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87–096—PDF 2013

S. HRG. 113–215 

THE TRADE FACILITATION AND TRADE 

ENFORCEMENT ACT OF 2013 

HEARING 

BEFORE THE

COMMITTEE ON FINANCE 

UNITED STATES SENATE 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

ON

S. 662 

MAY 22, 2013 

( 

Printed for the use of the Committee on Finance 

COMMITTEE ON FINANCE 

MAX BAUCUS, Montana, Chairman 

JOHN D. ROCKEFELLER IV, West Virginia 

RON WYDEN, Oregon 

CHARLES E. SCHUMER, New York 

DEBBIE STABENOW, Michigan 

MARIA CANTWELL, Washington 

BILL NELSON, Florida 

ROBERT MENENDEZ, New Jersey 

THOMAS R. CARPER, Delaware 

BENJAMIN L. CARDIN, Maryland 

SHERROD BROWN, Ohio 

MICHAEL F. BENNET, Colorado 

ROBERT P. CASEY, Jr., Pennsylvania 

ORRIN G. HATCH, Utah 

CHUCK GRASSLEY, Iowa 

MIKE CRAPO, Idaho 

PAT ROBERTS, Kansas 

MICHAEL B. ENZI, Wyoming 

JOHN CORNYN, Texas 

JOHN THUNE, South Dakota 

RICHARD BURR, North Carolina 

JOHNNY ISAKSON, Georgia 

ROB PORTMAN, Ohio 

PATRICK J. TOOMEY, Pennsylvania 

AMBER COTTLE, Staff Director 

CHRIS CAMPBELL, Republican Staff Director 

(II) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Baucus, Hon. Max, a U.S. Senator from Montana, chairman, Committee 

on Finance ............................................................................................................ 1 

Hatch, Hon. Orrin G., a U.S. Senator from Utah ................................................. 3 

WITNESSES 

Cook, William A., director of worldwide logistics and Customs, Chrysler 

Group, LLC, Rochester, MI ................................................................................. 4 

Cooper, David, global Customs compliance manager, the Procter and Gamble 

Company, Cincinnati, OH ................................................................................... 6 

Silcox, Clark R., general counsel and secretary, National Electrical Manufacturers Association, Rosslyn, VA .......................................................................... 8 

Comstock, Mary Ann, brokerage compliance manager, UPS Supply Chain 

Solutions, Sweet Grass, MT ................................................................................ 10 

ALPHABETICAL LISTING AND APPENDIX MATERIAL 

Baucus, Hon. Max: 

Opening statement ........................................................................................... 1 

Prepared statement .......................................................................................... 25 

Brown, Hon. Sherrod: 

Prepared statement .......................................................................................... 27 

Comstock, Mary Ann: 

Testimony .......................................................................................................... 10 

Prepared statement .......................................................................................... 28 

Responses to questions from committee members ......................................... 34 

Cook, William A.: 

Testimony .......................................................................................................... 4 

Prepared statement .......................................................................................... 42 

Responses to questions from committee members ......................................... 49 

Cooper, David: 

Testimony .......................................................................................................... 6 

Prepared statement .......................................................................................... 52 

Responses to questions from committee members ......................................... 60 

Hatch, Hon. Orrin G.: 

Opening statement ........................................................................................... 3 

Prepared statement .......................................................................................... 63 

Silcox, Clark R.: 

Testimony .......................................................................................................... 8 

Prepared statement .......................................................................................... 65 

Responses to questions from committee members ......................................... 71 

COMMUNICATIONS

American Wire Producers Association (AWPA) .................................................... 81 

Coalition to Enforce Antidumping and Countervailing Duty Orders .................. 85 

Committee to Support U.S. Trade Laws ................................................................ 86 

International Trademark Association (INTA) ....................................................... 88 

National Customs Brokers and Forwarders Association of America, Inc. .......... 90 

(III) 

(1) 

THE TRADE FACILITATION AND TRADE 

ENFORCEMENT ACT OF 2013 

WEDNESDAY, MAY 22, 2013 

U.S. SENATE, COMMITTEE ON FINANCE, Washington, DC. 

The hearing was convened, pursuant to notice, at 10:05 a.m., in 

room SD–215, Dirksen Senate Office Building, Hon. Max Baucus 

(chairman of the committee) presiding. 

Present: Senators Wyden, Nelson, Hatch, Grassley, Crapo, and 

Thune. 

Also present: Democratic Staff: Mac Campbell, General Counsel; 

Bruce Hirsh, Chief International Trade Counsel; and Hun Quach, 

International Trade Analyst. Republican Staff: Chris Campbell, 

Staff Director; and Everett Eissenstat, Chief International Trade 

Counsel. 

OPENING STATEMENT OF HON. MAX BAUCUS, A U.S. SENATOR 

FROM MONTANA, CHAIRMAN, COMMITTEE ON FINANCE 

The CHAIRMAN. The hearing will come to order. 

The American composer, Aaron Copland, once said, ‘‘To stop the 

flow of music would be like the stopping of time itself, incredible 

and inconceivable.’’ 

Like the flow of music, international trade must be orchestrated 

and properly executed. If trade were stopped, it could cripple the 

U.S. economy and cause a ripple effect around the world. 

Today we are focused on critical legislation to reauthorize U.S. 

Customs and Border Protection, or CBP, and Immigration and Customs Enforcement, or ICE. These two agencies orchestrate the flow 

of trade and ensure shipment smoothly through United States 

ports. 

In 1979, when I joined the Senate Finance Committee, total U.S. trade in goods and services was $472 billion. Last year, it was $4.9 

trillion, nearly a 1,000-percent increase. Times have changed, and 

CBP and ICE must modernize to meet the challenges of the 21st 

century. 

On a typical day, 365,000 entries move through U.S. ports. That 

includes more than 3,000 express entries. These goods arrive in 

more than 66,000 truck, rail, and sea containers, as well as hundreds of aircraft carrying express cargo shipments. This is just an 

average. On a busy day, CBP must manage almost half a million 

entries. 

American businesses, ranchers, farmers, and consumers depend 

on the timely movement of all these goods across borders to remain 

2 

competitive. In business, time is money. So CBP and ICE must facilitate trade expeditiously. At the same time, CBP and ICE must 

ensure that our borders are secure. This is the challenge that CBP 

faces given the volume of today’s trade. 

CBP must fulfill its historic mission of collecting duties owed to 

the U.S. Treasury. CBP and ICE also enforce U.S. antidumping 

and countervailing duty laws and ensure that foreign companies do 

not undercut American jobs by circumventing those laws. And CBP 

and ICE stop counterfeit goods from entering the U.S. market. 

In 2002, Congress gave CBP and ICE yet another mandate—to 

keep terrorists and illegal weapons out of the United States. Since 

then, CBP and ICE’s trade missions have been put on the back 

burner as they have pursued new security and law enforcement 

missions. 

But trade and security are not mutually exclusive. CBP and ICE 

must effectively facilitate the flow of trade and ensure our National 

security. To do this, Senator Hatch and I introduced the ‘‘Trade Facilitation and Trade Enforcement Reauthorization Act of 2013.’’ 

The bill, which we introduced in March, gives CBP the tools and 

authority it needs to refocus on its trade mission. This bill creates 

new high-level positions within CBP solely dedicated to trade facilitation and trade enforcement. It allows CBP to target the imports 

that are most likely to violate the U.S. intellectual property, import 

safety, and other laws. And it provides speedy Customs clearance 

and other commercial benefits for importers with a strong record 

of compliance. 

This bill also includes the ENFORCE Act, as marked up by this 

committee last year. The ENFORCE Act gives CBP and the private 

sector the tools they need to combat the evasion of antidumping 

and countervailing duty laws. I want to commend Senator Wyden 

and all of the bill’s co-sponsors for working with us to mark up the 

bill last year, and I am glad that we are able to include it here. 

The Trade Facilitation and Trade Enforcement Reauthorization 

Act also provides important benefits for States like Montana. On 

the average day, CBP processes more than 1,000 entries through 

Montana ports. 

This bill establishes a pilot program for 24-hour port operations. 

The 24-hour pilot program will help CBP determine whether 

round-the-clock operation can help manage the flow of goods across 

the northern border. And the bill helps Montana’s honey producers 

by ensuring their foreign competitors pay the required duties on 

their imports. 

Finally, the bill requires CBP and ICE to do a better job consulting with U.S. businesses that are affected by its policies, as 

well as with this committee and with Congress as a whole. 

The bill, in short, gives CBP and ICE the tools and resources 

they need to refocus on their trade missions. Or, as Aaron Copland 

might say, ensures that international trade is properly orchestrated, executed, and continues to flow. 

[The prepared statement of Chairman Baucus appears in the appendix.] 

The CHAIRMAN. Senator Hatch? 

3 

OPENING STATEMENT OF HON. ORRIN G. HATCH, 

A U.S. SENATOR FROM UTAH 

Senator HATCH. Thank you, Mr. Chairman. I appreciate this 

hearing. 

The long and distinguished history of the United States Customs 

and Border Protection agency dates back to 1789, when the First 

Congress of the United States created its predecessor, the United 

States Customs Service. 

The U.S. Customs Service was the first agency in the Federal 

Government. Its primary function was the collection of import duties, which placed the agency under the direct authority of the Secretary of the Treasury. 

As our Nation evolved, so did the agency’s mission. Most recently, following the terrorist attacks of 9/11, Congress passed the 

Homeland Security Act of 2002 to help improve border security. 

That act reorganized the U.S. Customs Service along with other 

agencies into two new agencies now known as Customs and Border 

Protection, CBP, and Immigration and Customs Enforcement, ICE. 

Since their creation, these two agencies have faithfully carried out 

their dual missions of facilitating trade and protecting our Nation 

from terrorist attacks. 

Today, international trade is a vital component of our economy. 

U.S. imports and exports amount to trillions of dollars. Robust 

international trade enables companies such as Procter and Gamble 

and Oracle to expand their operations around the world and in my 

home State of Utah as well. 

As our future economic growth is increasingly linked to international trade, it is important that Congress works to enhance our 

economic security. That is why Senator Baucus and I have introduced S. 662, the Trade Facilitation and Trade Enforcement Reauthorization Act of 2013. 

Among other things, this bill would improve our ability to protect 

one of the Nation’s most important economic assets, and that is intellectual property. We included in the bill provisions to codify the 

National Intellectual Property Rights Coordination Center, which 

coordinates Federal efforts to combat intellectual property rights 

violations. 

The bill also significantly expands CBP’s tools and authorities to 

protect intellectual property rights at the border by requiring the 

agency to share information about suspected infringing merchandise with rights holders. Our legislation requires CBP to establish 

a process for enforcing copyrights while registration with the Copyright Office is pending, and to publish information about unlawful 

circumvention devices that are seized. 

S. 662 also strengthens CBP’s targeting of goods that violate intellectual property rights, and requires an intellectual property 

rights education campaign for travelers at the border. The bill requires the Customs declaration form that everyone entering the 

country fills out to contain a warning that the importation of goods 

that infringe intellectual property rights may violate criminal and/ 

or civil laws and may pose serious risk to health and safety. 

Now, this seems to me to be an obvious way to raise awareness 

about the dangers of intellectual property rights infringement at no 

real cost to U.S. taxpayers. 

4 

Our bill will do many other things to facilitate trade, including: 

improving the CBP Trusted Trader partnership programs; enhancing the private-sector advisory system so that U.S. importers and 

others involved in trade have a stronger voice in formulating trade 

policy; and ensuring that CBP completes and deploys information 

technology systems such as the Automated Commercial Environment, which fosters trade facilitation through the use of automation. 

Through these provisions, S. 662 will help alleviate unnecessary 

and costly delays at the border. At the same time, it will help to 

prevent unsafe and illegal goods from entering the United States 

as well as protect American businesses from unfairly traded goods 

coming into our country. 

This legislation is long overdue. I want to compliment the chairman for pursing it. S. 662 is a strong bill that will benefit our economy and help ensure that America remains one of the most competitive nations in the world. 

I look forward to continuing our work with CBP to ensure that 

its dual mission of protecting our homeland and facilitating trade 

is successfully fulfilled. At the same time, I hope that the administration will soon nominate a new CBP Commissioner. This agency 

has been without a Senate-confirmed Commissioner since December of 2011, which is far too long. In choosing a new Commissioner, 

I hope the administration will make sure that individual has a 

strong foundation and understanding of international trade. 

Mr. Chairman, I want to thank you once again for holding this 

hearing today. I look forward to hearing from each of our witnesses 

about how S. 662 can help to strengthen and improve the trade facilitation and enforcement functions of CBP and ICE, and I look 

forward to any criticisms as well. 

The CHAIRMAN. Thank you, Senator. I appreciate that. 

[The prepared statement of Senator Hatch appears in the appendix.] 

The CHAIRMAN. We are pleased to begin our hearing today with 

Mr. William Cook, director of logistics and Customs at the Chrysler 

Group. Following Mr. Cook is Mr. David Cooper, global Customs 

compliance manager with the Procter and Gamble Company. The 

third witness, Mr. Clark Silcox, is general counsel and secretary at 

the National Electrical Manufacturers Association. And finally, we 

welcome again Ms. Mary Ann Comstock from Sweet Grass, MT. 

Mary Ann serves as brokerage compliance manager for UPS Supply Chain Solutions. 

Everybody, it is all yours. You know the drill here. Statements 

are included in the record, and we urge you to summarize them for 

about 5 minutes. 

Mr. Cook, you are first. 

STATEMENT OF WILLIAM A. COOK, DIRECTOR OF WORLDWIDE 

LOGISTICS AND CUSTOMS, CHRYSLER GROUP, LLC, ROCHESTER, MI 

Mr. COOK. Thank you. Thank you, Chairman Baucus, Ranking 

Member Hatch, and Finance Committee members. 

I want to begin by thanking you again for inviting Chrysler 

Group, LLC to testify today. Chrysler appreciates being given the 

5 

opportunity to share its views on S. 662, the Trade Facilitation and 

Trade Enforcement Reauthorization Act of 2013. 

My name is William Cook. I am the director of worldwide logistics and Customs for Chrysler. In this capacity, I lead the team responsible for developing logistics strategy, purchasing transportation services, Customs and export compliance, operating Chrysler 

Group Transport, and controlling logistics operations. 

I am also a licensed Customs broker and served on the Advisory 

Committee for Commercial Operations (COAC) of U.S. Customs 

and Border Protection from 2007 until 2010. 

Because of the significant volume of trade involved, coupled with 

the company’s reliance on just-in-time inventory management practices, Chrysler’s ability to import and export vehicles and parts in 

an efficient and timely fashion is critical. 

In 2012, Chrysler handled almost 300,000 entries into the United Sates worth $24 billion. By volume, 70 percent of these entries 

were production parts, and the remainder were vehicles. Chrysler 

also handed 1.2 million entries into Canada worth almost $12 billion and 55,000 entries into Mexico worth $5.5 billion. 

Even minimal delays can have serious consequences for the company, and now more than ever, with demand sky-high for Chrysler 

products and fierce competition in the auto sector, we cannot afford 

any production delays. As such, it has been Chrysler’s practice to 

take advantage of every opportunity to reduce the time it takes for 

the company’s shipments to cross the border and, more generally, 

to reduce our direct and indirect Customs-related costs. 

Therefore, Chrysler is a charter member of the Customs–Trade 

Partnership Against Terrorism (C–TPAT) and Importer SelfAssessment (ISA) programs. Chrysler also takes advantage of all 

border crossing privileges that are provided, including the Free and 

Secure Trade, or FAST, program. We are also members of the 

Automotive and Aerospace Center of Excellence and Expertise, the 

CEE, and have participated in a number of CBP pilots. 

Additionally, as a member of CBP’s Trade Support Network, 

Chrysler provides direct input to the agency regarding the design 

and development of Customs modernization initiatives including 

the Automated Commercial Environment (ACE). My full statement 

on S. 662 was previously submitted; however, in the interest of 

time, today I will only address two key issues for Chrysler. 

The first issue is the Automated Commercial Environment. Like 

the committee, Chrysler looks forward to the day when ACE is 

fully up and running and appreciates the support for the development of ACE reflected in the bill. 

Based on our discussions with CBP, it appears that the agency 

is making real progress in rolling out the ACE system. However, 

the inclusion of ACE-related provisions in the reauthorization legislation and the committee’s exercise of its oversight responsibilities 

will help ensure that CBP completes the roll-out in a timely fashion. 

Chrysler was one of the original 41 participants in the 2004 pilot. 

Despite the fact that it has yet to be fully implemented, we already 

see tremendous benefits from the ACE system and expect those 

benefits to increase as additional elements of the system are rolled 

out. 

6 

Of particular interest to Chrysler is the International Trade Data 

System (ITDS) or ‘‘single window’’ concept, which will allow Chrysler to use ACE for all of its entries. Having to file entries in both 

the Automated Commercial System (ACS) and the ACE systems is 

administratively burdensome and requires careful monitoring of 

Chrysler’s post-entry work to ensure that it is properly done. 

We understand the next ACE roll-out will relate to export reporting, which could improve the company’s ability to manage its exports and duty drawback filing, and Chrysler will volunteer to participate in any export reporting pilot program. 

The second issue is the pilot program to designate 24-hour commercial ports of entry. Chrysler was pleased to see the language in 

the proposed legislation requiring CBP to launch this pilot program 

and designate more 24-hour commercial ports of entry. 

Since we rely so much on just-in-time inventory practices, keeping more of the U.S. land border commercial ports of entry open 24 

hours a day will help to reduce wait times at the border, facilitate 

trade, and significantly benefit Chrysler and many other U.S. companies. 

In conclusion, Chrysler welcomes the introduction of S. 662 and 

hopes that it is taken up for consideration by the committee and 

on the Senate floor as soon as possible. Like many industries, the 

auto sector is extremely competitive. Many of the measures included in this legislation will help to streamline and make more efficient Customs processes and procedures. 

While savings on a single entry associated with these proposed 

improvements may not necessarily be large, for companies like 

Chrysler, with our combined 400,000 import and export transactions, the total savings would be significant. Thank you again for 

this opportunity. 

The CHAIRMAN. Thank you, Mr. Cook, very much. 

[The prepared statement of Mr. Cook appears in the appendix.] 

The CHAIRMAN. Mr. Cooper? 

STATEMENT OF DAVID COOPER, GLOBAL CUSTOMS COMPLIANCE MANAGER, THE PROCTER AND GAMBLE COMPANY, 

CINCINNATI, OH 

Mr. COOPER. Chairman Baucus, Ranking Member Hatch, members of the committee, thank you for inviting P&G to testify here 

this morning. 

My name is David Cooper. I am the global Customs compliance 

manager at Procter and Gamble. I also work closely with P&G’s 

global brand protection team, which is responsible for protecting 

consumers, retailers, and our brands from the threat of counterfeit 

goods. 

Ninety-nine percent of American households contain at least one 

P&G product, and over 90 percent of the products we sell in the 

U.S. are manufactured in one of our 33 U.S. facilities, including our 

new Box Elder facility in Utah. 

More than 4.6 billion times a day our trusted brands touch the 

lives of consumers in virtually every country. I would like to briefly 

discuss P&G’s supply chain and brand protection issues as background for why the Trade Facilitation and Trade Enforcement Reauthorization Act is important to us. 

7 

P&G has a global supply chain. We purchase raw materials, 

equipment, packaging, and other inputs from thousands of suppliers in the United States, but imports from foreign suppliers play 

a key role in our U.S. manufacturing capabilities as well. 

Direct P&G imports amount to more than 35,000 entries each 

year with a value of roughly $3 billion. On an average day, we 

manage almost 100 entries at a value of more than $8 million. The 

ability of these shipments to quickly and efficiently pass through 

the Customs and Border Protection import process is critical to our 

U.S. manufacturing operations. 

As important as efficiency is to us, our supply chain is more than 

a logistical or operational issue. Millions of times every day, imported materials are used by U.S. consumers as part of the Pampers diapers we put on our children, the Gillette razor blades we 

use to shave, the Nyquil cold medicine we take, and the Tide detergent we use to care for our clothes. 

The safety of P&G products is our number-one priority, and we 

build our supply chain around that fact. We have strict policies 

with our partners at all stages of our supply chain to ensure that 

imports are safe for consumers, and that finished products that 

cross into the U.S. are genuine P&G brands and not counterfeits. 

Protecting consumers against counterfeits is a business and consumer protection imperative for us. Counterfeits are inferior products that undermine consumer trust in our brands. They are often 

sold at artificially low price points which affect our legitimate sales 

and profits, eroding the significant investment P&G makes in research and development. 

P&G’s relationship with CBP on intellectual property rights is a 

great example of a public/private partnership that is critical to an 

effective IPR enforcement regime. We work with CBP on 70 to 80 

counterfeit cases every year by offering our expertise and cooperation to identify and investigate counterfeit products. 

Each year we conduct training sessions for hundreds of law enforcement and CBP officers on how to distinguish genuine P&G 

products from counterfeits. 

P&G applauds the efforts of this committee in addressing trade 

facilitation and intellectual property protection in S. 662. We support the bill and find particular value in the following provisions. 

Section 201 requires the Commissioner of the CBP to consult 

with private- and public-sector stakeholders to ensure CBP partnership programs provide companies commercially meaningful and 

measurable benefits. P&G is a Tier II C–TPAT company and, as 

such, we anticipated receiving measurable benefits for our participation in the program. We support 201 although, to date, we have 

not seen these benefits apply in a measurable way to our entries. 

Section 202 authorizes a trusted importer program that will be 

a powerful trade facilitation tool, particularly the provision that allows pre-clearance of imports for companies that demonstrate the 

highest levels of security and compliance. 

Section 206 provides CBP the resources and time line required 

to fully implement the Automated Commercial Environment program. If all 30 aspects of this program are fully implement as intended in the 1993 Customs Modernization Act, importers like 

8 

P&G will benefit from a simpler, more transparent, more efficient 

Customs experience, facilitating legitimate trade. 

Section 231 codifies the National Intellectual Property Rights Coordination Center, which P&G strongly supports. P&G has worked 

closely with the IPR Center on a number of critical counterfeit investigations and has benefitted greatly from coordinated enforcement efforts. 

Section 241 authorizes CBP personnel to seek and receive assistance from experts in the private sector to quickly ascertain whether a suspect shipment is genuine or counterfeit. We believe CBP officers should be allowed to share product samples or identifying 

packaging information with rights holders like P&G as quickly as 

possible. This would enable CBP to officially authenticate legitimate goods so they can make it to consumers, or seize counterfeit 

goods to rightfully prevent their entry into the market. 

Mr. Chairman, Senator Hatch, thank you again for the invitation 

to testify this morning. P&G values our partnership with you and 

this committee on these issues. We also value our partnership with 

CBP, and we believe this bill will help CBP keep our country safe 

while allowing globally engaged companies like Procter and Gamble to be competitive here in the U.S. and throughout the world. 

Thank you. 

The CHAIRMAN. Thank you, Mr. Cooper, very much. 

[The prepared statement of Mr. Cooper appears in the appendix.] 

The CHAIRMAN. Mr. Silcox? 

STATEMENT OF CLARK R. SILCOX, GENERAL COUNSEL AND 

SECRETARY, NATIONAL ELECTRICAL MANUFACTURERS ASSOCIATION, ROSSLYN, VA 

Mr. SILCOX. Good morning, Chairman Baucus, Ranking Member 

Hatch, members of the committee. Thank you very much for inviting me to appear before the committee to address the trade enforcement provisions of S. 662. 

I am Clark Silcox, general counsel at the National Electrical 

Manufacturer’s Association, NEMA. I am speaking today primarily 

to section 241 of the bill, but I noticed that sections 231 and 242 

through 258 are intended to enhance IPR enforcement, and we endorse and support those provisions as well, particularly the provision in section 231 about the IPR Center in Crystal City that Senator Hatch mentioned in his remarks. 

NEMA represents approximately 430 North American manufacturers of electrical equipment used in the generation, distribution, 

and control of electricity. The product scope of our organization is 

quite broad, with over 50 product categories of electrical products. 

That includes electrical products used in factories, commercial 

buildings, apartments, and homes, as well as hospitals, schools, 

and government buildings. 

It also includes some consumer products sold at retail as well. 

Our member companies have business operations and employees in 

all 50 States, and they have either headquarters or factories in the 

States of every member of this committee. 

Of interest to the committee members, NEMA members that 

have been victims of electrical product counterfeiting have headVerDate Nov 24 2008 19:15 Mar 28, 2014 Jkt 000000 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 R:\DOCS\87096.000 TIMD
9 

quarters and/or plants in New York, Ohio, Pennsylvania, Georgia, 

North Carolina, Florida, and New Jersey. 

Product safety is a major concern of our industry, and many electrical products are third-party tested to the standards of thirdparty independent labs. Counterfeit electrical products are frequently found to be substandard either in terms of their safety or 

their product performance characteristics. 

One of our member companies, with headquarters and manufacturing in Illinois, a few years ago learned that it had a counterfeiting problem, when it was named a defendant in a product liability lawsuit in South Carolina because of a defective counterfeit 

product with its name on it. 

Annual Customs data has routinely recognized our products in 

the top five seizure categories for health and safety products. The 

counterfeit electrical products that we have found in this country 

include, for example, residential circuit breakers, medium-voltage 

circuit breakers, extension cords, batteries, ground rods, light 

bulbs, receptacles, ground fault circuit interrupters, electrical connectors, and adapters; and outside the United States there are a 

number of other electrical products we have seen that are counterfeit. 

Members of our industry along with the testing and certification 

industry, whose certification marks have been counterfeited as 

well, have worked diligently with U.S. Customs at the ports to help 

them identify suspect counterfeit products, educating them where 

the genuine products are made and where the counterfeit products 

come from. 

I have been personally involved in several of those training programs, and we appreciate the public/private partnership that has 

combined our resources to achieve some very good results in the 

past. 

I hold, today, in my hand a counterfeit circuit breaker and counterfeit packaging that that circuit breaker came to the United 

States in. The genuine product is made here in the United States; 

it is made in Nebraska. 

Knowing that fact, which is something that we inform the ports 

officials about, a port official seeing that product come off a ship 

or an airplane from China ought to be able to make the determination that the product is counterfeit and take action. That decision 

is reinforced when the packaging that comes in from China says 

‘‘Made in the USA’’ on it, as this counterfeit package does. If there 

is any doubt though, brand owners are in the best position to determine quickly if the product is genuine or a fake. 

In the civil litigation that ensued over the counterfeit circuit 

breakers in this country, the typical defense asserted by the importers was—despite the fact that it said ‘‘Made in the USA’’ on the 

packaging—we were fooled, we could not tell. 

So, in terms of trade facilitation and timeliness, if Customs is in 

any doubt as to the authenticity of the product, the manufacturer 

is in the best position to evaluate. Customs should give them a 

deadline to respond, and both trade facilitation and trade enforcement are served and supported at the same time. 

10 

NEMA battery manufacturers, for example, make batteries for 

the domestic market here, but they make batteries for the Asian, 

European, and African markets overseas. 

The labeling of the counterfeit batteries can successfully simulate—and I provided an example to you—the genuine label, so it 

can be very difficult to tell the difference by visual inspection. 

A look under the hood, so to speak, is sometimes required to 

make the ultimate determination of whether the battery is genuine 

or counterfeit, and it can be secured by an X-ray of the battery cell. 

And you can see the structural differences between a genuine battery and a fake battery by looking under the hood with an X-ray. 

But the manufacturer is in the best position to do that and work 

with Customs to facilitate trade. 

Historically, as part of their port training programs, NEMA battery manufacturers have told the ports, if you need our assistance, 

send us a product for study and we will have a response for you 

within 48 hours, and we did. Customs has 30 days to make a determination whether the goods it is holding are genuine or counterfeit. 

Customs officers were forced to suspend that part of the public/ 

private partnership a few years ago, when they were reminded of 

an agency legal opinion that port officials violated the Trade Secrets Act if they disclosed unredacted images or samples of the 

product to trademark owners whose marks were on the suspect 

product. 

This was a curious interpretation of trade secrets because, if the 

product is counterfeit, the importer has no legal right to sell the 

product, and a claim of trade secrets makes absolutely no policy 

sense. If the product is genuine, the trade secrets inherent in the 

product belong to the trademark owner, the manufacturer who 

made it. 

So I have outlined in my written remarks the legal background 

and the history of the problem that section 241 is intended to affect. The intent of section 241 is to restore that relationship between ports and trademark owners so that the ports can reach out 

to brand owners quickly to ascertain if the product is genuine or 

counterfeit, to both facilitate and enforce trade laws. Thank you 

very much. 

The CHAIRMAN. Thank you, Mr. Silcox. Very interesting. 

[The prepared statement of Mr. Silcox appears in the appendix.] 

The CHAIRMAN. Ms. Comstock? 

STATEMENT OF MARY ANN COMSTOCK, BROKERAGE COMPLIANCE MANAGER, UPS SUPPLY CHAIN SOLUTIONS, SWEET 

GRASS, MT 

Ms. COMSTOCK. Chairman Baucus, Ranking Member Hatch, and 

members of the Finance Committee, on behalf of UPS, I appreciate 

the opportunity to discuss the Trade Facilitation and Trade Enforcement Reauthorization Act of 2013. 

My name is Mary Ann Comstock. I am a native Montanan who 

has been involved in the Customs brokerage business since 1971. 

I live and work in Sweet Grass, MT, and I obtained my broker’s 

license in 1978. I am currently a Trade Compliance Manager for 

UPS Supply Chain Solutions. 

11 

In today’s trade environment, UPS deals with complex, divergent 

processes when we move goods across international borders. These 

border barriers raise costs and slow down trade. An efficient, innovative Customs clearance process coordinated between the U.S. 

Government and its agencies, along with its global trading partners, would remove many of the bottlenecks found in global supply 

chains. 

I would like to focus on four topics today, the first of which is 

the most important to UPS. UPS strongly supports the increase in 

the de minimis threshold of section 321. The current de minimis 

value was set at $200 in 1993, and the Trade Act of 2002 set the 

personal exemption for travelers returning to the United States at 

$800. 

This is an appropriate benchmark for increasing the de minimis 

value, and we believe the increase offers significant benefits to 

CBP, the trade community, and the importing public. We also applaud CBP for the increase in the informal entry value to $2,500, 

as this provides benefits to all importers, small and large. 

The Automated Commercial Environment, or ACE, has allowed 

CBP to focus their efforts on security and high-risk targeting, and 

this value simplifies the entry release process and lowers the cost 

of importing goods. 

The second topic relates to the establishment of a Certified Importer Program, a trusted trader program that would be recognized 

by all U.S. agencies with border clearance responsibilities. A wellbalanced CIP will simplify the clearance process and reduce border 

holds for highly compliant importers. It is critical to ensure that 

any CIP provide concrete benefits and incentives to those certified 

entities, including fast-track processing through Customs. 

The account-based management concept was developed by CBP 

in 1994 to work with importers and brokers handling significant 

entry volumes to achieve a high level of compliance, better managing trade. The program should be revitalized to include commercial, security, inter-agency, and information technology account 

components. The new Centers of Excellence and Expertise should 

be well-positioned to support a CIP program. 

The third topic focuses on the need for a ‘‘single window’’ (one 

government at the border) program. We encourage the U.S. to finalize the development and implementation of the International 

Trade Data System, creating a single window for processing goods 

inbound to the U.S. 

The ITDS process will provide trade data to partner government 

agencies, hopefully well in advance of arrival. The PGA’s must 

have funding resources to update their internal systems, to effectively communicate in the ACE environment. 

ITDS will provide paperless processing to streamline the admission of those goods. It allows the PGA’s to work from centralized 

locations where they can receive, review, and maintain data on imported goods while providing trade facilitation, safety, and security 

oversight. 

We hope the PGA’s will provide speedy data responses just as 

CBP does today, 24 hours a day. 

The final topic regards the 24-hour land border commercial port 

pilot program. I believe this proposal would benefit Montana and 

12 

other border States. State and local governments must be willing 

to commit resources and infrastructure improvements to support 

the commercial designation of the port of entry. 

This is a trade facilitation opportunity that would benefit importers by cutting down on transit times and provide local economies 

a boost from increased traffic. The proposal also fosters dialogue 

with Canada and Mexico, our closest trading partners. 

UPS thanks the committee for your continued support and firm 

deadlines imposed for the ACE project. CBP is challenged to meet 

mission responsibilities, and a key component is information technology. It is imperative that the ACE project is completed. 

In closing, UPS commends the committee for their renewed focus 

on trade. Limiting cross-border friction in the supply chain will 

boost global competitiveness to U.S. businesses and reduce operational costs. 

This bill provides CBP the tools to facilitate legitimate trade 

while enforcing our Nation’s trade laws. Security and trade facilitation should be of equal concern. Thank you again for allowing me 

the opportunity to testify on this critical issue. 

The CHAIRMAN. Thank you, everybody, very much. 

[The prepared statement of Ms. Comstock appears in the appendix.] 

The CHAIRMAN. The question that comes across my mind is—I 

appreciate the various comments that you have all made about provisions in this legislation you think help facilitate trade, and all 

four of you have a lot of experience in this area. 

Among either the provisions you talked about or other provisions 

in the bill designed to help facilitate trade, which ones are you kind 

of most worried may not happen as we would like them to happen 

or proceed? 

You know the agencies, you know your business, you know the 

practicalities, and you know the provisions that are in this legislation. Obviously, we are trying to help facilitate trade here. 

But just based on your experience and your thoughts, which ones 

of these might you just kind of highlight a little bit and say, this 

is going to need a little extra help; you are going to have to provide 

a little more oversight, whether it is CBP or whomever, to make 

sure this works as well as intended? I would just be curious of 

which ones might cross anybody’s mind. 

I will start with you, Mr. Cook. 

Mr. COOK. Okay. 

The CHAIRMAN. Or it can be a little softer, ordered by what is 

really, really important and prioritized a little bit. 

Mr. COOK. Well, I think that what I pointed out was the full implementation of the Automated Commercial Environment. 

The CHAIRMAN. Right, and most of you have. 

Mr. COOK. And I think that that, as with any massive system 

and business process implementation, is a huge undertaking. But 

I think that that is, in our view, a very key and critical area to 

complete, to adequately fund, to make sure that it achieves what 

objectives have been stated all the way along. 

The CHAIRMAN. Could you focus a bit on that, because you think 

it is so important that it be up and running and fully implemented. 

That is why you are focusing on that. 

13 

Mr. COOK. Yes, because today—and I pointed out in my oral 

statement—we are operating in two environments. We have been 

very engaged in all of the pilots on ACE, and so I think we are a 

very big participant, but we still have things we have to do in the 

old environment. And, from a business process perspective, it exposes us to different types of risks to try to operate in both environments. 

The CHAIRMAN. Right. Mr. Cooper? 

Mr. COOPER. I think the two most important aspects of the bill 

to Procter and Gamble focus around the trade facilitation having 

measurable benefits from participating in the government programs and CBP programs. So we believe those programs are wellintended and have the right interest at heart, but we need to make 

sure that it is a measurable benefit for doing the work that is required to participate in it. 

The other section of the bill that we believe is equally important 

is the quick facilitation/resolution of IPR issues and counterfeit 

products as they cross the border, to enable CBP to quickly engage 

with the rights holders to understand if it is a legitimate product 

or not. 

The CHAIRMAN. So, you think the provisions are pretty good as 

long as they are well-implemented? 

Mr. COOPER. Yes, exactly. 

The CHAIRMAN. All right. Mr. Silcox? 

Mr. SILCOX. I spoke directly to the IPR provisions, which are obviously of extreme importance to us for the health and safety reasons I alluded to. 

The CHAIRMAN. You talked about section 241 and using manufacturers—— 

Mr. SILCOX. Right. 

The CHAIRMAN. I am sorry. Go ahead. 

Mr. SILCOX. And, in the case of 241, I just would like to see that 

that is, in a sense, self-executing at the ports so that it is not a 

matter of interpretation anymore. It seems like a very commonsense, practical policy solution to a problem that has arisen. 

I would also mention that, as it became known that I was going 

to be here today, I had calls from a number of companies saying 

to me that they support the ENFORCE Act part. I did not address 

that, but I do not want to leave it unspoken that there is nothing 

else that we are interested in. 

We had our entire trade staff—we have two trade people on our 

staff at NEMA who took a look at the bill and basically said, this 

is a good bill, the whole package is a good bill. 

The CHAIRMAN. Okay. Good. Ms. Comstock? 

Ms. COMSTOCK. Thank you, Senator. I think the International 

Trade Data System and bringing the partner government agencies 

on so that they can provide clearance in advance of goods arriving 

at the border is critical. 

In order to get to the ITDS process, we have to have ACE complete, we have to have entry release done in the ACE system. And 

I think, if you can get those two things done and worked out in a 

couple of years—because CBP is enforcing 47 other government 

agency requirements, they have to rely on those other government 

14 

agencies to provide feedback to admissibility. It is going to be very 

important to have that taken care of properly. 

The CHAIRMAN. A quick question, Mr. Silcox: where are all these 

counterfeit products coming from? 

Mr. SILCOX. I know in the case of my industry, I would say pretty close to 100 percent are coming from China. 

The CHAIRMAN. And it is electrical? 

Mr. SILCOX. Yes. The manufacturing skill set exists there that 

does not exist in a lot of other parts of the world. 

The CHAIRMAN. Do you know where in China? 

Mr. SILCOX. It is primarily in the coastal and the southern region, but what we are witnessing is that a lot of the production is 

starting to move further and further from the coast. 

The CHAIRMAN. Further west? 

Mr. SILCOX. Yes, as we try to track it down. That has occurred 

over about a 10-year period, that transition. 

The CHAIRMAN. Any estimate as to what the volume might be? 

Mr. SILCOX. It is going to vary from year to year. One of the 

things that I like to tell my CEO and others in our industry is that 

we have actually had some success here in the United States, and 

part of that has been working with Customs, but also part of it is 

working with our distribution channel to tell them not to buy these 

products and to explain it to them. 

We have had some success, I think, at least domestically, in reducing the demand. But in our industry we know, globally, it is in 

the probably hundreds of millions of dollars a year if not a billion. 

It is difficult to come up with numbers on something like that. 

The CHAIRMAN. Well, my time has expired, and I would like to 

ask Mr. Cooper the same question about his company, but I will 

get to that later. Thank you. 

Senator Hatch? 

Senator HATCH. Go ahead. 

The CHAIRMAN. Mr. Cooper, where do the products that you are 

most worried about come from? 

Mr. COOPER. P&G is a fast-moving consumer goods product company, and, as with any company in this industry, we experience 

counterfeits. They come from a variety of places. There is no specific expertise that is coming from one part of the world. 

We have a broad variety of products that we manufacture, and 

those counterfeits can come from literally anywhere. 

The CHAIRMAN. Are there certain products you are most concerned about? 

Mr. COOPER. If we could, we would like to take that discussion 

outside of the hearing. We do not like to discuss specific counterfeit 

products and efforts in a public forum. We would be happy to follow up with your office. 

The CHAIRMAN. I would appreciate that. Okay. Thank you very 

much. 

Senator Hatch? 

Senator HATCH. Well, thank you, Mr. Chairman. Mr. Cooper, we 

are very pleased that you chose Utah as the home for the first new 

U.S. plant in over 40 years. It means a lot to us. I understand the 

plant is a major distribution center and there are plans to continue 

to grow the plant for years to come. 

15 

Now, even though the plant in Box Elder is not specifically 

linked to international trade, in my opinion its future success is. 

How important is international trade to your company’s ability to 

maintain and grow jobs in Utah and in your other plants across the 

country? Speak for other manufacturers as well. 

Mr. COOPER. Senator, trade is a critical part of P&G’s operations, 

and it does support all of our manufacturing in the U.S., including 

in Utah. So some of the equipment we have in Utah and some of 

the raw materials that come into the Utah plant are coming across 

borders. 

The trade—or crossing a border, imports and exports—is just one 

aspect of how important trade is to P&G. In the U.S., one out of 

every five jobs that we have in the U.S. supports our global businesses. In Ohio, it is two out of every five. 

My job is a perfect example. I am the global Customs compliance 

manager for Procter and Gamble. I have a team of 12 people whom 

I work with in Cincinnati, OH, and we are specifically supporting 

our global operations, which involves all of the import and export 

of our company. 

Senator HATCH. Well, Mr. Cook, as you know, many counterfeits 

are produced and distributed by criminal organizations. They use 

the profits from these activities for other illegal ventures. One of 

the key factors in successfully stopping these organizations is the 

close collaboration between the CBP Commissioner and the Director of Immigration and Customs Enforcement. 

Now, do you think the development of a biannual joint strategic 

plan as mandated by this Act will be of assistance to these two 

agencies in fulfilling this particular mission? 

Mr. COOK. Yes, I do. We stated in my written statement that we 

believe that the strategy developed will help and will provide the 

work plan between the agencies, so we look forward to that. 

Senator HATCH. All right. Mr. Silcox, the National Intellectual 

Property Rights Coordination Center was created to coordinate the 

Federal Government’s efforts on intellectual property rights enforcement and to provide a centralized resource for the private sector to exchange information with the government. 

Can you please discuss your association’s experience in working 

with the IPR Coordination Center? 

Mr. SILCOX. It has been very good, Senator Hatch. I will say our 

view is that the IPR center has been one of the best things, particularly in the IPR space, that the Federal Government has done. 

We participate in seminars and educational programs at the IPR 

center. Our member companies come in and, when they believe 

they have counterfeiting problems with their products, they will 

come to the IPR center as that centralized resource where information sharing occurs among the multiple agencies that are there and 

present, and it helps facilitate building a coordinated enforcement 

plan with respect to that product and a strategy for enforcement 

because that group is there in Crystal City. 

Senator HATCH. Thank you. Ms. Comstock, just a question for 

you. As you note in your testimony, it is critical for the United 

States to lead by example in the area of trade facilitation and enforcement. I certainly agree with you. 

16 

As we continue our efforts to improve trade facilitation through 

negotiations at the World Trade Organization, negotiations with 

the European Union, and of course negotiations to create the 

Trans-Pacific Partnership, it is even more important that the 

United States sets the standard worldwide and lives up to it. 

Can you describe how quick enactment of this bill will help us 

to achieve that goal? 

Ms. COMSTOCK. Well, as you know, my company is a global company, and I believe that leading by example and having good quality trade facilitation at home helps us to be able to provide to our 

global trading partners the incentive, if you will, to quickly build 

trade in their corridors as well. 

Again, if you have good trade facilitation, your economies grow, 

and I think that the most important thing here is that we are globally competitive. And having this bill push that agenda is going to 

be very important, not only for UPS, but for CBP, and it provides 

a good standard framework for the SAFE Port Act and other global 

initiatives. 

Senator HATCH. Thank you. Mr. Cooper, as you know, we included provisions in this bill to make sure that the partnership programs provide real and meaningful benefits to company participants. 

Of course, one of the reasons why we included these provisions 

is to encourage companies like yours to join these partnerships and 

be active participants in government efforts to stop illegal and dangerous imports from coming into our country, into the United 

States. 

You note that you have not always seen measurable benefits 

from these programs to date. Let me just ask you, what type of 

benefits would your company like to see from these programs going 

forward? 

Mr. COOPER. Thank you. I think there are three primary benefits 

that we would like to see. Faster clearance time, fewer inspections 

for trusted traders, and expedited inspections for when that does 

occur. 

To date, we believe those principles are in place, but there is no 

specific way to measure them, and that is really the piece that we 

would like to get to, is to understand how the effort that goes into 

joining these programs then pays off. 

Senator HATCH [presiding]. All right. Well, I have a lot of other 

questions, but I will submit them. 

Senator Wyden, we will call on you. Excuse me, Senator Thune 

was here first. I did not notice you came back in. 

Senator THUNE. Thank you, Mr. Chairman. Thank you for holding the hearing today, and I want to thank our witnesses for their 

willingness to testify. 

Today, this is a hearing that recognizes that trade is not only 

about bilateral and multi-lateral agreements, it is also about ensuring that our laws allow for the easiest possible movement of goods 

and agricultural products, while at the same time enforcing international trade commitments. That is why the bill that we are discussing today is aptly entitled the Trade Facilitation and Trade Enforcement Reauthorization Act. 

17 

This is legislation that is designed to expedite trade flows, while 

also improving enforcement of our trade laws. I want to thank you, 

Mr. Chairman, and Chairman Baucus, for including in this legislation two provisions that are of importance to me. 

First, the bill includes a provision designed to stop the evasion 

of anti-dumping duties by importers of Chinese honey. Specifically, 

the bill includes safeguards to stop the trans-shipment of honey, 

Chinese honey, through other nations, which some have labeled 

‘‘honey laundering.’’ 

Senator Wyden, who is here, and I actually held a hearing on 

evasion of our trade laws in May of 2011, at which Richard Adee 

of Adee Honey Farms in South Dakota and others testified regarding the difficulties that Customs and Border Protection faces when 

attempting to enforce our trade laws. 

While more needs to be done in this area, I am hopeful the provisions in the bill will give CBP the additional tools that they need 

to stop the circumvention, I should say, of our trade laws. 

Secondly, I appreciate that the bill we are discussing today in- cludes an increase in the de minimis threshold from $200 to $800. 

This provision mirrors legislation I introduced earlier this year 

along with Senator Wyden and is supported by a broad range of 

businesses and trade associations including, as we heard earlier, 

UPS. 

It is a provision that I believe will do a great deal to facilitate 

trade, and I am glad it is included in the bill. So I want to, again, 

thank Chairman Baucus and you, Ranking Member Hatch, for your 

work on this bipartisan legislation. I look forward to marking it up 

in committee later this year. 

I just wanted to, if I might, ask a couple of questions about some 

of those provisions. 

Ms. Comstock, in your testimony you discuss four issues of interest to UPS in this bill, but you note that one issue is of utmost importance to UPS, and that issue is the increase in the de minimis 

threshold from $200 to $800. 

For those who may be unfamiliar with this provision, could you 

elaborate on why it is so important to express delivery companies 

such as UPS and how it would facilitate trade? 

Ms. COMSTOCK. Sure. The current $200 was put into place in 1994, and that $200 amount for section 321 allows for goods to 

cross the border without a formal entry or even an informal entry. 

It has to be manifested, it has to meet all of the FDA or EPA or 

any other standards, any other government standards, but it moves 

the goods through the process very quickly. 

For an express courier, as UPS is and a number of my competitor 

colleagues, that is one way to shrink the haystack, if you will, to 

get the very small shipments out of the way so that we can concentrate on the larger shipments. 

I also think it benefits the U.S. consumer. Our economies are becoming more and more global. People are ordering off the Internet. 

I know that I have ordered off the Internet. I am not always sure 

where it comes from. I have a feeling other people feel that way 

too. 

But if I am buying something within my price range, it might be 

$200 or $300. If I do not have to make an entry on it, I think that 

18 

is a good thing for the small and medium businesses as well as the 

individual consumer. 

So I think it is going to simplify trade, and it will expedite trade. 

Senator THUNE. Just as a follow-up regarding that provision, 

your testimony calls for the de minimis level to be indexed to inflation going forward, a provision that we include in the bill that I 

have introduced with Senator Wyden, but it is not included in the 

bill that we are discussing today. 

Ms. COMSTOCK. I am familiar with that. 

Senator THUNE. Our bill also includes a sense of Congress calling 

on USTR to encourage other nations to follow our example by also 

improving their de minimis thresholds. 

Ms. COMSTOCK. Absolutely. 

Senator THUNE. Would you support these additional provisions, 

the inflation adjustment and the sense of Congress, being added to 

the bill that we are discussing, and, in your view, would they make 

the bill better? 

Ms. COMSTOCK. Yes, they absolutely would, and I think my written testimony does suggest an indexing of that value, and I certainly support having our trade partners have similar thresholds. 

Senator THUNE. I just want to ask one other question, if I can, 

on the other subject, and that is that the GAO has reported that 

duties related to anti-dumping and countervailing duties sometimes go uncollected, in large part because, unlike other countries, 

we do not assess these duties at the time of import. 

Under our retrospective system, it can take years before the 

Commerce Committee tells CBP how much to collect. As I mentioned earlier, I am acutely aware of this problem because my 

State of South Dakota is a top honey-producing State, and duties 

imposed to stop the dumping of Chinese honey have too often gone 

uncollected. 

To address the problem, the GAO and others have recommended 

that we change to a perspective duty assessment system that 

would enable CBP to collect these duties upon import like we do 

for regular duties. 

You do serve on the Advisory Committee on Commercial Operations which advises CBP on these matters, and I would appreciate 

your view as to whether a prospective system would improve CBP’s 

ability to enforce our trade laws. What are the problems with the 

current retrospective system, and do you believe a prospective system would make it easier to get these duties collected? 

Ms. COMSTOCK. I would be glad to state that the 12th term of 

the COAC, the advisory committee, did recommend to CBP that we 

should move away from a retrospective system to a prospective system, simply because there is difficulty in being able to manage the 

costs. 

On average, it takes 31⁄2 years for the Department of Commerce 

to determine what dumping duties should be collected, and that is 

just not quick enough for any average business. 

The prospective system, which means you are going to set a duty 

rate when the goods start coming in and you are going to change 

and modify that duty rate in a prospective way, that allows you to 

collect the duty right then and there. 

19 

It does not wait 31⁄2 years for you to determine what the duty 

is. It is going to give CBP the ability to collect the duty right then 

and there. 

One of the issues that I think they have in the evasion of duties 

is that, because duties are not known for so long, it is almost an 

incentive to evade. I think if we can provide predictability in our 

global supply chain, that will be helpful. 

We do not have predictability for U.S. businesses today. I do not 

see how you could build a business model not knowing what your 

duties are going to be for 31⁄2 years. 

Senator THUNE. A lot of it goes uncollected, and if we could get 

that change made, we would have a lot of happy honey producers 

in South Dakota. 

Ms. COMSTOCK. Having been a honey producer myself, I would 

support that. 

Senator THUNE. All right. Thank you. Thank you, Mr. Chairman. 

My time has expired. Thanks. 

Senator HATCH. That is good. 

Senator Wyden? 

Senator WYDEN. Thank you very much, Senator Hatch. While he 

is here, I just want to tell Senator Thune how much I have enjoyed 

working with him on the ENFORCE legislation and also the legislation, what we call the de minimis legislation, the threshold for 

imports that are not subject to tariff. Clearly both of those bills are 

going to be of real value in the effort to create more good-paying 

jobs in South Dakota, Oregon, and across the country, and I appreciate it. 

I also want to thank Senator Hatch for his help. He and Senator 

Baucus have been very helpful as we move, particularly, to look at 

the ENFORCE Act and to deal with the variety of issues that have 

come up as the debate goes forward, and I am very grateful, Senator Hatch, to you and Senator Baucus for including it in this legislation we consider today. 

I think for our panel members, what you are getting is a sense 

of how importantly this committee regards international trade. 

This is one of the economic engines of our country that allows us 

to, in effect, make things here, grow things here, add value to them 

here, and then ship them somewhere. That is in a sense a summary of what the potential is in terms of the American economy 

and global trade. 

When we look at some of the challenges, for example Customs 

and Border Protection, they are doing extremely important work as 

it relates to security, but we are concerned that some of the other 

functions, particularly in terms of their trade-related obligations 

where they can really play a key role in facilitating commerce, we 

are concerned that that is really getting short shrift. 

So I think that is what I would like to do in this kind of debate 

about how we facilitate commerce and Americans looking to the future, particularly to these growth markets in Asia and Brazil and 

elsewhere, while we combat unfair commerce. And I noticed, Mr. 

Silcox, you held up that circuit breaker, the phony circuit breaker, 

which is not really different from the kind of phony goods that Oregon companies, whether Nike or a whole host of companies, are 

holding up. 

20 

You all have kind of spotlighted the problem for us today, and 

of course it relates to this potential for expanded trade and commerce, which in my State is responsible for about one out of six 

jobs. We are traders in Oregon. The trade jobs pay better than do 

the non-trade jobs. 

I just have a couple of questions for you four that kind of relate 

to this function. 

On the question of Customs and Border Protection, the real question is how we reinvigorate this commitment to the trade side of 

CBP. Now some people, I think, basically say that we can just politely ask the agency to do a better job. 

To tell you the truth, we have done that. We have gone that 

route. We have essentially, through letters and even at hearings, 

we basically said, look, we would like to see you go about your business; you have extensive authority in this area, and we need you 

to do a better job, for the reasons I have outlined. Facilitate the 

commerce where so many American businesses have great stakes 

and combat unfair commerce. 

That has not worked. So that is why we felt that we needed to 

have an actual piece of legislation, an actual piece of legislation 

which would ensure accountability, facilitate the movement of 

goods through ports and the collecting of the appropriate tariffs 

that are assigned to imports, stopping imports of goods that in effect infringe on intellectual property. We have to get those things 

done. 

So my question is, do you all feel that legislation is warranted 

at this point to deal with these issues? You can choose, by the way, 

to say, hey, you do not have to go the legislative route. Maybe it 

is going to get done just by posing requests. 

We felt, on a bipartisan basis, that at this point we think legislation is needed to get a reinvigorated focus at Customs on this trade 

function. So, if you would, we will just go right down the row. We 

will start with you, Ms. Comstock. I know you are from the West, 

our part of the world, and we welcome you. 

Ms. COMSTOCK. Thank you very much. Senator, I do feel that the 

bill is important. I know that in 2009 there was a similar bill, and 

I believe that CBP has made an awful lot of progress between 2009 

and now. 

This bill codifies some of the things that they are doing, the Centers of Excellence and Expertise. I think it is pushing them further 

forward, so I do really support this bill at this time. 

Senator WYDEN. Very good. And I think that is always the hope, 

that, as you spotlight the problems, make it clear that you do feel 

that you are going to, I characterize it, reinvigorate the trade function there, as much headway as can be made administratively is 

always on the good side. I think we need to go further, and frankly 

I think, without the kind of glare that this committee has put on 

this issue in a bipartisan way, I am not sure we would have even 

gotten this far. 

Mr. Silcox, your thoughts on the idea that legislation would be 

useful at this point. 

Mr. SILCOX. We support this legislation, but I think it is worth 

taking a step back and looking at what both the Congress and the 

21 

administrations, I say that plural, have done for the past 7, 8, 9 

years. 

A few years ago there was an incremental change with the Stop 

Counterfeiting in Manufactured Goods Act—which dealt with a 

couple of little points that related to enforcement. A few years later 

there was the PRO–IP Act which passed Congress that created, at 

least in the executive branch, a more coordinated enforcement program involving the administration at the highest levels in the 

White House, the Justice Department, and other relevant agencies. 

As a result of that legislation, the administrations, again plural, 

started building a little bit of the structure that is now going to be 

codified in this Act. 

So a key portion again, and this was part of the PRO–IP Act, but 

it is in this bill as well, is the accountability to Congress and the 

ability to come back to this committee and report on, this is what 

we have been doing, this is how our resources have been allocated, 

so that there is some oversight. That is what I know industry has 

been looking for for a number of years in the IP area: periodic oversight to just ensure that the resources are adequate and the program is on track to get what Congress wants and what the people 

want. 

Senator WYDEN. Our Chairman, Senator Baucus, has returned. 

Let us just see if we can wrap up with the two other witnesses on 

the question of the value of actually having legislation here. I 

thank the chair for the courtesy. 

While you were gone also, Chairman Baucus, I just wanted to reiterate how much I appreciate your working with me on this legislation. We have been toiling on ENFORCE in a bipartisan way for 

some time, and I think now, with the excellent bill that you and 

Senator Hatch are sponsoring, we are ready to go, and I appreciate 

it. 

So let us just wrap up your comments. Mr. Cooper, if you would. 

Mr. COOPER. We will do it quickly. First, I would echo the comments that Ms. Comstock and Mr. Silcox made about the codification of some of these components into legislation versus just an informal request to CBP. 

Again, while we have been making progress, really defining them 

and having them in the legislation is important. Additionally, the 

creation of the high-level positions within CBP to focus on trade facilitation will really ensure that that part of CBP’s mission gets the 

focus that it deserves, and I believe that that is an important reason to pass this. 

Senator WYDEN. Very good. We will wrap up with Mr. Cook. 

Mr. COOK. I will reiterate everything that was previously said. 

But again, the importance of the dual mission that CBP has of security and trade facilitation, this proposed legislation codifies all 

the pieces that will allow them to keep at the forefront that mission of trade facilitation, which is very important. 

Senator WYDEN. Very good. Thank you all. Thank you, Mr. 

Chairman. 

The CHAIRMAN. Thank you, Senator. I have heard rumblings that 

the community is a little concerned about inadequate consultation 

between CBP and the industry community, that sometimes CBP 

goes off and does something not thought through that causes probVerDate Nov 24 2008 19:15 Mar 28, 2014 Jkt 000000 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 R:\DOCS\87096.000 TIMD
22 

lems, and then various American companies say, whoa, whoa, that 

is causing more problems than it is trying to solve. 

You can be specific if you want, but if you could comment on that 

and indicate the degree to which you think the provisions in this 

bill will help, say the trade advocate, for example, will help, do we 

need to go farther? 

How do we know this language which basically says, you have 

to consult, is going to work? But if you could just talk about that 

main issue, which is the degree to which CBP could consult more 

and maybe ICE too, with the trade community. 

Does anybody have any thoughts about that? I have heard it has 

been a problem. If somebody wants to. 

Ms. COMSTOCK. Senator, my experience in dealing with CBP has 

been very good. I believe, especially through the Advisory Council 

on Customs Operations or COAC, they have been extremely forthcoming in listening to what the COAC has to say, and I believe 

that the engagement they have with other trade communities has 

been very good. 

I see great initiative there to try to do the right thing and consult with the trade. 

The CHAIRMAN. But there are provisions here to try to help 

COAC. 

Ms. COMSTOCK. Absolutely. I agree that the focus on this bill is 

trade facilitation, and I think that that is very important. 

I am not so much of an insider knowing how Customs works to 

be able to say whether or not having a Deputy Commissioner for 

Trade is really going to solve any problems. However, I do support 

that they are trying to do everything they can to facilitate trade. 

I really firmly believe that. 

The CHAIRMAN. Mr. Silcox, your views? 

Mr. SILCOX. Yes. Industry, and my industry in particular, has 

had very good dialogue with CBP. I think the problem that I alluded to that section 241 is intended to address was an ‘‘oops, we 

went off the reservation’’ kind of problem. 

However, their outreach to us, and I think our responsiveness 

back, has been reasonably good. I think one of the things we have 

advocated for in the past, and we have tried to deal with this sometimes in the appropriations process, is to look for dedicated resources on the intellectual property rights enforcement issue. 

One of the debates that has gone on between industry and the 

agency in the past is, because of their dual function for both security and for trade facilitation and enforcement, they will say, our 

resources have to be flexible and capable of dealing with all these 

issues as they arise at the time. 

Okay, that is one point of view, but, as Senator Wyden said, 

sometimes we do not always focus on these issues of intellectual 

property rights enforcement, and that has been one of our little 

gripes over the years, that there just was not, in the past, a small 

group of people that was dedicated to intellectual property rights 

enforcement. 

Some legislation in recent years has tried to improve that by appropriating to various agencies dedicated resources. But that is one 

thing we are interested in seeing. 

The CHAIRMAN. Mr. Cooper? 

23 

Mr. COOPER. Procter and Gamble has enjoyed a strong partnership with CBP over the years. What we see this legislation providing us, though, is a little more focus on the facilitation piece of 

it as CBP’s mission has shifted over the years to focus more on enforcement and national security. 

This provides us with the opportunity to work more closely with 

them and understand what the benefits of different programs will 

be and, again, to help against counterfeiting. 

The CHAIRMAN. Mr. Cook? 

Mr. COOK. We have also been engaged and have participated in 

the pilot programs, which we think are beneficial and should be enhanced. On any new initiatives, as far as COAC, my personal involvement, I found it to be great engagement. 

There are subcommittees within the COAC that oftentimes could 

be expanded, or the use of subcommittees to provide a broader base 

of participants might be one area, but that is within the structure 

of COAC which this—— 

The CHAIRMAN. Do you see the benefits of greater consultation? 

It is one thing to consult, but do you see the benefits of consultation, any of you? 

Mr. COOK. Yes, we have. 

The CHAIRMAN. All of you? 

Mr. COOPER. Certainly with our training with CBP. 

The CHAIRMAN. Okay. That is what we are trying to do here is 

get benefits. 

The border pilot programs here, I think the bill provides three 

at the northern border and three in the southern. You mentioned, 

Mr. Cook, the importance of flow back and forth to Canada. 

Ms. Comstock, could you just address a little bit some of the concerns that you see with inadequate hours on the border? 

Ms. COMSTOCK. Sure, and I will try to address it within the concept of Montana, which obviously I know best, since I live there. 

Right now in Montana, we have a 550-mile northern border, and 

it is a big stretch of territory. There are only two commercial ports 

on that northern border that support a 24-hour operation. Yet it 

does not always give us the opportunity, in driving those long distances, to be able to get the goods where they need to go. 

So in that expanse of northern border, if there were a third port 

halfway in between the two we have, that would allow goods to 

funnel through there. Particularly in support of the Bakken Oil 

Field now, I think that would be very, very helpful. 

I think that I could see similar situations occurring on the southern border. Having spoken with a number of colleagues, I believe 

that there is great opportunity there as well. 

The CHAIRMAN. That is a good point with the Bakken, in addition 

to tar sands, because there are a couple of companies, some very 

significant, developing, as you know, in Montana, especially north 

of Great Falls, where there is going to be a lot of traffic up to Canada and back, and in eastern Montana up and back around—— 

Ms. COMSTOCK. And there already is today. There are regular 

routes established by carriers going to and from Edmonton, Nisku, 

Calgary, down to Houston, back up again over to Williston, and so 

this would really support them. 

24 

The CHAIRMAN. Does anybody have any other comments or 

thoughts about anything? Did anybody say anything so outrageous 

it has to be addressed? Any thoughts in the back of your mind, a 

little something that you want to share? Now is your chance. 

Okay. We are dedicated to make trade better. It is good now, but 

we want to still work to improve it and get this bill passed. Thank 

you very much for your testimony. It all helps. It helps to energize 

us to help get this enacted. Thank you very much for your testimony. I appreciate it. The hearing is adjourned. 

[Whereupon, at 11:16 a.m., the hearing was concluded.] 

(25) 

A P P E N D I X 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD


87096001.eps
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87096.002

But trade and security are not mutually exclusive. CBP and ICE must effectively facilitate the flow of 

trade and ensure our national security. 

To do this, Senator Hatch and I introduced the "Trade Facilitation and Trade Enforcement 

Reauthorization Act of 2013." 

The bill, which we introduced in March, gives CBP the tools and authority it needs to refocus on its trade 

mission. 

This bill creates new high-level positions within CBP solely dedicated to trade facilitation and trade 

enforcement. It allows CBP to target the imports that are most likely to violate U.S. intellectual 

property, import safety and other laws. And it provides speedy customs clearance and other 

commercial benefits for importers with a strong record of compliance. 

This bill also includes the ENFORCE Act, as marked up by this committee last year. The ENFORCE Act 

gi,!es CBP and the private sector tools to combat the evasion of antidumping and countervailing duties. 

want to commend Senator Wyden and all of the bill's co-sponsors for working with us to mark up that 

bill last year, and I'm glad that we were able to include it here. 

The Trade Facilitation and Trade Enforcement Reauthorization Act also provides important benefits for 

states like Montana. On an average day, CBP processes more than 1,000 entries through Montana 

ports. 

This bill establishes a pilot program for 24-hour port operations. The 24-hour pilot program will help 

CBP determine whether round the clock operation can help manage the flow of goods across the 

northern border. And the bill helps Montana's honey producers by ensuring their foreign competitors 

pay the required duties on their imports. 

Finally, the bill requires CBP and ICE to do a better job consulting with U.S. businesses that are affected 

by its policies, as well as with this committee and Congress as a whole. 

This bill, in short, gives CBP and ICE the tools and resources they need to refocus on their trade 

missions. Or, as Aaron Copland might say, it ensures that international trade is properly orchestrated, 

executed and continues to flow. 

### 
27 


87096.003

Senate Finance Committee Hearing on May, 22, 2013 regarding 

S. 662, the Trade Facilitation and Trade Enforcement Act of 2013 

Statement for the Record - Senator Sherrod Brown 

Thank you, Chairman Baucus, for convening this hearing on important legislation 

involving trade facilitation and enforcement. 

America needs a pro-growth, jobs-focused, trade and manufacturing agenda to 

strengthen American competitiveness and offer everyone the chance to benefit from the 

opportunities ofthc global economy. 

U.S. Customs and Border Protection (CBP) plays a vital role in achieving this goal. 

Enforcement of our trade agreements and trade laws is an essential part of safeguarding the competitiveness of American workers, businesses and farmers and ensuring 

the playing field on which they compete is level. 

Much work has gone into putting together this bill, and I thank the Committee 

Members and staff for their efforts in drafting this legislation. 

This legislation aims to provide a framework for enhancing the work ofCBP and U.S. 

Immigration and Customs Enforcement on trade facilitation and enforcement activities as 

well as providing a much-needed increased focus and coordination on import safety 

issues to protect the health and safety of all Americans. 

A very important area of this bill is the ENFORCE Act, which focuses on improving 

trade enforcement at our borders. 

Attempts to evade America's trade laws harm the competitiveness of U.S. 

manufacturers and eviscerate the legal protections that we have given to American 

businesses and workers. 

Trade remedy laws are vitally important to our nation's economy. American 

manufacturers and workers use the trade remedy laws to obtain remedies against unfair 

trade practices. Often, this relief is the difference between a steel or paper plant kecping 

its doors open or shutting down. 

And too often, the relief can be short-lived, as foreign parties evade the duties applied 

to their unfairly traded imports. 

This bill provides an important mechanism to strengthen the procedures for fraud and 

evasion investigations through a transparent and timely process. 

As we work to finalize this legislation, I hope the necessary changes are included to 

ensure American manufacturers and workers alike are able to petition for investigations 

into fraud and evasion. 

American businesses and workers can successfully compete provided the playing field 

is level and unfair trade practices and fraud and evasion are not allowed to harm their 

competitiveness. 

This legislation will help accomplish this goal. 

Thank you, Mr. Chairman. 
28 


87096.004

WRITIEN TESTIMONY OF MARY ANN COMSTOCK 

UPS Supply Chain Solutions, Inc. 

Sweet Grass, Montana 

Before the Senate Finance Committee 

"Trade Facilitation and Trade Enforcement Reauthorization Act of 2013" (S.662) 

May 22, 2013 

Chairman Baucus, Ranking Member Hatch, and Members of the Finance Committee, on 

behalf of the almost 400,000 UPS employees worldwide, I appreciate the opportunity to appear 

before you today to discuss components of the Trade Facilitation and Trade Enforcement 

Reauthorization Act of 2013. My name is Mary Ann Comstock, and I am a native Montanan who 

has been involved in the Customs brokerage business on the northern border since 1971. I live 

and work in Sweet Grass, Montana which is by volume, the 8th busiest port of entry on the 

northern border. I've been a licensed Customs broker since 1978 and bring a unique 

perspective having owned my own small brokerage firm. I am currently a compliance manager 

for UPS. As you are probably aware, UPS operates one of the world's largest, most 

sophisticated, intermodal transportation service networks and is one of the world's largest 

customs brokerage firms. On a daily basis, UPS delivers more than 16.3 million packages and 

documents to 8.8 million customers in more than 220 countries and territories around the globe. 

UPS handles more than 6% of the U.S. GDP and 2% of the global GDP every day. In Montana, 

UPS has 854 employees, 195 retirees, 16 operating facilities, 18 UPS Stores, and one UPS 

Supply Chain Solutions location. 
29 


87096.005

UPS would like to thank the Committee for its work on this significant piece of legislation. 

We appreciate the services provided by U.S. Customs and Border Protection (CBP), and view 

this bill as a way to enhance the relationship between the public and private sector through 

increased trade facilitation and customs modernization. Customs issues can be arcane, and 

perhaps not as exciting as trade negotiations to many, but customs rules and regulations are 

the essential machinery of trade. The best external trade policy in the world cannot be effective 

without the safe and efficient movement of cargo in and out of our ports. UPS applauds the 

Committee for its attention to this critical and overarching portion of its trade jurisdiction. 

UPS continues to encounter an increasingly complex and divergent web of international 

trade infrastructure, most notably "at and behind the border barriers to trade," such as inefficient 

and uncoordinated customs clearance and security procedures. These barriers raise costs and 

slow down trade at the border. Efficient and speedy customs processes, coordinated between 

the U.S. and its global trading partners, will constitute a huge step towards removing the 

bottlenecks found in global supply chains. By embracing the opportunities of e-commerce and 

meeting the growing demands of international trade flows through effective trade facilitation, the 

global economy stands to gain immensely. Chokepoints at the border, such as costly customs 

procedures, inefficient facilitation programs, and burdensome regulations, reduce the critical 

predictability of the supply chain, and as a result can have the same stifling impact on trade as 

tariffs. Reducing supply chain barriers to trade could increase global GDP by nearly 5% and 

trade by nearly 15%, according to a recent World Economic Forum study. Cutting red tape at 

the border through trade facilitation reforms could boost the world economy by as much as $1 

trillion and generate more than 20 million jobs, according to the Peterson Institute for 

International Economics. We are confident that the resolution of one of these global trade 

challenges will have a positive impact towards the resolution of others e.g. simplifying customs 

processes will lower input costs, and enable more small and medium-sized enterprises (SMEs) 

from the U.S. to establish export to other international markets. These changes in turn will 
30 


87096.006

contribute to a more level playing field for businesses and greater choice for consumers. 

Furthermore, it is critical that the U.S. shows leadership at home in improved customs and trade 

facilitation initiatives as these key elements are essential in our trade negotiations, particularly 

the Trans-Pacific Partnership (TPP), Transatlantic Trade and Investment Partnership (TTIP) and 

the Trade in Services Agreement (TISA). 

I would like to focus on four topics today, the first of which is of utmost importance to 

UPS. UPS, along with other express carriers, diverse trade associations, and numerous supply 

chain partners, strongly support the increase in the de minimis threshold. We commend the 

Committee for recognizing the importance of this issue. In order to meet the demands of 

inflation and the global economy, we strongly support the language in Section 410 to raise the 

de minimis amount from $200 to $800, which has not been changed since 1993. An increase in 

de minimis for low value shipments allows for better allocation of resources as the costs of 

customs processing can outweigh the value of the duty collected. We believe the Trade Act of 

2002, which provided for an increase in the personal exemption of goods from $400 to $800 for 

those travelers returning to the U.S., is an appropriate benchmark for increasing the de minimis 

value. In addition, we recommend that the Secretary of Treasury periodically consider adjusting 

these values to ensure the limits are consistent with the rate of inflation as measured by the 

Consumer Price Index. We were pleased to see this language in Senators Thune and Wyden's 

legislation on de minimis values, S. 489. Increasing the value thresholds offers significant 

benefits to the exporting and importing public. We applaud CBP for its work to increase the 

informal entry value to $2500 and believe this provides the framework and opportunities for 

further growth. The Automated Commercial Environment (ACE) program has allowed CBP to 

focus their efforts on security and high risk targeting, and this value change offers all levels of 

business, particularly SMEs, the opportunity to reduce brokerage expenses and provide for 

simplified procedures for entry and release. Security is not affected by this legislation, as 

manifest information on all shipments, regardless of value, is analyzed for security threats and 
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subject to CBP risk assessment processes prior to arrival. By increasing de minimis and 

informal values, the U.S. will act as a role model to other countries, such as Canada and 

Mexico, to increase their values, and thereby promote trade. We need to reinforce efforts to 

raise de minimis levels globally, which is particularly timely with the TPP negotiations occurring 

this week in Lima, Peru. The wide variety of customs policies and practices around the globe 

often create bottlenecks at the borders, creating barriers to trade facilitation and international 

trade growth. 

The second topic relates to establishing a Certified Importer Program (CIP), a trusted 

trader program that would be recognized by all U.S. agencies with border clearance 

responsibilities. For UPS, this will simplify the clearance process and reduce border holds for 

highly compliant importers. It is critically important to ensure that CIP is implemented in a 

manner that provides concrete benefits and incentives to certified entities, such as automatic 

known consignor status for cargo security, fast track processing through customs, permission to 

provide required documentation post-release, and an incentive structure of fewer inspections for 

fully compliant traders. Current requirements of these programs make them prohibitively costly 

for many SMEs. Simplifying the requirements and reducing costs will encourage SMEs to join 

Trusted Trader Programs. In addition, the U.S. should establish account-based customs 

processing for Trusted Traders, as opposed to transaction-based collection of customs duties. 

This includes Account Based Management, which is an existing CBP program. UPS strongly 

supports the concept of an integrated comprehensive account based processing program. The 

concept of Account Management was developed by CBP in 1994, with the idea of creating a 

platform for CBP to work with importers and brokers handling significant volume of imports into 

the U.S. The goal of the public-private partnership between CBP, importers and brokers was to 

achieve a high level of compliance and focus on trade issues. Revitalizing the existing program 

would be an immense step forward in trade facilitation without hindering security, and would 

bring cohesion between the government and the trade community by establishing multiple 
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components, including the enhanced role of National Account Managers. The program would 

include commercial, security, interagency and information technology account components. This 

should include periodic summaries of entry filings that would maximize efficiencies and improve 

compliance. UPS supports the language in Section 203 and believes the new Agency-wide 

Centers of Excellence and Expertise (CEEs) are well-positioned to support a CIP program. 

The third topic is to focus on the need for a Single Window (one govemment at the 

border) program. Of particular importance to express delivery service (EDS) companies is the 

centralized clearance and release of goods. The use of national clearance agents with different 

computerized systems provides an extremely inefficient and administratively burdensome 

business landscape. We support the language in Section 207 and encourage the U.S. to 

finalize the development and proceed with the implementation of the Intemational Trade Data 

System (ITDS) which creates a single window for processing goods inbound to the U.S. The 

ITDS process could prove extremely beneficial in providing trade data to Participating 

Govemment Agencies (PGAs) in advance of the arrival of the goods. The PGAs must have 

funding resources to update their internal systems to effectively communicate in the ACE 

environment. ITDS will provide paperless processing to streamline the admission of goods. It 

allows PGAs to work from centralized locations where they can receive, review and maintain 

data on imported goods, while providing trade facilitation and security oversight. ITDS through 

ACE provides a single platform to be utilized by multiple agencies, and sharing the cost of 

development and implementation makes sense from a business perspective. The 

implementation of ITDS will benefit the movement and release of goods exponentially. We 

stress the need for this to be completed by the June 30, 2014 deadline as any further delays 

would prevent effectively harnessing these benefits. By having a system that provides for a 

multi-government agency single release, commerce will flow allowing goods to reach the 

marketplace at a faster pace. We hope the PGAs will provide speedy data responses as CBP 

does, 24 hours a day. 
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The final topic regards the pilot program for establishing 24-hour land border ports of 

entry and UPS supports the language in Section 406. Coming from the 4th largest state in the 

Union that has only two commercial ports of entry on our 550 mile long northem border, I 

believe this proposal will benefit the borders. State and local governments eligible for a new 24 

hour land border port must be willing to commit resources and infrastructure improvements to 

support the commercial designation of a port. This is a trade facilitation opportunity that could 

benefit importers by cutting down on transit times, and provide local economies a boost from 

increased traffic. The proposal also fosters dialogue with Canada and Mexico, our closest 

trading partners. 

UPS would like to thank the Committee for your continued support and the firm 

deadlines imposed for the ACE project. We ask the Committee to continue to urge CBP to meet 

its mission responsibilities, particularly the key component of improved information technology. 

It is imperative that this project is completed. 

In closing, UPS would like to applaud the Committee for their renewed focus on trade. In 

today's global economy, businesses are linked together through a web of interconnected, 

predictable, and efficient supply chains. Inputs come from all over the world to create products 

with the greatest value for the consumer. Limiting cross-border friction will boost the global 

competitiveness of U.S. businesses and reduce costs across our highly-integrated operations. 

By providing CBP the tools to facilitate legitimate trade and reorganizing their structure to 

emphasize trade's importance to the United States economy, you have taken a huge step to 

strengthening U.S. competitiveness and growing our exports. Security and trade facilitation 

should be of equal concern. Thank you again for allowing me the opportunity to testify in front of 

this Committee on this critical issue. 
34 


87096.010

FINANCE COMMITTEE QUESTIONS FOR THE RECORD 

United States Senate 

Committee on Finance 

Hearing on 

S.662, The Trade Facilitation & Trade Enforcement Act of 2013 

June 11,2013 

Questions to Ms. Mary Ann Comstock, Brokerage Compliance Manager, UPS Supply 

Chain Solutions, Sweet Grass, MT 

Questions from Chairman Baucus 

Question 1: 

The creation of the Office of Trade (QT) consolidated CBP trade policy, program 

development, and compliance measurement functions into one office. Some of the revenuerelated positions, including import specialists and entry specialists, remained under the 

Office ofField Operations (OFO). What effect has this had on your interactions with CBP, 

especially in terms of communication and policy implementation? Some have proposed 

moving these positions from OFO to OT. What are yonr thoughts on this proposal? 

Answer: 

While I support the creation of the Office of Trade (OT), consolidating CBP trade policy, 

program development and compliance measurement functions into one office, I hesitate to 

endorse the movement of import specialists and entry specialists from the Office of Field 

Operations (OFO). While we do experience tensions between these functions today, the 

separation of functions may actually benefit the trade community. With the Office of Trade 

having the National Import Specialists (NIS) and the Office of Regulations and Rulings (ORR), 

they provide effective guidance to import specialists and entry specialists today. Would the NIS 

and ORR simply rubber stamp what the Import Specialists propose on internal advice requests? 

Hopefully not, and having that separate reporting structure is helpful to ensure due process for 

trade issues. Having the import specialists (IS) and entry specialists (ES) under the Office of 

Field Operations gives them the ability to train and coach the customs inspectors on the front 

lines, so they do a better job. The IS and ES personnel are already located at the ports of entry 

where there is a management reporting structure in place. Moving them to OT causes an 

administrative burden on the existing field structure. 

Yes, the trade has experienced issues when the current Office ofInternational Trade 

(OlT) establishes trade policy and the Office ofField Operations (OFO) fails to implement or 

interpret it correctly. I think this falls upon the Commissioner of Customs to ensure all parties 

work together in a level playing field, meeting both enforcement and trade facilitation needs at 

the same time. I am not certain that creating individual deputy commissioners with specific 

focus will solve this issue, and it may cause more division than we have today. Previously the 
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87096.011

Deputy Commissioner had no affi liation to any particular Assistant Commissioner office, but 

often came up in the ranks through OFO. Former Deputy Commissioner Aguilar is a great 

example of an individual who came up through the enforcement ranks (Border Patrol) and 

understood the importance of Trade. Selecting the right Deputy Commissioner who can balance 

the needs ofOT, BP, OFO etc. is ideal. IfCBP moves to a multiple Deputy Commissioner 

structure, it is imperative that those individuals selected for those positions understand the 

balancing act between enforcement and trade facilitation and can work together. 

Ouestion 2: 

The Advisory Committee on Commercial Operations of Customs and Border Protection 

(COAC) is a forum for the Secretaries of the Department of Treasury and the Department 

of Homeland Security to discuss the commercial operations of U.S. Customs and Border 

Protection and related DHS functions with the trade community. Do you see benefits in 

including a representative, either formally or informally, from U.S. Immigration and 

Customs Enforcement (ICE)? Also, current COAC meetings are open to the public and 

must follow the rules under the Federal Advisory Committee Act (FACA). What benefits 

do you see in allowing the COAC to hold closed meetings in order to address specific issues 

for which disclosure would compromise CBP operations or ICE investigations? 

Answer: 

I believe there are benefits for informal representation from US Immigration and 

Customs Enforcement (ICE) which I think is now known as Homeland Security Investigations 

(HSI). We currently have interaetion and dialogue with the IPR Center and those interactions 

and dialogue have strengthened government's understanding of the supply chain, and allowed 

the trade to provide ideas and feedback on what can be further done in the important work they 

do. I believe we currently have the right balance between the Department of Treasury, 

Department of Homeland Security, and the Commissioner of U.S. Customs & Border Protection 

at our meetings. Allowing ICE/HIS to consult with COAC on an as needed basis on topics that 

impact commercial trade makes very good sense. 

Yes, current COAC meetings are open to the public and must follow the FACA rules. 

believe there are benefits in allowing COAC to hold closed door meetings in order to address 

specific issues for which disclosure would compromise CBP operations or an [CE/HS[ 

Investigation. It will be important that the trade public understand that most of the work that 

COAC does is in the public eye, and that COAC members may receive information in closed 

door sessions that require a DHS security clearance, therefore are not fit for public consumption. 

I would recommend there be clear guidelines on how to conduct open versus closed 

COAC sessions. I presume the closed door sessions would be carefully limited in use to 

situations truly beneficial to both sides. COAC has been very engaged in the l2'h and 13th terms 

and I'm not sure how much additional bandwidth we have for meaningful tasks and 

subcommittee work again, the work would need to impact commercial trade for COAC to 

engage. 
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87096.012

Ouestiou 3: 

The President's FY14 budget proposed providing funds for the Department of Homeland 

Security to conduct a study on the feasibility and cost related to imposing a crossing fee on 

pedestrians and passenger vehicles along the northern and southern borders. Today, these 

travelers enjoy free movement across our borders. As a border state, Montana's economy 

is depeudent upon cross-border trade and tourism. Businesses rely on the free flow of 

people across our northern border to export world class Montana products. And for 

Montanans, crossing the border is a way of life in order to access essential services, travel 

to their jobs, to shop and dine, to attend church, and to visit family and friends. I'm 

concerned about the impact this would have for Montanans. In your opinion, what would 

be the impact of imposing such a fee in other states or on your businesses? 

Answer: 

The impact of a crossing fee on pedestrians and passenger vehicles along the northern 

and southern borders would (in my opinion) be devastating to local economies. While some 

affluent travelers would not hesitate to pay a fee to expedite their border crossing experience, for 

the average traveler or pedestrian (particularly those who cross frequently for 

work/school/family visits or other services), a user fee would be a significant financial burden 

and barrier. I believe user fee collections would further slow down the border crossing 

experience travelers have today. We certainly saw significant slow down in border crossing 

times when the WHTI documentation requirements were implemented, and this requirement 

continues to contributes to the slower passenger clearances we see today. 

For Montanans living within an hour's drive of the border, we often travel to Canada to 

visit friends and family or they come to visit us. I've been known to travel to Lethbridge, 

Alberta (A B) to see a new movie that isn't yet playing in Shelby or Cut Bank, MT. I go to Milk 

River, AB frequently to have dinner with friends. Some folks from Coutts, AB attend my church 

in Sunburst, MT (just as I used to attend church in Coutts, AB when the church was still open). 

Our Lions Club organization consists of members from Shelby, MT up to Milk River, AB. The 

fire department in Coutts, AB has volunteers from Sweet Grass, MT since our communities sit 

side by side, barely separated by "No Man's Land" between the two countries. Many southern 

Alberta residents have post office boxes in Sweet Grass, MT to facilitate mail services/parcel 

shipping or delivery. The Sweet Grass brokerage community has employed several US citizens 

who married and lived in Canada, so they crossed the border daily for work. There are numerous 

examples of the symbiotic relationship between the communities just north or just south of the 

border. 

With regard to border crossings in other states, I was interested to read the study on the EI 

Paso Regional Ports and Entry Operations Plan, commissioned by the Texas Department of 

Transportation. While the study is 2 years old, the impact of border wait times on local 

economies is significant, indicating the economy would contract by $54 billion (21.8%) and 

cause a net job loss of 850,000 (17.4%). The study can be found at; 

http://www.camsys.com/pubs/EPOperations.pdf While I have no direct knowledge of other 

studies that spell out the impact of border wait times on the local economies, I am certain the 

impact is felt in the major border crossings like Blaine, W A, Detroit, MI, Champlain and 

Buffalo, NY as well as Otay Mesa, CA and Laredo, TX. 
37 


87096.013

Question 4: 

The President's FY14 budget also included a proposal to increase certain customs user 

fees. As you know, customs user fees are paid by the trade community in return for 

customs services, such as the inspection and processing of imported merchandise. The 

budget proposes a $2 increase to the fee on commercial trucks, commercial aircraft, 

commercial vessel passenger, and international mail subject to duties, COBRA user fees, 

and a proportionate increase for all other COBRA user fees. This funding from increased 

fees would fund an additional 1,877 Customs and Border Protection Officers, which would 

help to address long wait times and speed processing of goods across our borders. In fact, 

wait times at most U.S. ports of entry would be reduced by 30 minutes. What are your 

views on the proposal to increase these customs user fees? How can the trade community 

be a partner in ensuring CBP has sufficient funding to facilitate the movement of goods 

across our borders? 

Answer: 

I support a reasonable increase in the COBRA user fees, provided the funds are used to 

improve the movement of cargo and people across our international borders, regardless of their 

mode of transportation. I believe the trade community would welcome the increase in services 

provided from the COBRA user fees. I do not recommend the COBRA user fee rate be tied to 

something like the Consumer Price Index to increase the fee and keep up with demand, as it may 

dampen trade because the increases would be unpredictable. In this global economy, much effort 

is put into controlling and predicting costs as far out as a year or two in advance. Predictability 

is important, so suggest any increase to COBRA user fees should be handled as they are today: 

through legislation. 

One added thought, if user fees are indeed raised to hire more inspectors, the trade 

community would like assurance that the additional funds collected will in fact be used for their 

intended purpose: to hire more inspectors at key ports of entry. User fees should not be diverted 

to the general fund or to pay for other programs. 
38 


87096.014

Question from Senator Hatch 

Question 1: 

A recent letter we received from the U.S. Chamber of Commerce in support of this bill 

stated that this legislation "would facilitate trade, improve enforcement of customs and 

trade laws, advance cooperation among government agencies, and set the global standard 

for border management." The letter goes on to state that "implementing such 

improvements would increase the competitiveness of U.S. businesses and would unleash the 

potential for small-and medium-sized businesses to access foreign markets." 

Given, your breadth of experience, do you agree this bill will be beneficial to small- and 

medium-sized business? 

Answer: 

Yes, I believe the bill will be beneficial to small and medium sized businesses. For 

example, the Centers for Excellence and Expertise will blossom and encompass all entries for a 

particular industry section. This structure provides one stop shopping to a small/medium sized 

importer and they will receive a consistent message regarding classification, valuation, 

requirements from partner government agencies, etc. This is a sea change for CBP, and it will 

take some time to fully implement the program. 

Another benefit will come through the ACE Export program, allowing small/medium 

sized enterprises to utilize one system to report exports instead of the numerous systems we have 

today. I believe the agencies involved are making a real effort to streamline the export 

requirements, removing any roadblocks along the way. Small and medium sized enterprises 

would benefit from an export system that helps them easily identify any licensable goods so they 

do not unknowingly violate federal law, thus removing one more 'unknown fear' they have 

about exporting their products. 

The opportunity for small/medium sized businesses to join a partner "Trusted Trader" 

program is another benefit, particularly if CBP secures agreement with their international 

counterparts through mutual recognition programs. This could be a big incentive to participate 

in the import program so their exports receive the same benefits. 
39 


87096.015

Question from Senator Brown 

Question 1: 

You indicated that a prospective system elimiuates the under collection problem because 

importers pay the duties owed at the time of importation. However, in a November 2010 

report to Congress, Commerce is cited as explaining that "the main difference between the 

two types of systems is that prospective systems will never collect additional duties when 

dumping, pursuant to a review, is found to increase." By contrast, under the retrospective 

system, the U.S. government collects additional duties when final dumping margins are 

higher than initially estimated because of increased dumping over time. 

As certain parties noted in comments submitted to Commerce related to the November 

2010 report, is it not true that "[sJwitching to a prospective system does not solve thc 

problem of uncollected duties, it simply defines it away"? 

Answer: 

While there are drawbacks to both the prospective and retrospective system for collection 

of dumping duties, I believe the retrospective system causes more harm to American businesses 

than the protection offered to American business who filed the dumping claims. 

We live in a global economy, and business is challenged to purchase finished goods and 

component parts at the best price they can obtain. In order to price those goods, they need 

certainty as to their costs. Waiting 3+ years for Commerce to finalize the amount of dumping 

duties owed on an imported goods does not allow any business (small, medium or large) to price 

their goods for sale. Predictability is key for American businesses to successfully operate in the 

global economy. This is the clear standard for fair trade. 

The United States (to the best of my knowledge) is the only country with a retrospective 

dumping system. I believe it undermines our competitiveness because business does not have 

predictable pricing or full knowledge of the costs associated with an international transaction. 

I do not believe a prospective system solves all problems. There will still be those who 

evade legitimate duty by altering documents or providing false certificates. The prospective 

system allows CBP to collect dumping duties based on the best information available to 

Commerce at the time the antidumping case is initiated. Adjustments to the dumping duties 

should occur systematically, just as they do today. This gives reasonable predictability to the 

importer who can make a rational decision whether to continue to import at the dumping rates set 

or to find another supplier for their imported goods or materials. 

Under the retrospective system, it is a risky enterprise to estimate what the duties will be 

in 3+ year's time, so the importer can set pricing for their product. This system is resource 

intensive for Commerce to determine the 'fair' price for dumping purposes. While it may be the 

most 'fair', it is not the most efficient. CBP is unable to collect antidumping duties for numerous 

reasons, such as: 

o Importer has gone out of business 

o CBP has no jurisdiction over the Non-Resident Importer of Record. 
40 


87096.016

o CBP is in no better position to predict what the dumping duties will be in 3+ years time, 

therefore they are challenged to set a surety bond amount that will be adequate. 

The significant lag time between entry and the attempted collection of any dumping increase 

contributes heavily to CBP's collection issues. 

I wish to point out that small businesses often face the greatest impact from the 

retrospective rate increases. They are less experienced importers (not understanding the 

potential impact of importing goods subject to dumping duty), and far less likely to financially 

recover or survive a significant increase in dumping duties 3+ years after goods are imported. 

There are specific examples of small and medium sized U.S. companies literally forced 

into bankruptcy because of the retrospective nature of our ADD system .. No small or medium 

sized company can handle a 200% rate increase 3+ years after import and stay in business. 

Sometimes the rate increases are tied to changes in methodology which the importer has no 

control over. We are aware of numerous cases where Commerce makes a change to a 

complicated formula and surrogate value inputs to construct the retrospective "fair market value" 

determinations. The results have meant millions of dollars in liability that no one could have 

predicted and are not based on any kind of improper importer or exporter activity. The result: 

US owned and operated companies are thrown into turmoil, trade flows for goods often needed 

by downstream U.S. manufacturing become chaotic and in the end, CBP spends a tremendous 

amount of resources trying to chase duties that can never be collected and no one's interests (not 

even those plaintiffs in the original ADD complaint) are served. 

The International Trade Administration, Department of Commerce Report to Congress in 

November 20 I 0 lays out an overview of several prospective systems: 

I. Prospective ad valorem system 

2. Prospective per unit system3. Prospective "normal value" system - in this system a normal value is established for each 

of the types or models of merchandise subject to an order and as merchandise is 

imported, the normal value is compared to the merchandise's export price. If the normal 

value is greater than the export price, an antidumping duty is assessed on the difference in 

price. (this is actually an improvement over today's retrospective system as companies 

are forced to pay dumping even if the value of the imported goods is well above the 

normal value price - to receive a lower rate of duty, Commerce must perform a new 

shipper review and these are quite costly to obtain, not to mention the strain on 

Commerce's resources to produce the new shipper review) 

4. There can also be a two part approach to assessment of dumping margins based on the 

original investigation and also on the ascertained export price. 

The report also noted that Commerce believed that certain administrative functions would 

be less burdensome under a prospective system, including instructing CBP to take action on a 

particular case. 

The GAO Report issued in 2008 indicates the final duty rates increased 16 percent of the 

time, based on their analysis of data over a six year period. The median rate increase was less 

than 4 percentage points. If there are the differences in duty between a prospective and 
41 


87096.017

retrospective system, it occurs to me that 4% is certainly manageable for any business enterprise 

to build that into their pricing., The challenge is with some very large increases in certain sectors 

where median rates increased 200 percentage points or more. Under the prospective system you 

may think it 'defines it away' but I believe it allows importers to make a rational decision 

whether to continue to import or not, unlike the retrospective system where they are gambling 

that they can afford the final dumping rate established 3+ years later. 

I believe the important question that needs answering is the overall purpose of our 

ADICYD system. Is it to set and collect duties under a very complicated system or is it to create 

an 'even playing field' in specific cases where it is determined that no level playing field exists. 

A prospective system operates differently than a retrospective system, and duties absolutely still 

exist so they are not being "defined away" in some sweeping manner. Real dumping duties will 

still be collected, and adjusted prospectively, so that CBP can enforce the requirements and 

collect the duty NOW, not 3+ ycars later. I believe a prospective system serves the higher goal 

of actually creating a more normal playing field NOW. Our trade partners around the world 

seem to agree as every other country has chosen to adopt some form of a prospective dumping 

system. 
42 


87096.018

Committee on Finance 

United States Senate 

Statement of 

William A. Cook 

Director, Worldwide Logistics and Customs, 

Chrysler Group LLC 

May 22,2013 

1000 Chrysler Drive 

Auburn Hills, MI 48326 
43 


87096.019

I. INTRODUCTION 

Chairman Baucus, Ranking Member Hatch and Finance Committee members, I want to begin by 

thanking you for inviting Chrysler Group LLC (hereinafter "Chrysler") to testifY today. Chrysler 

appreciates being given the opportunity to share its views on S.662, the Trade Facilitation and 

Trade Enforcement Reauthorization Act of2013. 

My name is William Cook. I am the Director, Worldwide Logistics and Customs, for Chrysler. 

In this capacity, I lead the team responsible for developing logistics strategy, purchasing 

transportation services, Customs and export compliance, operating Chrysler Group Transport and 

controlling logistics operations. I am also a licensed Customs broker and served on the Advisory 

Committee for Commercial Operations (COAC) of U.S. Customs and Border Protection (CBP) 

from 2007 until 2010. 

II. BACKGROUND 

Because of the significant volume of trade involved, coupled with the company's reliance on 

just-in-time inventory management practices, Chrysler's ability to import and export vehicles 

and parts in an efficient and timely fashion is critical. 

In 2012, Chrysler handled almost 300,000 entries into the United States worth $24 billion. By 

volume, 70 percent of these entries were production parts and the remainder were vehicles. 

Chrysler also handled 1.2 million entries into Canada worth almost $12 billion and 55,000 

entries into Mexico worth $5.5 billion. 

Even minimal delays can have serious consequences for the company - if a shipment of parts 

destined for a manufacturing plant gets delayed at a border, operations may have to shut down 

until the shipment arrives. And now more than ever, with demand sky high for Chrysler 

products and fierce competition in the auto sector, we cannot afford any production delays. 

As such, it has been Chrysler'S practice to take advantage of every opportunity to reduce the time 

it takes for the company's shipments to cross the border and, more generally, to reduce our direct 

and indirect Customs-related costs. Therefore, Chrysler is a charter member of the CustomsTrade Partnership Against Terrorism (C-TPAT) program and participates in the Importer SelfAssessment (ISA) program. We take advantage of all border crossing privileges that these 

programs provide, including the Free and Secure Trade (FAST) program. We are a member of 

the Automotive & Aerospace Center of Excellence and Expertise (CEE) and have participated in 

a number of U.S. Customs and Border Protection Agency (CBP) pilots. Our participation in 

such programs is not limited to the United States. For instance, in Canada, Chrysler participates 

in the Partners in Protection program, the Partners in Compliance program, and the Customs 

Self-Assessment program. 

Additionally, as a member ofCBP's Trade Support Network (TSN), Chrysler provides direct 

input to the agency regarding the design and development of Customs modernization initiatives, 

including ACE. Chrysler also provides input as one of our employees is a CBP-designated 

Automated Commercial Environment (ACE) Trade Ambassador. 
44 


87096.020

Moreover, we are a member of a number of groups that advocate for greater trade facilitation, 

including the Alliance of Automobile Manufacturers, the American Association of Exporters and 

Importers, the American Auto Policy Council, the Automotive Industry Action Group, the 

Business Alliance for Customs Modernization, the National Association of Manufacturers', and 

the U.S. Chamber of Commerce. 

III. DISCUSSION OF S.662, THE TRADE FACILITATION AND TRADE 

ENFORCEMENT REAUTHORIZATION ACT OF 2013 

The remainder of my testimony will focus on provisions in S.662, the Trade Facilitation and 

Trade Enforcement Reauthorization Act of 20 13, which are of particular interest and importance 

to Chrysler. 

A. Joint Strategic Plan on Trade Facilitation and Trade Enforcement 

Chrysler applauds the inclusion of provisions in S.662 requiring the CBP Commissioner and 

Director of U.S. Immigration and Customs Enforcement (ICE) to develop a biennial "Joint 

Strategic Plan on Trade Facilitation and Trade Enforcement". 

CBP and ICE are already dedicating time and resources to trade facilitation and trade 

enforcement, reflecting a commitment to both issues. The establishment of joint reporting 

requirements and metrics like those proposed in S.662 will help to ensure that the agencies' 

efforts are focused and give them, and the public, the ability to assess whether they are making 

progress in achieving their goals. Moreover, by making it a joint report, it will encourage 

improved communication and coordination between the two agencies. 

Of particular interest to Chrysler is the provision requiring CBP and ICE to describe their 

" ... efforts to improve consultation and coordination among Federal agencies regarding trade 

facilitation and trade enforcement". As discussed further below, some ofthe more serious 

Customs challenges that Chrysler faces are not necessarily attributable to CBP or ICE, but 

instead, to participating government agencies with a presence at the border. Anything that can 

be done to promote better collaboration between these participating government agencies and 

CBP and ICE is welcome and this reporting requirement is therefore helpful in this regard. 

Additionally, Chrysler supports the language in S.662 requiring CBP and ICE to consult with the 

COAC and TSN when developing the Plan. Both entities can provide the perspective ofindustry 

and their trade facilitation and enforcement experiences, and it is important that their views be 

reflected in the report. 

As mentioned previously, Chrysler'S U.S. - Canada trade is significant. Steps that can improve 

trade facilitation between the two nations, like full implementation ofthe U.S. - Canada Beyond 

the Border Action Plan, would significantly benefit the company, as well as other U.S. 

companies with similar trade profiles. 

I Chrysler is the chair of the National Association of Manufacturers Customs and Border Task Force. 
45 


87096.021

This winter, the National Association of Manufacturers sent a letter to then-Acting 

Commissioner Aguilar, thanking CBP for the progress made to date implementing the Beyond 

the Border Action Plan. The letter also urged CBP to prioritize the implementation of the 

following recommendations from the Businesses for a Better Border (B3) Coalition2

: 

• Complete the harmonization ofC-TPAT and PIP, 

• Align data requirements and submission timeframes, 

• Implement identical technology for the transmission of advance data, 

• Dedicate primary inspection lanes at all border crossings for C-TPA TIPIP certified 

companies, and 

• Eliminate burdensome visa requirements for Canadian and U.S. citizens and permanent 

residents traveling for business. 

We hope to see these Beyond the Border priorities implemented before the first Joint Strategic 

Plan is released. Ifnot, these priorities, as well as the other remaining elements of the Beyond 

the Border initiative, should be included in the Plan, along with firm commitments from CBP 

and ICE that they will be swiftly implemented. 

B. The Automated Commercial Environment 

Like the Committee, Chrysler looks forward to the day when ACE is fully up and running and 

appreciates the support for the development of ACE reflected in S.662. Based on our 

discussions with CBP, it appears that the Agency is making real progress in rolling out the ACE 

system. However, the inclusion of ACE-related provisions (as well as International Trade Data 

System-related provisions) in the reauthorization legislation, and the Committee's exercise of its 

oversight responsibilities, will help ensure that CBP completes the roll out in a timely fashion. 

Chrysler was one of the original 41 participants in the 2004 ACE pilot. Despite the fact that it 

has yet to be fully implemented, Chrysler is already seeing tremendous benefits from the ACE 

system, and expects those benefits to increase as additional elements of ACE are rolled out. Of 

particular interest to Chrysler is the "single window" concept, which will allow Chrysler to use 

ACE for all of its entries. 

Currently, for shipments released using a border release program such as FAST, Department of 

Transportation and the Food and Drug Administration entry documentation relating to imports of 

vehicles and some parts cannot be filed through ACE. Chrysler is obligated to use the Automated 

Commercial System (ACS) for these entry transactions. 

Having to file entries in both systems is administratively burdensome, and requires careful 

monitoring of Chrysler's post-entry work to ensure that it is done properly. ACE entries are filed 

electronically as Post Summary Corrections (PSC) and ACS entries are filed manually as Post 

Entry Adjustments (PEA). Moreover, while refund requests filed in ACE are fulfilled in about 

four to six weeks, it takes CBP six to eight months to fulfill a refund request filed in ACS, a 

2 Businesses for a Better Border Coalition members include the National Association of Manufacturers, the 

American Auto Policy Council, Canadian Manufacturers and Exporters (CME) and the Canadian Vehicle 

Manufacturers Association (CVMA). Chrysler Canada is a member ofCME and CVMA. 
46 


87096.022

significant delay of time. Usage of the ACS system has a number of other drawbacks, including 

the fact that unlike ACE, if a non-ISA importer needs to obtain data concerning past entries for 

measurement reporting and compliance monitoring, the importer must file a Freedom of 

Information Act (FOIA) request. 

The most recent ACE roll out - Simplified Entry - adds greater certainty to the air freight 

environment for Chrysler, one oftwo importers to participate in the 2012 Simplified Entry pilot 

program. Simplified Entry allows for the release of air cargo prior to the arrival of the aircraft in 

the United States and eliminates the need for a broker to file a Customs Release Form 3461, 

which is especially important when cargo is arriving after hours. As a result, a potential delay in 

the delivery of parts to Chrysler'S plants is eliminated. 

We understand that the next ACE roll out will relate to export reporting, which could improve 

the company's ability to manage its exports and duty drawback filings, and Chrysler will seek to 

participate in any export reporting pilot program. 

C. The Centers of Excellence and Expertise 

Chrysler was pleased to see that S.662 includes language authorizing the creation of the Centers 

of Excellence and Expertise (CEE). As mentioned above, Chrysler is a member of the 

Automotive and Aerospace CEE and has had a very positive experience. Chrysler's import 

entries are now reviewed by a centralized team within the CEE that is familiar with automotive 

products. The Chrysler Customs Department meets with the CEE management on a regular 

basis to discuss ways to process Chrysler entries in the most efficient manner possible, which 

saves time and money for both Chrysler and CBP. 

Chrysler also works with the CEE when other ports make requests that do not appear to align 

with Customs policies and procedures. Through these types of efforts, the CEE is driving 

improved consistency between different ports of entry, which has been a longstanding concern 

for importers. 

D. The Advisory Committee for Commercial Operations 

From 2007-20 I 0, I served as a COAC member and can attest to the important role that the 

Advisory Committee can play in driving policy improvements. Reviewing the provisions in 

S.662 authorizing COAC, it is apparent that many of the proposed requirements for the COAC 

are already the norm. Nevertheless, the codification of these practices is important and will 

ensure that the Advisory Committee continues to play an important role in the development and 

implementation of U.S. Customs policy. 

Chrysler respectfully suggests that S.662 should explicitly allow non-COAC advisors to 

participate on the COAC subcommittees. This practice has worked well in the past, and allows 

the COAC to access broad, technical expertise and a wider range of perspectives. 

E. Intellectnal Property Rights Enforcement 

For Chrysler, intellectual property rights enforcement is about safety. If subpar, counterfeit parts 

end up on a Chrysler vehicle, it could put the driver, their passengers and others at risk. The 
47 


87096.023

company therefore takes combatting counterfeits very seriously and welcomes the attention that 

S.662 gives to this important issue. 

To date, working with CBP, we have had some success in combatting counterfeit parts. For 

instance, in March 2013, CBP notified Chrysler Brand Protection of a suspect shipment of 198 

Dodge Charger wheels from China entering at the Port of Tampa. Working with our Brampton 

Plant, Brand Protection confirmed that the wheels were counterfeit. 

Building off of successes like these, Chrysler is seeking to make its collaboration with CBP to 

combat the import of counterfeit goods more efficient and effective. 

Chrysler is striving for improved and more streamlined information sharing between CBP and 

the company concerning a suspect entry. We suggest that CBP should simultaneously share 

electronically as much information as possible, including photos, regarding suspect goods with 

all the Chrysler business units with counterfeit goods responsibilities. Right now, CBP only 

provides Chrysler with a limited amount of information about a suspect shipment, despite the 

fact that we have an IPR bond. Moreover, initial contact with Chrysler is typically by certified 

mail or phone. These interactions could be made much more efficient, reducing the time and 

effort spent by both CBP and Chrysler vetting suspect shipments. 

Chrysler is also seeking to ensure that CBP's counterfeit targeting better reflects its priorities 

(e.g., not t-shirts and trinkets) and takes into greater consideration Chrysler's Customs practices. 

For instance, in all but a very few instances, Chrysler should always be the importer of record on 

an entry of parts. If that is not the case, there is a very high likelihood that the shipment is 

counterfeit and as such, CBP should alert the company. 

This year, CBP and the Automotive & Aerospace CEE have proactively reached out to Chrysler 

expressing an interest in working with the company on counterfeiting issues. We are taking full 

advantage of the Agency's interest and engagement. Our discussions with CBP on ways to 

improve our collaboration are still in the preliminary stages, and the Agency's ability to 

accommodate our requests remains unclear. However, what is apparent is that the IPR 

provisions reflected in S.662 would give CBP an enhanced mandate to work with Chrysler, as 

well as other companies, to combat counterfeit goods. 

F. Pilot Program to Designate 24-Hour Commercial Ports of Entry 

Chrysler was pleased to see language in S.662 requiring CBP to launch a pilot program to 

designate more 24-hour commercial ports of entry. As discussed above, Chrysler relies on justin-time inventory management practices and as such, even minimal delays can have serious 

consequences for the company. Moreover, reflecting the integration of the North American auto 

sector, the volume of trade in Chrysler vehicles and parts between the United States, Canada and 

Mexico is considerable. Thus, keeping more of these U.S. - Canada and U.S. - Mexico land 

border commercial ports of entry open 24 hours a day to accept merchandise entries would help 

to reduce wait times at the border, facilitate increased trade and significantly benefit Chrysler 

and many other U.S. companies. 
48 


87096.024

G. De Minimis and Informal Entry 

While not a priority issue for Chrysler, we were pleased to see that S.662 increases the de 

minimis threshold to $800 and the infonnal entry threshold to $2500. As CBP increased the 

informal entry value to $2500 last year, the legislation would codify the existing regulation. But 

the increase in the de minimis would be a new, significant development, allowing CBP to 

allocate more resources to enhance trade facilitation and combat counterfeit goods. 

IV. CONCLUSION 

Chrysler welcomes the introduction of S.662, the Trade Facilitation and Trade Enforcement 

Reauthorization Act of 20 13 and hope that it is taken up for consideration by the Committee and 

on the Senate floor as soon as possible. Like many industries, the auto sector is extremely 

competitive. Many of the measures included in this legislation will help to streamline and make 

more efficient Customs processes and procedures. And while the savings on a single entry 

associated with these proposed improvements may not necessarily be large, for companies like 

Chrysler, which had almost 300,000 import entries in 2012 and over 100,000 export filings, the 

total savings, and corresponding increased competiveness, would certainly be significant. 
49 


87096.025

FINANCE COMMITTEE QUESTIONS FOR THE RECORD 

United States Senate 

Committee on Finance 

Hearing on 

S.662, The Trade Facilitation & Trade Enforcement Act of 2013 

June 11,2013 

Questions to Mr. William A. Cook, Director of Worldwide Logistics and Customs, Chrysler 

Group, LLC, Auburn Hills, MI 

Questions from Chairman Baucus 

Question 1: 

The creation of the Office of Tradc (OT) consolidated CBP trade policy, program 

development, and compliance measurement functions into one office. Some of the revenuerelated positions, including import specialists and entry specialists, remained under the 

Office of Field Operations (OFO). What effect has this had on your interactions with CBP, 

especially in terms of communication and policy implementation? Some have proposed 

moving these positions from OFO to ~T. What are your thoughts on this proposal? 

Answer: Given Chrysler's involvement in the Automotive & Aerospace Center of 

Excellence and Expertise, its interactions with CBP primarily occur through the Center. The 

consolidation ofOT and OFO, coupled with Chrysler's participation in the Center, has 

provided "one-stop shopping" opportunities for the company. Chrysler would therefore 

welcome additional OT-OFO consolidation, and its associated efficiency benefits. 

Ouestion 2: 

The Advisory Committee on Commercial Operations of Customs and Border Protection 

(COAC) is a forum for the Sccretaries ofthe Department of Treasury and the Department 

of Homeland Security to discuss the commercial operations of U.S. Customs and Border 

Protectiou and related DHS functious with the trade commuuity. Do you see benefits in 

including a representative, either formally or informally, from U.S. Immigration and 

Customs Enforcement (ICE)? Also, current COAC meetings are open to the public and 

must follow the rules under the Federal Advisory Committee Act (FACA). What benefits 

do you see in allowing the COAC to hold closed meetings in order to address specific issues 

for which disclosure would compromise CBP operations or ICE investigations? 

Answer: Chrysler believes that there would be a real benefit in having ICE formally 

participate in the COAC. ICE's participation in the COAC would help ensure that ICE is 

apprised of issues affecting the Trade, including issues relating to counterfeit goods; that it is 
50 


87096.026

aware of the policies being considered to address those issues; and that it plays a role in 

developing those policies. Giving ICE aformal role in the COAC will thus encourage ICE's 

investment in such policies, increasing the likelihood that it will implement them properly, and 

promote accountability. 

Closed meetings may be appropriate under certain circumstances and could provide 

COAC members with insight on Customs' issues that they wouldn't otherwise be able to obtain 

because of the nature of the information involved. However, the fact that COAC meetings are 

public is of real benefit to COAC members and outside stakeholders alike. As such, closed 

meetings should be the rare exception to the norm. To ensure that this is the case, clear 

criteria setting a high thresholdfor closing a meeting should be established. 

Question 3: 

The President's FY14 budget proposed providing funds for the Department of Homeland 

Security to conduct a study on the feasibility and cost related to imposing a crossing fee on 

pedestrians and passenger vehicles along the northern and southern borders. Today, these 

travelers enjoy free movement across our borders. As a border state, Montana's economy 

is dependent upon cross-border trade and tourism. Businesses rely on the free flow of 

people across our northern border to export world class Montana products. And for 

Montanans, crossing the border is a way of life in order to access essential services, travel 

to their jobs, to shop and dine, to attend church, and to visit family and friends. I'm 

concerned about the impact this would have for Montanans. In your opinion, what would 

be the impact of imposing such a fee in other states or on your businesses? 

Answer: Chrysler is very concerned about the costs associated with the imposition of a 

land border crossing fee. Chrysler has multiple facilities in close proximity to both sides of the 

United States-Canada border, and several hundred Chrysler employees cross the border eve~v 

day to reach their jobs, or for other work-related reasons. As Chrysler would have to 

reimburse a large portion, if not all, of the crossing fees imposed on its employees, even a 

small fee would impose significant costs on the company. 

Chrysler is also concerned that the collection of such fees could increase traffic 

congestion at the border, disrupting the smooth flow of goods. Even minimal delays can have 

serious consequences for the company - if a shipment of parts destined for a manufacturing 

plant gets delayed at a border, operations may have to shut down untif the shipment arrives. 

And now more than ever, with demand sky high for Chrysler products and fierce competition 

in the auto sector, we cannot afford any production delays. 

For these reasons, Chrysler opposes the imposition of a crossing fee and suggests that 

the funds requested by the Department of Homeland to conduct a feasibilitylcost study should 

not be provided. 
51 


87096.027

Ouestion 4: 

The President's FY14 budget also included a proposal to increase certain customs user 

fees. As you know, customs user fees are paid by the trade community in return for 

customs services, such as the inspection and processing of imported merchandise. The 

budget proposes a $2 increase to the fee on commercial trucks, commercial aircraft, 

commercial vessel passenger, and international mail subject to duties, COBRA user fees, 

and a proportionate increase for all other COBRA user fees. This funding from increased 

fees would fund an additional 1,877 Customs and Border Protection Officers, which would 

help to address long wait times and speed processing of goods across our borders. In fact, 

wait times at most U.S. ports of entry would be reduced by 30 minutes. What are your 

views on the proposal to increase these customs user fees? How can the trade community 

be a partner in ensuring CBP has sufficient funding to facilitate the movement of goods 

across our borders? 

Answer: BecaIL~e of its large entry volume - in 2012, Chrysler Customs handled 

almost 300,000 entries into the United States worth $24 billion - even a minimal fee increase 

can impose significant costs on the company. For instance, as a result of the recent .1364 

percent Merchandise Processing Fee (MPF) increase, Chrysler incurred roughly $1.5 million 

in additional MPF fees in 2012. If the fee hikes being contemplated by CBP were imposed, 

Chrysler would incur significant additional costs, making it more difficult for the company to 

compete in the marketplace. 

We support efforts to increase CBP staffing to address long wait times and speed the 

processing of goods across our borders. However, as every American consumer benefits from 

enhanced trade facilitation, we question whether importers should have to shoulder tlte 

additional costs associated with achieving tit is aim. Moreover, Chrysler, like many other 

importers, has made significant investments of time and money to become a Trusted Trader 

and participates in C-TPAT Tier 3, ISA, FAST and the Automotive & Aerospace Center of 

Excellence and Expertise. Being an active member of these programs guarantees that 

Chrysler has robust processes in place to ensure compliance and security, dramatically 

reducing CBrs costs of monitoring all aspects of Chrysler's import activity. 
52 


87096.028

Testimony of David Cooper 

Global Customs Compliance Manager 

The Procter & Gamble Company 

Cincinnati, Ohio 

United States Senate Finance Committee 

Hearing on 

"S. 662, the Trade Facilitation and Trade Enforcement Action 0[2013" 

Wednesday, May 22, 2013 
53 


87096.029

Introduction 

Chairman Baucus, Ranking Member Hatch, members of the Committee, thank you for inviting 

me to testify this morning on S. 662, the Trade Facilitation and Trade Enforcement 

Reauthorization Act of 20 13. 

My name is David Cooper. I am the Global Customs Compliance Manager at Procter & Gamble 

where I am responsible for developing and implementing P&G's global tools, standard practices 

and systems to ensure compliance with customs regulations. My function is part of P&G's 

international trade global center of excellence. I also work closely with P&G's Global Brand 

Protection team, which is responsible for protecting consumers, retailers and our brands from the 

threat of counterfeit goods. 

P&G has 33 manufacturing facilities in 22 states (including Delaware, Maryland, Ohio, Utah, 

New Jersey, Georgia, Iowa, Kansas, North Carolina, and Pennsylvania) and approximately 

126,000 global employees. Ninety-nine percent of American households contain at least one 

P&G product and over 90% of the products we sell in the U.S. are manufactured in the U.S. 

More than 4.6 billion times a day, our trusted brands-Pampers, Tide, Bounty, Pantene, Olay, 

Gillette, Crest and many others-touch the lives of consumers in virtually every country. 

P&G's Supply Chain 

P&G's supply chain reflects our business operations and indeed our consumer base. It is global, 

diverse and key to our success as a company. We have thousands of U.S. suppliers from which 

we purchase raw materials, equipment, packaging and other inputs that allow us to manufacture 

our brands at our 33 U.S. manufacturing facilities. We also import raw materials and equipment 

for our U.S. manufacturing operations, and we indirectly purchase other imports that are brought 

into the U.S. by our suppliers as part of their own supply chains. 

Direct P&G imports amount to more than 35,000 entries each year, with a value of roughly $3 

billion. These shipments come into the U.S. through more than 50 ports of entry by container 
54 


87096.030

ship, rail and truck. On an average day, we manage almost 100 entries at a value of more than $8 

million. The ability of these shipments to quickly and efficiently pass through the Customs and 

Border Protection (CBP) import process is critical to our U.S. operations. 

In many cases, these products cannot be purchased in the U.S. Two brief examples illustrate this 

point. P&G imports a product not manufactured in the U.S. called pentammine cobalt dinitrate, 

which is the active ingredient in CoFlake, a proprietary cobalt catalyst used as a bleach activator 

in our Cascade dishwasher detergent. CoFlake is the ingredient in Cascade that helps prevent 

spotting and film on dishes. We also import a warp knit fabric that we use as fasteners on 

Pampers diapers. Again, this key component is not manufactured in the U.S. Keeping dishes 

spot-free and making disposable diapers more economical and easier to use are just two of the 

many cases where imports support P&G's U.S. manufacturing base and the performance of our 

brands. Timely CBP processing ofP&G's imported inputs helps us ensure reliable U.S. 

manufacturing operations. 

As important as efficiency is, our supply chain is more than a logistical or operational issue for 

us. Millions of times every day, imported materials are used by U.S. consumers as part of the 

Gillette blades we shave with, the Nyquil cold medicine we take or the Cover Girl make up we 

wear. The safety of these P&G products is our number one priority, and we build our supply 

chain around that fact. Our foreign suppliers are thoroughly vetted to ensure our products are 

safe. We have strict policies and standard operating procedures with our partners at all stages of 

our supply chain. Ensuring that raw materials we import are safe for consumers, and that finished 

products that cross into the U.S. are genuine P&G brands, are imperatives from both business 

and consumer protection standpoints. 

Intellectual Property Protection 

Protecting consumers against counterfeits is consistent with P&G's purpose to touch and 

improve the lives of consumers around the world. Counterfeit products are substandard, possibly 

harmful or dangerous and a form of consumer fraud. Counterfeit goods are inferior products and 

do not deliver on the high expectations and performance consumers expect and receive from 
55 


87096.031

legitimate P&G products, undermining consumer trust in our brands. In fact, a rise in consumer 

complaints is one indication that P&G consumers may have purchased a counterfeit product. 

Counterfeit goods confuse consumers with artificially low price points which affect our 

legitimate sales and profits. This lower rate of return undermines the significant investments 

P&G makes in creating the intellectual property and developing products that delight U.S. 

consumers. 

Our ability to grow as a company and meet consumer needs depends on successful product and 

operations innovation. This includes the successful development, introduction and marketing of 

new products and improvements to our equipment and manufacturing processes. The IP 

generated from these innovations is sometimes copied and imported into the U.S. by 

counterfeiters, making a strong intellectual property rights (IPR) enforcement regime at CBP 

critical to P&G's innovation efforts. 

Despite P&G's best efforts, we cannot win the fight against counterfeits alone. A collaborative 

relationship between CBP and P&G demonstrates the "public-private partnership" that is a 

crucial element to an effective IPR enforcement regime. Anti-counterfeiting efforts undertaken 

by law enforcement agencies overlap and intersect with those undertaken by individual rights 

holders like P&G. P&G assists CBP with its aggressive IPR enforcement program by offering 

our expertise and cooperation to identify, investigate and seize counterfeit products at the 

manufacturing site or within the supply chain. 

For example, each year we conduct many training sessions for up to 800 law enforcement 

officials and Customs' officers on how to distinguish genuine P&G products from counterfeits. 

P&G works in consultation with CBP on roughly 70 - 80 cases a year, from port seizures to full 

fledge undercover investigations with global sourcing. Also, P&G has an advisory role on CBP's 

Commercial Operations Advisory Committee (COAC) IPR Subcommittee, where P&G provides 

the voice of the consumer packaged goods industry on IP enforcement issues that rights holders 

face with CBP around the world. 
56 


87096.032

While P&G has been incredibly impressed with CBP's efforts and its willingness to collaborate 

on IPR enforcement matters, there are several intellectual property provisions in the Bill that we 

believe would remove current impediments to CBP's and rights holders' IPR enforcement 

efforts. 

P&G Views ofS. 662 

P&G applauds the efforts ofChairrnan Baucus, Ranking Member Hatch and others on this 

Committee in addressing trade facilitation, customs modernization and intellectual property 

protection in S. 662, the Trade Facilitation and Trade Enforcement Reauthorization Act of2013. 

Balancing the trade facilitation, trade enforcement and national security missions of CBP is not a 

simple task. We support the bill and find particular value in the following provisions: 

• Section 20l-Improving Partnership Programs: P&G is a Tier II company of the 

Customs-Trade Partnership Against Terrorism (C-TPAT) program and we have 

incorporated direct C-TP A T language into our existing standards and policies. To be 

clear, P&G's supply chain security is driven by consumer protection and operational 

considerations. Irrespective of our C-TP AT status, our internal and supplier policies 

would maintain a high level of import and supply chain security. However, having met or 

exceeded the security requirement for this program, we anticipated receiving in a 

measurable way the benefits highlighted by CBP for C-TP AT eompanies-Iower 

inspection rates, expedited processing at ports of entry, expedited treatment when 

containers are selected for scanning or inspection, and others. 

To date, we have not seen these benefits apply in a measurable way to our entries. We 

support the requirement in this provision that the Commissioner of the CBP consult with 

private and public sector stakeholders to ensure that C-TP AT and other partnerships 

provide participating companies commercially meaningful and measurable benefits. 

• Section 202-Trade Facilitation Program: The trusted importer program authorized in 

this section is powerful trade facilitation tool for CBP and participating stakeholders. The 
57 


87096.033

prospect of preclearance for imports is a powerful incentive for companies to adopt or 

maintain the highest levels of compliance with U.S. trade and customs laws and 

regulations. We support the Committee's requirement that CBP work with private 

stakeholders to ensure that the benefits provided under this program facilitate trade in 

direct, measurable and specific ways. 

• Sections 206-Automated Commercial Environment Computer System: Two decades 

have passed since the Automated Commercial Environmcnt (ACE) was authorized in the 

1993 Customs Modernization Act. Section 206 provides the resources and timeline 

required to fully implement the customs modernization requirements of ACE. If all 30 

aspects of this program are fully implemented as intended in the 1993 Modernization Act, 

importers like P&G will benefit from a simpler, more transparent, more efficient customs 

experience, facilitating legitimate trade. 

• Section 23 I-National IPR Center: P&G also supports the codification of the National 

Intellectual Property Rights Coordination Center (IPR Center). The IPR Center stands at 

the forefront in the global fight against intellectual property crime, as it seeks to 

coordinate investigation and interdiction efforts of key law enforcement agencies. The 

IPR Center provides an efficient, single point of contact for rights holders seeking 

assistance when their valued IP is under attack. P&G has worked closely with the IPR 

Center on a number of critical counterfeit investigations and has benefited greatly from 

coordinated enforcement efforts. 

• Section 241 - Sharing Information with Rights Holders: P&G supports Section 241 

because it gives CBP personnel the unequivocal authority to seek, and to receive 

assistance from experts in the private sector in determining whether a suspect shipment is 

genuine or counterfeit. The most qualified individuals to make such a determination are 

those who own the product's IP. 

For example, P&G can quickly identify if a suspect laundry detergent is legitimate or 

counterfeit in most cases if CBP provides us with a photo of its granules. In the case of 
58 


87096.034

suspect shampoo, if CBP provides us with printed identifiers from the bottle, P&O can 

identify which of the hundreds ofP&O shampoo formulas correspond to the genuine 

product, and give that information to CBP so the officer can run the appropriate field test 

to authenticate. 

Prior to the implementation of provisions included in last year's National Defense 

Authorization Act (NDAA), CBP interpreted the law and its own policies as preventing 

its officers from providing suspect counterfeit product samples to rights holders and 

requiring officers remove various markings, including UPC codes and other preprinted 

codes. During this period, P &0 has been presented with evidence of suspected 

counterfeit products that was so heavily redacted, or refused photos or samples, so as to 

make the authentication process impossible. 

Upon implementation of these provisions last year's NDAA, CBP officers can now send 

un-redacted samples to rights holders but only after requesting proof of authentication 

from the importer and waiting a 7-day period. While an improvement, the communication 

process between CBP officers and rights holders is cumbersome and highly inefficient. It 

also creates a delay in identifying counterfeits that may pose a health and safety risk to 

consumers. 

Section 241 is a legislative fix that is necessary for CBP to bring rights holders into the 

authentication process as soon as possible. The faster CBP can conclusively determine 

the authenticity of suspect goods, the faster legitimate goods make it to market. Any can 

increase costs to manufacturers and consumers. Unnecessary detention or seizure of 

legitimate goods mistakenly believed to be counterfeit, or entry into market of counterfeit 

goods mistakenly believed to be legitimate, creates additional issues for manufacturers 

and consumers. 
59 


87096.035

Conclusion 

Mr. Chairman, Senator Hatch, thank you again for the invitation to testify this morning. P&G 

values our partnership with you and this Committee on this important Bill. We also value our 

partnership with the CBP and we believe this bill will help CBP keep our country safe while 

allowing globally engaged companies like P&G to be competitive here in the U.S. and 

throughout the world. 
60 


87096.036

FINANCE COMMITTEE QUESTIONS FOR THE RECORD 

United States Senate 

Committee on Finance 

Hearing on 

S.662, The Trade Facilitation & Trade Enforcement Act of2013 

June 11,2013 

Questions to Mr. David Cooper, Global Customs Compliance Manager, Procter & Gamble, 

Cincinnati, OH 

Ouestions from Chairman Baucns 

Ouestion 1: 

The creation of the Office of Trade (OT) consolidated CBP trade policy, program 

development, and compliance measurement functions into one office. Some of the revennerelated positions, including import specialists and entry specialists, remained under the 

Office of Field Operations (OFO). What effect has this had on your interactions with CBP, 

especially in terms of communication and policy implementation? Some have proposed 

moving these positions from OFO to ~T. What are your thoughts on this proposal? 

Question 2: 

Answer: These organizational changes at CPB haven't impacted P&G's 

operations or interactions with CBP in a substantive way. We support efforts to 

achieve meaningful organizational efficiencies at CBP that result in faster and 

simpler clearances, but we have no position on the proposal to move revenue 

positions from OFO to ~T. 

The Advisory Committee on Commercial Operations of Customs and Border Protection 

(COAC) is a forum for the Secretaries of the Department of Treasury and the Department 

of Homeland Security to discuss the commercial operatious of U.S. Customs and Border 

Protection and related DHS functions with the trade community. Do you see benefits in 

including a representative, either formally or informally, from U.S. Immigration and 

Customs Enforcement (ICE)? Also, current COAC meetings are open to the public and 

must follow the rules under the Federal Advisory Committee Act (FACA). What benefits 

do you see in allowing the COAC to hold closed meetings in order to address specific issues 

for which disclosure would compromise CBP operations or ICE investigations? 
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87096.037

Qnestion 3: 

Answer: P&G is not a member of the COAC and as a result our direct experience 

is very limited. We would not be opposed to fonnal or informal ICE participation 

in the COAC. 

Holding occasional closed COAC meetings to address issues that would otherwise 

compromise CBP and ICE investigations is reasonable. It would allow 

government and non-government stakeholders to address issues candidly and 

freely without risking interference with sensitive investigations. 

The President's FY14 budget proposed providing funds for the Department of Homeland 

Security to conduct a study on the feasibility and cost related to imposing a crossing fee on 

pedestrians and passenger vehicles along the northern and southern borders. Today, these 

travelers enjoy free movement across our borders. As a border state, Montana's economy 

is dependent upon cross-border trade and tourism. Businesses rely on the free flow of 

people across our northern border to export world class Montana products. And for 

Montanans, crossing the border is a way of life in order to access essential services, travel 

to their jobs, to shop and dine, to attend church, and to visit family and friends. I'm 

concerned about the impact this would have for Montanans. In your opinion, what wonld 

be the impact of imposing such a fee in other states or on your businesses? 

Question 4: 

Answer: The impact on P&G would be minimal. Our employees do not cross the 

northern and southern borders in a business capacity as pedestrians or in 

passenger vehicles at a rate that would cause us to be seriously concerned by this 

proposal. 

The President's FYl4 budget also included a proposal to increase certain customs user 

fees. As you know, customs user fees are paid by the trade community in return for 

customs services, such as the inspection and processing of imported merchandise. The 

budget proposes a $2 increase to the fee on commercial trucks, commercial aircraft, 

commercial vessel passenger, and international mail subject to duties, COBRA user fees, 

and a proportionate increase for all other COBRA user fees. This funding from increased 

fees would fund an additional 1,877 Customs and Border Protection Officers, which would 

help to address long wait times and speed processing of goods across our borders. In fact, 

wait times at most U.S. ports of entry would be reduced by 30 minutes. What are your 

views on the proposal to increase these customs user fees? How can the trade community 

be a partner in ensuring CBP has sufficient funding to facilitate the movement of goods 

across our borders? 
62 


87096.038

Answer: The trade community clearly has a vested interest in efficient processing 

and clearance of goods crossing the border and should bear a reasonable portion 

of the cost of these services. P&G believes some of the wait times could be 

reduced by funding additional CBP officers. We also believe wait times could be 

reduced by simplifying the information submission process (fully implementing 

ACE), by moving from an entry-based clearance process to an account-based 

clearance process, and through the establishment of more robust preclearance 

programs that provide trusted importers with clear and measurable benefits if the 

meet high standards of internal controls and CBP eligibility criteria. 
63 


87096.039

STATEMENT OF HON. ORRIN G. HATCH, RANKING MEMBER 

U.S. SENATE COMMITTEE ON FINANCE HEARING OF MAY 22, 2013 

THE TRADE FACILITATION AND TRADE ENFORCEMENT ACT OF 2013 

WASHINGTON - U.S. Senator Orrin Hatch (R-Utah), Ranking Member of the Senate Finance 

Committee, today delivered the following opening statement at a committee hearing 

examining S. 662, the Trade Facilitation and Trade Enforcement Reauthorization Act of 2013: 

The long and distinguished history of the United States Customs and Border Protection 

agency dates back to 1789, when the First Congress of the United States created its predecessor, 

the United States Customs Service. 

The U.S, Customs Service was the first agency of the federal government. Its primary 

function was the collection of import duties, which placed the agency under the direct authority 

of the Secretary of the Treasury. 

As our nation evolved so did the agency's mission. 

Most recently, following the terrorist attacks of 9/11, Congress passed the Homeland 

Security Act of 2002 to help improve border security. That act reorganized the U.S. Customs 

Service along with other agencies into two new agencies now known as Customs and Border 

Protection (CBP) and Immigration and Customs Enforcement (iCE). 

Since their creation, these two agencies have faithfUlly corried out their dual missions of 

facilitating trade and protecting our nation from terrorist attacks. 

Today, international trade is a vital component of our economy. 

U.S. imports and exports amount to trillions of dollars. 

Robust international trode enables companies such as Proctor and Gamble and Oracle ta 

expand their operations around the world and in my home state of Utah. 

As our future economic growth is increasingly linked to international trade it is important 

that Congress works to enhance our economic security. 

That is why Senatar Baucus and I have introduced S. 662, the Trade Facilitation and 

Trade Enfarcement Reauthorizatian Act of 2013. 

Among other things, this bill would improve our ability to protect one of our nation's 

most important economic assets: intellectual property. 

We included in the bill provisions to codify the National Intellectual Property Rights 

Coordination Center which coordinates federal efforts to combat intellectual property rights 

violations. 
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87096.040

The bill also significantly expands CBP's tools and authorities to protect intellectual 

property rights at the border by requiring the agency to share information about suspected 

infringing merchandise with rights holders. 

Our legislation further requires CBP to establish a process for enforcing copyrights while 

registration with the Copyright Office is pending, and to publish information about unlawful 

circumvention devices that are seized. 

S. 662 also strengthens CBP's targeting of goods that violate intellectual property rights, 

and requires an intellectual property rights education campaign for travelers at the border. 

And, the bill requires the Customs dec/a ration form that everyone entering the country 

fills out to contain a warning that the importation of goods that infringe intellectual property 

rights may violate criminal and/or civi/laws and may pose serious risks to health and safety. 

This seems to me to be an obvious way to raise awareness about the dangers of 

intellectual property rights infringement at no cost to u.s. taxpayers. 

Our bill will do many other things to facilitate trade, including: improving the CBP 

Trusted Trader partnership programs; enhancing the private-sector advisory system so that u.s 

importers and others involved in trade have a stronger vaice in formulating trade policy; and 

ensuring that CBP completes and deploys information technology systems such as the 

Automated Commercial Environment which fosters trade facilitation through the use of 

automation. 

Through these provisions, S. 662 will help alleviate unnecessary and costly delays at the 

border. At the same time, it will help to prevent unsafe and illegal goods from entering the 

United States as well as protect American businesses from unfairly traded goods coming into 

the country. 

This legislation is long overdue. 

S. 662 is a strong bill that will benefit our economy and help ensure that America 

remains one of the most competitive nations in the world. 

I look forward to continuing our work with CBP to ensure that its dual mission of 

protecting our homeland and facilitating trade is successfully fulfilled. 

At the same time, I hope that the administration will soon nominate a new CBP 

Commissioner. 

This agency has been without a Senate-confirmed commissioner since December of 

2011, which is for too long. In choosing a new commissioner, I hope the administration will 

make sure that individual has a strong faundation and understanding of international trade. 

Mr. Chairman, thank you, once again, for holding this hearing today. I look forward to 

hearing from each of our witnesses about how S. 662 can help to strengthen and improve the 

trade facilitation and enforcement functions of CBP and ICE. 

### 
65 


87096.041

WRITTEN TESTIMONY OF CLARK R. SILCOX 

GENERAL COUNSEL, 

NATIONAL ELECTRICAL MANUFACTURERS ASSOCIATION 

ROSSLYN, VIRGINIA 

Legislative Hearing on S.622 

The Trade Facilitation and Trade Enforcement Reauthorization Act of 2013 

United States Senate 

Committee on Finance 

May 22, 2013 
66 


87096.042

CHAIRMAN BAUCUS, RANKING MEMBER HATCH and Members of the Committee. Thank 

you for inviting me to appear before the committee to address the trade enforcement provisions 

of The Trade Facilitation and Trade Enforcement Reauthorization Act of 2013. I testify primarily 

about Section 241 of the Bill, but I note Sections 231 and 242 through 258 are intended to 

enhance intellectual property enforcement and we are in support of those provisions as well. 

I am Clark Silcox, General Counsel of the National Electrical Manufacturers Association 

(NEMA), which is headquartered in Rosslyn, VIrginia. NEMA represents approximately 430 

North American manufacturers of electrical equipment used in the generation, distribution, and 

control of electricity. The product scope of our organization is very broad and includes over 50 

different electrical product groups. It includes electrical equipment used in factories, in 

commercial buildings, apartments and homes, as well as hospitals, schools, and government 

buildings. These are products sold for installation by electrical contractors in construction 

projects, to utilities, as well as medical imaging and radiation therapy equipment. It also 

includes some Consumer products sold at retail such as batteries, extension cords, smoke 

detectors, thermostats, lighting products, and for the do-it-yourself homeowner, products like 

circuit breakers, fuses, switches and receptacles that are also sold at retail. 

Our member companies have business operations and employees in all fifty states, and they 

have either headquarters or plants in the states of every member of this committee. Of interest 

to the committee members, NEMA member companies who have been victims of electrical 

product counterfeiting have headquarters and/or production facilities in New York (receptacles, 

ground fault circuit interrupters, conduit fittings), Ohio (lighting, ground rods, and batteries, 

welding products), Pennsylvania (circuit breakers), Georgia (batteries, circuit breakers), North 

Carolina (ground rods, receptacles, batteries), Florida (batteries) and New Jersey (batteries). 

We have member companies with headquarters and/or production facilities in many other states 

who have been impacted by counterfeiting as well. 

Product safety is a major concern of our industry, and many electrical products are third-party 

tested to safety standards by independent laboratories such as Underwriters Laboratories, CSA 

Group, Intertek, and other testing and certification organizations. Counterfeit electrical products 

are frequently found to be substandard in terms of safety or product performance 

characteristics. One of our member companies with headquarters and manufacturing in Illinois 

learned they had a counterfeiting problem a few years ago when they were wrongly named as a 

defendant in a products liability lawsuit involving a defective counterfeit product, 

The electrical sector is not often viewed as the poster child for trademark counterfeiting, yet 

annual Customs data has recognized our products in the top 5 seizure categories for health and 

safety products. The counterfeit electrical products that we have found in this country include, 

for example, residential circuit breakers, medium voltage circuit breakers, extension cords, 

batteries, ground rods, light bulbs, electrical receptacles, ground fault circuit interrupters, 

electrical connectors, electrical adaptors, and outside the United States a number of other 

electrical products. Members of our industry, along with the testing and certification industry 

whose certification marks have been counterfeited, have worked with US Customs at the ports 

to help them identify suspect counterfeit products, educating them where genuine products are 

made and where counterfeit products come from. I have been personally involved in several of 

those training programs. And we appreciate the public private partnership that has combined 

their resources to achieve some good results. 

Sometimes, based on information provided by the trademark owner to Customs, the port 

officials are able to make a determination that a product is counterfeit or genuine. In that case, 
67 


87096.043

our training programs have worked and are effective, There are situations where it can be very 

difficult for a port official to determine whether a suspect product is genuine or counterfeit. 

I hold in my hand today a counterfeit circuit breaker and counterfeit packaging for that circuit 

breaker. The genuine product is made here in the USA .- Nebraska, Knowing that, a port 

official seeing the product come off a ship or airplane from China ought to be able to make the 

determination that the product is counterfeit and take action, That decision is reinforced when 

the packaging that comes from China says "Made in the USA" as this counterfeit package does. 

In contrast, NEMA battery manufacturers make batteries for the domestic market here, but they 

will make batteries for the ASian, European and African markets overseas. The labeling of the 

counterfeit batteries can successfully simulate the genuine labeling and it can be difficult to tell 

the difference by visual inspection. A look under the hood so to speak, may be required, and 

sometimes the ultimate determination of whether the battery is genuine or counterfeit is secured 

by an X-ray examination that can see the structural differences inside the battery cell. 

Historically, as part of their port training programs, NEMA manufacturers told the ports, if you 

need our assistance, send us the product for study and we will have a response for you within 

48 hours of receipt of the sample. And we did. Customs has 30 days to make a determination 

whether goods it is holding are genuine or counterfeit. 

Customs officers were forced to suspend that part of public private partnership a couple of years 

ago when they were reminded of an agency legal opinion that port officials violated the Trade 

Secrets Act if they disclosed images or samples of products to trademark owners whose marks 

were on the suspect products. 1 This was a curious interpretation of trade secrets. If the product 

is counterfeit and the importer has no legal right to sell the product, a claim of trade secrets 

makes no policy sense. If the product is genuine, the trade secrets inherent in the product 

belong to the trademark owner. 

Although Customs' interpretation has now been superseded by Section 818(g) of the National 

Defense Authorization Act of 2012 (P,L. 112-81), that provision sunsets upon the enactment of 

this bill and Customs has not stepped forward to implement the 2012 law. See Addendum. It is 

time to make this policy permanent as provided in Section 241 of this bill and implement it so 

that the ports hands are no longer tied by an erroneous interpretation of the Trade Secrets Act. 

That is the intent of Section 241. 

There are twin policies at stake here and they are reflected in the title of this bill: Trade 

Facilitation and Trade Enforcement. Brand owners are in the best position to determine quickly 

if it is their product or not. The brand owner may be the only person who can make that 

determination. In the civil litigation that ensued over the counterfeit circuit breakers in this 

country, the typical defense asserted by those who imported them was _ •• despite the fact that 

they came from China with Made in the USA on the packaging ••• We were fooled. We could 

not tell. We thought they were genuine.2 So in terms of trade facilitation, if Customs has doubts 

about the authenticity of a product, the most effective tool is to allow the manufacturer to 

examine the product and give them a deadline to respond, and both trade facilitation and trade 

enforcement are supported at the same time. 

1 See Addendum. 

, Square 0 Co. v Breakers Unlimited, 2009 WL 1407019 at *2 (S.~. Ind. 2009). See also Square 0 Co. v Breakers 

Unlimited, 2010 Wl381334 *1 (S.D. Ind. 2010)(final Judgment on Jury verdict that defendant sold counterfeit 

circuit breakers, but did not act with willful blindness). 
68 


87096.044

ADDENDUM 

Legal Background on Information Sharing Respecting 

Suspect Counterfeit Goods 

Historically, the identification of, and enforcement against, suspected counterfeit shipments 

entering the country generally followed the process described below. Upon their arrival at a port 

of entry, imported goods are presented to US Customs and Border Protection for examination 

and inspection. Customs regulations authorized officers, "At any time following presentation of 

the merchandise for Customs examination ... to provide a sample of the suspect merchandise 

to the owner of the trademark or trade name for examination or testing to assist in determining 

whether the article imported bears an infringing trademark or trade name."3 On that authority, if 

a CSP officer had questions regarding the authenticity of those goods, they would routinely 

query their Recordation Database, find the designated contact for the trademark owner, and 

provide them with a sample or digital image of the goods. Our members report an average 

turnaround time of 48 hours or less, from the time that image or sample is received, to respond 

to CSP's inquiry. During this same period, CBP was permitted to provide the trademark owner 

with a variety of information related to the shipment, including the date of the importation, the 

port of entry, the quantity involved, a description of the merchandise, and the country of origin of 

the merchandise.4 

Because of the potential for unreasonable delay for legitimate imports bound for the U.S. 

market, Federal Regulations have required (both in the past, and currently,) prompt action by 

CBP in making determinations about shipments' suitability for entry, Within five days of the 

goods' presentation for examination, pursuant to 19 CFR 133,25, CBP is required to either 

permit their entry, or provide notice to the importer that the goods are being detained for a 

suspected intellectual property violation. If the officer chooses to detain the goods, such 

investigation, absent a showing of good cause, is to be concluded within 30 days of the goods' 

presentation for inspection. Following the issuance of a notice of detention, the importer is 

permitted to present evidence that the importation of the goods is, in fact, not prohibited or can 

be remedied by action prior to the release of the goods. 5 During this period of detention, the 

trademark owner whose rights are implicated can likewise provide evidence to demonstrate that 

the importation of the goods in question would constitute an IP violation, and that CBP should 

therefore seize the shipment 

At the conclusion of its investigation, CBP would either release the goods into the country (if the 

evidence available was insufficient to establish an IP violation), or seize the goods (if the 

evidence was sufficient to establish a violation), Following a seizure of articles bearing a 

counterfeit mark, CBP was required to provide to the owner of the mark both the information for 

which disclosure was required following detention of the goods, as well as the name and 

address of the manufacturer, the exporter, and the importer,6 

319 CFR 133.2S(C). Similar authority, with respect to imports violating copyrights is set forth in 19 CFR 

133.43. 

419 CFR 133.2S(b). Disclosure ofthat same information to the trademark owner is not permissible, but 

required, by the regulation within 30 days of the issuance of a notice of detention. 

5 See, 19 CFR 133.2s(a), 133.22(C), 133.23(d). 

619 CFR 133.21(C). 
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87096.045

Several years ago, U.S. Customs and Border Protection ("CBP") announced a change in policy 

that has served only to frustrate the sort of collaboration that was once the norm. The agency 

advised its personnel that, even when made for the limited purpose of determining whether 

goods intended for import were authentic or counterfeit, the disclosure of certain information 

regarding that shipment was impermissible. The rationale offered by CBP is that such 

disclosures would constitute a violation of 18 U.S.C. 1905 ("the Trade Secrets Act"), and 

Customs Regulations concerning the procedures for providing information and samples related 

to suspected IP violations. CBP points to the issuance of Customs Directive 2310-00BA7 

(hereafter, "the Directive"), dated April 7, 2000, as the date of the formal change in policy, 

however NEMA members continued to enjoy data sharing under historical practices up until 

approximately 200B, and then it changed. 

The Directive includes language in Section 5.2.3, which requires Customs officers to "remove or 

obliterate any information indicating the name and/or address of the manufacturer, exporter, 

and/or importer, including all bar codes or other identifying marks," prior to the release of any 

sample to a trademark holder. The basis for the Directive appears to be tied to an overlyformalistic reading of the relevant regulatory code sections related to the sharing of information 

regarding, and samples of, the suspect shipment. The apparent conflict, as seen by CBP, is 

between CBP's officers' authority to seek assistance by providing a physical sample (or a digital 

image of those goods) to a trademark owner from the date the goods are presented for 

inspections, and the timing authorized for the disclosure of other information related to the 

shipment.9 CBP has stated that if various markings, distribution codes or the like might reveal to 

the trademark owner any information that would otherwise only be made available after a 

determination that the goods should be seized, any such markings must be removed or 

redacted before providing the samples to the rights-holder. It is worth noting however, that no 

such language mandatinq the removal or redaction of information Is Included in the relevant 

regulatory code sections. 0 Contrary to CSP's position, Customs regulations provide no basis 

whatsoever for the proposition that samples of the suspect goods should be provided to the 

rights-holder in any condition other than that in which they were presented for inspection. 

CBP argues, by extension, that because it believes it has no specific authorization to reveal that 

information relating to the identity of the manufacturer, exporter, or importer, pre-seizure - and 

on the assumption that bar codes, or other information included on the product or packaging 

would reveal that information to the trademark owners - that providing unredacted samples or 

images of the goods would constitute a violation of the Trade Secrets Act. That statute prohibits 

the disclosure by a federal employee of confidential information to a third party which is not 

otherwise authorized by law. Violations of the statute are punishable by no more than one year 

imprisonment, and removal from office or employment. 11 

7 See, U.S. Customs & Border Protection -Customs Directive 2310-008A. 

B See 19 CFR 133.2S(C). 

9 Compare 19 CFR 133.2S(b) ,permitting the disclosure, from the time of presentation, of the date of 

importation, the port of entry, a description of the merchandise, the quantity involved, and the country of 

origin of the merchandise; and 19 CFR 133.21(C), authorizing the disclosure of the above information, as well as the identity of the manufacturer, exporter, and importer, subsequent to a seizure. 

10 Compare, Customs Directive 231O-008A, 19 CFR 133.21 and 19 CFR 133.25. 

11 See, 18 U.S.C. 1905. 
70 


87096.046

It is clear that the conduct In question - the provision of samples to rights-holders by CBP 

officers, for the limited purpose of seeking assistance in fulfilling its IP enforcement mission -is 

not the sort of conduct that Congress intended to crlmlnalize by its enactment of the Trade 

Secrets Act. Furthermore, such conduct should not be precluded by the Act, because the bar 

codes and other such information included on the products and packaging in question are not 

"trade secrets." Were the goods to be released into the U.S., those same codes will be plainly 

visible to the trademark owner, and to any consumer who finds the product on a store shelf. 

The markings themselves are in no way secret or confidential; the only arguable secret inherent 

in the markings is the Information encoded by the markings. But even if that assertion is 

accepted, the disclosure of an unredacted sample or Image to the trademark owner would not 

run afoul of the Act. If the suspect goods in question were, In fact, legitimate goods, then the 

codes and information in question were applied by, and owned by the rights-holder to whom 

they would be disclosed; and the Trade Secrets Act does not prohibit the disclosure of a trade 

secret to its owner. If the goods were counterfeit however, any such codes included on the 

goods will be indecipherable by the trademark owner; they will not reveal any information 

regarding the identity of the manufacturer, exporter, or Importer, but simply reveal the fact that 

the goods are not genuine. 

Though drafted broadlr,12courts and federal agencies have generally construed the Trade 

Secrets Act narrowly.1 CBP's adopted policies though take a very expansive view of the range 

of conduct that is prohibited by the Act. This expansive view is unwarranted. 

In December 2011, Congress addressed this very issue with its enactment of provisions 

pursuant in the National Defense Authorization Act. authorizing the Secretary of the Treasury to 

"share information appearing on, and unredacted samples of, products and their packaging and 

labels, or photographs of such products, packaging, and labels, with the right holders of the 

trademarks suspected of being copied or simulated for purposes of determining whether the 

products are prohibited from importation pursuant to such section," in cases where CBP 

suspects the goods of being imported in violation of trademark law. 14 Since the enactment of 

that law however, CBP continues to refuse to provide such Information and unredacted 

samples, purportedly due to conflicts between that law and existing regulations. Furthermore, 

because the Defense Authorization provisions are scheduled to sunset upon the enactment of 

forthcoming Customs Reauthorization legislation. Congressional action is necessary to ensure 

that CBP will not revert to its current policy in the future. Section 241 will direct the ports to 

provide to trademark and copyright owners information that appears on the merchandise and its 

packaging, including unredacted images and product samples, if examination of the 

merchandise would assist the port in determining if a counterfeiting violation has occurred. 

12 One court has observed that the Act, "had a bizarre effect of criminalizing and imposing prison terms for 

almost every communication by government employees of information they obtain in the scope of 

employment." See United States u. Wallington, 889 F. 2d 573,576 (5th Cir. 1989). 

13 See, e.g., "Business Confidentiality After Chrysler." United States Department of Justice, FOIA Update, 

Vol. 1, NO.2 (1980), describing the policy of the Department of Justice's Criminal Division to not 

prosecute government employees for violations of 18 U .S.C. 1905, if the employee was acting in good faith 

to comply with a request made pursuant to the Freedom of Information Act. 

14 See, National Defense Authorization Act for Fiscal Year 2012, Public Law No: 112-81, at Section 818(g). 
71 


87096.047

FINANCE COMMITTEE QUESTIONS FOR THE RECORD 

United States Senate 

Committee on Finance 

Hearing on 

S.662, The Trade Facilitation & Trade Enforcement Act of 2013 

June 11,2013 

Questions to Mr. Clark Silcox, General Counsel and Secretary, National Electrical 

Manufacturers Association, Rosslyn, VA 

Ouestions from Chairman Baucus 

Question 1: 

The creation ofthe Office of Trade (OT) consolidated CBP trade policy, program 

development, and compliance measurement functions into one office. Some of the revenuerelated positions, including import specialists and entry specialists, remained under the 

Office of Field Operations (OFO). What effect has this had on your interactions with CBP, 

especially in terms of communication and policy implementation? Some have proposed 

moving these positions from OFO to OT. What are your thoughts on this proposal? 

Answer: NEMA believes that OFO needs to maintain control of both the 

commercial positions because: 

there needs to be unity of command. Some people reporting through one chain and 

others reporting through another is not effective. 

the Office of Trade (OT) supports the present reporting system through OFO. 

the new Centers for Excellence and Expertise (CEEs) will profit from a strong interrelationship with the port director (OFO). When the CEE can't get support for 

something, that relationship means that the port director goes to bat for them. An 

example of this is the strong relationship that exists in LA between two CBP leaders. 

That will mean that the CEEs will be more effective on performing their anticounterfeiting function. 

the goal -- developing a stronger presence within the CBP culture and hierarchy for the 

OT and commercial staff -- can better be accomplished through more cross-assignment of 

OFO and Trade staff. Career OFO people need to work for a time at OT and vice 

versa. This is underway but ideally would be expanded. The culture at CBP -- where 

only uniformed officers have political clout within the organization - needs to change. 

Question 2: 

The Advisory Committee on Commercial Operations of Customs and Border Protection 

(COAC) is a forum for the Secretaries of the Department of Treasury and the Department 
72 


87096.048

of Homeland Security to discuss the commercial operations of U.S. Customs and Border 

Protection and related DHS functions with the trade community. Do you see benefits in 

including a representative, either formally or informally, from U.S. Immigration and 

Customs Enforcement (ICE),? Also, current COAC meetings are opcn to the publie and 

must follow the rules under the Federal Advisory Committee Act (FACA). What benefits 

do you see in allowing the COAC to hold closed meetings in order to address specific issues 

for which disclosure would compromise CBP operations or ICE investigations? 

Answer: NEMA does not have a formal representative on the COAC, but has on 

occasion had discussions with persons, including members, who are familiar with the COAC's 

structure. The COAC is presently led by CBP, Treasury and DHS. All have representatives at 

the meeting; however, CBP sets me agenda. Presently, a representative ofICE attends the 

meetings and sits on the dais on an informal basis. NEMA believes me mandate of COAC 

should not be diluted by expanding its oversight to ICE. That would require an entire set of 

private sector people who work with ICE sitting on the COAC. Presently, there is very little 

expertise on ICE operations. Also, the focus of COAC is on commercial operations -- both 

facilitation and enforcement. There is very little subject matter t11at crosses the line into me 

scope ofICE at present. ICE's presence helps to educate ICE on commercial issues. 

As to the question about closed sessions, NEMA understands that is the way the COAC 

is run now, de Jacto. There is a closed meeting the day before the public session so that 

confidential discussions can occur. 

Question 3: 

The President's FY14 budget proposed providing funds for the Department of Homeland 

Security to conduct a study on the feasibility and cost related to imposing a crossing fee on 

pedestrians and passenger vehicles along the northern and southern borders. Today, these 

travelers enjoy free movement across our borders. As a border state, Montana's economy 

is dependent upon cross-border trade and tourism. Businesses rely on the free flow of 

people across our northern border to export world class Montana products. And for 

Montanans, crossing the border is a way of life in order to access essential services, travel 

to their jobs, to shop and dine, to attend church, and to visit family and friends. I'm 

concerned about the impact this would have for Montanans. In your opinion, what would 

be the impact of imposing such a fee in other states or on your businesses? 

Answer: NEMA has no information at this time in response to this question. 

Question 4: 

The President's FY14 budget also included a proposal to increase certain customs user 

fees. As you know, customs user fees are paid by the trade community in return for 

customs services, such as the inspection and processing of imported merchandise. The 

budget proposes a $2 increase to the fee on commercial trucks, commercial aircraft, 

commercial vessel passenger, and international mail subject to duties, COBRA user fees, 
73 


87096.049

and a proportionate increase for all other COBRA user fees. This funding from increased 

fees would fund an additional 1,877 Customs and Border Protection Officers, which would 

help to address long wait times and speed processing of goods across our borders. In fact, 

wait times at most U.S. ports of entry would be reduced by 30 minutes. What are your 

views on the proposal to increase these customs user fees? How can the trade community 

be a partner in ensuring CRP has sufficient funding to facilitate the movement of goods 

across our borders? 

Answer: NEMA has no information at this time in response to this question. 

Questions from Senator Hatch 

Question t: 

You make an important point in your testimony: protection of intellectual property rights 

is riot just about keeping out low priced counterfeit products, it is about consumer safety. 

Can you provide me with an example of how a counterfeit product has impacted consumer 

safety in the past? 

Answer: As I indicated in my oral testimony, a substantial number of counterfeit 

electrical products are sub-standard. In the United States electrical products sector, a significant 

number of products arc "listed" or evaluated and certified by third-party testing organizations to 

confbrmity with safety standards. This involves a significant investment on the part of the 

domestic electrical manufacturing industry, an investment and expense that is typically avoided 

by tirms producing counterfeit versions of their products. In some case, the counterfeit mark on 

the product is the certification mark of the third party testing organization who has never 

evaluated the counterfeit product. When these products arc evaluated, they are found to fail in 

unsafe ways that risks damage or injury to property or person. Here is an example where a cord 

caught fire in a manner of minutes after it was connected to an electrical outlet: 

The most tragic example of an unsafe counterfeit product that I am familiar with 

actually occurred outside of the United States when it young British boy was killed by a 
74 


87096.050

counterfeit electrical adaptor while on vacation in Thailand. The details of this event are 

described in a newspaper article and the inquest report, which I attach to my responses to these 

written questions. 

In my oral testimony I also mentioned the example of a NEMA member company 

that learned it had a counterfeiting problem when it was sued in a product liability lawsuit here in 

the united States. I attach a report from the company. 

Finally, a few years ago, there was a seizure of counterfeit circuit breakers at San 

Francisco. A sample of the counterfeit circuit breaker was provided to Underwriters 

Laboratories for evaluation, and applying a simple standard short circuit test, the following photo 

illustrates the catastrophic event that occurred during the test. Had this event occurred in 

someone's home when people were present near the panelboard, very serious injury could have 

occurred. 

Question 2: 

S. 662 authorizes and directs Customs and Border Protection to share information with 

Intellectual Property Rights holders to help quickly ascertain whether a suspect good 

crossing the U.S. border violates a recorded copyright or trademark. 

Please tell us whether your association sees this as something that will serve to protect U.S. 

intellectual property rights at the border? 
75 


87096.051

Answer: As I indicated in my oral testimony, NEMA believes that IPR holders 

are in the best position to respond quickly to CBP inquiries about suspected counterfeit products. 

We understand the CBP recognizes this as well. In the past, our member companies have been 

able to respond quickly to CBP inquiries about suspect counterfeit products and affirm that the 

products are either genuine or counterfeit. Currently, US Treasury policy requires CBP to 

provide the importer a 7 -day window to first respond to such inquiries. In our experience, the 

importers of counterfeit electrical products are the least qualified to make this assessment and 

sometimes do not even respond, and thus both trade facilitation and intellectual property 

enforcement is hindered by this policy. Given that CBP has to make a decision to seize within 

30-days, this 7-day delay in reaching out to the most knowledgeable party who can assist CBP in 

determining whether the product is genuine or not prejudices officers at the port in the timely 

performance of their duties. We understand that it is the intent ofS.622 to allow CBP to 

promptly share information with IPR holders when they suspect that imported merchandise is 

counterfeit without impediment, and we support that policy and intent. As I indicated in my 

oral testimony, we believe this is something that will not only serve to protect US IPR holders at 

the border, but in the case of counterfeit electrical products it will protect the safety and health of 

American consumers. The Committee may want to emphasize in S.622 that CBP shall share the 

specified information with IPR holders immediately, promptly, without delay or some similar 

language. Except in the case where there is a law enforcement reason not to share with the 

importer, we would not object to CBP making whatever inquiry it believes it needs to make of 

importers simultaneously. The goal is to allow CBP officers to do their job in the most timely 

way to both facilitate trade and protect intellectual property rights. 
76 


87096.052
77 


87096.053

In the Southwark Coroners Court 

In the Matter of an Inquest touching the death of 

Connor Dean O'Keeffe 

VERDICT 

Box 3 

Connor was on holiday In Phuket Province at the Sunset Beach Resort 

Hotel Pa Tong with his family at the end of 2006. They were enjoying a 

holiday in which a lot of activities were taking place but in the 

preparations for the holiday! the charger unit for Connors Nintendo 

Gameboy had been forgotten. As a result his step father bought a 

charger unit which appeared to be an official product from a local 

store. It was not a licit product but a counterfeit one. 

On the 30th December 2006 following a day quad biking the family 

returned home at about 4 PM and Connor and his mother and other 

family members ordered some food from the hotel. Unusually Connor 

asked for more and his mother ordered some additional food for him 

which was delivered in only a few minutes. When she called Connor 

there was no reply and she went to look for him wondering if he had 

gone Into the pool which he had not. She heard a shout from his step 

aunt Maureen Hopkins and discovered Connor unresponsive on the 

floor of the.hotel room (2101). She felt he was dead and .• plcked him 

up to lay him on the bed. Maureen told her that when she found 

Connor he had been attached to the flex of the charger unit, the 

Gameboy had not been connected and when she had pulled the unit 

from him she got a shock herself. 

Assistance was given Initially by other people at the hotel and 

ultimately by Emergency Services and· resuscitation was continued 

sadly without success for some time following his arrival at the 

Hospital at Pa Tong where he was certified dead at about 8:00 PM that 

day. 

The charging unit was examined at the laboratories of LGA in Nurnberg 

Germany who reported on the 24th May 2007 that the unit was not licit 

and had a serious defect making it likely that It could be easily live and 

capable of delivering a fatal shock. The unit would not have complied 

with EU safety standards and was a hazard. 
78 


87096.054

In the initial police report there was some confusion over whether 

Connor had attempted to plug In the charger whilst wet from 

swimming. On the evidence although Connor had been swimming on 

his return from the days quad biking he was dry and changed Into dry 

Clothes before he ate. 

Box 4 

Accidental Death 

11th October 2007 John Sampson 

H M Coroner for ..the Inner South 

District of Greater London 
79 


87096.055

Annex A of the ERCA·Safety Alert 1/2007 (informative): 

Please note that this letter Is only attached to inform about the message provided by 

PRCA. 

112007 Strandvise® connectors 

This message was send by the PRCA. Please reconsider the utilization of strandvises 

produced by MacLean Power Systems since the manufacturer does not allow any application 

on ropes courses. 

Ropes Course Advisory - Strandvise 

Recently a Qualified Ropes Challenge Course Professional attempted to 

purchase strandvise devices from a well known challenge course 

equipment supplier. They were informed by the supplier that MacLean 

Power Systems had ordered them not to sell these devices for use on 

ropes courses anymore. This in conjunction with mandated requirements 

associated with the on-going ANSI Industry Standard resulted in the PRCA 

immediately contacting MacLean Power Equipment to determine the problem. 

MacLean Power Systems had recently been named in a personal 

injury/product liability suit involving the use of a counterfeit 

strandvise on a ropes course. Discovering that their products are still 

in use, the MacLean - Fogg Company was highly disturbed as they feel 

that at the time of their November 27, 2000 Application Advisory they 

had adequately and clearly indicated that their product was not designed 

nor intended for ropes chai/enge course usage in any application with or 

without back up. 

The PRCA has attempted to negotiate a moratorium on MacLean's Advisory 

to ai/ow courses time to effect replacement of these devices without 

result. MacLean Power Systems has notified its' distributors again that 

they are not to sell this product for ropes challenge course 

installations and has requested that the PRCA notify the challenge 

course industry not to "utilize Strandvise® connectors in any ropes 

challenge course design, construction or installation." For further 

information, including copies of the MacLean Power Systems advisory and 

letter, liability concerns, etc. visit the Professional Ropes Course Association's web site at 

www.prcainfo.org. 

Annex A ERCA Safety Alert 1_2007 

Safety Commission 

European Ropes Course Association (www.erca.cc) 
(81) 

COMMUNICATIONS


87096056.eps
82 


87096.057

INTRODUCTION 

The American Wire Producers Association (AWPA) appreciates the opportunity to 

submit this written statement in connection with the Committee's hearing on the "Trade 

Facilitation and Trade Enforcement Reauthorization Act of 2013" bill (S. 662). 

Specifically, our members support the inclusion of the "Enforcing Orders and Reducing 

Customs Evasion Act of 2012" (ENFORCE, as approved by the Finance Committee in 

July 2012) in this bill. We remain firm in our view that the U.S. Government needs to be 

more proactive in ensuring that foreign producers and exporters cease the illegal 

evasion of antidumping and countervailing duties by transshipping goods through third 

countries and illegally declaring the goods as a product of that third country; falsifying 

documents to misrepresent country of origin or misclassify the goods; and other 

"creative" means of evading the duties imposed on the goods by the U.S. Government. 

American wire and wire products manufacturers have been seriously and adversely 

impacted by these trade-distorting policies, making it almost impossible for our industry 

to compete with unfairly-traded imports. The ENFORCE Act's provisions included in S. 

662 will increase the transparency, responsiveness and effectiveness of Customs and 

Border Protection's (CBP) enforcement activities and, thus, greatly improve the 

effectiveness of our trade laws and the relief that they are intended to provide to U.S. 

industries and American workers injured by unfairly-traded imports. 

BACKGROUND 

The AWPA is a trade association which represents companies that collectively produce 

more than 80% of all carbon, alloy and stainless steel wire and wire products in the 

United States. The 80 member companies employ more than 26,000 workers in over 

165 plants and facilities located in 33 states and 110 Congressional Districts. 

American wire and wire products manufacturers are entrepreneurial and work hard to 

maintain their competitive market position despite heavy import pressure on their 

products. They pride themselves on their high productivity and constant reinvestment in 

the latest technology and equipment, keeping the American wire industry one of the 

most globally competitive segments of the steel industry. 

CIRCUMVENTION AND EVASION OF DUTIES 

Domestic producers and industries may petition the U.S. Commerce Department and the 

U.S. International Trade Commission (ITC) to investigate imports that are believed to be 

sold at less than fair value or "dumped" in antidumping duty (AD) investigations or which 

benefit from improper government subsidies in countervailing duty (CVD) investigations. 

AD/CVD investigations and orders are the primary means by which U.S. industries 

combat unfairly-traded imports. However, these remedies are only effective to the extent 

the orders are enforced and attempts to illegally evade the orders are stopped. 

The Situation Today: 

Foreign exporters and U.S. importers are increasingly using various schemes to evade 

payment of AD/CVD duties when goods are imported. These often involve transshipping 

products through a third country, sometimes by repacking or relabeling the product, and 

then using false documentation to declare that the third country is the country of origin. 

Importers also may deliberately misclassify imports, claiming that they are a different 
83 


87096.058

product or that they are excluded from the scope of the case. Other common tactics to 

avoid AD/CVD duties include subjecting the products to minor alterations or sending 

parts to a third country where insignificant completion or assembly operations are 

performed. Such products are then improperly identified as a product of the third country 

in blatant circumvention of the order. 

These actions not only violate U.S. law and deprive American companies of the relief 

which the AD/CVD laws are intended to provide, they also result in hundreds of 

millions of dollars that are lost annually to the U.S. Treasury in the form of 

uncollected duties from wire and wire products alone. In addition, there are a host of 

other industries being impacted, including glycine, honey, diamond saw blades and 

tissue paper products. In these lean economic times, failure to collect these duties is 

unconscionable and unacceptable. 

AWPA Position: 

A number of AWPA member companies have successfully obtained multiple AD and 

CVD orders against imported wire products that were found to be sold at dumped prices 

or unfairly subsidized by foreign governments. These companies have experienced 

firsthand the effects of the illegal evasion schemes used by foreign producers and U.S. 

importers to evade the payment of lawfully-owed duties. These illegal schemes have 

caused further injury to these companies and caused the loss of more American jobs. 

We fully support the inclusion of the ENFORCE Act in the Customs Reauthorization bill. 

This legislation establishes the process outlined below for CBP to investigate claims that 

AD/CVD orders are being evaded: 

Domestic producers can formally petition CBP to investigate possible 

evasion. 

Once an investigation is initiated, CBP must make both a preliminary and a 

final determination as to whether an importer is engaged in evasion. 

To make a determination of evasion, CBP is directed to focus on whether 

the correct amount of duty is being collected on the merchandise, rather 

than on an importer's intent to engage in evasion. 

CBP is authorized, however, to use its full authority and enforcement 

tools, including collaboration with Immigration and Customs Enforcement 

(ICE) to pursue additional criminal charges when an importer's intent is 

involved. 

CBP is required to act and publicly report on its findings within set time 

frames. 

The bill prescribes enforcement and remedial measures for each 

determination, and specifically instructs CBP to use all its existing tools to 

enforce the U.S. customs and trade remedy laws. 

The legislation does NOT give CBP the authority to expand the existing scope of 

covered merchandise or expand CBP's existing authority to investigate goods subject to 

AD/CVD orders. 
84 


87096.059

One Requested Revision: 

AWPA would support a slight change to the language as written. In Section 302, the 

amendment of Sec. 517 (b)(2)(A), we believe that all domestic interested parties should 

be allowed to file allegations of evasion, including manufacturers, producers, 

wholesalers, certified or recognized unions or group of workers, trade or business 

associations, and/or U.S. importers. Providing all domestic interested parties the ability 

to file allegations of duty evasion would allow all affected parties to offer their own 

perspectives and knowledge of the markets and industries in which they operate. We 

believe this change would improve the overall bill and make it more effective. 

We look forward to working with the Members and staff of the Finance Committee to 

move this critical bill forward with the inclusion of the ENFORCE Act language. In these 

challenging economic times, we are not asking for special treatment, just the opportunity 

to compete fairly with our international trading partners. 

Sincerely, 

Janet Kopenhaver 

Director of Government Relations 

American Wire Producers Association (AWPA) 
85 


87096.060

United States Senate Committee on Finance 

Hearing on S.662, the Trade Facilitation and Trade Enforcement Act of 2013 

May 22, 2013 

The Coalition to Enforce Antidumping and Countervailing Duty Orders applauds the inclusion of the 

Enforcing Orders and Reducing Customs Evasion Act of 2012 (as approved by the Finance Committee in July 

2012) in Section 3 of S.662, the Trade Facilitation and Trade Enforcement Reauthorization Act of 2013. 

The Coalition represents American manufacturers in more than a dozen industries - including garment 

hangers, innersprings, steel nails, tissue and crepe paper products, glycine, threaded rod, carbon-quality 

steel line pipe, kitchen appliance shelving racks, PC strand, and diamond sawblades - with operations and 

workers across the United States. Each of these industries has invested enormous amounts of time, 

internal resources and money into the arduous process of obtaining relief from unfairly-traded imports and 

the injury they cause to these industries and their workers. Having done so, however, they have been 

confronted with pervasive efforts to undermine this relief by illegal evasion of antidumping and 

countervailing duties. 

We continue to advocate administrative and legislative solutions to improve efforts to combat illegal 

evasion of antidumping and countervailing duty orders. The ENFORCE Act's provisions will increase 

transparency, responsiveness, and the effectiveness of Customs and Border Protection's enforcement 

activities - significantly improving the effectiveness of our trade laws and the relief that they are intended to 

provide to U.S. industries and workers injured by unfairly-traded imports. 

In considering the final form these provisions should take, however, we would support action by the 

Committee to revise the provision identifying the parties who can submit allegations of evasion. Consistent 

with the statutory provisions concerning standing to file antidumping and countervailing duty petitions, 

found in 19 U.S.c. 1677(9), we believe that the most effective approach to combatting duty evasion would 

be allow all domestic interested parties, including manufacturers, producers, wholesalers, certified or 

recognized unions or group of workers, trade or business associations, and/or U.S. importers, to file 

allegations of duty evasion. 

Allowing all domestic interested parties to file allegations of duty evasion would allow these varied types of 

interested parties to draw upon their unique perspectives and knowledge of the markets and industries in 

which they operate. We believe that such a change to the legislation would serve to make it more effective, 

and would be to the benefit of all domestic stakeholders. 

We fully support the Committee's commitment to preparing the most effective legislation to address the 

critical issue of duty evasion. The Coalition and our members stand ready to assist the Committee in any 

way we can. 

Thank you for consideration of these comments. If you have any questions concerning the above, or if we 

can provide any additional information, please do not heSitate to contact us. 

Respectfully submitted, 

The Coalition to Enforce Antidumping & Countervailing Duty Orders 

Contact: Amy DeArmond 

P.O. Box 757 

Carthage, MO 64836 

Phone: 800-888-4569 x. 2539 

E-mail: coalition@adcvd-enforce.com 
86 


87096.061

COMMITTEE TO SUPPORT U.S. TRADE LAWS 

1776 K Street, NW 1 Washington, DC 200061 (202) 719-7000 

Alan H. Price, President 

The Committee to Support U.S. Trade Laws 

(202) 719-7000 

May 20,2013 

Committee on Finance 

United States Senate 

219 Dirksen Senate Office Building 

Washington, D.C. 20510 

Re: Committee Hearing, Wednesday, May 22, 2013: S. 662, the Trade 

Facilitation and Trade Enforcement Act of 2013 

Dear Members of the Senate Finance Committee: 

On behalf of the Committee to Support U.S. Trade Laws (CSUSTL), I write to you in 

regard to the provisions of the Enforcing Orders and Reducing Customs Evasion Act of 2012 

("ENFORCE act"), passed out of the Senate Finance Committee in July 2012, as included in 

Trade Facilitation and Trade Enforcement Reauthorization Act of2013, or S.662. 

CSUSTL's members, which span all major industrial sectors, including manufacturing, 

technology, agriculture, and mining (companies, associations and workers representatives) are 

continually harmed by unscrupulous foreign companies and U.S. importers that increasingly 

devise schemes to avoid paying antidumping (AD) and countervailing duty (CVD) fees rightfully 

owed on certain products unfairly sold into the United States. These bad actors evade the 

assessment of AD/CVD duties through transshipment, misclassification, misreporting, 

negligence, or outright falsification of import documents. 

Importantly, provisions in the Senate ENFORCE act allow injured U.S. parties to submit 

allegations of evasion of the AD/CVD duties to U.S. Customs and Border Protection (CBP). 

Currently, there is no procedure or requirement under statute that requires CBP to take any steps 

or actions in response to evidence of evasion. However, while the Senate ENFORCE act 

provisions do provide a new and helpful enforcement procedure, they do not allow all domestic 

"interested parties," - as defined in the AD/CVD laws - to submit allegations of evasion to CBP. 

These domestic interested parties all have legal standing to file AD/CVD cases as a result of 

unfair competition, so their absence from the ENFORCE act provisions is highly problematic 

both in terms oflegal policy and practical application. 

In terms of legal policy, it makes no sense to allow a party the right to file AD and CVD 

cases, but thcn not avail them the right to petition CBP when their case(s) are being evaded. In 

practical terms this debases enforcement efforts and the legitimate rights of parties who have 

been found to be materially injured as a result of dumped and subsidized imports and then further 

injured as a result of evasion. For example, excluded from the provisions are trade associations 

who have filed AD/CVD petitions as an industry in order to fulfill the requisite percentage of 

U.S. production needed under the AD/CVD laws and also, in some instances, in order to avoid 
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May 20, 2013 

Page 2 

improper and targeted retaliatory measures. As it stands, under the current ENFORCE act 

provisions, these organizations and other domestic interested parties do not have the right to 

petition CBP where they have direct knowledge of the evasion oftheir ADICVD orders. 

Thus, CSUSTL members strongly urge that all domestic "interested parties" as defined 

under 19 U.S.C. Section I 677(9)(C) through (F), be included in a final bill and allowed to submit 

allegations of evasion to CBP. Passage of ENFORCE act provisions that include this change is 

critically important to the efficacy of its enforcement provisions and members of CSUSTL. 

We look forward to continuing to work with you to support comprehensive legislation in 

the House and Senate to secure enactment into law of procedures to stop the widespread evasion 

of unfair trade orders. 

President 

Committee to Support U.S. Trade Laws 
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87096.063

~. 

~ 

lNTA International 

'.H Trademark 

---;;;;:: Association 

1990 M SL N.W., SUite 340. Washington. D.C. 20036·3422, USA 

t: +U02-223-0989 t f: +1-202-7850687 

inta.org I info@inta.org 

STATEMENT FOR THE RECORD 

Senate Committee on Finance 

hearing on 

"5.662, The Trade Facilitation and Trade Enforcement Act 

of 2013" 

May 22,2013 

Alan Drewsen 

Executive Director 

International Trademark Association 

New York! Shanghai I Brussels 1 Washington, D.C. 

Powerful Network Powerfu I Brands," 
89 


87096.064

~ 

IN''rA International ~Trademark 

~ Association 

May 29, 2013 

The Honorable Max Baucus 

Chairman 

Senate Finance Committee 

Washington, D.C. 20510 

1250 Connecticut Avenue, SUite 200. D,C, 20036 261\3, 

The Honorable Orrin Hatch 

Ranking Member 

Senate Finance Committee 

Washington, D.C. 20510 

t: +1202 2616570 I f 

Dear Chairman Baucus and Ranking Member Hatch: 

The International Trademark Association appreciates your leadership in moving forward with S. 662, the 

Trade Facilitation and Enforcement Act of 2013. In particular, we are pleased with the inclusion of 

Section 241 that re-establishes the ability of U.S. Customs and Border Protection (CBP) to share 

information with rights holders in order to identify counterfeit and pirated merchandise, and then 

prevent it from entering the commerce of the United States. 

Prior to 2008, CBP routinely sought the expertise of rights holders as they worked to interdict the 

mounting and often overwhelming volume of illegal merchandise crossing our borders. While the 

customs officers are weU~trained in enforcement techniques, the trademark or copyright owner is in the 

best position to identify counterfeit or pirated products. In fact, CBP found that with the increased 

sophistication of counterfeiting and piracy, the guidance of the rights holders is often the only way to 

differentiate rea! merchandise from fake. In 2008, however, customs officers were told to remove or 

obliterate much of the identifying information transmitted to the rights holder because to do otherwise 

would violate the Trade Secrets Act. 

This interpretation has now been superseded by Section 818(g) of the National Defense Authorization 

Act (NOAA) of 2012 (Public Law 112-81), although CBP continues through regulation to restrict CBP 

officers despite the NOAA provision. Also, the NOAA provision will sunset upon passage of this 

legislation. 

5.662 is therefore critical to ensure that CBP officers can utilize the expertise of rights holders to identify 

counterfeit and pirated goods. Section 241 makes it clear that the Trade Secrets Act should not be an 

obstacle to law enforcement officers collaborating with intellectual property owners in order to detect 

illegal products before they enter the country. Given our experience with CBP's implementation of the 

NOAA, however, we would like to continue to confer with your staffs in order to ensure that the 

language effectively accomplishes this purpose. 

INTA thanks you for introducing 5.662. We appreciate your strong and continued commitment to 

enforcement of our intellectual property laws. We would also appreciate your entering this letter in the 

hearing record for the legislation. 

?14J{;lrk}~-t((;~~ Alan Drewsen 

Executive Director 

New York 1 ShanghCli j Brusse!s i WAshington< 

Powerful NetworkPowerful Brands" 
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87096.065

NATIONAL CUSTOMS BROKERS & 

FORWARDERS AsSOOATION OF AMERICA, INC. 

1200 18TH ST., NW, SUIll: 901 

PHONE 2021466·0222 

Statement for the Record of the 

Senate Finance Committee 

Hearing on 

WASHINGTON. DC 20036 

FAX 2021466·0226 

"S. 662, the Trade Facilitation and Enforcement Act of 2013" 

May22,2013 

The National Customs Brokers and Forwarders Association (NCBFAA) appreciates this 

opportunity to comment on S. 662, "The Trade Facilitation and Trade Enforcement 

Reauthorization of 2013." We are encouraged by the committee's strong commitment to 

passage of a customs authorization bill. 

As the association representing licensed customs brokers, NCBFAA has long worked with 

the committee to provide our unique perspective on customs-related issues. We again 

stand ready to help in this effort to streamline CBP processes, facilitate trade and improve 

enforcement. 

Organizational Changes at CBP (Section 102): NCBFAA applauds efforts by the 

committee to ensure that, through structural refinements, CBP will be as responsive to 

commercial operations as it is to its other missions. This recognizes that it is important to 

perpetuate present efforts within CBP to acknowledge the importance of trade facilitation. 

One example of how the committee has approached this is by creating a second deputy 

commissioner with responsibility for CBP's trade function. As we have said publicly, such a 

position would be best occupied by a member of the Senior Executive Service rather than 

by a political appointee. NCBFAA has valued its relationships with Deputy Commissioners 

because they bring the experience of career-long, diverse positions within the agency. As a 

partner to the Commissioner, who is a presidential appointee, a career CBP Deputy 

Commissioner provides a valuable balance to decision-making at the top of the 

agency. Thus, we support the way the Finance Committee has approached this issue. 

Authorization of ACE (Section 206): The bill reauthorizes the Automated Commercial 

Environment computer system, providing a more realistic budget for completion of ACE. 

NCBFAA appreciates the Committee's continuing commitment to ACE and your rigorous 

and responsible oversight of the program. 

The core functions of ACE - that is, "end to end electronic processing of customs entries" -

must be completed. CBP has committed to doing this in a 3-year time frame. However, this 

is premised on the availability of sufficient budgetary resources. It is imperative that ACE 

funds not be diverted or sequestered and there be recognition that ACE is fundamental to 

CBP's cargo facilitation and security missions. 

SERVICE • INTEGRITY • TRUST 

NTERNET: www.ncbfaa.org E-MAIL: recp@ncbfaa.org 
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87096.066

We ask the committee to stipulate - both formaJJy and informally - to the Department and 

to CBP that it must meet its present timetable and provide the necessary resources for its 

completion. 

The Centers for Excellence and Expertise (Section 203): Section 203 codifies the 

Centers for Excellence and Expertise (CEEs), broadly defining their objectives. 

The CEEs show great promise as a resource for the trade community, expediting CBP's 

ability to process entries with greater uniformity and consistency. Yet, the CEEs are new 

and their capabilities are just emerging. We are therefore pleased that the committee has 

chosen to provide broad parameters rather than defining a detailed structure. This 

approach allows greater flexibility for the CEEs to evolve over time, as CBP and its trade 

partners work closely and innovatively to see what works best. 

As the process continues, however, it will be especially important for the Centers to serve 

small and medium-sized businesses, not just large importers. This can be achieved, to a 

great extent, by involvement of customs brokers in the operation of the CEEs. Customs 

brokers are the pathway for the vast majority of importers to reap the benefits envisioned 

for the CEEs. We encourage the Committee to include this objective in the bill. 

Although S. 662 does not specify where the CEEs should be placed within CBP's 

organizational structure, NCBFAA wishes to emphasize our position that the CEEs remain 

under the umbrella of the Office of Field Operations (OFO). We do not support a 

realignment of the CEEs to the Office of International Trade. 

International Trade Data System (ITDS) (Section 207): Section 207 reinforces the ITDS 

by requiring the Secretary to work with the head of each agency participating in the ITDS to 

develop and maintain the necessary information technology infrastructure. $25 million 

per year from 2014 through 2018 is authorized for this purpose. 

It is essential for ITDS to become the single-window interface to ACE for other government 

agencies with import or export data requirements. Not only willlTDS reduce costs by 

eliminating redundant data submission requirements, it will give agencies more accurate 

and complete trade data at an early point, increasing their ability to detect risky cargo and 

to expedite cargo processing. Great strides have been made in coordinating ITDS among 

the agencies, yet progress continues to be hampered by competing priorities and funding 

limitations. NCBFAA therefore appreciates the Committee's strong support for ITDS. 

Importer of Record Numbers (Section 215): The legislation requires CBP to establish an 

importer of record program to assign and maintain importer of record numbers. 

NCBFAA recognizes that the current numbering system for identifying importers of record, 

as well as other parties to the transaction, is fraught with problems. There are significant 

concerns about the uniqueness of each number. For example, CBP uses the IRS number as 

an identifier for an importer of record. However, that one importer of record may have 50 

different locations. The importer of record or his broker distinguishes these 50 different 
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locations by adding a suffix at the end of the IRS number. Because anyone can assign the 

suffix, duplicate numbers for the same importer location are very common, as are multiple 

importers having the same number. Everyone agrees CBP must have better control over 

the numbers assigned to each importer of record. 

Yet, repairing or redesigning this system is a complex undertaking. How does CBP avoid 

creating a new system that leads to the very same problems? How do you require the 

reassignment of millions of numbers without disrupting trade? This is not a mechanical 

task that CBP can design and implement in six months. 

There is no requirement in the bill to work with other agencies in coordinating the 

numbering system. So, even as we move to a "single window" to the government under 

ITDS, an importer could have a different number with each of the 47 agencies participating 

in ITDS. There is also no requirement to work with the private sector to ensure that the 

system works from a commercial perspective. 

We strongly urge the committee to task CBP with the following: 1) Analyze the 

shortcomings of the current system; 2) Conduct a critical review not only of the Importer of 

Record numbering system, but also the Manufacturer's Identification (MID) numbering 

system (which is a source of great confusion); 3) Engage the trade in developing a solution 

through consensus; 4) Consult with other agencies to ensure that the import numbering 

systems of each agency will be compatible; 5) Inform Congress as a solution is developed; 

and 6) Employ the rulemaking process. 

This section ofS. 662 also requires CBP to develop "criteria that importers must meet in 

order to obtain an importer of record number." Although we understand the committee's 

concern with "sham" corporations formed to skirt the nation's trade laws, we also think it 

is a dangerous step to create restrictive hurdles before allowing companies to participate in 

global trade. New companies enter the market every day. This is a normal, welcome 

occurrence in a healthy economy. It would be very unfortunate if the "criteria" for 

importers unduly restricts these new entities from participating in international trade. 

Drawback (Section 402): NCBFAA supports the reform concepts incorporated in S.662, 

including substitution at the 8-digit tariff level and other simplification provisions. Due to 

the complex nature of drawback, we think that numerous technical changes are required in 

order to ensure that these concepts are implemented correctly. We are committed to 

working with the Committee to put them in place. 

Commercial Risk Assessment Targeting (Section 211): In 2002, when the requirements 

for providing advance trade data on the Importer Security Filing (ISF) were established, the 

advance trade data was to be used for the sole and express purpose of ensuring cargo 

safety and security. In effect, a firewall was erected to prevent CBP from using the data for 

commercial enforcement purposes and to shield ISF filers from commercial penalties for 

errors in the security data provided in advance. Now, Section 211 of the bill amends 

current law to allow CBP to use the advance trade data for "commercial enforcement 

purposes." We believe that advance data from the ISF should only be available for 
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targeting purposes designed to identify high risk shipments that may violate our laws 

relating to health, safety and security. Once targeted, goods would then be subject to 

inspection and appropriate customs processes. We do not believe that the data should be 

used for other customs enforcement purposes, most particularly those resulting in fines 

and penalties imposed upon the party filing the ISF (with the exception of instances of 

fraud). 

Customs Operations Advisory Committee (Section 205): The Customs Operations 

Advisory Committee (COAC) is codified and its role expanded by this legislation. We note 

with concern that the scope of COAC is broadened to include matters relating to 

Immigration and Customs Enforcement (ICE) investigations. COAC has always been 

focused on commercial facilitation. To dilute its attention by widening its mandate to 

include the enforcement-driven ICE will only reduce its effectiveness as a strong voice for 

commercial operations. 

At the same time, we also question the name change from "Commercial Operations" to 

"Customs Operations." Given the growing importance of other agencies in the import 

process and their partiCipation in ITDS, use of the word "Customs" may draw a line that 

precludes effective solutions for customs commercial operations. 

Consultation with the Private Sector (Section 101): NCBFAA appreciates that the 

committee directs CBP to consult with the private sector in carrying out its duties. We urge 

the committee, however, to make it clear that the COAC and Trade Support Network (TSN) 

should not be the exclusive path for discourse and resolution. Issues must be discussed 

openly and fully with trade community representatives in order to resolve specific issues 

and initiatives. 

Customs Broker Offenses (Section 403): The legislation adds "has been convicted of 

committing or conspiring to commit an act of terrorism" as an offense subject to 

disciplinary proceedings, including removal of a customs broker license. Although there 

has been an absence of evidence to substantiate the need for this section, NCBFAA can 

nonetheless support this change. At a minimum, the requirement for a "conviction" assures 

due process. 

Increase in Informal Entry and De Minimis Thresholds (Section 410): The legislation 

raises the informal entry threshold from $1,000 to $2,500 and the de minimis threshold 

from $200 to $800. While we will not stand in the way of advocates for reasonable 

increases of these limits, we must observe that increases beyond adjustments for inflation 

run counter to trade enforcement objectives provided elsewhere in this same bill. Already, 

unscrupulous importers squeeze themselves under the current limits to bypass CBP 

scrutiny. This is found particularly in airfreight and some truck freight, where the informal 

entry is used to bring in fake drugs or other products that violate intellectual property or 

anti-dumping laws. These proposed increases will only compound this all-too-frequent 

problem. Also, NCBFAA questions whether the revenue impact of this increase which we 

believe is substantial - has been fully considered. 
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