# U.S. Consumer Product Safety Commission

1 This presentation was prepared by CPSC staff, has not been reviewed or approved by, and may not reflect the views of, the Commission. 

## CPSC Staff Workshop on Electronic Filing of Certificates as Included in Proposed Rule on Certificates of Compliance September 18, 2014 For those of you in the room, please mute electronics and phones.

 For those of you watching on the web, you can email questions for the speakers to: efiling@cpsc.gov

.

 The transcript for today’s workshop will be added to the docket at: www.regulations.gov Docket number: CPSC

– 2013

– 0017

 The PowerPoint presentations will also be available at: http://www.slideshare.net/USCPSC

# U.S. Consumer Product Safety Commission

3 This presentation was prepared by CPSC staff, has not been reviewed or approved by, and may not reflect the views of, the Commission. 

## Certificates of Compliance Section 14 of the CPSA & 16 C.F.R. Part 1110 Jacqueline Campbell, CPSC EXHR

# Presentation Overview

 

### Statutory Requirements

 

### What is a Certificate, When is It Needed, and Who Issues It?

 

### Content , Form, Availability, and Filing Requirements for Certificates



###  

### Regulatory Requirements

 

### Existing 16 C.F.R. part 1110 Rule

 

### Proposed Amendments to 16 C.F.R. part 1110



###  

### Electronic Filing of Certificates for Imported Products

4

# Statutory Requirements for Certificates

5

# Section 14(a) of the CPSA

6 

### • 

### C onsumer products must be tested and certified as compliant with any applicable consumer product safety rule under the CPSA or similar rule, ban, standard, or regulation under any other law enforced by the Commission.

# Statutory Authority

 

### Section 14(a)(1) of the CPSA

 Certification of non

- children’s products based on a test of each product or a reasonable testing program.



###  

### Section 14(a)(2) of the CPSA

 Certification of children’s products based on testing conducted by a CPSC

- accepted third party laboratory.



###  

### Sections 14(a) & (g) of the CPSA

 Provides certificate content and availability requirements.



###  

### Section 3 of the CPSIA

 Authority to implement the CPSIA and the amendments made by the CPSIA.

7

# What Is a Certificate, When Is It Needed, and Who Issues It?

8

# What Is a Certificate?

9 

###  

### A certification that a consumer product or other substance regulated by the Commission:

 

### h as been tested, and

 Non

- children’s products

– a test of each product or a reasonable testing program

 Children’s products

– testing conducted by a third party conformity assessment body (laboratory)

 

### c omplies with all applicable safety rules, bans, standards, and regulations.

# All Certificate Types

10 

###  

## General Conformity Certificate (GCC)

 

## Children’s Product Certificate (CPC)

 

### 16 C.F.R. part 1107



###  

## Component Part Certificate

 

### 16 C.F.R. part 1109

# Required Certificate Types

11 

###  

### General Conformity Certificate (GCC)

 Non

- children’s products only

 Based on a test of each product or a reasonable testing program (14(a)(1) of the CPSA)

 Must comply with 16 C.F.R. part 1110



###  

### Children’s Product Certificate (CPC)

 Products intended primarily for children 12 years of age and younger

 Based on testing conducted by a CPSC

- accepted third party laboratory (14(a)(2) of the CPSA)

 Requires periodic and material change testing

 Must comply with 16 C.F.R. part 1110

# What Products Require Certificates?

12 

###  

### R egulated consumer products.

 

### A product subject to a consumer product safety rule under the CPSA or similar rule, ban, standard, or regulation under any other law enforced by the Commission.



###  

### I mported for consumption or warehousing, or distributed in commerce.

 

### CPSA defines “distribute in commerce” to mean “to sell in commerce, to introduce or deliver for introduction into commerce, or to hold for sale or distribution after introduction into commerce.”

# When Is a Certificate Not Required?

13 

###  

### No product safety rule, standard, or ban applies

 

### Products subject to a rule under section 15(j) of the CPSA

 Drawstrings on children’s upper outerwear

 Immersion protection on hand held hairdryers



###  

### Products not imported for consumption or warehousing or not distributed in commerce

 Foreign Trade Zone

 Samples

 Trade Show Exhibit

 Component parts not for individual sale.

# Who Issues a Certificate and When?

14 

##  

## WHO?

 

## Manufacturers (including importers) and private labelers.



##  

## WHEN?

 

## Before importing products for consumption or warehousing or distributing products in commerce.

# Statutory Certificate Requirements

15 

##  

## Content

 14(a) and (g )(1) of the CPSA



##  

## English Language

 14(g)(2) of the CPSA



##  

## Availability

 14(g)(3) of the CPSA



##  

## Electronic Filing of Certificates for Imported Products

 14(g)(4) of the CPSA

# Certificate Requirements: Content

16 

### • 

### Identification of the product(s);

• 

### List each applicable consumer product safety regulation;

• 

### Identify;

• T he manufacturer (including importer) or private labeler issuing the certificate.

• T he third party conformity assessment body on whose testing the certificate depends, if applicable.



### • 

### Date(s ) and place(s );

• W here the product was manufactured

.

• W here the product was tested for compliance with each safety rule

.



### • 

### Each party’s name, full mailing address, telephone number; and

• 

### Contact information for the individual maintaining records of test results.

# Certificate Requirements: Language

17 

##  

## Legible

 

## All required content in English

 

## May contain the same content in another language

# Certificate Requirements: Availability

18 

##  

## Required certificates must:

 

## a ccompany the product or shipment of products covered by the certificate;

 

## b e furnished to each distributor or retailer of the product; and

 

## b e furnished by the issuer to the Commission, upon request.

# Electronic Filing Requirements

19 

##  

## In consultation with CBP, the CPSC, by rule, may provide for the electronic filing of certificates up to 24 hours before arrival of an imported product.

 

## Issuer must furnish certificates to CBP and to CPSC, upon request.

# Regulatory Requirements for Certificates

20

# Existing 16 C.F.R. Part 1110 Rule

21

# Background on Part 1110

22 

###  

### Consumer Product Safety Improvement Act of 2008 (CPSIA) was enacted on August 14, 2008.

 

### The Commission issued a rule on “certificates of compliance,” 16 C.F.R. part 1110, on November 18, 2008 (73 FR 68328)

.



###  

### Existing part 1110 rule sets forth certificate requirements, such as:

 

### l imiting the parties who must issue a certificate;

 

### a llowing certificates to be in hard copy or electronic form;

 

### c larifying requirements for an electronic form of certificate; and

 

### p roviding certificate content requirements that follow the statute.

# Product Testing & Certification Rules

 

## 16 C.F.R. part 1107

 

## Testing and Labeling Pertaining to Product Certification



##  

## 16 C.F.R. part 1109

 

## Component Part Rule



##  

## 16 C.F.R. part 1110

 

## Certificates of Compliance

23

# Product Testing & Certification Rules

 

## 16 C.F.R. part 1107: Testing and Labeling Pertaining to Product Certification

 

## Sets forth requirements for certification, material change, and periodic testing of regulated children’s products.

24

# Product Testing & Certification Rules

 

### 16 C.F.R. part 1109: Component Part Rule

 

### Provides for component part testing and reliance on another party’s testing or certification.



###  

### Component Part Certificate

 

### v oluntary (never required)

 

### c an be used to support a GCC or a CPC

 

### c an be issued by any party as long as it complies with 16 C.F.R. part 1109

 

### NPR proposes certificate must meet the form, content, and availability requirements described in 16 C.F.R. part

1110

25

# Proposed Amendments to 16 C.F.R. part 1110

26

# 2013 NPR to Amend Part 1110

27 

###  

### On May 13, 2013, the Commission issued a NPR to amend the existing 1110 rule (78 FR 28080).

 

### The NPR proposed to:

 Clarify certificate requirements in light of the testing and component p art r ules, and

 Define and use new terms

 Describe how certificates must be integrated and consistent with these new rules

 Implement electronic filing of certificates.

 Section 14(g)(4) of the CPSA a llows the Commission, in consultation with the Commissioner of Customs, to require that certificates for imported products be filed electronically with CBP up to 24 hours before arrival of an imported product.

# Who Must Certify Products Manufactured Outside of the U.S.?

28 

###  

## CPSA requires that certificates be issued by a manufacturer, importer, or private labeler (as defined by the CPSA ).

 

## Existing 1110 rule requires certificates for imported products to be issued by the importer.

 

## NPR would continue to require certificates for imported products to be issued by the importer.

 

### E xcept for products delivered directly to a consumer.

# Proposed Amendments: Certificate Availability

29  Proposed rule implements “accompany” requirements for imported products:

 Importers must file certificates electronically with CBP at the time of filing the CBP entry or the time of filing the entry and entry summary, if both are filed together

.

 For all other purposes of providing a certificate, NPR maintains that certificates may be paper or electronic ( i.e. , URL) for:

 Request by CPSC or CBP; or

 Furnishing to Retailers or Distributors

.

 Proposed rule also sought comment on allowing filing of certificates at a time earlier than entry (at manifest).

# Electronic Filing of Certificates for Imported Consumer Products Proposed 16 C.F.R. 1110.13(a)(1)

30

# Why Electronic Filing?

31 

###  

### CPSC proposes to receive data elements from certificates into our RAM system, which can be used to:

 Expedite clearance;

 Identify high risk cargo for inspection;

 Conduct post

- importation enforcement;

 Generate reports to assist with:

 Risk assessment; and

 Setting agency priorities and goals;

 Meet objectives of EO 13659, Streamlining the Export/Import Process for America’s Businesses.

# Proposed Electronic Filing: Technology

32 

###  

## The NPR mentions two data types:

 

### PDF file

 

### D ata elements



###  

## The NPR stated that the Commission prefers data elements so that the information can be uploaded and searchable in a database.

# Proposed Electronic Filing: Technology

33 

##  

## NPR recognized electronic filing of certificates would require:

 

## Implementation in phases

 

## Software upgrades

 

## CBP’s technology requires CBP’s assistance and cooperation to implement

# Conclusions

 

### The statute imposes basic certificate requirements.

 

### The NPR proposes several amendments to the current 1110 rule , including filing electronic certificates with CBP at entry.

 

### The Commission is considering the process and requirements for electronic filing.

34

## CPSC Electronic Filing of Certificates Workshop

Nancy MacPherson, Director External Relations

# Key Concerns

1. The proposed requirement uses assumptions on the number of import transactions that significantly underestimate the impact of having to upload each certificate 24 hours in advance of import.

2. The proposed rule does not address import processes that utilize a Foreign Trade Zone (FTZ).

3. The apparent lack of process flexibility in the proposed rule discounts current processes and IT systems that already permit the CBP and CPSC immediate access to the certificate data 24 hours in advance of import.

4. Changes do not “ streamline the Export/Import process for America’s businesses” as per Executive Order 13659 which is intended to “ reduce supply chain barriers ” and “to modernize and simplify the way agencies interact with traders .” They might simply create a bigger data ‘haystack’ in which to find the violative ‘needle’.

# LEGO® US Import Overview

Dallas DC is a Foreign Trade Zone (FTZ) 2013 Activity

1,500,000 Avg. # sets packed in the LEGO factory in Monterrey, Mexico and shipped to the DC near Dallas

80

- 160 Trucks per week between factory and DC

100

- 150 Trucks per week leaving DC with customer shipments (The point of import from the FTZ)

1150 Avg. # unique SKUs shipped per week to customers

1500 Peak # unique SKUs shipped per week in high season

## As compared to.....

CBP estimated that ‘‘in 2005, more than 70 to 85 percent of all importers imported fewer than 12 shipments .’’ Additionally, “This ( referencing cost ) estimate is based on the assumption that one certificate of conformance would be required per shipment

. NPR CPSC

- 2013

- 0017 SEC VI, B (Reporting and Recordkeeping)

• LEGO A/S usually processes one import transaction per week in accordance with FTZ regulations

• Each entry could include up to 1500 different certificates given 1 per SKU and up to 15000 data elements ....each week.Import Flow of Goods and Entry Documents

# The current LEGO Certification process ensures certificates ‘accompany’ the product, are immediately available to CBP and can also be accessed 24 hours ahead of import without any duplicative uploading of data.www.LEGO.com/Compliance

# Recommendations

1. Provide flexibility to accommodate various supply chain models. The proposed rule describes one option , but that should not be the only option. If there are alternative means for providing CBP access to the certificates they should be allowed. From PR: “CPSC is considering allowing, but not requiring certificates to be filed in advance”



### 2. Ensure that FTZ processes , including ‘when’ an item is imported, are recognized and integrated into any rule changes.

# Thank you...

## Proposed Joint Presentation of the Retail Industry Leaders Assoc. & the National Retail Federation

Before the U.S. Consumer Product Safety Commission Workshop on Proposed 16 CFR Part 1110 Electronic Filing of Certificates of Compliance September 18, 2014

Kathleen McGuigan, Senior Vice President, Legal & Regulatory Affairs, RILA: kathleen.mcguigan@rila.org

Jon Gold , Vice President, Supply Chain and Customs Policy, NRF: goldj@nrf.org

### CPSC Workshop on Electronic Filing of Certificates of Compliance

Sean T. Murray, Esq. Representing the NAFTZ
September 18, 2014

### National Association of Foreign

- Trade Zones

• Represents the interests of U.S. Foreign

- Trade Zone (FTZ) grantees, operators, and users

• Composed of public and private member representatives across the United States

• FTZs handle a significant volume of U.S. international trade

– Approximately 12.4% of all imports move through FTZs

– Calendar Year 2013 data:

• Shipments into FTZs totaled $835 billion (including $290.3 bn foreign and $545.5 bn domestic status merchandise)

– Warehouse/distribution operations received over $264 billion in merchandise

– FTZ production operations received over $571 billion in merchandise

• Over $79 billion in exports from FTZs

• 3,050 firms employing 390,000 persons used FTZs

### Response to CPSC Certificates of Compliance Proposed Rule

• FTZs have unique trade function; also unique procedures

– Used to store/stage merchandise that never enters the U.S. Customs Territory

– With specific U.S. FTZ Board approval, used by manufacturers to produce goods in the U.S. using foreign components

– Used as “safety valve” for addressing damaged, scrap, unknown products

• FTZ users need procedures that do not impose unnecessary burden on the FTZ unique operations

### Response to CPSC Certificates of Compliance Proposed Rule

• We request that FTZs be specially recognized so that the CPSC rules

– Do not apply to merchandise admitted into and held in an FTZ

– Do not apply to component parts of finished products that are produced in an FTZ

– That the CBP

- recognized FTZ inventory control systems be accepted for CPSC purposes

– That CPSC documentation only be required to be filed with the CBP Form 7501 Entry Summary for merchandise entered for consumption from an FTZ

– That CPSC documentation not be filed for exports from FTZs

### Unique FTZs Operations

– Weekly Entry

• 19 U.S.C. § 1484(i) authorizes FTZ operators/ users to file weekly estimated Customs entries for a business week’s shipments into the U.S. Customs territory instead of one Customs entry per shipment

– FTZs establish a 7

- day zone shipping week and obtain CBP approval to file an estimated CBP Form 3461

• NAFTZ believes that the large majority of activated FTZ operators and users utilize weekly entry procedures

• Submitting CPSC certificates of compliance at the time of entry or at the time of entry summary is problematic under Weekly Entry

– The CBP Form 3461 for Weekly Entry is just an estimate used for purposes of securing a CBP release to enter merchandise over the upcoming 7

- day zone week; it is not related to actual shipments or merchandise from the FTZ

### Unique FTZs Operations

– Inventory Control and Recordkeeping

• FTZ companies can choose to manage their inventory for purposes of reporting to CBP using either a specific identity (lot) methodology or a unique identifier number (UIN) (record identity) methodology

– Many FTZ companies ship commercially interchangeable merchandise that is managed by a UIN methodology and reported on a FIFO basis, not on the actual country of manufacture of the physical merchandise in the particular shipment

– Track using inventory control and recordkeeping system (ICRS)

– Use of inventory control methodology and Weekly Entry poses challenge to tying CPSC certificates of compliance to physical shipments

### Unique FTZs Operations

– Scrap, Waste, Repair, Reconditioning

• CPSC should continue to recognize FTZs as a place to bring merchandise into compliance before Customs entry

### General Comments

• Filing CPSC Certificates of Compliance at entry will place a burden on industry

– Uploading process would be a significant burden to many importers

– Estimated cost burden for importers required to file certificates of compliance is significantly undervalued

– Need to keep business

- proprietary information private

PLF/PP/113243

# CPSC S eptember 18, 201456 

# Role of the Customs Broker

• Trade Facilitator

• No financial interest in the imported goods

• Definition of Importer (party whose actions caused the goods to be imported) versus Importer of Record

• Identification of shipments requiring CPSC Reporting (HTS# flags)

─ Prioritize HTS # requirements, e.g. High Priority assigned to child safety seats and data required at entry release

─ Low( er ) Priority goods

– fewer data elements and possible post entry reporting57 

# Reporting Challenges

• Amount of and availability of data to be reported

• Cost to Broker, Carrier and Importers including small & medium sized enterprises and individuals :

─ Cargo Holds

– significant increase

─ Demurrage, CES warehouse costs

─ Cargo Abandonment

– product destruction costs

─ Cost to report additional data58 

# Reporting Challenges

• Cost estimate for UPS Express shipments for 1 year

– significant impact to the importing community

─ Held shipments would overwhelm existing storage capacity (estimated impact 75% of current shipments)

─ Large staffing increases to handle held package volume

• Additional document requirements

- brokerage



### • US Consumer is impacted through added costs to ship and shipping delays59 

# Opportunities

• Transaction by Transaction Based Program

─ Implement a de minimis rule for products subject to compliance certificates

─ Provide relief in reporting requirements for low priority merchandise, personal shipments (not entering the commerce of the USA)

─ Opportunity to develop a Trusted or Known Importer Program

─ Blanket Certificates of Compliance (COC)

─ Certificates of Compliance issued by foreign manufacturerSeptember 18, 2014 | Bethesda, Maryland 

## CPSC Certificates of Compliance Section 1110 Rule Workshop

Presented by:
Alan P. Kaufman Senior Vice

- President, Technical Affairs61 CPSC Certificates of Compliance Workshop| September 18, 2014 

## Toy Industry Association (TIA)

 Trade association for North American

- based manufacturers, importers, licensors and toy retailers (regular members)

 Associate members include inventors, designers, testing labs

 Formed in 1916

 Long History of Dedication to Child Safety

 Over 750 members

 Members represent approx 85% of the U.S. market62 CPSC Certificates of Compliance Workshop| September 18, 2014 

## Toy Industry Association Toy Companies, Licensors, Inventors and Designers, Manufacturers Reps, Retailers63 CPSC Certificates of Compliance Workshop| September 18, 2014 

## A Snapshot of the U.S. Toy Industry

Average price of a toy is less than US$9.00

US$22+ Billion in direct toy sales (2013) An estimated 3 Billion+ units sold each year

Estimated 512,775 FTE toy industry jobs in the United States

Total annual economic impact of US$69 Billion64 CPSC Certificates of Compliance Workshop| September 18, 2014 

## Stakeholder’s Current Certificate and Import Procedures

 Current 1110 Rule/Toy Importer practices

– Original 1110 rule allowed flexibility in requirements for certificates of conformity

• Each importer developed system best suited to their operations and supply chains

• No issues have been raised by CPSC to date with current systems companies have in place

• Current systems adequately meet needs of CPSC and importers; importers have adapted to current level of administrative burden65 CPSC Certificates of Compliance Workshop| September 18, 2014 

## Stakeholder’s Current Certificate and Import Procedures (cont.)

 Issues with proposed changes to the 1110 rule:

– No evidence that proposed changes would improve safety

– Would add significant costs for industry

– Current CPSC targeting methodology adequately identifies higher

risk imports

– Port staffing and expertise is current limiting factor, not inability to target

– No evidence that electronic submission of CoCs would improve targeting efficiency or safety of imported product66 CPSC Certificates of Compliance Workshop| September 18, 2014 

## Stakeholder’s Current Certificate and Import Procedures (cont.)

 Benefits of current 1110 Rule “On Demand” Certificate System

– Allows for certificates to be produced on request to either CPSC or CBP no later than 24 hours after request

– This meets needs of CPSC and CBP while minimizing importer burden

– Due to varying supply chain management systems, requiring a “one

- size

- fits

- all” system of filing at entry is not workable for the industry at large67 CPSC Certificates of Compliance Workshop| September 18, 2014 

## Stakeholders’ Anticipated Challenges in Meeting an Electronic Filing Requirement

 Costly Changes to Current Requirements

- Underestimated by CPSC

– Requiring certificates to be filed at entry will be extremely costly for the toy industry

• Linking certificates to cargo containers will require costly database reconfigurations for companies

• Consolidated freight will present special challenges

- possibility of multiple importers for same container

• Systems that have worked well since 2008 will need to be totally revamped under the proposed rule, with no anticipated advancement in safety68 CPSC Certificates of Compliance Workshop| September 18, 2014 

## Stakeholders’ Anticipated Challenges in Meeting an Electronic Filing Requirement (cont.)

 CPSC’s Regulatory Flexibility Act (RFA) analysis contemplates “typical” shipping systems which are anything but typical

– Dramatically underestimates the number of shipments and certificates companies are responsible for maintaining

– Ignores the extreme seasonality of toy and consumer product imports, with a majority occurring in the last calendar quarter of the year

– RFA estimate is that importers ship fewer than 12 shipments annually, but this low figure is applicable to only the smallest toy importers; several TIA members import more than 12 shipments per day.69 CPSC Certificates of Compliance Workshop| September 18, 2014 

## Stakeholders’ Anticipated Challenges in Meeting an Electronic Filing Requirement (cont.)

– Consolidated cargo co

- loads product from multiple importers; this will further complicate certificate submission, as release of all cargo is dependent upon all importers timely submitting certificates

– Regardless of the number of shipments, each container may contain many different products requiring potentially hundreds ( considering component part certificates) of different certificates be submitted at entry

– This means that the RFA estimate will need to be revised exponentially upward, and thus the costs associated with filing entries will likewise increase many

- fold70 CPSC Certificates of Compliance Workshop| September 18, 2014 

## Stakeholders’ Anticipated Challenges in Meeting an Electronic Filing Requirement (cont.)

 Methods of Importation Vary

– The prop osed rule does not contemplate costs and challenges associated with imports coming across our borders by truck or rail, rather than on cargo ships • Trailers may be filled with many different product lines at a factory and placed on trucks that leave for import when full

• Trailers could contain any different number of products and each would require a certificate (or multiple certificates) to be filed

• Multiple trucks with multiple products are shipped every day using this method; this will potentially cause a logistical nightmare entering certificates of specific products in each truck into CBP’s system71 CPSC Certificates of Compliance Workshop| September 18, 2014 

## Stakeholders’ Anticipated Challenges in Meeting an Electronic Filing Requirement (cont.)

 CBP is Not Yet Able to Handle the Influx of Data Proposed in Rule

– As stated in the proposed rule, CBP’s systems do not yet have the capability to handle all CPC’s to be filed at entry

– It is premature for CPSC to require such a mandate when the agency charged with controlling the data portal is not ready for such information to be filed, and may not be for some time (if ever)

– TIA urges CPSC to develop a multi

- stakeholder group that includes industry, CBP, CPSC, import specialists and other interested parties to guide the agency on this regulation and others72 CPSC Certificates of Compliance Workshop| September 18, 2014 

## Issues to be resolved from CBP’s DIS and PGA Message Set Tests in ACE

 Does CBP have the bandwidth to handle the volume of data that will be generated by supplying CPC’s and GCC’s at entry, especially if importers only have the capability to submit PDF files which often can be large?

 When will CBP’s ACE system be ready to handle such data?

 What is the timeline for implementation of the “single

- window” system contemplated in EO 13659?73 CPSC Certificates of Compliance Workshop| September 18, 2014 

## CPSC’s RAM Pilot

 TIA is supportive of the RAM program and urges the CPSC to expand the program beyond the pilot program

 What criteria are CPSC using to target shipments for inspection?

– The toy industry is happy to provide any information to the agency that will lead to more targeted inspection

• Industry is concerned about sharing confidential business information with CPSC in a manner (e.g. unsecured website) that could jeopardize relationships of importers with their supply chains, especially if safety benefit is marginal74 CPSC Certificates of Compliance Workshop| September 18, 2014 

## Thank You!

 Questions?
Al Kaufman (646) 520

- 4868 akaufman@toyassociation.orgwww.anderinger.com © 2013 A.N. Deringer, Inc. Heritage of Trust Since 1919 

# CPSC

- ITDS

• Who should be responsible for filing the certificate ?

• Definition of Importer

• Exclusion of Customs Brokers

• How and when must certificates be made available?

• Time of submission and format

• ITDS/PGA message set/DIS

• HTS # Flags

• Supply Chain

• Northern Border vs. AV shipments

• Wait timesMayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Pract ice s"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe

- Brussels LLP , both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by th e Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM , a Hong Kong partnership and its associated legal practices in Asia; and Tauil & Chequer Advogados , a Brazilian law partnership with which Mayer Brown is associated. Mayer Brown Consulting (Singapore) Pte. Ltd and its subsidiary, which are affiliated with Mayer Brown, provide customs and trade advisory and consultancy services, not legal services. " Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions. 

# Electronic Filing of Certificates of Compliance

Presentation of the Bicycle Product Suppliers Association
At the CPSC Workshop

Erika Z. Jones ejones@mayerbrown.com September 18, 2014 CPSC Docket 2013

- 0017

### Bicycle Product Suppliers Association

• BPSA is an association of over 70 manufacturers, importers and suppliers of bicycles, parts, accessories and services who serve the specialty bicycle retailer.

• BPSA members are interested in this proposed rule because they manufacture, import and sell three categories of regulated products required to have COCs :

– Bicycles

– Bicycle Helmets

– Clothing



### • In addition, BPSA is interested because the proposal suggested possible expansion to replacement parts.

### Summary of BPSA Position on the Proposal to Require Electronic Filing of COCs

• The CPSC has underestimated the costs of compliance with the proposal.

• The proposed tracking requirements would be difficult to manage.

• Mandatory electronic filing is premature.

– Current CBP capabilities require manual uploading of PDFs of each certificate into the automated system.

– This is labor

- intensive and introduces potential for error.

– And, it is unclear if CBP’s system will accept PDFs of CPSC GCCs

.


### • Practicability problems increase significantly if replacement parts are included.

### Costs of Compliance Have Been Significantly Underestimated

• CPSC estimated 1,900 bicycle models sold annually, based on an extrapolation of its estimate of children’s bike models.

• However, BPSA estimates 7,170 bicycle models are being sold in 2014 through the independent distributor ( IBD ) channel (this has increased since 2013).

– Many more models are sold through mass market channels.



### • If a COC is issued only once a year for these models, using CPSC’s time and labor estimates, the annual incremental cost for IBD bicycles alone exceeds $450,000

– and far more when mass market bicycles, helmets and clothing are included.

### Cost of Compliance, Continued

• And, BPSA respectfully submits that CPSC’s time and labor estimates are too low.

• Many bicycle models receive new COCs more than once annually due to changes in components or other reasons.

• The CPSC’s estimate does not take into account the substantially increased manual labor required to upload the certificates to CBP’s website under the current system design.

### The Proposed Tracking Requirements Would Be Difficult to Manage

• CPSC proposed to require (among other things) that the GCC identify the scope of finished products for which the GCC applies, such as by start date, start and end date, lot number, starting serial number or serial number range or other means.

• This appears to go far beyond the existing requirement to identify the month and year of manufacture.

• This proposal is complicated further if extended to the hundreds of thousands of models of components and aftermarket parts, which are rarely serialized or date coded now.

• The bicycle industry supply chain is not equipped for this.

### Mandatory Electronic Filing is Premature

• It is BPSA’s understanding that CBP’s “ACE” system is not equipped to accept the data elements from CPSC’s 1110 rule at this time.

• Thus, the only process for filing electronic certificates would apparently be a labor

- intensive, manual upload of PDFs of each certificate.

• It is not clear that CBP will even accept PDF attachments.

• This imposes great costs and introduces potential for human error, with no commensurate improvement in consumer product safety.

### Conclusion

• CPSC should not require electronic filing of GCCs with CBP

.

• To BPSA’s knowledge, CBP’s system is not yet ready to accept true electronic filings of GCCs , and would instead require labor

- intensive manual uploads.

• The current system of making GCC’s available on request is working well.

• The additional costs of mandatory electronic filing have not been justified, nor is there any evidence that such a requirement will improve safety.

# CPSC WORKSHOP ON RULE 1110

SEPTEMBER 18, 2014

# MEMBERS

EXPRESS ASSOCIATION OF AMERICA

# RESOURCES

• Over 1.2 Million Employees



# • $200 Billion in Revenues Annually



# • 30 Million Shipments Delivered Daily



# • Over 220 Countries and Territories Served

EXPRESS ASSOCIATION OF AMERICA

## INTEGRATED END

- TO

- END PROCESS

Image Capture at Origin (Shipper documents) Manifest Creation Advanced Manifest Review

Downloads to: AMS/ATS
Clearance Site
Broker

Entry Prep & Submission Selected

Held Released Domestic Network

Caged

- Indicates Physical Package Scan Customer

Location Origin Station Export Import Domestic

Station Operations

POD Scanning at Arrival

Very “tight” cycle with demanding deadlines

– entire process complete in 24 hours Shipment creation ( AWB / Automation) 

### ACAS

# RULE 1110
– KEY ISSUES

• Trade Act 2002

– party with the best information on the shipment should be responsible for providing it



## • For product safety issues, party with best information is the importer, owner of goods



## • Importer of record is a nominal consignee, a convenience for completing the financial aspects of the transaction



## • For products sold online, seller is responsible party



## • Brokers cannot certify if product is in compliance



## • Importers do not want carriers representing them on safety issues

EXPRESS ASSOCIATION OF AMERICA

# OPTIMUM SOLUTION

• CPSC provide list of products requiring certificate



## • Submit certificates electronically



## • When importer obtains certificate, load it into Document Imaging System (ITDS)



## • Provide certificate post

- release for otherwise compliant shipments



## • Continue to provide certificate on demand, not with every shipment



## • If IOR has to hold goods pending receipt of certificate, costs and time delays increase

– potentially hundreds of items

EXPRESS ASSOCIATION OF AMERICA

# LONGER TERM

• CPSIA = CPSC has trade facilitation mission



## • Private sector cannot carry out enforcement actions



## • Establish ongoing dialogue with trade to address issues and find best solutions



## • Leverage relationship with CBP to create Working G roup under COAC auspices



## • Identify information CPSC really needs

– improve risk targeting



## • Executive Order on ITDS

– Government needs common approach to risk management



## • Identify trusted traders and provide meaningful benefits

EXPRESS ASSOCIATION OF AMERICA

# QUESTIONS?

Michael C. Mullen

Executive Director
Tel: 703 759

- 0369 Michael.mullen@expressamerica.org

EXPRESS ASSOCIATION OF AMERICA