Background

U.S. Customs and Border Protection said at a recent meeting of the Customs Commercial Operations Advisory Committee that it is changing course on how to implement risk-based bonding for imports.

Section 115 of the Trade Facilitation and Trade Enforcement Act requires CBP to develop importer risk assessment guidelines to adjust bond amounts, especially for its seven priority trade issues (antidumping/countervailing duties, agriculture, free trade agreements, import safety, intellectual property rights, and revenue), with a focus on new and non-resident importers. CBP began work toward meeting that obligation in September 2019 by announcing a plan to implement an additional risk-based AD/CV single transaction bond for certain entries. However, that plan was shelved due to concerns from the trade community.

CBP then pursued an alternative risk-based AD/CV STB framework to mitigate the trade community’s concerns as well as CBP litigation concerns with the proposed requirement. The agency had planned to communicate this proposal via an advance notice of proposed rulemaking but has now decided not to proceed with that effort, due in part to the complexity of the framework in determining if an additional AD/CV risk-based STB would be required and in what amount.

Instead, CBP said it intends to implement risk-based bonding by leveraging existing authorities. For example, COAC has previously pointed out that CBP’s current continuous bond sufficiency formulas already take the priority trade issues into account in many ways. CBP also has a policy in place that can require additional STBs for high-risk shipments of AD/CV goods and can consider enforcing this more routinely. To this end, CBP will conduct training with port offices and Centers of Excellence and Expertise on its existing authority to request additional bonding and when this can be exercised under current statutes, laws, regulations, directives, and policy provisions.

CBP is taking other related actions as well. Effective May 11, CBP is no longer permitting importers of record that are suspended or debarred by CBP (or another federal agency, as applicable) to use a continuous or drawback bond to clear entries or file drawback claims. Affected importers may still use single transaction bonds or cash in lieu of surety (for single transactions only) to engage in customs activities. When an importer’s suspension and/or debarment terminates, sureties may file a new continuous bond to resume customs activities.

CBP also plans to issue a proposed rule that would update eBond functionality from a test to a requirement, eliminate the majority of paper bond processing, and ensure that bonds are on file. COAC noted that the eBond test, which has been running since 2015, “is the gold standard for allowing imported cargo to move seamlessly from origin to destination and in-bond throughout the United States.” However, COAC added, there are thousands of customs bonds not yet fully operational as eBonds, including importer security filing bonds, International Trade Commission bonds, and intellectual property rights bonds.

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