COAC proposes ‘green lane’ benefits
Low-risk importers who go the extra mile to ensure the integrity of shipments from suppliers should be granted privileges, such as remote filing of all customs entries, expedited duty drawback claims and no penalties for late duty payments, as the first step towards achieving U.S. Customs and Border Protection’s promise of a “green lane” expedited customs clearance process.
The Department of Homeland Security’s Commercial Operations Advisory Committee (COAC) Thursday recommended that these and nine other benefits were necessary to reward companies for investments made to achieve the highest tier of supply chain security within the Customs-Trade Partnership Against Terrorism, which is a voluntary program.
Ever since former CBP Commissioner Robert C. Bonner unveiled his green lane concept last January, CBP has tried to develop a workable program that includes benefits beyond simply eliminating almost all security inspections for shippers with strong internal controls over their supply chains.
Companies that successfully complete a CBP security audit and adopt extra best practices are eligible for Tier 3 status and receive reduced inspections and “front-of-the-line” exam priority.
Some of the 12 benefits proposed by COAC are similar to recommendations well-known security and compliance consultant Michael Laden forwarded to CBP earlier this year (November American Shipper, page 8). COAC’s approval gives the recommendations the force of broader industry approval.
The 12 benefits for Tier 3 C-TPAT members are:
* Permission to remotely file all types of entries. Under current rules, only consumption and informal entries are allowed to be electronically filed from other locations besides the actual port of entry.
* Pure paperless entries for all customs entries, except for hardcopy documents required by other agencies with jurisdiction over admissibility.
* Expedited duty drawback claims. Duty drawback is a refund of customs duties paid on imported materials that are exported or used in the manufacture of exported articles. COAC said eligible importers should receive expedited refunds and liquidation of claims.
* Change the calculation of single transaction and continuous entry bond formulas to allow a lower limit of liability. Single transaction entry bonds would always be set at the value plus estimated duty. Continuous entry bonds would be set at 5 percent of the duty, fees and taxes paid in the previous year, or 5 percent of the value if the merchandise is duty free. Foreign Trade Zone bonds would be at 5 percent of on-hand inventory value.
* Zero inspections for purposes of enforcing compliance with trade laws.
* Expedited response, or first-in-line priority, to requests for rulings so that importers are notified of a decision within 10 days vs. the normal 30 days.
* Penalty mitigation for customs violations, except in cases of fraud.
* Allow multiple suffixes to the same nine-digit IRS number to be combined in a single statement for the periodic monthly statement. Tier 3 importers would be allowed to combine multiple two-digit suffixes to the same nine-digit root IRS numbers. This is a change from the current Periodic Monthly Statement requirement that all entries on statements must be for the same 11-digit IRS number.
* Sharply reduce, or eliminate, the use of the CF-28 form to request information from importers and their brokers. Questions about classification of a product or other commercial issues should only be handled by the company’s designated CBP account manager and the importer could submit its response electronically.
* Expedited background checks. CBP should waive the requirements for discretionary background checks for Tier 3 importers. In cases where importers are required to have background checks for their employees, the port director will request expedited service of the request by Immigration and Customs Enforcement. Also, once required, Tier 3 firms will receive expedited service for national transportation worker identification cards.
* No penalties for late duty payments. Entry summaries filed after 10 business days would be subject to interest on the unpaid duty only (subject to the $25 minimum).
* Allow importers the opportunity to implement corrective action plans or make a prior disclosure before seizure of shipments or the issuance of fines and penalties. An importer would be allowed a reasonable period of time, perhaps 30 days, to address and cure the situation that led to the seizure of penalty. The prior disclosure benefit is similar to the disclosure process allowed under the Importer Self-Assessment audit program.
Curtis Spencer, president of foreign trade zone and supply chain consulting group IMS Worldwide, said the COAC green lane task force he headed made sure to only include benefits that were completely or almost completely within CBP’s control, and would not require any change in law or regulation. Spencer said the task force decided that it would take too long to implement the first phase of the green lane if approval from other agencies or legislative changes were required.
Michael Mullen, CBP’s director of trade relations, said CBP would review COAC’s “fairly aggressive list” of possible changes. Many of the proposals were probably feasible in the near term, he said, but some items are still “a bridge too far.”
Timothy Skud, deputy assistant secretary for tax, trade and tariff policy at the Treasury Department, raised a red flag that some of the proposals have implications for tax collection that would need closer review by his department.