NCBFAA Customs Committee



NCBFAA Customs Committee

draft Meeting Notes – September 21, 2005

Wyndham Washington

1400 "M" Street, N.W.

Washington, D.C. 20005

|NCBFAA Customs Committee Roster |

|Voting |Name |Position |Present |

|Area 1 |Amy Magnus |Member |Yes |

|Area 2 |Cary Weinberg |Member |No |

|Area 3 |Ken Bargteil |Chairman |Yes |

|Area 4 |Myra Reynolds |Member |Yes |

|Area 5 |Marie Armelagos |Member |Yes |

|Area 6 |Gary Ryan |Member |Yes |

|Area 7 |Darrell Sekin |Member |Yes |

|Area 8 |Russ Jones |Member |No |

|Area 9 |John Peterson |Vice Chairman |Yes |

|Non-Voting | | | |

|Advisor |Harvey Isaacs |General Counsel |No |

|Advisor |Harold Brauner |Senior Counselor |No |

|Advisor |Art Litman |Senior Counselor |Yes |

|Automation Subcommittee |Bob Perkins |Chairman |Yes |

|CESAC Representative |Stewart Hauser |Chairman |Yes |

|Regulatory Agencies Committee |Cary Weinberg |Chairman |No |

|LB&F Subcommittee |Chip Bown |Chairman |Yes |

|President |Kiko Zuniga |ex-Officio |No |

|Carrier Best Practices Subcommittee |John Hyatt |Co-Chairman |No |

        The Chairman acknowledges with gratitude the meeting notes provided by John Peterson, Amy Magnus, Myra Reynolds and Gary Ryan, on which basis this report has been drafted. Special thanks is also due John Leonard for his organization of CBP participation at this NCBFAA Customs Committee meeting.

09:00 – Call to order

Opening Remarks and Introductions

        Ken Bargteil opened the meeting and attendees introduced themselves. A sign-in sheet was circulated.

Recordkeeping Amendments

        The Office of Regulations & Rulings recently reviewed our request. CBP expressed concern that changing the regulations along the lines requested would create problematic options for all recordkeepers, an undesirable outcome. CBP also represented the opinion that revised regulations were unnecessary since customs brokers are already authorized to maintain records in electronic form. The first reason given is speculative and Ken Bargteil highlighted that the request concerned itself only with the customs broker regulations in Section 111. He suggested that it should not be a problem to restrict changes to that section. Sherri Hoffman conceded the point. Several Committee members also hastened to explain that the issues are not related to whether records could be stored in an alternative format, but rather the requirement to retain original records after electronic copies were made for recordkeeping, and the required scheme for organizing and reporting recordkeeping storage sites.

        Customs brokerage is customer driven, and in particular for key accounts clearing imports at multiple ports, the business will be managed at a single location, which is where original records will be received. Any attempt to describe a recordkeeping organization that cannot be predicted in advance and that will change over time involves an unwarranted expense for both the customs broker and CBP. There should be no constraint for recordkeeping based on predesignated recordkeeping centers for particular records. The sole issue should be the timely production of records. The Committee once again confirmed that there was no reason to change CBP’s current expectation regarding timely production. The regulations have fallen to far behind business practice and should be revised. CBP admits that it misplaced the Committee’s original request, and misdirected the second request, filed months later and only after discovering through follow-up that the original had been lost and forgotten. At this meeting the Committee learned that after finally considering the request, CBP did not understand it, repeated to the Committee the same reservation relating to our usage "reasonably available", which the Committee had (according to CBP at that time) satisfactorily responded to at its May 27 meeting, as resting entirely on the current understanding for "timely production". Ken Bargteil invited CBP to further define the term if they wished, but sees no need and affirmed that we must get past this non-issue. In 40 months there has been no serious consideration of our actual request. Sherry said she would explain the request again to Regulatory Audit and she believes they will be O.K. with the requested revisions.

        The Committee asked for an opportunity to meet directly with the CBP legal staff in OR&R to explain the issues.

Customs Bond Centralization

        Bruce Ingalls attended for CBP Revenue Branch. He began by emphasizing that bond centralization remains a pilot program and that following review by OR&R, revised regulations for Section 113 would be published as an NPRM. Ken Bargteil introduced this agenda topic by reporting that the Committee believes the pilot has failed. A survey had been made of 21 firms from around the country that were represented at the Committee’s September 17th meeting. The collective experience was that it takes about 2 weeks, on average, for revenue branch to process a bond filed in good form and without error, and at least and additional 2 weeks for a bond to be rejected. Surety contacts report the same experience, and have requested support from NCBFAA for solving these problems. Bruce Ingalls advised that he met with the sureties the previous week and is aware of their concerns. The Committee believes that CBP should be able to process bonds filed in good order within 48 hours, and to give notice of bond rejection within 24 hours, in line with its original commitment. A greater degree of accountability is needed. Customs needs to follow industry standards and produce metrics on processing times for posting to the CBP website.

Prior to this pilot there was a relationship between the customs broker and the bond desk. Tracking and follow-up was easily done. Bruce Ingalls responded that regulations rather than relationships should control, and that port processing of bonds was inconsistent and in some cases incompetent, and CBP needed to correct that.

Bruce Ingalls replied that the Revenue Branch is struggling with growth and the strain of processing an increasing workload. With XL Specialty leaving the customs bond business there is a one time glut of bond replacements. Ken Bargteil replied that a development in the business environment of that kind is not unusual, will recur, should be anticipated, and must be managed. It doesn’t serve as an excuse for an unacceptable degradation of service and would incur penalties if allowed to persist in the private sector.

        Since many of the errors causing CBP to reject a bond filing are technical, the Committee asked why these errors have taken on such a high priority with zero tolerance. Bruce Ingalls replied that technical corrections became an issue because sureties decline liability on bonds based on the least of these technical problems, and CBP has lost such cases, causing the government to take very large write-offs. Part of his job is to collect delinquent debt, so he approaches bond processing as an opportunity to avoid losses due to technical defects in the bond. One surety denied liability due to a misspelled name of the bond principal. In theory, the CBP inspector should not release cargo if there is a name or identification number mismatch, but that rarely happens – the inspectors are not focused on these minor discrepancies. The SRE data has to match the BND file. Too many times changes made to the CBP SRE file data by filers are not accompanied by a conforming change to the bond by rider. It is his position that bond review at the time of filing must be rigorous. Ken Bargteil asked whether it would be possible for CBP to obtain surety agreement to waive such technical issues if there is a CBP demand on an otherwise valid bond since the sureties are also concerned about the continuing processing delays. Unsurprisingly, Bruce Ingalls replied that was not a viable alternative.

        Ken Bargteil reported receipt of an eMail from CBP with an internal report card showing that bonds are being processed in 8 to 10 business days, and that a reject might take another 5 to 10 business days. This was consistent with the Committee’s findings. The message also advised that response to a status requests will take 2 business days. An explanation was requested regarding the announcement that misdirected bond documents received by the Revenue Branch would be discarded without notice to the filer. The Committee was told that if a bond is lost, the filer should submit another copy only if requested by the bond team. The Committee asked, how will the filer know that the bond has been lost?.

        Bruce Ingalls said that when he left the office yesterday the processing time frame was 6 days for approval and filing. The current goal is 3 to 5 days. With the reject rate back up to about 20%, they are wasting time handling 20% of the workload at least twice. In too many cases CBP is receiving filings with multiple errors and the filers are refilling after correcting one or two of the errors. CBP is tracking filing errors and filer performance. He advised that CBP is going into an enforced compliance mode for rejected bond applications. Ken Bargteil rejoined that we need some certainty in the process. If CBP must centralize the process, this needs to be considered. The Customs Committee is not interested in cross complaints; the Committee wants to work together with CBP to solve these long standing problems.

        Bruce Ingalls invited the Committee to visit the Revenue Branch operations in Indianapolis and confer on the issues raised at this meeting. The invitation was accepted and Ken Bargteil appointed Bob Perkins as Chairman of an ad hoc subcommittee to be organized for that purpose.

        In response to a comment from Gary Ryan, Bruce Ingalls indicated that there is a list on the CBP web site of the 14 most common reasons for bond reject. Gary Ryan also asked why we couldn’t file a bond termination request at the Revenue Branch with the replacement bond so that termination could be coordinated with the new bond, avoiding the current problem where and existing continuous bond is terminated long before its replacement is put on file. This problem is exacerbated by unpredictable bond processing delays and creates disputes between customs brokers and importers over the cost differential with substitute single transaction bonds. These disputes in turn can become intractable when CBP backdates effective dates on the replacement continuous bonds they eventually place on file. Bruce Ingalls commented that CBP is exploring a terminate-and-replace mechanism but there are numerous obstacles, including getting the original bond from its field offices, and affirming the filer’s authority to terminate the bond.

        Art Litman suggested that filers might provide a cover sheet, copy of their power of attorney and a copy of the old bond with the replacement bond, and that CBP could in turn provide for termination of the old bond simultaneously with the filing and effective date of its replacement. In such and environment there would be a reasonable expectation that the entire process could be easily be done in a 30 day time frame. Ken Bargteil asserted that our entire community should not suffer from "bad actors", and that CBP must find a way to deal with the problem while avoiding that outcome.

        Amy Magnus questioned Bruce Ingalls about importer numbers, and Bruce Ingalls replied that CBP has a policy that when a new 5106 is filed with data different from what is already on file, the new data file will replace the previous data file.

Introduction of Vera Adams

        Vera Adams arrived at the meeting and introductions were repeated. Vera Adam mentioned that the name of her office has been changed from … Trade Compliance to … Trade Enforcement. She confirmed that we will continue the same close working relationship that we enjoyed under Betsy Durant’s leadership, and that Larry Rosenzweig will be her deputy.

WPM Enforcement

        Cathy Sauceda reported for CBP. She repeated much of the information from her presentation at the GAC, which affirmed the welcome news posted on the CBP web site detailing phased implementation. She explained that for goods imported from Canada that are not of Canadian origin it will be assume that the packing material is also not of Canadian origin and a valid stamp required. The WPM marking exemption will only apply if (1) the goods are of Canadian origin, and (2) the goods are imported directly from Canada and (3) there is an appropriate statement on the documentation. The phased implementation was put in place because, despite USDA allowing a year for importers and suppliers to get ready, in July research showed that almost 25% of shipments were non-compliant and strict enforcement on September 16th would risk serious dislocation for the supply chain. Some variations for the stamp are O.K. All of the elements, as shown in the examples posted on the CBP web site, must be present. As noncompliant cargo is identified, a flyer is being placed on the cargo stating it did not meet WPM standards. A copy is also forwarded to the offending country. Cargo will not be examined solely for the WPM but the wood packing will be inspected during normal exams. Cathy Sauceda said if we learn of shipments being turned back to let her know.

        Each signatory to the convention has its own enforcement peculiarities, so particular requirements should be verified prior to exporting goods with WPM. Canada may allow admission with a phytosanitary certification. It is also important to note that Mexico will not take their cargo back without it being fumigated before it enters the country. They will allow fumigation at the border, but there are no fumigation facilities on the Mexican border (only inland), so costs can be excessive if fumigation must be belatedly arranged.

        T&E shipments will be refused transit if examined and found to be noncompliant. It is anticipated that dunnage will be the most difficult WPM to control.

FDA-BTA Prior Notice

        Cathy Sauceda reported on the two issues we had on the agenda. With regard to our request for a comprehensive ABI alternative to PNSI – the only enhancement that is being considered is ABI input for untimely prior notice. CBP explored with FDA a solution that would extend PN viability beyond the current 30-day limit, but since this issue was not anticipated or included when commenting on the NPRM, FDA has declined to consider it at this time.

CBP CES Policy & Practice

        The Committee informed CBP that there are abuses of the contracting system by some CES operators. The Committee expressed its view that Centralized Examination Station, as a creation of CBP, and one that under pressure of heightened security concerns, port congestion and stressed infrastructure has emerged as a unique challenge to the trade, must be controlled to some degree by CBP. If CBP will not develop and implement a national policy for control of these contractors, requiring minimum and measurable service standards, transparent tariff review, and formal channels for meaningful redress of grievances, trade will suffer from arbitrary and monopolistic practices.

        The Committee believes that these operators should be monitored by CBP, including tariffs – in order to prevent profiteering, and to ensure that reasonable service levels are maintained. Steve Shore with CBP Cargo Control responded that from headquarters perspective, rates should be reasonable and customary in the local commercial environment and that port directors are responsible for contract governance. He asked whether NCBFAA had addressed our operational and rate concerns in writing. It had been intended that John Hyatt, who was not able to attend the meeting, would lead this discussion, and while it is believed that we these concerns have been put it writing to local port director(s) a unqualified answer will require John Hyatt’s input.

        Steve Shore reported that there will be a CES manual published soon. CBP believes that CES’s must be, and are competitive. Stewart Hauser reported that in New York metrics on CES performance have helped improve and maintain service levels. This is also the case in Baltimore. Steve Shore said that there is provision in Section 118 of the regulations for suspension or revocation of CES contracts. Ken Bargteil related information received from John Hyatt that the Gulf Port CES charged over $1,000 for an examination. Steve Shore replied that the rates should have been reviewed and approved by the Port Director per the regulations, but admitted that some small ports might be expected to have problems due to a shortage of available facilities. He will take up the Committee’s complaint with CBP at Gulfport, MS. Art Litman asked if there was one place where examination facility statistics were kept by CBP. There is not, and Art Litman suggested that there should be.

Customs Directive 3550-061 dated September 18, 1992

        It is agreed that customs broker will be allowed to use the old form in keeping with Customs Directive 3550-061 dated September 18, 1992 during the current phased-in implementation of the new CBP Form 7501 and superseding instructions. The term "ultimate consignee" will be better defined when the new directive is issued. There is a significant change in the consolidated entry. On the new form, block 3 – entry summary date should be left blank and the entry summary date will be the time received by Customs. Any questions about this should be addressed to sherri.hofmann@.

        The Committee suggested that CBP look into what size font is required for data entry on the form; customs brokers aren’t subject to same Americans With Disabilities Act (ADA) requirements when using the form as CBP is when designing it. It was opined that to conserve forms a filer could use smaller fonts for data printing and better exploit the compressed line item space. Sherri Hoffman will investigate this for CBP and advice further.

Commercial Compliance

        CBP has accepted the NCBFAA offer of a presentation to CBP personnel at their annual team leaders meeting on import operations from the customs broker’s perspective, and we will receive an official letter acknowledging same. The CBP training course is a 7-weeks long with the broker piece coming near the end. John Leonard will have Augustine Moore liaise with Barbara Reilly to make the necessary arrangements. Amy Magnus has volunteered to be the NCBFAA trainer and Myra Reynolds will be her backup.

ACE Development

        This agenda item introduced another issue not well understood by CBP, resulting in their failure to support the Committee’s recommendation for a change in the law to authorize CBP for administrative refund of excess estimated duty prior to liquidation and without limitation to overpayments resulting exclusively from clerical errors. Art Litman and Ken Bargteil explained very well why for electronic post summary correction to succeed, CBP needs this new authority. Art clarified that the recommended legal change will increase, not limit CBP’s current authority, and that it is in everyone’s interests to liberalize this authority to enable the earliest correction of entries and disposition of duties. Ken Bargteil identified the quandary for customs brokers that implementation of PSC without this legal change would create. Since there is a legal presumption that errors in classification and valuation (which errors will constitute the most common cause for a PSC) are not clerical, but rather errors in construction of the law, a requirement that the customs broker affirmatively certify in such matters that the underlying error was clerical exposes the customs broker to penalty under 19 U.S.C. 1641.

        The CBP proposal requiring affirmative verification of an importer 5106 record followed by the filing of a new CBP Form 5106 signed by the importer as a prerequisite for non-portal account eligibility for periodic payment of duty was characterized by the Committee as an unwarranted and arbitrary impediment to a lawful duty payment option for a large sector of the trade. It was also asserted that customs brokers have authority to sign the 5106’s for this purpose, and CBP should not require that the importer sign it. The Committee challenged CBP to quantify the alleged data integrity issue for importer records in their database. The Committee expressed the opinion that few data errors exist in the importer records, and that the true problem is with the ultimate consignee database, which should have no bearing on duty payment options. Speaking for CBP, Lou Samenfink reported that CBP absolutely wants everyone to pay duty using the periodic statement, but senior management cannot accept instant corruption of the ACE database with unverified 5106 records transferred directly from ACS. The issue is not negotiable. CBP believes their policy is both practical and reasonable, and relies on relatively easy "baby steps". Moreover, if the importer is C-TPAT certified, the 5106 verification and filing will be unconditionally waived and the importer automatically approved for non-portal account PMS. The non-portal account for PMS avoids altogether the need for signing terms and conditions required for an ACE portal account. The payment of duty on a periodic statement requires that CBP "flip a switch" in ACE – Customs is the gatekeeper.

        Art Litman suggested that the best way to clean up the CBP 5106 records is to establish a working group between NCBFAA and CBP to find a long-term solution. Brokers are CBP’s best source of information.

        A question was raised regarding the consequences of a customs broker’s failure to timely pay a periodic statement. How will CBP fix customs broker penalties for PMS late pays? How will CBP insulate harmless importers from the consequences, in particular the early and unjustified termination of their continuous bond by the surety that will now have accelerated bond termination capability? Lou Samenfink indicated that bond termination is just an option in these hypothetical cases, but members of the Committee rejoined that some sureties are of the opinion that it is not just an option, and that importer continuous bonds will be quickly terminated in every PMS late payment situation where that option is available. Lou Samenfink said he doesn’t think sureties would do that, but Ken Bargteil repeated that while we all should be reasonable in such situations, discussions he has had indicate that surety initiated quick continuous bond termination may well be the norm in these cases. Art Litman suggested that the Revenue Branch must have instructions so in the event of a late payment, CBP will call the importer rather than reflexively terminating the bonds. CBP will discuss these concerns internally.

Rewrite of CD’s – 3200-28 & 3240-63 dated February 13, 1989

        Jim Swanson reported that there has been no progress made because there are very significant issues involved, and any final resolution will also depend on new code. Given programming resource restrictions in ACS, and policy regarding enhancements of that system, this matter will be tabled and left to ACE development.

B-35 Report

        Jim Swanson reported that CBP is conducting a root cause analysis, and action will be contingent on those results. The land border environment accounts for the majority of these unresolved entries, and this is most often due to entry duplication. Cross-port processing is mitigating this problem. Failure to release by CBP is also a problem. In those cases where CBP was the cause, they are just removing the entries from the B-35 report. This has resulted in a substantial contraction of the Detroit B-35 report. CBP is working with its field offices to close unresolved entry files, and has provided queries and reports for use in determining underlying issues. Good progress is being made.

On routine entry deletions and cancellations, CBP wants to allow for easy, paperless input and correction from filers. CBP will reserve the right to require paperwork to support these inputs, but they want to greatly simplify the process and avoid future backlogs of unresolved entries. Amy Magnus pointed out that CBP officials at some ports harbor the suspicion that brokers are already trying to game the system and that she would expect some resistance to allowing customs brokers greater access to system records as envisioned.

Broker Compliance Penalties

        This matter focuses on, but is not limited to 19 U.S.C. 1641 penalties issued by Customs at JFK against individual license holders, rather than against their corporate customs broker employer, for declaring a wrong country of origin on entry of Chinese safeguard goods. The Committee made the case that absent any factual showing of personal culpability, in these case CBP should be penalizing the corporate customs broker, rather than their individual employees. Joe Shankle reported for CBP that his advice to CBP FP&F officers was that if they determine that it is necessary, they can penalize both the corporate broker and the individual license holder. It is CBP policy that the corporate customs broker is always liable, and the individual licensee may also be subject to penalty. Essentially, he said that OR&R is not inclined to get in the way of local FP&F initiative in 19 U.S.C. 1641 penalty cases.

        The Committee cautioned that issuing penalties to individuals is a very serious matter and should be undertaken with great care, which care may not be universally exercised throughout the network of FP&F field offices. Amy Magnus explained the situation quite well. Individual licensees frequently have limited control over the events that create a violation, whereas the corporation always has control, and that CBP is wrong when it assumes that penalizing the individual will increase compliance. Art Litman pointed out that entries can be created at one port for filing in another, and that punishing the local licensee for the actions of something entirely out of his control is ludicrous. Ken Bargteil explained that in some customs broker districts such as Cleveland a corporate licensee may operate permitted offices in locations as far flung as Indianapolis, Cincinnati, Columbus and Cleveland. It is implausible to expect a designated individual licensee to prove entry data for every customs transaction filed at all those ports on an ongoing basis. Even in the context of a single port operation, a corporate licensee may file scores of customs transactions every day, and no individual is capable of personally supervising line detail for all those transactions. What is critical is that before CBP penalizes an individually licensed customs broker, a factual basis personally implicating that individual in the subject violation must be established by CBP. Joe Shankle agreed to take the issue back to CBP for further discussion.

        A second issue involves "data integrity". Ken Bargteil reiterated that this is problematic. Sherri Hoffman said that CBP is drafting instructions for CBP Form 5106 data. If the importer provided the information filed by the customs broker, then CBP will not penalize the customs broker.

Tier 3 C-TPAT Best Practices

        Wayne Kornmann reported that CBP is looking for CBP Form 3461 information as early as possible for their automated targeting system (ATS). CBP has asked our trade sector, in the context of ACE trade engagement, how we might be able to provide entry-level data as early as 24-hours prior to lading because the manifest doesn’t provide data needed for their ATS. Ken Bargteil cautioned that some of the data required for the 3461 might not be available 24-hours prior to loading. The Committee noted that carriers do not provide customs brokers with the manifest data that they are currently filing through AMS in advance of loading. Wayne Kornmann suggested that we work with our customers to have carriers provide necessary information (such as B/L number) as early as possible, and in advance of loading.

Ken Bargteil observed that these ideas are publicized before the details are nailed down. He said it would be a good idea for CBP to engage with the NCBFAA Customs Committee before going public with little more than unproven concepts. Art Litman indicated that the Committee should provide input to our ACE Trade Ambassadors to assist in developing a mechanism for this. Currently CBP is operating under the assumption that for these purposes, customs brokers (and self-filers) will be filing the entry-level data through ABI.

        CBP is already giving priority for cargo examination to C-TPAT partners. The Committee reminded CBP of the overwhelming support for C-TPAT within our community, and of the considerable costs associated with these efforts on the part of our membership. The Committee asked what specific benefits might be targeted directly to customs brokers. Wayne Kornmann invited our suggestions, which included: waiver of the annual permit fees and additional relief in late duty payment cases.

Integration of APHIS Inspections

        A Committee member mentioned that the combining of inspection functions is as yet unfulfilled and that releases are not being coordinated. Roger West, was a legacy APHIS employee on the transition management team, and has been with CBP since February, 2005 and spoke for CBP on this issue. He said that we are correct about the unfulfilled promise of a unified CBP inspection force. One impediment is that security clearances had to be completed to authorize legacy APHIS personnel for access to the CBP databases, but all the background checks have now been completed so progress in this mission should soon accelerate.

        Roger West confirmed that there is an effort to integrate inspection activities of USDA and CBP where both may be required. The majority of inspections are taking place at CBP exam sites now and CBP is working toward providing messages through selectivity on Agriculture holds instead of relying exclusively on AMS.

        Creation of CBP in the Department of Homeland Security resulted in 1,872 former USDA positions moving over to CBP, but many of those positions were vacant. CBP has hired 482 new employees, but these inspectors are still undergoing training.

        Myra Reynolds recalled situations in Savannah involving cargo holds being placed by both legacy Customs inspectors and USDA inspectors. In these situations ACS records the first date of release, not the last, so the duty payment and summary certification clock begins the countdown from the first release posting, despite the fact that it may be a week after that before the cargo is actually released. Roger West said that CBP is aware of such issues and are working on them, but it isn’t his area of expertise.

Ken Bargteil questioned the provision in the WPM marking procedures regarding refusal of a shipment with violative wood packing materials. The procedures say that if the importer doesn’t arrange for export, USDA and CBP will export the goods. How will that be done, given the lack of agency expertise with the process? Who would execute required documentation, etc? Guidelines are being prepared for this, and these should provide for better coordination, resulting in the importer taking care of the export.

Gary Ryan inquired regarding shipments that are refused entry for violative wood pallets and for which permission is given to segregate the pallets from the cargo and export the pallets only. Would CBP require that the pallets be exported before the imported merchandise is released? Roger West wasn’t certain.

Textile Integration And Safeguards

        Attrition of Committee members was noted by the Chairman at the beginning of this discussion and an apology extended to Janet Labuda and the other remaining CBP officials. In future, Committee members will be expected to plan travel to permit formal meeting attendance until adjournment. Janet Labuda advised that there are approximately 68,000 textile importers and distributed PowerPoint screen prints for her presentation.

        Some FTA preference is claimed on 23% of textile entries filed. Of these entries, 48% were found to be noncompliant. Invalid NAFTA claims accounted for over 50% of these noncompliant entries. Not a single valid TPL entry has been filed. Previously ABI did not include edits to reject for obvious errors at entry as listed in the PowerPoint slides. CBP believes it has the edits in place now to correct for that.

CITA has given the go ahead for posting interim regulations eliminating the Textile Declaration. There will be a trade off. Somewhere in the documents must be the name of the actual manufacturer for conferring origin, and that will be the name used to construct the MID.

The current textile and quota agreement with China runs through December 2008. Negotiations with China continue, and the Chinese delegation will be in Washington, D.C. next week. Janet Labuda is on the U.S. negotiating team.

        Textile quota issues will be included on future customs broker examinations.

The Committee recommended that the trade might improve compliance if Janet Labuda issued Administrative Messages bringing these matters to light. The Committee felt it would be particularly useful if she could make her PowerPoint presentations available for general use as a training aid.

Replacement of Dial-up With VPN

        The problems that John S. James encountered with VPN transition were recounted, e.g., the overnight unwarranted and unexplained termination of logons. These recent and continuing experiences clearly demonstrate that VPN transition is not without its problems. The Committee needs to know if there is a reliable implementation model available. CBP has previously claimed that a conversion should cost no more than $1,000, but John S. James has spent $15,000 so far, and its communications remain unreliable. One member reported that just the router for VPN communications was $5,000.

        It has been clarified that CBP’s commitment to support legacy systems for 5-years after full ACE implementation refers only to ACE specific features, and not to phase out of ACS facilities independently scheduled for discard. The transition from dial-up to optional VPN communications is entirely independent of ACE development. John Leonard, who was speaking for CBP on this issue, was quick to point out that this is not his area of expertise, and he apologized for not having someone from OIT present to handle the question. He suggested that letters be written to Mike Mullen regarding any serious problems, such as those related by the John S. James company. Ken Bargteil emphasized that the system must be reliable and CBP must not ignore the cost factor since it will disproportionately impact the smallest customs brokerage firms. John Leonard agreed to have an OIT manager contact John S. James to follow-up on their particular issues.

16:30 – Adjourn

        Also attending were: Dan Meylor, Michael Schreffler, Roger Clarke, Karen West, Sherri Hoffman, John Leonard, Joe Trulik, Rodolfo Delgado, Tom James, Bruce Ingalls, Cathy Sauceda, Steve Schorr, Mark Johnson, George Menendez, Joe Shankle, Jim Swanson, Wayne Kornmann, Roger West, Scott Case, and Janet Labuda.

CBP participants are listed with red font

Blue headings indicate OLD BUSINESS

Green headings indicate NEW BUSINES

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