**Departmental Advisory Committee on Commercial Operations of the Bureau
of Customs and Border Protection**

**[Friday - Nov 16, 2007, Meeting Notes:]{.underline}**

**[Opening Remarks:]{.underline}**

Commissioner Basham suggested next year that Commercial Operations
Advisory Committee (COAC) host a panel during the Trade Symposium.

Barry O'Brien said we could summarize the main issues we have been
working on with Customs and Border Protection (CBP) during 2008.

**[Motion to Approve Minutes from August 16, 2007
Meeting:]{.underline}** Approved

**[Post Incident Response:]{.underline}**

Jeremy Luczkowski, Chief Incident Management Branch, Office of
Intelligence & Operations Coordination (OIOC):

-   Developed joint protocols with Canada that has been signed off by
    both CBP and Canada. Will start training.

-   Developed a plan for response by the Coast Guard and CBP that is
    awaiting review and approval.

-   Developed a joint protocol they are working on with Mexico.

    -   The plan is conduct exercises for all the above protocols during
        2008, to include table top exercises within the Government and
        the Trade.

-   With regards to communication and information, OIOC used CBP's
    messaging system during the California wildfires.

-   Working on getting feedback from the Office of Information
    Technology (OIT) and in the future from the Trade, via Automate
    Commercial Environment (ACE).

    -   The trade will be able to receive messages depending on the
        various environments within different modes, air, ocean, etc.

Beth Ann Rooney -- said we have not been able to participate in
high-level discussions or tactical plans; it is probable that we could
have some important input.

Tony Barone -- since COAC submitted our report, there have not been
further involvement from COAC. We think it behooves the Government to
include the Trade. If we had been engaged, we may have provided some
useful suggestion. Tony complimented the Messaging System and the fact
that it is not limited to the maritime environment.

Earl Agron- Said American President Lines (APL) sponsored a field
exercise which included several federal agencies including the Coast
Guard and CBP. The Coast Guard Auxiliary was especially invaluable.
Tested ship and terminal evacuations.

There were Lessons learned: But many of the government's lessons cannot
be shared with the Trade.

Commissioner pointed out that CBP won't necessarily be able to hand COAC
a playbook that would provide certainty as to how a particular incident
would be handled. So much of this is incident driven. Further, CBP's
approach is an all hazards approach and is communication coordination
among the various agencies and with trade.

Curtis asked if COAC could see the Trade Incident Response Report.
Jeremy said we could see the report. *CBP will send the report to Bruce
Leeds who will disseminate to the rest of us.* But Lauren Zucker
*clarified that the Report cannot be seen and no input can be given
until signed by the Commissioner.*

**[Secure Freight Initiative/GTX/Advance Trade Data]{.underline}**

Richard DiNucci, Director Secure Freight Initiative(SFI), Office of
Field Operations(OFO):

He will discuss three issues: 100% screening, 10 + 2, and Global Trade
Exchange (GTX)

> **SFI-**100% Scanning:

-   Operational in Pakistan, United Kingdom, and Honduras

    -   The SAFE PORT ACT required CBP to conduct a 100% scanning in 3
        pilot ports.

-   Will be established in 4 more ports in 2008

    -   Singapore, Hong Kong, Korea and Oman

    -   Volumes in the new ports will be higher than the previous 3
        ports.

-   CBP has 2 reports to prepare and deliver to Congress in 2008.

    -   The April report is the key report that will include the lessons
        learned.

    -   Trying to develop some metrics that will be included in the
        report.

    -   CBP will reach out to the Trade on this.

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

-   Notice of Proposed Rule-making(NPRM):

    -   Office of Management and Budget (OMB) has the report and has
        some questions for CBP which CBP has addressed.

    -   Publication of the NPRM should be likely by the end of this
        year.

-   Advance Trade Data Initiative (ATDI): CBP has between 40 to 45
    participants

    -   CBP has noticed the data is available but it is a timing issue
        that CBP is working through.

> **GTX**:

-   Notional Stage at this time.

-   Request For Quotation (RFQ) has been mentioned and there are
    legalities that limit the information that can be discussed.

    -   An RFQ will be issued with requirements and then the vendors
        respond with their suggestion as to how they'd meet those
        requirements.

    -   Once selected, the Vendor would go out and select voluntary,
        private partners for testing.

    -   At this point, information will be available to COAC and we can
        assist in providing input.

    -   This will be small scale pilot project.

    -   The RFQ will be issued fairly soon, couple of weeks.

-   Is designed to be a data clearing house. The data is provided by the
    Trade and the clearing house would organize the data and would
    provide the information to any Customs authority that needs it.

-   Is designed to aid in targeting primarily. This would be data that
    would not have been historically utilized such as Purchase Order
    (PO) data.

-   Could this data be used in a seamless import/export transaction in
    the future? Yes.

Is there potential to include product safety analysis here? Rich says
yes because this is an experimental pilot.

Commissioner: What role would COAC play, if any, and when in providing
feedback? The Annmarie Highsmith ,CBP counsel, said there was some
flexibility here and she'd let us know later when she has explored this.

Rich clarified -- that 10+2 is the priority and the trade will see it
first, whereas the GTX is a more long term project that will aid in
security and hopefully trade facilitation.

Tony Barone raised a concern regarding confidentiality within GTX -- he
pointed out even the banks have failed at keeping the information secure
and with GTX; CBP is saying that the information in GTX will be shared
with other foreign countries whose systems may not be as secure. But
Commissioner pointed out that this will be voluntary so if a company
does not want to join due to concerns over the loss of confidential
information, they can choose not to participate.

Assistant Commissioner (AC) Thomas Winkowski: pointed out when Automated
Broker Interface (ABI) was being discussed there were similar fears and
concerns. But he said we should look at the opportunities that GTX may
provide to the Trade.

**[C-TPAT/Container Security Initiative (CSI) Programs:]{.underline}**

**Brad Skinner- Director C-TPAT:**

-   Status of the Customs and Trade Partnership Against Terrorism
    (C-TPAT) Program and Criteria

    -   7,774 members

    -   Over 2000 validations this year

    -   2002-2006 -- 5248 validated or 90%

    -   600 additional validations by year's end, achieving the year's
        goal of 3000 validations total.

    -   Removed 416 members, half of those are highway carriers

    -   230 Tier III (T3) Members

    -   3000 validations planned in 08

-   Security Criteria

    -   Rolled out for Mexican Long-haul Carriers (August of 07)

    -   Air Carrier Criteria just announced yesterday (11-15-07) on the
        C-TPAT Portal

        -   CBP coordinated and worked with Transportation Security
            Administration (TSA) on these criteria and did a mutual
            validation to better understand each other's programs.

        -   CBP will continue to coordinate with TSA in this endeavor
            and to reduce any direct conflict.

        -   If a Company meets stringent TSA requirements for
            identification, then that Company should have no issue
            meeting the CTPAT requirements.

    -   3^rd^ Party Logistics (3PL)

        -   CBP needs to gather quite a bit more information before this
            is rolled out.

        -   Wants to include those partners who most frequently touch
            the cargo.

        -   Should have a draft proposal available early December and
            will have a formal proposal to bring to COAC by year's end

-   Third Party Pilot Program

    -   There are 11 validators that were approved to conduct
        validations.

    -   Of the 300 companies that were invited to be validated only 12
        companies agreed to do so.

-   Validations in China

    -   There are meetings being planned to discuss China allowing CBP
        validators in to conduct the meetings.

-   New C-TPAT Houston Offices -- will have management teams in place by
    year's end.

-   Annual C-TPAT Training is Feb 26^th^ -- 29^th,,^2008 in New Orleans.

*Brad Skinner promised Bruce Leeds that we can have a copy of the latest
current status report on C-TPAT. (Complete)*

Bruce Leeds suggested expanding C-TPAT to exporters. It's appropriate to
do this to extend mutual recognition for Authorize Economic Operator
(AEO). He argues that the jurisdictional issue should be overcome and
that if there were concerns regarding resources, that COAC has some
suggestions regarding these.

*Countries that refuse C-TPAT Validations -- Short of China, Brad
Skinner is only aware on one other situation --It is a small country; he
will get back to us, once he confirms this.*

**[CBP/Trade Supply Chain Assessment:]{.underline}**

**Brad Skinner:** Met with COAC members -- subcommittee for supply chain
security, discussed security and business partner vetting requirements.
Additional individual discussions have been held since then.

Sam Banks: Foreign Supplier Vetting was discussed and a huge hole is
import safety. Also discussed data flows as opposed to paper flows. Also
discussed benefits. Will continue to provide these resources and will
offer these as we phase in 10+2, import safety and GTX. Custody transfer
was explored as well.

**[ACE Program Status/ITDS:]{.underline}**

**Lou Samenfink, Executive Director, Cargo systems Program Office,
Office of Information Technology**

**Tim Skud, Deputy Assistant Secretary, Tax, Trade and Tariff Policy,
Department of Treasury:**

-   Report to Congress on International Trade Data System (ITDS) was
    provided to COAC

    -   Outlines the program and the benefits as well as the progress.

    -   It also describes individual agency participation.

        -   Can review what each agency's vision is and their progress.

    -   Key recommendation: Import Safety Agencies involved should step
        up their efforts.

    -   Additionally, agencies are recommended to look at their
        structures so as to better streamline the process.

-   Goal is to get more data from ACE into ITDS

    -   There is still more data that CBP collects that is not in ACE
        and needs to be in the data warehouse.

    -   Recommendation is to have standardized data formats among
        agencies so no translation or less translation is required.

        -   The United States (US) has been a prime mover of developing
            standardized formats to ensure cross-functionality across
            federal agencies.

        -   Also considering the ramifications of ramping up the use of
            World Customs Organization (WCO) standards formats.

            -   CBP has a mandate to make sure our data set is in
                keeping with the WCO Model.

                -   WCO's standards are edifact-based and are simply a
                    format for delivering the data.

    -   Also exploring what kinds of edits and validations should be
        built into the system.

    -   The rest of recommendations are centered on internal governance
        and communication as well as budgeting issues.

-   There are 40 Federal Agencies that are participating in ITDS

Barry O'Brien: COAC's concerned about funding and what budget is
required to bring ACE and ITDS together. Lou clarified that ITDS is
baked into ACE and he said that there has been adequate funding of about
17 million. Question is whether this funding will continue to be
adequate. Lou wants to turn ACS off so we can just use ACE. ITDS
represents extra services and data that ACE will offer.

Lou said that information regarding ACE and ITDS should be transparent
to the trade -- the trade will be required to provide information it
does not currently provide electronically but perhaps does provide via
paper.

**[Office of International Trade Update:]{.underline}**

**Dan Baldwin, Assistant Commissioner, Office of International Trade
(OT):**

-   Three successes accomplished during this Office's first year of
    operation:

    -   Listening to the Trade on policy and operational issues -- heard
        us and has responded.

    -   Tremendous impact internally so that policy is translated more
        seamlessly to the Trade

    -   More engaged on the modernization role as it relates to ACE --
        that what we are building today is in keeping with CBP's vision.

-   The future focus of this Office:

    -   New National Trade Strategy that is rolled out -- compliance and
        enforcement will take a better foot-hold.

    -   Needs to better communicate how well the trade is doing by using
        metrics.

    -   More Trust afforded to Importer Self Assessment (ISA) Members

        -   Example -- the new Textile Enforcement Policy

Brad Shorser: COAC agrees that we have accomplished a great deal. Brad
presented a letter regarding the issues that have been discussed and the
current initiatives we are currently working on with OT. One area of
concern has to do with communication or the lack thereof -- such as the
textile detention policy that was implemented without any input from
COAC. He asserts that the policy should be amended because it is not
risk-based.

Barry O'Brien suggested that CBP measure how the new textile policy
impacts the Trade.

**[President's Import Safety Group]{.underline}**

> **Brenda Smith, Executive Director, Trade Policy and Programs, Office
> of International Trade (OT) --**
>
> The President's Plan was released on Tuesday, November 6^th^, 2007.

-   This Action Plan to focus on:

    -   information sharing and interoperability (ITDS)

        -   ITDS will be the core means

        -   Agencies will work together on criteria for identifying and
            targeting unsafe goods

        -   May co-locate Other Government Agency's (OGA) at the
            National Targeting Center (NTC)

    -   Collaboration and Common Mission

        -   The plan lays out procedures for meetings to collaborate on
            incidents and the responses

        -   Potential authorization of CBP to act on behalf of other
            OGA's

        -   Potential increase in penalties and required bond amounts

    -   Public- Private Partnership

        -   How best to use these partnerships to address safety?

            -   ISA may be more appropriate to update since it's a
                trade-based system with benefits.

            -   Need to better understand the application of "quality
                assurance" concepts common in the trade

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            -   Best Practices and training need to be developed within
                the Trade

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    -   Alison Reichstein: Overridingly characterized as risk-based; the
        penalty and bond components need to reflect that as well.

        -   Bond/penalty: The penalty component being the bond increase
            driver, we reasonably expect that the intent to apply
            risk-based approach be carried through any resulting
            regulatory and legislative changes. Organizations that have
            demonstrated a strategic commitment to supply chain security
            and controls and present a reduced risk should have relief
            from any additional bond and or penalty burdens. Exclusions
            would apply to companies meeting CTPAT and ISA standards.

        -   Existing language of the action plan appears to reflect the
            intent that these measures would be used as a deterrent
            specifically "against importers who repeatedly import
            products that violate U.S. law."

        -   Gratified to see the language and content of COAC input
            within the Action Plan. This process highlights the benefits
            we all seek in engaging COAC in the creation of content as
            opposed to soliciting comment to a signed, completed
            document.

    -   Adrienne: Questioned the ISA placement in this scenario given
        the limited number of members in ISA currently (150 members
        presently).

    -   Assistant Commissioner Dan Baldwin: said that including a safety
        program in ISA could perhaps drive greater ISA participation

        -   Regarding toughened penalty stance (no mitigation, zero
            tolerance); will change to eliminate the approach that
            penalties can be treated as the cost of doing business.

**[Intellectual Property Rights Enforcement subcommittee]{.underline}**

**Therese Randazzo, CBP Acting Executive Director, Commercial Targeting
and Enforcement (CTE), Office of International Trade**

-   Intellectual Property Rights (IPR) Enforcement

    -   197 million dollars worth of seized goods in the last year

        -   Significant growth of border seizures activity

    -   US is working with the WCO to develop a set of standards, as
        well as with the G-8 for information sharing to identify trends
        and specific violations before the goods arrive

        -   Joint US/European Community (EC) exercise to be conducted by
            year's end.

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    -   CTE -- offers program on IPR practices

    -   Partnership growing beyond that

    -   Asking how to better collect information to better model
        legitimate trade?

        -   Barry: Recordation needs process improvement; timing
            currently exceeds the product-to-market window by such a
            significant measure as to be ineffective

        -   Tony: make note of relative situation (compliance vs. fraud)
            "we may screw up our legal import process, but we are
            importing a legal product."

    -   Asst. Comm. Mike Mullen read International Intellectual Property
        Alliance (IIPA) document into COAC record

**[World Customs Organization & Mutual Recognition
Status:]{.underline}**

-   PRIVATE SECTOR CONSULTATIVE GROUP (PSCG) ACTIVITY (WCO)

    -   **[PSCG Roadmap]{.underline}**

        -   The PSCG is completing work on a Roadmap outlining future
            work of the PSCG.

        -   General areas of concern include:

            -   Trade Systems (risk management, Single Window Concept)

            -   Trade Processes (best practices)

            -   People (training, integrity)

            -   Mutual Recognition (Customs controls, AEO Status,
                Integrated Border Management, role of the WCO, appeal
                process and amendment processes and Small and Medium
                Enterprises 's (SMEs))

            -   AEO Benefits

    -   **[100% Scanning]{.underline}**

        -   The PSCG discussed the 100% Scanning law enacted by the
            United States and identified several areas of concern to
            members.

        -   **Action:** The PSCG resolved to send a letter to the
            Secretary General and CBP Commissioner Basham and key
            members of the US Congress expressing its concerns and its
            opposition to the 100% scanning initiative.

    -   **[10 plus 2]{.underline}**

        -   The PSCG also discussed the US CBP "10 plus 2" initiative.
            When the details of the program are available, PSCG members
            will focus on three main areas that impact the WCO:

            -   Data elements to be added,

            -   Definition of elements, and

            -   Process on how to file (cost and Information Technology
                perspective).

    -   **[Mutual Recognition]{.underline}**

        -   The PSCG continues to support Mutual Recognition discussions
            and applauds the recent announcement of mutual recognition
            between the US and New Zealand.

        -   Mutual Recognition of a country's AEO authorization is a
            real benefit to the trade.

        -   **Recommendation:** The SAFE Framework provides for a phased
            approach from bilateral and regional mutual recognition
            agreements to a global mutual recognition program. What is
            needed is a time table and strategy so that this goal is
            realized in the near future.

        -   AC Michael Mullen: Lighthouse Project for secure trade (EC &
            US). Roadmap to achieve mutual recognition by 2009. We can
            anticipate an update mid-January following the Joint Customs
            Cooperation Committee (JCCC) meeting.

    -   **[PSCG attendance and membership review]{.underline}**

        -   A small nominated group was created to review PSCG
            attendance and decide on future membership. It was agreed
            that the group should be kept to around 30 members with
            roughly half divided between companies and associations.
            There is a need to manage the first transition
            (roll-off/roll-on) of members.

        -   Bruce Leeds: COAC representation on WCO has moved from a
            temporary to a permanent standing membership

        -   Some PSCG members will travel to Kazakhstan for meeting with
            the WCO Policy commissions next month.

        -   The next full meeting of the PSCG is likely to be in April
            2008.

**[FUTURE COAC PRE-MEETINGS and MEETINGS:]{.underline}**

**Miami** - February 19^th^ and **February 20^th^\\**

**Washington D.C.** -- May 7^th^ and **May 8^th^**

**Seattle** -- August 13^th^ and **August 14^th^**

**Washington, D.C.** -- **November -- 2008, TBD**

**Commissioner Basham suggested Tucson in lieu of either the Miami or
May D.C. meeting.** Wants us to see how a workable technology can be
used with the Secure Border Initiative.

*Tentative date is Feb. 14, 2008*