CBP's Swanson Says Type 86 Entries Continuing to Break Records
CBP saw a record 38 million Type 86 entries in April, said Jim Swanson, CBP director-cargo and conveyance security and controls, who was speaking virtually to the National Customs Brokers & Forwarders Association of America conference on May 5. That's still not capturing the full scope of small packages that come into the U.S. under de minimis, which tops 600 million.
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"That’s a lot of work, a lot of packages, and a lot of risk," Swanson said, including the risk of brand counterfeits; dangerous counterfeits, such as medical devices; auto parts and medicines; and narcotics destined for the black market. But what CBP has learned through the Type 86 pilot will help it rewrite the regulations on de minimis shipments so CBP can collect data electronically from sellers ahead of the packages' arrival.
Swanson said that the agency's goal with the pilot was not to have electronic clearance, but it is finding that about 97% of packages that send Type 86 data can clear electronically. Before the pilot, clearance was manual, and packages arriving outside express shipment channels were taking four to eight days for the cargo to clear. Clearing packages electronically saves shippers $3 a transaction and saves CBP a couple of dollars per package as well. But more importantly, it allows CBP to reallocate resources on a risk basis, he said.
Swanson said that the seller often provides the name of the platform where the good was sold, the description on the platform, and sometimes even the link to the listing, in addition to the buyer and seller names and addresses.
A member of the audience asked if having a Harmonized Tariff Schedule code would be better for CBP in its pre-clearance process. "HTS Code is a revenue-collecting device, not a targeting device," he said, and even at 10 digits, one number can cover many, many products. So a paragraph description or a link to a picture is more helpful, he said.
An employee of R.L. Jones Customhouse Brokers told Swanson that his firm is handling many container ships from Asia coming to Long Beach, California, where the company then ships the imports under bond to Mexico before bringing small packages back over the border to the U.S., so those goods can be covered by de minimis.
Swanson said that is legitimate, but he's also working with the ports to seek more advance data from these operations. The employee said he expects that this business model creates headaches for FDA.
Swanson agreed, saying many shippers include a disclaimer under FDA, and it's more than they would like. "We intend to work more with the [partner government agencies]," he said, in order to give guidance on when filing is required even if the value of the shipment is small.
"If it’s $10 worth of medical product, you’re required to provide that information to FDA," he said. "There is no value-based de minimis for them."
Swanson also updated the audience on how CBP is implementing its binding ruling that when de minimis shipments are going to a fulfillment center, they have to be no more than $800 worth of product per day, or else the warehouse cannot qualify for the tariff benefit. He said 10% of de minimis packages are going to a fulfillment operation. "We've managed to reach the top 50 foreign exporters" using de minimis, and the proportion of packages going to U.S. warehouses is going down, he said. So far, CBP has not banned an exporter from using Section 301 for ignoring the ruling, but he said for some exporters, "we're going to have to take some kind of halting action."