Sen. Cassidy Asks for Trade's Input on Customs Modernization Act
The office of Sen. Bill Cassidy, R-La., started sharing a discussion draft of the Customs Modernization Act with the goal of avoiding unintended consequences for businesses that provide services to importers or that import. It's a bill that would strengthen CBP's hand in numerous areas. "We were working with CBP on the legislation and, then, this is now sending it to industry experts," Cassidy spokesperson Ty Bofferding said. That input will help shape the final bill, he said, and described this as the middle of the process. He could not predict whether a bill would be introduced in 2022.
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In addition to the full legislative text, the office provided a section-by-section summary to help the trade understand what's at stake. “Sen. Cassidy is working on a bipartisan solution to strengthen supply chain transparency and counter illicit imports. We shared the discussion draft of the legislation with industry experts and business leaders to bring their perspective on the real world implications into the legislative process. Our goal is to create a final version of the bill that best addresses the challenges we face as a country, while meeting the needs of the current industry,” Bofferding said.
As drafted, the bill would make major changes in CBP's ability to enforce customs regulations. For instance, it would allow CBP to use electronic advance information for commercial enforcement. Current law says: "The information collected pursuant to the regulations shall be used exclusively for ensuring cargo safety and security, preventing smuggling, and commercial risk assessment targeting, and shall not be used for any commercial enforcement purposes, including for determining merchandise entry."
But even as that could be a pain point for importers, the same section allows importers to convert pre-entry information into a certified entry filing, which could reduce administrative costs and burdens by eliminating steps in the entry filing process.
The National Customs Brokers & Forwarders Association of America, which is telling its members to write to Cassidy's office with their views, highlighted the proposals that would give CBP more authority to assess liability for false submissions and to increase penalties for parties other than importers. It would expand data retention requirements for e-commerce platforms and "those who knowingly caused merchandise to be imported, participated in, facilitated, or were otherwise connected or related to an importation," which covers third-party service providers such as freight forwarders and express shippers.
This version of the bill also would say that any records that are required to be retained must be provided if demanded by CBP, and it authorizes CBP to apply adverse inference to those who failed to comply to the best of their ability. The intent of this provision is to accelerate enforcement decisions on suspected violations. Members of Congress have been arguing for years that businesses whose products are being counterfeited should get more information from CBP about its enforcement against counterfeits (see 1911080061), and have repeatedly introduced legislation to give CBP that authority (see 2104160033).
This bill, too, would give CBP permission to share non-public information about intellectual property with rights-holders, in the hopes of accelerating the identification of counterfeits. This has been something CBP has said it wanted a legislative fix for.
The bill would give CBP the authority to set the dollar threshold for formal vs. informal entry. It also changes parameters for penalties, including allowing CBP to issue penalties for the intentional spoiling of evidence and removing the "gross negligence" standard from CBP’s Section 592 penalty statute, and it allows CBP to assess penalties for unlawful imports, even if there is no seizure, and even if the underlying violation is not related to the movement of goods.
The bill also would authorize CBP to not allow parties that are suspended or debarred from doing business with the federal government to be importers of record, and would give CBP the authority to promulgate rules that would make administrative exemptions unavailable for them.
Even though the progression to a draft text would suggest that CBP's work to propose a 21st Century Customs Framework is wrapping up, NCBFAA's Customs Counsel Lenny Feldman said the organization "will continue to discuss and deliberate with CBP the impact of such legislation, ensuring it provides a modern, forward-thinking trade platform for customs brokers, freight forwarders and the cargo owners they serve."