The Customs and Trade Facilitation Reauthorization Act

July 19, 2006

On July 13, 2006, U.S. Senators Chuck Grassley (R-Iowa) and Max Baucus (D-Mont.) introduced S. 3658, the “Customs and Trade Facilitation Reauthorization Act” (“CTFRA”), which aims to improve trade security, while simultaneously facilitating the free flow of legitimate commerce.   The bill proposes enhancing trade facilitation by increasing authorizations for additional personnel at all U.S. ports, and for trade facilitation and enforcement within the Bureau of Customs and Border Protection (CBP) and Bureau of Immigration and Customs Enforcement (ICE).  With regard to security, the proposed legislation would require CBP to plan for the swift resumption of trade in the event of a transportation disruption that could harm the national economy.

Grassley and Baucus are Chairman and Ranking Member of the Senate Finance Committee which has jurisdiction over the revenue functions, commercial operations and trade facilitation, regulation and enforcement functions of CBP and ICE.  The Finance Committee last authorized customs and trade functions in the Trade Act of 2002.  Both members cited the need for such legislation:

Containerized traffic at American ports is expected to double by 2010 and threats are growing every day.   But national security and economic prosperity through trade are not mutually exclusive interests.  It is absolutely possible, and essential, to make trade both secure and efficient.

Specifically, the legislation would:

  • Require, within one year, an assessment of nonintrusive container scanning in foreign ports;
  • Add personnel for all U.S. ports of entry;
  • Require the Commissioner of Customs, within one year, to develop a trade resumption plan:
  • To be routinely exercised with Federal, state, local officials and private stakeholders; and
  • Subject to comment by port authorities, terminal operators and the Customs Commercial Operations Advisory Committee (COAC).
  • Authorize the negotiation of bilateral customs partnerships (such as the Container Security Initiative (CSI)) with foreign governments to facilitate safer U.S.-bound trade;
  • Authorize a Customs Industry Partnership Program (CIPP) (which would include C-TPAT) to facilitate safer trade:
  • The CIPP would be codified in the Customs statute at 19 USC § 1499(d);
  • The CIPP would include 3 tiers/levels of voluntary participation with varying degrees of benefits;
  • The statute will set forth minimum requirements for participation, as well as deadlines for CBP to complete certifications, validations and verifications of potential members;
  • The statute would authorize CBP to develop and implement processes for revalidation and re-verification of CIPP participants; and
  • Applicants would have the right to appeal any decision by CBP denying or suspending benefits under the CIPP.
  • Authorize multilateral negotiations in the World Customs Organization (WCO) and World Trade Organization (WTO) to facilitate safer trade;
  • Require a one-portal government-wide system to collect mandatory import and export clearance documentation;
  • Add personnel for Treasury Department oversight of delegated customs functions carried out by CBP;
  • Increase resources for trade facilitation and enforcement to be used to hire additional CBP employees for the following purposes:
    • Restore and add import specialists
    • Increase oversight of the implementation of the International Trade Data System (ITDS)
    • Oversee the implementation and enforcement of Free Trade Agreements (FTAs),
    • Restore and add ICE custom violations inspectors
    • Create a new CBP Intellectual Property Rights (IPR) Division to coordinate with ICE investigators
  • Require a study on the competitiveness of U.S. ports and port terminal operators; and
  • Streamline and automate claims and the collection of customs duty drawback:

    • Claims for drawback shall   be filed within 5 years after the date the merchandise was imported;
    • Claims must be made electronically through the Automated Commercial Environment (ACE) or an electronic data interchange system authorized by the Secretary of the Treasury; and
    • Goods would qualify for substitution drawback if the imported good and exported good are both classifiable within the same 8-digit HTS subheading.

The legislation has been referred to the Senate Finance Committee for consideration..