Highlights of Senate Finance Committee Hearing on its Customs Reauthorization Bill

On October 20, 2009, the Senate Finance Committee held a hearing on S. 1631, the Customs Facilitation and Trade Enforcement Act of 2009¹.

Testifying at the hearing were private sector witnesses representing Hanesbrand Inc., Coalition Against Counterfeiting and Piracy (CACP), Target Corporation, and UPS Supply Chain Solutions, Inc.

In his opening statement, Senate Finance Committee Chairman Baucus (D) stated that he and Ranking Member Grassley (R) introduced S. 1631 to address CBP's failure to make trade facilitation and enforcement a priority in recent years. Chairman Baucus noted that CBP has devoted fewer people to stopping illegal and counterfeit goods from crossing U.S. borders, has imposed burdensome paperwork and reporting requirements on U.S. businesses, and has failed to consult with Congress or businesses before imposing sweeping policy changes.

Ranking Member Hopes to Have Committee Markup Later in 2009

According to a Committee press release on the hearing, Ranking Member Grassley (R) hopes that the Senate Finance Committee can proceed to a markup of S. 1631 later in 2009.

Trade Comments on S. 1631 for the Hearing Record May be Submitted

During the course of the hearing, Senate Finance Committee Chairman Baucus noted that as of October 20, 2009, the hearing record would remain open for 10 additional days in order to receive comments. Committee sources have confirmed that anyone, not just the invited witnesses, may submit comments.

Witnesses Discuss Desired Changes, Additions to S. 1631

While generally supportive of various aspects of the legislation, the witnesses, in their written statements and in their hearing testimony, addressed various provisions in S. 1631 that they would like revised, as well as provisions they would like added. Highlights of such statements/testimony include:

ACE has implemented only 4 of 30 key provisions. Hanesbrand applauded the authorization of funds until 2012 for the Automated Commercial Environment and requiring CBP to report to Congress, noting that oversight of CBP is desperately needed to bridge the competing demands of CBP's development of the full commercial functionality and the importance of implementing ACE to the business community. Hanesbrand's testimony noted that of the 30 key provisions that the Customs Mod Act provided for being included in ACE, only four (electronic entry of merchandise, electronic entry summary, electronic manifest, and electronic payment of duties and fees), are even partially implemented.

Mandate for relevant agencies to participate in ITDS, etc. Hanesbrand recommended that S. 1631 include a mandate that (1) all agencies that are authorized to regulate cross-border commerce participate in the ITDS and (2) all data elements that are provided from the ITDS agencies to Customs be submitted electronically.

CBP, PTO cooperation on trademark recordation should be mandated. The Coalition Against Counterfeiting and Piracy (CACP) supported the concept of having CBP work with the U.S. Patent and Trademark Office to establish a one-step process for registering a trademark and then recording the mark with CBP; however, CACP would prefer the Committee to authorize this process directly, rather than include it as a "Sense of the Congress" provision.

CBP needs more explicit authority for detention/seizure of suspected IPR violative products. CACP supports S. 1631's provision which would allow CBP to provide a sample of suspect merchandise to rights holders to determine if the product infringes a copyright or trademark. However, to be effective in thwarting counterfeit and pirated products, CACP states that the provision must provide more explicit authority to CBP officers.

Greater increases in de minimis and informal entry values. UPS stated that it, along with express couriers and numerous supply chain partners, strongly support the increase in de minimis and informal entry values. UPS suggested that those amounts be raised even further - raising the de minimis amount for Section 321 from $200 to $800, and raising the informal entry limits from $2,000 to $5,000.

Use of 102 data for commercial enforcement poses problems. UPS stated that it believes that allowing the use of security related data (e.g. 102 data) for commercial enforcement purposes would undermine the role of the Customs broker and expose importers to potential penalties because the information submitted was not prepared by the Importer of Record (IOR) or a party licensed to perform customs business.

CBP should work with brokers, trade to resolve IOR problems. While being familiar with the existing process to identify a unique IOR number , UPS recommended that CBP work with the brokerage and trade community to fix the existing IOR system or agree upon a new solution.

Clarification of broker penalties for terrorism conviction needed. UPS stated that S. 1631's provision on penalizing a Customs broker convicted of committing or conspiring to commit an act of terrorism should be clarified to indicate that the revocation of a broker's license under that provision is only for individual licensed brokers so convicted and corporate licensees and brokers acting in a supervisory capacity of a brokerage employee who is convicted as an act of terrorism should not be affected.

CBP should impose "knowing" standard on IPR violator list. UPS expressed concern about S. 1631's provision that would create a confidential list of persons having a history of attempting to import goods that infringe on intellectual property rights (IPR).

Senate Finance Committee's Chairman questioned the witnesses on whether there should be an "intent" or "knowing" standard applied to such a list. UPS expressed support for such a standard.

Additional benefits should be provided to all C-TPAT participants. UPS stated that it would like to see the wording of the provision providing additional trade benefits to C-TPAT Tier 1, Tier 2, and Tier 3 participants be changed so that all participants in the C-TPAT program, not just importers, are eligible to receive the additional benefits. Such a change would allow carriers, brokers, and the other categories of C-TPAT membership to receive additional C-TPAT benefits.

¹S. 1631 is also referred to as the Customs Facilitation and Trade Enforcement Reauthorization Act of 2009.

(See ITT's Online Archives or 10/21/09 news, 09102155, for BP summary on the hearing. See ITT's Online Archives or 10/15/09 news, 09101505, for BP summary announcing the hearing. See ITT's Online Archives or 09/22/09 news, 09092215, for the final part of BP's series of summaries of S. 1631, with links to the other parts in the series.)

Witness written testimony available at http://finance.senate.gov/sitepages/hearing102009.htm.