 2017 budget
that provides $12.9 billion for Customs and Border Protection (CBP), an
increase of 5.2% over FY 2016. In FY 2017, CBP plans to have onboard
23,861 CBP Officers at the ports of entry--which achieves the hiring
goal of 2,000 additional CBP Officers initially funded in FY 2014.
The most recent results of CBP's Workload Staff Model (WSM)--
factoring in the additional 2,000 CBP Officers from the FY 2014
appropriations--shows a need for an additional 2,107 CBP Officers
through FY 2017. The Agriculture Resource Allocation Model (AgRAM)
calculates a need for an additional 631 CBP Agriculture Specialists for
a total of 3,045. CBP's FY 2017 budget submission seeks congressional
approval to fund these 2,107 new CBP Officers through an increase in
user fees, but includes no additional funding to address the current
631 Agriculture Specialist staffing shortage.
There is no greater roadblock to legitimate trade and travel
efficiency than the lack of sufficient staff at the ports. Understaffed
ports lead to long delays in commercial lanes as cargo waits to enter
U.S. commerce and also creates a significant hardship for CBP
employees.
An example of the negative impact staffing shortages have on CBP
Officers can be found at the San Ysidro port of entry where CBP has
instituted involuntary temporary duty assignments (TDYs) to address a
staffing crisis there. At John F. Kennedy (JFK) Airport, CBP has
granted overtime exemptions to over one half of the workforce to allow
managers to assign overtime to Officers that have reached the statutory
overtime cap. Both involuntary overtime--resulting in 12 to 15 hour
shifts, day after day, for months on end--and involuntary work
assignments far from home disrupt CBP Officers' family life and destroy
morale. Ongoing staff shortages directly contribute to CBP's perennial
ranking at the very bottom of the Partnership for Public Service's
``Best Places to Work'' Survey--314 out of 320 agency subcomponents on
the latest survey.
For years, NTEU has maintained that delays at the ports result in
real losses to the U.S. economy. According to the U.S. Department of
the Treasury, more than 50 million Americans work for companies that
engage in international trade and, according to a University of
Southern California (USC) study, ``The Impact on the Economy of Changes
in Wait Times at the Ports of Entry,'' dated April 4, 2013, for every
1,000 CBP Officers added, the U.S. can increase its gross domestic
product (GDP) by $2 billion, which equates to 33 new private sector
jobs per CBP Officer added. This analysis was supplemented by USC in
its update entitled ``Analysis of Primary Inspection Wait Times at U.S.
ports of Entry'' published on March 9, 2014. This study found that by
adding 14 CBP Officers at 14 inspection sites in 4 international
airports, the potential total net impact would be to increase annual
GDP by as much as $11.8 million.
CBP Officer Hiring Challenges
Of major concern to NTEU is that CBP continues to fall short in its
authorized hiring efforts by approximately 800 of the 2,000 officers
that were funded by Congress in 2014. According to CBP, they hope to
have hired the 2,000 authorized by the second quarter of 2017. CBP
contends that they are unable to find eligible applicants to fill the
vacant positions.
One factor that may be hindering hiring is that CBP is not
utilizing available pay flexibilities, such as recruitment awards and
special salary rates, to incentivize new and existing CBP Officers to
seek vacant positions at these hard to fill ports, such as San Ysidro.
NTEU and CBP are currently negotiating over the agency's proposal
to draft CBP Officers to work involuntary TDYs at San Ysidro for longer
than 90 days. CBP has made this proposal because its solicitation for
volunteers to staff this TDY is no longer keeping up with what CBP
believes to be its staffing requirements. Yet, while asserting that it
would prefer to use volunteers and not involuntarily draft employees,
CBP has rejected NTEU proposals that would incentivize employees to
volunteer. For example, CBP has balked at offering any monetary
incentives or seeking legislative changes to allow special hiring
incentives such as student loan repayments to entice more individuals
to apply to work in San Ysidro.
To help address staffing shortages, NTEU is also exploring whether
our members would be interested in CBP offering an entry level age
waiver of 40 years and a mandatory retirement age waiver of 60 years as
a means to attract a larger pool of potential applicants and to reduce
attrition rates due to the statutory mandatory retirement at age 57
years.
Finally, the best recruiters are likely current CBP Officers. Let
me rephrase that and say that current CBP Officers could be the best
recruiters. Unfortunately, based on their experiences with the agency,
many officers would never encourage their family members or friends to
seek employment with CBP. That ought to be telling them something
pretty important too. I have suggested to CBP leadership that they look
at why this is the case.
In its FY 2017 budget submission, CBP offered several proposals to
mitigate the ongoing staffing shortage of 2,107 CBP Officers that will
continue into FY 2017 and beyond. One of these proposals is to backfill
50 CBP Officer attrition vacancies in FY 2017 with CBP Technicians in
order to free up CBP Officers from administrative duties. NTEU supports
the hiring of additional CBP Technicians to free up CBP Officers from
administrative duties as long as CBP is not reducing the current
onboard goal of 23,821 CBP Officers. However, CBP's proposal, as
outlined in its FY 2017 budget submission, proposes a one for one
replacement of 50 CBP Officer positions with 50 CBP Technicians. NTEU
strongly opposes this proposal.
CBP Technicians cannot ``backfill'' CBP Officer positions, because
they are not qualified as CBP Officers. With an ongoing shortage of
2,107 CBP Officers, hiring new CBP Officers should be CBP's priority.
NTEU supports hiring additional CBP Technicians to give administrative
support to CBP Officers, but strongly objects to CBP replacing CBP
Officer positions made vacant through attrition with CBP Technicians.
A funding proposal in the FY 2017 CBP budget submission that NTEU
strongly supports is for Congress to authorize a $2.00 increase in
immigration and customs user fees to fund the hiring of the 2,107
additional CBP Officers needed to end the current CBP Officer staffing
shortage.
NTEU was disappointed that Congress, in last year's highway bill,
indexed customs user fees to inflation, but diverted this fee increase
to serve as an offset for highway and infrastructure funding, rather
than to hire additional CBP Officers.
By diverting the difference in the amount of customs user fees
collected currently and the additional amount indexed to inflation to
non-CBP related projects both increases the cost to the private sector
by escalating the current level of customs user fees paid over the next
10 years, and compels the private sector to separately fund--through
Reimbursable Service Agreements (RSA)--CBP inspectional staffing and
overtime. NTEU will work to redirect this $400 million a year funding
stream back to CBP for its intended use--to pay for CBP inspection
services provided to the user.
Reimbursable Service Agreements (RSA)
In recent years, in order to find alternative sources of funding to
address serious CBP Officers and Agriculture Specialist staffing
shortages, CBP received authorization and has entered into RSAs with
the private sector as well as with state and local government entities.
These organizations reimburse CBP for additional inspection services
including overtime pay and the hiring of new personnel that in the past
has been paid for entirely by user fees or appropriated funding.
According to CBP, since the program began in 2013, CBP has entered into
agreements with 21 stakeholders, providing more than 112,000 additional
processing hours for incoming commercial and cargo traffic at a cost of
nearly $13 million to these public and private sector partners.
Section 560 of the FY 2013 DHS appropriations bill authorized CBP
to enter into five reimbursable fee agreements for a 5-year term with
the City of El Paso land port of entry; the City of Houston Airport
System; Dallas/Fort Worth International Airport; Miami-Dade County; and
the South Texas Assets Consortium (STAC.) It should be noted that
agricultural inspectional services are not eligible for reimbursement
under the Section 560 program, as it is limited to ``customs and
immigration'' inspectional services such as salaries, benefits,
relocation expenses, travel costs and overtime as necessary at the City
of El Paso land ports and solely to overtime at the three air ports of
entry.
An expansion of the Section 560 RSA CBP pilot program was
authorized by Section 559 of the Consolidated Appropriations Act of
2014 (Pub. L. 113-76). Section 559 expanded on the Section 560 RSAs by
allowing for increased services at newly selected ports, to include
customs, immigration, agricultural processing, and border security
services. Because of the need for CBP Agriculture Specialists to
process incoming produce, STAC quit the 560 program and applied for the
559 program. Under Section 560, RSAs were limited to CBP Officer
overtime and staffing, except in the air environment where only CBP
Officer overtime reimbursement is allowed. Under both Section 560 and
559, reimbursement for the hiring of additional CBP Officer and CBP
Agriculture Specialist positions is allowed at sea and land ports, but
only overtime reimbursement is allowed at airports.
The new Section 559 has no restriction on the number of RSAs for
sea and land ports and no limits on the terms of agreement for customs,
agricultural processing, border security services and immigrations
inspection-related services. These costs may include salaries,
benefits, administration, transportation, relocation expenses and
overtime expenses incurred as a result of the services requested.
NTEU's RSA Concerns
NTEU believes that the RSA program would be entirely unnecessary if
Congress authorized user fees collected to be indexed to inflation,
with the additional funding provided by indexing being used as set
forth in existing statute. NTEU also believes that the RSA program is a
band aid approach and cannot replace the need for Congress to either
authorize an increase in customs and immigration user fees indexed to
inflation or to authorize increased appropriations to hire additional
new CBP Officers to adequately address CBP staffing needs.
Further, NTEU strongly believes that CBP should not enter into a
RSA if it would negatively impact or alter services funded under any
Appropriations Acts, or services provided from any Treasury account
derived by the collection of fees. RSAs simply cannot replace CBP
appropriated or user fee funding--making CBP a ``pay to play'' agency.
NTEU remains concerned with CBP's new Preclearance expansion program
that also relies heavily on ``pay to play.''
NTEU also believes that the use of RSAs to fund CBP staffing
shortages raises significant equity and other issues, which calls for
an engaged Congress conducting active oversight.
For example:
How does CBP ensure that RSAs are not only available
to ports of entry with wealthy private sector partners? (When
RSAs were first considered, there was a proposal to require 30%
of the total RSA funds collected be reserved for ports with
greatest need, not just those that have partners with the
greatest ability to pay.)
How does CBP ensure that RSA funds pay for the hiring
of new CBP Officer and Agriculture Specialist personnel and are
not simply used to pay for relocating existing CBP personnel
from other ports (robbing from Port A to staff Port B without
hiring additional staff)?
How does CBP ensure a long-term public-private
funding stream? (When RSAs were first considered, there was a
proposal to have RSA pay up front for 10 years over 3
installments.)
There are also some port locations where staffing shortages are so
severe currently, that even entering into a RSA program may be
problematic. In 2009, there were approximately 10.7 million
international travelers processed at New York's JFK. By the end of
2015, it is estimated that JFK will process 14.5 million passengers, a
30% increase in mission critical work over a 6 year period. Over this
same period, NTEU estimates that there has been a net gain of
approximately 100 officers to process over 3.5 million additional
travelers.
For the last 2 years JFK management has received overtime cap
waivers for CBP Officers compelling these officers to work 12, 13, or
15 hour shifts day after day for months on end. Officers were required
to come in additional hours before their standard shifts, to stay an
indeterminate number of hours after their shifts (in the same day) and
compelled to come in for more overtime hours on their regular days off
as well.
The majority of CBP Officers are already working all allowable
overtime, much of which is involuntary. I want to be clear that all CBP
Officers are aware that overtime assignments are an aspect of their
jobs. However, long, extensive periods of overtime hours can severely
disrupt an officer's family life, morale and ultimately his or her job
performance protecting our nation.
CBP is currently negotiating separate RSAs with British Airways and
American Airways at JFK. In this situation where existing Officers'
overtime at JFK is already stretched beyond their limits, the RSA
should be restricted to hiring new CBP Officers, and not to simply
expanding overtime hours.
Another concern is that CBP continues to be a top-heavy management
organization. In terms of real numbers, since its creation, the number
of new managers has increased at a much higher rate than the number of
new frontline CBP hires. CBP's own FY15 end of year workforce profile
(dated 10/3/15), shows that the Supervisor to frontline employee ratio
was 1 to 5.6 for the total CBP workforce, 1 to 5.7 for CBP Officers and
1 to 6.6 for CBP Agriculture Specialists.
The tremendous increase in CBP managers and supervisors has come at
the expense of national security preparedness and frontline positions.
Also, these highly paid management positions are straining the CBP
budget. With the increased use of RSAs to fund additional CBP Officer
new hires, NTEU urges that CBP return to a more balanced supervisor to
frontline employee ratio.
Agriculture Specialist Staffing
CBP employees also perform critically important agriculture
inspections to prevent the entry of animal and plant pests or diseases
at ports of entry. For years, NTEU has championed the CBP Agriculture
Specialists' Agriculture Quality Inspection (AQI) mission within the
agency and has fought for increased staffing to fulfill that mission.
The U.S. agriculture sector is a crucial component of the American
economy generating over $1 trillion in annual economic activity.
According to the U.S. Department of Agriculture, foreign pests and
diseases cost the American economy tens of billions of dollars
annually. NTEU believes that staffing shortages and lack of mission
priority for the critical work performed by CBP Agriculture Specialists
and CBP Technicians assigned to the ports is a continuing threat to the
U.S. economy.
NTEU worked with Congress to include in the recent CBP Trade
Facilitation and Enforcement Act (Pub. L. 114-125) a provision that
requires CBP to submit, by the end of February 2017, a plan to create
an agricultural specialist career track that includes a ``description
of education, training, experience, and assignments necessary for
career progression as an agricultural specialist; recruitment and
retention goals for agricultural specialists, including a timeline for
fulfilling staffing deficits identified in agricultural resource
allocation models; and, an assessment of equipment and other resources
needed to support agricultural specialists.''
CBP's FY16 AgRAM, shows a need for an additional 631 frontline CBP
Agriculture Specialists and supervisors to address current workloads
through FY 2017, however, even with the 2016 increase in AQI user fees,
CBP will fund a total of 2,414 CBP Agriculture Specialist positions in
FY 2017, not the 3,045 called for by the AgRAM.
NTEU urges the Committee to authorize the hiring of these 631 CBP
Agriculture Specialists to address this critical staffing shortage that
threatens the U.S. agriculture sector.
CBP Trade Operations Staffing
CBP has a dual mission of safeguarding our nation's borders and
ports as well as regulating and facilitating international trade. In FY
2015, CBP processed more than $2.4 trillion worth of trade goods and
collected $46 billion in revenue. Since CBP was established in March
2003, however, there has been no increase in CBP trade enforcement and
compliance personnel even though inbound trade volume grew by more than
24 percent between FY 2010 and FY 2014.
In 2011, CBP established the Centers of Excellence and Expertise
(CEEs)--10
industry-specific Centers--requiring significant changes in CBP trade
operations employees' workload and work practices.
In 2014, four of the CEEs began operating at an accelerated level
of processing and became fully operational. On March 24, 2016, the
remaining six CEEs came on board. Critical for supporting the CEE's
virtually-managed and geographically dispersed workforce is the
completion of the Automated Commercial Environment (ACE). Now 3 years
behind schedule and more than $1 billion over budget, CBP began rollout
of the ACE ``single window'' for industry filing electronic trade
entries on March 30, 2016. According to industry users, the ACE rollout
has been challenging. Users have experienced network error and system-
wide crashes.
The rollout of CEEs has raised many issues affecting trade
operations staff at the ports including insufficient frontline staffing
and insufficient training for both frontline employees and supervisors.
NTEU urges Congress to authorize the hiring of additional trade
enforcement and compliance personnel, including Import Specialists, to
enhance trade revenue collection.
Additional CBP Personnel Funding Issues
NTEU commends the Department for increasing the journeyman pay for
CBP Officers and Agriculture Specialists. Many deserving CBP trade and
security positions, however, were left out of this pay increase, which
has significantly damaged morale. NTEU strongly supports extending this
same career ladder increase to additional CBP positions, including CBP
trade operations specialists and CBP Seized Property Specialists. The
journeyman pay level for the CBP Technicians who perform important
commercial trade and administration duties should also be increased
from
GS-7 to GS-9.
NTEU also supports extending enhanced retirement that was granted
to CBP Officers in 2008 to the approximately 120 CBP Seized Property
Specialists, the only armed, uniformed officers at CBP that do not
receive Law Enforcement Officer retirement.
RECOMMENDATIONS
Funding for additional CBP staff must be increased to ensure
security and mitigate prolonged wait times for both trade and travel at
our nation's ports of entry. The use of RSAs as an alternate source of
funding is merely a band-aid approach and cannot replace the need for
Congress to authorize an increase in customs and immigration user fees
or to provide sufficient appropriations to hire 2,107 new CBP Officers
to adequately address CBP staffing needs.
Therefore, NTEU urges the Committee to:
Authorize increases in trade, travel and agriculture
inspection and enforcement staffing to the level called for in
CBP's most recent WSM that shows a need for 2,107 additional
CBP Officers and an additional 631 CBP Agriculture Specialists
through FY 2017;
Authorize an increase in journeyman pay to additional
CBP personnel, including CBP Technicians, Import and other
Commercial Operations Specialists, and enhanced retirement to
armed, uniformed CBP Seized Property Specialists; and
Engage in robust oversight of RSAs to ensure that
this program does not replace primary funding sources or result
in inequitable distribution of CBP Officer resources.
Lastly, NTEU asks Congress to support legislation to allow CBP to
increase user fees to help recover costs associated with fee services
and provide funding to hire additional CBP Officers. If Congress is
serious about job creation, then Congress should either authorize
funding or raise immigration and custom user fees to hire the
additional 2,107 CBP Officers as identified by CBP's own Workload
Staffing Model.
The more than 25,000 CBP employees represented by NTEU are proud of
their part in keeping our country free from terrorism, our
neighborhoods safe from drugs and our economy safe from illegal trade,
while ensuring that legal trade and travelers move expeditiously
through our air, sea and land ports. These men and women are deserving
of more resources to perform their jobs better and more efficiently.
Thank you for the opportunity to testify before the Committee on
their behalf.
______
Prepared Statement of Hon. Orrin G. Hatch,
a U.S. Senator From Utah
WASHINGTON--Senate Finance Committee Chairman Orrin Hatch (R-Utah)
today delivered the following opening statement at a hearing to examine
the U.S. Customs and Border Protection's (CBP) efforts to enhance trade
facilitation and enforce U.S. trade laws, including the implementation
of the Trade Facilitation and Trade Enforcement Act of 2015.
I would like to welcome everyone to our hearing this morning.
And welcome to the Honorable R. Gil Kerlikowske, Commissioner of
U.S. Customs and Border Protection. The Commissioner last appeared
before this committee during his confirmation hearing in January 2014.
A lot has happened since then. So, we are happy to have the
Commissioner here again today.
The Finance Committee--and, in fact, the entire Congress--has been
extremely active on trade over the past year and a half.
Just last night, the Senate, by unanimous consent, passed the
American Manufacturing Competitiveness Act, a bipartisan, bicameral
bill that will provide tariff relief to American job creators by
establishing a reformed process for the consideration and passage of
Miscellaneous Tariff Bills, or MTBs.
Once it's signed into law, this legislation will allow American
manufacturers to lower their production costs on parts that can't be
found in the United States. This is absolutely essential if we want
American companies to be able to compete effectively in the 21st-
century global marketplace.
Passage of the MTB bill is long overdue and I'm very pleased that
we've finally gotten it through Congress and over to the President for
his signature. Many members of the committee--on both sides of the
aisle--worked to get this bill over the finish line. I want to commend
all of them--especially Senators Portman, Burr, and Toomey--for their
efforts.
This MTB bill closely resembles legislation we reported out of the
Finance Committee last year. In fact, it was just about a year ago that
we began floor debate on several of our committee's trade bills that
all eventually became law. One of those bills, the Trade Facilitation
and Trade Enforcement Act of 2015, commonly referred to as the Customs
bill, was signed into law on February 24th of this year.
The passage and signing of the Customs bill marked the end of a
legislative process that began almost 10 years ago and underwent many
iterations. With the law now in place, CBP and other agencies have the
tools necessary to ensure that America is able to compete in the world
economy while also ensuring that our trading partners play by the
rules.
As we all know, CBP has the dual responsibility of facilitating
legitimate trade and travel while also protecting the United States
from illicit goods and inadmissible people, such as terrorists. This
dual mission is vitally important to ensuring the strength of our
economy and the security of our borders. The overarching goal of our
Customs bill was to facilitate the efficient movement of low-risk and
compliant goods to the marketplace while also allowing CBP to focus its
resources on goods that could do harm to the economic or physical
security of the United States.
To that end, I'd like to take a few minutes to discuss some
specific ways that the recently-passed law enhances and modernizes the
way CBP operates.
The new statute includes a number of elements that were designed to
help facilitate trade.
For example, the law requires CBP to consult with private-sector
entities to identify commercially significant and measurable trade
benefits for participants in
public/private-sector partnership programs. It also raises the de
minimis level from $200 to $800 and modernizes the duty drawback
process.
In addition, the new law provides a number of new enforcement
tools.
These tools include a new process at CBP, with strict deadlines and
judicial review, for dealing with evasion of our antidumping and
countervailing duties laws and a significant expansion of CBP's
authorities to protect intellectual property rights at the border.
Given the importance of intellectual property to our economy, these new
authorities are long overdue and they were among my top priorities in
crafting and passing the Customs bill.
On top of that, the law includes a codification of the Centers of
Excellence and Expertise, which, among other things, ensures that the
post-release process for goods coming into the United States will be
aligned by industry rather than the port of entry where a shipment
arrives. These Centers provide tailored support to unique trading
environments and eliminate the need for importers to work with
individuals at multiple ports of entry that may slow down legitimate
trade with needless and duplicative inquiries. The Centers also allow
CBP to enforce our trade and customs laws uniformly on a nationwide
basis and to prevent nefarious trade practices, including what some
have called ``port shopping.''
The new statute also provides the necessary authorization and
funding to fully implement the Automated Commercial Environment, or
ACE, and requires the completion of the International Trade Data
System, or ITDS, by the end of this year. The completion of ACE and
ITDS will allow for the electronic submission of all import
requirements through a single window and process. Once fully
implemented, this will simplify and streamline the submission of import
documents, reducing the paperwork burden on the private sector and
ensuring that CBP has the data it needs to identify high-risk imports
and importers.
Much has changed since 2003 when CBP was first established. The new
law is the first comprehensive authorization of the agency since that
time, and many of the improvements that CBP has made internally over
the years have been codified in the statute, including increased
coordination between the two offices primarily responsible for trade
facilitation and trade enforcement--the Office of Trade and the Office
of Field Operations. We included this codification to address concerns
that many had expressed about CBP over the years, namely, that its
security mission could overshadow its trade mission.
There are many other significant provisions in this bill, several
of which were championed by members of the committee. I hope we will
have an opportunity to touch on some of those in more detail today.
While most of us are pleased with these new changes to our customs
laws, simply providing new tools and putting new mandates in place will
not, in and of itself, improve conditions on the ground. As with the
passage of any new law dealing with any important government agency,
congressional oversight is going to be key to ensuring that the statute
is implemented in a manner that reflects our intent.
That is why I've requested Commissioner Kerlikowske to appear
before the committee today.
With passage of the Customs bill, the Commissioner has many new
authorities to implement. I am looking forward to hearing about how the
Commissioner intends to use these authorities as well as a robust
discussion of CBP's ongoing efforts to facilitate trade and enforce our
laws.
With that, I'll turn to Senator Wyden for his opening remarks.
______
Prepared Statement of Hon. R. Gil Kerlikowske, Commissioner,
Customs and Border Protection, Department of Homeland Security
Chairman Hatch, Ranking Member Wyden, and members of the committee,
it is an honor to appear before you today to discuss U.S. Customs and
Border Protection's (CBP) role in facilitating international trade and
enforcing our Nation's trade laws.
As America's unified border agency, CBP protects the United States
against terrorist threats and prevents the illegal entry of
inadmissible persons and contraband, while facilitating lawful travel
and trade. CBP is the second-largest revenue-
collecting source in the Federal Government and our operations have a
significant impact on the security and facilitation of legitimate
international commerce and America's economic competitiveness.
CBP's trade enforcement and facilitation mission is highly complex.
We enforce nearly 500 U.S. trade laws and regulations on behalf of 47
Federal agencies, facilitate compliant trade, collect revenue, and
protect the U.S. economy and consumers from harmful imports and unfair
trade practices. Fraudulent trade activities, including the import of
counterfeit and pirated goods, threaten America's innovation, economy,
the competitiveness of our businesses, the livelihoods of U.S. workers,
and, in some cases, national security and the health and safety of
consumers.
Annually, CBP manages over 300,000 active unique importer-of-record
numbers, accounting for 30.4 million commercial transactions, which
represents approximately $2.4 trillion in imports and generates over
$40 billion in duties, fees and taxes. In addition to applying the
multitude of tariffs and the processing of mass amounts of commercial
shipments, CBP must also consider the complexities of enforcing U.S.
Free Trade Agreement (FTA) commitments. The United States has existing
FTAs with 20 countries and completed negotiations for the Trans-Pacific
Partnership Agreement with 11 Pacific region countries, and is
currently negotiating the Transatlantic Trade and Investment
Partnership (T-TIP) with the European Union (EU). These are important
agreements for the United States that will promote U.S. international
competitiveness, jobs, and growth. In fiscal year (FY) 2015, FTAs
accounted for over $636 billion in imports.
The enactment of the Trade Facilitation and Trade Enforcement Act
of 2015 (TFTEA), Pub. L. No. 114-125, or ``the Act'' in February 2016
demonstrates that economic competiveness and enforcement of our trade
laws are among our Nation's highest priorities. This law is a major
milestone for CBP, as it is the agency's first authorization since its
creation within the Department of Homeland Security (DHS) in 2003. It
supports CBP's efforts to ensure a fair and competitive trade
environment, sending a strong message that CBP will effectively enforce
U.S. trade laws, including safeguarding Intellectual Property Rights
(IPR), combating Anti-dumping/Countervailing Duty (AD/CVD) evasion, and
prohibiting the importation of forced labor-derived goods.
My testimony will discuss CBP's progress in some of our key trade
facilitation and trade enforcement efforts, including implementation of
the Act, and our path forward in securing and enabling international
commerce and promoting the growth of the U.S. economy.
cbp's trade transformation
CBP recognizes its vital role in the economy and has embarked on a
``Trade Transformation,'' a series of initiatives that create
efficiencies for U.S. businesses, the government, and the consumer.
In addition to enhancing the import process, CBP is working to
modernize its export process in support of the President's National
Export Initiative to streamline the export process and foster growth
for U.S. companies, and the Export Control Reform Initiative to bolster
competitiveness of key U.S. manufacturing and technology sectors. Even
as trade volumes continue to rise, these initiatives strengthen CBP's
capabilities and the Nation's economic competitiveness by lowering the
cost of doing business, strengthening enforcement efforts, and leveling
the playing field for U.S. businesses.
CBP's Trade Transformation initiatives not only seek to create
efficiencies within the agency's business processes, but also seek to
develop a consistent ``One U.S. Government'' approach at the border.
CBP, in collaboration with 47 Partner Government Agencies that have
equities in the trade process, is working toward standardizing
government procedures, streamlining processes, driving efficiencies
through automation, and aligning and harmonizing with industry business
processes.
The need for consistency and harmonization has been a driving force
behind our transformation efforts. Currently, there are hundreds of
paper forms being used to import and export goods. In February 2014,
President Obama issued an Executive Order (E.O. 13659), Streamlining
the Export/Import Process for America's Businesses, which, among other
things, directs Federal agencies with a role in trade to design,
develop, and integrate their requirements into an electronic ``Single
Window,'' known as the International Trade Data System, by December
2016. CBP's cargo processing system, the Automated Commercial
Environment (ACE), will ultimately serve as the ``Single Window'' and
enable businesses to electronically transmit the data required by the
U.S. Government to import or export cargo. Through ACE, manual
processes will be streamlined and automated, paper will be virtually
eliminated, and the international trade community will be able to more
easily and efficiently comply with U.S. laws and regulations. ACE is
being developed and deployed in increments, and CBP is on track to
deliver all core trade processing capabilities in ACE by December 31,
2016.
Close collaboration with the trade community, and developing
public-private partnership programs, is an essential component of CBP's
Trade Transformation efforts. The Customs-Trade Partnership Against
Terrorism (C-TPAT) program is a public-private partnership program
wherein members of the trade community volunteer to adopt tighter
security measures throughout their international supply chains in
exchange for enhanced trade facilitation, such as expedited processing.
The C-TPAT program now has more than 11,000 members, with C-TPAT
imports accounting for 54 percent (by value) of all imports to the
United States. Additionally, in collaboration with the U.S. Consumer
Product Safety Commission and the U.S. Food and Drug Administration,
CBP is working to complete another important pilot, our Trusted Trader
program, which unifies C-TPAT and the Importer Self-Assessment
processes.\1\
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\1\ Federal Register Notice, June 16, 2014. Announcement of Trusted
Trade Program Test, https://www.federalregister.gov/articles/2014/06/
16/2014-13992/announcement-of-trusted-trader-program-test.
The C-TPAT program continues to expand and evolve as CBP works with
our foreign partners to establish bilateral mutual recognition of
respective C-TPAT-like programs. Mutual Recognition as a concept is
reflected in the World Customs Organization's Framework of Standards to
Secure and Facilitate Global Trade, a strategy designed with the
support of the United States, which enables Customs Administrations to
work together to improve their capability to detect high-risk
consignments and expedite the movement of legitimate cargo. These
arrangements create a unified and sustainable security posture that can
assist in securing and facilitating global cargo trade while promoting
end-to-end supply chain security. CBP currently has signed Mutual
Recognition Arrangements with New Zealand, the EU, South Korea, Japan,
Jordan, Canada, Taiwan, Israel, Mexico, and Singapore and is continuing
to work towards similar recognition with China, Brazil, the Dominican
Republic, India and other countries.\2\
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\2\ CBP also has multiple Customs Mutual Assistance Agreements,
which allow for the exchange of information, intelligence, and
documents that will ultimately assist countries in the prevention and
investigation of customs offenses. The agreements are particularly
helpful for U.S. Attache offices, as each agreement is tailored to the
capacities and national policy of an individual country's customs
administration. See http://www.cbp.gov/border-security/international-
initiatives/international-agreements/cmaa.
Another public-private partnership program that focuses on cargo
entering the United States via air is CBP's Air Cargo Advance Screening
(ACAS) program. This pilot, which currently has 51 participants, will
run through July 2016, after which we look forward to identifying a
path forward for permanent status. Additionally, CBP is implementing a
multifaceted approach to e-commerce, particularly as it impacts sales
and imports through the mail and express environments. We are educating
consumers and working with major e-commerce businesses to identify and
prevent the sale and import of counterfeit or dangerous products, and
look forward to continued partnerships with the trade community to help
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us evolve with the growth in e-commerce.
A hallmark of our transformation efforts is the implementation of
the Centers of Excellence and Expertise \3\ (Centers), established in
2011 to increase uniformity at the POEs, facilitate the timely
resolution of trade compliance issues nationwide, and further
strengthen our knowledge about industry practices. In 2014, 4 of the 10
Centers became fully operational, and, I'm proud to announce that, last
month, the remaining 6 became fully operational. These virtually-
managed Centers align CBP with modern business practices, focusing on
industry-specific issues, and provide tailored support to unique
trading environments.
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\3\ The 10 Centers are: Pharmaceuticals, Health and Chemicals--New
York, NY; Agriculture and Prepared Products--Miami, FL; Automotive and
Aerospace--Detroit, MI; Apparel, Footwear and Textiles--San Francisco,
CA; Base Metals--Chicago, IL; Petroleum, Natural Gas and Minerals--
Houston, TX; Electronics--Los Angeles, CA; Consumer Products and Mass
Merchandising--Atlanta, GA; Industrial and Manufacturing Materials--
Buffalo, NY; and Machinery--Laredo, TX.
Through the implementation of CBP's Trade Transformation
initiatives we are working to increase the Nation's economic
competitiveness by lowering the cost of doing business, removing
barriers to facilitation, and leveling the playing field for U.S.
businesses. Additionally, these transformative efforts help CBP
strengthen trade enforcement efforts and address ongoing challenges
such as AD/CVD collection, by improving and modernizing our trade
processes.
cbp's trade intelligence and targeting
As the Nation's unified border agency, CBP is responsible for
detecting and interdicting goods imported to, exported from, and
transiting through the United States by means of fraudulent trade
activities intended to avoid the payment of duties, taxes and fees, or
activities meant to evade U.S. legal requirements for international
trade. Central to all of CBP's multi-layered trade enforcement
activities are the continuous enhancements to our targeting programs,
the expansion of our trade intelligence, and our ability to identify
and understand trade risks that may affect national security, U.S.
business competitiveness, or the collection of revenue.
Enforcement of trade laws and interdiction of illegal cargo are
based on trade intelligence and advanced risk-based targeting.
Partnerships with other Federal agencies and the trade community are
essential to expanding CBP's trade intelligence. CBP works closely with
U.S. Immigration and Customs Enforcement's Homeland Security
Investigations (ICE/HSI), the Department of Justice's Drug Enforcement
Administration, the Financial Crimes Enforcement Network, and the
Departments of Commerce and Health and Human Services to promote
information sharing and the exchange of trade intelligence.
Through collaboration with industry, CBP deepens its understanding
of the way businesses and industries operate in the ever-changing
global marketplace and leverages that information for risk analysis and
targeting. A key element in CBP's trade intelligence and targeting
efforts are the 10 Centers. The Centers redefine how CBP works
collaboratively with industry members to understand trade risks and
support CBP's efforts to target the evasion of U.S. trade laws, protect
the revenue of the U.S. Government, and ensure a level playing field
for U.S. industry.
Depending on the specific pathway, CBP performs targeting
activities throughout the import process--prior to departure from
origin, before cargo arrives at a POE, at the time of entry, and after
the cargo is conditionally released. In accordance with the Trade Act
of 2002, Pub. L. No. 107-210, and the SAFE Port Act of 2006, Pub. L.
No. 109-347, carriers are required to submit manifest data containing
an inventory of all goods, supplies, cargo, and persons on board a
conveyance or container in advance of arriving at a POE for vetting
through CBP's Automated Targeting System (ATS). ATS is a critical
decision support tool that CBP uses to assess the risk of goods
entering the United States. Incorporating information from CBP and
other law enforcement databases, ATS provides a uniform screening of
all its cargo transactions and identifies anomalies based on numerous
risk factors.
Shipments matching ATS targeting factors are presented to CBP
officers assigned overseas with the Container Security Initiative
(CSI), officers at our numerous Advance Targeting Units (ATUs) located
at our domestic POEs, as well as our seasoned experts at the National
Targeting Center for Cargo Operations (NTC-C). Upon arrival of cargo at
a POE, using targeting results to prioritize inspection of high risk
cargo, CBP has the authority to perform an exam of the goods; detain,
and where appropriate, seize, or request re-export of the goods; or
release the goods. In the post-entry environment, CBP assesses duties,
determines statutory and regulatory compliance, and collects import
statistics. Effective targeting not only enables CBP to detect and
address potential risks before a shipment arrives at a POE, but it also
enables CBP to separate low-risk and legitimate shipments from those
that require additional scrutiny.
When it comes to targeting shipments for potential threats to
consumer safety, the Commercial Targeting and Analysis Center (CTAC) is
a CBP facility designed to streamline and enhance Federal efforts to
address import safety issues. Created in 2009, the CTAC facilitates
information sharing amongst 11 participating government agencies,\4\
while simultaneously developing, implementing, and streamlining
cohesive import-safety enforcement procedures that drive further
interdiction of harmful and inadmissible goods. Supporting CBP's
unified trade targeting mission, the NTC-C has an embedded presence at
the CTAC facility to heighten the connectivity between the
participating government agencies' admissibility mission and the NTC-
C's 24/7 operational capabilities.
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\4\ The 11 Federal agencies that participate in the CTAC include:
CBP; U.S. Consumer Product Safety Commission; U.S. Department of
Agriculture Animal Plant Health Inspection Service; Food Safety and
Inspection Service; U.S. Immigration and Customs Enforcement Homeland
Security Investigations (ICE/HSI); U.S. Environmental Protection Agency
(EPA); Pipeline and Hazardous Materials Safety Administration (PHMSA);
National Highway Traffic Safety Administration (NHTSA); Food and Drug
Administration (FDA); U.S. Fish and Wildlife Service (FWS); and the
National Marine Fisheries Services (NMFS).
The National Targeting and Analysis Groups (NTAGs) are the primary
national trade targeting assets for CBP. Providing in-depth risk
analysis for high priorities, the NTAGs work in concert with the
Centers, and the NTC-C Tactical Trade Targeting Unit (T3U), to enhance
trade targeting expertise. These entities work with the entire life-
cycle of trade fraud enforcement--from information intake, analysis,
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targeting, investigative case support, and operational assessments.
Each of these entities brings a particular targeting skill set to
the table. For example, by virtue of the Centers' industry-based
knowledge, CBP can apply critical trade intelligence toward our
enforcement efforts. Additionally, because of the NTAGs' expertise, CBP
can better understand the overlapping risk areas within each industry
sector. Integrating these knowledge areas is an enforcement priority
for the agency. By creating a common operating picture that identifies
risk within the trade arena, CBP can quickly act on fraudulent trade
schemes. Moreover, by leveraging expertise within each targeting unit,
CBP deepens its trade enforcement posture, resulting in more effective
outcomes. For example, in FY 2015, referrals from the T3U resulted in
341 seizures with a Manufacturer's Suggested Retail Price (MSRP) value
of over $92.1 million.
Integration of these national targeting groups is crucial, as each
provides support for our law enforcement partners, such as ICE/HSI
Agents assigned to the newly formed National Targeting Center for
Investigations (NTC-I). Partnerships between T3U and NTC-I personnel
are leveraged as a force multiplier which has resulted in more
effective sharing of information and increased outcome-based
enforcement actions. For example, in FY 2015, the T3U supported ICE/HSI
case work concerning goods worth an estimated $179 million total MSRP,
including 132 criminal arrests, 81 indictments, 65 convictions, 179
search warrants and 3 administrative arrests.
cbp trade enforcement operations
In the performance of its trade enforcement operations, CBP has
identified several high-risk areas, designated as Priority Trade Issues
\5\ (PTI) that could cause significant revenue loss, harm the economy,
or threaten the health and safety of the American people. PTIs drive
risk-informed investment of CBP resources and enforcement and
facilitation efforts, including the selection of audit candidates,
special enforcement operations, outreach, and regulatory initiatives.
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\5\ The five current PTIs are Intellectual Property Rights;
Textiles and Apparel; Import Safety; Trade Agreements; and Antidumping
and Countervailing Duties. The Trade Enforcement and Facilitation Act
of 2015 added Agriculture programs and Revenue to the list of PTIs.
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Antidumping and Countervailing Duties
AD/CVD \6\ has been identified by CBP as a PTI because collection
of these duties is critical to the U.S. economy and the competitiveness
of U.S. businesses. While the vast majority of manufacturers,
importers, customs brokers, and other parties involved in shipments of
goods subject to AD/CVD orders accurately provide shipment information
and pay appropriate duties, CBP has a core statutory responsibility to
detect and deter the circumvention of AD/CVD laws and collect all
revenue owed to the U.S. Government that arises from the importation of
goods. CBP is constantly enhancing our AD/CVD detection and enforcement
protocols, including advancing our targeting and analysis, streamlining
our administrative processes, and utilizing all available authorities
to meet the challenges posed by the increasing complexity of AD/CVD
evasion schemes.
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\6\ Under the Tariff Act of 1930, U.S. industries may petition the
government for relief from imports that are sold in the United States
at less than fair value (``dumped'') or which benefit from subsidies
provided through foreign government programs. Under the law, the U.S.
Department of Commerce determines whether the dumping or subsidizing
exists and, if so, the margin of dumping or amount of the subsidy. The
United States International Trade Commission determines whether there
is material injury or threat of material injury to the domestic
industry by reason of the dumped or subsidized imports.
CBP's AD/CVD targeting and enforcement activities are applied at
every stage in the import process. CBP personnel at POEs are
continuously reviewing import information to detect AD/CVD evasion and
noncompliance, deter future evasion, and bring importers into
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compliance with AD/CVD requirement.
For instance, in FY 2015, entry summary reviews and cargo exams of
solar panels resulted in the identification of $56 million in potential
loss of revenue of AD/CVD duties and the recovery of almost $8 million
in AD/CVD duties on shipments of solar cells and panels from China and
Taiwan. Also, an audit of an importer of tapered roller bearings from
China discovered a loss of revenue of $36 million, most of which was
antidumping duties. In another example, Import Specialists detected AD/
CVD evasion on tires from China, with over $7 million in AD/CVD duties
identified, penalties imposed, and collection efforts ongoing.
Since 2013, CBP has broadened the use of single transaction bonds
to ensure additional protection when CBP has reasonable evidence that a
risk of revenue loss exists. These measures have been very effective in
protecting the revenue and facilitating compliance with AD/CVD.
Furthermore, in 2014, as part of our strategy to resolve AD/CVD debts,
CBP created a team within the Office of Administration dedicated to AD/
CVD collection. The creation of the AD/CVD Collections team will
enhance CBP's technical expertise to deal with the unique complexities
of the
AD/CVD process; enable CBP to identify importers unwilling or unable to
pay outstanding duties earlier; and provide deeper integration of the
full AD/CVD processes to anticipate AD/CVD debts, rather than simply
react to those debts after they are formally established.
CBP, in collaboration with ICE/HSI and the Department of Commerce,
has had increasing success in identifying, penalizing, and disrupting
distribution channels of imported goods that seek to evade AD/CVD. CBP
personnel refer many cases of
AD/CVD evasion to ICE/HSI for criminal investigation and work closely
with
ICE/HSI to establish the evidence of criminal violations. A few
examples demonstrating the success of this collaborative relationship
include:
Operation Honeygate--ICE/HSI, in collaboration with CBP,
exposed a criminal network responsible for evading $180 million
in antidumping duties on imported Chinese honey. Several
individuals were imprisoned for their criminal activities and
two of the Nation's largest honey suppliers paid millions of
dollars of fines.
Lined Paper--An ICE/HSI investigation, with substantial CBP
support, culminated in the criminal indictments of Chinese,
Taiwanese, and U.S. companies and officials for illegally
transshipping lined paper from China in order to evade over $25
million in antidumping duties.
Aluminum Extrusions--ICE/HSI agents, working jointly with
CBP officers, arrested five individuals and indicted three
companies who allegedly participated in a conspiracy to
illegally import aluminum extrusions from China transshipped
through Malaysia to avoid over $25 million in AD/CVD duties.
Another recent example of this effort is our enforcement of AD/CVD
orders on steel products. In FY 2015, CBP, in coordination with ICE/
HSI, was able to successfully seize over $900,000 worth of steel
products that violated AD/CVD laws and assess $45.5 million in
penalties for AD/CVD violations on importers of steel products. In FY
2015, CBP also conducted over 7,200 entry summary reviews of steel
imports for AD/CVD issues, and identified violations with a value of
over $970,000. Additionally, in January 2016, an examination by CBP
port personnel resulted in CBP identifying nearly $200,000 in AD/CVD
violations. CBP industry experts at the Base Metals Center of
Excellence and Expertise are actively enforcing 149 AD/CVD orders on
steel products. CBP works closely with our steel industry partners and
the Department of Commerce to educate both CBP personnel and steel
industry members through seminars that explain how AD/CVD enforcement
can best be implemented in the current trade environment.\7\
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\7\ In FY 2015, CBP, in partnership with the U.S. steel industry,
conducted five AD/CVD seminars, which took place at key trade locations
in California, Georgia, Illinois, New York, and Texas, for CBP
personnel and customs brokers. In FY 2016, CBP will conduct additional
Steel Seminars in Laredo, Texas; New Orleans; Philadelphia; Long Beach,
California; and Detroit.
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Intellectual Property Rights
CBP enforces IPR, another PTI, by seizing products that infringe on
U.S. trademarks, copyrights, and by enforcing exclusion, seizure, or
forfeiture orders of the International Trade Commission with respect to
products found to infringe U.S. patents. The theft of intellectual
property and trade in fake goods threaten America's economic vitality
and national security, and the American people's health and safety.
CBP, in close collaboration with ICE/HSI, protects businesses and
consumers every day through an aggressive IPR enforcement program.
CBP uses technology to increase interdiction of fake goods,
facilitates partnerships with industry, and enhances enforcement
efforts through the sharing of information and intelligence. In
addition to seizing goods at U.S. borders, CBP conducts post-import
audits of companies that have been caught bringing fake goods into the
United States, issues civil fines and, when appropriate, refers cases
to other law enforcement agencies for criminal investigation.
Strong partnerships with our Federal enforcement counterparts,
effective targeting of high-risk shipments, and frontline interceptions
of cargo at U.S. POEs produced more than 28,000 seizures of fake
products in FY 2015, with an estimated MSRP of $1.35 billion that could
have cheated or threatened the health of American consumers. CBP also
enforced 152 exclusion orders enforcement action in FY 2015. CBP's
collaboration with the HSI-led National Intellectual Property Rights
Coordination Center \8\ (IPR Center) resulted in 538 arrests, with 339
indictments and 357 convictions. IPR seizures increased nearly 25
percent in 2015 from 2014, representing DHS' busiest year on record for
IPR related seizures.
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\8\ The IPR Center is one of the U.S. Government's key weapons in
the fight against criminal counterfeiting and piracy. Working in close
coordination with the Department of Justice Task Force on Intellectual
Property, the IPR Center harnesses the tactical expertise of its 23
member agencies to share information, develop initiatives, coordinate
enforcement actions and conduct investigations related to intellectual
property theft.
For example, in recent months, CBP officers nationwide have seized
record numbers of counterfeit self-balancing scooters, commonly
referred to as ``hoverboards.'' \9\ As of February 19, 2016, there have
been 245 hoverboard seizures, totaling more than 63,000 pieces, with a
MSRP of $24.7 million. Hoverboard seizures have been recorded in 42
different ports of entry. The hoverboards contain batteries that are
deemed unauthorized, and therefore counterfeit, as well as fake
trademark logos. Major safety concerns have also surfaced following
reports of fires possibly caused by substandard and counterfeit lithium
ion batteries that power some hoverboards.
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\9\ CBP officers have seized hoverboards at ports in Chicago,
Houston, Buffalo, International Falls, Miami, Charleston, Puerto Rico,
Savannah, Sterling, Norfolk, and at John F. Kennedy airport.
Invaluable to the enforcement of all trade laws, CBP's Laboratories
and Scientific Services Directorate (LSSD) has been part of U.S. trade
enforcement since 1841. LSSD plays a key part in the enforcement of
trade priorities, including AD/CVD, IPR, classification, value, and
transshipment. In FY 2015, this division handled 1,035 samples relating
to 294 entries of importations of suspect AD/CVD violations \10\ and
700 samples relating to 125 importations of suspect IPR violations.\11\
LSSD analyzes a wide range of commodities, including honey, garlic,
plastic carrier bags, steel, bearings, wax candles, paper, pasta,
hardwood and decorative plywood, and mushrooms.
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\10\ The commodities analyzed involving the Nation's various AD/CVD
orders included: honey, garlic, monosodium glutamate, glycine,
melamine, plastic carrier bags, polyethylene terephthalate film,
manganese dioxide, potassium phosphate salts, stilbenic optical
brightening agents, chlorinated isocyanurates, steel, steel pipe, line
pipe, steel nails, steel wire hangers, steel threaded rods, stainless
steel wire rod, petroleum wax candles, aluminum extrusions, aluminum
tubing, electrolytic multilayered wood flooring, artist canvases,
thermal paper, tissue paper, coated paper, paper clips, pencils, solar
cells and panels, narrow woven ribbons, woven electric blankets,
refined brown aluminum oxide, and magnesia carbon bricks.
\11\ The commodities analyzed involving potential IPR violations
included: integrated circuits, network routers, electronic memory media
(compact flash, SD, USB drives, etc.), movie DVDs, wearing apparel,
pharmaceuticals, smartphones, perfume, video game consoles, and food.
Partnerships with the trade community are critical to rooting out
unfair trading practices and illegal trading activity. U.S. industry,
trade associations, and importers provide critical insight to CBP on
enforcement issues related to developments in AD/CVD, IPR, and other
trade sensitive imports. CBP meets regularly with U.S. industry
representatives to discuss circumvention schemes, and U.S. industry
representatives share valuable market and product intelligence with us.
CBP's online referral process, e-Allegations, facilitates the process
for the trade community to provide CBP with critical information. Since
e-Allegations' inception in June 2008, CBP has received more than
10,500 commercial allegations. While the majority of e-allegations are
IPR-related, nearly 10 percent are AD/CVD-related.\12\ Every allegation
submitted through e-Allegations is reviewed and researched to determine
the validity of the trade law violation(s) being alleged. Some are
reviewed and resolved internally within CBP, and some are referred to
ICE/HSI for further investigation. Intellectual Property Rights holders
can also use our web-based tool, e-Recordation, to record their
trademarks and copyrights with CBP. Recordation makes information on
protected rights available to CBP offices throughout the United States.
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\12\ As of April 5, 2016.
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the trade facilitation and trade enforcement act of 2015
The Act strengthens CBP's trade enforcement capabilities and
provides the agency with new tools to better enforce AD/CVD and IPR
laws. It enhances our targeting capabilities and collaboration efforts
with our international counterparts and with IP rights holders. The Act
also strengthens our enforcement of other illicit trade activities,
such as honey transshipment, and provides revenue-protecting provisions
such as increased bonding for high-risk imports.
Effective March 10, 2016, the Act eliminates the ``consumptive
demand'' exemption, meaning that goods made with indentured, child, or
other forced labor are no longer allowed into the country just to meet
U.S. demand. With this change, CBP will no longer be legally required
to weigh consumptive demand considerations to process information
concerning forced labor. Since March 10, 2016, CBP has executed several
withhold/release orders related to suspicions of goods made by convict
or forced labor. Specifically, on March 29, 2016, I directed CBP
frontline personnel to detain certain chemical, fiber, and potassium
products believed to be manufactured in Chinese prisons. CBP will be
updating its regulations to clarify this new provision, along with the
process through which we are notified of potential violations of forced
labor laws. In addition, effective March 10, 2016, CBP implemented an
increase to the de minimis value for an imported shipment from $200 to
$800. CBP has made the needed changes in ACE and we are training field
personnel. This change will save businesses money, exempting low-value
shipments from certain duties and taxes.
The Act also authorizes several critical CBP programs and lays a
strong foundation for many of our most vital initiatives. The law
authorizes continued funding for operations and maintenance of ACE--the
backbone of the U.S. Government's ``Single Window.'' As we continue to
drive toward the President's year-end 2016 goal for delivery of all
core trade processing capabilities in ACE, continued funding will
ensure that ACE and the Single Window are fully supported over the long
term.
Supporting CBP's efforts in modernizing the way we work with the
trade and do business, the Act formally recognizes the Centers and
their importance to modernizing and streamlining operations by industry
sector, generating expertise that also improves CBP's enforcement
capabilities. The Act also simplifies and modernizes the drawback
process for duty refunds, making drawback more workable for CBP while
increasing efficiencies for trade stakeholders. Furthermore,
recognizing the value of our industry advisory committee in improving
CBP's trade operations and policies, the Act enhances the role of the
Customs Operations Advisory Committee within DHS, and increases
involvement from our ICE/HSI partners.
In the travel environment, the Act improves funding mechanisms and
supports CBP's Preclearance efforts, better positioning us to push our
security efforts outward and increase locations around the globe to
meet our goal of processing 33 percent of U.S.-bound air travelers
through Preclearance by 2024. In addition, in accordance with the IPR
outreach provisions in the Act, CBP revised Form 6059B, Customs
Declaration Form, to include a warning to travelers of the penalties
associated with transporting IPR-infringing goods.
The Act has a significant impact on CBP, both organizationally and
operationally, and we are working aggressively to shift resources and
develop processes to ensure swift and effective implementation of the
Act. We are establishing within the Office of Trade a Trade Remedy Law
Enforcement Division, led by a director and a dedicated NTAG for
evasion. We are also drafting numerous regulations, covering a broad
span of trade enforcement areas, including IPR information sharing with
rights holders; procedures for investigating claims of evasion of AD/
CVD orders and timelines; allowing donations of certain equipment,
training, and other support services from the private sector for
enforcing IPR; and setting minimum standards for brokers and importers
regarding importer identity verification.
As we move forward, CBP will work closely with this committee and
with our trade partners to implement the provisions of the new law. For
example, we will be collaborating with the private sector to ensure
that participants of CBP's voluntary partnership programs, such as C-
TPAT, are receiving significant and measurable trade benefits in
exchange for their participation. We also look forward to working with
our industry partners to educate the trade community about how to file
allegations with CBP. Since the Act was executed, CBP has hosted
webinars, industry phone calls and participated in events on a range of
topics related to implementation of the numerous provisions in the Act.
We look forward to continuing our strong dialogue and partnership with
private industry and with this committee as we work to implement the
Act's trade enforcement and trade facilitation provisions.
conclusion
CBP recognizes and is committed to our vital role in supporting the
U.S. trade agenda. We will continue to enhance our Trade Transformation
initiatives, which strengthen our enforcement capabilities and
streamline trade for low-risk legitimate shipments. We will also
continue to advance our risk-based targeting to enforce trade laws and
interdict illegal cargo to ensure compliance with statutory and
regulatory authorities and to minimize loss of revenue.
CBP is committed to working with our Federal, international, and
private sector partners to enhance our trade intelligence, detect and
resolve unfair or unlawful trade practices, and develop solutions to
facilitate legitimate trade and protect the U.S. economy.
Chairman Hatch, Ranking Member Wyden, and members of the committee,
thank you for the opportunity to testify today. I am happy to answer
any questions you may have.
______
Questions Submitted for the Record to Hon. R. Gil Kerlikowske
Questions Submitted by Hon. Orrin G. Hatch
syrian and iraqi antiquities
Question. A number of press reports claim that antiquities from
Syria and Iraq are being sold in the United States, and those reports
have linked such trade to terrorism financing. What law enforcement
actions has CBP taken to determine the extent to which such antiquities
are being trafficked in the United States and to implement existing
import restrictions on trafficked antiquities? And, to what extent, if
at all, has CBP assessed the risk of terrorist financing from such
activities?
Answer. U.S. Immigration and Customs Enforcement (ICE) Homeland
Security Investigations (HSI) and its U.S. Customs and Border
Protection partners monitor the importation of antiquities and cultural
property from conflict areas, which include Iraq and Syria. Cultural
property from those countries has been sold in the United States both
legally and illegally for some time. It often takes 5 to 10 years from
the time an artifact is looted, to the time it comes up for sale.
While there are no confirmed cases linking the funding of terrorism
from cultural property imported into the United States, HSI Special
Agents are serving as liaisons to the Federal Bureau of Investigation's
(FBI) Counterterrorism Division and the Terrorism Financing Operations
Section. These Special Agents will support all ICE investigative
efforts involving the theft and exploitation of cultural property, art,
and antiquities for the purposes of providing illicit financial
resources to further terrorism. ICE is committed to using all of its
authorities to disrupt and prevent acts of terrorism and the material
support of terrorism, to include the profiting by smuggling or
trafficking of cultural property by any individual or organization
associated with terrorism.
CBP is actively enforcing existing import restrictions on
trafficked antiquities, effecting seizures of trafficked cultural
property, pursuing civil administrative penalties against violative
parties involved, and supporting Department of State repatriation of
those antiquities to the rightful countries of origin.
Specifically, through the National Targeting Center-Cargo (NTC-C),
CBP has conducted tactical trade targeting to identify (for CBP
examination and/or investigative referral) suspected shipments of
antiquities from Syria and Iraq, which may be trafficked in the United
States and to implement existing import restrictions on trafficked
antiquities in general.
CBP has neither obtained nor developed any evidence that
conclusively supports a link between the trafficking of Syrian and
Iraqi cultural artifacts and the financing of terrorist operations. CBP
has also not assessed the risk of any terrorist financing obtained from
the trafficking of antiquities from Syria and Iraq for sale in the
United States and is unaware of the scope and extent of any such
activity.
However, CBP actively collaborates with HSI to investigate the
trafficking of antiquities for sale in the United States, e.g., by
conducting data analysis, targeting and examinations in support and
referring interdictions of cultural property to HSI for investigative
consideration. The purpose of this close CBP coordination is to assist
HSI efforts to identify, arrest, and convict criminal associates of
organizations responsible for the smuggling of trafficked antiquities.
CBP's National Targeting Center (NTC) has collaborated with the
FBI, HSI, and Department of State (DOS) for targeting antiquities
smuggling out of the territories in Syria and Iraq to United States.
NTC will participate in FBI-led meetings in Switzerland to assess the
movement of antiquities through the free trade zone. These meetings are
not yet scheduled at the time of our response to this question. NTC
also participated in an FBI-led conference on countering antiquities
smuggling, held in Denver, Colorado this past July. NTC is working with
various agencies to support law enforcement efforts related to
importations of antiquities.
advance electronic data
Question. Virtually every other week a company comes into my office
describing the challenges that they face battling counterfeit products.
Many of these counterfeit products are being advertised and sold on-
line. The products are then shipped in small packages, often through
the U.S. Postal Service. This appears to be a very serious problem that
harms both job-creators and consumers. Todd Owen, the Executive
Assistant Commissioner of CBP's Office of Operations, has spoken
publically about the need to collect electronic data in advance
specifically because there is no way to identify and stop counterfeit
products through manual inspection alone.
Does CBP currently have authority to require advance electronic
data from all small package shippers, including the U.S. Postal
Service? If not, what additional authority would CBP need to require
such data?
Answer. For all modes of transportation, CBP has the authority to
collect advance electronic data. With respect to shipments by the
United States Postal Service, however, DHS must exercise its authority
in consultation with the Postmaster General and determine the extent to
which the advance electronic data requirements may be applied to USPS
shipments. CBP continues to work with USPS in obtaining advance
electronic data from multiple countries, as they receive it from other
countries through a Memorandum of Understanding. Currently, CBP
receives limited advance electronic data on international mail packages
from the following countries: Australia, Canada, China, France, Hong
Kong, South Korea, Singapore, Spain, and the United Kingdom.
CBP has played an integral part in working with the Universal
Postal Union (UPU) to amend Article 9 of its convention to adopt a
security strategy that ``. . . includes the principle of complying with
requirements for providing electronic advance data on postal items. . .
.''
CBP has also been actively involved in developing the implementing
provisions of this Article in cooperation with UPU subsidiary bodies
and other international organizations. Along with these efforts, USPS
and DHS have contributed significantly to efforts to: establish
international electronic messaging and data sharing standards agreed to
by the UPU and World Customs Organization (WCO); develop a global
postal electronic data model; and establish minimum security standards
for physical screening and security of all facilities world-wide that
process international mail.
additional mutual recognition agreements
Question. Mutual recognition arrangements, or MRAs, can be very
effective tools to enhance trade facilitation and trade enforcement. As
you know, the United States currently has a number of MRAs in place.
Can you please tell us what additional countries are being
considered for MRAs? Is CBP prioritizing MRAs for countries that are
signatories to existing free trade agreements with the United States?
Answer. CBP has established procedures prior to engaging countries
and their supply chain security programs in joint work plans and Mutual
Recognition Arrangement (MRA) discussions. There must be an established
Authorized Economic Operator (AEO) program of an operational nature for
CBP to engage within these efforts. While it is not a pre-requisite,
CBP does consider trade volume and free trade agreements that we are
signatories with when prioritizing countries and AEO programs to engage
with.
Since 2007, CBP has signed a total of 11 MRAs with the following
countries/
programs: New Zealand, Canada, Mexico, Jordan, Japan, South Korea,
Taiwan, Singapore, the European Union, Israel and the Dominican
Republic. Out of those 11, 7 are with countries that the U.S. has a
free trade agreement in force with.
CBP/Customs-Trade Partnership Against Terrorism (C-TPAT) has signed
joint work plans towards an MRA with the following countries: China,
India, Brazil, Peru and Uruguay. Such joint work plans detail the
process by which C-TPAT and the AEO program will engage in a systematic
and multi-step analysis of each other's program to determine
compatibility and to verify if an MRA is feasible.
customs bill section 303
Question. Section 303 of the customs bill closes a statutory
loophole regarding the seizure and disclosure of information related to
circumvention devices. Can you please provide us with CBP's timeline
for implementation of this new provision?
Answer. CBP is currently drafting regulations to implement section
303 of the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA)
and and is seeking input from rights owners in this regard. CBP
anticipates that it will have completed work on this initiative within
the 1 year period provided for in TFTEA.
new rules implementing drawback simplification
Question. The recently enacted customs bill includes new rules
simplifying the administration of the duty drawback system that will go
into effect 2 years after the date of enactment the bill. As you know,
this is an arcane area of the law that we have been working to simplify
for at least 10 years. Can you share with us the status of your efforts
to write new rules implementing drawback simplification? And how do you
intend to engage stakeholders for their input?
Answer. The drawback community and CBP have a history of working
together. CBP has been engaging the trade community on this effort ever
since passage of the Trade Facilitation and Trade Enforcement Act of
2015 to include the Trade Support Network (TSN) and the Commercial
Customs Operations Advisory Committee (COAC). CBP meets and
communicates regularly with a smaller working group that is part of the
TSN drawback committee to review system requirements and policy.
Furthermore, CBP recently attended the American Association of
Exporters and Importers Drawback Committee meeting on June 8, 2016, to
share progress and seek stakeholder input. CBP continues to meet with
the drawback community. There have been several drawback working group
meetings where CBP and the drawback community discussed the upcoming
implementation. We also have intermittent conference calls with working
group members to discuss specific drawback issues that need to be
addressed.
While the associated regulatory changes are not required until
February 24, 2018, CBP has begun laying the groundwork for promulgating
new regulations to ensure that the deadline is met. CBP Office of
Trade/Policy and Office of Trade/Regulations and Rulings have been
involved since the passage of the Act addressing what regulations would
need to be updated. CBP is coordinating a regulation working group
which will be made up of Trade and CBP personnel to address all
concerns. Initial discussions are planned with this new workgroup and a
timeframe for new regulations are being addressed. This new working
group will address the additional regulations.
information sharing
Question. The new customs law requires CBP to share information and
photos of suspect counterfeit merchandise with rightsholders when CBP
determines that doing so would help determine whether the merchandise
is counterfeit.
How is CBP complying with section 302 of the Trade Facilitation and
Trade Enforcement Act of 2015 (TFTEA)?
Answer. As a general matter, section 302(a) of TFTEA provides that
if CBP suspects that violative Intellectual Property Rights (IPR)
merchandise is being imported, and determines that examination or
testing by the right owner would assist the agency in determining the
existence of a violation, it shall disclose certain information
appearing on the imported merchandise or its retail packaging.
Accordingly, CBP is in the process of drafting regulations that would
implement section 302(a).
In drafting the regulations to implement section 302, however, we
are also taking into account section 499 of the Tariff Act of 1930, as
amended by the Customs Modernization Act, which provides that when
merchandise is detained CBP shall advise the importer of the nature of
any information which, if supplied, might accelerate the disposition of
the merchandise. To this end, we anticipate following the same approach
as was adopted in the recently published final rule on trademark
disclosure (80 Fed. Reg. 56370 (September 18, 2015); see also 19 CFR
Sec. 133.21). These regulations require that the importer be notified
of a detention and given 7 business days in which to present
information that would establish to CBP's satisfaction that the
detained merchandise does not bear a counterfeit mark.
Question. In the previous 2 fiscal years, how many times has CBP
requested assistance from rightsholders to determine the legitimacy of
an import(s)?
Answer. CBP does not systematically track the frequency with which
it requests assistance from right owners at detention. In order to do
so, CBP would need to implement certain system changes to capture the
data. As a general matter, however, CBP often reaches out to rights
holders when additional information would be helpful in determining if
an imported article bears a counterfeit mark or piratical work.
tftea compliance
Question. With the signing of the TFTEA, CBP's authority for
sharing of information with rightsholders from the National Defense
Authorization Act of 2012 was terminated. However, stakeholders have
informed me that CBP continues to cite the terminated authority when
requesting assistance from rightsholders. When does CBP intend to
comply with the new law?
Answer. CBP is aware that subsection 818(g) of the National Defense
Authorization Act (NDAA) of 2012 no longer has force or effect. The
NDAA was one of a number of authorities pursuant to which CBP's
trademark disclosure regulations were promulgated. In order to comply
with section 302 of the TFTEA, CBP will be issuing implementing
regulations as noted above. CBP's recently-promulgated trademark
disclosure regulations, at 19 CFR Sec. 133.21 remain in effect,
however.
importer response
Question. Under current regulations, CBP provides an importer with
up to 7 days to provide information substantiating the legitimacy of
their import(s) before requesting assistance from a rightsholder. In
the previous 2 fiscal years, what is the average time it takes for an
importer to respond to CBP?
Answer. As noted above, CBP does not systematically track rights
holder assistance, nor the average time it takes for an importer to
respond to a request for assistance. As a general matter, however,
anecdotal evidence suggests that most right owners respond to requests
for assistance within a matter of days.
Question. In the previous 2 fiscal years, how many importers have
provided CBP with information that has substantiated the legitimacy of
their import(s) and negated the need to request assistance from a
rightsholder?
In the previous 2 fiscal years, how many importers have provided
CBP insufficient information to CBP to substantiate the legitimacy of
their import(s)?
Answer. As noted above, there is limited tracking of detention
information, and the tracking process varies between ports. However,
many ports maintain detention packets with information on why detained
merchandise was released. If merchandise detained for a possible IPR
violation is released, the log notes may or may not indicate why the
goods were released. Factors leading to release may include, importer-
provided information, IPR owner information, or even a lack of
cooperation on the part of the IPR owner (e.g., they do not timely
respond and we do not have enough information to move from a reasonable
suspicion to probable cause).
voluntary abandonment pilot program
Question. As an alternative to the normal seizure process, CBP has
been piloting a voluntary abandonment program in the express
consignment environment. Under what statutory authority does the
voluntary abandonment pilot program operate?
When a seizure is made in the traditional seizure process, CBP
provides the rights holder with eight data elements. During the
voluntary abandonment pilot, however, CBP has stated that it would be a
violation of the Trade Secrets Act (18 U.S.C. 1905) to provide all
eight elements, and thus CBP only provides five of the eight data
elements to rights holders. Please provide a detailed explanation
regarding why it is permissible to provide all eight data elements to
rights holders under the traditional seizure program but impermissible
when goods are ``stopped'' using the voluntary abandonment pilot.
Answer. CBP developed the Voluntary Abandonment Program as a pilot
program to prevent illicit goods from entering commerce in response to
a significant increase in IPR infringing merchandise being imported
through purchases made on the Internet.
The Voluntary Abandonment Program is based on a different legal
authority than the detention and seizure process. The ability of
importers to abandon their merchandise is governed by 19 U.S.C. 1506,
which requires CBP to make an allowance in duty liability for
merchandise abandoned to the United States, and 19 U.S.C. 1609, which
provides CBP with the authority to forfeit property to which no claim
of ownership is given. CBP regulations on abandonment include 19 CFR
Sec. Sec. 127.12, 127.13, and 158.42. Under the Voluntary Abandonment
Program, both the importer of record and ultimate consignee of the
merchandise must agree to voluntarily relinquish their proprietary
interest in the merchandise.
In contrast to voluntary abandonment, CBP must make an affirmative
determination of infringement during the detention and seizure process.
When CBP detains suspected counterfeit merchandise, the agency
initially only shares information that is not protected by the Trade
Secrets Act with rights holders (the 5 elements listed in 19 CFR
Sec. 133.21(b)(4)). In addition, when CBP needs the assistance of
rights holders to determine whether detained merchandise bears a
counterfeit mark, the agency has special statutory authority to share
additional information that is protected by the Trade Secrets Act with
rights holders (19 CFR Sec. 133.21(c)). Only after CBP has determined
that detained merchandise is counterfeit and seizes merchandise does
the agency provide rights holders with 3 additional data elements
protected by the Trade Secrets Act pursuant to 19 CFR Sec. 133.21(e).
intellectual property rights
Question. It is widely documented that Canada refuses to enforce
intellectual property rights (IPR) for in-transit cargo destined for
the United States.
What is CBP doing to target these shipments and prevent them from
entering the United States?
Answer. CBP has implemented a three-pronged approach to IPR
enforcement incorporating: (1) direct engagement with rights holders
through several roundtable events; (2) increased international
cooperation with foreign governments through bi-lateral agreements
(e.g., China and Singapore) and multilateral partnerships like Asia-
Pacific Economic Cooperation that facilitate joint or simultaneous
enforcement operations; and (3) increased focus on express consignment
shipments which accounted for 52 percent of all IPR seizures in fiscal
year 2015. High risk shipments are identified through CBP's targeting
systems, and interdiction and seizure data provide valuable
intelligence for use in targeting subsequent shipments and tracking
trends. In addition to CBP engagement with Canada Customs counterparts
on IPR-related issues, targeting of high risk in-transit cargo entering
the U.S. via Canada occurs at both the national and the port levels and
through local IPR enforcement operations.
Question. CBP recently released its fiscal year 2015 statistics on
seizures of IPR infringing imports. How many of these seizures are from
cargo transiting through Canada?
Answer. During fiscal year (FY) 2015, CBP's enforcement efforts
resulted in 28,865 IPR seizures which represented a 25 percent increase
over FY 2014. CBP was able to identify 109 seizures or 0.38 percent
that were sourced from Canada (i.e., exported from (including
transitioning through) or made in Canada).
exclusion order proceedings
Question. Given the critical role that intellectual property plays
in our economy and the emphasis that the Congress has placed on
supporting CBP's role to stop infringing products at the border, I am
interested in examining CBP's efforts to increase the transparency,
efficiency, and effectiveness of the enforcement of section 337
exclusion orders.
Many stakeholders have proposed that CBP, when investigating the
applicability or inapplicability of an ITC exclusion order to a
particular product, institute inter partes proceedings rather than ex
parte proceedings in which rightsholders may not participate. I would
support such inter partes proceedings. I understand that CBP is in the
process of developing such a proposal. Please provide a detailed
explanation of the proposal, including its development progress and
CBP's plans for finalization.
Answer. CBP is drafting a Notice of Proposed Rulemaking (NPRM) to
amend part 177, CBP Regulations (19 CFR part 177) by creating a new
subpart C to implement an inter-partes proceeding in respect of ruling
requests submitted to the agency in connection with the administration
of exclusion orders issued by the U.S. International Trade Commission
(ITC).
jurisdiction
Question. As you know, the ITC issues an exclusion order based on
an extensive legal and factual record developed with the benefit of an
adversarial process, expert testimony, outside counsel, the expertise
of an Administrative Law Judge, and review by the Commission. Some have
argued, therefore, that complex legal and factual issues regarding
allegedly redesigned products are more appropriately directed to the
ITC rather than CBP. What are your views?
Answer. The ITC has advised that section 337 expressly places the
responsibility for the enforcement of exclusion orders expressly with
the Secretary of the Treasury, and as delegated, to the Commissioner of
CBP. Accordingly, CBP is of the view that questions concerning the
enforcement of exclusion orders, including redesigns, are appropriately
directed to CBP. In order to enforce exclusion orders, the Regulations
and Rulings Directorate, Office of Trade, has attorneys who are members
of the patent bar and familiar with 337 practice, and are able to
adjudicate the admissibility of articles potentially subject to ITC
exclusion orders. CBP understands that questions about redesigned
articles can also be addressed to the ITC but notes that CBP's NPRM
proposal would complement those procedures.
current regulatory environment
Question. Under the current regulatory environment, how do CBP and
the ITC work together to administer exclusion orders?
Answer. CBP meets regularly with the ITC to review specific
exclusion orders as well as to discuss general matters relating to the
enforcement and administration of exclusion orders. Following the
issuance of an exclusion order, the ITC provides CBP with electronic
copies of the administrative record. When making infringement
determinations, CBP reviews the administrative record at the ITC,
including the Administrative Law Judge's Initial Determination and the
Commission Opinion. In situations where the record is unclear CBP
requests assistance from the ITC regarding the record; however, if
there are no questions concerning specific findings in the ITC record,
CBP does not contact the ITC inasmuch as the ITC has made it clear that
CBP, not the ITC, is responsible for infringement determinations at the
border.
Question. What are the benefits and the limitations of the current
regulatory environment, in which both CBP and the ITC have certain
authorities and obligations?
Answer. The current system functions well given that CBP, as a
border agency, is best placed to make admissibility determinations. The
disadvantage of the current system, however, is that CBP determinations
can be challenged in a forum where neither the ITC nor the complainant
are represented. Accordingly, as a matter of public policy the current
system could be improved as noted below in the response to the
following question.
Question. What can be done to improve the effectiveness and to
increase the efficiency of the administration of exclusion orders?
Answer. From CBP's perspective, one way to improve the
effectiveness and to increase the efficiency of the administration of
ITC exclusion orders is to establish an inter-partes procedure at CBP
to adjudicate rulings requests submitted to the agency in the post-
issuance phase. The ITC Trial Lawyers Association, among others, has
supported the concept. As noted above, CBP is working on a notice of
proposed rulemaking to address this concern.
______
Questions Submitted by Hon. Ron Wyden
trade enforcement act enforce provisions
Question. One of my top priorities in the Trade Enforcement Act is
the Enforce procedures to combat evasion of anti-dumping and
countervailing duty orders. The Enforce provisions represent years of
work by this committee, starting with a sting operation I undertook as
chairman of the Trade Subcommittee to reveal the brazen evasion of U.S.
trade laws by foreign, often Chinese, exporters. Although CBP has put
in place new initiatives to address evasion, it hasn't been enough, as
was evident from a recent filing of U.S. Steel describing the ease with
which importers can find foreign exporters willing to evade U.S. laws.
If trade cheats evade our laws, domestic businesses are harmed, making
our trade remedy laws all but useless in protecting American jobs. The
Enforce provisions, if robustly implemented, can go a long way to
preventing this result. It is important both to get it done now, and to
get it done right.
Can you describe how CBP plans to implement the Enforce provisions
within the 180-day deadline, and what steps it has taken to engage
stakeholders, including the domestic industries directly impacted by
evasion?
Answer. CBP has drafted regulations implementing section 421 of
title IV of the TFTEA (Enforce and Protect Act, EAPA). The interim
final rule implementing those regulations was published within the
statutory deadline, on August 22, 2016, and parties have 60 days within
which to provide comments to CBP. CBP has engaged, and will continue to
engage impacted stakeholders throughout the implementation process.
CBP's West Coast Trade Symposium addressed TFTEA during the General
Session on opening day and discussed title IV in detail during panel
discussions on day 2. CBP has also participated in multiple meetings
and discussions with various trade groups including the American
Institute for International Steel and the Retail Industry Leaders
Association. Furthermore, within CBP's Trade Remedy Law Enforcement
Directorate, a Trade Enforcement Task Force has been stood up that will
initially administer the new EAPA provisions and coordinate across CBP
resources to ensure timely and transparent management.
Question. In particular, the Enforce process should be transparent
and allow all interested parties an opportunity to meaningfully
participate. Can you assure me that CBP shares this priority and
describe how the Enforce procedures will reflect this?
Answer. CBP agrees that the EAPA allegation process should be
transparent and encourage participation. During the investigation
phase, CBP will be reaching out to all interested parties with
questionnaires and other forms of inquiries in order to gather
pertinent information related to the investigation. Also, all parties
to the investigation will be informed of CBP's decision to investigate
and will be provided ample opportunity to contribute evidence on the
record.
``e-allegations'' system
Question. Up to now, CBP has used the ``e-allegations'' system to
accept allegations of evasion. Can you describe to me how that system
differs from the ENFORCE process, as you see it? For example, what
opportunities will interested parties have to participate in the
investigations once they are initiated?
Answer. CBP will create a separate track in the existing e-
allegations system in order to accommodate the open and transparent
processing of EAPA allegations. The previous system allowed for
anonymous submissions; however, under the new EAPA allegation
processing guidelines, parties to the investigation will be notified by
CBP and will be given the opportunity to provide documentary evidence
to be placed on the record.
revenue collection
Question. A fundamental task of CBP is to collect revenue. CBP's
collection of tariffs on imports is the second largest source of
revenue for the Federal Government. In CBP's own estimation it
collected 98.61% of import revenue owed in 2015. Over 98% sounds pretty
good, until you realize that means over $400 million in duties went
uncollected in a single year. Just think what that means over 2 years,
or 10. In addition, CBP's revenue collection protects U.S. businesses
and workers. Much of the uncollected revenue comes from foreign goods
subject to anti-dumping and countervailing duty orders put in place to
protect U.S. manufacturers from unfair trade practices.
Congress said in the Trade Enforcement Bill that revenue collection
is a priority trade issue. What is CBP doing to make revenue collection
a priority, particularly when that revenue is also collected to protect
American workers and business?
Answer. Revenue protection is one of the oldest missions of CBP,
dating back to 1789 when the U.S. Customs Service was established. For
many years, revenue was considered a Priority Trade Issue (PTI), and
the Trade Facilitation and Trade Enforcement Act of 2015 once again
elevates revenue to PTI status. As such, the Drawback and Revenue
National Targeting and Analysis Group (NTAG) located in Chicago, IL,
focuses its efforts on applying risk management principles to target
misclassification, undervaluation, and other material revenue risks,
while also addressing drawback policy and enforcement issues to prevent
the over-refunding of duties. In fact, the NTAG uses Trade Compliance
Measurement statistics as one means to identify areas in which duties
are owed, and implements corrective action aimed at collecting unpaid
duties. CBP has also established a Trade Enforcement Task Force to
focus on issues involving anti-dumping and countervailing duty (AD/CVD)
evasion, which includes a renewed focus on ensuring AD/CVD duties are
collected.
centers for excellence and expertise (cees) authority
Question. The Trade Enforcement Act reflects the priorities of
Congress, and is the result of a great deal of deliberation on how we
can best protect U.S. revenue and ensure that American businesses and
workers aren't harmed by unfair and illegal trade practices. In some
cases, this means significant reorganization that is also meant to
change the way that CBP approaches trade enforcement. It is critical
that CBP does not think it can merely change titles and call it a day
for implementing these changes. For example, the Centers for Excellence
and Expertise (``the CEEs'') are sector-based centers of trade
enforcement and facilitation. The CEEs reflect our highly sophisticated
economy--we shouldn't have folks sitting at ports looking at shipments
of steel, for example, not knowing what other shipments may be coming
in at other ports of the same product.
We need experts in the product, with knowledge of what is going on
across our ports of entry. Leaders of the CEEs need to have complete
authority over those reporting to them, and the tools to be effective.
How are you ensuring that this is happening?
Answer. The Centers of Excellence and Expertise (Centers) represent
one of CBP's modernization efforts to better align the trade component
with the current business models of the importing community. As such,
the Centers are organized on an industry basis, applying account-based
principles, in which the agency works with the account as a whole
rather than the traditional focus on individual transactions.
Additionally, the Centers have national authority to make trade
decisions and determinations, and the trade staff for a Center is
located at various ports of entry (POE) in order to ensure transparency
and visibility into shipments and products being imported at all
locations. This means that all of an importer's trade transactions are
being processed by one Center, which provides uniformity and
predictability to the importer while also positioning CBP to better
understand the global activities of companies and the industry. CBP can
then use this enhanced knowledge obtained through the Centers to
strengthen enforcement methods on a national basis, rather than on a
port basis. CBP is fully dedicated to ensuring that this transformation
effort serves as the premier model for trade enforcement and
facilitation; that the Centers are fully and permanently staffed with
trade personnel; and that our automated systems provide the flexibility
and capability for national processing. From an organizational
perspective, the Centers are national POE for trade processing with the
permanent staff under their chain of command located across many POE
across the Nation.
de minimis thresholds
Question. The Trade Enforcement bill didn't only include
enforcement provisions, it also included a provision to help small
businesses that has long been a priority of mine. It raises the de
minimis threshold for small shipments to be exempt from customs duties
and other filing requirements--from $200 to $800. There is a vibrant
economy of small businesses thanks to the spread of the Internet and
platforms like eBay, Etsy and others, and the best way for us to
support them is to cut out the red tape. Not everyone can hire a
customs broker to help them import raw materials, or export to their
customers abroad. I hope that the U.S. example will encourage other
countries to raise their de minimis thresholds. To achieve these goals,
the U.S. threshold increase must be meaningful.
Will CBP or any other agency place any requirement on imports under
the new threshold that did not apply when it was at $200?
Answer. CBP has been engaged with the trade community and our
Partner Government Agencies (PGA) concerning the TFTEA section 901, de
minimis provision. CBP has implemented only the value increase from
$200 to $800 at this time. No other requirements were changed. CBP has
been gathering comments from our PGA community and providing
information and education about the de minimis provisions for each PGA.
CBP will not place any additional requirements for the new value
threshold. At this time, we are not aware of any new requirements from
another PGA.
forced labor prohibition
Question. In the Trade Enforcement Act, thanks to the leadership of
Senator Brown, we closed an egregious loophole that could have allowed
products like these into the United States. Now we can say that the
product of forced labor is never permitted here. The Trade Enforcement
Act has brought some welcome attention to the prohibition, and I am
pleased to see CBP's actions on two orders related to products made in
China with forced convict labor, including soda ash. However, the
renewed interest in the provision has raised questions from
nongovernmental organizations and U.S. importers on how the forced
labor prohibition will be implemented going forward.
What outreach is CBP undertaking to provide guidance to these
stakeholders and partner with them on how the prohibition will be
enforced going forward?
Answer. CBP is actively engaging with Non-Governmental
Organizations (NGOs), industry stakeholders, foreign producers, Federal
partners, and others, urging them to come forward with information
regarding suspected use of forced labor with respect to goods imported
into the United States.
Because many NGOs are uniquely positioned to gather information in
places where CBP do not have the authority to operate, by the end of FY
2016, the CBP Office of Trade (OT) will send a forced labor Fact Sheet
to 93 NGOs who are actively engaged in forced labor and forced child
labor issues and leverage the CBP Centers of Excellence and Expertise
to meet with other interested stakeholders.
As part of our outreach to industry stakeholders, CBP provided
three breakout sessions on forced labor enforcement during the recent
CBP West Coast Trade Symposium, in May 2016. The breakout sessions were
attended by domestic industries, importers, customs brokers, customs
attorneys, and members of the press. Furthermore, OT has met with, or
provided information to, the following groups: Center for American
Progress; Central American Sugar Association; Chicken of the Sea;
Deloitte; Environmental Defense Fund; Federal Human Capitol; Food
Marketing Institute; Global Forum on Responsible Business Conduct,
OECD; Honduran Embassy; Institute for Business and Human Rights of
Georgetown Law; IO Sustainability; Laogai Research Foundation; LCDR;
National Retail Federation; Nestle Corporate Affairs; Pelagic Data;
Resources for the Future; Royal Thai Embassy; Sodexo; Stove Boat;
Stimson; Target; U.S. Council for International Business; U.S. Fashion
Industry Association; Wal-Mart; Wasserman DC; White House Council on
Environmental Quality; Worker Rights Consortium; and World Wildlife
Fund.
CBP is also engaged with foreign producers, interested importers,
and trade groups to explain the impact of the repeal of consumptive
demand and the process of any subsequent CBP enforcement action or
detention.
In addition, CBP is collaborating with the Department of State,
Department of Labor, and ICE/HSI to present an informational webinar on
forced labor to embassy Economic and Labor Officers.
gao's recommendation
Question. Near the end of the George W. Bush administration, the
Government Accountability Office conducted an investigation into CBP's
approach to revenue collection and found some troubling information.
First, the GAO found that Homeland Security auditors had not conducted
any assessments of high-risk areas within customs revenue functions and
did not perform any audits focused on improving these functions.
Second, CBP had not determined how many staff and what skills it needs
in customs revenue positions since the agency was moved from the
Department of Treasury into the Department of Homeland Security, when
Congress created the department in 2003.
How has CBP responded to this criticism by the GAO and implemented
the GAO's recommendations in these two areas?
Answer. The Government Accountability Office (GAO) report 07-529
(job code 320470), entitled Customs and Border Protection Needs to
Improve Workforce Planning and Accountability, included two
recommendations for CBP, both of which were closed as implemented, and
one recommendation directed to the Department of Homeland Security
(DHS) Office of Inspector General (OIG).
In recommendation 1, GAO provided that the Commissioner of CBP
should develop a strategic workforce plan that aligns its human capital
efforts with its objectives related to performing customs revenue
functions. In response, U.S. Customs and Border Protection (CBP)
adopted several documents that together contain the elements of a
strategic workforce plan. In 2009, CBP issued a Resource Optimization
Model that assists management in determining the optimal level of staff
to meet the performance outcomes and goals of CBP's trade mission. In
addition, CBP issued a Human Capital Strategy for Revenue Positions
Fiscal Years (FY) 2010-2011, and CBP Trade Strategy FY 2009-2013, both
of which address the principles outlined in GAO's recommendation for a
strategic workforce plan. Finally, CBP officials discuss quarterly
updates on the status of customs revenue staffing to evaluate progress
toward human capital goals.
In recommendation 2, GAO suggested that the Commissioner of CBP
establish specific customs revenue performance measures and targets as
well as evaluate, track, and report performance measures in annual
agency Performance and Accountability Reports for congressional and
public oversight of customs revenue functions. In response, in FY 2009,
CBP developed two new measures for the Department of Homeland
Security's FY 2010-2011 Annual Performance Plan: (1) the percentage of
estimated revenue losses due to non-compliance with trade laws,
regulations, and agreements, and (2) estimated revenue losses due to
non-compliance with trade laws, regulations, and agreements (in
millions). The two measures are tracked and monitored in the DHS Future
Years Homeland Security Program database system and were submitted for
inclusion in the FY 2011 Congressional Budget Justification.
Recommendation 3, in GAO-07-529, was directed to the DHS OIG and
there was no action required of CBP.
single transaction bond errors
Question. In response to concerns about the rampant evasion of
anti-dumping and countervailing duties employed by foreign suppliers,
CBP told this committee that increasingly requires importers to post a
``Single Transaction Bond'' in order to improve the likelihood that CBP
can collect any duties that are determined to be owed. In June of 2011,
the Office of the Inspector General determined that CBP did not have
adequate controls over its Single Transaction Bond process.
Specifically, CBP could not identify the number of these bonds it
required in a given year. Many of the bonds were inaccurate or
incomplete, and there was no consistent policy as to when the bonds
should be required. Furthermore, the Inspector General determined that
more than half of the single transaction bonds it reviewed had errors
that impact CBP's ability to collect on the bond.
Can you describe to the committee how CBP responded to the
Inspector General's criticism and recommendations?
Answer. In response to the Office of Inspector General's
recommendations, CBP developed E-Bond, which centralizes CBP's
management of Single Transaction Bonds (STBs), and helps to facilitate
the collection of funds secured by STBs. E-bond is a web-based bond
application which serves as the platform through which sureties provide
STBs when both an entry and entry summary are filed in CBP's Automated
Commercial Environment (ACE). E-bond became operational in January
2015, and since then, the number of inaccurate/incomplete STBs (among
the bonds filed electronically) has decreased.
In addition, in May 2012, CBP issued guidance to CBP personnel on
the use of STBs to protect against potential losses of revenue with AD/
CVD. This guidance discusses when the bonds should be required and how
to determine the amount of the STBs to protect the revenue.
Question. The Inspector General said that of the $12 billion in
Single Transaction Bonds CBP accepted in 2009, two thirds--$8 billion--
of them contained errors that could result in non-collection. What do
you think those numbers are today--how many Single Transaction Bonds
were accepted in 2015 and how many of them are likely to contain the
types of errors the Inspector General identified?
Answer. On January 3, 2015, CBP deployed e-Bond processing in the
Automated Commercial Environment (ACE). E-Bond enables sureties or
their designated agent to electronically transmit a Continuous or
Single Transaction Bond (STB) to CBP and receive a positive response
from ACE within 10 or 15 seconds, while providing a centralized view of
the number of bonds filed via e-Bond. E-Bond provides a number of
validations around the bond information submitted to ACE that ensures
the validity and integrity of the bond prior to ACE allowing cargo to
be released. These validations help to greatly reduce or eliminate many
of the items the Inspector General identified that could result in non-
collection. In 2015, 107,030 STBs totaling $1,246,605,154, were filed
through ACE's e-Bond program. Following July 23, 2016, when ACE cargo
release becomes mandatory, all STBs will be required to be filed via e-
Bond, meaning that the full universe of all STBs filed after July 23,
2016 will be available in e-Bond. CBP anticipates that the mandatory
use of e-Bond will continue to lead to a significant improvement in the
quality of STBs.
``port shopping''
Question. Additionally, what measures have you taken to ensure that
use of these bonds is consistent across ports--so that unscrupulous
foreign suppliers can't ``port shop''--and that these bonds cover the
full amount of the potential liability and can actually be collected?
Answer. CBP employs targeting systems to alert all ports when one
port requests an STB to address revenue threats involving AD/CVD, so
that STBs will be required uniformly at each port for the particular
merchandise at issue. CBP has issued internal guidance on the amount of
the STBs to ensure that these bonds cover the full amount of the
potential liability.
unpaid duties
Question. Can you provide recent statistics on the overall amount
of unpaid duties actually covered by bonds and the collection rate?
Answer. $642.7 million in open duty bills is currently associated
with bonds which have not been exhausted (i.e., collections from the
surety still likely/possible). $2.5B in open duty bills is currently
associated with bonds where the bond has already been exhausted (i.e.,
surety has paid).
Collections rate for FY 1986-FY 2015 is 99.5%. Calculated as
(current open debt + amounts written off)/total collections.
Question. The Inspector General said that of the $12 billion in
Single Transaction Bonds CBP accepted in 2009, two thirds--$8 billion--
of them contained errors that could result in non-collection. What do
you think those numbers are today--how many Single Transaction Bonds
were accepted in 2015 and how many of them are likely to contain the
types of errors the Inspector General identified?
Answer. On January 3, 2015, CBP deployed e-Bond processing in the
Automated Commercial Environment (ACE). E-Bond enables sureties or
their designated agent to electronically transmit a Continuous or
Single Transaction Bond (STB) to CBP and receive a positive response
from ACE within 10 or 15 seconds, while providing a centralized view of
the number of bonds filed via e-Bond. E-Bond provides a number of
validations around the bond information submitted to ACE that ensures
the validity and integrity of the bond prior to ACE allowing cargo to
be released. These validations help to greatly reduce or eliminate many
of the items the Inspector General identified that could result in non-
collection. In 2015, 107,030 STBs totaling $1,246,605,154, were filed
through ACE's e-Bond program. Since July 23, 2016, when ACE cargo
release became mandatory, all STBs are required to be filed via e-Bond.
CBP anticipates that the mandatory use of e-Bond will continue to lead
to a significant improvement in the quality of STBs.
information sharing on counterfeit products
Question. The import of counterfeit products is a growing threat to
U.S. consumers and businesses--but trade cheats have become so
sophisticated that it can also be a challenge for CBP to accurately
identify fake drugs, computer chips, and even sneakers. In the Trade
Enforcement Act, we gave CBP authority to share information about
suspected counterfeit products with those who are best equipped to
identify them--the U.S. companies who make the real thing.
Can you provide an overview of how CBP has used this authority
already? And, can you provide examples of how you expect it to further
CBP's detection of counterfeits in the future?
Answer. Section 302(a) authorizes CBP to disclose information
appearing on merchandise or its retail packaging. Pursuant to earlier
authority provided by subsection 818(g) of the National Defense
Authorization Act (NDAA) of 2012, now repealed, CBP has been disclosing
such information at the time of detention, either by means of digital
images or by making available a sample of the article concerned, since
the interim final rule on trademark disclosure was published in 2012
(See 77 Fed. Reg. 24375). Prior to supplying the information to the
trademark owner, the importer is notified and given 7 days in which to
respond with information that would establish that the detained
merchandise does not bear a counterfeit mark, though rarely is the
importer successful in establishing this to CBP's satisfaction. CBP
considers that the ability to disclose ``information appearing on,''
has been of significant help in establishing the probable cause
required to seize merchandise.
As discussed in the response to previous questions, CBP is drafting
regulations to implement section 302 of the customs bill and to require
the disclosure of ``information appearing on'' in connection with
suspect copyright and Digital Millennium Copyright Act violations
(DMCA), subject, in the case of suspect copyright violations, to
notifying and affording the importer an opportunity to provide
information in accordance with statutory authority that would
accelerate the disposition of the detention.
CBP anticipates that the ability to disclose information to
copyright owners will greatly assist the agency in making copyright
seizures, just as it has with trademarks. In contrast, CBP considers
that it is unlikely that the disclosure authority will result in an
appreciable increase in DMCA seizures, given that in the case of mod
chips and other circumvention devices the article itself constitutes
the probable cause needed to seize.
illegal logging
Question. Illegal logging doesn't just hurt the environment, it
hurts sawmill workers in Oregon and around the country who have to
compete with an influx of cheap stolen wood. I have fought for years to
stop trade in illegally harvested timber. As you know, the enforcement
legislation Congress passed this year requires Customs agents to be
trained in detection and seizure of illegally traded fish, wildlife,
and plants.
Will you commit to work with experts such as the World Wildlife
Fund and the Environmental Investigation Agency within the next 30 days
to develop an effective training module on illegal logging and begin
trainings, so that America's port officers are fully equipped to deal
with illegal trade in wood products?
Answer. U.S. Fish and Wildlife Service (FWS) and Animal and Plant
Health Inspection Service (APHIS) are the agencies with both the legal
authority and expertise specific to wood and wood products under the
Lacey Act. Because of this, CBP defers to FWS and APHIS to inspect and
make determinations on the admissibility and origin of imported wood
that may have been sourced from illegal logging. For these reasons,
non-governmental organizations must work through FWS and APHIS to
develop any training module on illegal logging. In turn, CBP will work
with FWS and APHIS on training to ensure operational awareness of
illegal logging at ports of entry for CBP personnel.
unpaid duties from china
Question. In your testimony, you highlight recent successful
criminal investigations of AD/CVD evasion, which included the illegal
evasion of $180 million in duties on Chinese honey, $25 million in
duties on paper from China, and $25 million on aluminum extrusions from
China.
How much of these unpaid duties has CBP collected to date?
Answer. CBP supported these three ICE HSI criminal investigations
of AD/CVD evasion which disrupted illegal distribution channels of
imported goods, and resulted in criminal indictments, convictions, and
monetary fines. Operation Honeygate resulted in the imprisonment of
four individuals, the conviction of two companies, the seizure of 828
drums of honey, and monetary fines of over $7 million. The lined paper
investigation resulted in the indictment of four individuals and $1.75
million in fines (the criminal prosecution and related civil actions
are still ongoing). The aluminum extrusions investigation resulted in
the conviction of four individuals and one company, the seizure of 14
containers of aluminum extrusions and $493,400 in bank accounts, and $4
million in fines.
To the extent that liability for AD/CVD duty payments by the
importers of record was not covered by the convictions, CBP seeks to
collect any duty payments from the importer of record and surety when
possible. However, due to the criminal nature of these importations,
which were set up with shell companies with no assets and other schemes
specifically to avoid duty payments, it can be challenging for CBP to
collect duties from importers beyond any amounts covered by the
importation bonds.
e-cigarette importation
Question. As you know, starting January 1, 2016, the United States
began to collect customs data on e-cigarettes, and the liquids used in
e-cigarettes, for the first time. This follows my request to Chairman
Broadbent of the U.S. International Trade Commission (USITC) asking
that the U.S. Government begin tracking the imports of e-cigarettes and
related products, such as the nicotine liquids used in
e-cigarette devices. On October 20, 2015, the interagency committee
responsible for establishing these tracking codes agreed to this
request and approved the establishment of five new codes that track
these imports.
After 3 months, the data thus far raises some important questions.
First, China accounts for roughly 85% of all imports, but e-cigarette
devices and liquids come into the U.S. from two dozen other countries.
Second, the value of all e-cigarette-related imports being reported is
running in the neighborhood of $20 million a month. For a U.S. retail
e-cigarette market that is estimated to be in the range of $3.5 billion
a year, the value of imports being reported doesn't appear to be
capturing everything that's coming into the United States.
What steps does CBP take to ensure that shippers and importers
properly report these imports from all of these countries, that they
declare the correct customs value, and that the right duties are paid?
Answer. CBP has worked with the International Trade Commission 484f
Committee to implement the additional Harmonized Tariff Schedule (HTS)
commodity classification codes within our systems. Commercial imports
are largely processed by customs brokers with responsibilities for
declaring goods for proper classification and valuation. CBP can react
to specific, actionable intelligence for non-compliance and conducts
post-entry random sampling across all commodities to ensure broad
compliance.
e-cigarette codes
Question. When new statistical reporting numbers are put in place--
in this case, there are five new e-cigarette-related codes--what steps
does CBP take to ensure that its own customs officers are aware of and
implementing the new codes?
Answer. New HTS commodity codes are implemented directly in our
import processing systems. Regulatory requirements for additional
Partner Government Agency reporting can be flagged in our system
against specific HTS codes, thereby informing both CBP officers and
filers of the additional reporting requirements. Specific enforcement
and compliance issues are handled through our targeting systems.
chinese honey
Question. I was pleased to hear that ICE/CBP recently seized
132,000 pounds of Chinese honey that had been fraudulently imported
into the United States as Vietnamese honey. CBP labs later confirmed
that there was a 99 percent chance this honey had actually originated
in China. I've also heard, though, that a study commissioned by
domestic beekeepers estimates that 90 million pounds of Chinese honey
was fraudulently imported last year as being honey from Vietnam, India,
Thailand, and Taiwan, and thereby avoided about $87 million in dumping
duties. Ninety million pounds is roughly one-fourth of all U.S. honey
imports last year.
This seems exactly like the duty evasion schemes Congress intended
CBP to stop through the Enforce provisions in the Trade Enforcement
Act. Is CBP planning on investigating this allegation?
Answer. CBP, in coordination with U.S. Immigration and Customs
Enforcement (ICE), Homeland Security Investigations (HSI), is
continuing to actively target illegally transshipped shipments of honey
subject to the antidumping duty order on honey from China. Over the
past several years, CBP has detected a substantial amount of illegal
transshipment of Chinese honey through third countries and the
misclassification of honey as syrup and other sweeteners. CBP has used
a variety of enforcement techniques to enforce this antidumping duty
order, including nationwide and port-specific special operations,
seizures, single transaction bonds, and lab testing, as well as
supporting HSI's criminal investigations. CBP's enforcement efforts on
honey from China have contributed to several successful HSI criminal
investigations, including Operation Honeygate.
CBP recently held three extensive meetings with domestic
beekeepers, honey importers, honey packers, scientists, and other
interested parties to obtain in-depth trade intelligence on honey
imports, new evasion schemes (including the scheme referenced in the
question), and the world honey market. Representatives from ICE HSI,
the Food and Drug Administration, and the U.S. Department of Justice
also participated in these meetings. CBP is using the intelligence from
these meetings to further improve and expand its targeting of high-risk
honey shipments.
testing of honey imports
Question. Couldn't CBP reduce the widespread country-of-origin
fraud reported in the domestic beekeepers' study by significantly
increasing its testing of honey imports from these four countries?
Answer. CBP regularly tests honey imports to determine whether they
are subject to the antidumping duty order on honey from China. CBP will
continue to test honey imports as part of its active targeting of
illegal transshipment of honey from China. These efforts are an
integral part of CBP's strategy to detect high-risk activity, deter
non-compliance, and disrupt fraudulent behavior on imports subject to
AD/CVD. CBP has increased targeting and testing of high risk honey
imports to determine whether they are subject to the antidumping duty
order on honey from China.
Question. Does CBP now have the technology and other resources it
needs to undertake a comprehensive testing regime for imported honey?
Answer. For over 15 years, the CBP Laboratories have been using the
trace metal profiles in honey determined by Inductively Coupled Plasma
Mass Spectroscopy (ICP-MS) for country of origin verifications. Using
multivariate discriminant and canonical statistics, the trace metal
profiles obtained by ICP-MS are compared to our honey database which
consists of honey reference samples obtained from multiple countries of
interest, including Vietnam, India, Thailand, and Taiwan. However,
additional database samples are always needed from these countries, and
from other countries of interest, in order to provide maximum support
to honey transshipment investigations.
In addition to ICP-MS, CBP Laboratories also use Isotopic Ratio
Mass Spectrometry (IRMS), High Performance Liquid Chromatography
(HPLC), microscopy, moisture content and color analyses for enforcement
of both honey AD/CVD and honey Harmonized Tariff Schedule
classification. The honey industry has recently suggested that Nuclear
Magnetic Resonance (NMR) technology could be used to assist in the
determination of both country of origin and potential adulteration of
honey. CBP has NMR instruments that could be used to investigate and
validate industry's claims that it can be used for determining
adulteration. However, country of origin determinations using NMR also
require a honey reference database, and CBP's current honey reference
database is not suitable for NMR testing. A completely new collection
of honey reference samples would need to be obtained in order to add
the honey industry's suggested approach to CBP's testing protocols.
chinese bonds
Question. For the past 4 years, Members of Congress--myself and
Senator Thune included--have been trying to get an accurate accounting
of the approximately $628 million worth of bonds that secure
antidumping and countervailing duties owed on Chinese imports of honey,
garlic, crawfish, and canned mushrooms. We've written numerous letters,
legislated reporting requirements through appropriations measures, and
secured a commitment from you to develop a strategy to identify and
collect on these bonds. Yet, we do not have any clearer picture of
these bonds now than we did in 2012.
Please tell me when CBP will provide an accounting of these bonds,
specifically in accordance with the mandate from the Consolidated
Appropriations Act of 2016, which requires CBP to make available to
Congress and the public:
``. . . a reasonably detailed inventory, including disposition,
of single-entry customs bonds received by CBP as security on
entries subject to any antidumping duty orders on imports of
honey, fresh garlic, crawfish tail meat, and certain preserved
mushrooms from October 1, 1998 through September 20, 2007. The
inventory shall include details on each bond for which summary
materials were previously provided to Congress, including the
date of the bond, the orders against which the bonds were
posted, and whether it is in litigation, pending collection or
not collectible.''
Answer. Assembling a detailed accounting of this type would be
extremely resource intensive. CBP would have to provide individualized
information concerning every STB it has received on imports of honey,
fresh garlic, crawfish tail meat, and certain preserved mushrooms for
entries from October 1, 1998, through September 30, 2007. Bonds are not
sorted by commodity, so this would essentially require CBP to locate,
examine, research, and analyze each individual STB it has received from
October 1, 1998, through September 30, 2007, whether there was a bill
associated with that entry or not. This would require a manual review
of tens of thousands of entry files created between October 1, 1998,
and September 30, 2007, some of which are located in Indianapolis under
the Office of Finance and many of which are scattered at approximately
50 ports, offices, and/or Federal Records Centers. Some of these files
are up to 18 years old and many have been destroyed pursuant to
established records retention policies. Identifying the universe of
entry files would be extremely time consuming. Then, locating the bonds
would be even more time consuming (both for the Office of Finance and
Office of Field Operations). After that, CBP would have to physically
examine each bond to verify its applicability, and then perform a
manual accounting of the events that transpired with each individual
bond. Finally, entry and bond information would need to be manually
entered into a new database correlating bond and debt information. As a
CBP official testified, ``accurately responding to such a request would
be practically impossible and any attempt to do so would require
personnel resources far beyond our present capabilities and CBP's
ongoing mission priorities would be severely compromised,'' including
the enforcement and collection of AD/CVD on many other commodities.
Moreover, a manual review of this scope is highly unlikely to
result in greater collections by CBP. CBP has provided a detailed
accounting of unpaid AD/CVD debts and the resources CBP has committed
to collecting as much of these debts as possible to the House and
Senate Appropriations Committees each year since Fiscal Year 2012. As
CBP reported last year, collection from the surety bond(s) has been
completed for a significant majority of the debts, while CBP continues
to work with the Justice Department to aggressively pursue payment from
the surety for other debts.
comprehensive plan on trade enforcement and facilitation
Question. Section 105 of the Trade Enforcement Act requires CBP to
develop a comprehensive multiyear plan on joint strategic plan on trade
enforcement and trade facilitation measures every 2 years, with the
first plan due 1 year after the date of enactment.
In light of this requirement, and with respect to trade
facilitation, can you please describe the activities that your office
is currently developing in order to keep pace with technological
innovation?
Answer. The Automated Commercial Environment (ACE) is CBP's
signature effort to incorporate modern technological capabilities to
improve the flow of cargo into and out of the United States. By the end
of 2016, ACE will become the Single Window--the primary system through
which the trade community will report imports and exports and the
government will determine admissibility. Through ACE, processes will be
streamlined for industry and government and paper will be greatly
reduced; following the implementation of ACE, all forms can be
submitted electronically. Interactions between CBP, members of the
trade community, and Partner Government Agencies will be automated to
enable near real-time decision making, reducing costs for business and
government. Federal agencies will now have earlier, automated
visibility to shipment data, expediting their import or export
assessments at the border and speeding the flow of legitimate trade
while also improving security, health, and safety of cargo. ACE also
promotes improved data quality which further supports risk management
and contributes to streamlined processing.
Within CBP, we are constantly scanning the trade and business
environment, leveraging numerous information sources, and engaging the
technology and trade communities to stay abreast of developments and
innovations that could potentially enhance the fulfillment of CBP's
trade mission. Recently, CBP engaged with innovators in Silicon Valley
to flag priority areas where we see potential the technology enablers
to have a positive impact for not only for CBP but also for other
customs agencies and the trade community.
u.s. harmonized tariff schedule
Question. Through the inter-agency consultation process in
developing the joint strategic plan, please describe any activities CBP
will conduct with the United States International Trade Commission
(USITC) in order to ensure the U.S. Harmonized Tariff Schedule keeps
pace with technological innovation and avoid import/customs delays for
new technology products?
Answer. CBP currently works closely with the United States
International Trade Commission (ITC) on amendments to the Harmonized
System (HS), as part of one delegation to the World Customs
Organization Harmonized System Committee Review Subcommittee (RSC). CBP
will continue to solicit from the trade community, as well as from
subject matter experts within CBP, areas of the HS that require
updating, and work with ITC to propose necessary amendments to the HS.
CBP has proposed to increase the frequency of its meetings between the
offices within CBP and ITC that are responsible for updates to the HS
and the U.S. Harmonized Tariff Schedule (HTSUS), in order to be more
proactive in this area. ITC has published a notice of investigation,
``WCO Sixth Review Cycle: Request for Proposals to Amend the
International Harmonized System for Implementation in 2022,'' on
November 9, 2015, soliciting comments from the trade for amendments to
the 2022 HS 80 Fed. Reg. 69248. On June 18, 2015, CBP published a
general notice, ``Notice of Opportunity and Procedures To Request
Assistance on Tariff Classification and Customs Valuation Treatment by
Other Customs Administrations Affecting United States Exports,'' 80
Fed. Reg. 34924. CBP will post both notices on the public website as a
reminder to the trade of these opportunities to request assistance. CBP
is planning a joint ITC and CBP presentation to the trade on the 2017
HTSUS amendments that are expected to take effect on January 1, 2017.
consultation and coordination with private sector
Question. What plans does CBP have to engage the private sector to
improve consultation and coordination, as called for in section
105(b)(10)?
Answer. CBP will fully engage with our Commercial Customs
Operational Advisory Council (COAC) groups and Trade Support Network
working groups to improve consultation and coordination. We will engage
with each sub-working group as needed to ensure that all levels of the
private sector are aware and coordination is taking place at all
levels. Other working groups that are created will be notified and
engaged.
single window participation
Question. Through the International Trade Data System (ITDS) and
the Automated Commercial Environment (ACE) the U.S. Government is
creating a ``Single Window'' to ensure the admissibility of goods into
the United States. Through ACE, CBP has announced that manual processes
will be streamlined and automated, paper will be eliminated, and
importers will be able to more easily and efficiently comply with U.S.
laws and regulations.
What agencies will be participating in the single window?
Answer. CBP and 47 other federal agencies are working together to
implement the Single Window through ACE:
------------------------------------------------------------------------
------------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE DEPARTMENT OF JUSTICE
AMS | Agricultural Marketing ATF | Bureau of Alcohol, Tobacco,
Service Firearms and Explosives
APHIS | Animal and Plant Health DEA | Drug Enforcement
Inspection Service Administration
FAS | Foreign Agricultural Service
FSIS | Food Safety and Inspection
Service
GIPSA | Grain Inspection, Packers
and Stockyards Administration
------------------------------------------------------------------------
DEPARTMENT OF DEFENSE DEPARTMENT OF LABOR
USACE | Army Corps of Engineers BLS | Bureau of Labor Statistics
DCMA | Defense Contracts Management
Agency
------------------------------------------------------------------------
DEPARTMENT OF COMMERCE DEPARTMENT OF STATE
BIS | Bureau of Industry and A/LM | Bureau of Administration,
Security Office of Logistics Management
U.S. Census Bureau DDTC | Directorate of Defense Trade
FTZB | Foreign Trade Zones Board Controls
E&C | Enforcement and Compliance OES | Bureau of Oceans and
OTEXA | Office of Textiles and International Environmental and
Apparel Scientific Affairs
NMFS | National Marine Fisheries OFM | Office of Foreign Missions
Service
------------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION DEPARTMENT OF ENERGY
BTS | Bureau of Transportation OFE | Office of Fossil Energy
Statistics EIA | Energy Information
FAA | Federal Aviation Administration
Administration OGC | Office of General Counsel
FHA | Federal Highway
Administration
FMCSA | Federal Motor Carrier
Safety Administration
MARAD | Maritime Administration
NHTSA | National Highway Traffic
Safety Administration
PHMSA | Pipeline Hazardous
Materials Safety Administration
------------------------------------------------------------------------
DEPARTMENT OF TREASURY DEPARTMENT OF HEALTH AND HUMAN
IRS | Internal Revenue Service SERVICES
OFAC | Office of Federal Assets CDC | Centers for Disease Control
Control and Prevention
TTB | Alcohol and Tobacco Tax and FDA | Food and Drug Administration
Trade Bureau
FinCEN | Financial Crimes
Enforcement Network
------------------------------------------------------------------------
DEPARTMENT OF HOMELAND SECURITY INDEPENDENT AGENCIES
USCG | United States Coast Guard CPSC | Consumer Product Safety
CBP | U.S. Customs and Border Commission
Protection EPA | Environmental Protection
TSA | Transportation Security Agency
Administration FCC | Federal Communications
Commission
FMC | Federal Maritime Commission
ITC | International Trade
Commission
NRC | Nuclear Regulatory Commission
USAID | U.S. Agency for
International Development
USTR | Office of the United States
Trade Representative
------------------------------------------------------------------------
DEPARTMENT OF THE INTERIOR
FWS | Fish and Wildlife Service
------------------------------------------------------------------------
automated commericial environment (ace) misuse
Question. Can you describe how CBP will ensure that the agencies
participating in ACE will not utilize ACE as a tool to inject
additional regulatory and informational requirements, which may be
decreasing efficiencies in the import and customs processes and
increase burdens on importers?
Answer. ACE will only provide each Partner Government Agency (PGA)
the data that it is legally authorized to access, according to its MOU
with CBP. The Border Interagency Executive Council (BIEC) Change
Control Board (CCB) will be responsible for approving and prioritizing
any PGA requests for enhancements or new requirements once core ACE
development is complete. All changes to information collections in
ACE--including additional requirements--continue to be subject to
approval by the Office of Management and Budget under the Paperwork
Reduction Act and will be subject to public notice and comment
procedures before implementation.
Additionally, by collecting all information required by nearly 50
government agencies in one system--ACE, CBP and its partner government
agencies will reduce duplicative information collections from the
public by making sure that information given for a data field for one
agency will automatically populate data fields for other agencies that
are asking for the exact same information. This is not something that
was previously possible when information collections for entry and
export were spread across numerous systems and will save the reporting
public time.
______
Questions Submitted by Hon. Chuck Grassley
swift and efficient implementation
Question. The Trade Facilitation and Trade Enforcement Act provides
important tools to promote effective enforcement of intellectual
property rights at our borders, including information sharing between
law enforcement and right holders. Importantly, this law affirms the
authority of U.S. Customs and Border Protection (CBP) to seek
assistance from intellectual property owners in carrying out its
intellectual property enforcement mission. Historically, right holders
have provided invaluable assistance to CBP in determining whether the
goods before them were genuine or counterfeit. However, in recent
years, the U.S. Treasury Department and CBP have taken a more
restrictive view of what information can be shared with right holders.
I understand that in the past, this restrictive view has hampered right
holders' ability to provide the needed expertise to identify whether a
good is genuine or counterfeit, and has made it difficult for right
holders' own intellectual property enforcement efforts.
The Trade Facilitation and Trade Enforcement Act now specifically
requires that where a right holder can assist CBP in determining
whether a suspected good is counterfeit, CBP must ``provide to the
person information that appears on the merchandise and its packaging
and labels, including unredacted images of the merchandise and its
packaging and labels.''
What is CBP doing to ensure that the new customs law provisions--
especially the information sharing provisions--are being implemented
swiftly and effectively and in a manner that will facilitate the timely
sharing of vital information such as unredacted photos and samples with
right holders?
Answer. The initiative to disclose information appearing on
merchandise or its retail packaging was originally proposed by CBP and
the administration in 2010 when it submitted the 19 U.S.C. Sec. 1628a
legislative proposal to Congress. Thus, rather than taking a
restrictive view of disclosure, CBP has long sought statutory authority
to disclose confidential information to rights' holders that is
otherwise protected by the 18 U.S.C. Sec. 1905. See 77 Fed. Reg. 24375,
24376 (April 24, 2012) (``The protection afforded by the Trade Secrets
Act, however, must be balanced against the important and legitimate
interests of government.''). As noted above, pursuant to earlier, more
limited, authority in the 2012 National Defense Authorization Act, CBP
has been disclosing information appearing on imported merchandise, or
its retail packaging, suspected of bearing counterfeit marks, since
2012. CBP is drafting a notice of proposed rulemaking to implement the
provisions within section 302 of TFTEA.
abandoned and destroyed goods
Question. There is no doubt that we are seeing a massive shift in
how counterfeit goods are coming to our country. While large container
shipments are still a problem, small shipments by post--fueled by the
ease of online websites selling counterfeit goods--are rapidly
increasing. In fact, a report released recently by the OECD on
counterfeits strikingly found that postal shipments are the top method
of shipping fake goods, accounting for 62% of seizures over 2011-2013.
To address this problem, in early 2015, CBP began operating a pilot
program with express delivery carriers to streamline the process of
abandoning and destroying imported goods detained by CBP that violate
intellectual property rights. U.S. 2015 seizure statistics indicate
that there have been more than 2,800 voluntary abandonments since this
program's inception. While the goal of this program is a good one, I
understand that under the pilot program, the importer of the goods, not
the right holder whose intellectual property rights were violated, is
given notice that the goods have been abandoned and destroyed. A
failure to provide right holders with this information can make it
harder for them to protect their brands.
How can this program ensure better information sharing between
right holders and law enforcement?
Answer. During the abandonment process both the importer of record
and ultimate consignee of the merchandise must voluntarily relinquish
their proprietary interest in the merchandise. Unlike the detention and
seizure process, where CBP has exercised authority to share information
with rights holders to assist the agency in determining whether
merchandise bears a counterfeit mark, in the abandonment process CBP
does not mandate any action on the part of the importer or consignee,
take physical possession of the merchandise or make a final
determination on infringement. The merchandise is never detained or
seized by CBP, but abandoned by the consignee and importer and
destroyed by the express carrier. CBP has a robust outreach strategy
that incorporates regional stakeholder roundtables and participation in
domestic and international trade association conferences that promote
effective communication and information sharing. Throughout the course
of the pilot program, CBP has shared information with stakeholders at
these events and other meetings about trends identified with respect to
abandoned merchandise and best practices identified with regard to
processing small packages.
asylum seekers
Question. In recent years we've heard a lot about the dramatic
increase in the number of people arriving at Ports of Entry along the
southern border who announce that they are seeking asylum. According to
a media report in 2012: [T]housands of asylum-seekers--reportedly 200
in a single day at the Otay Mesa Port of Entry in California--are
forcing the U.S. Customs and Border Protection agents to pay for hotels
rooms for hundreds of immigrants while they wait for an immigration
judge to decide whether they can stay in the country.
http://www.dailymail.co.uk/news/article-2390442/Surge-immigrants-
seeking-asylum-Mexican-border-crossings-forced-authorities-pay-hotels-
hundreds-release-thousands-U-S.html#ixzz48TR0oFMJ.
It is my understanding that the flow of asylum seekers arriving at
the southern border has not diminished since 2012 and has likely only
increased.
Please give the number of aliens arriving at Ports of Entry (POEs)
along the southern border, in FY14, FY15, and FY16 to date, who have
sought asylum, with a breakdown by the aliens' countries of origin.
Answer. Please see the below credible fear statistics showing the
number of credible fear claims by country of nationality by individuals
who presented themselves at U.S. Ports of Entry. USCIS asylum reports
do not differentiate between the northern and southern borders, nor
between the types of ports of entry (i.e., land v. airport). USCIS
asylum reports do not include individuals who ask for asylum at Ports
of Entry and who are not placed in expedited removal with credible fear
but instead are placed in removal proceedings with the Executive Office
for Immigration Review.
Credible Fear POE by Nationality Report
------------------------------------------------------------------------
FY16 through
Nationality FY14 Receipts FY15 Receipts Q2 Receipts
------------------------------------------------------------------------
AFGHANISTAN 9 16 6
------------------------------------------------------------------------
ALBANIA 1 13 13
------------------------------------------------------------------------
ALGERIA 0 0 2
------------------------------------------------------------------------
ANGOLA 4 7 2
------------------------------------------------------------------------
ARGENTINA 2 9 5
------------------------------------------------------------------------
ARMENIA 33 87 98
------------------------------------------------------------------------
AUSTRALIA 2 3 1
------------------------------------------------------------------------
AUSTRIA 0 1 0
------------------------------------------------------------------------
AZERBAIJAN 5 1 1
------------------------------------------------------------------------
BAHAMAS 1 4 1
------------------------------------------------------------------------
BAHRAIN 0 1 0
------------------------------------------------------------------------
BANGLADESH 231 532 64
------------------------------------------------------------------------
BELARUS 4 7 1
------------------------------------------------------------------------
BELIZE 8 15 14
------------------------------------------------------------------------
BENIN 4 7 2
------------------------------------------------------------------------
BOLIVIA 8 4 4
------------------------------------------------------------------------
BOSNIA-HERZEGOVINA 0 1 0
------------------------------------------------------------------------
BRAZIL 31 57 167
------------------------------------------------------------------------
BULGARIA 0 4 1
------------------------------------------------------------------------
BURKINA FASO 3 25 28
------------------------------------------------------------------------
BURMA 6 10 6
------------------------------------------------------------------------
BURUNDI 1 5 6
------------------------------------------------------------------------
CAMBODIA 1 1 0
------------------------------------------------------------------------
CAMEROON 239 165 183
------------------------------------------------------------------------
CANADA 7 11 5
------------------------------------------------------------------------
CENTRAL AFRICA 0 2 1
------------------------------------------------------------------------
CHAD 3 1 3
------------------------------------------------------------------------
CHILE 4 2 1
------------------------------------------------------------------------
CHINA, PEOPLES REPUBLIC 147 131 162
------------------------------------------------------------------------
COLOMBIA 61 127 83
------------------------------------------------------------------------
CONGO 8 12 14
------------------------------------------------------------------------
COSTA RICA 5 1 6
------------------------------------------------------------------------
COTE D'IVOIRE 4 8 16
------------------------------------------------------------------------
CUBA 1 3 0
------------------------------------------------------------------------
DEMOCRATIC REPUBLIC of 7 3 2
CONGO
------------------------------------------------------------------------
DENMARK 0 1 0
------------------------------------------------------------------------
DJIBOUTI 0 0 2
------------------------------------------------------------------------
DOMINICA 12 6 6
------------------------------------------------------------------------
DOMINICAN REPUBLIC 23 35 15
------------------------------------------------------------------------
ECUADOR 129 65 66
------------------------------------------------------------------------
EGYPT 45 37 19
------------------------------------------------------------------------
EL SALVADOR 1,221 841 1,501
------------------------------------------------------------------------
EQUATORIAL GUINEA 0 0 1
------------------------------------------------------------------------
ERITREA 135 175 151
------------------------------------------------------------------------
ETHIOPIA 125 156 54
------------------------------------------------------------------------
GABON 0 1 0
------------------------------------------------------------------------
GEORGIA 1 12 9
------------------------------------------------------------------------
GERMANY 0 0 3
------------------------------------------------------------------------
GHANA 151 473 329
------------------------------------------------------------------------
GUATEMALA 796 1,002 1,252
------------------------------------------------------------------------
GUINEA 17 54 75
------------------------------------------------------------------------
GUINEA-BISSAU 1 3 1
------------------------------------------------------------------------
GUYANA 5 2 1
------------------------------------------------------------------------
HAITI 180 162 109
------------------------------------------------------------------------
HONDURAS 1,017 882 1,319
------------------------------------------------------------------------
HONG KONG 0 0 1
------------------------------------------------------------------------
INDIA 108 132 128
------------------------------------------------------------------------
INDONESIA 2 2 1
------------------------------------------------------------------------
IRAN 15 19 10
------------------------------------------------------------------------
IRAQ 35 61 10
------------------------------------------------------------------------
IRELAND 0 0 2
------------------------------------------------------------------------
ISRAEL 1 1 3
------------------------------------------------------------------------
ITALY 1 0 2
------------------------------------------------------------------------
JAMAICA 14 31 28
------------------------------------------------------------------------
JORDAN 5 5 15
------------------------------------------------------------------------
KAZAKHSTAN 1 1 0
------------------------------------------------------------------------
KENYA 4 4 5
------------------------------------------------------------------------
KOSOVO 0 1 0
------------------------------------------------------------------------
KUWAIT 0 4 1
------------------------------------------------------------------------
KYRGYSTAN 0 1 0
------------------------------------------------------------------------
LAOS 0 1 0
------------------------------------------------------------------------
LEBANON 9 11 3
------------------------------------------------------------------------
LIBERIA 3 3 2
------------------------------------------------------------------------
LIBYA 4 0 0
------------------------------------------------------------------------
LITHUANIA 1 0 0
------------------------------------------------------------------------
MACEDONIA 0 1 0
------------------------------------------------------------------------
MALAWI 0 0 1
------------------------------------------------------------------------
MALAYSIA 1 1 1
------------------------------------------------------------------------
MALI 2 3 14
------------------------------------------------------------------------
MAURITANIA 0 1 2
------------------------------------------------------------------------
MAURITIUS 0 0 1
------------------------------------------------------------------------
MEXICO 4,251 6,467 2,843
------------------------------------------------------------------------
MOLDOVA 4 4 2
------------------------------------------------------------------------
MONGOLIA 4 2 1
------------------------------------------------------------------------
MOROCCO 5 2 2
------------------------------------------------------------------------
NEPAL 12 98 97
------------------------------------------------------------------------
NETHERLANDS 1 2 0
------------------------------------------------------------------------
NICARAGUA 40 39 23
------------------------------------------------------------------------
NIGER 132 138 103
------------------------------------------------------------------------
NIGERIA 76 73 21
------------------------------------------------------------------------
NORTH KOREA 1 0 0
------------------------------------------------------------------------
NORWAY 0 1 0
------------------------------------------------------------------------
OMAN 1 0 0
------------------------------------------------------------------------
PAKISTAN 28 157 45
------------------------------------------------------------------------
PANAMA 0 2 0
------------------------------------------------------------------------
PARAGUAY 1 0 2
------------------------------------------------------------------------
PERU 54 53 40
------------------------------------------------------------------------
PHILIPPINES 7 4 1
------------------------------------------------------------------------
POLAND 2 1 2
------------------------------------------------------------------------
ROMANIA 79 55 28
------------------------------------------------------------------------
RUSSIA 23 44 36
------------------------------------------------------------------------
RWANDA 17 6 1
------------------------------------------------------------------------
SAMOA 1 0 0
------------------------------------------------------------------------
SAUDI ARABIA 4 3 1
------------------------------------------------------------------------
SENEGAL 3 30 30
------------------------------------------------------------------------
SIERRA LEONE 3 7 10
------------------------------------------------------------------------
SERBIA and MONTENEGRO 0 0 1
------------------------------------------------------------------------
SINGAPORE 1 0 1
------------------------------------------------------------------------
SOMALIA 254 728 252
------------------------------------------------------------------------
SOUTH AFRICA 3 2 2
------------------------------------------------------------------------
SOUTH KOREA 3 1 2
------------------------------------------------------------------------
SPAIN 0 1 0
------------------------------------------------------------------------
SRI LANKA 22 36 15
------------------------------------------------------------------------
ST. LUCIA 0 3 4
------------------------------------------------------------------------
STATELESS 4 5 4
------------------------------------------------------------------------
SUDAN 9 8 1
------------------------------------------------------------------------
SWAZILAND 1 2 60
------------------------------------------------------------------------
SYRIA 70 77 10
------------------------------------------------------------------------
TAIWAN 1 1 0
------------------------------------------------------------------------
TAJIKISTAN 0 3 3
------------------------------------------------------------------------
THAILAND 1 0 0
------------------------------------------------------------------------
THE GAMBIA 2 13 16
------------------------------------------------------------------------
TOGO 5 19 16
------------------------------------------------------------------------
TRINIDAD AND TOBAGO 0 3 0
------------------------------------------------------------------------
TUNISIA 5 1 2
------------------------------------------------------------------------
TURKEY 3 10 6
------------------------------------------------------------------------
UGANDA 4 3 2
------------------------------------------------------------------------
UKRAINE 15 69 39
------------------------------------------------------------------------
UNITED KINGDOM 2 0 1
------------------------------------------------------------------------
UNKNOWN 20 12 58
------------------------------------------------------------------------
URUGUAY 2 0 0
------------------------------------------------------------------------
USSR 1 0 1
------------------------------------------------------------------------
UZBEKISTAN 1 1 2
------------------------------------------------------------------------
VENEZUELA 61 82 108
------------------------------------------------------------------------
VIETNAM 3 2 4
------------------------------------------------------------------------
YEMEN 1 4 3
------------------------------------------------------------------------
ZAMBIA 1 0 0
------------------------------------------------------------------------
ZIMBABWE 3 4 6
------------------------------------------------------------------------
Total 10,151 13,744 9,939
------------------------------------------------------------------------
hotel rooms for asylum seekers
Question. Does CBP pay for hotel rooms for asylum seekers while
they await their date in immigration court? If so, how much has CBP
spent on such accommodations for asylum seekers in FY14, FY15, and FY16
to date?
Answer. CBP does not pay for hotel rooms for asylum seekers and has
not expended any funding on accommodations outside of those provided.
CBP generally processes aliens either administratively or criminally
and maintains short-term custody of individuals, pending transfer of
custody to another agency (generally ICE ERO) or final case
disposition. CBP temporarily holds individuals for the length of time
necessary for CBP to complete the required casework, which may entail
an interview, the collection of biographic and biometric data, records
checks, determination of disposition, and release of the individual or
transfer of him/her to another agency's custody. CBP has many
facilities throughout the United States to support mission-critical
operations, most of which include short-term hold rooms.
infrastructure changes
Question. What infrastructure changes has CBP had to make at the
POEs to accommodate this flow? I understand, for example, that at some
POEs there is a dedicated line for asylum seekers in the pedestrian
entryway.
Answer. CBP works within our existing infrastructure to manage the
flow. However, when necessary, CBP has made infrastructure changes to
POEs to accommodate increased flow of asylum seekers. When there is a
high volume of asylum seekers, CBP will coordinate a dedicated line or
waiting area to ensure the orderly flow of regular pedestrians through
the facility.
financing the smuggling of minors
Question. I have read about the various Department of Homeland
Security informational and media campaigns to discourage family units
and Unaccompanied Alien Children from making the dangerous journey to
the United States border. Clearly, none of that is working, given the
high numbers of minors and family unit members who crossed the border
during the first 6 months of this fiscal year. Statistics from your
agency show that apprehensions of unaccompanied minors are 78% higher
than the same period last year, and on par with apprehensions for the
same period in Fiscal Year 2014, which was the year that brought us the
record-breaking surge. Family unit apprehensions are up 131% over the
same period last year and 62% over the same period in FY 2014.
According to data obtained from the Department by the Associated
Press, about 80 percent of the 71,000 mostly Central American minors
who crossed the U.S. border in 2014 were placed by the government with
adults or sponsors who were in the country illegally. Clearly, someone
is paying the smugglers to bring the unaccompanied alien children to
the border. Participating in alien smuggling is a felony under section
274(a)(1) of the Immigration and Nationality Act. Some would say that
in many cases these smugglers are being paid by the minors' parents and
family members, currently residing in the United States.
Is your agency, or anyone else in the Department of Homeland
Security, ``following the money'' and then prosecuting or removing the
persons determined to have financed the smuggling of the minors?
Answer. As the largest investigative agency in the U.S. Department
of Homeland Security (DHS), U.S. Immigration and Customs Enforcement
(ICE) is charged with protecting national security and public safety by
enforcing the Nation's immigration and customs laws. Combating human
smuggling is a core mission priority of ICE Homeland Security
Investigations (HSI) and U.S. Customs and Border Protection (CBP). The
Department has, and will continue to, target transnational criminal
organizations to hold them accountable for their actions and help
prevent illegal and dangerous migration.
One of ICE's tools in combatting transnational criminal
organizations is to focus on financial facilitation. Seizing the funds
that motivate and fuel criminal activity is a high priority for ICE.
ICE HSI has identified a multitude of methods through which human
smuggling organizations hide, move, and store proceeds associated with
illegal activity. Human smuggling organizations have unique money
laundering footprints or patterns that must be addressed specifically.
These patterns include the utilization of money services businesses
(MSBs) and funnel accounts to facilitate and conceal illicit payments.
Interstate funnel accounts provide efficient and hard-to-detect
means for human smugglers to transfer their illicit proceeds rapidly
from the interior of the United States to the U.S. States bordering
Mexico. Funnel accounts are simple bank accounts that are opened in
financial institutions located in southern U.S. border regions. These
accounts receive regular cash deposits from remote branches that are
usually located in interior States. The deposits tend to be anonymous
counter deposits that are of relatively low value so they do not exceed
Bank Secrecy Act reporting thresholds. Once enough deposits are made
into the account and the funds are recognized by the host financial
institution, a nominee for the account will withdraw the funds in
relatively small increments, similarly evading Federal reporting
thresholds. The withdrawn funds are then smuggled south across the
border into Mexico.
MSBs are financial institutions that enable the swift and efficient
movement of funds from one geographic location to another. Unlike bank
customers, MSB users are not required to maintain committed, long-term
financial relationships with the MSB. Because of this, MSB users often
perceive that they have greater levels of financial privacy. These
characteristics combine to make MSBs particularly attractive means by
which human smugglers move their illicit proceeds.
Operation Coyote was ICE HSI's response to the surge in
unaccompanied children and other migrants from Central America in 2014.
The operation was created and designed to combat the financial aspect
of human smuggling, and is focused on targeting and identifying
criminal organizations that utilize funnel bank accounts to move
illicit proceeds. Information and evidence collected during the course
of Operation Coyote has led to the conclusion that nearly all human
smugglers move unaccompanied children.
ICE and its DHS partners pursue the removal of aliens in all cases
deemed appropriate and according to policy.
Question. How many, if any, such cases has CBP investigated?
Answer. Since 2012, ICE HSI has investigated 30 human smuggling or
trafficking cases that involved the use of interstate funnel accounts
as a means of financial facilitation. Since 2005, ICE HSI has
investigated 49 human smuggling or trafficking cases that involved MSBs
as a means of financial facilitation.
entry/exit overstay report
Question. In January 2016, CBP published the long-awaited ``Entry/
Exit Overstay Report'' for fiscal year 2015. The report lists, country
by country, the percentage of visitors who overstay their visas. The
Department of Homeland Security had dragged its feet on publishing the
report for many years. What finally made the Department publish it was
a provision in the Consolidated Appropriations Act of 2016 prohibiting
the release of $13,000,000 for the Office of the Secretary of Homeland
Security until both the overstay report and the comprehensive plan for
implementation of the biometric entry and exit data system are
submitted to Congress. Significantly, the appropriations act requires
that the overstay report include statistics on overstays from all
nonimmigrant visa categories.
When will CBP publish a complete overstay report, with overstay
statistics for all visa categories, not just for the tourist and
business visitor categories?
Answer. The Department released the fiscal year (FY) 2015 Entry/
Exit Overstay Report after addressing concerns it had about the quality
and completeness of the data that had been collected. In the FY 2016
report, CBP plans to address additional nonimmigrant classes,
including:
Addition of the foreign student exchange visitor population
to the report (F, M, and J nonimmigrant admission classes);
Addition of other nonimmigrant admission classes (such as H,
O, P, and Q nonimmigrant admission classes); and
Addition of land related overstay populations.
This summer, CBP, ICE, and USCIS have successfully implemented data
system changes that will allow reporting of these additional visa
categories. CBP is now working to add historic FY 2016 data from the
systems in ICE and USCIS into the Entry/Exit reporting capability. CBP
anticipates being able to develop a full set of FY 2016 data on these
additional visa categories.
Question. Since the overstay report does not include data on
overstays in all visa categories, do you agree with me that the report
fails to satisfy the requirements set forth in the FY16 omnibus
appropriations act and that, therefore, the Office of Management and
Budget should not release the $13 million in funding for the
Secretary's office?
Answer. CBP believes this report is responsive to the requirements
in the FY 2016 omnibus appropriations act, as the FY 2015 Entry/Exit
Overstay Report provided country-specific overstay statistics on all
visa categories that CBP data systems were technically able to report
on at that time. This report covers approximately 85 percent of all
nonimmigrant travelers arriving via air or sea.
biometric entry/exit plan
Question. On April 20, 2016, U.S. Customs and Border Protection
published its ``Comprehensive Biometric Entry/Exit Plan.'' The report
describes the agency's strategy for implementation of a biometric exit
system that would apply to all travelers departing the United States.
The strategy takes into account the $1 billion in funding for biometric
exit that was made available in the fiscal year 2016 Omnibus
Appropriations Act.
As I understand the report, CBP will be in a position to begin
implementing a biometric exit system in 2018, but only at the highest
volume airports, and focusing initially on only high-risk flight
departures. So when 2018 rolls around, at best we might have
implemented biometric exit at a few airports, and even then, for only a
few high-risk flights at that limited number of airports. Is my
understanding correct?
Answer. CBP will begin deployment of biometric exit in FY 2018,
starting with the largest gateway airports. CBP does not plan to limit
biometric exit to only ``high-risk'' flights, but will deploy biometric
exit in a manner that covers all departing international flights from
airports that support biometric exit.
Question. Do I further understand the report correctly that the $1
billion provided by the FY 2016 Omnibus Appropriations Act is not
sufficient to reach that 2018 implementation goal and that additional,
up-front funding is required? If so, can you please provide me with
details of the cost assessment upon which you are basing this need for
additional funding?
Answer. The $1 billion provided by the FY 2016 Omnibus
Appropriations Act will significantly advance CBP's deployment of
biometric exit. However, not all of the $1 billion is available right
away or provided to CBP in a single allotment. The $1 billion is
derived from the fees paid by petitioners for H-2B and L-1A visas, and
will accrue over 10 fiscal years. CBP expects the fund to provide about
$86 million at the start of FY 2017, and provide an estimated $115
million at the start of FY 2018.
Fee funding for FY 2017 and FY 2018 is sufficient for CBP to begin
deploying biometric exit in FY 2018. No additional ``up-front funding''
is required to begin work.
______
Questions Submitted by Hon. John Cornyn
duty drawback rules
Question. Section 906: Drawback. As you know, Congress recently
passed trade legislation which included simplification of the duty
drawback rules. This culminated a long, 10-year process where industry
worked closely with Customs to simplify rules that will save both the
public and private sectors money by improving administration of this
export promoting law. I have constituents that utilize the duty
drawback program and in order to prepare for filing claims two years
after the date of enactment, by 2018, they must have time to reprogram
their systems. In order to do so in a timely manner, they need
assurances that Customs will work with the industry to develop
regulations within 12-18 months, and meet regularly with the industry
to discuss your agency's view on the new law and the development of
regulations.
I have heard concerns from my constituents about section 906 with
respect to the new calculation of claim language. Can you provide
assurance that a meeting with the industry will occur in the near
future and that the new regulations can and will be completed in the
next 12-18 months?
Answer. CBP has formed a working group with both government and
trade representatives to address all of the new provisions laid out in
section 906. Besides recent outreach efforts with the trade through
teleconferences, the Automated Commercial Environment (ACE) Trade
Support Network, and a recent meeting of the American Association of
Exporters and Importers, the new working group is scheduled to meet
this Fall specifically to address new regulations to implement section
906 of the law. CBP is still digesting all of the provisions contained
in section 906 of the law, not the least of which is the requirement
for CBP to develop a method to properly calculate the amount of
Drawback. The trade community has indicated to CBP that this is a
concern, and CBP will continue to engage industry through the new
working group. CBP must significantly revise the current regulations on
drawback to implement section 906 of the law. The drafting process is
ongoing and involves collaboration among our legal, policy, operational
and ACE programming experts. New regulations will be issued as quickly
as possible.
cbp resource planning and forecasting
Question. As an agency engaged in critical border security and
trade facilitation functions, it is vitally important that CBP allocate
resources and personnel based on both current and anticipated needs.
To what extent is CBP's Workload Staffing Model, Land Port of Entry
(LPOE) Construction Plan, or other agency planning or forecasting tools
based on anticipated business or trade activity?
Answer. OFO's Workload Staffing Model (WSM) incorporates the WSM
baseline analysis, staffing requirements related to planned facility
expansions or enhancements, staffing efficiencies or requirements
related to planned technology deployments, and requirements for
conservatively projected growth in travel and trade volumes. For FY
2017, this projection for trade and travel volumes was 3 percent.
A key element of CBP enforcement strategy is a network of 110 land
ports of entry (LPOE) encompassing 167 separate crossings along both
borders. CBP utilizes a robust methodology known as a Strategic
Resource Assessment (SRA) to determine those LPOE facilities most in
need of capital improvements. Generally, the SRA process gathers
internal and external stakeholder feedback regarding operations, volume
and facility conditions at each LPOE through questionnaires, interviews
and other avenues. The feedback and data collected are then put into a
prioritization scoring methodology to achieve an objective ranking of
the LPOEs that is then used to determine the level of investment needed
to bring a location up to current mission standards. CBP completed the
most recent SRA effort in FY 2015.
More specifically, the current SRA scoring methodology employs
weighted scaling across four distinct criteria as shown in Table 1:
Table 1: SRA Scoring Criteria and Weights
------------------------------------------------------------------------
Criterion Weight
------------------------------------------------------------------------
Mission and Operations 35%
------------------------------------------------------------------------
Security and Life Safety 25%
------------------------------------------------------------------------
Space and Site Deficiencies 25%
------------------------------------------------------------------------
Personnel and Workload Growth 15%
------------------------------------------------------------------------
The Mission and Operations criterion measures the facility's
compatibility with specific inspection responsibilities; Security and
Life measures the facility's ability to protect occupants and visitors
while allowing law enforcement functions to occur; Space and Site
Deficiencies references the space available and site of the LPOE
related to the functional work environment; and Personnel and Workload
Growth measures current personnel levels along with current and
projected workload categories that will require additional personnel
and space.
It is this last criterion, Personnel and Workload Growth, which
addresses anticipated increases in traffic by evaluating changes in
traffic volumes and patterns over the previous 3 years, and assessing
regional and national patterns of growth, including regional economic
assessments and traffic forecasting and trends, such as asylum seekers.
This evaluation, in conjunction with inputs from the Workload Staffing
Model (WSM), is used to forecast anticipated growth for a future 10-
year period. This forecast is then fed back into the SRA model to
determine overall LPOE infrastructure investment needs.
Question. How does CBP anticipate trends driven by private-sector
decision-
making?
Answer. Emerging trade and global supply chain trends are garnered
from CBP's regular engagement with the Commercial Customs Operational
Advisory (COAC) Committee, Trade Support Network (TSN), and key trade
and travel associations.
information sharing with trade community partners
Question. If CBP could receive business forecasts from private
industry, would the agency have a strategy for utilizing this data to
better inform resource allocation decisions and future traffic flows?
Answer. One component of CBP's strategy for its Workload Staffing
Model (WSM) is to improve its methodology for predicting and
forecasting workload and volume. Receiving business forecasts from
private industry could possibly be incorporated into the agency's
approach for informing resource allocation decisions. CBP has had
discussions with industry groups about this concept, and is currently
awaiting a draft project outline from one industry group. CBP would
need to thoroughly and carefully review any forecast data received from
private industry prior to using it for resource allocation or resource
request purposes. CBP currently must defend the validity of its own
data against Department and Congressional auditors. Therefore, CBP
would proceed very carefully before basing resource-related
recommendations and requests on third-party data.
Question. How would CBP work with private-sector, nonprofit
institutions, and international equivalent agencies, to establish and
implement such an information sharing regime with trade community
partners that better informs agency resource management?
Answer. CBP's Office of Trade Relations is in continuous
communication with industry sectors impacted by its mission. A primary
part of our outreach and communication plan includes webinars and
roundtables used as methods of bi-directional education with the
domestic and international trade community as well as partner and
international government agencies. CBP has implemented Centers of
Excellence and Expertise (CEE) to integrate management-by-account
principles and allows CBP trade personnel to specialize in a key
industry, by building advanced knowledge in the intricacies of
particular products and processes. Communication and outreach efforts
have enabled CBP to better understand the trends and needs from
industry.
protect confidential business information
Question. What methods might CBP use aggregate data and protect
confidential business information?
Answer. Any confidential business information submitted by the
trade community to CBP is protected by the Trade Secrets Act and the
Privacy Act and adheres to DHS privacy policies. There are strict
guidelines and procedures put into place to guard this information from
release/misuse.
Fair Information Practice Principles (FIPPs)
In 2008, DHS issued a policy declaring the eight Fair Information
Practice Principles (FIPPs) as the foundation and guiding principles of
the Department's privacy program. The FIPPs were formed from the
foundations of the Privacy Act of 1974, and memorialized in the
National Strategy for Trusted Identities in Cyberspace.
On February 12, 2013, the President signed an Executive Order on
Improving Critical Infrastructure Cybersecurity (Executive Order)
(learn more about the White House's ongoing cybersecurity policies).
Section 5 of the Executive Order directs the DHS Chief Privacy Officer
and the Officer for Civil Rights and Civil Liberties to issue an annual
report using the FIPPs to assess the Department's cyber operations
under the Executive Order. As Deputy Attorney General James M. Cole
explained during the public presentation of the Executive Order, the
FIPPs are ``time-tested and universally recognized principles that form
the basis of the Privacy Act of 1974 and dozens of other Federal
privacy and information protection statutes.''
The Executive Order also directs the senior agency privacy and
civil liberties officials of other agencies engaged in activities under
the order to conduct their own assessments for inclusion in the DHS
public report. In 2010, DHS issued a White Paper on Computer Network
Security and Privacy Protection to provide an overview of the
Department's cybersecurity responsibilities, the role of the EINSTEIN
system in implementing those responsibilities, and the integrated
privacy protections.
For further information, see this link: https://www.dhs.gov/sites/
default/files/publications/privacy_cyber_0.pdf.
anzalduas international bridge commercial traffic
Question. Since January 2015, the Anzalduas International Bridge
has been fully permitted to facilitate international commercial traffic
between the U.S. and Mexico. However, delays and inaction by U.S.
Federal agencies, as well as counterparts in Mexico, have forced local
governments to take unprecedented steps to initiate the first phases of
commercial traffic (expected to focus on unladen or ``empty''
commercial vehicles headed southbound toward Mexico), including funding
infrastructure improvements in Mexico and signing a historic agreement
to share bridge revenue among public entities in both countries.
Despite the concerted efforts of local leaders, the Anzalduas
International Bridge has still, to date, been unable to conduct even
limited commercial traffic.
Is your agency aware of the requirements that Mexico and its
governmental agencies have imposed on the Anzalduas Bridge Board and
the local governments that the Board represents?
Answer. Yes, CBP was made aware of the requirements that Mexico and
its governmental agencies have imposed on the Anzalduas Bridge Board
and the local governments that the Board represents.
Question. What specific and credible steps is CBP taking to assist
the efforts of the Anzalduas International Bridge to initiate the first
phases of commercial traffic?
Answer. CBP met with the Anzalduas Bridge Board and representatives
from the U.S. Department of State, U.S. Department of Transportation,
U.S. General Services Administration and the Government of Mexico on
June 13, 2016, to discuss commercial expansion plans at the Anzalduas
International Bridge. CBP will be working with the Anzalduas Bridge
Board, as well as U.S. and Mexico partners to develop a roadmap of
forward looking milestones, activities, and timelines to help
facilitate and organize future commercial expansion efforts. Once that
roadmap is developed CBP will have a clearer understanding of what
specific and credible steps it can take in order to assist the
Anzalduas Bridge Board.
The Anzalduas International Bridge is now open to southbound empty
commercial vehicles. The first vehicles crossed on August 22, 2016. The
Binational Bridges and Border Crossing Group and the U.S.-Mexico Joint
Working Committee on Transportation Issues continues to progress toward
commercial facilities at Anzalduas. (http://www.krgv.com/story/
32817469/cities-expected-to-benefit-from-anzalduas-bridge-expansion)
bridge board donating infrastructure improvements
Question. I understand the Bridge Board has communicated their
interest in donating to the Federal Government certain infrastructure
improvements to the Land Port of Entry (LPOE) to accommodate inbound
commercial vehicles, with initial project phases focused on
infrastructure and technology improvements necessary to process unladen
or ``empty'' northbound commercial vehicles. In light of the
substantial commitments local sponsors have already agreed to with CBP
and the Government of Mexico, how would your agency work to expedite
such a proposal, to ensure an opportunity to improve binational trade
and commerce is not hamstrung by administrative red tape?
Answer. CBP understands that the Anzalduas Bridge Board plans to
submit a formal donation proposal for consideration during the next
proposal submission period which is scheduled to open in October 2016.
CBP traveled to McAllen, TX on June 22, 2016 to discuss the Anzalduas
Bridge Board's proposal plans and will continue to work with them to
develop and submit a successful and viable proposal. Moreover, CBP is
already exploring its operational, infrastructure and technology
requirements for northbound empty improvements to help facilitate
planning and development activities should the Anzalduas Bridge Board's
proposal be approved.
laredo pre-inspection pilot
Question. Last year, CBP, in cooperation with counterparts in
Mexico, launched a pilot program at the Laredo International Airport to
pre-inspect certain Mexico bound automotive, electronics, and aerospace
component parts. This is the only operation of its kind outside of the
Mexico City International Airport.
What levels of pilot program participation has your agency observed
at Laredo, and how has that compared to other pre-inspection pilot
sites in the United States and Mexico?
Answer. Mexico Customs is the lead government agency for the Laredo
pre-
inspection pilot, as this pilot involves cargo destined to Mexico. The
level of company participation has been modest; eight companies that
were able to pass all of Mexico Customs vetting requirements for
participation. A few additional companies are going through the vetting
process, but CBP is not aware of the status of those companies.
CBP and Mexico Customs are working very well together inspecting
multiple shipments destined for Mexico in Laredo.
As you are aware, the only other cargo pre-inspection pilot CBP is
currently conducting with Mexico Customs is at their Mesa de Otay,
Mexico customs facility. Since the two locations were limited to
specific vetted participants, we did not see a large increase in the
number of participants. We believe there are no more than 10
participants for the Mesa de Otay pilot.
CBP and Mexico Customs are working very well together inspecting
multiple shipments destined for the United States in Mesa de Otay.
Question. What benefits, in terms of reduced processing or wait
times, has CBP found during the first 6-months of the Pre-Inspection
Program? How is your agency working with stakeholders in both countries
to ensure that the Laredo pilot is a success?
Answer. For shipments that originate from the United States
destined to Mexico, CBP understands from Mexico Customs that a reduced
processing time is observed once cargo arrives in Mexico. Since the
cargo is inspected in the U.S., there is normally no need to conduct
another inspection once it arrives in Mexico. Again, this pilot in
Laredo involves Mexico Customs inspecting goods destined for Mexico.
CBP and Mexico Customs have conducted multiple stakeholder events
and we understand that Mexico Customs plans to adjust their strict
vetting requirements that would allow additional companies to
participate.
expand pre-inspection program
Question. Is CBP considering steps to make the pre-inspection
program permanent or expand it to add additional pilot sites? If so,
what criteria will the agency use to determine the best ports of entry
to develop and deploy an expanded pre-inspection regime?
Answer. CBP is working with Mexico Customs to evaluate the three
locations that were agreed upon under the pilot. Once the pilots are
concluded and the results are validated, CBP leadership will evaluate
next steps.
If the decision is to expand and make the pilot permanent, CBP will
develop a list of criteria to determine locations. Cost to place
employees on foreign soil will definitely be one of the criteria used.
Mexico Customs will decide if this pilot works for them and then
decide on the next steps. Air cargo seems to be the best approach for
them.
west rail international bridge
Question. Recall that last year, the United States and Mexico
inaugurated the West Rail International Bridge between Brownsville and
Matamoros, the first international rail bridge between the United
States and Mexico in over a century. One of the key challenges to
reaching this historic achievement was resolving the deployment of
vehicle security screening and inspection.
How has CBP worked to build on the innovative image and information
sharing partnership, entered into with Mexican Aduanas as part of the
initiation of international traffic at the West Rail Bridge, to improve
communication and collaboration between customs agencies in both
countries?
Answer. CBP and Mexico Customs have had multiple discussions on
possible future locations for image data sharing. At a rail crossing in
California/Baja California, Mexico Customs does not have a rail x-ray
imaging system. The idea would be to install the necessary equipment
for Mexico Customs to remotely view the images. Since this is something
that Mexico Customs wants, we have asked for them to fund this project.
CBP is standing by to see if they can fund such technology. Future
acquisitions for CBP rail inspection technology will include
requirements to allow data sharing and remotely view imaging
information.
Question. To what extent are current technologies at the West Rail
facility and other international rail crossings fulfilling the security
and trade facilitation needs of CBP?
Answer. Current rail imaging technology provides CBP with the
capability to non-intrusively inspect inbound trains while transiting
at all Southwest Border crossings. At the West Rail facility, CBP also
has the capability to share Non-Intrusive Inspection (NII) data with
our Mexican counterparts and leverage their data to examine trains
prior to entry.
rail bridge maintenance
Question. What steps are you taking to ensure equipment at rail
bridge POEs like this one is not only maintained to full functional
standards, but replaced when it reaches the end of its maximum useful
life?
Answer. Current rail imaging technology provides CBP with the
capability to non-intrusively inspect inbound trains while transiting
at all Southwest Border crossings; however, the technology has been in
place for an average of over 10 years. A key component of the Non-
Intrusive Inspection (NII) technology recapitalization is to replace
rail imaging systems with more capable technology via a new open, full
procurement. The goal is to deploy an integrated solution that enables
data sharing, increases the effectiveness of scanning, leverages
advancements in technology and facilitates improved efficiency for both
the rail industry and CBP operations.
presido-ojinaga international rail bridge
Question. State and local officials have worked to develop and
implement a project to restore service to the arson-damaged Presido-
Ojinaga International Rail Bridge. How has your agency coordinated with
Texas leaders to proactively address the inspection technology and
equipment requirements of a reconstructed Presidio bridge?
Answer. CBP Office of Field Operations have held initial
discussions with the State of Texas regarding the Presido-Ojinaga
International Rail Bridge. The State of Texas is aware of the general
requirements for inspection technology and the associated facilities
and for a rail inspection facility. CBP's existing Rail LPOE standard
has been provided to the State of Texas with the caveat that the
standard will be updated once the procurement for new rail imaging
technology is completed.
Question. What best practices or lessons learned from the West Rail
International Bridge experience might CBP apply to efforts to process
traffic at the reinstated Presidio rail POE?
Answer. The West Rail International Bridge project spanned several
years with the original design being completed many years prior to the
start of construction. During the intervening years, CBPs facility
design requirements were upgraded (per CBP's 3-year cyclical process).
As a result, by the time construction was funded, the designs required
upgrading to be in compliance with the most current standards. This
increased the cost of the project.
In addition, the project experienced a delay due to uncertainty
regarding the responsibility to fund the relocation of the rail x-ray
system. Had this issue been resolved at the beginning of the project,
the project might have been completed earlier. Going forward, funding
responsibilities are to be clarified during the programming phase,
prior to the start of design.
Since the construction project was a County-funded project rather
than a CBP-funded project, CBP's involvement in the early stages of the
project was minimal. Going forward, CBP will work with local
stakeholders starting at project inception through construction to
ensure stakeholder plans are in compliance with CBP's requirements so
as to prevent delays and equally important, adverse impact to the LPOE
operations.
cross border trade enhancement act
Question. As you may know, I authored a bill to provide innovative
partnerships between border communities and businesses to boost
staffing and improve infrastructure at our land ports of entry. The
bill, S. 461, the Cross Border Trade Enhancement Act, has been amended
to reflect the input of various members and stakeholders and was
recently passed by HSGAC prior to the Memorial Day recess.
Texas communities have shown that they can't wait to meet the
resource needs at our ports of entry, and have been leading efforts to
partner with CBP to improve staffing and modernize infrastructure at
our ports of entry using their own resources. What steps is your agency
taking to improve administration of existing partnership programs to
achieve even better results, and will you support my legislation to
standup a more permanent framework that better meets the needs of your
agency as well as my constituents?
Answer. CBP continues to expand and mature its capacity to explore
infrastructure and staffing partnership opportunities through its
Donations Acceptance and Reimbursable Programs. In June, the Donations
Acceptance Program announced that three new proposals had been approved
for further planning and development and has recently implemented a new
process by which to accept and evaluate small scale proposals valued at
$3 million or less on a year-round basis. The Reimbursable Services
Program has also made significant strides towards expanding its
capacity and announced 29 new selections for reimbursable services
agreements on June 23rd, a number of which are located in Texas. CBP
has and continues to collaborate with its stakeholders to explore new
opportunities to improve the implementation and administration of its
Donations Acceptance and Reimbursable Services Programs.
CBP is supportive of legislation that establishes a more permanent
legislative framework, and commits to working with your office and
other Members of Congress to support authorities that provide the
Federal Government with full flexibility to explore, foster, and
facilitate partnerships for infrastructure and staffing improvements.
border wait times
Question. Along with then-Senator Hutchison, I requested a GAO
Report on CBP border wait time collection practices, responding to
concerns from border communities and businesses that current agency
processes were antiquated and failing to keep pace with increasing
trade volumes. The final 2013 report outlined serious flaws in agency
practices, including: poor wait time collection methods; a lack of
progress toward automated data collection; and an overall absence of
trade facilitation-related metrics for guiding agency resource
allocation decisions. Since the report was issued in July 2013, CBP has
struggled to fully implement the GAO's recommendation to improve and
modernize data collection practices. One option for improving data on
Texas border wait times that CBP has evaluated is leveraging an
existing automated wait time collection system (Border Crossing
Information System, operated by the Texas A&M Transportation Institute)
toward the existing Border Wait Times online platform. CBP has
discussed a maintenance and funding strategy with the Federal Highway
Administration as well as TxDOT, but has thus far not committed
resources.
As you may know, wait times at the Texas-Mexico border are a
concern for Texas border communities, as well as binational trade and
commerce. How is your agency working to improve the methods it uses to
collect wait times along the Southwest Border and move toward
automated, technology-based solutions, like those we have piloted in
Texas?
Answer. CBP and the Federal Highway Administration (FHWA) have
assessed the feasibility of replacing current manual methodologies for
calculating commercial vehicle wait times with automated methods. CBP
and FHWA recommended enhancements to leverage the existing automated
wait time collection system--the Border Crossing Information System,
operated by the Texas A&M Transportation Institute. The enhancements
were completed in 2016.
In July 2016, CBP committed additional resources via an Interagency
Agreement with FHWA to continue the operations and maintenance of the
seven automated RFID wait time collection system in Texas through FY
2017 in order for CBP to perform final ground truth data verification
on the accuracy of the data being collected.
The automated commercial vehicle wait time measurement solution is
currently deployed at eight southern border crossings: seven in Texas
and one in Nogales, Arizona. The RFID solution captures wait times
every 10 minutes using benchmarks identified by CBP (e.g., exit from
toll booths or Aduana Mexico):
Veterans Memorial Bridge (Brownsville, TX),
World Trade Bridge (Laredo, TX),
Pharr-Reynosa International Bridge (Pharr, TX),
Colombia Solidarity Bridge (Laredo, TX),
Bridge of the Americas (El Paso, TX),
Yselta/Zaragosa Bridge (El Paso, TX),
Camino Real International Bridge (Eagle Pass, TX), and
Mariposa Port of Entry (Nogales, AZ).
The system will begin measuring automated wait times at the
Mariposa Port of Entry in Nogales, AZ in the 4th Quarter of FY 2016.
Mariposa is the first crossing location in the State of Arizona to
collect automated wait times. The FHWA has also funded a new border
wait time study for the New Mexico-Chihuahua, Mexico border which is
expected to begin by the end of October 2016. With this recent study,
FHWA has funded border wait time studies for all four southern U.S.
border States. It is anticipated that the automated commercial vehicle
Radio Frequency Identification (RFID) wait time measurement solution
will provide CBP with accurate and reliable commercial vehicle wait
time data, eliminating the need for the port to manually calculate wait
times. The eight crossings outfitted with RFID wait time technology
will enable CBP to capture wait times for nearly 70 percent of
commercial traffic on the Southwestern Border. (The TTI website may be
accessed at http://bcis.tamu.edu/index.aspx).
Beginning on October 24, 2016, the DHS Science and Technology (S&T)
directorate will be performing an independent verification on the
accuracy and reliability of the RFID solution. Pending verification,
CBP will coordinate efforts to develop communication protocols to
automatically update the commercial wait time data on the CBP Mobile
Border Wait Time website and Border Wait Time app.
CBP is also moving forward with developing a data-driven wait time
measurement solution (i.e., no hardware deployment required) for
measuring privately owned vehicle wait times. The data-driven solution
takes advantage of travel data (i.e., Floating Car Data) derived from
the public sector and CBP's vehicle throughput data.
The data-driven solution will enable CBP to provide wait time and
mapping data to the traveling public in near real-time, allowing the
traveler to make an informed decision on when and where to cross the
border. The solution is currently collecting test data at nine
crossings along the northern and southern border.
Due to the complexity of the commercial vehicle environment, the
data-driven solution pilot will only focus on private vehicles at this
time.
CBP is committed to implementing an automated wait time solution
for both commercial and privately-owned vehicles along high-volume
northern and southern border crossings and will continue to work
collaboratively with our border partners to identify innovative
solutions to reach this goal.
______
Questions Submitted by Hon. Patrick J. Toomey
drug interdiction
Question. You testified in September 2015 at a Senate Homeland
Security Committee field hearing that seizures of illicit fentanyl had
risen substantially in the last 3 years. Despite the increased
enforcement actions, there has been a dramatic and disturbing increase
in overdose deaths attributable to illicit fentanyl and other synthetic
drugs. The Drug Enforcement Administration (DEA) suggests much of the
illicit fentanyl and other drugs are arriving from China, either
directly or through Canada and Mexico.
Why in your view has it been so hard to detect and seize these
drugs before they do harm to U.S. citizens?
Answer. CBP employs a multilayered approach to border security,
utilizing advanced data, trend analysis, tactical intelligence and
automated targeting systems to identify high-risk cargo, conveyances,
and passengers for secondary examination.
The primary challenges to intercepting synthetic narcotics, such as
illicit fentanyl, include the identification of synthetic narcotic
compositions, the lack of advanced targeting or analysis in
international mail and the ability of laboratories to change the
chemical compositions of substances once deemed to be illegal. Standard
field test kits do not accurately detect fentanyl. Many fentanyl
shipments are smuggled into the United States as mixtures that are
difficult to identify using field equipment with personnel without the
requisite scientific training. Regarding pure fentanyl, the field
equipment currently in use have librairies that may identify a pure
laboratory form of fentanyl but has trouble identifying street grade
forms of fentanyl. It must also be emphasized that fentanyl analogues
are extremely potent and must be handled very carefully, making field
examination more difficult than other scheduled narcotics.
CBP has improved its effectiveness with detecting and seizing other
narcotics. CBP is deploying a new field detection technology at the
port of Otay Mesa, the express consignment hubs, and the International
Mail Facilities (IMF). This new technology allows CBP's labs to
remotely and rapidly analyze sampled narcotics to more accurately
determine the substance. Within the International Mail environment,
service providers are not required to provide CBP with any advanced
manifest information. This lack of advanced data significantly impacts
CBP's ability to identify and target high-risk packages prior to
arrival. Without the pre arrival risk assessment, intercepting illicit
contraband is left to Officers manually sorting for identification and
manifest information.
Due to the wide range of chemical compositions, law enforcement
generally has difficulty identifying synthetic narcotics. Once the
chemical composition is deemed ``illegal'' it is placed on the
scheduling list.
Question. How do you determine whether CBP is effective at
interdicting illicit fentanyl and other synthetic drugs?
Answer. CBP has had successes interdicting illicit fentanyl and
other illicit synthetic drugs. During fiscal year (FY) 2016 until the
end of August, CBP seized 173.78 kilograms of fentanyl. This is a
152.77 percent increase in the amount seized (68.75 kilograms) during
the same time frame in FY 2015. As technology improves allowing CBP to
more accurately assess the contents of packages and shipments into the
United States, our interdiction rates will improve. Robust cooperation
from our law enforcement partners in Mexico and the Peoples Republic of
China will also greatly enhance our ability to interdict illicit
fentanyl and other illicit synthetic drugs.
trade and goods relationship
Question. Is there any relationship between the volume of licit
trade flows through U.S. ports of entry and the volume of illicit
contraband goods flowing through those same ports of entry?
Answer. In general, the more trade and travel any given POE
processes, the more likely that POE is to seize illicit contraband;
however, beyond this generalization, CBP is not aware of any direct
relationship between individuals and organizations involved in licit
trade and the volume of illicit contraband seized.
chinese help
Question. On October 1, 2015, the Chinese Ministry of Public
Security (MPS) Narcotics Control Bureau announced the sale and
distribution of 116 chemical compounds used in the production of
synthetic drugs will be regulated in China, including acetyl-fentanyl.
Part of the challenge to stopping the flow of controlled substances is
the ability of chemists and drug gangs to slightly manipulate the
molecular structure of a chemical to circumvent the law. Despite recent
efforts by the Chinese government to stop the export of fentanyl, what
else do you believe the Chinese could do to help stop the large
quantities of acetyl-fentanyl and other dangerous, illegal substances
that are continuing to flow into our country?
Answer. Most direct shipments of acetyl-fentanyl to the United
States from China arrive as air cargo or in postal shipments. Advanced
information is voluntarily provided by carriers participating in the
Air Cargo Advance Screening (ACAS) pilot, but only for conventional air
cargo and express consignment shipments. Pre-loading advance data for
postal shipments is not yet available. Because of the unique nature of
the postal data supply chain, postal shipments were not included as
part of the ACAS pilot. If China could provide export data on acetyl-
fentanyl shipments destined to the United States by air, or information
on suspected shipments, this information may be helpful to CBP air
cargo targeting efforts. As most chemical manufacturers of acetyl-
fentanyl in China are state-owned enterprises, it may also be possible
for these companies to provide to CBP the export data for shipments of
this chemical, and its various related formulations, to U.S., Central
American and Mexican addresses. China's General Administration of
Customs, could also provide more complete information about the results
of its Container Security Initiative-requested container inspections,
to improve CBP's targeting efforts.
drug flow
Question. While you were Director of the Office of National Drug
Control Policy between 2009 and 2014, was the flow of illicit fentanyl
and other synthetic drugs, including new psychoactive substances, a
concern?
Answer. Yes, synthetic drugs such as illicit fentayl and new
psychoactive substances, were a significant concern. In fact, two
primary objectives of the interagency visit to China I led in September
2012 were to encourage China to address methamphetamine precursor
chemicals and synthetic drugs to include new psychoactive substances.
To follow up our constructive conversations in Beijing and to ensure
that they fully understand our message I sent a follow up letter to
China's Ministry for Public Security dated December 12, 2012. This
letter specifically noted that a ``. . . priority issue for the White
House is the control of new psychoactive substances.''
Question. What policies did you try to put in place as drug czar to
limit the import of illicit fentanyl?
Answer. When I served as ONDCP Director, I worked with my
interagency colleagues, in multiple forums, to encourage producing
countries--primarily China--to ban production and transshipment of
synthetic drugs and precursors, as well as illicit fentanyl. In 2013,
ONDCP began to receive discrete reports from High Intensity Drug
Trafficking Areas detailing heroin and fentanyl related overdoses. Data
was inconclusive, therefore ONDCP asked DEA to coordinate data sets
with the HIDTAs to better assess fentanyl use.
My staff and I also worked, in collaboration with the Department of
State and the Drug Enforcement Administration, to improve the exchanges
of information about effective approaches to controlling synthetic
drugs with key partners, including the European Union, the United
Kingdom, Sweden, Australia, and New Zealand. Many of these
conversations occurred on the margins of the annual Commission on
Narcotics Drugs meetings in Vienna where synthetic drugs including new
psychoactive substances had become a high priority concern of many
nations.
tariff evasion report
Question. Since 2008, the Department of Commerce (DOC) and the
International Trade Commission (ITC) have enacted or extended 130 anti-
dumping/countervailing duty (AD/CVD) orders on imports of illegally
subsidized Chinese products. These orders are important to some of my
constituents who compete directly with Chinese manufacturers.
Unfortunately, many constituents--particularly producers of steel and
paper products--inform me that importers often evade AD/CVD orders by
falsifying country-of-origin labels and other import documentation. Tax
fraud is always problematic, but it is especially harmful in this
instance because it negates the legal remedies my constituents have
obtained from the ITC.
In the past, CBP has provided Congress and other stakeholders with
data on CBP's actions to combat tariff evasion. I ask that you provide
my office with an updated report on the actions CBP is now taking to
reduce tariff evasion, specifically for Chinese products covered by:
ITC Investigation Nos. 701-TA-451 and 731-TA-1126-1127; and existing
AD/CVD orders for product groups ISM, ISO, and ISP.
Answer. The enforcement of AD/CVD orders is a priority for CBP. CBP
takes an agency-wide approach to enforcing AD/CVD orders, utilizing
nationwide assets from across the agency to enforce AD/CVD. CBP employs
multiple methods such as document reviews, cargo exams, audits,
targeting and analysis, and scientific testing at the port, Centers of
Excellence and Expertise, and national level to target AD/CVD evasion
on imports subject to AD/CVD, including document reviews, cargo exams,
audits, targeting and analysis, and scientific testing. CBP works in
partnership with the trade community and other government agencies,
including the U.S. Department of Commerce and U.S. Immigration and
Customs Enforcement/Homeland Security Investigations.
The referenced ITC investigations refer to the AD/CVD orders on
thermal paper from China. CBP is working in partnership with Commerce,
ICE HSI and the U.S. thermal paper industry to enforce the AD/CVD
orders on thermal paper from China. CBP has been requesting single
transaction bonds from importers of thermal paper, due to suspected
transshipment of thermal paper from China; conducting entry summary
reviews and cargo exams of thermal paper imports; auditing thermal
paper importers; and working with foreign customs authorities to obtain
information about shipments that have potentially been transshipped to
evade AD/CVD liability. In November 2015, CBP personnel visited the
facility of U.S. thermal paper producer Appvion in Dayton, Ohio, and
has been regularly meeting with Appvion staff to obtain additional
commodity expertise and market intelligence to enforce these AD/CVD
orders on thermal paper from China.
CBP is currently taking enhanced steel enforcement measures by
targeting steel imports (in product groups (Mill Products (ISM)), Other
Products and Castings (ISO), and Pipe Products (ISP) to counter AD/CVD
duty evasion. The enhanced steel enforcement measures include enhanced
reviews of Chinese steel imports which will provide a statistically
valid measure of risk of duty evasion, and provide targets for further
enforcement. CBP is also requiring ``live entry'' for certain high risk
steel shipments, which means that the importer must provide all entry
documents and duties are required to be provided before cargo is
released by CBP into U.S. commerce. The live entry requirements have
already been implemented on certain shipments of steel plate from
China, and CBP is examining other high-risk steel imports to determine
if live entry is necessary. CBP is also increasing other operational
measures on steel imports, including audits of steel importers.
CBP is also working with its North American partners to increase
steel enforcement throughout North America. CBP, the Canada Border
Services Agency (CBSA) and Mexico Servicio de Administracion Tributaria
are initiating a trilateral customs dialogue at the North American
Steel Trade Committee to discuss these efforts and additional
collaboration in order to strengthen the North American position in the
global economy. Additionally, CBP and CBSA recently developed an AD/CVD
collaborative work plan on AD/CVD information sharing and cooperation,
and CBP and the CBSA are collaborating on a joint steel operation. CBP
is also exploring
AD/CVD information sharing and potential joint trade enforcement
operations with Mexico's Servicio de Administracion Tributaria to
address threats to our respective economies.
______
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF NATIONAL DRUG CONTROL POLICY
Washington, DC 20503
December 12, 2012
State Councilor Meng Jianzhu
Ministry of Public Security
No. 14 East Chang'an Street
Beijing 100741 China
Dear State Councilor Meng Jianzhu:
It was a great pleasure for me, as a White House official and
Director of National Drug Control Policy, to lead an interagency
delegation to the People's Republic of China September 10-14, 2012. We
were very pleased with the constructive and substantive nature of our
bilateral discussions and the warm hospitality with which we were
received.
The United States intends to maintain regular, high-level
cooperation with China on drug issues as a vital and permanent part of
our bilateral relationship. In that context, the White House Office of
National Drug Control Policy (ONDCP) looks forward to continuing our
counternarcotics cooperation in accordance with the Memorandum of
Intent we signed on September 12, 2012. To ensure that the important
progress from our meetings in Beijing is maintained, I have shared our
agreements and discussions on the topics below with the U.S. co-chairs
of the U.S.-China Joint Liaison Group (JLG), who, as you know, have
already built a good record of success on counternarcotics efforts.
Precursor Chemical Control
During our meeting both sides highlighted the very
productive efforts by China and the United States to combat
pseudoephedrine/ephedrine-based methamphetamine production. However,
the United States noted with concern that methamphetamine manufacturers
have adapted and now the vast majority of methamphetamine consumed in
the United States is manufactured through the phenyl-2-propanone (P2P)
method using phenylacetic acid (PAA). The United States requested that
China take steps to enhance scrutiny of shipments of PAA and related
chemicals to Central American nations, and other states with no
apparent legitimate need that might be used as conduits for illicit
methamphetamine manufacturing producers.
The United States, China and other nations should
accelerate the exchange of specific information about this new threat.
The United States' Drug Enforcement Administration (DEA) office in
China would be pleased to facilitate information exchange between
China's Ministry of Public Security (MPS) and Western Hemisphere
nations, as appropriate.
New Psychoactive Substances
Another priority issue for the White House is the
control of new psychoactive substances. This issue has previously been
a discussion topic at the JLG counternarcotics working group, but
requires added emphasis.
Synthetic drugs--primarily synthetic cannabinoids and
synthetic cathinones--are widely used and have caused significant harm
to U.S. citizens. Many of these substances are illegal controlled
substances in the United States, but manufacturers continue to
circumvent the legislation by producing new variants that are not yet
subject to controls.
The United States would be interested in additional
law enforcement operational exchanges on cases related to new
psychoactive substances via our DEA office in Beijing. In addition,
ONDCP, per our September 2012 Memorandum of Intent, would be pleased to
exchange information concerning use of these substances.
Trade-Based Money Laundering
During our discussions in Beijing, the U.S. side
proposed, and China accepted in principle, that we increase cooperation
on money laundering investigations.
We should build on the positive steps taken earlier
this year when MPS and DEA completed a training exchange with officers
from the Narcotics Control Board (NCB) regarding money laundering
investigations.
The U.S. Internal Revenue Service (IRS) delegation
member proposed, and the MPS accepted in principle, an increase in
bilateral law enforcement cooperation on the investigation of the
transactions involving laundering of narcotic proceeds occurring in the
United States and China. The IRS, assisted by Joint Interagency Task
Force West (JIATF-West), hopes to share its enforcement experience with
our Chinese partners in money laundering trends and methods to detect
and investigate those offenses.
I thank you again for your outstanding efforts, and those of your
entire team from the Ministry of Public Security, to ensure a
productive and enjoyable visit by our delegation. If there are key
points from our discussions that have not been included above, please
let me know. I have directed my staff member, Richard Baum, who
accompanied me on the trip and who works closely with your Ministry of
Public Security representatives in Washington, to follow up on the
issues raised on our visit. He can be reached at [email protected] or
by phone at 202-395-7221. Please feel free to contact me directly, or
your staff may work through Mr. Baum, if ONDCP can be of assistance in
any way.
I look forward to future engagements between our organizations.
Sincerely,
R. Gil Kerlikowske
Director
______
Question Submitted by Hon. Tim Scott
targeting methodologies
Question. Effective and efficient trade enforcement is vital to
upholding our free trade agreements and improving revenue collection.
As you know, Customs' targeting methodology has not been disclosed with
Congress in any meaningful way. To that end, I offered an amendment to
the Trade Facilitation and Trade Enforcement Act of 2015 that required
CBP to include in their strategic plan a description of the actual
targeting methodologies used in enforcement activities.
Has Customs started to implement this provision? If not, what are
your plans for implementation and how far along are you in that
process?
Answer. CBP and U.S. Immigration and Customs Enforcement are
currently in the process of drafting the Joint Strategic Plan and
intend to submit this plan in accordance with the requirements outlined
in the Trade Facilitation and Trade Enforcement Act of 2015.
______
Questions Submitted by Hon. Maria Cantwell
trade enforcement trust fund
Question. Commissioner Kerlikowske, H.R. 644, the Trade
Facilitation and Trade Enforcement Act of 2015, included a provision I
authored to authorize a $15 million Trade Enforcement Trust Fund
specifically for the purposes of enforcement and capacity building with
our FTA and World Trade Organization partners. I strongly believe that
if we are going to have economically meaningful trade deals and high
standard commitments from our partners, then we must make sure those
partners actually live up to those commitments.
The Customs and Border Protection is on the front lines in the
enforcement of our trade laws, specifically anti-dumping and
countervailing duty orders, when we find that countries we are doing
business with are trying to bend the rules. In addition to those laws,
would you please explain the role that Customs and Border Patrol plays
in enforcing the free trade agreements and WTO commitments that the
United States is a party too?
Answer. U.S. Customs and Border Protection (CBP) plays an integral
role in the implementation and enforcement of trade agreements and
trade preference programs, which provide duty-free or reduced duty
access to the U.S. market for qualifying merchandise. CBP works to
ensure that the benefits afforded by the free trade agreements (FTAs)
accrue only to eligible importations.
CBP utilizes a layered, multi-faceted approach to detect non-
compliant shipments and deter violators. This layered approach includes
data analysis and targeting, verification, and enforcement. CBP
conducts extensive verifications of trade agreement preference claims
(for both textile and non-textile imports) to ensure that the goods
qualify under the agreement. CBP also utilizes collaborative
partnerships with other Federal agencies, foreign governments and the
trade community to more effectively enforce trade agreements.
Question. Do you have the resources you need to enforce these laws?
Answer. CBP utilizes its existing resources to best enforce free
trade agreements and trade preference programs.
Question. What enforcement actions could CBP improve if given
access to more funding?
Answer. CBP continues to explore new and innovative ways and
methods to enhance and strengthen its trade agreement enforcement
efforts and seeks to expand the use of existing tools with the
available resources.
ustr funding in coordination with cbp
Question. Would the funding made available to the USTR through the
trust fund, in coordination with agencies like CBP, help you better
enforce our trade agreements and improve economic outcomes here at
home?
Answer. Any funding made available to CBP through the Trust Fund
could only enhance CBP's capabilities to detect non-compliance and
enforce trade agreements to ensure a fair and competitive trade
environment. The Trust Fund is managed by USTR per section 611 of TFTEA
that directs that USTR ``. . . shall, on the basis of the advice of the
Trade Policy Committee and relevant subordinate bodies of the TPC, use
or transfer for the use by Federal agencies represented on the TPC
amounts in the Trust Fund. . . .''
______
Questions Submitted by Hon. Robert P. Casey, Jr.
illicit antiquities interdicted
Question. We must take a whole of government approach to curb the
means and mechanisms by which terrorist groups raise revenue to conduct
operations, procure weapons, and pay salaries to fighters. The
President recently signed into law the ``Protect and Preserve
International Cultural Property Act.'' This bill, which I sponsored in
the Senate, authorizes the President to restrict the import of cultural
artifacts illicitly smuggled out of Syria since the beginning of the
conflict. This will help cut off a meaningful component of the way ISIS
finances its operations and send an important signal to our partners in
the region that we expect them to do the same. CBP will be instrumental
in successful implementation of this legislation. I request responses
to the following questions:
What is the annual volume of illicit antiquities that CBP has
interdicted coming into the United States from 2011 to 2015?
Answer.
Fiscal Year Seizures
2011 27
2012 15
2013 18
2014 13
2015 20
antiquities identification training
Question. Do CBP officers have sufficient training in
identification of antiquities and their provenance documents? If not,
what additional training is required to improve CBP officers' ability
to effectively interdict smuggled antiquities?
Answer. CBP officers do not receive training specific to the
identification of antiquities; however, the CBP Office of International
Trade (OT) Cultural Property Integrated Project Team is working with
CBP's Office of Field Operations (OFO) and the Office of Chief Counsel
(OCC) to develop a training program. With regard to provenance
documents, OT has always recommended that the documents be sent to U.S.
Immigration and Customs Enforcement (ICE) for authentication depending
on the circumstances. OCC and OT are working on a directive and other
implementing documents to provide agency guidance/policy on how to
establish an antiquity's provenance.
U.S. Customs and Border Protection (CBP), Office of Field
Operations, ensures that CBP Officers are trained on detecting
prohibited goods entering the United States as part of their basic
training. New hire CBP Officers receive training on Anti-Terrorism,
Other Agencies, and Introduction to Travel Documents as part of their
pre-academy preparation.
During the 19-week CBP Officer Basic Training, CBP Officers also
receive training to address cultural property:
Prohibited and Restricted Merchandise; and
Seizure Processing.
CBP Officers also receive training during basic to address the
anti-terrorism mission of CBP, as well as risk based targeting:
Anti-Terrorism Overview;
Anti-Terrorism, Risk Targeting, and Passenger; and
Anti-Terrorism, Risk Targeting and Trade.
Finally, CBP Officers receive document fraud detection training
through the following courses during basic:
Analyzing Documents;
Document Analysis and Questioning Lab;
Primary Document Examination/Primary Document Examination
Practical Exercise;
Secondary Passenger Processing; and
Secondary Document Examination.
Upon their return from basic academy, CBP Officers are then
required to complete a post-academy curriculum over the remainder of
their one-probationary period. The following modules revisit what was
taught at basic and certifies the CBP Officer to work in the area:
Primary Inspections;
Secondary Inspections; and
Processing Seizures.
The Forensic Document Analysis Unit (FDAU) distribute mandatory
training to the field (e.g., Border Security Coordinators, Tactical
Analysis Units) each year with the latest trends in fraudulent
documents and impostor detection in addition to alert bulletins.
CBP Officers have the authority to detain any item suspected of
being cultural property and collaborate with CBP Import Specialists,
Immigration and Customs Enforcement, Homeland Security Special Agents,
and INTERPOL to confirm legitimacy, valuation, and ownership of the
item before release or seizure.
Finally, the Office of Field Operations distributes musters and
policy memoranda to be disseminated during shift musters to ensure CBP
Officers have the latest information on trends and threats to our
Nation.
training and technical assistance to foreign partner countries
Question. What training and technical assistance does CBP offer to
foreign partner countries on border control and identification of
illicit goods, like IED precursor chemicals, drugs, weapons, and
antiquities?
Answer. CBP's Office of International Affairs offers training and
technical assistance to foreign partner countries, including the
International Passenger Interdiction Training and International Border
Interdiction Training and the Targeting and Risk Management (Land)
Training. These training efforts are geared towards assisting our
foreign partners increase their capability to manage border security
operations and identify illicit materials and goods, including IED
precursor chemicals, drugs, weapons, and antiquities.
Question. Are there any legislative or funding barriers to CBP
offering this type of training?
Answer. Because CBP does not have title 10 or title 22 authority,
and title 19 does not provide funding for foreign assistance, CBP
collaborates with the Department of State to develop and implement all
foreign training programs.
Question. What training and technical assistance does CBP and the
Trade Transparency Unit offer to foreign partner countries on
identification and interdiction of trade based money laundering?
Answer. U.S. Immigration and Customs Enforcement (ICE) Homeland
Security Investigations Trade Transparency Unit (TTU) provides law
enforcement and customs agencies around the world information,
assistance, and training on Trade Based Money Laundering (TBML). The
training provided by the TTU ranges from the basic introduction to the
concepts of TBML to development of complex TBML investigations. Most
foreign countries are unable to conduct TBML investigations because
they lack access to both sides of trade transactions and are unable to
analyze big data. The sharing of data and access to the ICE analytical
system are two of the benefits provided in TTU partnerships. Bulk data
analysis may be one of the key factors in identifying the illicit
movement of antiquities and cultural artifacts. ICE has had initial
discussions with the U.S. Department of State's Cultural Heritage
Center on TBML, suspected illicit goods, and utilizing big data as a
means to disrupt ISIS finances.
trade-based money laundering
Question. What is the annual number of investigations CBP initiated
concerning trade-based money laundering from 2011 to 2015?
Answer. U.S. Customs and Border Protection (CBP) and U.S.
Immigration Customs Enforcement (ICE) Homeland Security Investigations
(HSI) coordinate extensively on investigations involving cultural
antiquities, trade-based money laundering. Specifically, between 2011
and 2015, ICE HSI initiated 1,029 trade-based money laundering cases.
ICE HSI Trade-Based Money Laundering Cases Initiated
------------------------------------------------------------------------
Fiscal Year
-------------------------------------------------
2011 2012 2013 2014 2015
------------------------------------------------------------------------
Number of cases 209 213 277 195 135
initiated
------------------------------------------------------------------------
Question. What is the value of goods interdicted as a result of
those investigations?
Answer. Illicitly trafficked artifacts and antiquities seized as
part of these investigations are usually considered priceless,
especially by the country that is the lawful owner. Often, antiquity
experts are extremely hesitant to assign a monetary value to cultural
property. As such we cannot give an estimated total value for illicitly
trafficked cultural property seized during investigations.
______
Questions Submitted by Hon. Robert Menendez
refunding erroneously collected duties
Question. As I mentioned at the hearing, several of my constituents
have been accidentally charged higher rates of duty for imported
products due to CBP error. Although they worked to rectify the problem
with CBP, and CBP has admitted to them, in writing, that they were
charged a higher rate of duty than they should have been, CBP has
stated that they are statutorily unable to refund the excess charges.
In the past, these ``reliquidation'' cases were addressed through the
MTB process, but the new process Congress is currently debating would
not provide these companies relief.
Commissioner Kerlikowske, can you please explain to the members of
the committee why CBP is statutorily barred from refunding erroneously
collected duties from these companies, and if the MTB process is no
longer the proper avenue to correct these mistakes, what should
Congress do in order to make sure that these companies receive the
money rightfully owed to them?
Answer. Generally, if an importer does not file a timely protest as
is required by statute (see 19 U.S.C. 1514) and more than 90 days have
elapsed since the original liquidation of an entry by CBP, the agency
is barred by statute from carrying out reliquidations that may result
in a refund of collected duties.
Liquidation is defined as the final computation or ascertainment of
duties accruing on an entry of merchandise. See 19 CFR Sec. 159.1. Once
liquidation occurs, the import transaction is completed and the
decision made by CBP becomes final and conclusive on all parties,
including the United States. See 19 U.S.C. Sec. 1514(a). There are two
exceptions to this rule. First, an importer may file a protest
challenging a CBP decision within 180 days from the date of
liquidation. Filing a protest commences the administrative review
process. If not satisfied with the result of the administrative
process, the importer may seek judicial review of the decision made by
CBP. If a protest is not filed, however, the liquidation remains final
and is no longer subject to administrative or judicial review. See
Chemsol, LLC v. United States, 755 F.3d 1345, 1349-50 (Fed. Cir. 2014).
Even if a protest is not filed, CBP may on its own reliquidate an
entry, in any respect, within 90 days from the date of liquidation. See
19 U.S.C. Sec. 1501, amended by the Trade Facilitation and Trade
Enforcement Act of 2015 Sec. 911, Pub. L. No. 114-125, 130 Stat. 240
(changing the start of the 90-day voluntary reliquidation period from
the date of posting of notice original liquidation to the date of
original liquidation). Once this 90-day voluntary reliquidation period
expires, CBP no longer has the legal authority to reliquidate an entry
unless a protest is filed. Thus, if an importer does not file a protest
and the entry is beyond the 90-day voluntary reliquidation period, the
liquidation of an entry becomes final and CBP is statutorily barred
from changing the liquidation. In order for companies with entries that
are statutorily barred to receive refunds, Congress must provide CBP
with express statutory authority to make the refunds.
Before 19 U.S.C. Sec. 1520(c) was repealed by Sec. 2105 of the
Miscellaneous Trade and Technical Corrections Act of 2004, Pub. L. No.
108-429, CBP could reliquidate an entry or reconciliation to correct
``a clerical error, mistake of fact, or other inadvertence . . . not
amounting to an error in the construction of a law, adverse to the
importer and manifest from the record or established by documentary
evidence, in any entry, liquidation, or other customs transaction, when
the error, mistake, or inadvertence is brought to the attention of
[CBP] within one year after the date of liquidation.''
goods made with forced labor
Question. I and many other members of this committee were proud to
close the consumptive demand loophole in the Customs bill we passed
last year and to pass my amendment to TPA to withhold ``fast track''
for countries on Tier 3 of the State Department's Trafficking in
Persons Report. As you know, many victims of forced labor have been and
continue to be victims of human trafficking. I was therefore surprised
to see that CBP states on the forced labor section of its website that,
``[t]he agency does not generally target entire product lines or
industries in problematic countries or regions.'' Furthermore, since
2001, CBP has only issued two withhold release orders for products made
with forced labor. Both of these orders were made about 6 weeks ago and
target Chinese companies in the chemicals industry. But we all know
that forced labor is a global problem--much more widespread than just
one country or one product.
Given Congress's clear direction on this issue, does CBP leverage
the work of the State Department's Trafficking in Persons Report and
the Department of Labor's List of Goods Produced by Forced and Child
Labor to identify countries and products with a higher likelihood of
being made with forced labor?
Answer. Yes, CBP employs a risk-based approach to all enforcement
issues, including forced labor, to identify countries and products with
the highest likelihood of being made with forced labor. While CBP
leverages the source information provided to support the Department of
Labor lists and State Department reports and values the strong
relationships we have with the Department of Labor and the Department
of State to work together to combat forced labor, CBP has a different
evidentiary burden to meet in making a determination under 19 U.S.C.
Sec. 1307. CBP has issued four withhold release orders in FY 2016 and
continues to enforce the entire list of active withhold release orders
and findings posted on its website.
Question. Does CBP have the proper resources--both at home and
abroad--to identify and interdict products made with forced labor?
Answer. Since the passage of the Act, CBP has reallocated or
detailed existing staff to create a team within the Trade Enforcement
Task Force that includes one program manager, two additional personnel,
and contract support, to work full time on this issue. Additionally,
auditors from Regulatory Audit and attorneys from Regulations and
Rulings have been assigned to forced labor allegation cases to review
and, where appropriate, prepare withhold release orders. To the extent
possible, CBP leverages its overseas offices and partners with the U.S.
Immigration and Customs Enforcement (ICE) Homeland Security
Investigations (HSI) to support forced labor enforcement; however, U.S.
authority is limited outside the United States and forced labor and
forced child labor often occurs in countries where cooperation with
U.S. authorities is limited. CBP's trade enforcement resources address
a myriad of critical trade topics as directed by the Act, and CBP
acknowledges that additional resources to support its trade enforcement
missions would facilitate improved identification and interdiction of
forced labor products.
body-worn and dashboard cameras
Question. Would you please update the committee on what progress
has been made, and when the public can expect widespread CBP deployment
of body-worn and dashboard cameras?
Answer. U.S. Customs and Border Protection (CBP) has been actively
seeking to expand our camera technology to enhance officer and agent
safety, transparency and accountability through the use of both body-
worn cameras and vehicle-mounted cameras. Earlier this year, in April
2016, CBP issued a Request for Information (RFI) on body-worn camera
and vehicle-mounted camera systems, which yielded responses from 29
vendors. Based on the results of this market research, CBP issued a
Request for Quote (RFQ) on September 13. We solicited quotes for 108
body-worn cameras and 12 vehicle-mounted cameras, and CBP awarded 4
delivery orders. These cameras will be used at select air, sea and land
ports, checkpoint locations, and CBP training academies.
Multiple awards will enable CBP to evaluate several commercially
available camera systems in varied operational environments and,
ultimately, determine the right mix of camera systems. The purchase
will also help to define reasonable cost estimates for processing and
storing audio and video files.
To further this initiative, on October 11, 2016, CBP hosted a Body-
Worn Camera and Vehicle Mounted Cameras Industry Expo at CBP's Advanced
Training Center, which included 45 leading camera and software
providers. CBP law enforcement, policy, information technology,
training, and procurement personnel interacted with a room full of
vendors to learn about innovative camera technologies as well as video
processing and storage options. Vendors demonstrated camera systems and
answered questions about their products.
All cameras, not just body-worn, are as important to officer and
agent safety as they are to the safety of the public we serve. CBP
operates in a diverse border environment. Agents patrol the border in
desert heat, on the water, and in below freezing temperatures. These
drastically different environments present a challenge in finding the
right camera solutions. CBP was the first Federal agency to conduct a
feasibility study on body-worn cameras. From the study, we learned that
there isn't a ``one-size-fits-all'' solution. Nonetheless, we have many
different factors to consider during this next phase. Because cameras
are already used in much of CBP's day-to-day operations, a full-scale
deployment of body-worn cameras on every CBP officer and agent is
neither necessary nor cost effective. For example, a body-worn camera
may not be needed at a port of entry where there is already an
abundance of cameras in place. As with any large-scale modernization
project, we must deploy the technology carefully and in a fiscally
responsible way.
Question. Your statement also included a January deadline for
``[a]n assessment of existing fixed camera capabilities with
recommendations for enhancements, to include funding estimates.'' Is
that assessment complete and can you share it?
Answer. CBP is expanding the overall use of cameras to include
body-worn and vehicle-mounted cameras. The working group designated by
CBP operationally reviewed where cameras do and do not exist to
determine where to deploy additional cameras purchased. A formal report
was not produced although these workgroup reviews may guide future
camera deployments.
cbp integrity advisory panel
Question. I appreciate the work performed by dedicated external
law-enforcement professionals on the CBP Integrity Advisory Panel, co-
chaired by NYPD Commissioner Bratton and former DEA Administrator
Tandy. You are rightly committed to instituting best law enforcement
practices of oversight and accountability at CBP.
The panel's recommendations in its two reports are extensive: can
you comment on CBP's approach to implementing them and provide the
committee with periodic reports on DHS's and CBP's progress?
Answer. CBP welcomed and worked very closely with the Integrity
Advisory Panel. CBP realizes how important integrity is within our
workforce and to our stakeholders and the general public. The IAP's
recommendations often were confirmatory of work that was begun by CBP
and also directed new efforts. CBP established a mechanism to track and
review goals through a multi-component process.
Many of the recommendations in the IAP reports are completed or are
well underway. Several recommendations need outside Agency assistance
or require further consideration. CBP is willing to provide briefings
to the committee on CBP's IAP implementation progress and will reach
out to your staff to coordinate.
Question. One Panel finding I was particularly struck by is that
``[t]he CBP discipline system is broken.'' What reforms are you putting
in place to remedy that situation and to reform CBP's complaints
system?
Answer. In 2015, CBP created a Complaints and Disciplinary Steering
Committee to improve the way the agency responds to complaints and
communicates with the public. It has also addressed this matter through
the Integrity Advisory Panel and the Pivotal Report. These concerted
efforts have conducted inventories of all formal and informal case
handling systems, as well as existing systems and processes, to
identify leading practices. Other significant comprehensive initiatives
completed or underway include:
Staffing complaint intake centers with Spanish-speaking
personnel;
Instituting a centralized electronic complaint management
system;
Creating an online complaint form with DHS/Office of the
Inspector General points for receipt of complaints;
Formalizing a 24-hour complaint intake program with Spanish
language capability;
Establishing specific timeframes and processes for
furnishing confirmation of complaint receipt and providing
appropriate status updates;
Preparing a performance dashboard that will support
complaint reporting capabilities at the Sector Chief and Port
Director levels;
Developing guidance that will allow the CBP Office of
Professional Responsibility (OPR) to serve in a consultative
role to mission support and other organizational components;
Providing regular reports on complaint case resolution
similar to the Federal Bureau of Investigation, Office of
Professional Responsibility reports;
Maintaining complainants informed of the complaint status
through a closure letter;
Delegating to supervisors the effective resolution of
complaints with less serious offenses;
Regular reporting on the resolution of complaint cases; and
An assessment of the effects on the workload and staffing
(mission) of the response requirements in cases of use of force
incidents.
Question. When can we expect tangible changes and how will you
measure their effectiveness?
Answer. Since 2015, the CDSC has met frequently to improve the
complaints management and disciplinary process within CBP. The CDSC is
actively working to complete over two dozen recommended actions for
improvement or implementation (some are listed under 9a above). One
significant milestone that has already been completed is the
implementation of a centralized complaint management system to be used
by all CBP components. This centralization of complaints information
through a single electronic management information system will be
critical to ensure appropriate oversight at the CBP organizational
level. The CDSC is also working on instituting quantitative metrics for
determining workload-based hiring factors.
Question. Is Secretary Johnson also actively considering actions in
response to the reports?
Answer. As Secretary Johnson was instrumental in establishing the
Integrity Advisory Panel (IAP) under the rubric of the Homeland
Security Advisory Council, he has been kept informed on the Panel's
recommendations and CBP's response to said recommendations. The
Secretary was briefed both after the IAP's Interim report release in
June 2015 and the Panel's final report released in March 2016. The
Secretary concurs and supports CBP's response and implementation of the
IAP's recommendations.
______
Prepared Statement of Hon. Ron Wyden,
a U.S. Senator From Oregon
Across the world, trade cheats are looking for any way they can to
break our trade laws and rip off American jobs. Customs and Border
Protection is often our number-one defense against them. It is tasked
with spotting the illegally dumped steel and solar technology, the
counterfeit chainsaws and computer chips, before jobs are lost or
economic damage is done.
Earlier this year, the Finance Committee spearheaded the first big
package of customs legislation in decades as part of the Trade
Enforcement Act. Back when the last overhaul was passed, our customs
agency was fighting a very different foe. It was much more difficult
for foreign companies to evade duties by concealing their identities.
Now the Internet makes it easier to move quickly and stay hidden in the
shadows. Blocking counterfeit products from creeping into our market
used to mean stopping the right shipping container. Now counterfeit
products are often tougher to trace; they can be spread out in
individual boxes shipped straight to the doorsteps of American homes.
Since the last customs overhaul, China shifted its unfair trade
practices into overdrive. And in many cases, the old schemes to get
past our trade laws and rip off American jobs have taken on a new spin.
So in the wake of the Trade Enforcement Act becoming law, this
committee has an important role to play in ensuring that CBP is meeting
the mark on its trade mission. That mission remains as critical as
ever, even with CBP now under the Department of Homeland Security. It's
all about focusing like a laser on enforcing our trade laws, protecting
American workers, and defending our economy.
The early signals are, this focus is producing real results. For
example, our new legislation closed an egregious, old loophole in U.S.
trade laws that allowed for certain products made by slave or child
labor to be imported to this country. What the loophole said--that
economics trumped human rights--is wrong and un-American. I was very
glad to see that CBP has already taken action to stop the imports of
soda ash and several other industrial products from two Chinese
companies alleged to be using forced labor.
CBP has a lot of other tools to fight against the trade cheats, and
our new customs legislation added even more to the kit. I'll be
especially interested today in hearing about CBPs plans to implement
the ENFORCE Act, which gives CBP 6 months to put in place procedures to
ensure that American workers and firms aren't injured by foreign
products that are evading our laws.
Another of CBP's most important roles is fighting unfair
competition and job loss by cracking down on duty evasion and bringing
in revenue for taxpayers. CBP is also responsible for keeping illegally
harvested timber out of our market and for protecting consumers from
unsafe products. It is absolutely vital in the fight against trade
cheats that all of those enforcement tools are fully implemented,
including those that were created and strengthened in the Trade
Enforcement Act. I look forward to discussing today how CBP will do its
part to implement those policies as quickly and as effectively as
possible.
Thank you again, Mr. Chairman, for convening this hearing. And
thank you, Commissioner Kerlikowske, for being here today.
______
Communications
----------
American Council of Life Insurers (ACLI)
101 Constitution Avenue, NW, Washington, DC 20001-2133
www.acli.com
Hearing Statement of the Honorable Dirk Kempthorne
President and Chief Executive Officer
The American Council of Life Insurers (ACLI) is pleased to submit this
statement for the record for today's hearing titled ``Debt versus
Equity: Corporate Integration Considerations.'' We thank Chairman Orrin
Hatch and Ranking Member Ron Wyden for holding this hearing. ACLI would
like to take this opportunity to respectfully comment on life insurer
investments.
ACLI is a Washington, DC-based trade association with approximately 300
member companies operating in the United States and abroad. ACLI
advocates in federal, state, and international forums for public policy
that supports the industry marketplace and the 75 million American
families that rely on life insurers' products for financial and
retirement security. ACLI members offer life insurance, annuities,
retirement plans, long-term care and disability income insurance, and
reinsurance, representing more than 90 percent of industry assets and
premiums.
On behalf of the U.S. life insurance industry, we share the goal of
encouraging economic growth through a competitive tax system. The
nature of the life insurance business is very different from that of a
manufacturer or retailer in that it involves the satisfaction of long
duration promises. Life insurers receive premiums in exchange for a
contractual promise to pay insurance or annuity benefits. These
premiums are invested in assets that match our expected liability
obligations and duration and that are subject to the state financial
regulatory frameworks that influence and can constrain life insurers'
investment options. Life insurers utilize those premiums as well as
investment returns on the premiums to pay policyholder benefits as they
arise, often many decades in the future. The protections and guarantees
our products provide for consumers are not available from any other
financial services companies.
The life insurance industry has priced its products and made guarantees
to its policyholders based on receiving 100 percent of its investment
income. The industry utilizes these resource as they are earned by its
investment portfolios in order to fulfill the future obligations and
promises under its insurance and annuity contracts. A 35 percent,
nonrefundable withholding tax on gross investment income would amount
to a de facto gross income tax with a substantial retroactive effect on
existing business. Specifically, earnings from current investments
would fall far short of providing sufficient income each year to pay
contractual obligations on in-force business. Therefore, a withholding
tax on investment income would have a crippling effect on the life
insurance industry and ultimately on consumers' ability to purchase
valuable coverage.
The ACLI appreciates the opportunity to comment and point out the
unique features of our products that make them so critical to the
financial security of all Americans. ACLI and its member companies look
forward to working with Senate Finance Committee Chairman Hatch and his
staff to address the industry's concerns on these very important
issues.
______
Express Association of America (EAA)
1390 Chain Bridge Road #748
McLean, VA 22101
703-759-0369
[email protected]
Submitted by Michael C. Mullen, Executive Director
Express Association of America (EAA) members are DHL, Federal Express,
TNT and UPS, the four largest express delivery service providers in the
world, providing fast and reliable service to the U.S. and more than
200 other countries and territories. These four EAA member companies
have estimated annual revenues in excess of $200 billion, employ more
than 1.1million people, utilize more than 1,700 aircraft, and deliver
more than 30 million packages each day.
The Express Association of America (EAA) strongly supported the passage
of the Trade Facilitation and Trade Enforcement Act (TFTEA) of 2015 and
applauded the bipartisan Congressional effort to enact this important
legislation. This statement will address measures EAA believes are
necessary to achieve effective implementation of TFTEA and ensure both
the private sector and the Government realize the full benefits of the
bill. EAA encourages Congress to ensure these recommendations are part
of the oversight process going forward, as the bill is implemented.
Raising the de minimis level, under which most shipments are not
subject to collection of tariffs, taxes or formal customs procedures,
to $800 (TFTEA Section 901) will have major benefits for the U.S.
economy, particularly for small and medium-size companies that handle
proportionately greater numbers of low value shipments. U.S. Customs
and Border Protection (CBP) should be commended for implementing this
provision by the mandated deadline of March 10th this year. To realize
the full benefits of this measure Congress should ensure that:
All U.S. Government agencies with jurisdiction over goods
crossing the border--especially those with hold authority--take steps
to facilitate the movement of goods and target efforts on the highest
risk by minimizing the number of low value shipment ``exceptions''
which would not receive de minimis treatment among the products they
regulate.
The U.S. Trade Representative actively adheres to the Section
901 language encouraging other countries to adopt commercially
meaningful de minimis levels as part of our trade negotiations with
them. The ongoing Trans-Atlantic Trade and Investment Partnership
negotiations represent the first opportunity to take this step.
The TFTEA measures aimed at improving Partnership Programs (Section
101) will significantly upgrade the benefits of the Customs-Trade
Partnership Against Terrorism (C-TPAT), if implemented in a robust way.
In providing oversight of this section of the bill, Congress should
ensure that:
CBP consults closely with the private sector to ensure the
trusted partnership program is providing commercially significant and
measurable benefits to the trade, including:
Pre-clearance of goods;
A lower rate of shipment detentions for program members;
Tier 3 C-TPAT membership for non-importers; and
Reduced bond requirements.
The CBP Commissioner is consulting actively, as the bill
prescribes, with other federal agencies to establish a single, U.S.
Government-wide trusted partnership program that provides immediate
release of goods that do not pose a security or compliance risk.
In providing the authorized funding for the construction of the
Automated Commercial Environment (ACE) system (Section 106), TFTEA
ensures the United States will have the modern, effective tool we need
to keep our businesses competitive globally and to stimulate exports.
By the end of 2016, ACE will be the single system on which the entire
trade of the United States, inbound and outbound, depends for timely
clearance actions at the border. Even the slightest disruption in
normal ACE operations will cause backups, storage charges, and
logistics and transportation costs that will quickly run into billions
of dollars. It is therefore mandatory that Congressional oversight
ensure ACE maintenance is fully funded and that Congress consider
providing a fully redundant second system that can be brought on line
immediately to guarantee uninterrupted ACE availability. As an interim
measure, the current Automated Commercial System (ACS) provides an
effective backup capability for ACE and retaining this system after it
is replaced by ACE is advisable.
TFTEA confirms in law (Section 107) the goal established by the
President's Executive Order on the International Trade Data System
(ITDS), that all U.S. Government agencies will use ACE and the ITDS
functionality for processing data on cross-border trade shipments. In
implementing this measure, Congress should ensure that:
All agencies use a common approach to risk management that
relies on weighted algorithms and automated targeting as the basis for
a unified decision on a government-wide release of goods. This common
approach should incorporate the government-wide trusted trader program
mentioned above.
All agencies are available to conduct border clearance
operations at the same time, including weekends and holidays. Global
commerce is now a 24/7 operation, and to ensure the competitiveness of
U.S. businesses, the U.S. border clearance operation must adopt a
similar approach.
TFTEA (Section 108) requires CBP to consult with Congress before
entering into negotiations on, and before finalizing, any agreements on
mutual recognition of trusted partner programs with other nations, and
also requires the partnership programs of the other nation be
compatible with U.S. programs. Reports required by Congress on this
subject should include:
A detailed description of how the benefits of mutual recognition
agreements are aligned between the U.S. and partnering nations and how
they are commercially meaningful;
Ensuring that the application and validation processes to become
a member of each nation's trusted partner program are fully aligned and
mutually recognized.
TFTEA codifies in law (Section 110) the very successful procedures and
policies that have been developed for the Centers of Excellence and
Expertise (CEE). In providing oversight in this area, Congress should
ensure that CBP:
Provides uniform implementation at each port of entry of the
United States of policies and regulations relating to imports and
exports;
Formalizes an account-based approach to the importation of
merchandise into the United States;
Ensures CEE account managers coordinate with other government
agencies on all related border issues for their account, to support the
single U.S. Government-wide release process under the ITDS.
TFTEA ensures (Section 904) that goods being returned to the United
States after being exported are not subject to payment of duties twice
based on the original location of the goods' manufacture. This
provision has removed an obstacle that was preventing many small U.S.
eCommerce businesses from developing export markets for their
innovative products. In implementing this provision, Congress should
ensure a simple, automated process exists by which a company can verify
the goods were exported from the United States without needing to
provide cumbersome paperwork.
TFTEA includes several provisions for improving the ability to identify
and track entities importing goods into the United States, including:
Section 114, establishing an importer of record (IOR) program,
an IOR database and a streamlined process of assigning IOR numbers to
importers;
Section 115, establishing an importer risk assessment program
that would adjust bond amounts for new importers based on risk; and
Section 116, on Customs broker identification of importers,
which will establish standards for customs brokers to collect
information on the identity of importers. Changes are under
consideration to Customs Form 5106 that will assist in meeting this
requirement for brokers to collect more information on the identity of
importers.
In implementing each of these sections, EAA recommends that Congress
ensure that CBP consults closely with the trade community to ensure:
Any new procedures produce clear improvements in trade
facilitation and do not impose unreasonable requirements for
information on parties that do not possess it;
The provisions of these sections apply only to larger commercial
importers, and a de minimis level is established to ensure individual
consumers are not subject to the definition of a new importer as
envisioned by these measures, which would have a debilitating impact on
e-Commerce.
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