Trade Compliance

GHY discusses changes to international trade regulations and explores cutting-edge compliance strategies.

U.S. Customs Outlines New E-Commerce Strategy

Posted March 27, 2018

U.S. Customs and Border Protection (CBP) earlier this month released a long-awaited strategy document for how the agency plans to confront the revenue collection and security threats posed by rising cross-border e-commerce volume.

“This growth in volume has increased the opportunity for illicit and dangerous products to cross our borders, placing Americans’ health and safety at risk and creating new risks that can compromise U.S. intellectual property rights,” said the agency in a statement.

The CBP’s new e-commerce strategy establishes a number of broad goals and more specific objectives pertaining to each that CBP will aim to accomplish. To this end, the CBP says it intends to enhance legal and regulatory authorities to better position the agency to address emerging threats and also create what it describes as “a more agile, dynamic workforce” – one that utilizes state-of-art techniques and technology to better target high-risk shipments, improving data collection from CBP targeting systems, and leveraging enforcement partnerships.

“The shift from traditional methods of importing via large, containerized shipments to small, low-value packages has presented new challenges for CBP,” recently appointed CBP Commissioner Kevin McAleenan wrote in the report. “The growing volume of these small packages, coupled with the actionable data challenges CBP and other federal agencies face, requires new methods and resources in order for CBP to continue carrying out its mission of facilitating trade and enforcing trade laws.”

To effectively address these challenges without hindering legitimate trade, the CBP’s new e-commerce strategy will revolve around four objectives:

  • Recalibrate CBP’s regulatory posture and partnerships with other U.S. agencies to address emerging threats posed by e-commerce;
  • Enhance data collection, targeting, examinations, intelligence and international engagement to better target small shipments over which CBP currently has less data than from larger, containerized shipments;
  • Induce e-commerce stakeholders to comply through enforcement resources and incentives, like trusted trade programs; and
  • Work with counterpart agencies abroad and through the World Customs Organization to develop more harmonized international e-commerce trade standards.

“Since 2000, the number of Americans shopping online has increased nearly fourfold, up from 22% to 79%,” the report said. “This rapidly accelerating increase in volume is largely comprised of shipments valued under $2,500. At the end of fiscal year 2017, one port that has an express consignment hub received an estimated 25 million predominantly informal and de minimis (packages declared at less than $800) value shipments. In comparison, this same facility averaged 2.4 million shipments between 1997 and 1999.

“With regard to lower-value, small shipments, CBP receives less actionable data on e-commerce shipments, which informs its traditional risk assessment and targeting screenings,” the document added. “To correct this vulnerability, CBP must put into place new protocols that allow for effective identification, enforcement, and deterrence of trade violations in the e-commerce environment.”

In addition to streamlining enforcement measures, the strategy also involves a number of initiatives designed to encourage more private sector compliance and broader technology adoption.

Regarding outreach to the private sector, the document suggests that “CBP will propose benefits for those parties who share advance electronic data and other information, and will utilize penalty action for those who are not compliant in this area. CBP will in turn seek to increase information sharing with e-commerce stakeholders, such as intellectual property rights holders.

“CBP will consider trade benefit incentives for e-commerce marketplaces and small package carriers, similar to the Customs Trade Partnership Against Terrorism (CTPAT),” it added. “CBP will explore all aspects of the e-commerce supply chain for partners in a known shipper program. To maximize participation and include the majority of the volume in the supply chain, CBP will focus on trading modes such as marketplaces and carriers.”

As for stepping up its technology game, the strategy indicates the agency will seek out more powerful target tools. “CBP originally designed its risk management practices to focus on traditional shipping methods,” the document said. “Now, it must expand them to address the unprecedented flow of goods from new, unknown, and often less proficient importers. CBP will increase its operational efficiency and effectiveness by using data analytics, data mining, and an array of powerful analytical tools.”