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**WORLD CUSTOMS ORGANIZATION**

*The Private Sector Consultative Group*

Border Security Regulations Branch

Office of Trade, U.S. Customs & Border Protection

1300 Pennsylvania Avenue (Mint Annex)

Washington D.C. 20229

**Re:** **Comments on Notice of Proposed Rulemaking on Importer Security
Filing and Additional Carrier Requirements FR Doc. E7-25306; Doc. ID:
FR02JA08-22**

> **(**Before the Border Security Regulations Branch Office of Trade
> Bureau of Customs and Border Protection (CBP) Department of Homeland
> Security)

Dear Sir:

On behalf of the World Customs Organization's ("WCO's") Private Sector
Consultative Group ("PSCG"), and in accordance with the referenced
Notice of Proposed Rulemaking, we respectfully submit the following
comments on the United States Customs and Border and Protection's
proposed Importer Security Filing and Additional Carrier Requirements
("ISF proposal").

**[PSCG Background]{.underline}**

The PSCG was established by the Secretary General of the World Customs
Organization in 2006 to provide private sector advice to the WCO High
Level Strategic Group of which the CBP is a founding member on matters
related trade security and trade facilitation. As of June 2007, the PSCG
is the advising private sector group to the Policy Council, of which CBP
is also a member.

The PSCG is comprised of thirty (30) members and represents Importers
and Trade Associations globally. The PSCG was instrumental in working
with the WCO in the development and the implementation of the "Framework
of Standards to Secure and Facilitate Global Trade" ("SAFE Framework",
June 2005) which established global standards for supply chain security
and facilitation.

As an advisory group, the PSCG seeks to ensure a balance between
international trade security and trade facilitation and consistency with
international trade agreements. It is in this light that the PSCG is
deeply concerned with CBP's ISF proposal. The proposed rule, if
implemented, will have global implications to trade well beyond the
borders of the United States. Specifically, the ISF proposal fails to
recognize the international agreements designed to balance the physical
and economic security interests of WCO and its member customs
administrations'.

**[Comment A - Standardization]{.underline}**

Internationally agreed upon common standards are key tools in
simplifying trade procedures. However, the introduction trade elements
which are not harmonized with international trade agreements is counter
to WCO objectives of which CBP has previously been a proponent. It is
counterproductive to other customs administrations, our trading
partners, US importers, as well as US export facilitation, if CBP
implements a proposal that is not aligned with international standards
and practices.

Trade facilitation is achieved where there is a balance between
simplification, harmonization and standardization. Simplification is the
process of eliminating all unnecessary elements and duplication in
formalities, processes and procedures. Harmonization is the alignment of
national procedures, operations and documents with international
conventions, standards and practices. And, standardization is the
process of developing internationally agreed upon formats for practices
and procedures, documents and data transmission. Many of the processes
which facilitate trade (i.e., risk-based intervention and
intelligence-led rather than pervasive - or quota-led interventions)
equally serve the need for security. However, the ever increasing
measures aimed at improving the security of the supply chain have
questionable benefit and compromise facilitation.

We believe that CBP's ISF proposal fails to meet the desired trade
facilitation agreement and further distorts the balance between trade
security and trade facilitation. The ISF proposal (1) amends the SAFE
Framework without garnering international consensus, (2) introduces
unsubstantiated data elements for security without global agreement and,
(3) is counter to international risk-based trade security management
practices. Please note our additional comments herein.

**[Comment B - Revised Kyoto Convention]{.underline}**

The Revised Kyoto Convention ("RKC") is one of the major international
instruments developed by the WCO and is recognized as an international
standard and benchmark for the global customs community. The RKC
represents a harmonized and simplified set of customs procedures. The
United States, along with 55 other counties, is a signatory. The key
principles of the RKC include:

-   Transparency and predictability

-   Standardization and simplification of goods declaration and
    supporting documents

-   "Fast Track" procedures for authorized persons with good compliance
    records

-   Maximum use of information technology

-   Minimum necessary control to ensure compliance

In addition, the RKC applies these principles as it pertains to trade
data principles:

-   Use of international standardized and harmonized message
    requirements

-   Minimum data for Customs control and release purposes

    The RKC provides the foundation upon which the SAFE Framework was
    developed.

We believe that CBP's ISF proposal fails to meet the United States
obligations to harmonize and simplify customs procedures and to minimize
information from trade to secure the supply chain. The ISF proposal
seeks to amend the SAFE Framework by *adding* data elements without
going through the stated amendment process. It seeks to increase the
number of data elements without providing any quantified evidence of
additional supply chain security. And, it undermines the principles of
transparency and predictability of global trade by proposing national
criteria inconsistent with international agreements and is contrary to
the goal of mutual recognition of Authorized Economic Operators and
similar national programs. Accordingly, the PSCG strongly urges that the
proposed rule be withdrawn and reconsidered in light of the U.S.
existing obligations to the WCO.

**[Comment C - WCO Data Model]{.underline}**

The main objective of the WCO Data Model is to define a set of
standardized data for use by both Customs Administrations and trade
operators for electronic data exchange for Customs Clearance purposes

The WCO Data Model Content consists of three components:

-   A data set containing names, definitions, coding and usage

-   A data model with the classes of data and the relationship to each
    other

-   Message implementation guidelines for message structure and
    documentation

Section 6.5 of the SAFE Framework provides that Economic Operators
required to submit cargo and goods declarations to customs authorities
should use the electronic message specifications of the WCO Customs Data
Model. However, CBP's ISF proposal seeks to rename and redefine data
elements which are inconsistent with the WCO Data Model.

We believe that CBP has sought to rename or redefine existing WCO Data
Elements without first seeking amendment to the WCO Data Model. It is
strongly recommended that if CBP withdrawn the ISF proposal and
harmonize it with the WCO Data Model definitions or address its proposal
via the agreed upon amendment process.

**Examples:**

> **CBP:** "Ship to name and address" -- Name and address of the first
> deliver-to party scheduled to physically receive the goods after the
> goods have been released from customs custody."
>
> **WCO: "**Delivery Destination" -- The location to which goods are to
> be delivered. Address, region and/or country as required by national
> legislation or according to national requirements.
>
> **CBP:** "Consolidator (stuffer) name and address" -- "Name and
> address of the party who stuffed the container or arranged for the
> stuffing of the container."
>
> **WCO:** "consolidator -- name" - "\[n\]ame \[and address\] of the
> freight forwarder combining individual smaller consignments into a
> single larger shipment (so called consolidated shipment) that is sent
> to a counterpart who mirrors the consolidator\'s activity by dividing
> the consolidated consignment into its original components".
>
> **CBP:** "Container stuffing location" -- "name and address(es) of the
> physical location(s) where the goods were stuffed into the container.
> For break bulk shipments, as defined in Section 149.1 of this part,
> the name and address(es) of the physical location(s) where the goods
> were to made "ready ship" must be provided."
>
> **WCO:** "Place of Vanning" defined as "\[n\]ame \[and address\] of
> the location where the goods are loaded into the transport equipment".

The PSCG recommends that CBP amend the ISF proposal to exclude any data
elements not included in the WCO Data Model and utilize existing WCO
definitions and standards. These would be significant steps toward
implementation of the SAFE Framework and mutual recognition of supply
chain security programs.

**[Comment C -- WCO SAFE Framework]{.underline}**

The SAFE Framework harmonizes the advance electronic information on
inbound, outbound and transit shipments using WCO standard Data Model
for electronic Customs messaging. Section 1.3 of the SAFE Framework
states that:

> "\[t\]he exporter or his or her agent has to submit an advance
> electronic export Goods declaration to the Customs at export prior to
> the goods being loaded onto the means of transport or into the
> container being used for their exportation".

CBP seeks to add data elements not contained in the list of data
elements contained in the SAFE Framework

Further, the Section provides that:

> "\[t\]he exporters have to confirm to the carrier in writing,
> preferably electronically, that they have submitted an advance export
> Goods declaration to Customs. [Where the export Goods declaration was
> an incomplete or simplified declaration, it may have to be followed up
> by a supplementary declaration for other purposes such as the
> collection of trade statistics at a later stage as stipulated by
> national law."]{.underline}

The SAFE Framework requires that:

> "Customs administrations should not burden the international trade
> community with different sets of requirements to secure and facilitate
> international commerce. There should be one set of international
> Customs standards developed by the WCO that do not duplicate or
> contradict other recognized intergovernmental security requirements".

The SAFE Framework, under Pillar I, Section 1.3, [Submission of
data]{.underline}, sets forth the list of accepted data elements for
security filing purposes. We believe that CBP proposes to add to the
list of data elements without first seeking amendment by the WCO Customs
administrations. Data elements CBP proposes to be add without amendment
to the SAFE Framework are:

-   Manufacturer (or supplier) name and address

-   Seller's name and address

-   Buyer's name and address

-   Consolidator (or stuffer) name and address

-   Country of origin

CBP should submit their request to add data elements to the WCO member
administrations for vetting through the amendment process as opposed to
taking the proposed unilateral action.

The SAFE Framework is widely known to contain the global standards
intended not only to secure, but also facilitate, the movement of
international trade. These twin elements are pervasive throughout the
RKC. CBP should withdraw its proposed Importer Security Filing Program
until such time as it has secured an agreed upon amendment to the SAFE
Framework by the WCO member administrations.

**[Comment D - Legislative Mandate]{.underline}**

The U.S. Congress made it clear that there was an expectation that CBP
will adhere to its international obligations, specifically those
involving the WCO. In particular, we refer to section 1701 of Public Law
110-53 of August 2, 2007, which amends Title 6, United States Code,
section 982(b). This provision, which concerns future cargo image
scanning requirements, obligates the Department of Homeland Security,
and by inference CBP, to ensure that its actions "...are consistent with
the World Customs Organization framework, or other international
obligations of the United States." (6 U.S.C. 982(b)(9))

The CBP ISF proposal is contrary to the Congressional mandate and should
be withdrawn. The requirements of the ISF proposal do not support the
objectives of the international agreements committed to by the United
States and CBP.

**[Comment E - Legislative Authority is limited to maritime
trade]{.underline}**

We note that the basis of authority for the ISF proposal is Section 203
of the SAFE Port Act, which, of course, relates solely to maritime
trade. If, however, these same additional data elements are to be
required in the future in respect of other transport modes as implied by
appropriate references on the CBP website, we believe that new
legislative authority will first be necessary.

**[Comment F - Exemption of C-TPAT members from additional data
requirements]{.underline}**

C-TPAT members have expressed dissatisfaction regarding the lack of
tangible benefits deriving from C-TPAT membership. We firmly believe
that to exempt C-TPAT members from these additional data requirements
would not only convey a positive message to critics of C-TPAT, but would
also actively encourage other traders to seek membership in the program.

In conclusion, the PSCG believes it imperative that CBP reconsider its
strategic approach to improved security and trade facilitation. The risk
posed by terrorism is a global risk that threatens many countries and
requires an international collaborative solution. The unilateral
approach taken by CBP in the ISF proposal should be replaced by renewed
international cooperation, consensus and mutual recognition. Given the
current and prospective security programs of and efforts by other
nations and international companies, it is incomprehensible that
shipments from all nations and parties are still perceived by CBP to be
of an equal risk and therefore subject the same level of reporting and
scrutiny. Failure to acknowledge such risk differences and reach
agreement with other nations subject to these risks jeopardizes not only
the global trading system from the proliferation of non-tariff trade
barriers, but puts at risk the efforts to prevent future terrorist
attacks. The resources CBP, other nations and the private sector spend
on collecting, sending, receiving, processing, analyzing information and
data on shipments that have not in the past or currently represent a
realist terrorist risk needless burdens governments and the private
sector and redirects the security efforts of these stake holders from
activities that increase supply chain security.. Massive data collection
exercises such as the ISF proposal should be replaced by programs that
target risk based on intelligence and international cooperation.
Indiscriminately spreading the security resources of governments and the
private sector across all imports, from all nations by all parties is a
risk and cost the international trading systems cannot bear and is
contrary to the very fundamentals upon which the WCO was created.

The PSCG represents a wide cross section of industry groups,
incorporating a number of different opinions, and because of the
different modal requirements included in the NPRM it has not been
possible for all industry sectors to align themselves with the
general PSCG submission.  The ocean carrier trade associations (ICS and
the WSC) have therefore chosen to submit their own separate comments on
the NPRM.  

The Private Sector Consultative Group appreciates the opportunity to
comment on this important matter and urges that its recommendations be
considered before the proposed rule becomes final.

> Thank you for your consideration of our comments.
>
> Regards,
>
> Renee Stein, Chair
>
> WCO Private Sector Consultative Group

List of Supporting WCO Private Sector Consultative members:

American Association of Exporters and Importers (AAEI)

Barloworld (So. Africa)

Boeing

British Petroleum

Business Alliance for Secure Commerce (BASC)

Carrefour

FEDEX

General Motors

Global Express Association (GEA)

International Association of Ports and Harbors (IAPH)

International Air Transport Association (IATA)

IBM

International Chambers of Commerce (ICC)

International Freight & Customs Broker Association (IFCBA)

Japan Machinery Center for Trade and Investment (JMCTI)

The Limited Brands

Moscow International Business Association (MIBA)

Microsoft

Nissan Europe

Philips

Proctor & Gamble

Siemens

SITPRO

Thales Group

Business Anti-Smuggling Coalition (BASC)

CC: Michel Danet, Secretary General, WCO