[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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