CBP Announces Work on Simplified Entry/Summary & Payment Models, Plans Pilot in FY 2012
U.S. Customs and Border Protection has issued a fact sheet and presentation on the work being done to model simplified entry and financial processes for imports, as called for by Commissioner Bersin, who asked industry and government to consider how import trade processes can be re-engineered to meet the technological needs of the 21st century. CBP hopes to pilot these models in fiscal year 2012.
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Gov’t-Industry Workgroup Established to Create Model Approaches
A Simplified Entry, Summary, & Financial Workgroup, comprised of members from both government and industry1, has been tasked to create models for a streamlined entry/entry summary, as well as financial processes, that reduce the administrative burden of CBP procedures, while employing risk management principles that facilitate legitimate trade.
These models will pursue opportunities to (1) reduce the number of filings for low-risk accounts, (2) resolve entry issues before arrival to speed release, (3) allow entry/summary data transmission and submission to follow an importer's business model, and (4) allow the periodic settlement of consolidated monies due.
Simplified Entry Model
Less Data Needed for Release for Trusted Partners
The model for Simplified Entry links security and admissibility to the release of shipments. Under this model, a reduced number of data points required for release should decrease the overall resources it takes for importers to transport their shipments to the marketplace, while providing necessary and accurate data to determine admissibility. Furthermore, the reduced scrutiny of trusted partners would better allocate scarce governmental resources on riskier shipments.
10-14 Data Elements, Standardization Across Industries, Mode Specific, Etc.
The key process changes with the Simplified Entry Model include: (i) admissibility is tied to 10-14 key data elements transmitted to CBP; (ii) process can be mode-specific; (iii) standardizes filing requirements across industries; (iv) streamlines current CBP paperwork forms, as necessary, required for filing; (v) reduces entry data requirements to prevent duplication and repetition; and (vi) CBP policies and business rules would be revised as necessary to accommodate changes.
Must Develop Qualifications for Participation, Adjust Technology
Key challenges to this model include (i) the qualifications for participation; (ii) the required statutory and regulatory changes, including penalty regime; (iii) technology adjustments and enhancements; (iv) aligning participating government agency (PGA) data requirements with streamlined entry and release; (v) addressing non-standard or low value shipments; and (vi) changing management requirements across CBP and businesses.
Simplified Summary & Financial Model
Enhance Cash Flow, Reduce Transactional Reviews
Implementing the Simplified Summary & Financial process improvement would provide enhanced cash flow ability for importers, while reducing the transactional review burden for CBP.
(Under the current system, importers file on a transactional basis and face an inflexible financial management environment associated with paying duties, taxes, and fees that negatively impacts their overall efficiency and effectiveness. Additionally, the current Periodic Monthly Statement (PMS) program is a complicated and cumbersome process for both CBP and importers.2)
Management by Account Structure that is Decoupled from Release
The notional model for the Simplified Summary & Financial processes would move to a “management by account structure,” which links the summary and financial submissions from importers while decoupling from release transactions. The model would also provide importers with the flexibility to select both the summary and payment period based on their specific financial and inventory systems. This approach is essential to managing by account, aligning CBP’s processes with industry, increasing the accuracy of trade data, and segmenting risk at the national level.
Process Specific to Importer's Business Model & Accounting Practices, Etc.
The key process changes with the Simplified Summary and Financial Model would include: (i) true management by account, (ii) summary and payment are linked and happen simultaneously, and (ii) entry summary and payment are no longer tied to release. Instead, process is specific to an importer's business model and accounting processes. An importer will summarize all entries that hit inventory within its "business month" on one entry summary. The importer would have up to 30 days after close of that "business month" to make necessary amendments to entries, and then file summary and financial at the same time.
Must Develop Qualifications for Participation, Adjust Technology
Key challenges to this model include: (i) qualifications for participation; (ii) required statutory and regulatory changes, including penalty regime; (iii) technology adjustments and enhancements; (iv) calculating interest payments; (v) liquidation; and (vi) Merchandise Processing Fees (MPFs).
Project Schedule & Next Steps
The project was initiated in June 2011 and the Workgroup should currently be in the phase of conducting data collection and analysis. The following is the estimated schedule for the remaining duration of this project:
| Project Milestone | Date Estimate |
|---|---|
| Draft Solution Options | 08/18/11 |
| Finalized Solution Options | 09/16/11 |
| Final Report and Proposal | 09/30/11 |
Next Steps Include COAC Meeting, PGA Consultations, Pilot Models in 2012, Etc.
The following are next steps the Workgroup is expected to take:
- Brief the Commercial Operations Advisory Committee (COAC) on proposed Simplified Entry models in mid-August 2011
- Continue consultations with participating government agencies (PGAs)
- Finalize proposal to present to Commissioner Bersin in October 2011
- Approve and pilot models in FY2012
1Including importers, brokers, carriers, and association representatives. Key participants include: the ACE Business Office, Office of International Trade, the American Association of Exporters and Importers (AAEI), Commercial Operation Advisory Committee (COAC), National Customs Brokers and Forwarders Association of America (NCBFAA), etc.
2The concept of periodic entry summary filing is not new. Congress passed the Customs Modernization and Informed Compliance Act of 1993 with the objective of improving the efficiency of U.S. customs processes.
(See ITT's Online Archives or 07/22/11 news, 11072226, for BP summary of the House and Senate Committee mock mark-ups of the three pending free trade agreements, which would increase the MPF on formal entries by more than 60%.
CBP Contact -- Brenda Smith (202) 863-6406
Presentation from July 2011 CBP webinar on this project is available here.
CBP fact sheet is available via email by sending a request to documents@brokerpower.com.
* Note that as of 12/09/11, figure 1 in the fact sheet is incorrect.