CPSC Compliance Cert Proposal Would Result in More Broker POAs, Reduce Use of Brokers
New certification requirements proposed by the Consumer Product Safety Commission (CPSC) threaten to add new liability issues and costs in the use of customs brokers, said the Express Association of America (EAA) in comments to the CPSC. The EAA joined a slew of other trade associations and companies that voiced major concerns with the proposal at the CPSC (see 13073014). There were numerous objections to the new rules in the comments (here), some of which compared the proposal to the controversial filing requirements imposed under the Lacey Act.
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The requirement for certificates of compliance at entry submitted by the importers of record (IOR) would mean "demands by brokers for powers of attorney would increase significantly as brokers would not want to assume liability for product safety," said the EAA, which represents UPS, DHL, FedEx and TNT. This will in turn add demands for single and continuous customs bonds, require more CBP staffing and add costs to the consumer, it said. Such a requirement would also reduce the reliance on customs brokers as IORs because brokers could not certify whether a product was in compliance as they "rely on the actual buyer of the goods to know and provide that information," it said.
The rules would also "impose enormous liability on the IOR and introduce significant delays in the border clearance process," said the EAA. "Express companies serve as the IOR in 70% of cases, but have no knowledge of the safety of the product or any means to verify if proper tests have been conducted. Therefore it is infeasible for the IOR to assume the liability for product safety." UPS Supply Chain Solutions agreed, in separate comments, saying "manufacturers and other interested parties in the supply chain are much better positioned [than brokers] to issue the required certifications," and could use this proposed rule as a means to shortcutting compliance measures by not acting as the IOR. Brokers very rarely take title to imported products and can't test samples as required under the guiding statute, said UPS.
It makes no sense to "require customs brokers, freight forwarders, common carriers, etc. responsible for the testing and certification of products simply because they may technically be the 'importer of record," said the National Retail Federation. "If the CPSC were to in fact begin to enforce this position, such entities can be expected to begin to refuse to in fact serve as 'importers of record,' or might charge a significant premium for assuming the detailed activities this would require, further driving up costs and slowing import release and delivery times for all involved, including consumers."
The Pacific Coast Council and Freight Forwarders Association agreed that brokers aren't the right party to provide the certifications and advised CPSC to convene a working group for import issues. A CPSC Import Compliance Advisory Group, made up of selected members of the trade community "would provide a mechanism for the commission to understand the complexities of the international supply chain and the practicalities that confront implementation of this Proposed Rule, and other Commission initiatives in the future," it said.
The CPSC should "heed the example of the Lacey Act" and pull back on proposed "at entry" filing requirements, said the Retail Industry Leaders Association (RILA). Both the import community and the U.S. Department of Agriculture "are still reeling" from the filing requirements imposed in through the Lacey Act meant to prevent illegal logging, it said. The USDA has been "inundated with the declarations required by the statute to be filed at entry, even though USDA is only part way through the Act's implementations (which arguably covers fewer products than the CPSC standards that require certification) and USDA has more staff available to process these documents," said the RILA. CPSC should use statutorily provided option to use a more sensible risk-based approach for the documents on demand system, it said.
Foreign Trade Zones Also Potentially Affected
The CPSC certification filing requirement would also pose problems for users of Foreign-Trade Zones (FTZs), said the Nationals Association of FTZs. FTZ operators can file weekly estimated entries for a business week’s shipments into the U.S. Customs territory instead of one Customs entry per shipment, it said. "Requiring the filing of a CPSC certificate of compliance at the time of estimated [CBP Form 3461] entry would not be appropriate as it is an estimate only, not actual transfer of merchandise to the U.S. Customs territory," the association said.