Foreign importers of record, particularly e-commerce companies, will face new hurdles in importing following the June 3 executive order strengthening customs enforcement. Importers may have to consider restructuring their supply chain in response, according to trade lawyers.
Brokers will also have more liability in the import process, both in importer vetting and compliance, and there will be less penalty mitigation available for administrative mistakes.
Lenny Feldman, customs counsel to the National Customs Brokers & Forwarders Association of America, said CBP will be confirming compliance for active importers of record by creating risk-based tiers in an importer registry. He said foreign importers of record won’t be able to file informal entries, and will only be able to file formal entries if the bonding is sufficient and the importer is in good standing.
“Now there's going to be multiple hurdles that they will have to clear, if ,in fact, they're going to maintain the ability to serve as importers of record,” he said.
Aaron Applebaum, partner at Sidley, said foreign e-commerce companies will be impacted, as they often make informal entries, and rely on the ability to import lower-value shipments.
Susan Thomas, CBP's executive assistant commissioner, said in a LinkedIn video all importers must now follow stricter rules and share more information on their supply chains.
“Brokers, they’re on the hook for vetting their clients more thoroughly,” she said. “And those [importers] that comply with our trade laws have nothing to worry about, and those who don’t will see tougher penalties and may lose their importing privileges.”
Feldman said there will be companies that are going to be challenged, as they have to adjust their supply chain and ensure their importers are in good standing. However, some U.S. importers may be happy about the order.
“There are a lot of importers who have been really playing by the rules and have been indicating that they feel that just allowing non-resident importers the same rates, the same footing as U.S. importers, puts them at a competitive disadvantage.”
Enforcement has already been on the rise. Applebaum said he's seen an increase in CF 28s and CF 29s, as he used to only see them every month or so, and now a few every week. Feldman said CBP has been "very intentionally" asking for IDs and passports to validate the identity of importers who are providing power of attorney to brokers. He said some IDs have been stolen or are false.
“We're looking at about 180-day window, but right now, right before us, there's, I think, an unprecedented level of scrutiny as to the right to make entry,” he said.
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