Earlier this year, the White House issued a sweeping executive order intended to strengthen Customs enforcement. Attorney Valerie A. Sorensen-Clark tells us what it’s all about.
The June 3 order is “one of the most significant developments in [U.S. Customs and Border Protection] enforcement, and the practical applications of the day-to-day mechanics of importing,” says Sorensen-Clark, a partner in the law firm of Grunfeld Desiderio Lebowitz Silverman & Klestadt. What used to be mostly administrative matters are now emerging as a strict set of requirements for compliance, as the Trump administration seeks to speed up the pace of Customs reform.
Much of the executive order relates to foreign importers of record (IORs), who will no longer be allowed to file informal entries, and will be subject to additional heightened scrutiny. CBP will likely rely on the Customs-Trade Partnership Against Terrorism (C-TPAT), originally created as a voluntary program, as a screening tool to establish the legitimacy of importers, Sorensen-Clark says. In addition, CBP permission will be required in order for foreign IORs to use a continuous bond.
Penalty assessment will be stricter as well. Previously, importers had some leeway in the determination of how much they owed in penalties, subject to CBP discretion. Now, they’re facing a minimum mitigation floor of 50% of the penalty assessed. And there will be mandatory thresholds for liquidated damages. “It’s definitely a policy shift,” Sorensen-Clark says.
CBP presented importers with a further burden in a September 18 advance notice of proposed rulemaking, requiring the trade community to answer some 64 questions about their compliance with Customs rules. It entails “a tremendous uptick” in mandated information, Sorensen-Clark says, with a “scope broader than we’ve seen before.”