US Customs Overhauling "The Role of the Broker"
US Customs and Border Protection (CBP) has been working to completely revamp its regulations governing licensed customs brokers. CBP has scheduled a series of summer webinars designed to describe the issues and the agency's goals and to generate feedback from the trade community before it publishes a first draft of proposed new regulations for formal comment. Participation in this process will be critical for any broker who wishes to have a voice in shaping the future of the broker profession. For any importer that relies on a broker as part of an import compliance strategy – which applies to, almost all commercial importers – each company should consider whether its past experiences or present concerns warrant making any comments in the process. In any case, CBP's process serves as a useful reminder for importers to review whether they are properly instructing and managing brokers, since any error in the import declaration, no matter how it occurs, creates CBP enforcement risk for the importer and not necessarily for the broker.
In January 2011, CBP kicked off the Role of the Broker – Regulatory Revision Workgroup, together with the National Customs Brokers and Forwarders Association of America. CBP has described the Role of the Broker initiative as an effort to develop solutions to the challenges of 21st Century commerce, to leverage broker relationships and extend opportunities for small and medium businesses, and to encourage the spread of best practices in the industry. Central to the Role of the Broker initiative, CBP has announced its intention to completely overhaul 19 CFR Part 111, the regulations governing brokers. Any broker covered by 19 CFR Part 111, whether an individual license holder, a broker in a brokerage house, or an in-house broker for an importing company, will be impacted by the planned overhaul of Part 111. Since licensed customs brokers are the conduit through which most importers make their import declarations to CBP, these changes also will necessarily impact importers.
CBP has explained its view that current broker regulations have not kept up with advancements in technology and the trade facilitation goals of the agency. CBP describes the main goals of the planned changes to the regulations as:
- Clarifying brokers' responsibilities related to importer validation and to provide greater visibility regarding importers to CBP
- Modernizing the regulations to align with current electronic capabilities and business practices – hopefully resulting in decreased administrative costs for CBP, customs brokers and importers
- Reinforcing the broker's responsibility to exercise due diligence in conducting business and to "professionalize" the customs broker by introducing a continuing education requirement
CBP is conducting extensive outreach this summer with the goal of publishing a Notice of Proposed Rulemaking in the Federal Register in late 2012 or early 2013. Broad public outreach by CBP on each of the major themes up for discussion is meant to generate feedback from the trade community so that the agency can reach its goal of updating the broker regulations in order to, in CBP's words, "better reflect modern and efficient trade practices, and encourage brokers to be force multipliers for CBP's trade facilitation efforts."
A key part of CBPs outreach is a series of public webinars during the summer of 2012 to solicit comment and input on all facets of the broker regulations. The webinars hosted by CBP are open to the public and are intended to reach the widest possible audience. There will also be a webinar for importers who wish to better understand how they will be affected by the CBP's Role of the Broker initiative on July 26. Participants can interact with the host online during each webinar and can also submit questions, comments, and suggestions to RoleoftheBroker@cbp.dhs.gov prior to a webinar covering a particular topic of interest. A full schedule of webinars and topics is available on the CBP's trade transformation website.
All importers know that the licensed customs broker is a critical part of any import compliance program and can add substantial value and advice to improve compliance and reduce liability. Nonetheless, US law places the responsibility on the importer of record to exercise "reasonable care" to confirm that all the information declared to CBP is complete and accurate. This obligation rests solely with the importer of record, not the customs broker, the supplier, nor any other party. Once merchandise is entered in the name of the importer of record, any duty (and potential penalty) liability attaches to that importer. With CBP reviewing the role of the broker, now is an excellent time for importers to review their own procedures for instructing and managing brokers. Written instructions to the broker, periodic meetings with broker personnel, and periodic review of broker filings by the importer are among the steps that importers should implement, or at least consider. These steps will facilitate compliance and increase the accuracy of the importer's filings with CBP. These steps also have the added advantage of providing defenses for a CBP penalty case or, even worse, an audit.
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