Monday, October 24, 2005

The Death of the Entry?

A lot of what Customs has to do is routine and painfully dull. But, it is important. Think about the thousands of passengers and cargo containers that present absolutely no issues whatsoever. Most people tell the truth when entering the country and most importers properly declare their goods. The tricky part is letting the legitimate trade happen while finding and stopping the bad guys.

One of the current trade facilitation projects is the Periodic Monthly Statement under the Automated Commercial Environment. The Periodic Monthly Statement (which is still technically a test program) lets participating importers identify entries and pay Customs for them by the 15th business day of the following month. This creates an interest free loan of up to 45 days for importers. It also simplifies recordkeeping and allows importers to create national or port summaries of activity.

Until recently, the only way importers could take advantage of the Periodic Monthly Statement was to have an ACE Portal account. Customs has now announced that certified C-TPAT members who are not current ACE accounts will automatically be established as ACE Non-Portal Accounts. This will make certified C-TPAT members eligible to participate in PMS. Non-C-TPAT members can also choose to participate. The importer needs an appropriate bond and their broker needs to be a portal participant.

This seems to be a good move in that it really does provide a benefit to importers and will not have a negative impact on cargo security because it only defers the payment of duties and fees. So, Customs should be given credit for expanding this test program.

But, it does not address the real underlying inefficiency: the entry. Why is it that Customs continues to work from a business model that requires each and every transaction to be the subject of separate documentation? It is as if you had to file a tax return every pay day. The IRS doesn't work that way and there is no intrinsic reason why Customs could not simplify entry reporting while increasing the importers' obligations to periodically report imports and the associated liability. Some sort of cargo manifest report of arriving shipments should be enough to match up to a subsequent quarterly report of duty and fee liability.

Of course, there is a problem with this pie-in-the-sky idea: Congress. Right now, importers are statutorily required to file entries and Customs is, therefore, required to accept them. And, many compliance activities are triggered by entry dates and the corresponding liquidation dates. But, those are details. If Congress wants to help facilitate trade, it should take another look at the continued rationale for the entry. It is clear that Customs is inching away from the all important entry and liquidation. That is clear from the fact that there are now Supplemental Information Letters, Reconciliation, and now the expanded Periodic Monthly Statement. Let's face it, the entry as we know it is on life support and someone needs to pull the plug.

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