Part of CBP’s Trade Transformation InitiativesFall 2013

The Role of the Broker:Changes to Broker Regulations

Background• Role of the Broker-Broker Regulatory Revision

Workgroup – Established January 2011 by CBP in partnership with

NCBFAA • COAC Role of the Broker Working Group

– Part of COAC Trade Modernization Subcommittee– Submitted position paper outlining 17 recommendations

for CBP to consider (October 4, 2011)– Key recommendation: CBP should recognize the broker’s

role as a communicator and force multiplier to increase compliance, especially for small- and medium-sized importers

Key elements of this initiative • Overhaul the broker regulations contained in

19 CFR Part 111 (Customs Brokers) – Broker examination– Licensing– Permits– Definitions– Relationship with freight forwarders– Triennial reporting– Importer bona fides

• Add regulations on continuing education

Broker Examination/Licensing

• Account for electronic processes– Online exam registration and payment– Global Enrollment System for license applications

• Changes in CBP’s license applicant vetting processes

• Reflect organizational changes within CBP and DHS

Broker Permitting

• Should CBP reconsider current permitting requirements, which are based on geographical location?

Broker Permitting• Permitting is outdated

– Both CBP and brokers are moving toward centralization and virtual environments

• Permitting is provided for in statute– Absent a legislative change, what can we do to make

permitting more business friendly?

Broker Permitting Options• Eliminate permit requirement entirely• Move to national permit only • Broaden district permit waivers• Delineate geographical areas based on time zones or

in some other reasonable manner • Increase the district permit waiver from 1 year to 3

years

Importer Bona fides

• Should brokers be required by regulation to collect some minimal information on their clients before agreeing to conduct customs business on their behalf?

Importer Bona fides• Overwhelming majority of brokers support a “level

playing field” through the regulation of bona fides (rather than simply provide guidance)

• A short checklist (5 to 10 items) would be preferred over a “plan” submitted by the broker describing how importers are validated (would modify Part 141)

• While CBP supports and encourages in-person visits and review of financial documents, we recognize that this is not always feasible

Importer Bona fides (continued)• CBP is considering using CBP trusted trader status to

satisfy bona fides requirements• CBP Form 5106 (Importer ID) is being overhauled to

more meaningfully capture information about an importer

Continuing education

• Should continuing education be mandated in order to hold a customs broker license?

Continuing education• Almost all professional licenses have a continuing

education or minimum training requirement—staying current is important

• Broker community is mixed but tips positive; still some hesitation that education should be mandated

• Expanded CBP broker workgroup convened in ‐February 2013– Group developed framework for continuing education– Requirements are for individual license holders

How many hours will I need?• Individual license holders will be required to take 40

hours of continuing education over 3 years• This equates to about 1 hour of education a month• Anything much more than this will be perceived in

the broker community as too burdensome • Anything much less than this will not be a meaningful

level of education for a professional license

Won’t this be hard to obtain?• Low cost/no cost education opportunities are very

important to both CBP and the broker community• “Education” will include activities beyond the

traditional classroom setting• Travel should not be necessary in order to obtain

quality continuing education

Who can provide accredited education?• CBP will determine which individuals or entities can

accredit coursework• CBP will not do accreditation (resource constraints)• CBP will announce an open season to receive

applications from outside entities who are interested in evaluating and accrediting quality coursework

• CBP will select a small pool from the applicants (probably 5 to 10)

• After 5 years, CBP will have another open season and all hopeful accreditors (including incumbents) could apply again

How do I report my credits to CBP?• CBP will automate the triennial report• Certify your credit hours along with your triennial

report and fee• If any of these four things is missing from your

triennial submission…1) Indication that you are active2) Certification of your education credits3) Triennial report4) Triennial fee

… then you are issued a suspension notice– You then have 60 days to respond to CBP to fill in the gap(s)– If you do not respond, your license is revoked by operation of law

Continuing education (continued)• COAC Recommendations:

– Minimum of 40 hours over 3 years– Minimum of 32 hours must be accredited– CBP should take a measured, commercially reasonable

approach to the 40 hours continuing education requirement for customs brokers wishing to reactivate a license that is inactive

– Reporting of continuing education should be tied into the triennial reporting

– Reporting of the license holder and the reporting of continuing education be done together in ACE

Proposed regulations• Result of co-creation

– CBP is incorporating feedback from Summer 2012 roundtables, the CBP webinars, the NCBFAA workgroup, the CBP-trade workgroup on continuing education, NBCBA, PCC, Congressional staffers, and the COAC

– This feedback has been critical to our policy development• Nothing is final; many details to be developed • CBP is currently making the final decisions to begin

drafting the Notice of Proposed Rulemaking

Proposed regulations• Internal consultations

– Several meetings per week between Broker Management Branch and RR attorneys

– Consulting port personnel and other relevant parties

• Economic analysis required• Legal reviews within CBP; and DHS, Treasury,

and/or OMB reviews could alter course

Proposed regulations: Next steps• CBP is waiting for two COAC

recommendations:– Importer bona fides– Permitting modernization

• CBP also awaits guidance from the NCBFAA broker workgroup on permitting modernization

Other Issues

• ACE Update• Broker Exam• Broker-Known Importer Trusted Trader

Program

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Websites and communication toolsQuestions/Comments/Concerns related to the regulatory

rewrite, email us at RoleoftheBroker@cbp.dhs.gov

Questions/Comments/Concerns related to general broker management, email us at BrokerManagement@cbp.dhs.gov

Our Broker Management website:http://www.cbp.gov/xp/cgov/trade/trade_programs/broker/

Our trade transformation website:www.cbp.gov/xp/cgov/trade/trade_transformation/