U.S. CUSTOMS AND BORDER PROTECTION

1300 Pennsylvania Avenue, N.W., Room 8.5C

Washington, D.C. 20229

**Departmental Advisory Committee**

**on Commercial Operations of the**

**Bureau of Customs and Border Protection**

February 13, 2008

J.W. Marriott Starr Pass Resort & Spa

Tucson, Arizona

\[TRANSCRIPT PRODUCED FROM A DIGITAL RECORDING.\]

C O N T E N T S

Page

Opening Remarks

**W. Ralph Basham**, Commissioner,

U.S. Customs and Border Protection\...\...\...\...\...\...\.....3

**Timothy Skud**, Deputy Assistant Secretary,

Tax, Trade and Tariff Policy\...\...\...\...\...\...\...\...\.....5

**Stephen Heifetz**, Deputy Assistant Secretary

for Policy Development\...\...\...\...\...\...\...\...\...\...\.....8

**Bruce Leeds**, The Boeing.Company\...\...\...\...\...\...\...\.....9

Motion to Approve Minutes from

November 16, 2007, Meeting\...\...\...\...\...\...\...\...\...\.....11

Advance Trade Data (10+2)

**Rich DiNucci**, Director, Secure Freight Initiative,

Office of Field Operations\...\...\...\...\...\...\...\...\...\...12

**Bruce Leeds**, The Boeing Company\...\...\...\...\...\...\...\....18

International Trade Issues/Update

**Adrienne Braumiller**, Braumiller Schulz & Co\...\...\...\....28

Secure Freight Initiative/Global Trade Data Exchange

**Rich DiNucci**, Director, Secure Freight Initiative,

Office of Field Operations\...\...\...\...\...\...\...\...\...\...43

P R O C E E D I N G S

**Opening Remarks**

COMMISSIONER BASHAM: Good afternoon, everyone, and welcome to beautiful
Arizona, Tucson. Compared to where we could be right now, this is very
nice. Talking to our fellow cohorts back in Washington, I understand it
is miserable. So, when I continue to tell them how wonderful it is out
here and what great weather we are enjoying, of course, when they hear
the click when the phone hangs up, that conversation is over.

I do want to start out by, first of all, thanking you for being here and
making this trip out here, and secondly, I want to apologize because
unfortunately, or maybe fortunately for you, after this COAC meeting was
scheduled, the Appropriations Committee scheduled the 2009
appropriations hearing, which I have been summoned to testify tomorrow.
So I am going to have to leave here shortly, but I think all of you
recognize that we will be left in very capable hands, all of your hands,
to discuss some very, very significant issues.

I know we do have some issues that you want to talk about. I know 10+2,
First Sale, and other issues that are out there for discussion, and we,
quite frankly, are interested in hearing your remarks and having some
discussion, to the extent we can, on these significant issues.

I do want to just thank you again for all of the hard work that you have
done over the past several months and years, whether it be the 10+2 and
the coordination of that, working together with us on these very, very
important issues.

I think since we last met, if I am not mistaken, we have put out an RFQ
on GTX. We have an RFI on the Conveyance Security Device. So we are
anxious to see the feedback on those.

I know Annmarie is over there watching me very closely, what I say. I
would say with respect to 10+2, I will say this. That we are in this
period of comments, and so we are very limited in terms of what we can
say, but you can pretty much say whatever you want on this subject,
which I don\'t doubt that you will.

I want to just reassure you that we recognize that we need to make sure
that this is, in fact, done in an appropriate way and that this is
phased in over a period of time.

I think we have already stated that this is where we are going. So I
think what we need to now do is to work very closely with you and
continue to get your consultation, your advice on how we implement this,
and to make sure that we establish a timeline that does not cause
failure, but that we want this to succeed, and I think we all recognize
that that is the goal here. So we will work with you and continue to
work with you on the implementation of that requirement.

Let me turn it over to Tim who is taking his tie off and who has joined
us.

MR. SKUD: Well, thank you, Mr. Commissioner. Thanks, Mr. Banks, for
keeping me in line with the dress code.

\[Laughter.\]

MR. SKUD: I want to thank your officers here in Tucson and down on the
border, Nogalis \[ph\], for the very informative tour we had yesterday.
I appreciate it. Thank you.

I would like to give the COAC members a chance to introduce themselves.
Do you want to start, Mike?

MR. ZACHARY: Mike Zachary, Tompkins Associates.

MS. SHELDON: Carol Sheldon with DHL.

MR. SPENCER: Curtis Spencer with IMS Worldwide.

MR. POWELL: Geoff Powell with C.H. Powell.

MR. ZUNIGA: Federico Zuniga, Zuniga, Inc., Southern Border Broker.

MS. ROONEY: Beth Rooney, Port Authority of New York and New Jersey.

MR. AGRON: Earl Agron, APL.

MS. RUTLEDGE: Peggy Rutledge, GreenLine Systems.

MR. O\'BRIEN: Barry O\'Brien with Hasbro.

MR. LEEDS: Bruce Leeds, Boeing Company.

MS. SCHIMMELPFENNING: Lisa Schimmelpfenning with Wal‑Mart Stores.

MR. BANKS: Sam Banks, STTAS.

MS. BRAUMILLER: Adrienne Braumiller, Braumiller Schulz & Company.

MR. JAMIESON: Jevon Jamieson, ABF Freight System, Incorporated.

MR. KOCH: Chris Koch, World Shipping Council.

MR. COOK: Bill Cook, Chrysler.

MR. SCHMID: Leigh Schmid, Limited Brands.

MR. SKUD: Thanks very much.

COMMISSIONER BASHAM: I would just like to follow up on Tim\'s comment
about the border, the opportunity to go down to visit the port.

I think what hopefully you saw and I believe you did see is that we have
a workforce here who is committed to performing one of the most critical
jobs in this country, and that is, quite frankly, bottom line, keeping
bad things and bad people out of this country. They know their mission,
and they know it is an all‑threats mission. I am just very, very pleased
at what I have seen and continue to see from this workforce that is out
there really protecting the homeland.

So I really appreciate you taking the time to go and to talk to them and
hear from them and visit them, and it means a lot to them to know that
you are interested enough to go and hear what they have to say and see
what they do, so that you as an advisory committee have a better idea of
what they are doing out there, which makes you a better advisor to us as
we move forward in working together to protect the homeland.

So I just want to personally thank you for taking the time to do that. I
appreciate it.

Stephen. Be very brief.

MR. HEIFETZ: I just want to take the opportunity to thank everybody for
coming, and I appreciate the opportunity to be here with you today and
to recognize the important service that this committee continues to
provide.

This is my first COAC meeting. I am in a new role as Deputy Assistant
Secretary for Policy Development at DHS, and I want to emphasize at the
outset how supportive the Department is of COAC and the ongoing
dialogue.

Lauren Zucker, who I think all of you know, who was not able to be here
today, has highlighted for me how important this advisory group is. I
know that you offer a tremendous amount of real‑world expertise on what
are often very complicated issues involving the balance between
facilitating trade and security, and I want to thank you for the value
that you provide to us.

I also should say I had the opportunity to join in the port tour
yesterday. It was the second time I have had the opportunity to see
operations at a port.

I have been told many times that all ports are unique, but certainly,
one commonality that I have seen ‑‑ and this is probably true of most or
all of the ports ‑‑ is the daunting challenge at these ports of entry
and the skill and professionalism with which our customs and border
protection meets that challenge.

I think we all agree that the international supply chain should move as
quickly and seamlessly as possible, and we probably would also agree
that this can be in some tension with the need for security and with the
attendant monitoring and inspection regimes, but to minimize those
tensions, we need to continue to rely on partnerships like this one to
find the best possible balance between facilitating trade and security.

So I look forward to hearing more about these issues today and to
working with CBP and COAC in the future.

COMMISSIONER BASHAM: Thank you. Thanks, Steve.

Make sure you tell your dad I am not dodging that golf game. I still
intend to ‑‑

ATTENDEE: The weather has been bad.

COMMISSIONER BASHAM: Bruce?

MR. LEEDS: Just one final comment on the tour yesterday, on behalf of
the committee, we thank everybody who helped to arrange that tour. We
were very favorably impressed by the professionalism and the enthusiasm
of the offices at the border. That is not an easy assignment, and we\'re
very impressed by the job they are doing and how they come across.
Excellent.

COMMISSIONER BASHAM: Appreciate that. Thank you.

MR. LEEDS: We also had a great demo yesterday here in this hotel by CBP
and by the Border Patrol on operations in this area, the strategy and
enforcement efforts. It was a very good briefing, and so thanks to them
for that as well.

COMMISSIONER BASHAM: Great.

MR. LEEDS: Listening to your comments you just made on the
implementation of 10+2, are you sure you didn\'t have a spy in our
meeting this morning?

\[Laughter.\]

MR. LEEDS: Because what you just mentioned about ideas on the
implementation and collaborating with the trade and doing it phased in,
it very much echoes our recommendations which you are going to be
hearing shortly.

COMMISSIONER BASHAM: Great.

Unfortunately, I do have to leave at 1:30, but what I thought I would do
is if there is something that you would like to beat me up on before I
get out of here, we can certainly kind of go off.

Mike is giving me that eye. Process.

ATTENDEE: Gatekeeper.

COMMISSIONER BASHAM: But if there is something that you would like to
talk about before I get out of here, please feel free. We can just
launch into that, or we can just go with the agenda.

ATTENDEE: I think we want to go with 10+2 which is first on the agenda
after we adopt the minutes.

COMMISSIONER BASHAM: Okay.

ATTENDEE: If there is time, then we will talk about First Sale.

COMMISSIONER BASHAM: Right. Okay.

**Motion to Approve Minutes from**

**November 16, 2007, Meeting**

COMMISSIONER BASHAM: First of all, if you have had an opportunity to
review the minutes from the November 16th meeting, I would like to call
for someone to approve those minutes.

ATTENDEE: So moved.

ATTENDEE: Second.

ATTENDEE: All agree?

\[Chorus of ayes.\]

ATTENDEE: The minutes have been approved.

**Advance Trade Data (10+2)**

COMMISSIONER BASHAM: So we will launch right into the 10+2 discussion.
Rich was going to give us an update.

MR. DiNUCCI: Thank you, sir. Everybody can hear me, I hope. I think you
have heard a few times from a number of people that their voices are
fading. Mine is not in the best of shape. So I will do the best I can in
between gulps of water to give you the update.

COMMISSIONER BASHAM: I need to move you back into that nice D.C.
weather.

\[Laughter.\]

MR. DiNUCCI: Well, there was something mentioned about a golf game. If
some of you need a substitute, I volunteer. That will make me healthy
real fast.

10+2, a quick update on where we are. We do have our team together to
review comments. Obviously, so far with the 15‑day extension, we have
only received about 10 to 12 comments. The team is taking a look at
those already. Their primary focus really has been systems, taking a
look at some of the things we have created in terms of interface to make
sure that the users are comfortable with that and to talk a little bit
about how we are going to train our field folks and then to begin the
other key piece, which is how we are going to do outreach to the trade.
So they have been together for a bit on that, and they will be coming in
and out as we move through this whole process.

Again, as I noted, the 15‑day extension, I do believe that notice was
published in the Federal Register. So we are aware that that is out
there. So I think the new date is the 18th of March.

The last piece I would like to talk a little bit about is the ATDI, if I
could. I think the biggest concern I have heard raised so far is what do
we need to do from a programming perspective, how are we going to
approach this, how do we get the data to you.

I apologize. The voice is beginning to fade.

What we have talked about a little bit is a couple of our partners in
ATDI, we have asked them if they would be willing to participate in kind
of a roundtable or however we could organize that, so we could begin to
sort of pull that curtain back a little bit and show you what we have
done there, so you get a better idea as to what we are looking at
system‑wise in terms of what programming might be involved, what changes
we have made, and what might be entailed in that regard, and also from
an operational perspective, what they have seen.

We have got a pretty good cross‑section of volunteers in that. We have
got some mass merchandising. We have got some automotive folks, textile
and apparel importers as well. So we think there are some good lessons
in there.

Obviously, with the rule out in draft form, that has complicated this a
little bit, but I think I have got a comfort level now with our
attorneys to get this done, and what I would like to do the next couple
of days ‑‑ certainly, I would encourage you guys, if you have any ideas
in terms of what the best way to do that, what the best form for that
might be ‑‑ I would encourage you to send some comments my way, and we
can put something together to do that.

As I noted, I have got one of the principal volunteers in ATDI who has
agreed to talk about this as much as they possibly can, obviously
without giving away too much in terms of their business. So I think we
might be able to get something like this done and give you some comfort
level with what is going on.

By now, I think everybody has my e‑mail. So that is no mystery, and my
phone number as well. So, if you have got any comments or suggestions on
that, please, I encourage you to send those forward, and we will begin
to put that together. I think that will go a long ways toward answering
some of the questions, the key questions in terms of how this will be
done, and give you an idea in terms of what you might have to do to
respond to the filing itself.

That said, I think we are now at just a quick update in terms of where
we are with filings. We have received about 25,000 of these datasets. We
have now been able to pull out, extract, and as I said, there is a good
cross‑section of the community involved in it.

The linking has not been a major issue. The data itself in terms of the
10 hasn\'t been a problem.

The timing is still an issue. There is no doubt about that, and that is
what we are working through as we go through this experiment to work on
the timing, and part of talking about it is to sort of pull that back a
little bit and show you what\'s going on. So there\'s things you can do
to prepare for it. Okay?

I think as the Commissioner noted, we have consistently said that we
would phase this in, in terms of how we do it, so that we can get it
done right. I know there is some unease in terms of some of the things
that have been discussed in terms of penalties and the like, but it is
much too important for us from a security and targeting perspective to
get sort of bogged down in this \"gotcha\"‑type thing because it is not.
It is too important for us to do that. We want everybody to get it
right, including us. So I think we are committed to that, and I think
the phase‑in will be what drives that for us, and we will get those
questions answered.

The next subject is GTX. Right now, we have got a review time together.
We have had multiple bids submitted on that. I cannot get into the
number of bids. Obviously, I cannot discuss bid, and quite frankly, for
the record, I have taken myself out of that process, with the exception
of putting the team together, because I had been involved in receiving
some presentations originally on the concept. So I have taken myself out
of the review process.

We have got a team together, specifically CBP officers taking a look at
the proposals from a technical perspective, but there is also
operational elements that would include a statement of work. They are
looking at that. They will work through that.

Our close‑out date to get the technical review done is the end of
February. So we will have that done then, and then we will work out from
there in terms of how that procurement process may or may not move
forward, but that team has been together now reviewing that for about
three weeks now.

ATTENDEE: A suggestion, Rich, why don\'t we return to the 10+2 right now
while the Commissioner is still here, and GTX is then a little bit
further on the agenda.

MR. DiNUCCI: Okay.

ATTENDEE: Does that work?

MR. DiNUCCI: That will be fine by me.

I don\'t know if any of you have received any approaches by anybody, but
certainly, if you have any idea there you want to sure, we are more than
willing to listen, but in terms of what I can talk about with the
procurement process in place, my hands are pretty well tied in that
regard right now.

100‑percent scanning ‑‑

ATTENDEE: Rich, that suggestion was we are going to talk about 10+2 now.

MR. DiNUCCI: Oh, I apologize. It is not only the voice. It is the
hearing that has gone, so what can I tell you.

\[Laughter.\]

ATTENDEE: He was obviously trying to avoid your comment.

\[Laughter.\]

ATTENDEE: Whatever works, but I think his placard is not big enough to
hide behind.

MR. DiNUCCI: I will get the target put back on it for you to bull\'s eye
in a bit, but we took it off this time.

Bruce, why don\'t you ‑‑

MR. LEEDS: Okay. We had a pre‑meeting this morning. We spent a
considerable amount of time going through recommendations.

This is a bit of background. As soon as the Proposed Rule came out in
the Federal Register, we reconstituted our Advanced Data Elements
Subcommittee, and that subcommittee has been meeting weekly.

In fact, we took on additional new members, like over 50 people, like an
All Star team from the trade working on comments.

What we are going to present today is actually we are going to present a
resolution to submit comments in response to the Proposed Rule, and we
will actually present the text of our eight primary recommendations
today and vote on that to be adopted and sent in, in response to the
Federal Register Notice.

Those eight recommendations are based on a whole lot of good work by a
whole lot of good people who actually came up with all kinds of
analysis, arguments, details, suggestions, what have you. There is more
than a 20‑page document which backs up those eight recommendations.

The 20‑page document still needs some work, and what we may be
requesting ‑‑ and we will work with Annmarie on this ‑‑ is a special
COAC public meeting on March 14 to review that more details
recommendations and consider whether or not we want to vote on adopting
those and also submitting those in response to the Federal Register
Notice.

So what we are prepared to do right now, today, is present a list of
eight recommendations with some other thoughts on the 10+2 and vote on
that, to adopt it and finalize it and sign it and send it off post
haste.

My colleague Curtis has the full text of our letter up on his computer.
So I am going to turn it over to Curtis to read that.

MR. SPENCER: Yes. It is hot off the press.

I will read this quickly through because I know we have time.

The COAC hereby submits the following recommendations in response to
Proposed Rulemaking. Before providing its comments, COAC wants to make
clear that the committee agrees that U.S. CBP requires additional data
to perform proper national security screening of cargo destined for the
United States.

However, from our perspective, the advanced data element requirement
will only be successful if implemented in a manner that, one, achieves
the national security aims of the Import Security Filing, the ISF; two,
will not unduly burden the U.S. import supply chain; three, will not
disrupt other CBP systems and programs; and four, will result in solid
short‑term tangible accomplishments leading to a successful and
effective long‑term implementation.

This implementation must be accomplished with the participation and
cooperation of the trade in the truest sense to the term,
\"public‑private partnership.\"

So our summary of recommendations are as follows. Number one, CBP should
use a phased approach to the operational implementation and the
enforcement of the ISF requirements, sufficient to allow the trade and
the agency adequate time to take the necessary steps for effective
implementation without an undue disruption to commerce or to CBP\'s
information systems. COAC recommends that the effective date for all
filers to be projected to be 12 months from the time of the effective
date of the Final Rule, subject to implementation progress.

Two, the proposed imposition of liquidated damages in connection with
the ISF is unnecessary and should be deleted.

Three, there must be no linking of the data elements in the ISF.
Instead, filers should transmit all required information in an
established format, allowing CBP to manipulate the data to best achieve
effective security screening.

Four, there should be a timely confirmation message with a unique
identification number issued indicating that the security filing has
been completed, filed, and accepted. This would provide required
assurance to the filer, forwarder, consolidator, and the importer of
record, and greatly contribute to the success of the ISF.

Five, the type, length, and definition of each required data element
must be clearly described in the regulations and any accompanying
instructions, so that filers may properly program their IT systems to
accommodate the ISF.

Six, the ISF and the Safe Framework of Standards promulgated by the
World Customs Organization should be harmonized.

Seven, the carrier messaging requirements must be clearly defined, so
that the carriers may carry out an effective implementation of their
portion of the security filing requirement.

Eight, we strongly recommend a more realistic and collaborative
cost‑benefit and feasibility study as COAC believes that the costs used
are understated in the NPRM.

Finally, we urge that the Proposed Regulations be initially published as
an Interim Final Rule providing details of the data requirements, so
that companies can develop or adapt their IT systems and software to
properly transmit the filing.

We trust you will carefully consider and adopt these recommendations. We
believe that by working together, the trade and the U.S. Government can
best implement a program to protect our national security, while at the
same time facilitating the legitimate trade on which our country and its
economy so heavily depends, especially in these very volatile economic
times.

COMMISSIONER BASHAM: First of all, Curtis, thank you, and I thank the
entire advisory committee. Clearly, this is another example of where you
have taken the time and the energy to present a well‑thought‑out
proposal and recommendations. I really do thank you for that because it
is important that we have that collaborative effort.

Your points will be taken and reviewed, but I assure you our thanks for
taking the time and the effort into this is truly appreciated.

MR. SPENCER: Thank you.

COMMISSIONER BASHAM: I move that we adopt that letter and send it in, in
response to the Federal Register Notice.

Do we have a second?

ATTENDEE: Second.

COMMISSIONER BASHAM: More than one second. Kico \[ph\] is our second.
Okay, good.

All in favor?

\[Chorus of ayes.\]

COMMISSIONER BASHAM: Any opposed?

\[No response.\]

COMMISSIONER BASHAM: Any abstentions?

\[No response.\]

COMMISSIONER BASHAM: Okay. We also have on record that Tony Barone of
Pfizer who is not here today indicated that he would abstain.

It looks like it is carried. Thank you.

Annmarie?

MS. HIGHSMITH: Just to get back from this morning on the teleconference,
the logistics, we can do a telephone conference meeting of the COAC.
There has to be an additional meeting according to the COAC charter. It
has to be called by the co‑chairs of the committee. So that will have to
be you gentlemen calling the extra COAC meeting by telephone, and
logistically, there are some hoops that we have to jump through because
of the Open Meeting Act. We have to make sure that it is accessible to
individuals who have disabilities.

I was just reading a telephone conference announcement for the Arsenic
Review Panel. That was published last week.

So I think we can do it. It is just going to take a little bit of extra
logistical stuff. So the co‑chairs call the extra meeting with the
approval of the Designated Federal Official, and that is how you all get
it started.

COMMISSIONER BASHAM: Okay. Right now, just pencil in March 14 as the
proposed date.

Is there further discussion on this topic?

Yes. Go ahead, Chris.

MR. KOCH: Commissioner, while you are here, you asked for anything that
might be useful, and I would observe today that what COAC decide to do
is they are not contesting the strategy behind 10+2 or your initiative
or that it should proceed as you are talking about.

What they are really talking about, I think, is how do we do this
collaboratively with you in a time frame that works for the agency and
for the trade. That is the 12‑month recommendation there. It is a
recognition that this is a big change.

One of the observations I would make to you is many of the issues and
questions and comments that the trade presently has about the initiative
reflect less on the terms of what is in the regulation than it is about
the technical issues of what will be required to implement this, data
format, communications back and forth, how is this going to blend
together. Those are not things that are in the NPRM, but are going to be
very important.

Because this is an NPRM in process right now, the agency hasn\'t had
much of a dialogue with the trade on those technical details, and I
would urge you to consider ‑‑ you would probably have to talk to your
lawyers ‑‑ whether or not there isn\'t a way to begin that dialogue
quickly with the trade about data formats and how these things would
actually work, how the data process would flow and how they would be
linked, before you get to a conclusion of going through all the comments
you are going to get on the NPRM, digesting them, getting them cleared
off, and getting an Interim Final Rule out because that process is going
to take us into some period to be defined, but quite a while.

It would seem to me that many of these issues could admit very
reasonably to conversation with the trade that would help address many
of these issues if we could get that dialogue going maybe a little bit
more quickly than waiting for the actual rule to be out.

MR. DiNUCCI: If I could. That is the purpose of the ATDI and beginning
to pull that back a little bit, so you could see exactly what has been
going on.

We do have schema laid out. We have been working through that for how it
specifically will be transmitted to us. So that is part of it, and I
think I have got ORR \[ph\] to agree that that is a conversation we can
have in the ATDI format, but still, nonetheless, talking about what you
will be looking at here.

MR. KOCH: Thank you.

ATTENDEE: Just a real quick request. Could we talk about First Sale real
quick before Commissioner has to leave and then rework on these other
issues? Do you have two minutes?

COMMISSIONER BASHAM: Only two minutes.

ATTENDEE: Two minutes.

ATTENDEE: Okay. We recognize that CBP right now, because it is in the
Proposed Rule stage, really can\'t say much about the modification to
the First Sale rule.

Adrienne, are you here to talk about our people here?

**Discussion on First Sale**

MS. BRAUMILLER: Yes. I will try to be brief, but I don\'t know if I can
speak in two minutes, but I will try.

Essentially, the first point we want to make is that the COAC was
disappointed that we were not consulted on the First Sale rule, as it
was such a significant change, and that this consultation obviously
didn\'t occur prior to the publication.

In fact, the Port Safe Act in Section 401(c)(1) requires 30‑day notice
to COAC of any policies and actions that have a significant impact on
international trade and customs revenue functions.

Also, the attempt to change the law pursuant to a Notice of Proposed
Interpretation is not appropriate. CBP cannot legally change the
valuation statute through the use of a proposed interpretation. The
value statute is clear on its face that, thus, there is no
interpretation by CBP that is necessary.

The statute at 19 USC 1401, subparagraph (a), subparagraph (f), states
that the merchandise imported into the U.S. may not be appraised under a
system that provides for the appraisement at the higher of two
alternative values.

Further, the proposed interpretation runs counter to a line of cases by
U.S. courts dating back 20 years. In fact, as recently as January 3rd,
2008, in the case, [Target v. United States]{.underline}, CBP conceded
to Target in which the first sale for exports on importations of shoes
purchased through a middle man was conducted.

So, in conclusion, any change in this law must be introduced by
legislation amending the statute at 1401(a) and not through a Notice of
Proposed Interpretation, and as such, we would request that the Notice
of Proposed Interpretation be withdrawn, and we would also like to
propose a resolution that the notice be withdrawn.

ATTENDEE: So moved.

COMMISSIONER BASHAM: Do we have second?

ATTENDEE: Yes. Second.

COMMISSIONER BASHAM: I think Peggy spoke first. We will let ladies go
first.

All in favor of the resolution to request that the Proposed
Interpretation be withdrawn? All in favor?

\[Chorus of ayes.\]

COMMISSIONER BASHAM: All opposed?

\[No response.\]

COMMISSIONER BASHAM: Any abstentions?

\[No response.\]

COMMISSIONER BASHAM: Carried. Thank you.

I am going to leave any of my remarks to Dan, the First Sale man, over
here.

MS. BRAUMILLER: I don\'t know that he wants that.

ATTENDEE: You might want to leave now, too, Dan.

\[Laughter.\]

MR. BALDWIN: This is my job to take abuse.

Can I ask one question on the issue? Based on the recommendations
provided, can you just walk me through the logic of why you are
requesting to have this proposal removed now as opposed to making it
part of the comment process?

MS. BRAUMILLER: Because, again, the point is that the manner in which
this was proposed is really not legally the correct process.

The right procedure would be to have legislation introduced to amend
1401(a).

MR. BALDWIN: I think that is my point, and forgive me for not being a
lawyer here.

MS. BRAUMILLER: Okay, no problem.

MR. BALDWIN: If you are suggesting that the proper avenue to have this
interpretation reviewed is actually a statutory change as opposed to an
interpretative change ‑‑

MS. BRAUMILLER: That is correct.

MR. BALDWIN: ‑‑ is there a reason why this isn\'t a part of the official
comment process?

Of course, having us just revoke the proposal now means this is never
really seriously considered. So I am just asking why. Why recommend that
as opposed to making it part of the comments and then having it on the
record, so that there is an official avenue to get it to the Hill?

MS. BRAUMILLER: Well, I guess, I mean, either way. If you continue with
‑‑

MR. BALDWIN: Well, I mean, I think it is important. The distinction is
important, I think ‑‑

MS. BRAUMILLER: Yeah.

MR. BALDWIN: ‑‑ as to which way you do it.

MS. BRAUMILLER: Well, I think the bottom line for us is simply Customs
cannot attempt to achieve a change in this policy via a proposed
interpretation when legislative action is required. I mean, it is just
not the correct process.

And I understand you are saying, well, wouldn\'t you want to get your
comments out there. I guess I would say sure. I mean, there would still
be required an implementing regulation. Once the statute is amended, it
is not like we are giving up our opportunity to make any comments. The
statute comes first, then the implementing regulation, and obviously,
with all that that would require, again, a Notice of Proposed
Rulemaking, and our opportunity to comment at that time would be more
appropriate.

ATTENDEE: Dan, you might not actually believe this, but we spent a lot
of time saying what is the appropriate response from CBP\'s perspective
in terms of how this all works.

You might want to relook at this under a different methodology as
opposed to a Notice of Reinterpretation, which has gotten into a whole
lot of legal issues.

I think Adrienne only touched on a couple that we came up with. So we
are trying to be brief.

MR. BALDWIN: Understood. And I certainly don\'t want to cut into the
agenda because I am sure we will talk more about it during the trade
sessions.

MS. BRAUMILLER: The only other thing I would mention, Dan, is simply
that you have also got, again, a long line of court decisions that have
appropriately interpreted the statute as clearly allowing for a first
sale. So, again, that just goes back to trying to get at it, trying to
tackle a change in the current policy ‑‑ cannot be accomplished by this
method.

ATTENDEE: I am thinking we can actually do both, and what I mean by
that, we will send a letter to Commissioner urging the Federal Register
Notice be withdrawn, but we can also respond to the notice by saying you
need to withdraw this.

ATTENDEE: I think that is absolutely important.

MS. BRAUMILLER: Yeah, we\'ll do that.

ATTENDEE: Bruce, I think what Dan was trying to say is whatever they
decide on, the NPRM has to be based on the record of the comments. So,
if these are part of the record, it makes it easier for CBP to take
action, you might be endorsing by this resolution.

ATTENDEE: Well, if we do both, it will facilitate that.

ATTENDEE: Just a question. Was there any discussion internally prior to
the NPRI? Is that what it is called?

MS. BRAUMILLER: M.

ATTENDEE: NPRM? Okay.

About the great document that ‑‑ he is not even here anymore ‑‑ Mike
Mullen created for us as the ninth COAC turned into the tenth.

We got this Safe Act COAC Review Requirements Document, and under the
Dan Baldwin section, it says right here, \"DHS policies and actions that
have a significant impact on international trade and customs revenue
function, Section 401(c)(1), requires a 30‑day notice to COAC of
anything deemed significant impact,\" and this is an ongoing
requirement.

Was there discussions?

MR. BALDWIN: There was, and I know we want to have a meeting when we get
back to talk a little bit more in depth about some of these issues.

First off, I will just add in real quick. You know, I think it is
appropriate for us to talk to you about major significant policy
actions.

Then there is another school of thought that said this is really the
Administrative Rulings process that may not fall under this purview.

Having said that, I have been with Customs 21 years, too. I know First
Sale has been an issue for all 21 years. I wish we would have spent a
little bit more talking with all of you, as well as many other in the
trade community.

Having said that, I think there is a lot of fundamental legal issues
here where I would probably stress to you that there is significant
legal issues on both sides of the argument to say that it is not as hard
cut.

I would challenge the point that this is, in fact, required statutory
change. I\'m not sure that\'s true. I\'m not sure. What I am saying is I
think there is enough gray on both sides to say this is worthy of a
debate, and again, not to talk into our trade time is let\'s remember
this is a proposal looking for comments. No decision has been made. This
is an idea about get your thoughts on paper and get them to us, and I
think that is all it is right now.

So getting all spun up about we are going to do a significant amount of
damage, I think is premature at this stage.

You\'re welcome, Rich.

\[Laughter.\]

MR. DiNUCCI: I was enjoying that.

\[Laughter.\]

MS. BRAUMILLER: Dan, all I would say about that is, I mean, I don\'t
know if CBP fully recognized all of the different types of trade
relationships and transactions that will be impacted, including transfer
pricing which has huge tax implications, all those good things. Put it
in the comments.

MR. BALDWIN: Hence, the need for comments.

MS. BRAUMILLER: Yeah.

MR. BALDWIN: And if I can add just one last thing. What I would really
request of groups like COAC is soliciting your other trade partners,
again, as representatives of the entire trade industry to get their
comments on paper, too, and really not just 20 individual voices. I
think it is absolutely critical to this.

ATTENDEE: Well, I think you saw the speed of which we were able to give
you that resolution indicates that we have been bombarded by trade.

MR. BALDWIN: I hadn\'t noticed.

\[Laughter.\]

ATTENDEE: We received one or two e‑mails on the subject. We should
probably go back to the agenda.

ATTENDEE: Just to ‑‑ I don\'t know. I don\'t know if I owe you anything.

Look, this is something that Customs has been interested in for a long
time, discussed it with them numerous times over the past five years,
and we recognize that it would be controversial.

We recognized there would be legal issues with it. I wouldn\'t
necessarily say that the view of the Government would be the one that
Adrienne laid out about the Government\'s ability to re‑litigate an
issue.

But basically, it is administrative efficiency versus possible rise in
effective tax rates that is somewhat unknown for two reasons. One is
that some people will be able to mitigate under other portions of the
Value Code to change. The other is it is not really known, the effect to
which the First Sale Doctrine is used in terms of a quantifiable amount,
at least I haven\'t been able to find out over the past several years,
and I have asked the question a few times.

So one point I want to make is that if you have information,
quantifiable information about the effect of the effective duty rate, I
think that would be useful information for the Government to look at.

The other point I want to make is that I don\'t think it was a technical
foul in any sense to announce this publicly in terms of the Safe Port
Act and the obligations to consult with the COAC. I mean, just because
CBP has an obligation to consult with the COAC doesn\'t preclude it from
consulting on the same timetable with the rest of the trade community.

So I don\'t think it is totally fair to suggest that CBP wasn\'t
compliant with the letter of the Trade Act in that area.

MR. SKUD: I would like to add because as we talk about the coordination
of the trade viewpoint on this, I know there is going to be a lot of
work to do, but at the same point in time, the Government has a stake in
this process.

Just the thought about this rule, all I have to do is turn around and
talk to the Census Department because if you are going to have an
increase in value on the type of merchandise coming into our country,
the last 10 years, the last 5 years of Census data is going to be
distorted. So, from a Government perspective, that is only one
Department, but these are the things that they couldn\'t think of before
they came out with this rule.

That is a suggestion. Thank you.

MR. SPENCER: Tim, I just want to kind of respectfully say that you were
making the point a minute ago that you knew that this was going to be a
controversial rule, and you knew that Customs has gone through a 20‑year
period of court cases that they have lost to the First Sale Doctrine. I
think that was the point that Adrienne was making.

So there is no doubt that it has significant impact, and part of the
requirement in that Safe Port Act section is that this collaborative
process, it is not just, you know, notice. It is within that
collaborative spirit. So it has to be prior to issuing a rule for the
whole public to discuss.

MR. SKUD: I don\'t agree with that, Curtis. The collaborative process is
supposed to go before the rule goes into effect. It is not before.

MR. SPENCER: You guys can\'t talk about anything more in NPRM. I mean,
you can\'t discuss ‑‑

MR. SKUD: It\'s not ‑‑

MR. SPENCER: I mean, how many times has Rich had to say that in
different scenarios through the last year?

MR. SKUD: This is an NPRM. I am happy to talk about it, you know, if you
want to.

ATTENDEE: Well, and I would just chime in that, clearly, we are not
talking about the technical issues relating to the rule itself. I think
that is a lot of where we had some issues.

Right now, we are just talking about the instance and the impact on the
trade, and I think that is still reasonably well.

Now, the one thing I would suggest ‑‑ again, everything we are talking
about since we are here at the FAC has to be on the record. I strongly
submit that you need to put everything that we talk about today in
writing as part of the comment process.

MR. O\'BRIEN: Just one more point, too, from the trade perspective,
getting back to the Census Department. Just think about the concept of
NAFTA, the IVC content, prices changing, the North American Treaty to
establish this.

People are going to have to reevaluate their core structure, their
planning. It is a big trade issue. Just for the record, I would like to
mention NAFTA in this concept.

MR. SKUD: I think that is an excellent point, Barry.

Back to Curtis, look, I am not trying to pick a fight about this. The
point I am trying to make is that CBP knew this would be controversial,
and I don\'t think ‑‑ fundamentally, from talking with the people at
CBP, from talking with Dan about this, I think they have open ears, an
open mind about this. I mean, I am confident of that. That\'s the point
I want to make, but you know, they feel this is a serious administrative
problem for them that they thought needed public airing.

So, you know, I think they should be applauded for that.

ATTENDEE: We are strongly supportive of all CBP initiatives, especially
through the collaborative process. I would just strongly suggest that
the more collaborative versus something that ‑‑ you know, if you are not
following up on your Federal Register every single day ‑‑ \"Oh, what\'s
that? Is that going to have an impact on my business?\" Absolutely, it
is going to have an impact on everybody\'s business. Talking about
fundamental valuation questions of imports, that is pretty significant.

We could go on to the next thing. Sorry.

MR. DiNUCCI: I\'m okay, if you keep talking about this.

\[Laughter.\]

MR. LEEDS: I was just going to say on the agenda, we had a resolution to
request additional time for filing of comments in response to 10+2, and
we are not going to be making that resolution.

MR. DiNUCCI: 100 percent, or do you want me to?

MR. LEEDS: Yeah.

MR. DiNUCCI: Okay.

MR. LEEDS: Please.

**Secure Freight Initiative**

**Global Trade Data Exchange**

MR. DiNUCCI: I know we are kind of crunched for time. So I won\'t take
too much.

100‑percent scanning update. Just to reiterate, we are operational in
three ports, and that is in Southampton in the UK, Cortez in Honduras,
and Qasim in Pakistan. Still facing issues in those particular ports.
Transshipment is one of the biggest ones. Ship‑to‑ship and pier‑to‑pier
moves are difficult. We are working through that. Also, system
reliability, they do tend to go up and down in terms of software and
circuitry, but we do have data feeds back to the NTC.

Conceptually, it works. What we have seen from an operational
standpoint, specifically in Southampton, we have added about two to
three minutes to container cycle time as it comes in a port and is
routed through the facility for the scanning and then onto its place in
the stack. So, conceptually, it is working well there. There are issues.
As I said, transshipment and system reliability are issues.

We have begun to move into the additional four ports in a limited
capacity, but to look at high‑volume operations in Hong Kong, Singapore,
Busan, and Salalah, Oman. Salalah is a transshipment port, and that is
going to give us a good ground truth on that.

We had a congressional delegation at Salalah last month. We got a great
presentation from the terminal operator at that meeting to give the
CODEL a real good overview of the business impact of 100‑percent
scanning. I think they got some good insight there, things that they had
not considered nor seen before in understanding how the business
operators. They are taking that back, and we had some follow‑up meetings
with the staffers on that as well. So I think that was a success in
terms of sort of letting the congressional delegation see what the
operational business impact of 100 percent is.

But we are moving out. Same issues in those ports, transshipment system
liability, the software to circuitry are, in fact, issues for us. We
will work through that. Again, we work through it in partnership with
the terminal operator and the contractors involved with the software.
That works well, but nonetheless, those operational issues are still
there.

From a software perspective in terms of getting the data back to our
targeting system into our systems, that has been a success. That is
working. Again, it all depends, obviously, on the system reliability in
the port of operations.

We have drafted the report that is due to the appropriators this month.
That has been drafted, cleared through CBP. We are working now with the
Department on finalizing that report.

That, again, is one of the two that are due. There is an April report
that is due as well. That will encompass the lessons we are learning in
the three, as well as the four that we have now gone into. That, I would
argue would probably be a much more robust report, and that will begin
to encompass some of those lessons learned in those high‑volume ports.

We have recently sent out an e‑mail ‑‑ some of you may, in fact, have
received that ‑‑ asking for your input on that report specifically.

What we did was we identified the operators in those ports of entry, and
we have asked them for their feedback. I know I have talked to a number
of some former COAC members when we started this process and said,
\"Look, I will need your feedback. I want your feedback in terms of the
metrics you use to measure what is going on in terms of your container
flows, your container velocities.\"

So we went an e‑mail out to ask for that data, and what we have
committed to do is we want to look at the data. We will incorporate in
the report, but if your decision is you want to annex something to the
report, we will consider that as well.

So some of you may have received that communication a already. If you
haven\'t and you are still interested in submitting something, please
feel free to do so. We will do the best we can to get that in there and,
obviously, incorporate the feedback that you have got there, but that,
again, I will stress is for the April report. The February report is
already working its way through the review process. But that outreach
point is very important to us as far as the April report goes. So I
encourage you to submit come comments to us, especially in terms of
metrics.

I think we know conceptually how most people feel about it, but what we
are really interested in is what are the metrics behind what you are
seeing and what you think you potentially might see. That is of great
deal of interest to us.

That is all I have on 100 percent. So thank you for your time and
attention and for your feedback.

ATTENDEE: Any questions on 100 percent?

ATTENDEE: Or GTX.

MR. DiNUCCI: Or First Sale.

\[Laughter.\]

ATTENDEE: I think for Rich\'s sake, we ought to just go down the line
and talk about First Sale.

\[Laughter.\]

ATTENDEE: In terms of GTX, is there anything that you can report to us
at all about ‑‑ I mean, this was relatively controversial in the last
couple of COAC meetings because, quite frankly, we didn\'t know what the
heck was going on, what it was about, and nobody knew anything, and
nobody could say anything. Now the RFI and RFQ, I guess, is out.

So is there anything you can report back to us, Rich, in terms of ‑‑ I
mean, were you inundated with proposals? Is it still a voluntary
program, as planned?

Now the attorney is shaking her head no. She can\'t say anything.

MR. DiNUCCI: Well, she is shaking her head no, but I have never listened
to attorneys, so ‑‑

\[Laughter.\]

ATTENDEE: Uh‑oh.

MR. DiNUCCI: That\'s not true.

Real quick, multiple bids. We worked with finance on it. Multiple bids
have been submitted. In terms of the review process, I think I told you
what we have got there will be done by the end of the month.

It is voluntary, and again, some of you may have been approached to
participate. Nothing has changed in that regard as far as GTX. It is
voluntary.

So the vendors that have submitted bids, may have submitted bids, may
have contacted some of you to participate. If you told them no, I don\'t
think there is many repercussions because it is, in fact, voluntary.

So those are the three questions. I think I was safe in answering those.
Thank you, ma\'am.

ATTENDEE: Have you, in fact, received bids?

MR. DiNUCCI: Bids have been received. I said multiple bids have been
received.

ATTENDEE: Correct.

ATTENDEE: And again, the plan is that any voluntary company that signs
up for GTX will have to pay the cost of the GTX service?

MR. DiNUCCI: That is a question I think that will be ironed out between
the vendor and the participate at this particular point in time. That is
the long‑range view. I think we have been very open about how it will
work in the long term. It is an experimental approach right now. That
would be between the vendor and the participant, but I would have to say
there, the answer would be probably not.

ATTENDEE: During the testing, but as it gets rolled out?

MR. DiNUCCI: I think we made it clear, initially, as we talked about
this, that that, in fact, would probably be something that would occur,
that there would be a fee involved in providing data to that vendor.
Correct.

ATTENDEE: Thank you.

ATTENDEE: I would like to add something to this conversation, and it
also ties into another event on the agenda which is IPR.

The only reason why I am bringing it up now is a while back, Tony, who
is not here today, our fellow COAC participant, we met with Dan
Baldwin\'s group, and we had a discussion in IPR.

So I apologize for jumping over the agenda, but the reason why I want to
bring it up is that IPR is a process ‑‑ and we are getting to it earlier
‑‑ that it needs a change. The whole concept of the IPR process needs to
be strengthened.

Dan and I were trying to get together and through associations to
stimulate something that could be responsive to the trade, and I won\'t
go beyond that until the next item we discuss.

I am bringing it up now because this concept of GTX, I was approached by
two of the bidders, and they asked me my comments about the project. And
I don\'t want to get into my comments, but I would just like to add for
the record that if we want to make something happen, you want to think
outside of the box. You should bring in the IPR process to this
environment.

So, for the record, I don\'t know who is going to do what in the future,
but I would also like to add, if they do include this IPR process, that
is meaningful and it works, if it is going to come to a situation that
we have to pay for it, meaning a trade, then something is out of scope
because from a trader, I am up front. I am trying to develop a process
that is not expensive, that we all can utilize and help defend our
country, that won\'t be costly, but now I am suggesting that I am giving
my ideas out. It goes into a GTX, whatever it is going to be, and it
might be costly. Now I have to pay for it. I just want to ‑‑ for the
record, it doesn\'t make sense.

Thank you.

ATTENDEE: Okay. If that is the last comment on that issue ‑‑

ATTENDEE: We don\'t have any other issues. Right?

Actually, I will once more go into the breach real quick because I did
want to address one issue on First Sale, just to make sure that we are
all aware.

It was kind of interesting to me that ‑‑ I go back and I look. I think
we did receive one letter request an extension on the comment period
before it actually appeared in the Federal Register.

\[Laughter.\]

ATTENDEE: That is interesting.

ATTENDEE: Pretty good. Now, that is a company that is plugged in, but
anyway, in case you don\'t know, we did actually publish in the Federal
Register, an extension until April 23rd, a 30‑day extension for the
comment period on First Sale. I know you probably want to talk about
that in a little bit.

And I am sure there\'s going to be other issues, but let me go through a
couple of other issues that I wanted to touch upon real quick.

I do want to highlight real quick that there are some tremendously
interesting international trade issues that are going on right now that
I know a lot of you have had involvement. A lot of them have to do with
the Hill.

As I am sure you are reading as much as I am, that this particular
Congress seems to be very interested in customs reauthorization and
modernization issues. I have been involved in, like some of the
Commissioner\'s favorite issues, like drawback, one of my favorite
topics, too, but that has really seemed to gain a lot of traction
lately. So I just want to let you all know that we have been focused at
a very high level on a lot of critical issue such as this, and I think
we have had a lot of successful outcomes.

Some of the issues that COAC themselves have brought up that I do want
to address, again, at the last meeting, we talked about our detention
policy on conditional release for textiles.

We did publish a document in October talking about how we would, in
fact, be able to release goods and do textile verifications, post
release. I know that the trade has asked for some clarifications on some
of those issues, particularly as it relates to the punitive aspects for
when issues come up. So we are preparing some scenarios to try to add
some clarification for the trade on how that would work out, but I would
still maintain that was a very successful first step, given the nature
of the industry and the nature of interest on both sides of the import,
export, and domestic process.

Another issue, I am starting to recognize that perhaps this agency is
going to rely a little heavily on NPRM, so that we don\'t have to talk
about them.

\[Laughter.\]

ATTENDEE: Or you could do RFQs.

ATTENDEE: Oh, we could.

\[Laughter.\]

ATTENDEE: But again, remote location filing is another issue. I think we
have an NPRM out, and I have received a lot of great feedback already,
to be honest, very good comments that I have seen as to some of the pros
and cons on how the RLF is currently situated.

I think we have actually worked very well with the COAC subcommittee as
well.

To try to highlight some of the areas that we can talk about, how we can
expand the use of RLF, while we are still waiting for that technology,
wunderkind of Ace, to really make it fully available, you know, without
‑‑ without going too far on this, I mean, I think we all have to
recognize that RFL is something that everybody has been clamoring for
forever, and technology has been really one of the main hangups.

And I think we are getting closer and closer to Ace. I think Tim has
already mentioned we had a fairly productive, I thought, TSN meeting
last week.

I will just through in my 2 cents on that, that as we get closer and
closer to A2, the entry summary release, in January of 2009, I am
terribly optimistic that here we are 11 months away, and we are still on
track from a target we set for that production several months ago. I
expected a slip long before, but I am still very optimistic we are going
to go a long way.

But we still have that RFL issue. Again, if you haven\'t submitted
comments, I strongly, strongly encourage the comments because they are
very helpful to help us understand what we can do today and how we can
have a staged‑in approach to those that are interested in that program.

I think, Adrienne ‑‑ I think you were going to speak for Brad at this
sessions.

MS. BRAUMILLER: Yes. Yes.

I don\'t have much more to add. So I will be brief, but essentially,
Brad wanted me to let everyone know that the subcommittee has been
divided into three separate workgroups. One has to do with the detention
policy for wearing apparel, which you have already addressed. The second
is increasing the opportunities for paperless and expanding eligibility
for remote location filings at other types of entries, and then the last
group is on import safety.

The only other thing I would add to what you have said about the
conditional release issue regarding wearing apparel is simply that there
will be a meeting that will be scheduled to review those scenarios that
you mentioned that CBP will come up with. So we should have something
more on that shortly.

With regards to remote location filing, there have been several meetings
to explore those opportunities for increasing paperless entries, and one
of those areas that we looked at deals with foreign trade zones, and
several days ago, importers provided statistics to CBP for analysis
because there seems to be a uniformity issue.

Paper is required for foreign trade zone admissions in several ports,
and in other ports, possibly not, and so I think that is something that
needs to be further explored.

Also, there was a question regarding actual use provisions, and the
group is trying to identify the harmonized tariff schedule numbers that
could go paperless without jeopardizing compliance. So that is
essentially it on the paperless RLF portion.

Then with regards to the Import Safety Workgroup, it only met once thus
far, but a wide range of topics were discussed, and that the main thing
that came out of that discussion was that an ISA‑type program would be
ideal. The next meeting to discuss this is scheduled for February 20th.

So those are the main accomplishments of the three separate workgroups,
and then there were just a few other items that we think are in need of
further discussion.

One has to do with a pilot project that potentially would have permitted
importers to pick up a day in the cycle time on designated for exam, and
apparently, that pilot project was canceled due to budget restraints.

And what the pilot called for was that inspectors in the Port of Newark
would have laptops that they would use to update ABI with a clearance
message at the time they completed the examination, but since the
cancellation, the inspectors have reverted back to the practice of
waiting until the end of the day to key in all the clearance updates to
ABI.

Then the very last thing I have is that in the month of January, several
importers reported that they had seen a significant increase in
documents required, as well as examinations, and CBP said that they
would review the January statistics with us, and we would discuss that
at our next meeting.

ATTENDEE: In January?

MS. BRAUMILLER: I\'m sorry.

ATTENDEE: The increase of record?

MS. BRAUMILLER: No. We reviewed the ‑‑ that CBP will review the January
stats, and that we\'ll discuss it at the next meeting, if that make
sense. Okay.

ATTENDEE: I just want to add just thanks for Angela Downey for her
ability to support all our meetings. We appreciate it.

ATTENDEE: Very good.

ATTENDEE: Yeah. Dan, I think maybe pursuant to your previous comments
about the need to review the bonds and the bond structure and the bond
program, it might be a good idea and maybe a recommendation be made that
the COAC establish a subcommittee to look at perhaps bond modernization,
if you want to call it that, and bring forward some of the expertise
from the sureties and some of the interested parties to work with you to
improve that program.

MR. O\'BRIEN: Well, I would like to add to that. I know in a trade
support network under the Revenue Committee that I chair, we do have a
couple of subcommittees. There is a Surety Subcommittee and an E‑Bond
Subcommittee. That might be the general direction that we could channel
your questions to.

This committee has been formed quite a few years, and it is quite
extensive, the things they have developed for Ace. So there might be
something in that environment that could help out.

ATTENDEE: To work together?

MR. O\'BRIEN: Yeah.

ATTENDEE: Or at the risk of introducing yet another word to our
vocabulary over the last couple of days, we could have a symbionic
relationship with the TSN to both not only look at where Ace is headed
and how bonds relate to Ace, but even on a more general level as what
could be done to bonds and how bonds are structured, how bonds are
applied for, how they work, the whole bond regulations, as you
suggested. Let\'s step back, take a look at it, what makes sense.

ATTENDEE: I would ask, Barry, if you are on the E‑Bond and Surety
Committee. A simple question is, has your group revisited the concept of
10‑percent duties, tax, and fees should be the standard? A fundamental
question like that is what I was thinking about.

MR. O\'BRIEN: Yeah.

ATTENDEE: And I am not aware that the TSN committees had been thinking
about it.

MR. O\'BRIEN: Yeah. That\'s a good point.

ATTENDEE: Whether it is within even the scope of that committee.

MR. O\'BRIEN: Maybe we can get together.

ATTENDEE: Right.

MR. O\'BRIEN: ‑‑ and whoever else would like to join us, and then we can
approach those two committees ‑‑ subcommittees.

ATTENDEE: Be on the veranda.

MR. O\'BRIEN: Yeah.

\[Laughter.\]

ATTENDEE: There is a plethora of verandas here.

ATTENDEE: A plethora of them.

ATTENDEE: I think the one, just the one final recommendation is that,
you know, we have Brad\'s group who has done just a phenomenal job and a
lot of work, but their plate remains pretty full. So if we are going to
take this on as COAC, I would like to see it as something separate, I
think, and a different group of individuals and also perhaps just a
specific focus on the bonds.

Thank you.

ATTENDEE: Well, I think you should have some internal discussion on
this.

I mean, as Dan ‑‑ the point Dan just made was that there was some basic
policy issues here that really need to be addressed, and not that that
couldn\'t be done on that TSN committee, but that is not really the
focus of that.

You know, the TSN committees exist to kind of take the existing
requirement and funnel it into an Ace requirement. So ‑‑

ATTENDEE: Right, I agree.

ATTENDEE: There is a difference there. It is not that it couldn\'t be
adopted, but I think it deserves a little more internal discussion and
recommendation.

ATTENDEE: Yeah.

ATTENDEE: Maybe what we can do is suggest that we talk about it
pre‑meeting and come up with a resolution to set up a task force next
May and get on that.

ATTENDEE: Okay. Anything else on anything Dan mentioned?

ATTENDEE: Yeah. Just a question on ‑‑ I had written a note on the NPRM
on RLF. I was just asking around, a couple of people here. What is that
on specifically? What does that NPRM describe?

ATTENDEE: The NPRM is about promoting remote location filing, and the
big contentious point ‑‑ I don\'t think I am violating any rules,
Annmarie. The big contentious point is that we would phase out paired
ports, and that is a very contentious point. That has actually been the
focus of most of the comments.

ATTENDEE: Phase out? I\'m sorry? What did you ‑‑

ATTENDEE: Paired ports.

ATTENDEE: Oh, paired. Oh, okay.

ATTENDEE: That\'s what I saw.

ATTENDEE: Oh, oh, oh, oh.

ATTENDEE: That\'s been ‑‑ that\'s been the point that\'s been generating
most of the comments.

ATTENDEE: Oh, that one.

ATTENDEE: And Dan, when are comments due on that one?

MR. BALDWIN: I would have to do the math. I am looking here. It looks
like on March 23rd, 2007.

Is the comment period closed? Annmarie, do you know?

MS. HIGHSMITH: \[Inaudible.\]

MR. BALDWIN: I\'m sorry?

MS. HIGHSMITH: \[Inaudible.\]

MR. BALDWIN: No, no, no. On RL.

ATTENDEE: Remote location filing.

MR. BALDWIN: I\'m not sure. Let me find out.

ATTENDEE: Okay. If there\'s no more comments on those issues, we will
move on to Import Safety.

\[End of digital recordings.\]

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