    [Senate Hearing 113-215]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 113-215

            THE TRADE FACILITATION AND TRADE ENFORCEMENT ACT OF 2013

    =======================================================================

                                    HEARING

                                   before the

                              COMMITTEE ON FINANCE
                              UNITED STATES SENATE

                        ONE HUNDRED THIRTEENTH CONGRESS

                                 FIRST SESSION

                                       ON

                                     S. 662

                                   __________

                                  MAY 22, 2013

                                   __________

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                              COMMITTEE ON FINANCE

                         MAX BAUCUS, Montana, Chairman

    JOHN D. ROCKEFELLER IV, West         ORRIN G. HATCH, Utah
    Virginia                             CHUCK GRASSLEY, Iowa
    RON WYDEN, Oregon                    MIKE CRAPO, Idaho
    CHARLES E. SCHUMER, New York         PAT ROBERTS, Kansas
    DEBBIE STABENOW, Michigan            MICHAEL B. ENZI, Wyoming
    MARIA CANTWELL, Washington           JOHN CORNYN, Texas
    BILL NELSON, Florida                 JOHN THUNE, South Dakota
    ROBERT MENENDEZ, New Jersey          RICHARD BURR, North Carolina
    THOMAS R. CARPER, Delaware           JOHNNY ISAKSON, Georgia
    BENJAMIN L. CARDIN, Maryland         ROB PORTMAN, Ohio
    SHERROD BROWN, Ohio                  PATRICK J. TOOMEY, Pennsylvania
    MICHAEL F. BENNET, Colorado
    ROBERT P. CASEY, Jr., Pennsylvania

                          Amber Cottle, Staff Director

                   Chris Campbell, Republican Staff Director

                                      (ii)

                                C O N T E N T S

                                   __________

                               OPENING STATEMENTS

                                                                       Page
    Baucus, Hon. Max, a U.S. Senator from Montana, chairman,
      Committee on Finance...........................................     1
    Hatch, Hon. Orrin G., a U.S. Senator from Utah...................     3

                                   WITNESSES

    Cook, William A., director of worldwide logistics and Customs,
      Chrysler Group, LLC, Rochester, MI.............................     4
    Cooper, David, global Customs compliance manager, the Procter and
      Gamble Company, Cincinnati, OH.................................     6
    Silcox, Clark R., general counsel and secretary, National
      Electrical Manufacturers Association, Rosslyn, VA..............     8
    Comstock, Mary Ann, brokerage compliance manager, UPS Supply
      Chain Solutions, Sweet Grass, MT...............................    10

                   ALPHABETICAL LISTING AND APPENDIX MATERIAL

    Baucus, Hon. Max:
        Opening statement............................................     1
        Prepared statement...........................................    25
    Brown, Hon. Sherrod:
        Prepared statement...........................................    27
    Comstock, Mary Ann:
        Testimony....................................................    10
        Prepared statement...........................................    28
        Responses to questions from committee members................    34
    Cook, William A.:
        Testimony....................................................     4
        Prepared statement...........................................    42
        Responses to questions from committee members................    49
    Cooper, David:
        Testimony....................................................     6
        Prepared statement...........................................    52
        Responses to questions from committee members................    60
    Hatch, Hon. Orrin G.:
        Opening statement............................................     3
        Prepared statement...........................................    63
    Silcox, Clark R.:
        Testimony....................................................     8
        Prepared statement...........................................    65
        Responses to questions from committee members................    71

                                 Communications

    American Wire Producers Association (AWPA).......................    81
    Coalition to Enforce Antidumping and Countervailing Duty Orders..    85
    Committee to Support U.S. Trade Laws.............................    86
    International Trademark Association (INTA).......................    88
    National Customs Brokers and Forwarders Association of America,
      Inc............................................................    90

                                     (iii)

            THE TRADE FACILITATION AND TRADE ENFORCEMENT ACT OF 2013

                                  ----------

                            WEDNESDAY, MAY 22, 2013

                                           U.S. Senate,
                                          Committee on Finance,
                                                        Washington, DC.
        The hearing was convened, pursuant to notice, at 10:05
    a.m., in room SD-215, Dirksen Senate Office Building, Hon. Max
    Baucus (chairman of the committee) presiding.
        Present: Senators Wyden, Nelson, Hatch, Grassley, Crapo,
    and Thune.
        Also present: Democratic Staff: Mac Campbell, General
    Counsel; Bruce Hirsh, Chief International Trade Counsel; and
    Hun Quach, International Trade Analyst. Republican Staff: Chris
    Campbell, Staff Director; and Everett Eissenstat, Chief
    International Trade Counsel.

       OPENING STATEMENT OF HON. MAX BAUCUS, A U.S. SENATOR FROM
                MONTANA, CHAIRMAN, COMMITTEE ON FINANCE

        The Chairman. The hearing will come to order.
        The American composer, Aaron Copland, once said, ``To stop
    the flow of music would be like the stopping of time itself,
    incredible and inconceivable.''
        Like the flow of music, international trade must be
    orchestrated and properly executed. If trade were stopped, it
    could cripple the U.S. economy and cause a ripple effect around
    the world.
        Today we are focused on critical legislation to reauthorize
    U.S. Customs and Border Protection, or CBP, and Immigration and
    Customs Enforcement, or ICE. These two agencies orchestrate the
    flow of trade and ensure shipment smoothly through United
    States ports.
        In 1979, when I joined the Senate Finance Committee, total
    U.S. trade in goods and services was $472 billion. Last year,
    it was $4.9 trillion, nearly a 1,000-percent increase. Times
    have changed, and CBP and ICE must modernize to meet the
    challenges of the 21st century.
        On a typical day, 365,000 entries move through U.S. ports.
    That includes more than 3,000 express entries. These goods
    arrive in more than 66,000 truck, rail, and sea containers, as
    well as hundreds of aircraft carrying express cargo shipments.
    This is just an average. On a busy day, CBP must manage almost
    half a million entries.
        American businesses, ranchers, farmers, and consumers
    depend on the timely movement of all these goods across borders
    to remain competitive. In business, time is money. So CBP and
    ICE must facilitate trade expeditiously. At the same time, CBP
    and ICE must ensure that our borders are secure. This is the
    challenge that CBP faces given the volume of today's trade.
        CBP must fulfill its historic mission of collecting duties
    owed to the U.S. Treasury. CBP and ICE also enforce U.S.
    antidumping and countervailing duty laws and ensure that
    foreign companies do not undercut American jobs by
    circumventing those laws. And CBP and ICE stop counterfeit
    goods from entering the U.S. market.
        In 2002, Congress gave CBP and ICE yet another mandate--to
    keep terrorists and illegal weapons out of the United States.
    Since then, CBP and ICE's trade missions have been put on the
    back burner as they have pursued new security and law
    enforcement missions.
        But trade and security are not mutually exclusive. CBP and
    ICE must effectively facilitate the flow of trade and ensure
    our National security. To do this, Senator Hatch and I
    introduced the ``Trade Facilitation and Trade Enforcement
    Reauthorization Act of 2013.''
        The bill, which we introduced in March, gives CBP the tools
    and authority it needs to refocus on its trade mission. This
    bill creates new high-level positions within CBP solely
    dedicated to trade facilitation and trade enforcement. It
    allows CBP to target the imports that are most likely to
    violate the U.S. intellectual property, import safety, and
    other laws. And it provides speedy Customs clearance and other
    commercial benefits for importers with a strong record of
    compliance.
        This bill also includes the ENFORCE Act, as marked up by
    this committee last year. The ENFORCE Act gives CBP and the
    private sector the tools they need to combat the evasion of
    antidumping and countervailing duty laws. I want to commend
    Senator Wyden and all of the bill's co-sponsors for working
    with us to mark up the bill last year, and I am glad that we
    are able to include it here.
        The Trade Facilitation and Trade Enforcement
    Reauthorization Act also provides important benefits for States
    like Montana. On the average day, CBP processes more than 1,000
    entries through Montana ports.
        This bill establishes a pilot program for 24-hour port
    operations. The 24-hour pilot program will help CBP determine
    whether round-the-clock operation can help manage the flow of
    goods across the northern border. And the bill helps Montana's
    honey producers by ensuring their foreign competitors pay the
    required duties on their imports.
        Finally, the bill requires CBP and ICE to do a better job
    consulting with U.S. businesses that are affected by its
    policies, as well as with this committee and with Congress as a
    whole.
        The bill, in short, gives CBP and ICE the tools and
    resources they need to refocus on their trade missions. Or, as
    Aaron Copland might say, ensures that international trade is
    properly orchestrated, executed, and continues to flow.
        [The prepared statement of Chairman Baucus appears in the
    appendix.]
        The Chairman. Senator Hatch?

               OPENING STATEMENT OF HON. ORRIN G. HATCH,
                        A U.S. SENATOR FROM UTAH

        Senator Hatch. Thank you, Mr. Chairman. I appreciate this
    hearing.
        The long and distinguished history of the United States
    Customs and Border Protection agency dates back to 1789, when
    the First Congress of the United States created its
    predecessor, the United States Customs Service.
        The U.S. Customs Service was the first agency in the
    Federal Government. Its primary function was the collection of
    import duties, which placed the agency under the direct
    authority of the Secretary of the Treasury.
        As our Nation evolved, so did the agency's mission. Most
    recently, following the terrorist attacks of 9/11, Congress
    passed the Homeland Security Act of 2002 to help improve border
    security. That act reorganized the U.S. Customs Service along
    with other agencies into two new agencies now known as Customs
    and Border Protection, CBP, and Immigration and Customs
    Enforcement, ICE. Since their creation, these two agencies have
    faithfully carried out their dual missions of facilitating
    trade and protecting our Nation from terrorist attacks.
        Today, international trade is a vital component of our
    economy. U.S. imports and exports amount to trillions of
    dollars. Robust international trade enables companies such as
    Procter and Gamble and Oracle to expand their operations around
    the world and in my home State of Utah as well.
        As our future economic growth is increasingly linked to
    international trade, it is important that Congress works to
    enhance our economic security. That is why Senator Baucus and I
    have introduced S. 662, the Trade Facilitation and Trade
    Enforcement Reauthorization Act of 2013.
        Among other things, this bill would improve our ability to
    protect one of the Nation's most important economic assets, and
    that is intellectual property. We included in the bill
    provisions to codify the National Intellectual Property Rights
    Coordination Center, which coordinates Federal efforts to
    combat intellectual property rights violations.
        The bill also significantly expands CBP's tools and
    authorities to protect intellectual property rights at the
    border by requiring the agency to share information about
    suspected infringing merchandise with rights holders. Our
    legislation requires CBP to establish a process for enforcing
    copyrights while registration with the Copyright Office is
    pending, and to publish information about unlawful
    circumvention devices that are seized.
        S. 662 also strengthens CBP's targeting of goods that
    violate intellectual property rights, and requires an
    intellectual property rights education campaign for travelers
    at the border. The bill requires the Customs declaration form
    that everyone entering the country fills out to contain a
    warning that the importation of goods that infringe
    intellectual property rights may violate criminal and/or civil
    laws and may pose serious risk to health and safety.
        Now, this seems to me to be an obvious way to raise
    awareness about the dangers of intellectual property rights
    infringement at no real cost to U.S. taxpayers.
        Our bill will do many other things to facilitate trade,
    including: improving the CBP Trusted Trader partnership
    programs; enhancing the private-sector advisory system so that
    U.S. importers and others involved in trade have a stronger
    voice in formulating trade policy; and ensuring that CBP
    completes and deploys information technology systems such as
    the Automated Commercial Environment, which fosters trade
    facilitation through the use of automation.
        Through these provisions, S. 662 will help alleviate
    unnecessary and costly delays at the border. At the same time,
    it will help to prevent unsafe and illegal goods from entering
    the United States as well as protect American businesses from
    unfairly traded goods coming into our country.
        This legislation is long overdue. I want to compliment the
    chairman for pursing it. S. 662 is a strong bill that will
    benefit our economy and help ensure that America remains one of
    the most competitive nations in the world.
        I look forward to continuing our work with CBP to ensure
    that its dual mission of protecting our homeland and
    facilitating trade is successfully fulfilled. At the same time,
    I hope that the administration will soon nominate a new CBP
    Commissioner. This agency has been without a Senate-confirmed
    Commissioner since December of 2011, which is far too long. In
    choosing a new Commissioner, I hope the administration will
    make sure that individual has a strong foundation and
    understanding of international trade.
        Mr. Chairman, I want to thank you once again for holding
    this hearing today. I look forward to hearing from each of our
    witnesses about how S. 662 can help to strengthen and improve
    the trade facilitation and enforcement functions of CBP and
    ICE, and I look forward to any criticisms as well.
        The Chairman. Thank you, Senator. I appreciate that.
        [The prepared statement of Senator Hatch appears in the
    appendix.]
        The Chairman. We are pleased to begin our hearing today
    with Mr. William Cook, director of logistics and Customs at the
    Chrysler Group. Following Mr. Cook is Mr. David Cooper, global
    Customs compliance manager with the Procter and Gamble Company.
    The third witness, Mr. Clark Silcox, is general counsel and
    secretary at the National Electrical Manufacturers Association.
    And finally, we welcome again Ms. Mary Ann Comstock from Sweet
    Grass, MT. Mary Ann serves as brokerage compliance manager for
    UPS Supply Chain Solutions.
        Everybody, it is all yours. You know the drill here.
    Statements are included in the record, and we urge you to
    summarize them for about 5 minutes.
        Mr. Cook, you are first.

     STATEMENT OF WILLIAM A. COOK, DIRECTOR OF WORLDWIDE LOGISTICS
            AND CUSTOMS, CHRYSLER GROUP, LLC, ROCHESTER, MI

        Mr. Cook. Thank you. Thank you, Chairman Baucus, Ranking
    Member Hatch, and Finance Committee members.
        I want to begin by thanking you again for inviting Chrysler
    Group, LLC to testify today. Chrysler appreciates being given
    the opportunity to share its views on S. 662, the Trade
    Facilitation and Trade Enforcement Reauthorization Act of 2013.
        My name is William Cook. I am the director of worldwide
    logistics and Customs for Chrysler. In this capacity, I lead
    the team responsible for developing logistics strategy,
    purchasing transportation services, Customs and export
    compliance, operating Chrysler Group Transport, and controlling
    logistics operations.
        I am also a licensed Customs broker and served on the
    Advisory Committee for Commercial Operations (COAC) of U.S.
    Customs and Border Protection from 2007 until 2010.
        Because of the significant volume of trade involved,
    coupled with the company's reliance on just-in-time inventory
    management practices, Chrysler's ability to import and export
    vehicles and parts in an efficient and timely fashion is
    critical.
        In 2012, Chrysler handled almost 300,000 entries into the
    United Sates worth $24 billion. By volume, 70 percent of these
    entries were production parts, and the remainder were vehicles.
    Chrysler also handed 1.2 million entries into Canada worth
    almost $12 billion and 55,000 entries into Mexico worth $5.5
    billion.
        Even minimal delays can have serious consequences for the
    company, and now more than ever, with demand sky-high for
    Chrysler products and fierce competition in the auto sector, we
    cannot afford any production delays. As such, it has been
    Chrysler's practice to take advantage of every opportunity to
    reduce the time it takes for the company's shipments to cross
    the border and, more generally, to reduce our direct and
    indirect Customs-related costs.
        Therefore, Chrysler is a charter member of the Customs-
    Trade Partnership Against Terrorism (C-TPAT) and Importer Self-
    Assessment (ISA) programs. Chrysler also takes advantage of all
    border crossing privileges that are provided, including the
    Free and Secure Trade, or FAST, program. We are also members of
    the Automotive and Aerospace Center of Excellence and
    Expertise, the CEE, and have participated in a number of CBP
    pilots.
        Additionally, as a member of CBP's Trade Support Network,
    Chrysler provides direct input to the agency regarding the
    design and development of Customs modernization initiatives
    including the Automated Commercial Environment (ACE). My full
    statement on S. 662 was previously submitted; however, in the
    interest of time, today I will only address two key issues for
    Chrysler.
        The first issue is the Automated Commercial Environment.
    Like the committee, Chrysler looks forward to the day when ACE
    is fully up and running and appreciates the support for the
    development of ACE reflected in the bill.
        Based on our discussions with CBP, it appears that the
    agency is making real progress in rolling out the ACE system.
    However, the inclusion of ACE-related provisions in the
    reauthorization legislation and the committee's exercise of its
    oversight responsibilities will help ensure that CBP completes
    the roll-out in a timely fashion.
        Chrysler was one of the original 41 participants in the
    2004 pilot. Despite the fact that it has yet to be fully
    implemented, we already see tremendous benefits from the ACE
    system and expect those benefits to increase as additional
    elements of the system are rolled out.
        Of particular interest to Chrysler is the International
    Trade Data System (ITDS) or ``single window'' concept, which
    will allow Chrysler to use ACE for all of its entries. Having
    to file entries in both the Automated Commercial System (ACS)
    and the ACE systems is administratively burdensome and requires
    careful monitoring of Chrysler's post-entry work to ensure that
    it is properly done.
        We understand the next ACE roll-out will relate to export
    reporting, which could improve the company's ability to manage
    its exports and duty drawback filing, and Chrysler will
    volunteer to participate in any export reporting pilot program.
        The second issue is the pilot program to designate 24-hour
    commercial ports of entry. Chrysler was pleased to see the
    language in the proposed legislation requiring CBP to launch
    this pilot program and designate more 24-hour commercial ports
    of entry.
        Since we rely so much on just-in-time inventory practices,
    keeping more of the U.S. land border commercial ports of entry
    open 24 hours a day will help to reduce wait times at the
    border, facilitate trade, and significantly benefit Chrysler
    and many other U.S. companies.
        In conclusion, Chrysler welcomes the introduction of S. 662
    and hopes that it is taken up for consideration by the
    committee and on the Senate floor as soon as possible. Like
    many industries, the auto sector is extremely competitive. Many
    of the measures included in this legislation will help to
    streamline and make more efficient Customs processes and
    procedures.
        While savings on a single entry associated with these
    proposed improvements may not necessarily be large, for
    companies like Chrysler, with our combined 400,000 import and
    export transactions, the total savings would be significant.
    Thank you again for this opportunity.
        The Chairman. Thank you, Mr. Cook, very much.
        [The prepared statement of Mr. Cook appears in the
    appendix.]
        The Chairman. Mr. Cooper?

     STATEMENT OF DAVID COOPER, GLOBAL CUSTOMS COMPLIANCE MANAGER,
             THE PROCTER AND GAMBLE COMPANY, CINCINNATI, OH

        Mr. Cooper. Chairman Baucus, Ranking Member Hatch, members
    of the committee, thank you for inviting P&G to testify here
    this morning.
        My name is David Cooper. I am the global Customs compliance
    manager at Procter and Gamble. I also work closely with P&G's
    global brand protection team, which is responsible for
    protecting consumers, retailers, and our brands from the threat
    of counterfeit goods.
        Ninety-nine percent of American households contain at least
    one P&G product, and over 90 percent of the products we sell in
    the U.S. are manufactured in one of our 33 U.S. facilities,
    including our new Box Elder facility in Utah.
        More than 4.6 billion times a day our trusted brands touch
    the lives of consumers in virtually every country. I would like
    to briefly discuss P&G's supply chain and brand protection
    issues as background for why the Trade Facilitation and Trade
    Enforcement Reauthorization Act is important to us.
        P&G has a global supply chain. We purchase raw materials,
    equipment, packaging, and other inputs from thousands of
    suppliers in the United States, but imports from foreign
    suppliers play a key role in our U.S. manufacturing
    capabilities as well.
        Direct P&G imports amount to more than 35,000 entries each
    year with a value of roughly $3 billion. On an average day, we
    manage almost 100 entries at a value of more than $8 million.
    The ability of these shipments to quickly and efficiently pass
    through the Customs and Border Protection import process is
    critical to our U.S. manufacturing operations.
        As important as efficiency is to us, our supply chain is
    more than a logistical or operational issue. Millions of times
    every day, imported materials are used by U.S. consumers as
    part of the Pampers diapers we put on our children, the
    Gillette razor blades we use to shave, the Nyquil cold medicine
    we take, and the Tide detergent we use to care for our clothes.
        The safety of P&G products is our number-one priority, and
    we build our supply chain around that fact. We have strict
    policies with our partners at all stages of our supply chain to
    ensure that imports are safe for consumers, and that finished
    products that cross into the U.S. are genuine P&G brands and
    not counterfeits.
        Protecting consumers against counterfeits is a business and
    consumer protection imperative for us. Counterfeits are
    inferior products that undermine consumer trust in our brands.
    They are often sold at artificially low price points which
    affect our legitimate sales and profits, eroding the
    significant investment P&G makes in research and development.
        P&G's relationship with CBP on intellectual property rights
    is a great example of a public/private partnership that is
    critical to an effective IPR enforcement regime. We work with
    CBP on 70 to 80 counterfeit cases every year by offering our
    expertise and cooperation to identify and investigate
    counterfeit products.
        Each year we conduct training sessions for hundreds of law
    enforcement and CBP officers on how to distinguish genuine P&G
    products from counterfeits.
        P&G applauds the efforts of this committee in addressing
    trade facilitation and intellectual property protection in S.
    662. We support the bill and find particular value in the
    following provisions.
        Section 201 requires the Commissioner of the CBP to consult
    with private- and public-sector stakeholders to ensure CBP
    partnership programs provide companies commercially meaningful
    and measurable benefits. P&G is a Tier II C-TPAT company and,
    as such, we anticipated receiving measurable benefits for our
    participation in the program. We support 201 although, to date,
    we have not seen these benefits apply in a measurable way to
    our entries.
        Section 202 authorizes a trusted importer program that will
    be a powerful trade facilitation tool, particularly the
    provision that allows pre-clearance of imports for companies
    that demonstrate the highest levels of security and compliance.
        Section 206 provides CBP the resources and time line
    required to fully implement the Automated Commercial
    Environment program. If all 30 aspects of this program are
    fully implement as intended in the 1993 Customs Modernization
    Act, importers like P&G will benefit from a simpler, more
    transparent, more efficient Customs experience, facilitating
    legitimate trade.
        Section 231 codifies the National Intellectual Property
    Rights Coordination Center, which P&G strongly supports. P&G
    has worked closely with the IPR Center on a number of critical
    counterfeit investigations and has benefitted greatly from
    coordinated enforcement efforts.
        Section 241 authorizes CBP personnel to seek and receive
    assistance from experts in the private sector to quickly
    ascertain whether a suspect shipment is genuine or counterfeit.
    We believe CBP officers should be allowed to share product
    samples or identifying packaging information with rights
    holders like P&G as quickly as possible. This would enable CBP
    to officially authenticate legitimate goods so they can make it
    to consumers, or seize counterfeit goods to rightfully prevent
    their entry into the market.
        Mr. Chairman, Senator Hatch, thank you again for the
    invitation to testify this morning. P&G values our partnership
    with you and this committee on these issues. We also value our
    partnership with CBP, and we believe this bill will help CBP
    keep our country safe while allowing globally engaged companies
    like Procter and Gamble to be competitive here in the U.S. and
    throughout the world. Thank you.
        The Chairman. Thank you, Mr. Cooper, very much.
        [The prepared statement of Mr. Cooper appears in the
    appendix.]
        The Chairman. Mr. Silcox?

     STATEMENT OF CLARK R. SILCOX, GENERAL COUNSEL AND SECRETARY,
       NATIONAL ELECTRICAL MANUFACTURERS ASSOCIATION, ROSSLYN, VA

        Mr. Silcox. Good morning, Chairman Baucus, Ranking Member
    Hatch, members of the committee. Thank you very much for
    inviting me to appear before the committee to address the trade
    enforcement provisions of S. 662.
        I am Clark Silcox, general counsel at the National
    Electrical Manufacturer's Association, NEMA. I am speaking
    today primarily to section 241 of the bill, but I noticed that
    sections 231 and 242 through 258 are intended to enhance IPR
    enforcement, and we endorse and support those provisions as
    well, particularly the provision in section 231 about the IPR
    Center in Crystal City that Senator Hatch mentioned in his
    remarks.
        NEMA represents approximately 430 North American
    manufacturers of electrical equipment used in the generation,
    distribution, and control of electricity. The product scope of
    our organization is quite broad, with over 50 product
    categories of electrical products. That includes electrical
    products used in factories, commercial buildings, apartments,
    and homes, as well as hospitals, schools, and government
    buildings.
        It also includes some consumer products sold at retail as
    well. Our member companies have business operations and
    employees in all 50 States, and they have either headquarters
    or factories in the States of every member of this committee.
        Of interest to the committee members, NEMA members that
    have been victims of electrical product counterfeiting have
    headquarters and/or plants in New York, Ohio, Pennsylvania,
    Georgia, North Carolina, Florida, and New Jersey.
        Product safety is a major concern of our industry, and many
    electrical products are third-party tested to the standards of
    third-party independent labs. Counterfeit electrical products
    are frequently found to be substandard either in terms of their
    safety or their product performance characteristics.
        One of our member companies, with headquarters and
    manufacturing in Illinois, a few years ago learned that it had
    a counterfeiting problem, when it was named a defendant in a
    product liability lawsuit in South Carolina because of a
    defective counterfeit product with its name on it.
        Annual Customs data has routinely recognized our products
    in the top five seizure categories for health and safety
    products. The counterfeit electrical products that we have
    found in this country include, for example, residential circuit
    breakers, medium-voltage circuit breakers, extension cords,
    batteries, ground rods, light bulbs, receptacles, ground fault
    circuit interrupters, electrical connectors, and adapters; and
    outside the United States there are a number of other
    electrical products we have seen that are counterfeit.
        Members of our industry along with the testing and
    certification industry, whose certification marks have been
    counterfeited as well, have worked diligently with U.S. Customs
    at the ports to help them identify suspect counterfeit
    products, educating them where the genuine products are made
    and where the counterfeit products come from.
        I have been personally involved in several of those
    training programs, and we appreciate the public/private
    partnership that has combined our resources to achieve some
    very good results in the past.
        I hold, today, in my hand a counterfeit circuit breaker and
    counterfeit packaging that that circuit breaker came to the
    United States in. The genuine product is made here in the
    United States; it is made in Nebraska.
        Knowing that fact, which is something that we inform the
    ports officials about, a port official seeing that product come
    off a ship or an airplane from China ought to be able to make
    the determination that the product is counterfeit and take
    action. That decision is reinforced when the packaging that
    comes in from China says ``Made in the USA'' on it, as this
    counterfeit package does. If there is any doubt though, brand
    owners are in the best position to determine quickly if the
    product is genuine or a fake.
        In the civil litigation that ensued over the counterfeit
    circuit breakers in this country, the typical defense asserted
    by the importers was--despite the fact that it said ``Made in
    the USA'' on the packaging--we were fooled, we could not tell.
        So, in terms of trade facilitation and timeliness, if
    Customs is in any doubt as to the authenticity of the product,
    the manufacturer is in the best position to evaluate. Customs
    should give them a deadline to respond, and both trade
    facilitation and trade enforcement are served and supported at
    the same time.
        NEMA battery manufacturers, for example, make batteries for
    the domestic market here, but they make batteries for the
    Asian, European, and African markets overseas.
        The labeling of the counterfeit batteries can successfully
    simulate--and I provided an example to you--the genuine label,
    so it can be very difficult to tell the difference by visual
    inspection.
        A look under the hood, so to speak, is sometimes required
    to make the ultimate determination of whether the battery is
    genuine or counterfeit, and it can be secured by an X-ray of
    the battery cell. And you can see the structural differences
    between a genuine battery and a fake battery by looking under
    the hood with an X-ray. But the manufacturer is in the best
    position to do that and work with Customs to facilitate trade.
        Historically, as part of their port training programs, NEMA
    battery manufacturers have told the ports, if you need our
    assistance, send us a product for study and we will have a
    response for you within 48 hours, and we did. Customs has 30
    days to make a determination whether the goods it is holding
    are genuine or counterfeit.
        Customs officers were forced to suspend that part of the
    public/private partnership a few years ago, when they were
    reminded of an agency legal opinion that port officials
    violated the Trade Secrets Act if they disclosed unredacted
    images or samples of the product to trademark owners whose
    marks were on the suspect product.
        This was a curious interpretation of trade secrets because,
    if the product is counterfeit, the importer has no legal right
    to sell the product, and a claim of trade secrets makes
    absolutely no policy sense. If the product is genuine, the
    trade secrets inherent in the product belong to the trademark
    owner, the manufacturer who made it.
        So I have outlined in my written remarks the legal
    background and the history of the problem that section 241 is
    intended to affect. The intent of section 241 is to restore
    that relationship between ports and trademark owners so that
    the ports can reach out to brand owners quickly to ascertain if
    the product is genuine or counterfeit, to both facilitate and
    enforce trade laws. Thank you very much.
        The Chairman. Thank you, Mr. Silcox. Very interesting.
        [The prepared statement of Mr. Silcox appears in the
    appendix.]
        The Chairman. Ms. Comstock?

     STATEMENT OF MARY ANN COMSTOCK, BROKERAGE COMPLIANCE MANAGER,
              UPS SUPPLY CHAIN SOLUTIONS, SWEET GRASS, MT

        Ms. Comstock. Chairman Baucus, Ranking Member Hatch, and
    members of the Finance Committee, on behalf of UPS, I
    appreciate the opportunity to discuss the Trade Facilitation
    and Trade Enforcement Reauthorization Act of 2013.
        My name is Mary Ann Comstock. I am a native Montanan who
    has been involved in the Customs brokerage business since 1971.
    I live and work in Sweet Grass, MT, and I obtained my broker's
    license in 1978. I am currently a Trade Compliance Manager for
    UPS Supply Chain Solutions.
        In today's trade environment, UPS deals with complex,
    divergent processes when we move goods across international
    borders. These border barriers raise costs and slow down trade.
    An efficient, innovative Customs clearance process coordinated
    between the U.S. Government and its agencies, along with its
    global trading partners, would remove many of the bottlenecks
    found in global supply chains.
        I would like to focus on four topics today, the first of
    which is the most important to UPS. UPS strongly supports the
    increase in the de minimis threshold of section 321. The
    current de minimis value was set at $200 in 1993, and the Trade
    Act of 2002 set the personal exemption for travelers returning
    to the United States at $800.
        This is an appropriate benchmark for increasing the de
    minimis value, and we believe the increase offers significant
    benefits to CBP, the trade community, and the importing public.
    We also applaud CBP for the increase in the informal entry
    value to $2,500, as this provides benefits to all importers,
    small and large.
        The Automated Commercial Environment, or ACE, has allowed
    CBP to focus their efforts on security and high-risk targeting,
    and this value simplifies the entry release process and lowers
    the cost of importing goods.
        The second topic relates to the establishment of a
    Certified Importer Program, a trusted trader program that would
    be recognized by all U.S. agencies with border clearance
    responsibilities. A well-balanced CIP will simplify the
    clearance process and reduce border holds for highly compliant
    importers. It is critical to ensure that any CIP provide
    concrete benefits and incentives to those certified entities,
    including fast-track processing through Customs.
        The account-based management concept was developed by CBP
    in 1994 to work with importers and brokers handling significant
    entry volumes to achieve a high level of compliance, better
    managing trade. The program should be revitalized to include
    commercial, security, inter-agency, and information technology
    account components. The new Centers of Excellence and Expertise
    should be well-positioned to support a CIP program.
        The third topic focuses on the need for a ``single window''
    (one government at the border) program. We encourage the U.S.
    to finalize the development and implementation of the
    International Trade Data System, creating a single window for
    processing goods inbound to the U.S.
        The ITDS process will provide trade data to partner
    government agencies, hopefully well in advance of arrival. The
    PGA's must have funding resources to update their internal
    systems, to effectively communicate in the ACE environment.
        ITDS will provide paperless processing to streamline the
    admission of those goods. It allows the PGA's to work from
    centralized locations where they can receive, review, and
    maintain data on imported goods while providing trade
    facilitation, safety, and security oversight.
        We hope the PGA's will provide speedy data responses just
    as CBP does today, 24 hours a day.
        The final topic regards the 24-hour land border commercial
    port pilot program. I believe this proposal would benefit
    Montana and other border States. State and local governments
    must be willing to commit resources and infrastructure
    improvements to support the commercial designation of the port
    of entry.
        This is a trade facilitation opportunity that would benefit
    importers by cutting down on transit times and provide local
    economies a boost from increased traffic. The proposal also
    fosters dialogue with Canada and Mexico, our closest trading
    partners.
        UPS thanks the committee for your continued support and
    firm deadlines imposed for the ACE project. CBP is challenged
    to meet mission responsibilities, and a key component is
    information technology. It is imperative that the ACE project
    is completed.
        In closing, UPS commends the committee for their renewed
    focus on trade. Limiting cross-border friction in the supply
    chain will boost global competitiveness to U.S. businesses and
    reduce operational costs.
        This bill provides CBP the tools to facilitate legitimate
    trade while enforcing our Nation's trade laws. Security and
    trade facilitation should be of equal concern. Thank you again
    for allowing me the opportunity to testify on this critical
    issue.
        The Chairman. Thank you, everybody, very much.
        [The prepared statement of Ms. Comstock appears in the
    appendix.]
        The Chairman. The question that comes across my mind is--I
    appreciate the various comments that you have all made about
    provisions in this legislation you think help facilitate trade,
    and all four of you have a lot of experience in this area.
        Among either the provisions you talked about or other
    provisions in the bill designed to help facilitate trade, which
    ones are you kind of most worried may not happen as we would
    like them to happen or proceed?
        You know the agencies, you know your business, you know the
    practicalities, and you know the provisions that are in this
    legislation. Obviously, we are trying to help facilitate trade
    here.
        But just based on your experience and your thoughts, which
    ones of these might you just kind of highlight a little bit and
    say, this is going to need a little extra help; you are going
    to have to provide a little more oversight, whether it is CBP
    or whomever, to make sure this works as well as intended? I
    would just be curious of which ones might cross anybody's mind.
        I will start with you, Mr. Cook.
        Mr. Cook. Okay.
        The Chairman. Or it can be a little softer, ordered by what
    is really, really important and prioritized a little bit.
        Mr. Cook. Well, I think that what I pointed out was the
    full implementation of the Automated Commercial Environment.
        The Chairman. Right, and most of you have.
        Mr. Cook. And I think that that, as with any massive system
    and business process implementation, is a huge undertaking. But
    I think that that is, in our view, a very key and critical area
    to complete, to adequately fund, to make sure that it achieves
    what objectives have been stated all the way along.
        The Chairman. Could you focus a bit on that, because you
    think it is so important that it be up and running and fully
    implemented. That is why you are focusing on that.
        Mr. Cook. Yes, because today--and I pointed out in my oral
    statement--we are operating in two environments. We have been
    very engaged in all of the pilots on ACE, and so I think we are
    a very big participant, but we still have things we have to do
    in the old environment. And, from a business process
    perspective, it exposes us to different types of risks to try
    to operate in both environments.
        The Chairman. Right. Mr. Cooper?
        Mr. Cooper. I think the two most important aspects of the
    bill to Procter and Gamble focus around the trade facilitation
    having measurable benefits from participating in the government
    programs and CBP programs. So we believe those programs are
    well-intended and have the right interest at heart, but we need
    to make sure that it is a measurable benefit for doing the work
    that is required to participate in it.
        The other section of the bill that we believe is equally
    important is the quick facilitation/resolution of IPR issues
    and counterfeit products as they cross the border, to enable
    CBP to quickly engage with the rights holders to understand if
    it is a legitimate product or not.
        The Chairman. So, you think the provisions are pretty good
    as long as they are well-implemented?
        Mr. Cooper. Yes, exactly.
        The Chairman. All right. Mr. Silcox?
        Mr. Silcox. I spoke directly to the IPR provisions, which
    are obviously of extreme importance to us for the health and
    safety reasons I alluded to.
        The Chairman. You talked about section 241 and using
    manufacturers----
        Mr. Silcox. Right.
        The Chairman. I am sorry. Go ahead.
        Mr. Silcox. And, in the case of 241, I just would like to
    see that that is, in a sense, self-executing at the ports so
    that it is not a matter of interpretation anymore. It seems
    like a very common-sense, practical policy solution to a
    problem that has arisen.
        I would also mention that, as it became known that I was
    going to be here today, I had calls from a number of companies
    saying to me that they support the ENFORCE Act part. I did not
    address that, but I do not want to leave it unspoken that there
    is nothing else that we are interested in.
        We had our entire trade staff--we have two trade people on
    our staff at NEMA who took a look at the bill and basically
    said, this is a good bill, the whole package is a good bill.
        The Chairman. Okay. Good. Ms. Comstock?
        Ms. Comstock. Thank you, Senator. I think the International
    Trade Data System and bringing the partner government agencies
    on so that they can provide clearance in advance of goods
    arriving at the border is critical.
        In order to get to the ITDS process, we have to have ACE
    complete, we have to have entry release done in the ACE system.
    And I think, if you can get those two things done and worked
    out in a couple of years--because CBP is enforcing 47 other
    government agency requirements, they have to rely on those
    other government agencies to provide feedback to admissibility.
    It is going to be very important to have that taken care of
    properly.
        The Chairman. A quick question, Mr. Silcox: where are all
    these counterfeit products coming from?
        Mr. Silcox. I know in the case of my industry, I would say
    pretty close to 100 percent are coming from China.
        The Chairman. And it is electrical?
        Mr. Silcox. Yes. The manufacturing skill set exists there
    that does not exist in a lot of other parts of the world.
        The Chairman. Do you know where in China?
        Mr. Silcox. It is primarily in the coastal and the southern
    region, but what we are witnessing is that a lot of the
    production is starting to move further and further from the
    coast.
        The Chairman. Further west?
        Mr. Silcox. Yes, as we try to track it down. That has
    occurred over about a 10-year period, that transition.
        The Chairman. Any estimate as to what the volume might be?
        Mr. Silcox. It is going to vary from year to year. One of
    the things that I like to tell my CEO and others in our
    industry is that we have actually had some success here in the
    United States, and part of that has been working with Customs,
    but also part of it is working with our distribution channel to
    tell them not to buy these products and to explain it to them.
        We have had some success, I think, at least domestically,
    in reducing the demand. But in our industry we know, globally,
    it is in the probably hundreds of millions of dollars a year if
    not a billion. It is difficult to come up with numbers on
    something like that.
        The Chairman. Well, my time has expired, and I would like
    to ask Mr. Cooper the same question about his company, but I
    will get to that later. Thank you.
        Senator Hatch?
        Senator Hatch. Go ahead.
        The Chairman. Mr. Cooper, where do the products that you
    are most worried about come from?
        Mr. Cooper. P&G is a fast-moving consumer goods product
    company, and, as with any company in this industry, we
    experience counterfeits. They come from a variety of places.
    There is no specific expertise that is coming from one part of
    the world.
        We have a broad variety of products that we manufacture,
    and those counterfeits can come from literally anywhere.
        The Chairman. Are there certain products you are most
    concerned about?
        Mr. Cooper. If we could, we would like to take that
    discussion outside of the hearing. We do not like to discuss
    specific counterfeit products and efforts in a public forum. We
    would be happy to follow up with your office.
        The Chairman. I would appreciate that. Okay. Thank you very
    much.
        Senator Hatch?
        Senator Hatch. Well, thank you, Mr. Chairman. Mr. Cooper,
    we are very pleased that you chose Utah as the home for the
    first new U.S. plant in over 40 years. It means a lot to us. I
    understand the plant is a major distribution center and there
    are plans to continue to grow the plant for years to come.
        Now, even though the plant in Box Elder is not specifically
    linked to international trade, in my opinion its future success
    is. How important is international trade to your company's
    ability to maintain and grow jobs in Utah and in your other
    plants across the country? Speak for other manufacturers as
    well.
        Mr. Cooper. Senator, trade is a critical part of P&G's
    operations, and it does support all of our manufacturing in the
    U.S., including in Utah. So some of the equipment we have in
    Utah and some of the raw materials that come into the Utah
    plant are coming across borders.
        The trade--or crossing a border, imports and exports--is
    just one aspect of how important trade is to P&G. In the U.S.,
    one out of every five jobs that we have in the U.S. supports
    our global businesses. In Ohio, it is two out of every five.
        My job is a perfect example. I am the global Customs
    compliance manager for Procter and Gamble. I have a team of 12
    people whom I work with in Cincinnati, OH, and we are
    specifically supporting our global operations, which involves
    all of the import and export of our company.
        Senator Hatch. Well, Mr. Cook, as you know, many
    counterfeits are produced and distributed by criminal
    organizations. They use the profits from these activities for
    other illegal ventures. One of the key factors in successfully
    stopping these organizations is the close collaboration between
    the CBP Commissioner and the Director of Immigration and
    Customs Enforcement.
        Now, do you think the development of a biannual joint
    strategic plan as mandated by this Act will be of assistance to
    these two agencies in fulfilling this particular mission?
        Mr. Cook. Yes, I do. We stated in my written statement that
    we believe that the strategy developed will help and will
    provide the work plan between the agencies, so we look forward
    to that.
        Senator Hatch. All right. Mr. Silcox, the National
    Intellectual Property Rights Coordination Center was created to
    coordinate the Federal Government's efforts on intellectual
    property rights enforcement and to provide a centralized
    resource for the private sector to exchange information with
    the government.
        Can you please discuss your association's experience in
    working with the IPR Coordination Center?
        Mr. Silcox. It has been very good, Senator Hatch. I will
    say our view is that the IPR center has been one of the best
    things, particularly in the IPR space, that the Federal
    Government has done.
        We participate in seminars and educational programs at the
    IPR center. Our member companies come in and, when they believe
    they have counterfeiting problems with their products, they
    will come to the IPR center as that centralized resource where
    information sharing occurs among the multiple agencies that are
    there and present, and it helps facilitate building a
    coordinated enforcement plan with respect to that product and a
    strategy for enforcement because that group is there in Crystal
    City.
        Senator Hatch. Thank you. Ms. Comstock, just a question for
    you. As you note in your testimony, it is critical for the
    United States to lead by example in the area of trade
    facilitation and enforcement. I certainly agree with you.
        As we continue our efforts to improve trade facilitation
    through negotiations at the World Trade Organization,
    negotiations with the European Union, and of course
    negotiations to create the Trans-Pacific Partnership, it is
    even more important that the United States sets the standard
    worldwide and lives up to it.
        Can you describe how quick enactment of this bill will help
    us to achieve that goal?
        Ms. Comstock. Well, as you know, my company is a global
    company, and I believe that leading by example and having good
    quality trade facilitation at home helps us to be able to
    provide to our global trading partners the incentive, if you
    will, to quickly build trade in their corridors as well.
        Again, if you have good trade facilitation, your economies
    grow, and I think that the most important thing here is that we
    are globally competitive. And having this bill push that agenda
    is going to be very important, not only for UPS, but for CBP,
    and it provides a good standard framework for the SAFE Port Act
    and other global initiatives.
        Senator Hatch. Thank you. Mr. Cooper, as you know, we
    included provisions in this bill to make sure that the
    partnership programs provide real and meaningful benefits to
    company participants.
        Of course, one of the reasons why we included these
    provisions is to encourage companies like yours to join these
    partnerships and be active participants in government efforts
    to stop illegal and dangerous imports from coming into our
    country, into the United States.
        You note that you have not always seen measurable benefits
    from these programs to date. Let me just ask you, what type of
    benefits would your company like to see from these programs
    going forward?
        Mr. Cooper. Thank you. I think there are three primary
    benefits that we would like to see. Faster clearance time,
    fewer inspections for trusted traders, and expedited
    inspections for when that does occur.
        To date, we believe those principles are in place, but
    there is no specific way to measure them, and that is really
    the piece that we would like to get to, is to understand how
    the effort that goes into joining these programs then pays off.
        Senator Hatch [presiding]. All right. Well, I have a lot of
    other questions, but I will submit them.
        Senator Wyden, we will call on you. Excuse me, Senator
    Thune was here first. I did not notice you came back in.
        Senator Thune. Thank you, Mr. Chairman. Thank you for
    holding the hearing today, and I want to thank our witnesses
    for their willingness to testify.
        Today, this is a hearing that recognizes that trade is not
    only about bilateral and multi-lateral agreements, it is also
    about ensuring that our laws allow for the easiest possible
    movement of goods and agricultural products, while at the same
    time enforcing international trade commitments. That is why the
    bill that we are discussing today is aptly entitled the Trade
    Facilitation and Trade Enforcement Reauthorization Act.
        This is legislation that is designed to expedite trade
    flows, while also improving enforcement of our trade laws. I
    want to thank you, Mr. Chairman, and Chairman Baucus, for
    including in this legislation two provisions that are of
    importance to me.
        First, the bill includes a provision designed to stop the
    evasion of anti-dumping duties by importers of Chinese honey.
    Specifically, the bill includes safeguards to stop the trans-
    shipment of honey, Chinese honey, through other nations, which
    some have labeled ``honey laundering.''
        Senator Wyden, who is here, and I actually held a hearing
    on evasion of our trade laws in May of 2011, at which Richard
    Adee of Adee Honey Farms in South Dakota and others testified
    regarding the difficulties that Customs and Border Protection
    faces when attempting to enforce our trade laws.
        While more needs to be done in this area, I am hopeful the
    provisions in the bill will give CBP the additional tools that
    they need to stop the circumvention, I should say, of our trade
    laws.
        Secondly, I appreciate that the bill we are discussing
    today includes an increase in the de minimis threshold from
    $200 to $800. This provision mirrors legislation I introduced
    earlier this year along with Senator Wyden and is supported by
    a broad range of businesses and trade associations including,
    as we heard earlier, UPS.
        It is a provision that I believe will do a great deal to
    facilitate trade, and I am glad it is included in the bill. So
    I want to, again, thank Chairman Baucus and you, Ranking Member
    Hatch, for your work on this bipartisan legislation. I look
    forward to marking it up in committee later this year.
        I just wanted to, if I might, ask a couple of questions
    about some of those provisions.
        Ms. Comstock, in your testimony you discuss four issues of
    interest to UPS in this bill, but you note that one issue is of
    utmost importance to UPS, and that issue is the increase in the
    de minimis threshold from $200 to $800.
        For those who may be unfamiliar with this provision, could
    you elaborate on why it is so important to express delivery
    companies such as UPS and how it would facilitate trade?
        Ms. Comstock. Sure. The current $200 was put into place in
    1994, and that $200 amount for section 321 allows for goods to
    cross the border without a formal entry or even an informal
    entry. It has to be manifested, it has to meet all of the FDA
    or EPA or any other standards, any other government standards,
    but it moves the goods through the process very quickly.
        For an express courier, as UPS is and a number of my
    competitor colleagues, that is one way to shrink the haystack,
    if you will, to get the very small shipments out of the way so
    that we can concentrate on the larger shipments.
        I also think it benefits the U.S. consumer. Our economies
    are becoming more and more global. People are ordering off the
    Internet. I know that I have ordered off the Internet. I am not
    always sure where it comes from. I have a feeling other people
    feel that way too.
        But if I am buying something within my price range, it
    might be $200 or $300. If I do not have to make an entry on it,
    I think that is a good thing for the small and medium
    businesses as well as the individual consumer.
        So I think it is going to simplify trade, and it will
    expedite trade.
        Senator Thune. Just as a follow-up regarding that
    provision, your testimony calls for the de minimis level to be
    indexed to inflation going forward, a provision that we include
    in the bill that I have introduced with Senator Wyden, but it
    is not included in the bill that we are discussing today.
        Ms. Comstock. I am familiar with that.
        Senator Thune. Our bill also includes a sense of Congress
    calling on USTR to encourage other nations to follow our
    example by also improving their de minimis thresholds.
        Ms. Comstock. Absolutely.
        Senator Thune. Would you support these additional
    provisions, the inflation adjustment and the sense of Congress,
    being added to the bill that we are discussing, and, in your
    view, would they make the bill better?
        Ms. Comstock. Yes, they absolutely would, and I think my
    written testimony does suggest an indexing of that value, and I
    certainly support having our trade partners have similar
    thresholds.
        Senator Thune. I just want to ask one other question, if I
    can, on the other subject, and that is that the GAO has
    reported that duties related to anti-dumping and countervailing
    duties sometimes go uncollected, in large part because, unlike
    other countries, we do not assess these duties at the time of
    import.
        Under our retrospective system, it can take years before
    the Commerce Committee tells CBP how much to collect. As I
    mentioned earlier, I am acutely aware of this problem because
    my State of South Dakota is a top honey-producing State, and
    duties imposed to stop the dumping of Chinese honey have too
    often gone uncollected.
        To address the problem, the GAO and others have recommended
    that we change to a perspective duty assessment system that
    would enable CBP to collect these duties upon import like we do
    for regular duties.
        You do serve on the Advisory Committee on Commercial
    Operations which advises CBP on these matters, and I would
    appreciate your view as to whether a prospective system would
    improve CBP's ability to enforce our trade laws. What are the
    problems with the current retrospective system, and do you
    believe a prospective system would make it easier to get these
    duties collected?
        Ms. Comstock. I would be glad to state that the 12th term
    of the COAC, the advisory committee, did recommend to CBP that
    we should move away from a retrospective system to a
    prospective system, simply because there is difficulty in being
    able to manage the costs.
        On average, it takes 3\1/2\ years for the Department of
    Commerce to determine what dumping duties should be collected,
    and that is just not quick enough for any average business.
        The prospective system, which means you are going to set a
    duty rate when the goods start coming in and you are going to
    change and modify that duty rate in a prospective way, that
    allows you to collect the duty right then and there.
        It does not wait 3\1/2\ years for you to determine what the
    duty is. It is going to give CBP the ability to collect the
    duty right then and there.
        One of the issues that I think they have in the evasion of
    duties is that, because duties are not known for so long, it is
    almost an incentive to evade. I think if we can provide
    predictability in our global supply chain, that will be
    helpful.
        We do not have predictability for U.S. businesses today. I
    do not see how you could build a business model not knowing
    what your duties are going to be for 3\1/2\ years.
        Senator Thune. A lot of it goes uncollected, and if we
    could get that change made, we would have a lot of happy honey
    producers in South Dakota.
        Ms. Comstock. Having been a honey producer myself, I would
    support that.
        Senator Thune. All right. Thank you. Thank you, Mr.
    Chairman. My time has expired. Thanks.
        Senator Hatch. That is good.
        Senator Wyden?
        Senator Wyden. Thank you very much, Senator Hatch. While he
    is here, I just want to tell Senator Thune how much I have
    enjoyed working with him on the ENFORCE legislation and also
    the legislation, what we call the de minimis legislation, the
    threshold for imports that are not subject to tariff. Clearly
    both of those bills are going to be of real value in the effort
    to create more good-paying jobs in South Dakota, Oregon, and
    across the country, and I appreciate it.
        I also want to thank Senator Hatch for his help. He and
    Senator Baucus have been very helpful as we move, particularly,
    to look at the ENFORCE Act and to deal with the variety of
    issues that have come up as the debate goes forward, and I am
    very grateful, Senator Hatch, to you and Senator Baucus for
    including it in this legislation we consider today.
        I think for our panel members, what you are getting is a
    sense of how importantly this committee regards international
    trade. This is one of the economic engines of our country that
    allows us to, in effect, make things here, grow things here,
    add value to them here, and then ship them somewhere. That is
    in a sense a summary of what the potential is in terms of the
    American economy and global trade.
        When we look at some of the challenges, for example Customs
    and Border Protection, they are doing extremely important work
    as it relates to security, but we are concerned that some of
    the other functions, particularly in terms of their trade-
    related obligations where they can really play a key role in
    facilitating commerce, we are concerned that that is really
    getting short shrift.
        So I think that is what I would like to do in this kind of
    debate about how we facilitate commerce and Americans looking
    to the future, particularly to these growth markets in Asia and
    Brazil and elsewhere, while we combat unfair commerce. And I
    noticed, Mr. Silcox, you held up that circuit breaker, the
    phony circuit breaker, which is not really different from the
    kind of phony goods that Oregon companies, whether Nike or a
    whole host of companies, are holding up.
        You all have kind of spotlighted the problem for us today,
    and of course it relates to this potential for expanded trade
    and commerce, which in my State is responsible for about one
    out of six jobs. We are traders in Oregon. The trade jobs pay
    better than do the non-trade jobs.
        I just have a couple of questions for you four that kind of
    relate to this function.
        On the question of Customs and Border Protection, the real
    question is how we reinvigorate this commitment to the trade
    side of CBP. Now some people, I think, basically say that we
    can just politely ask the agency to do a better job.
        To tell you the truth, we have done that. We have gone that
    route. We have essentially, through letters and even at
    hearings, we basically said, look, we would like to see you go
    about your business; you have extensive authority in this area,
    and we need you to do a better job, for the reasons I have
    outlined. Facilitate the commerce where so many American
    businesses have great stakes and combat unfair commerce.
        That has not worked. So that is why we felt that we needed
    to have an actual piece of legislation, an actual piece of
    legislation which would ensure accountability, facilitate the
    movement of goods through ports and the collecting of the
    appropriate tariffs that are assigned to imports, stopping
    imports of goods that in effect infringe on intellectual
    property. We have to get those things done.
        So my question is, do you all feel that legislation is
    warranted at this point to deal with these issues? You can
    choose, by the way, to say, hey, you do not have to go the
    legislative route. Maybe it is going to get done just by posing
    requests.
        We felt, on a bipartisan basis, that at this point we think
    legislation is needed to get a reinvigorated focus at Customs
    on this trade function. So, if you would, we will just go right
    down the row. We will start with you, Ms. Comstock. I know you
    are from the West, our part of the world, and we welcome you.
        Ms. Comstock. Thank you very much. Senator, I do feel that
    the bill is important. I know that in 2009 there was a similar
    bill, and I believe that CBP has made an awful lot of progress
    between 2009 and now.
        This bill codifies some of the things that they are doing,
    the Centers of Excellence and Expertise. I think it is pushing
    them further forward, so I do really support this bill at this
    time.
        Senator Wyden. Very good. And I think that is always the
    hope, that, as you spotlight the problems, make it clear that
    you do feel that you are going to, I characterize it,
    reinvigorate the trade function there, as much headway as can
    be made administratively is always on the good side. I think we
    need to go further, and frankly I think, without the kind of
    glare that this committee has put on this issue in a bipartisan
    way, I am not sure we would have even gotten this far.
        Mr. Silcox, your thoughts on the idea that legislation
    would be useful at this point.
        Mr. Silcox. We support this legislation, but I think it is
    worth taking a step back and looking at what both the Congress
    and the administrations, I say that plural, have done for the
    past 7, 8, 9 years.
        A few years ago there was an incremental change with the
    Stop Counterfeiting in Manufactured Goods Act--which dealt with
    a couple of little points that related to enforcement. A few
    years later there was the PRO-IP Act which passed Congress that
    created, at least in the executive branch, a more coordinated
    enforcement program involving the administration at the highest
    levels in the White House, the Justice Department, and other
    relevant agencies.
        As a result of that legislation, the administrations, again
    plural, started building a little bit of the structure that is
    now going to be codified in this Act.
        So a key portion again, and this was part of the PRO-IP
    Act, but it is in this bill as well, is the accountability to
    Congress and the ability to come back to this committee and
    report on, this is what we have been doing, this is how our
    resources have been allocated, so that there is some oversight.
    That is what I know industry has been looking for for a number
    of years in the IP area: periodic oversight to just ensure that
    the resources are adequate and the program is on track to get
    what Congress wants and what the people want.
        Senator Wyden. Our Chairman, Senator Baucus, has returned.
    Let us just see if we can wrap up with the two other witnesses
    on the question of the value of actually having legislation
    here. I thank the chair for the courtesy.
        While you were gone also, Chairman Baucus, I just wanted to
    reiterate how much I appreciate your working with me on this
    legislation. We have been toiling on ENFORCE in a bipartisan
    way for some time, and I think now, with the excellent bill
    that you and Senator Hatch are sponsoring, we are ready to go,
    and I appreciate it.
        So let us just wrap up your comments. Mr. Cooper, if you
    would.
        Mr. Cooper. We will do it quickly. First, I would echo the
    comments that Ms. Comstock and Mr. Silcox made about the
    codification of some of these components into legislation
    versus just an informal request to CBP.
        Again, while we have been making progress, really defining
    them and having them in the legislation is important.
    Additionally, the creation of the high-level positions within
    CBP to focus on trade facilitation will really ensure that that
    part of CBP's mission gets the focus that it deserves, and I
    believe that that is an important reason to pass this.
        Senator Wyden. Very good. We will wrap up with Mr. Cook.
        Mr. Cook. I will reiterate everything that was previously
    said. But again, the importance of the dual mission that CBP
    has of security and trade facilitation, this proposed
    legislation codifies all the pieces that will allow them to
    keep at the forefront that mission of trade facilitation, which
    is very important.
        Senator Wyden. Very good. Thank you all. Thank you, Mr.
    Chairman.
        The Chairman. Thank you, Senator. I have heard rumblings
    that the community is a little concerned about inadequate
    consultation between CBP and the industry community, that
    sometimes CBP goes off and does something not thought through
    that causes problems, and then various American companies say,
    whoa, whoa, that is causing more problems than it is trying to
    solve.
        You can be specific if you want, but if you could comment
    on that and indicate the degree to which you think the
    provisions in this bill will help, say the trade advocate, for
    example, will help, do we need to go farther?
        How do we know this language which basically says, you have
    to consult, is going to work? But if you could just talk about
    that main issue, which is the degree to which CBP could consult
    more and maybe ICE too, with the trade community.
        Does anybody have any thoughts about that? I have heard it
    has been a problem. If somebody wants to.
        Ms. Comstock. Senator, my experience in dealing with CBP
    has been very good. I believe, especially through the Advisory
    Council on Customs Operations or COAC, they have been extremely
    forthcoming in listening to what the COAC has to say, and I
    believe that the engagement they have with other trade
    communities has been very good.
        I see great initiative there to try to do the right thing
    and consult with the trade.
        The Chairman. But there are provisions here to try to help
    COAC.
        Ms. Comstock. Absolutely. I agree that the focus on this
    bill is trade facilitation, and I think that that is very
    important.
        I am not so much of an insider knowing how Customs works to
    be able to say whether or not having a Deputy Commissioner for
    Trade is really going to solve any problems. However, I do
    support that they are trying to do everything they can to
    facilitate trade. I really firmly believe that.
        The Chairman. Mr. Silcox, your views?
        Mr. Silcox. Yes. Industry, and my industry in particular,
    has had very good dialogue with CBP. I think the problem that I
    alluded to that section 241 is intended to address was an
    ``oops, we went off the reservation'' kind of problem.
        However, their outreach to us, and I think our
    responsiveness back, has been reasonably good. I think one of
    the things we have advocated for in the past, and we have tried
    to deal with this sometimes in the appropriations process, is
    to look for dedicated resources on the intellectual property
    rights enforcement issue.
        One of the debates that has gone on between industry and
    the agency in the past is, because of their dual function for
    both security and for trade facilitation and enforcement, they
    will say, our resources have to be flexible and capable of
    dealing with all these issues as they arise at the time.
        Okay, that is one point of view, but, as Senator Wyden
    said, sometimes we do not always focus on these issues of
    intellectual property rights enforcement, and that has been one
    of our little gripes over the years, that there just was not,
    in the past, a small group of people that was dedicated to
    intellectual property rights enforcement.
        Some legislation in recent years has tried to improve that
    by appropriating to various agencies dedicated resources. But
    that is one thing we are interested in seeing.
        The Chairman. Mr. Cooper?
        Mr. Cooper. Procter and Gamble has enjoyed a strong
    partnership with CBP over the years. What we see this
    legislation providing us, though, is a little more focus on the
    facilitation piece of it as CBP's mission has shifted over the
    years to focus more on enforcement and national security.
        This provides us with the opportunity to work more closely
    with them and understand what the benefits of different
    programs will be and, again, to help against counterfeiting.
        The Chairman. Mr. Cook?
        Mr. Cook. We have also been engaged and have participated
    in the pilot programs, which we think are beneficial and should
    be enhanced. On any new initiatives, as far as COAC, my
    personal involvement, I found it to be great engagement.
        There are subcommittees within the COAC that oftentimes
    could be expanded, or the use of subcommittees to provide a
    broader base of participants might be one area, but that is
    within the structure of COAC which this----
        The Chairman. Do you see the benefits of greater
    consultation? It is one thing to consult, but do you see the
    benefits of consultation, any of you?
        Mr. Cook. Yes, we have.
        The Chairman. All of you?
        Mr. Cooper. Certainly with our training with CBP.
        The Chairman. Okay. That is what we are trying to do here
    is get benefits.
        The border pilot programs here, I think the bill provides
    three at the northern border and three in the southern. You
    mentioned, Mr. Cook, the importance of flow back and forth to
    Canada.
        Ms. Comstock, could you just address a little bit some of
    the concerns that you see with inadequate hours on the border?
        Ms. Comstock. Sure, and I will try to address it within the
    concept of Montana, which obviously I know best, since I live
    there.
        Right now in Montana, we have a 550-mile northern border,
    and it is a big stretch of territory. There are only two
    commercial ports on that northern border that support a 24-hour
    operation. Yet it does not always give us the opportunity, in
    driving those long distances, to be able to get the goods where
    they need to go.
        So in that expanse of northern border, if there were a
    third port halfway in between the two we have, that would allow
    goods to funnel through there. Particularly in support of the
    Bakken Oil Field now, I think that would be very, very helpful.
        I think that I could see similar situations occurring on
    the southern border. Having spoken with a number of colleagues,
    I believe that there is great opportunity there as well.
        The Chairman. That is a good point with the Bakken, in
    addition to tar sands, because there are a couple of companies,
    some very significant, developing, as you know, in Montana,
    especially north of Great Falls, where there is going to be a
    lot of traffic up to Canada and back, and in eastern Montana up
    and back around----
        Ms. Comstock. And there already is today. There are regular
    routes established by carriers going to and from Edmonton,
    Nisku, Calgary, down to Houston, back up again over to
    Williston, and so this would really support them.
        The Chairman. Does anybody have any other comments or
    thoughts about anything? Did anybody say anything so outrageous
    it has to be addressed? Any thoughts in the back of your mind,
    a little something that you want to share? Now is your chance.
        Okay. We are dedicated to make trade better. It is good
    now, but we want to still work to improve it and get this bill
    passed. Thank you very much for your testimony. It all helps.
    It helps to energize us to help get this enacted. Thank you
    very much for your testimony. I appreciate it. The hearing is
    adjourned.
        [Whereupon, at 11:16 a.m., the hearing was concluded.]

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