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Importer Bona Fides, Benefits for Broker Best Practices Discussed at COAC Meeting

Friday, November 22, 2013
Sandler, Travis & Rosenberg Trade Report

U.S. Customs and Border Protection and trade community representatives are continuing to work on developing a standard way for importers of record to establish their identity to customs brokers. A work group within the Trade Modernization Subcommittee of the Advisory Committee on Commercial Operations of CBP (COAC) has spent the last few months discussing what bona fides importers should be required to present to brokers, but no agreement has yet been reached. COAC adopted several related recommendations to CBP at its Nov. 15 meeting.

CBP has submitted a draft framework on this issue to the work group, being careful to make clear that the role of customs brokers in obtaining bona fides is not to vet the importer but to establish the identity of the authorized individual and their relationship to the importer. CBP recognizes that most brokers are very diligent and have developed best practices that assure the identity of the importer but states that the lack of a common standard allows some importers to “broker shop” for a company with less stringent standards.

The subsequent discussions within the working group have centered on what documentation is of significant value to this purpose and readily available to the importer. The group considered the use of a government issued photo identification of the authorized individual empowered to sign the power of attorney, but it was pointed out that the authorized person may not be directly involved in establishing the working relationship with the broker and could be hesitant to furnish a copy of their driver's license or passport for fear of identity theft. The group is continuing to look for acceptable alternatives.

There has also been some discussion on other information sources within the importation process that might enable CBP to obtain and retain additional information about an importer to establish identity and authenticity. For example, CBP has briefed the working group on the enhancement of the current Importer ID Input Record (CBP Form 5106) process. Although this would not be considered to be part of bona fides, the working group is hopeful that any revisions to this process will enable CBP to have a better idea of who the importer is and what they do as an importer.

At its Nov. 15 meeting, COAC members approved the following recommendations to CBP on this issue.

- CBP should modify 19 CFR section 111.36 (c) to require that brokers obtain a power of attorney directly from the importer. Nothing should prevent the broker from communicating directly with the importer.

- CBP should continue to pursue information collection to improve its admissibility determinations via the proposed revisions to CBP Form 5106. This could be helpful to CBP in addressing risks associated with traditional challenges related to antidumping/countervailing, intellectual property rights and other enforcement issues.

- Realizing that different brokers have different best practices for different business models, CBP should develop a program to recognize best practices within the broker industry and provide benefits to these brokers. Specific benefits will likely be discussed during future COAC meetings.

- Given that the proposed changes to the CBP Form 5106 will address many of the concerns surrounding the validation of bona fides, no changes should be made at this time to the current regulations regarding the collection of a valid power of attorney. This recommendation will be revisited after the proposed 5106 changes have been reviewed by COAC.

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