May 13, 2016
thought leaders | The DC Velocity Q & A

Partner-in-Chief: interview with R. Gil Kerlikowske

Partner-in-Chief: interview with R. Gil Kerlikowske

R. Gil Kerlikowske spent four decades in law enforcement. As head of U.S. Customs and Border Protection, he's added trade compliance and facilitation to his portfolio and has made building stronger relationships with the trade community a priority.

By Toby Gooley

When R. Gil Kerlikowske was nominated as commissioner of U.S. Customs and Border Protection (CBP) in 2014, international traders were concerned that he might give short shrift to trade facilitation and slow the wheels of commerce by focusing mainly on CBP's other key responsibility, law enforcement and security. Those worries weren't surprising; after all, he had spent four decades in law enforcement, including stints as chief of police in Seattle and police commissioner of Buffalo, N.Y. At the federal level, the U.S. Army veteran had served as deputy director for the U.S. Department of Justice's Office of Community Oriented Policing Services and director of the White House Office of National Drug Control Policy. All relevant for someone who would head the largest law enforcement agency in the federal government, with responsibility for border security, immigration, and the interdiction of smuggled drugs, merchandise, and people.

That concern was soon laid to rest. Kerlikowske began meeting with importers and customs brokers within days of his confirmation hearing. CBP's top officers started speaking about the agency's role in promoting economic prosperity and of its commitment to making trade processes more efficient. An increase in outreach programs, strengthened partnerships with industry advisory groups, and initiatives like CBP's industry-specific Centers of Excellence and Expertise are among the reasons more than one customs broker has said that the trade community's relationship with the agency is the best it has ever been. Granted, disagreements remain and there is still much work to be done, particularly in regard to the implementation of new technology, but Kerlikowske is confident that CBP's improved relationship with the trade community will help ensure those and future initiatives succeed.

The commissioner sat down with DC Velocity for a one-on-one interview in mid-April at the Coalition of New England Companies for Trade's (CONECT) Annual Northeast Trade and Transportation Conference in Newport, R.I. Here's what he had to say.

Q: What are some of the most important provisions of the Trade Facilitation and Trade Enforcement Act of 2015, also known as the Customs Authorization Act, and how will they enhance CBP's ability to carry out its mission?

A: Prior to the Customs Authorization bill, all of the necessary authorities for CBP rested in different laws. For the first time, all of that has been put together in one law, which will be very helpful in a number of respects.

There are quite a few important aspects of the law, but there are a couple in particular I can mention. One is that it enshrines the COAC (Advisory Committee on Commercial Operations) and puts into force of law the fact that we have a partnership with private sector stakeholders. A different administration in the future might say we don't need that. I don't think anyone ever would, but the law ensures that we will always have this beneficial relationship.

The law also strengthens our enforcement capabilities; for example, in antidumping cases for steel, and in preventing child and slave labor. NGOs (nongovernmental organizations) are sharing information with us, and [in early April] we refused two Chinese shipments of potash because we had a reasonable suspicion that both had been loaded by prison labor, a clear violation of U.S. law.

Another is the change in the de minimis, which reflects the growth of e-commerce. Also importantly, the law fully funds ACE (Automated Commercial Environment) for the first time. (Editor's note: The de minimis change exempts the first $800 of imported merchandise from customs fees and duties, as well as from most compliance requirements; the previous threshold was $200. ACE is CBP's comprehensive new information management system now being implemented.)

Q: Earlier this year, CBP announced a phased implementation of the Automated Commercial Environment (ACE) because many companies would not be ready by the original deadline. Have you seen a measurable increase in readiness since then? If not, what is holding companies back, and what can CBP do to get more of them on board?

A: Over the last six to eight months, it became apparent that for various reasons, the developers of the software the industry uses [for filing customs documents] were unable to deliver changes as rapidly as needed. We wanted to be attentive to their concerns. I spoke to the TSN (Trade Support Network, an industry forum that discusses CBP's modernization and automation efforts), and everybody recognized that the end results would all be for the better, but people needed more time, an extra 30 to 60 days. ... Currently, 72 percent of cargo releases and 92 percent of entry summaries are being submitted through ACE, so there has been a notable increase.

The changes we made in ACE several months ago had the greatest impact on the process. There were some glitches during implementation, and they have been addressed relatively quickly. We needed to address problems with air cargo immediately, and we did. I think the initial implementation problems have been pretty much resolved. We have a "strategy room" in our IT organization that will quickly deal with anything else that arises.

Q: CBP is the lead agency for the "Single Window," which will allow companies to submit data once and automatically share it with multiple federal agencies. Why are some of the other agencies still not ready, and what can CBP do to help move them forward?

A: I don't think we've taken our foot off the gas on this for the past two years. I give a lot of credit to COAC for its work on this issue. The Food and Drug Administration (FDA) and Consumer Product Safety Commission (CPSC) attend every COAC meeting and are well along in their plans. But the PGAs (participating government agencies) all have a huge number of other responsibilities. They have to carve out time and resources, and that direction has to come from the top of the organization. ... They have to balance the requirements with the resources they have.

We have 60,000 employees, and most of the PGAs don't ... so we can be very helpful to them. For example, on the southwest border, we may find bugs in imported produce, and if the U.S. Department of Agriculture doesn't have someone right there, we'll take a photo and send it to the USDA, and they'll tell us what to do. I think that as the PGAs recognize that we're there 24/7 at the large ports of entry and can help them, we'll build stronger relationships and more trust. Toward that end, we're doing more training on other agencies' rules and regulations so we can better support the other agencies.

Q: With the recent events in Western Europe and the increasing volatility in the Middle East and Africa, the threat of terrorism is understandably on many people's minds. How is CBP helping to address those concerns?

A: I went to four countries in Africa last year to help build relationships with their customs organizations. It was very clear that the model the United States has developed—combining the resources of trade enforcement, immigration, and border security to leverage finite resources—would be very helpful there. But in one country, customs officials told us that although they wanted to combine agencies, the ministry of finance wanted to keep them separate because they saw customs only as a revenue collector. They didn't recognize how much customs can help with security.

Supply chain disruptions can have a significant impact on an economy. We spend a lot of time sharing with other customs agencies the lessons we've learned about security that they could apply in their own countries. The World Customs Organization supports this kind of openness and mutual assistance. It's a good resource for technical assistance and best practices for securing the supply chain.

About the Author

Toby Gooley
Contributing Editor
Contributing Editor Toby Gooley is a freelance writer and editor specializing in supply chain, logistics, material handling, and international trade. She previously was Senior Editor at DC VELOCITY and Editor of DCV's sister publication, CSCMP's Supply Chain Quarterly. Prior to joining AGiLE Business Media in 2007, she spent 20 years at Logistics Management magazine as Managing Editor and Senior Editor covering international trade and transportation. Prior to that she was an export traffic manager for 10 years. She holds a B.A. in Asian Studies from Cornell University.

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