Regulatory intelligence for US exporters

Census Should Exhaust Other Options Before Finalizing New AES Filing Requirement, NCBFAA Says

Compliance with a new country of origin (COO) reporting requirement in the Automated Export System would be difficult for smaller and occasional exporters, many of which would likely have to develop new processes to report that information, the National Customs Brokers & Forwarders Association of America told the Census Bureau. The NCBFAA urged Census to research whether it can collect that COO information from other sources before it decides to move forward with the proposal.

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“For the amount of work required by the forwarder to obtain the proposed COO details, not to mention possible gathering of inaccurate data for [Electronic Export Information] filings, NCBFAA is not convinced that Census would accomplish its goals with the” proposed rule, the trade group said in its weekly newsletter Jan. 23.

Census proposed the new COO data element in 2021, saying it would help the U.S. better collect foreign trade statistics by requiring U.S. exporters of foreign-produced goods to declare the origin for their item in AES (see 2112140033). The agency last year received mostly opposing comments on the proposal, with trade groups saying the change could lead to costly compliance challenges (see 2203160026).

NCBFAA resubmitted its comments to Census this month in response to the agency’s recent information collection that mentioned the proposed COO requirement (see 2211180006). Census also mentioned the proposed rule in its fall 2022 regulatory agenda, which listed a June publication date for a final version of the rule. A Census spokesperson at the time said the agency hadn’t yet decided whether to finalize the rule, and that the June date was an estimate.

Although Census said U.S. exporters told it the COO information “would be readily available,” NCBFAA disagreed. “NCBFAA members’ experiences working with these exporters inform the Association that many of these companies will not have the information readily available and they will have to develop processes to obtain that information and manage their inventories,” the trade group said in its official comments to Census.

While larger companies may be able to pull from databases “or other means of tracking” to gather COO information, medium and small companies, as well as occasional exporters, may not have those abilities, NCBFAA said. “It would be very time consuming for these companies to find a way to track the countries of origin for their products in an organized manner that would allow them to have the information readily available for each export’s EEI filing.”

Even if the U.S. Principal Parties in Interest already separate their domestically sourced products from foreign-sourced ones, they would then have to go “a step further” to separate their foreign-sourced goods by country, NCBFAA said. Before they export, they would then have to determine which country represents the largest value or include the COO on the documents submitted to the EEI filer. “This could represent a real challenge to smaller businesses,” the association said.

NCBFAA also stressed Census would need to conduct “a great deal of outreach” before implementing the new data element. But despite “excellent” past Census outreach efforts, NCBFAA said freight forwarders would likely be forced to educate companies that didn’t “know that they had to be ‘reached’” by communicating with those businesses one at a time.

“This is already a time-consuming process at a critical point in the supply chain, and it sometimes results in delays and costs associated with those delays,” NCBFAA said. “Explaining this new requirement and fielding the inevitable questions regarding components, co-mingled products, goods consisting of multi origin components” and more “would add significant time to an already burdensome process.”

The group also acknowledged there “may be benefits” to collecting the information, but “gathering a single COO does not provide full, accurate data and would substantially water down the potential benefits.” NCBFAA pointed to “substantial gaps” in the collection requirement, including: “Missing COOs for goods that are substantially transformed, resulting in a new HTS/Schedule B code, would qualify as ‘D’ Domestic based on the definition of ‘Foreign’ in the” Foreign Trade Regulations.” Census may also encounter “Missing declarations for all transactions exempted from EEI filing.”

NCBFAA recommended Census see whether it can use customs entry information to obtain the COO information, research whether “drawback data in conjunction with Customs Entry data might be valuable” or “review the data that Census is already receiving on imports.” The group said it “reemphasizes that should Census determine that it is necessary to collect all the COOs for a single HTS/Schedule B code in order to give accurate statistics and satisfy the purposes stated in the NPRM, such a requirement would be complicated, costly, and a substantial impact on processes.”

A Census spokesperson said Jan. 23 that the agency is still reviewing comments and "having internal discussion in order to make a final decision on whether to add the new" data element. "The rule has required extensive discussion and therefore we are not in a position to make a final decision."