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President Trump Signs Executive Order to Strengthen CBP Enforcement

President Trump on June 3 signed an Executive Order to straighten the enforcement capabilities of Customs and Border Protection (CBP), with a focus on the importer of record (IOR) and preventing the evasion of customs duties.

“Customs reform is long overdue. Systemic inefficiencies, loopholes, insufficient enforcement mechanisms, and outdated processes have created opportunities for malign actors to evade Federal law. Examples of noncompliance include undervaluing imports, withholding critical information about IORs and the goods being imported, and avoiding payment of duties through various arrangements and schemes. These actions threaten national security, undermine foreign relations, disadvantage domestic businesses, and harm Americans,” the Executive Order said.

“The United States must strengthen its customs enforcement through comprehensive reform, including through agency action and legislation. Such reform should focus on protecting national security, promoting lawful trade, ensuring the timely collection of duties, modernizing systems and processes, bolstering compliance mechanisms, increasing transparency, and protecting Americans and the domestic economy,” the order added.

The Executive Order states that within the 180 days of the date of this order, the Secretary of Homeland Security shall, pursuant to 19 U.S.C. 66, 1484, 1498, 1623, 1624, and 4320, and any other applicable law, take steps to revise importer eligibility regulations, guidance, and policies consistent with the policy of this order. These revisions shall include:

• Requiring that an IOR maintain at all times a minimum level of tangible domestic assets, bonding, or both, as determined by CBP to be necessary to ensure compliance with U.S. customs and trade laws, and increasing the minimum required bond coverage for an IOR.
• Requiring that an IOR be designated and reported to CBP, and that a bond, or sufficient tangible domestic assets, or both, be required, for all formal entries under 19 U.S.C. 1484 and informal entries under regulations promulgated pursuant to 19 U.S.C. 1498.
• Requiring that an IOR provide to CBP additional data and identification information, including anticipated import volumes, year organized, ownership and beneficial ownership disclosures, business affiliation disclosures, and domestic asset disclosures, and any other data that CBP deems necessary.

The Executive Order added that prohibiting the filing of informal entries for foreign IORs puts all IORs on “equal footing and is necessary to treat IORs equally based on their individualized circumstances and in order to protect U.S. revenue and domestic industry, protect American consumers, strengthen national security, and maintain foreign relations.”

The Executive Order further said a foreign IOR: (1) may not rely on a continuous bond to meet the bond requirements for entry, except as permitted by CBP when the foreign IOR has demonstrated that the revenue would be fully protected and that compliance with the laws, regulations, and instructions enforced by CBP would be assured; and (2) be validated in CBP’s Customs Trade Partnership Against Terrorism (CTPAT), if determined by CBP to be eligible.

“IORs not in “good standing” with CBP shall not be allowed to import into the United States or otherwise conduct activities directly related to the importation of goods, including designating a customs broker to act as IOR on their behalf,” the order added.

President Trump’s order also stated that the DHS Secretary must establish heightened import disclosure and certification requirements, including certifying compliance with critical supply chain requirements like the Countering America’s Adversaries through Sanctions Act (Public Law 115-44), 18 U.S.C 545, and others to be determined by CBP, in consultation with the heads of relevant executive departments and agencies (agencies); disclosing certain foreign tax and global business identifiers; and providing detailed information about the imported good’s supply chain and production methods, such as the manufacturer’s product identifier (e.g., model or style number) or key specifications (e.g., composition, grade, or size).

CBP enforcement and penalties for wrongdoing will be enhanced by the administration through this Executive Order, including enforcing liquidated damages claims against bonds for noncompliance, restricting in-bond utilization, increasing audits, and imposing maximum penalties for customs brokers who fail to conduct due diligence, repeatedly represent noncompliant clients, or fail to cooperate in a timely manner with requests for information by CBP.

In addition, the Executive Order states that enforcement action will be heightened by CBP against imports involving products produced by forced labor, misclassification, undervaluation, and illegal transshipment, including investigations conducted pursuant to the Enforce and Protect Act (Public Law 114-125).

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