[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.]
A P P E N D I X
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