U.S. Customs and Border Protection announced Oct. 11 that a new proposal from the Greater Nogales Santa Cruz County Port Authority has been selected to engage in further planning and development activities as part of the Donations Acceptance Program. This proposal would upgrade existing air-conditioned dock space at the Nogales West land port of entry to food safety-certified refrigerated space. CBP states that the Nogales West POE processes more fresh produce than any other POE along the U.S.-Mexico border and that the proposed upgrades would improve CBP’s ability to safely handle and inspect seafood, berries, avocados, and other temperature-sensitive commodities.

CBP notes that this is the first proposal selected under its small-scale process for proposals valued at $3 million or less, which is a new offering and avenue for stakeholders interested in investing in and expediting small scale, high impact border infrastructure, technology, and other related improvements. Proposals that qualify as small scale may be submitted year-round and thus evaluated 60 to 70 percent faster than proposals submitted during the DAP’s annual cycle for mid- to large-scale proposals.



Joint Cargo Clearance, the next step in Customs Clearance

By Roxana Osuna | 09/18/2016 | 2:26 PM

On July 25, 2016, U.S. Customs and Border Protection (CBP) announced an innovative concept in which CBP and the Servicio de Administración Tributaria (SAT), the Mexican tax administration service,  will perform joint cargo clearance and examinations at the U.S. Customs Port of Nogales, Arizona for 120 days. By conducting joint cargo processing, CBP and SAT will reduce cargo inspections and wait-times at the border. These reduced wait-times will lower the cost of doing business in the region, as well as, enhance national security for the United States and Mexico.

The announcement came as an invitation for manufacturing companies currently certified in the Customs-Trade Partnership Against Terrorism (C-TPAT) to try the pilot program which is expanding to additional Ports of Entry. To participate, both the manufacturing company and its transportation partner must be approved to use the “FAST LANE”. Additionally, the manufacturing company must register for the pilot program with the Consejo Nacional de la Industria Maquiladora y Manufacturera de Exportacion (INDEX), the Mexican National Council for the Free Trade Manufacturing and Export Industry, which is tasked with monitoring participation and results.

The program can be seen as an incentive for companies which are currently not participating in C-TPAT or the equivalent Authorized Economic Operator (AEO) programs to support a perimeter approach to security and experience added benefits. It is also another step towards mutual recognition and acceptance of trusted trader programs while the U.S. pursues the implementation of the International Trade Data System (ITDS). ITDS, a system which will allows international traders to submit documents required by CBP and its partner government agencies through a “single window.”

The future of customs clearance looks promising as collaborative, intergovernmental programs are established that are designed to address security threats while allowing for the streamlined movement of goods and people across a shared border.






It will be easier for affected businesses to comply with import safety programs mandated by the Food Safety Modernization Act (FSMA) if more and better information from the government is more quickly shared and limitations faced by small and mid-sized firms are taken into account.

Those were some of the many sentiments expressed at three regional outreach meetings held in June by representatives of the U.S. Food and Drug Administration, according to a 22-page report FDA issued Friday.

The agency set up the meetings — in Costa Mesa, CA, Rutherford, NJ, and Detroit, MI — to give members of the public, importers, food producers and foreign and industry association representatives a chance to “provide information, share experiences and raise issues on implementation topics related to import safety.”

The import safety regulations under FSMA include the Foreign Supplier Verification Programs (FSVPs)Accredited Third-Party Certification, and the Voluntary Qualified Importer Program (VQIP).

These FSMA rules are designed to enhance the security and safety of the supply chain for imported food, which FDA has estimated makes up 15 percent of the U.S. food supply, including 50 percent of our fresh fruit, 20 percent of our fresh vegetables, and 80 percent of our seafood.

The regional meeting discussions focused on three main topics: the state of the import industry, VQIP, and education and outreach. After FDA officials listened to 350 importers, food producers, and foreign and industry association representatives and then analyzed related data, these four main themes emerged:

  • Members of industry want help in understanding what is required under the FSMA provisions, including clearer, concise information from FDA.
  • Small importers and food producers are at higher risk of failing to comply with FSVP.
  • Importers will likely consider cost, return on investment and effort necessary to participate when deciding whether to sign up for VQIP, which will provide expedited clearance to qualified participants.
  • FDA outreach and education efforts to foreign suppliers are considered of particular importance given the global scope of the issue.

More specifically, participants told the agency that they need help to understand what the new rules will require of them. For example, it would benefit them to know how compliance with the new rules will differ from current food safety practices.

Providing case studies and organizing compliance information by sector and commodity would help importers and producers, as would FDA officials sharing information more freely, quickly, clearly, and concisely, they said.

Training was also a major issue for meeting attendees, according to the report, with most industry members suggesting that FDA “leverage its large databases of registered importers and brokers to conduct targeted outreach activities by state, sector, and commodity” in order to target those who remain uninvolve





When President Bill Clinton signed the North American Trade Agreement (NAFTA) in December 1993, he predicted that “NAFTA will tear down trade barriers between our three nations, create the world’s largest trade zone, and create 200,000 jobs in [the U.S.] by 1995 alone. The environmental and labor side agreements negotiated by our administration will make this agreement a force for social progress as well as economic growth.” Twenty-three years later, scholars and policy makers often disagree about the impact that NAFTA has had on economic growth and job generation in the U.S. That impact, they say, is not always easy to disentangle from other economic, social and political factors that have influenced U.S. growth.

On the positive side, overall trade between the three NAFTA partners — the U.S., Canada and Mexico — has increased sharply over the pact’s history, from roughly $290 billion in 1993 to more than $1.1 trillion in 2016. Cross-border investment has also surged during those years, as the stock of U.S. foreign direct investment (FDI) in Mexico rose from $15 billion to more than $107.8 billion in 2014. As for job growth, according to the U.S. Chamber of Commerce, six million U.S. jobs depend on U.S. trade with Mexico, a flow that has been greatly facilitated by NAFTA, which has helped eliminate costly tariff and non-tariff barriers. NAFTA has also facilitated a multi-layered integration of the U.S., Mexican and Canadian supply chains. According to the Wilson Center, twenty-five cents out of every dollar of goods that are imported from Canada to the U.S. is actually “Made in USA” content, as are 40 cents out of every dollar for goods imported into the U.S. from Mexico.

Geronimo Gutierrez, managing director of the North American Development Bank (NADB), notes that trade between the United States and Mexico reached over $500 billion in 2015, a five-fold increase since 1992, when NAFTA negotiations concluded. Thus, he explains, Mexico imports more from the U.S. these days than do all of the so-called BRIC nations combined – Brazil, Russia, India and China. (The NADB acts as a binational catalyst in helping communities along the U.S.-Mexico border develop affordable, long-term infrastructure.)

Gutierrez adds that there are lesser-known benefits of NAFTA. By promoting the tight integration of North American industrial supply chains, “NAFTA is creating partners and not competitors among its member countries. As for Mexico’s interest in this bilateral relationship, it can be summarized in two facts: about 80% of Mexico’s exports go to the U.S., while 50% of the accumulated foreign direct investment received between 2000 and 2011 comes from the U.S. Moreover, NAFTA has been the fundamental anchor for reforms that make Mexico a more modern economy and open society.”

A Modest Impact

For all that, most studies conclude that NAFTA has had only a modest positive impact on U.S. GDP. For example, according to a 2014 report by the Peterson Institute for International Economics (PIIE), the United States has been $127 billion richer each year thanks to “extra” trade growth fostered by NAFTA. For the United States, with its population of 320 million at the time of that study, the pure economic payoff was thus only $400 per person, while per capita GDP was close to $50,000. And while the costs of NAFTA are highly concentrated in specific industries like auto manufacturing — where job losses may be significant for specific firms — the benefits of the trade pact (such as lower prices for imported electronics or clothing) are distributed widely across the U.S., as they are in the case of any trade pact worldwide.

Most studies conclude that NAFTA has had only a modest positive impact on U.S. GDP.

Supporters of NAFTA estimate that some 14 million jobs rely on trade with Canada and Mexico combined, and the nearly 200,000 export-related jobs created annually by NAFTA pay an average salary of 15% to 20% more than the jobs that were lost, according to a PIIE study. Furthermore, the study found that only about 15,000 jobs on net are lost each year due to NAFTA. “On our reckoning, since NAFTA’s enactment, fewer than 5% of U.S. workers who have lost jobs from sizable layoffs (such as when large plants close down) can be attributed to rising imports from Mexico,” wrote its authors, PIIE senior fellow Gary Clyde Hufbauer and research analyst Cathleen Cimino-Isaacs. For the roughly 200,000 out of 4 million people who lose their jobs annually under these circumstances, the job losses can be attributed to rising imports from Mexico, they wrote, but “almost the same number of new jobs has been created annually by rising U.S. exports to Mexico.” Moreover, “For every net job lost in this definition, the gains to the U.S. economy were about $450,000, owing to enhanced productivity of the workforce, a broader range of goods and services, and lower prices at the checkout counter for households.”

Trade specialists agree that it has proven difficult to separate the deal’s direct effects on trade and investment from other factors, including rapid improvements in technology, expanded trade with other countries such as China and unrelated domestic developments in each of the countries.


Walter Kemmsies, managing director, economist and chief strategist at JLL Ports Airports and Global Infrastructure, notes that that many of the job losses that are popularly blamed on NAFTA would likely have taken place even in the absence of NAFTA, in part because of growing competition from China-based manufacturers, many of which have taken advantage of currency manipulation by the Chinese government that has rendered China-made products more price-competitive in the U.S. Likewise, Mauro Guillen, head of Wharton’s Lauder Institute, agrees that without NAFTA, many American jobs that were lost over this period would probably have gone to China or elsewhere. “Perhaps NAFTA accelerated the process, but it did not make a huge difference.”

“A lot of instant experts on NAFTA don’t really understand trade and what drives trade,” said Kemmsies. “And so they get confused between NAFTA and the globalization of the world’s economy. The fact is, with or without NAFTA, we would have done a lot more trade with Mexico anyway. I’m not sure that NAFTA has even fostered any growth of trade between the U.S. and Mexico. Look at Mexico and forget about everything else for a second: What is the single-biggest trade-flow corridor in the world? It’s East-West — Asia to Europe to North America. Mexico happens to sit right smack in the middle of the East-West trade flow…. Here is Mexico, with 120 million people, and all of these abilities to draw raw materials…. You have a cheap labor force, a global geographic advantage, a rising middle class. It’s a good place to make stuff.”

For a long time, because of a lack of investment, Mexico’s infrastructure was well below par, including its ports, which were made to process raw materials, rather than handle industrial goods. In that respect, NAFTA has had a positive impact on Mexico’s economic development, and it has encouraged foreign investors to trust that Mexico, whose governments were long protectionist and populist, would follow the rule of international law. International trade specialists M. Angeles Villarreal and Ian F. Fergusson of the Congressional Research Service wrote in a recent report: “While Mexico’s unilateral trade and investment liberalization measures in the 1980s and early 1990s contributed to the increase of U.S. Foreign Direct Investment (FDI) in Mexico, NAFTA provisions on foreign investment may have helped to lock in Mexico’s reforms and increase investor confidence [in Mexico.]” Nearly half of total FDI investment in Mexico is in its booming manufacturing sector.

Job Losses and Lower Wages

Some critics argue that NAFTA is to blame for job losses and wage stagnation in the U.S., because competition from Mexican firms has forced many U.S. firms to relocate to Mexico. Between 1993 and 2014, the U.S.-Mexico trade balance swung from a $1.7 billion U.S. surplus to a $54 billion deficit. Economists such as Dean Baker of the Center for Economic and Policy Research and Robert Scott, chief economist at the Economic Policy Institute, argue that the consequent surge of imports from Mexico into the U.S. coincided with the loss of up to 600,000 U.S. jobs over two decades, although they admit that some of that import growth would likely have happened even without NAFTA.

“A lot of instant experts on NAFTA don’t really understand trade and what drives trade.”–Walter Kemmsies

While conceding that many U.S. high-wage manufacturing jobs were relocated to Mexico, China and other foreign locations as a result of NAFTA, Morris Cohen, Wharton professor of operations and information management, argues that NAFTA has, on balance, been a good thing for the U.S. economy and U.S. corporations. “The sucking sound that Ross Perot predicted did not occur; many jobs were created in Canada and Mexico, and [the resulting] economic activity created a somewhat seamless supply chain — a North American supply chain that allowed North American auto companies to be more profitable and more competitive.”

Moreover, in their 2015 study published by Congressional Research Service, Villarreal and Fergusson noted, “The overall economic impact of NAFTA is difficult to measure since trade and investment trends are influenced by numerous other economic variables, such as economic growth, inflation, and currency fluctuations. The agreement may have accelerated the trade liberalization that was already taking place, but many of these changes may have taken place with or without an agreement.”

Some of its harshest critics concede that NAFTA should not be held entirely responsible for the recent loss of U.S. industrial jobs. According to Scott of the Economic Policy Institute, “Over the past two decades, currency manipulation by about 20 countries, led by China, has inflated U.S. trade deficits, which [in combination with the lingering effects of the Great Recession] is largely responsible for the loss of more than five million U.S. manufacturing jobs.” Scott argues that while NAFTA and other trade deals such as the Trans-Pacific Partnership are bad for American workers, the fundamental problem is not that they are “free trade” pacts, but that they “are designed to create a separate, global set of rules to protect foreign investors and encourage the outsourcing of production from the United States to other countries.”

Unlike the earliest generation of “free-trade agreements” – which focused on reducing or eliminating tariffs and duties that stifled trade — these newer pacts are more comprehensive. As Scott explains, they “contain 30 or more chapters providing special protections for foreign investors; extending patents and copyrights; privatizing markets for public services such as education, health, and public utilities; and ‘harmonizing’ regulations in ways that limit or prevent governments from protecting the public health or environment.” When critics of the TPP conflate their criticism of that pact with their criticism of “free trade,” they miss an essential element of the TPP that has disaffected many otherwise loyal supporters of earlier-generation agreements that truly focus on deregulation of “trade” per se, he notes.

The Role of China

Two decades ago, when NAFTA was born, China had only a faint presence in the global economy, and was not yet even a member of the World Trade Organization. However, the share of U.S. spending on Chinese goods rose nearly eight-fold between 1991 and 2007. By 2015, U.S. trade in goods and services with China totaled $659 billion— with the U.S. importing $336 billion more than it exported. China has become the U.S.’s top trading partner for goods — a development never anticipated at the signing of NAFTA. And yet, NAFTA continues to attract the lion’s share of the blame among U.S. critics of globalization, despite the fact that the U.S. and China have yet to sign any bilateral free-trade treaty.

“NAFTA did foster greater U.S.-Mexican integration and helped transform Mexico into a major exporter of manufactured goods.”–Robert Blecker

How is that possible? In a recent study that de-emphasized the impact of NAFTA on the U.S. economy, economists David Autor (MIT), David Dorn (University of Zurich) and Gordon Hanson (University of California, San Diego) stress the role of China’s emergence on job growth and wages in the U.S. In the study, published by the National Bureau of Economic Research, they write: “China’s emergence as a great economic power has induced an epochal shift in patterns of world trade. Simultaneously, it has challenged much of the received empirical wisdom about how labor markets adjust to trade shocks. Alongside the heralded consumer benefits of expanded trade are substantial adjustment costs and distributional consequences…. Exposed workers experience greater job churning and reduced lifetime income. At the national level, employment has fallen in U.S. industries more exposed to import competition, as expected, but offsetting employment gains in other industries have yet to materialize. Better understanding when and where trade is costly, and how and why it may be beneficial, are key items on the research agenda for trade and labor economists.”

As Robert Blecker, an economist at American University, notes, “Contrary to the promises of the leaders who promoted it, NAFTA did not make Mexico converge to the United States in per capita income, nor did it solve Mexico’s employment problems or stem the flow of migration.” However, “NAFTA did foster greater U.S.-Mexican integration and helped transform Mexico into a major exporter of manufactured goods.”

The benefits for the Mexican economy were attenuated, however, by heavy dependence on imported intermediate inputs in export production, as well as by Chinese competition in the U.S. market and domestically. The long-run increase in manufacturing employment in Mexico (about 400,000 jobs) was small and disappointing, while U.S. manufacturing plummeted by 5 million — but more because of Chinese imports than imports from Mexico. In both Mexico and the United States, real wages have stagnated while productivity has continued to increase, leading to higher profit shares and a tendency toward greater inequality.”

Blaming NAFTA for all of these disturbing problems may make some NAFTA critics feel good, but as trade researchers have learned in recent years, the growing complexity of today’s economic challenges defies any simplistic explanations.




In a 22-page report released last week, FDA outlined its findings from three public meetings held in June about the implementation of the FSMA import safety programs. The report, “Focus on Strategic Implementation of Prevention-Oriented Import Safety Programs”, reviews the questions asked to participants about challenges and understanding in complying with the Foreign Supplier Verification Programs (FSVP), Accredited Third-Party Certification, and the Voluntary Qualified Importer Programs (VQIP) under FSMA. The agency analyzed data from 350 participants, and made the following conclusions:

Industry wants help in understanding what is required under the FSMA provisions, including clearer, concise information from the FDA

  • Industry may achieve faster compliance with FSVP if members are shown how it differs from existing food safety practices and compliance schemes
  • Organizing FSVP compliance information by commodity and sector may help in faster comprehension of rule
  • Small importers and food producers are at higher risk of failing to comply with FSVP
  • Generating case studies and other foreign supplier education mediums may aid in faster compliance with FSVP requirements
  • Importers will likely consider cost, return on investment and effort necessary to participant when deciding whether to sign up for VQIP, which will provide expedited clearance to qualified participants
  • Industry would benefit from FDA sharing information in a faster, clearer and more concise manner
  • FDA can use its existing facility registration database and existing relationships with industry to continue outreach efforts and elevate FSMA and FSVP compliance awareness


ACE allows for stricter Customs enforcement

From The Journal of Commerce By:Susan Kohn Ross, international trade attorney | Aug 16, 2016 11:13AM EDT

In the face of its recent reorganization and enhanced computer system, it was really only a matter of time before the trade community started to see U.S. Customs and Border Protection better organize its enforcement efforts, and now the first tangible step has been publicly disclosed.

When the concept for the Centers for Excellence and Expertise, or CEE, was rolled out, it was logical to expect that CBP would combine the enhanced computer capabilities of the Automated Commercial Environment with information developed from the industry focused CEEs. That meant, we would eventually see CBP relying on computer analytics and internal expertise to help the agency pinpoint where to focus its enforcement efforts. Over the years, we have seen those with the most experience retire. CBP and Immigration and Customs Enforcement seemed to lose their ability to make serious fraud cases. Yes, criminal cases for trade fraud, involving for example for antidumping and export license violations, continued to be brought, but it has been a long time since we have heard about a really significant civil penalty. Some smaller fish got caught, and many of them made some really poor decisions. Others who got caught just plain cheated. Now, however, CBP has launched a round of “informed compliance” letters, which are really warning letters to the trade community.

The current priority trade issues for CBP are: antidumping and countervailing duty, import safety, intellectual property rights, textiles/apparel, and trade agreements. In the recent past, that list also included agriculture products, penalties and revenue.

CBP has known for years that importers regularly make duty deferral claims, whether by way of free trade agreement, generalized system of preference or other claims that carry with them a zero rate of duty and, when audited years later, cannot support those claims. CBP didn’t need ACE or the CEEs to tell them that. What these new tools do provide, however, is a more concentrated focus on given industries and specific importers. Put another way, these powerful tools now allow CBP to do a better job identifying and ranking the likely levels of noncompliance.

What transpired earlier this month is Regulatory Audit publicized a project whereby importers that CBP thinks may not be compliant were sent letters which included a series of CBP’s informed compliance publications, on such topics as value, classification, reasonable care and the like. Recipients were encouraged to review their transactions, identify instances of non-compliance and file prior disclosures.

While making clear that no importer is required to file a prior disclosure, the letters go on to make clear that, having been notified of possible non-compliance, if not cured by a prior disclosure, and any violations are later found, seizure and penalty action is possible. While not able to say seizure and penalty would actually happen, since the initiation of any enforcement action turns on the facts of that situation, Regulatory Audit has said it will now recommend penalty action when non-compliance is found.

Of course, how this really changes from current practice remains to be seen. Current practice has been to notify the importer that unless he agrees to pay what the auditors think is due, the auditors are left with no choice but to recommend a penalty action be initiated. Pulling the noose tighter around the allegedly noncompliant importer’s proverbial neck, recipients of these warning letters are requested to acknowledge receipt by returning a signed copy of the letter.

Regulatory Audit has come right out and said those who were sent the informed compliance letters are likely candidates for an audit of some sort. There is also the suggestion that the formality with which the company is sent the letter is an indicator of how serious the importer is as an audit candidate, with those receiving the letter by call or email being seen as somewhat less of a risk than those who receive the letter by mail only. Whether that indicator is accurate remains to be seen. While full-blown Focused Assessments remain rare, CBP has developed other more abbreviated means to test importer operations. The most typical of these is a quick audit, sometimes now called an audit survey. Given that Focused Assessments often go on for many months (years?), Regulatory Audit has been conducting these quick audits for some time. They are designed to allow CBP auditors to check specific transactions, figure out whether the risk which was thought to exist does exist, and if not to exit relatively quickly, in weeks instead of months.

The fact these informed compliance letters are being sent (by whatever means of delivery) tells us all that CBP is finally starting to use data from ACE, along with internal expertise, to fine-tune one of the means by which it is evaluating risk and noncompliance.

The timing of these warning letters could also be telling. At the beginning of each fiscal year, Regulatory Audit rolls out a National Audit Plan that details the companies it plans to audit in that fiscal year. As we all know, the fiscal year for the federal government starts on Oct. 1. It is not unreasonable to think that if a company received a warning letter in August and no prior disclosure is filed by late September, the auditors will eventually come calling!

By way of reminder, the industries on which the CEEs focused are electronics; pharmaceuticals, health and chemicals; petroleum, natural gas and minerals; apparel, footwear and textiles; agriculture and prepared product; automotive and aerospace center; base metals; consumer products and mass merchandising; industrial and manufacturing materials; and machinery. While not every importer in each CEE is high-risk, there are certainly patterns that can be identified. For example, the industries the U.S. has typically protected with high duty rates and complicated import requirements are steel and steel products, footwear, textiles and apparel, and auto and auto parts. Add to that whether you are importing from a country subject to an antidumping case, one in which the rule of law is less well developed that in the U.S. or deal in products where classification is complex, to name a few key factors, and you can quickly start to figure out how much risk do your import transactions carry with them? If you are not accurately and completely stating your goods and their cost on your invoices, you are certainly going to be in a lot of trouble!

If you have received one of these informed compliance letters, it is best to conduct a thorough review and make sure your transactions are compliant. It is also important that any such review take place under the benefit of the attorney-client privilege, so make sure your management and legal team know what is going on before any transactions are reviewed and once they are reviewed, make sure to document what was done and on what the final decisions were based.

Susan Kohn Ross is an international trade attorney with Mitchell Silberberg & Knupp in Los Angeles. Contact her at






Lance Fritz, chief executive of Union Pacific, said that movements to and from Mexico in the first quarter grew 6 per cent for the company, which covers much of America west of the Mississippi River with its network.

The traffic now accounts for 12 per cent of all UP’s business. It could be vulnerable to any renegotiation of the North American Free Trade Agreement, signed in 1994, which has encouraged a surge in trade between the US, Canada and Mexico.

Many of UP’s other business areas are suffering because of slumping demand to move coal, reduced oil and gas drilling activity and lacklustre global trade growth. Overall traffic declined 8 per cent year-on-year in the first quarter.

Donald Trump, the presumptive Republican presidential nominee, has repeatedly called Nafta “a disaster,” vowing to scrap the deal.

Mr Fritz joked in response to a question about Mr Trump’s proposal to build a wall on the Mexican border: “As long as it has portals for rail traffic”.

He otherwise declined to comment on specific candidates, saying only that UP wanted a president who cared deeply about the issues that were important to the railroad.

None of the remaining potential candidates for the White House — Mr Trump, and the Democratic contenders, Bernie Sanders and Hillary Clinton — currently supports the Trans-Pacific Partnership trade agreement with Asian countries that is the US’s biggest pending trade deal. Mrs Clinton supported it when secretary of state from 2009 until 2013, however.

Mr Fritz rejected suggestions that he was mainly criticising Mr Trump.

“I’m concerned I don’t hear any candidate right now talking about free and open trade,” he said. “I’d like to hear one of them speak to and be more positive about Nafta. From 1994 to today, US trade to Mexico is up fourfold and Mexico trade with the US is up even more.”

Mr Fritz’s criticism of the candidates comes as UP wrestles with a sharp downturn in traffic that has abruptly ended several years of rapid growth following the 2008-09 Great Recession.

Movements of coal, 12 per cent of revenue, were down 34 per cent in the first quarter over the first three months of 2015. Intermodal traffic, as movement of shipping containers and truck trailers is known, was down 3 per cent in the first quarter. Mr Fritz said that this had worsened since the first-quarter report.

Copyright The Financial Times Limited 2016. All rights reserved. You may share using our article tools. 


Easing the flow of fruits and vegetables from Mexico and Canada
Easing the flow of fruits and vegetables from Mexico and Canada    

Now that it’s June, many of us are enjoying a variety of fresh fruit and vegetables that will be available throughout the summer.  During the rest of the year, some of these same fresh fruits and vegetables are available to American consumers thanks to trade agreements with Canada and Mexico.

In the last five years, the value and volume of fresh fruits and vegetables from Canada and Mexico to the United States has grown.  In 2015, the U.S. imported more than 2.8 billion pounds of fresh fruits and vegetables from Canada, valued at $1.4 billion.  From Mexico, the U.S. imported 17.4 billion pounds of fresh fruits and vegetables for $9.1 billion.  U.S. fruit and vegetable growers also have benefited.  In 2015, the U.S. exported nearly 7.1 billion pounds of fresh fruits and vegetables to Canada and Mexico, worth $4.2 billion.

With more market integration between the three countries, the potential for disputes can also increase. To address potential issues, the North American Free Trade Agreement created a unified system to enable effective trade dispute resolution. The Fruit and Vegetable Dispute Resolution Corporation (DRC) handles these disputes for the fruit and vegetable industry.

The DRC is a non-profit organization established in February 2000 to smooth the trade of fruits and vegetables between Canada, Mexico and the U.S. It helps its members, including buyers, sellers and brokers of fruits and vegetables, resolve complaints about contract and payment issues as well as about the condition of the fruit and vegetables.  This system is modeled on the dispute resolution system in the Perishable Agricultural Commodities Act (PACA), administered by AMS.  Today, the DRC has nearly 1,600 members.

Last week, I represented USDA’s Agricultural Marketing Service (AMS) at a meeting of the DRC. The recent meeting included topical discussion regarding Canada’s efforts to establish procedures similar to what the United States has had since 1984 that would give sellers of fruits and vegetables a priority status in the event their buyer becomes insolvent or files for bankruptcy protection.  We also discussed ways to expand the number of DRC-licensed members in Mexico.  All of this would provide added stability to the market place, and benefits farmers, produce suppliers, buyers, and consumers in all three countries.

Since its inception in 2000, the DRC has successfully resolved thousands of trade disputes worth tens of millions of dollars.  No matter the time of year, its members are working to help bring fresh fruits and vegetables to markets and stores throughout the United States, Canada and Mexico.



Customs and Border Protection badge


President Obama signed the bipartisan Trade Facilitation and Trade Enforcement Act of 2015 on February 24 2016. This is the first major customs legislation enacted since the Customs Modernisation Act.(1) The Trade Facilitation and Trade Enforcement Act focuses on facilitating legitimate trade and enforcing existing trade laws, such as those relating to intellectual property and trade remedies.

Trade facilitation

The Trade Facilitation and Trade Enforcement Act does not go so far as to implement a management-by-account system for customs entries. However, in an effort to streamline and modernise trade, the legislation:

  • provides support for the Automated Commercial Environment (ACE) and the International Trade Data System (ITDS);
  • addresses trade partnership programmes;
  • statutorily authorises the Centres of Excellence and Expertise (CEEs); and
  • makes significant changes to drawback (simplifying what many consider to be archaic and complicated rules).

In keeping with the administration’s goals of implementing ACE and the ITDS, the act provides further funding for the development of ACE. It requires that the ITDS be implemented no later than ACE is fully implemented; further, no later than December 31 2016, the ITDS must be the primary means for other agencies to receive data and documentation required for entry. In addition, the act requires that US Customs and Border Protection (CBP) work with the participating agencies to ensure that they develop and maintain the infrastructure necessary to support the ITDS and identify and transmit to CBP admissibility criteria and data elements for incorporation into ACE by June 30 2016.

Trade partnership programmes
The act also addresses trade partnership programmes. CBP maintains two primary trade partnership programmes, the security-focused Customs-Trade Partnership Against Terrorism (C-TPAT) and the compliance-focused Importer Self-Assessment programme. The act requires CBP to:

  • consider consolidating partnership programmes;
  • ensure a transparent system of benefits and compliance requirements; and
  • coordinate with other federal agencies for qualified parties to receive immediate clearance for entries, absent information that the transaction poses a threat.

While the act requires CBP to provide participants in partnership programmes with “commercially significant and measurable trade benefits”, the only benefit specifically enumerated is the requirement for CBP to provide pre-clearance of merchandise for those that demonstrate the highest levels of compliance.


Miscellaneous customs provisions

The Trade Facilitation and Trade Enforcement Act addresses a number of miscellaneous customs matters, some of which present duty savings opportunities.

Increased de minimis value
The act raises the de minimis value – the value of goods that may be entered without payment of duty – from $200 to $800.

Amendments to Chapter 98
The act introduces a number of important changes to duty savings provisions in Chapter 98 of the Harmonised Tariff Schedule. First, it authorises the use of inventory management for commingled fungible articles under Subheadings 9802.00.40 and 9802.00.50, concerning articles exported and returned after repair or alteration abroad. The act does not go so far as to authorise the use of inventory management in other Chapter 98 provisions, such as Subheading 9802.00.80. Second, the new law expands the range of articles that may be potentially imported duty-free by amending Subheading 9801.00.10 (previously for US goods returned) to allow the duty-free entry of any article, regardless of origin, that is exported and returned within three years of export, provided that it is not advanced in value or improved in condition while abroad.

Voluntary re-liquidations by CBP
The act makes a technical correction to the pre-existing law which allowed CBP to re-liquidate an entry within 90 days of the date of notice of liquidation. The new law changes the statute to allow CBP to re-liquidate an entry within 90 days of the actual liquidation.

Residue of bulk cargo in instruments of international traffic
The act amends the Harmonised Tariff Schedule to exempt from entry requirements the residue of bulk cargo in instruments of international traffic previously exported from the United States. This supplants a CBP ruling from 2009 requiring the entry of such residue.

Textile and apparel products from Nepal
The act creates a programme to provide duty-free treatment for certain textile and apparel products produced in Nepal. The programme, based on rules established under the Generalised System of Preferences and African Growth and Opportunity Act and authorised until the end of 2025, is limited to about 60 tariff classifications, encompassing bags, carpets and accessory items such as hats and shawls.

Trade enforcement

With respect to trade enforcement, the Trade Facilitation and Trade Enforcement Act addresses issues with importer-of-record identification, IP rights and anti-dumping and countervailing duty evasion.

Importer-of-record identifying information
In the wake of increased concerns surrounding unscrupulous and ‘fly-by-night’ importers of record, the act authorises three key changes to how CBP manages importers of record.

First, the legislation requires the establishment of an importer-of-record programme. As part of the programme, CBP must:

  • establish criteria that importers must meet in order to obtain an importer-of-record number;
  • provide a process by which numbers are assigned; and
  • maintain a database of importer-of-record numbers and associated information on the importer.

Second, the act requires CBP to establish an importer risk assessment programme to review the risk associated with certain importers – particularly new importers and non-resident importers – to determine whether to adjust an importer’s bond amounts and increase screening for the importer’s entries. Tier 2 and Tier 3 C-TPAT members are excluded from this programme.

Finally, the act requires CBP to prescribe minimum standards for identifying information that brokers must collect and maintain on importers of record, particularly non-resident importers. In addition to collecting and maintaining the information, the law requires that these standards include procedures that a broker must follow to verify the authenticity of the information and provides for monetary penalties and the potential revocation or suspension of a broker’s licence or permit for failure to comply with the standards.

IP rights enforcement
In an effort to combat the import of merchandise that infringes IP rights, the act provides CBP with enhanced enforcement tools and establishes an administrative framework for managing IP issues. Prior laws allowed CBP to share unredacted images and samples with rights holders; however, the act now requires CBP to share information about merchandise that potentially infringes trademarks or copyrights with the rights holder, if CBP believes that this would assist in determining whether a violation has occurred. The act also adds circumvention devices (ie, devices designed to circumvent a technological measure to control access to protected work) to the list of items that CBP is authorised to seize and requires CBP to enforce copyright for which registration is pending. The act also provides statutory authorisation for:

  • the National IP Rights Coordination Centre;
  • the dedication of certain CBP and US Immigration and Customs Enforcement employees to IP rights issues; and
  • enhanced training for CBP employees on IP rights issues, including though coordination with the private sector.

Trade remedies enforcement
Title IV of the act (separately titled the Enforce and Protect Act of 2015) makes significant changes to how CBP enforces anti-dumping and countervailing duty orders. In addition to requiring the creation of a trade remedy enforcement division within CBP’s Office of Trade, the newly enacted legislation establishes a mandatory procedure for CBP to investigate allegations of duty evasion. Title IV borrows heavily from the Senate’s previously proposed Enforcing Orders and Reducing Customs Evasion Act, with some amendments.

Under the newly defined procedures, investigations into allegations of evasion must occur as follows:

  • Where CBP receives an allegation (or referral from another federal agency) that a person has imported covered merchandise into the United States through evasion, and it determines that the information provided reasonably suggests that evasion has occurred, it must initiate an investigation no later than 15 business days from notification.
  • Not later than 300 calendar days after CBP initiates an investigation, it must make a determination – based on substantial evidence – regarding whether such covered merchandise entered the United States through evasion. This deadline may be extended by 60 calendar days if CBP determines that the investigation is extraordinarily complicated and additional time is necessary to make a determination.
  • In making its evasion determination, CBP may collect additional information, including by issuing questionnaires (to the party that filed the allegation, the person alleged to have entered the covered merchandise through evasion and the foreign producer or exporter) or by conducting verifications. If CBP finds that the party alleged to have imported covered merchandise through evasion has failed to act to the best of its ability to comply with a request for information, CBP may use an inference that is adverse to that party’s interests in selecting from the facts otherwise available to determine whether evasion has occurred. An adverse inference may include:
    • reliance on information derived from the allegation of evasion of the trade remedy laws submitted to CBP;
    • a determination by CBP in another investigation, proceeding or other action regarding evasion of the unfair trade laws; or
    • any other available information.
  • If CBP makes a determination that covered merchandise was imported into the United States through evasion, CBP will:
    • suspend the liquidation of unliquidated entries of the covered merchandise that enter on or after the date of the investigation’s initiation;
    • extend the period for liquidating unliquidated entries of the covered merchandise that entered before the date of initiation;
    • notify the Department of Commerce of the determination and request it to identify the applicable anti-dumping/countervailing duties rates; and
    • require the posting of cash deposits and assess duties on imports.
  • The party found to be evading duties may file an administrative appeal of CBP’s determination within 30 business days, which must be decided de novo within 60 days. The appeal is subject to judicial review at the Court of International Trade.

Title IV also eliminates the ability of an importer of a new shipper’s merchandise to post a bond or security instead of a cash deposit for imports of that merchandise while the Department of Commerce is determining the new shipper’s individual weighted average dumping margin or individual countervailing duty rate. This provision is intended to prevent unscrupulous importers from importing large quantities of dumped or subsidised merchandise during the review period and then disappearing or otherwise failing to pay the proper amount due.



We received this email from a driver picking up merchandise at our cold storage.  We are glad that we could lend a helping hand in times of need.  Esmeralda Hernandez is our receptionist and showed her humanitarian side.  It is rare that you receive this type of feedback, but I wanted to share with you.

Name:Brenda Bletscher
Comment:I just wanted to send out special Thank you to Esméralda, who works in the Laredo office. I had a death in my family, my niece was killed in automobile accident. I was so upset, she was so nice and made sure I was loaded and out of there so I could get back home for my family.everybody down at Jo Alverez have always been so nice. Thank you once again for everything.

Thank you Brenda for your kind words, and a big thank you to Esmeralda for giving her a helping hand.