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Import Declaration Requirement for Wood Products Poses Numerous Challenges, Report Says

Wednesday, July 03, 2013
Sandler, Travis & Rosenberg Trade Report

The Department of Agriculture’s Animal and Plant Health Inspection Service recently submitted to Congress a report indicating that the import declaration requirement included in the Lacey Act amendments of 2008 has been challenging for both APHIS and importers. In addition, the report finds, it is unclear what impact the amendments have had on their intended goal of reducing illegal logging.

Under the Lacey Act amendments, it is unlawful to (a) import, export, transport, sell, receive, acquire or purchase in interstate or foreign commerce any plant taken in violation of any federal, state, tribal or foreign law that protects plants and (b) make or submit any false record, account or label for, or any false identification of, any plant covered by the Lacey Act. In addition, imports of certain plants and plant products must be accompanied by an import declaration containing the scientific name of the plant, the value of the importation, the quantity of the plant and the name of the country from which the plant was harvested. For paper and paperboard products containing recycled content the declaration must also include the average percent of recycled content regardless of species or country of harvest.

Statistics. APHIS has received approximately 1.4 million import declarations since 2009 and nearly 40,000 are being filed monthly. Cumulatively, more than 17% of import declarations have been filed as paper documents, and while the proportion of declarations filed electronically has increased over time, paper declarations still account for about 13% of the total. An estimated 5% of the records included in the declarations are for products for which the import declaration requirement is not currently in force.

Compliance Challenges. Based on a review of customs data by HTSUS number, there appear to be a substantial number of entries for which import declarations have not been filed. About 15% of the electronic declarations appear to be missing information on genus, species or country of harvest, and 32% of the paper declarations appear to be missing at least one piece of information (e.g., entry number, genus, species or country of harvest). Genus and species information has either not been declared or has been improperly declared (due to factors such as difficulty identifying the species or deliberate misidentification) in at least 5% of the overall filings.

In some cases, particularly with respect to more complex HTSUS headings such as 4421 (miscellaneous items such as blinds, skewers, fencing and edge-glued lumber) and 4418 (items such as doors, shingles and certain flooring), importers may be reporting the country of origin or manufacture of the goods instead of the country of harvest.  Approximately 1.7% of electronic declarations have a blank value for the country of harvest field, and the number of such blank entries appears to be increasing as the declaration is being enforced on more complex products.

About 46% of the electronic declarations that APHIS has analyzed are missing accurate information on value, which makes it impossible to accurately reconcile the cumulative value reported on electronic import declarations with the value reported for customs purposes. While APHIS has made some effort to isolate the data problem, the extent of the errors is sufficiently large so as to preclude any meaningful analysis of the value information included in the import declarations submitted to date. Nevertheless, APHIS estimates the value of imports for which an import declaration is currently required at $3.2 billion per quarter, a number that could rise to $22.4 billion when enforcement of the import declaration requirement is fully phased in.

Administrative Challenges. APHIS continues to receive an average of 5,000 paper declarations per month. This creates a large administrative burden that APHIS has been limited in its ability to manage due to a lack of resources. The report notes that when a paper declaration is received it is filed in a storage box without first being processed or digitally scanned. The boxes are then stored in a secure location on USDA property. APHIS states that now that Congress has appropriated funding for Lacey Act implementation it is considering the possibility of electronic processing of import declarations as well as secure document storage provided by private companies.

APHIS anticipates that the use of paper declarations could increase, posing a further administrative burden. For example, the range of products covered by the import declaration requirement will eventually expand, yielding a subsequent rise in the number of paper declarations. A further increase could result from the requirement that when an importer does not know the genus and species or country of harvest of a plant product, all possible genera and species or all possible countries of harvest must be provided. This may comprise many lines of data, and if the importer uses a customs broker that charges per line of data submitted it may be cheaper to submit a paper declaration rather than to file electronically.

However, electronic declarations pose their own problems. These declarations are filed with U.S. Customs and Border Protection, which downloads the relevant data, burns it onto CDs and ships them to APHIS once a week. APHIS must then load the data onto the computer system it uses to track Lacey Act declarations, a process that requires several manual steps. Consequently, it can sometimes be more than a week after a shipment is entered before APHIS receives and evaluates the import declaration, by which time the imported good has most likely entered the stream of commerce and tracking it down, should enforcement actions need to be taken, becomes increasingly difficult.

Enforcement Challenges. APHIS states that ideal enforcement of the import declaration requirement would require an enhanced presence at ports of entry, where subject goods would be screened to ensure compliance. However, at present, APHIS typically receives the import declaration five to ten days after entry, and a lack of funding has meant that only a limited number of declarations have been monitored for compliance.

APHIS notes that the Lacey Act amendments apply to all wood illegally harvested prior to the 2008 Lacey Act amendments if someone imports, exports, sells, receives, acquires or purchases such wood after May 22, 2008. However, enforcement agencies are examining this issue to determine if there are administrative steps they might take to address concerns with respect to wood purchased and imported prior to the 2008 amendments.

Effects. Given the challenges identified above, it is significant that that APHIS has no clear idea whether the Lacey Act amendments have led to a reduction in the level of illegal logging and trafficking. Information on the effects of the law on such activity is “very limited” and “there is no resource available” that provides verifiable information that could be used to evaluate those effects. On the other hand, APHIS states that the extensive outreach activities it has conducted appear to have raised awareness of the significance of illegal logging and associated trade as well as actions by both government and the private sector to combat it. In addition, anecdotal reports indicate that entities that trade in imported wood and other plant products are increasing their efforts to understand the source and legality of those goods and to ensure that they are legally sourced.

Future. The report is short on details concerning APHIS’ future efforts to continue implementing the Lacey Act amendments. No new phase of the schedule for enforcing the import declaration requirement has been introduced for more than three years, although there have been some interdepartmental discussions about what types of additional products and corresponding HTSUS numbers could be included in the next phase that would present the least potential burden on legitimate trade and the agency. APHIS also gives no specific timeframe for completing the rule defining common food crops and common cultivars, which are excluded from the import declaration requirement, or for proceeding with an effort to develop a de minimis standard for the amount of plant material that must be present in a product for the declaration requirement to apply.

In the meantime, APHIS received $775,000 for implementation of the Lacey Act amendments in fiscal year 2012 and $716,000 in FY 2013. APHIS is using these funds to pay for three full-time staff and additional help as needed, to rent a secure, climate-controlled storage facility for the paper declarations that have been filed, and to educate affected industries and importers. If the additional resources requested in President Obama’s FY 2014 budget are appropriated, APHIS will work to implement a Web-based system for collecting and maintaining declarations to help eliminate the need for paper-based declarations.

Finally, APHIS is considering the cancellation of a pilot program for participants in CBP’s expedited border release programs, Automated Line Release and Border Release Advance Screening and Selectivity, that is testing the feasibility and practicality of collecting the import declaration information through a periodic blanket declaration with monthly reconciliation reports. This program does not appear to have proven particularly useful and APHIS may therefore elect to allow BRASS and ALR participants to submit their declarations at the same time they submit their entry information.

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