Newsletter - nynjforwarders-brokers.org · Why should all of this matter to you? If you or your cus-tomers have a drawback program, everything you know is about to change. Many members

Newsletter

New York New Jersey Foreign Freight Forwarders And Brokers Association Inc. nynjforwarders-brokers.org

VOLUME LXX FALL / WINTER 2017

CBP’s New Acting Commissioner U.S. Customs and Border Protection (CBP), Acting Commissioner Kevin McAleenan hosted a round table event with the local trade community at the New York Field Office in the World Trade Center. Our association and the JFK association were each invited to send five representatives. Other attendees included representatives from a few pharmaceutical companies (CEE users), a CES, and the Long Island Import/Export Association. Prior to the meeting, we submitted agenda topics including ACE/PGA’s, Cyber Security Threats, Section 321 and the Broker Management 111 rewrite. Section 321 was a major focus for both CBP and the attendees.

An interesting study was shared by Customs with the group: At the request of HQ, Frank Russo led a task force to analyze 3800 parcels arriving through the postal ser-vice from China / Hong Kong. It was found that 48% of these parcels were in viola-tion to import regulations for various reasons. Of the 48% of violations, 800 of the parcels were counterfeit related.

While surprised to hear such a high percentage of violations had been detected in this sampling process, we are pleased this is a high priority issue for CBP. The COAC subcommittee is also working on re-evaluating these loopholes / concerns.

For the full details of the July 27th meeting, please email the association’s office at: [email protected] and include “Request for CBP Roundtable Notes” in the subject line.

From left Matt Brauner, Brauner International; Charles Riley, Steer Company; MaryJo Muoio, GEODIS;

CBP Acting Commissioner Kevin McAleenan; Robert Silverman, GDLSK; Al Raffa, Seafrigo and Leon

Hayward, CBP NY Field Operations Acting Director

September 27, 2017

Board of Governors Meeting

October 18, 2017

Membership Meeting &

Luncheon

November 15, 2017


December 20, 2017


Luncheon

January 17, 2018


February 1, 2018

Annual Dinner Gala

February 21, 2018


Luncheon

March 21, 2018


April 18, 2018


Luncheon

May 16, 2018


June 20, 2018


Luncheon, Lothar Klestadt

Scholarship Award and Board

Elections

VOLUME LXX nynjforwarders-brokers.org

PAGE 2 nynjforwarders-brokers.org

President’s Message

Dear Member,

As President of the NYNJ Foreign Freight Forwarders and Bro-kers Association, I am honored to follow in the footsteps of the industry giants that have preceded me. For the past several decades, I have been fortunate to work with (and learn from) Stu Hauser, Matt Brauner, David Schlenger and Charles Riley in my roles as Board member, VP of NJ, VP of Education, and most recently as VP of Imports. I spent some time on the NCBFAA Customs Committee chaired by Ken Bargteil during the formation and implementation of the ISF program. It's been an incredibly educational and rewarding experience for me both professionally and personally. Now as I step into the role of President, I hope to be able to continue the fine accomplish-ments of my predecessors and keep working on your behalf to help our industry stay strong and vibrant in today's challenging environment.

Recently I witnessed the first 14,000 TEU vessel (CMA CGM T Roosevelt) make its way into the Port of NYNJ via the newly

raised Bayonne Bridge. (see article on page 11.). Our port will not only be able to handle these larger vessels now that the bridge is raised, but CMA CGM has named NYNJ as their first port of call, which will mean more containers coming thru our port as they make their way thru our improved railway system. Things are looking up here in NYNJ and the broker/forwarder industry is at the forefront.

First on my agenda is confronting the seriously flawed program that threatens not only the revenue to the government, but also our national security. I'm talking about the Section 321 fiasco that is quickly becoming a gateway for companies to avoid pay-ing duty, and for terrorists to toss a wrench into the supply chain without leaving much information behind. This program enables companies to avoid paying duty by addressing individu-al packages valued at less than $800 to the ultimate consumer, while still shipping the freight in consolidated containers. How is this possible? Well it's because of the strong politi-cal lobbyists exerted their influence to increase the minimum entry requirements from $200 to $800 for a single shipment. If I do nothing else as President, I will make sure this flawed pro-gram gets taken to task and brought under control. We have already discussed this issue in a roundtable discussion with the

Acting Commissioner of Custom and it is definitely on CBP's radar. (See article on page 10).

On a lighter note, I hope to see you all at our many industry functions. Getting involved in the association's activities is a great way to meet new people, improve your business opportu-nities and skills, and generally enrich your professional life. We host four or five Membership luncheons each year where we meet to discuss the topics of the day. We typically have an edu-cation seminar on the same day, where you can earn points to-wards your CCS or CES credential. Behind the scenes we have several committees you can join to help shape the future of our industry. We have the Import committee chaired by our VP of imports - Al Raffa, and our Forwarding committee chaired by our VP of exports- Jeanette Gioia. These committees are mind-ful of everyone's busy schedules; they typically communicate by email conversation, or a conference call. It's very simple to take part and you can voice as much or as little of your opinion as you feel comfortable contributing. In addition, you can help our Education VP - Michelle Maslow Hauser - with planning our webinar and seminar agendas. You can take part in our annual dinner committee where we work on the NYNJFFFBA Annual Gala held at the Marriott Marquis in Times Square the first Thursday in February. This year it is scheduled for Thursday February 1st and we are looking for volunteers.

There's ample opportunity for you to get involved. All it takes is an email or a phone call from you. We welcome anyone inter-ested.

Thank you for this opportunity to serve as your president. I look forward to meeting as many of you as possible during my tenure.

Regards,

Bill Skinner, President


VOLUME LXX PAGE 3

Drawback is a program that has centuries of history, but can go decades without seeing major changes. From its inception in 1789 to 1930, the program proceeded without alteration. Within 1930 to 1980, unused merchandise and then substitution be-came available. Beginning in the 1990s, the pace for change accelerated with effects from NAFTA and new drawback regula-tions in 1998, to the Miscellaneous Tariff Bill in 2004, and now the transition of drawback to ACE along with a new law and new regulations coming fresh to your doors in 2018.

Why should all of this matter to you? If you or your cus-tomers have a drawback program, everything you know is about to change. Many members of the trade, myself included, have been working with CBP to transition drawback to ACE since 2015, with the hope that we were a few months from a large-scale shift in how drawback claims will be transmitted. As a group, we knew that working ahead was to our advantage, as the passage of the Trade Facilitation and Trade Enforcement Act added Section 906 for Drawback Simplification, laying out a timeline for a new law and new regulations for February 24, 2018. In our ACE working group, we ironed out changes to vali-dations, worked through the layout for the program, and fought for the best program possible with CBP in an effective and pro-ductive set of meetings. The trade endured many tests to the ACE system in the certification environment and worked through bugs and problems. Even with the progress we were making, issues arose with other ACE programs tied to draw-back. Originally scheduled for an October 1, 2016 release, draw-back will now be unveiled to ACE on February 24, 2018. That date looks familiar, doesn’t it? With changes to the law, there will be changes required to make ACE work for February 24, 2018 as well.

So, for our all-important February 2018 date, we will have a new law that is effective with finalized regulations, a drawback system transitioning to ACE for the first time and major chang-es to test in ACE for the new law.

What are the major changes to the new law? The major updates to the drawback program are listed below. This is not a comprehensive list, but a sampling of the biggest topics to influ-ence claimants.

1. First is the allowance to claim drawback for unused substi-tution at an 8-digit HTS level. You can match 8-digit im-ports to 8-digit exports in the program to claim drawback dollars. Sounds fun and easy! While it is certainly easier than claiming a shirt, for example, that now requires you to match based on color, size, and style, you can mix and match shirts that you can claim so long as the HTS number is the same at 8-digits. However, if your 8-digit classifica-

tion starts with the word “other”, then you have to complete your match on a 10-digit HTS classification level. If the 10-digit classification starts with the word “other”, then you have to complete your drawback claim using unused mer-chandise direct identification. While you may not be able to utilize unused merchandise substitution, you can still claim drawback.

2. There will be a change to the calculation and how CBP de-termines the drawback amount you can receive. Claimants will still be allowed to collect 99% of the duties, but the language has been expanded to allow for collection of 99% of the taxes and fees across all drawback types (including HMF and MPF). Manufacturing claimants will benefit here where they haven’t had the opportunity in the past.

3. The drawback timelines have been simplified. Claimants can maximize their drawback for 5 years from the import date to the date of the claim. In the past, this timeline was restrictive, allowing for a 3-year reach back on exports. Manufacturing drawback is simplified as the removal of receipt dates will ease the burden for data requirements for claimants.

4. Claims will be required to be filed electronically. CBP will no longer be receiving the paper files with the claim infor-mation as everything they need will be transmitted elec-tronically.

5. Drawback claimants can wait to file under the new draw-back law until February 24, 2019. There is a one-year tran-sition in the law that allows for claimants to maintain the drawback program that they have for one year, and then the transition to the new regulations will be required in 2019. This may be important for those companies whose classified items fall into the “other” basket categories.

For those that attended our drawback session earlier this year, you know that drawback is a program that can provide benefits to any number of parties that are involved in the supply chain. It encourages manufacturing and exporting and has a robust his-tory. With the changes that are transforming our drawback world, you can bet we have circled February 24, 2018 on our calendars. Maybe it’s time that you did the same.

If you have questions about drawback, contact our author:

Dave Corn Vice President Comstock & Theakston, Inc. Drawback Specialists Since 1894 NYNJFFF&BA Treasurer and Government Affairs Chairman Email: [email protected] Office: (201) 967-1220 x103

Drawback: Save the Date for February 24, 2018!



Board of Governors

President

William Skinner III In 1986 Bill graduated Magna Cum Laude from Niagara University with BS in Transportation and Logistics Management. At the same time he was commissioned a 2nd Lieutenant in the Army Reserve and served a 4 year tour of duty with the Army in the Transporta-tion Corp. out of Fort Eustis, VA and Fort Story, VA. As an Execu-tive Officer of a Stevedoring com-

pany, and platoon leader of a hovercraft lighterage company, Bill supervised in LOTS (Logistics Over the Shore) operations in Honduras, Honolulu, Virginia, and Turkey.

In 1990 Bill ended his tour of duty and started working as a proud “S-O-B” or “Son-Of-a-Broker” for William B Skinner Inc. In February of 1991 he helped the company become licensed by the FMC as a freight forwarder. He passed the Customs Bro-ker Exam and received his License in 1992.

In 1998 Bill earned a Masters in Business Administration in Finance from Seton Hall University. He was named President of William B. Skinner Inc. the same year.

Bill served as the Area 2 Representative on the NCBFAA’s Cus-toms Committee from 2007-2009.

He was elected in June of 2017 as the President of the NY and NJ Brokers Association and prior to that served as VP-Imports and Dinner Chair.

Bill lives in NJ with his wife Timolyne and three kids: Ryan, Kelsey and Robbie. He enjoys running marathons and coach-ing youth sports.

Chairman

Charles Riley Charles Riley is a Vice-President with John A. Steer Co., a Customs Brokerage and Forwarding com-pany founded in 1905. He started at John A. Steer Co. in 2001 and has led John A. Steer’s New York operation since 2002.

He is a graduate of The Pennsylva-nia State University. Charles ob-

tained his broker’s license in 1989.

Charles has served on the Board of Governors of the New York/New Jersey Foreign Freight Forwarders and Brokers Association since 2005. He was elected as the Treasurer in 2007. He served as the Vice President, Imports from 2009 to 2013 and then was elected as the President and served from 2013 to June of 2107. He is currently serving as the Associa-tion’s Board of Governors Chairman.

Charles served from 2009 to 2012 as the NCBFFA Customs Committee Representative for Area 2. Charles was chosen as the NCBFAA Legislative Chairman in 2014.

Vice President Export

Jeanette Gioia Jeanette R. Gioia is President of both Serra International, Inc., a freight forwarding, customs bro-kerage, and 3PL company original-ly established in 1919 as Luigi Ser-ra, Inc., and Serra Shipping, Inc., its' NVO affiliate.

She holds a BA from Manhattan-ville College, Purchase, NY and a

MIA from Columbia University, NY, NY. Before joining Serra in 1984, Jeanette worked as an international economist with the foreign exchange advisory service of Brown Brothers Har-riman & Co; the international lending division of Mellon Bank; the international finance group of Kidder Peabody & Co.; and with the private consulting company Nakagama & Wallace. She has written and been a guest speaker on international eco-nomic and foreign exchange issues.

Although Jeanette was just recently elected Vice President of Exports, Serra has been a member of the NY / NJ FFF & BA since its inception. Previously, she had served on the Board of Directors for the Executive Association of Greater New York.

Vice President Import

Al Raffa Al Raffa is Vice President of Opera-tions with Seafrigo USA, Inc., a global logistics provider dedicated to food and beverages established in 1976. Al has been with Seafrigo for over fifteen years and is person-ally responsible for the develop-ment of the organizations US mar-ket. He spearheaded a satellite

location for the French Headquarters starting with five people growing to 200 plus employees and two 175,000 square foot refrigerated warehouses based in Elizabeth, New Jersey.

Prior to joining Seafrigo, Al worked for 22 years in various capacities in the brokerage industry. He received his Customs Broker license in 1997 and is also licensed for FMC / NVOCC services.

Al was elected as a board member in 2015 to the NY NJ For-eign Freight Forwarders and Brokers Association and in June of 2017 elected as the Association Vice President of Import.


VOLUME LXX PAGE 5

Board of Governors

Vice President Education

Michelle Maslow-Hauser Michelle Maslow-Hauser started in the brokerage and forwarding in-dustry as a file clerk at JFK Airport in the 1960s. She has been a li-censed Customshouse Broker since 1990 and purchased Martin Strauss Airfreight Corp in 1992. Currently she is the compliance manager for Brauner International Corp.

Through the years she has had an active role within the New York Association as a member of the board of governors and has served on several committees. Michelle has received her CCS and CES and continues to focus on education for the pro-fession.

She is an active member of various other industry associations and committees currently serving as the VP of Education for the NY/NJ Foreign Freight Forwarders & Brokers, the Area 2 representative to the NCBFAA Education committee. She also is involved in the JFK Airport Customs Brokers and Freight Forwarders association and serves as the scribe for our Port Users Group in Newark, NJ.

Treasurer

Dave Corn David Corn is a Vice President with Comstock & Theakston, Inc., start-ing his drawback career in 2011. With years of experience in the market research field, he has a suc-cessful history with large commodi-ty clients and has created, man-aged, and presented projects in consumer research, sales and sta-tistical analysis, and marketplace dynamics.

David was appointed to the co-chair position of AAEI's Draw-back and Duty Deferral Committee in 2015 and is the draw-back liaison for the AAEI Automated Commercial Environment

Task Force. He was recently selected through CBP’s Trade Sup-port Network along with a small number from the trade to take part in writing the new drawback regulations from the passage of the Trade Facilitation and Trade Enforcement Act of 2015.

He was elected to the board of governors for the New York/New Jersey Foreign Freight Forwarders and Brokers Associa-tion in 2013 and was recently appointed to the office of Treas-urer in 2016. David organizes the congressional meetings for NY and NJ on Capitol Hill for the NCBFAA Government Affairs Conference each September.

Mr. Corn has a Bachelor of Science degree from The Ohio State University in Consumer Affairs and is both a Licensed Cus-tomhouse Broker and Certified Customs Specialist. He resides in Morris County, NJ with his wife Danielle and their three daughters, Natalie, Charlotte, and Evelyn.

Secretary

Christine Solorzano Christine Solorzano is General Manager New York/Boston with Shipco Transport, Inc., a global neutral NVOCC. Christine has been with Shipco Transport for over twenty years serving the company in several capacities; Trade Lane Coordinator, Operations Manager, Lcl Export Manager, and in her current position as General Man-ager. Christine’s background spans

over 23 years in the NVOCC and management experience.

Prior to joining Shipco Christine started her career with Con-term Consolidation Services in 1994 and held various positions under the NVOCC services the most current as Operations Manager in charge of handling the export consolidations.

Christine has served on the Board of Governors for the New York/New Jersey Foreign Freight Forwarders and Brokers Association since 2013 and participated on the Transportation Committee. She was elected in June of 2017 as the Association Secretary.

Christine currently resides in Bayonne, New Jersey with her husband, Marcio and three boys, Alex, Christian and Eric.



Meeting the B2C Challenges: Their Impact on Retailers, Supply Chain

Industries & Government Oversight

The expansion of e-commerce. The Department of Commerce has reported that Americans purchase goods at the pace of $1.2 billion a day online, an amount which dou-bled in the last five years, and which is projected to double again in the next five. The e-commerce phenomenon is en-trenched in our culture and is expanding. The retail industry is closely watching, as well as the supply chain support sys-tem that comprises the engine to e-commerce. The U.S. gov-ernment also needs to keep pace with this fast changing marketplace and be sensitive to existing and prospective regulations that would negatively impact this important marketplace change.

Impact on brick-and-mortar operations. Coinciding with this e-commerce explosion, Amazon announced the intent of hiring 50,000 employees in the month of August, while many longtime retailers are closing hundreds of stores and doing away with commission-earning positions. In ef-fect, retail jobs are now rapidly shifting from shopping malls to warehouses located in rural areas, as warehousing re-quires large land spaces. Delivery systems are now being honed not only from rural areas in the U.S. for delivery to U.S. households, but even from far-off distribution ware-houses in Asia.

The expansion of e-commerce. The Department of Commerce has reported that Americans purchase goods at the pace of $1.2 billion a day online, an amount which doubled in the last five years, and which is projected to double again in the next five. The e-commerce phenomenon is entrenched in our culture and is expanding. The retail industry is closely watching, as well as the supply chain support system that comprises the engine to e-commerce. The U.S. government also needs to keep pace with this fast changing marketplace and be sensitive to ex-isting and prospective regulations that would negatively impact this important marketplace change.

Impact on brick-and-mortar operations. Coinciding with this e-commerce explosion, Amazon announced the intent of hiring 50,000 employees in the month of August, while many longtime retailers are closing hundreds of stores and doing away with commission-earning positions. In ef-fect, retail jobs are now rapidly shifting from shopping malls to warehouses located in rural areas, as warehousing re-quires large land spaces. Delivery systems are now being honed not only from rural areas in the U.S. for delivery to U.S. households, but even from far-off distribution ware-houses in Asia.

CBP and NAFTA considerations. The existing NAFTA agreement does not contain any updated e-commerce or digital trade provisions, but the recent NAFTA negotiation priorities of the Trump administration seek to change this. Some of the e-commerce provisions were already negotiated by the United States, Canada and Mexico under the Trans-

Pacific Partnership. Therefore, new rules concerning digital trade should not be unexpected because all three countries had already agreed to them. A most important issue to re-tailers is the goal of the U.S. government to raise the de minimis level for the payment of duties to $800. A specific negotiating priority for the U.S. is for all three countries to have a similar de minimis level before duties are owed. Can-ada now has a de minimis level of approximately $15, while Mexico has a de minimis level of approximately $50. These low de minimis levels are obstacles to e-commerce sales by U.S. companies to Canada and Mexico since at the current levels there is a definite bottleneck which impedes the effi-cient flow required by e-commerce.

The overseas fulfillment service centers: the impact of e-commerce on the U.S. CBP. Customs & Border Protection states on its website: “[w]orldwide e-commerce sales are expected to reach over $4 trillion by 2020 - the branch will work to address the various complexities result-ing from this new global shift.” “The branch” is a reference to CBP’s very recent establishment of the E-commerce and Small Business Branch within the agency’s Office of Trade. There are definite issues brewing with respect to CBP’s cur-rent ability to process thousands of small parcels originating from overseas fulfillment centers efficiently and still ensure the safe and legitimate flow of trade, while at the same time identifying and preventing inferior, unsafe, and counterfeit merchandise from entering into the global commerce. The challenge is one with which the e-commerce players with overseas fulfillment centers will need to coordinate efforts with CBP so that e-commerce flows as smoothly as possible and still maintains CBP required safeguards. The recent NAFTA renegotiations have the following objectives to streamline customs and trade facilitation which will impact e-commerce favorably:

To provide for streamlined and expedited customs treatment for express delivery shipments, including shipments above de minimis thresholds.

To increase transparency of customs laws, regulations and procedures by publication on the internet as well as identifying points of contact for follow-up questions from the trading public.

To ensure that, to the greatest extent possible, ship-ments are released immediately after determining com-pliance with applicable laws and regulations, and pro-vide for new disciplines on timing of release, automa-tion and use of guarantees.

U.S. fulfillment service centers. One alternative model to the overseas service centers is the proliferation of fulfill-ment warehouse facilities here in the U.S., strategically lo-cated with well-managed inventory, to provide efficient timely door service throughout the country. This model re-quires sophisticated forecasting and inventory management platforms coupled with supplier network design and strate-gies. The model minimizes to a significant degree the CBP issues, since the importation transaction destined to the retailers’ fulfillment warehouses in the U.S. does not involve

(Continued on page 7)


VOLUME LXX PAGE 7

door delivery to individuals at this import stage. This model provides greater controls for the retailer, but, as noted, requires effective inventory forecasting, supplier sourcing models and high velocity, quick response and efficient distribution facilities that can be costly. In this model, the consolidation from suppli-ers still occurs mainly in Asia but the importation process is to single consignee customers, avoiding the CBP crush noted above.

Showrooming and competitive e-commerce platforms. Brick-and-mortar retailers have traditionally tried to protect

against “showrooming,” where shoppers would go to stores to evaluate products and then would purchase them on web-sites specializing in e-commerce sales of con-sumer goods. Many re-tailers have taken various routes in responding to

this phenomenon. Now start-ups, as well as well-established retailers such as Sears, Nike, Bose, Samsung and Microsoft, are embracing the concept of showrooming at brick-and-mortar facilities and marketing their products through traditional e-commerce platforms. This has become a competitive arena in order to compete with the Amazons and the Zappos. The trend now for retailers is to seek out e-commerce platforms focused on mobile commerce (as opposed to desktop searches) and social media. Platforms such as Shopify, BigCommerce, Magneto and others seem to be the go-to marketing platforms at the moment.

Retailing is clearly in a paradigm shift that is still in a dynamic phase.

What are the supply chain challenges to retailers and other industry players, such as global and domestic logistics/distribution providers, and “last mile” courier and other transport services in this fast changing mar-ketplace environment?

The retail industry, logistic/distribution providers, couriers and other transportation companies should take into consideration the following when creating business models in search of a suc-cessful e-commerce program:

Structuring of efficient and strategically located fulfillment facilities in the U.S. and abroad, through creative purchase and/or leasing of warehousing facilities which involve con-tractual commitments from both the logistics/distribution providers and retailing entities involved in marketing prod-ucts through e-commerce.

Structuring of realistic fulfillment facility pricing and ser-vices agreements between retailers and fulfillment facilities to cover services such as forecasting and inventory manage-ment, kitting and assembly, returns inspection and testing, online order fulfillment and a myriad of other technical topics which make up a successful fulfillment operation.

Interfacing with price-effective, efficient delivery systems from domestic and foreign fulfillment centers involving air courier and other transport/delivery sources to the custom-er’s door, providing that important so-called “last mile” in the delivery system.

Keeping the pulse on the NAFTA efforts to streamline the e-commerce process. In that respect, CBP, as noted, has re-cently established the E-commerce and Small Business Branch. This industry has to ensure that this office is properly funded and has the appropriate marketplace per-spectives.

Addressing the issues of forecasting and inventory manage-ment, a very vital, costly and difficult part of the supply chain equation. This is especially relevant since many com-panies receive their inventory from numerous small to me-dium-sized suppliers worldwide. This can cause transit lead times to be long. It can result in a high level of stock-keeping units “sku(s)” to forecast and manage, and is sub-ject to supplier performance making it difficult to schedule for changing demand patterns.

Reviewing the design of efficient distribution centers to efficiently accommodate high volume and varying demand patterns whether or not they are internally or third-party operated. The warehouse cycle time must be efficient, quick and consistent in order to meet the delivery promise dates which the customers expect, and related topics concerning important and cost-saving efficiencies which result from warehouse engineering design.

Reviewing the factors that constitute strategically located distribution centers that can service the vast majority of customers quickly and efficiently. The analysis required to do this is both critical and complicated, including an analy-sis of the geographical sales patterns that drive demand and the service requirements (cycle time and inventory fill rate) that are being promised to the customer.

Conclusion. Like any other innovations in technology-driven commerce, e-commerce will constantly be in an evolving stage. It should be a clear objective that, in this consumer-driven de-velopment, government interference be minimized, notwith-standing that it may have legitimate interests in overseeing the process to prevent inferior, unsafe and counterfeit merchandise from entering into the global commerce. The one thing for sure is this is a fast-growing marketplace shift, and the players, in-cluding the retail industry, supporting couriers, other carriers, and fulfillment center logistics companies need to be especially alert to technology changes and government actions impacting this industry, and will need to continuously reevaluate its busi-ness models to stay in the race.

By Carlos Rodriguez, Partner, Husch Blackwell LLP and

Jeffrey Cascini, Managing Director, Cascini & Assoc., LLC

http://www.huschblackwell.com/content/retailinstitute

Published in the American Shipper August 24, 2017

http://www.americanshipper.com/main/news/commentary-meeting-the-b2c-challenges-68748.aspx

(Continued from page 6)

Meeting the B2C Challenges: Their Impact on Retailers, Supply Chain

Industries & Government Oversight

http://www.huschblackwell.com/content/retailinstitute



Annual Dinner Cruise - June 22, 2017

Preparing for Broker Surveys & Audits

Robert Silverman, Partner Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP will present at the October 18th, 2017 Membership Meeting a seminar on “surveys” of brokers performed by CBP that have resulted in full blown audits.

What you need to know to be prepared.

Topics to be discussed include:

Powers of Attorney

Non-Resident Importers of Record

Reliance on Information from your Client

Actions you should do for your Client and actions you should not do

Are you acting as an “Expert” for your Client under the MOD ACT?

Where are your records stored?

Sharing information with Non-licensed persons

Mr. Silverman will also provide detailed sample questions from recent surveys to assist you when preparing for a survey.

Register online at: nynjforwarders-brokers.org


VOLUME LXX PAGE 9

June 22, 2017

Robert Silverman, Partner Grunfeld, Desid-erio, Lebowitz, Silverman & Klestadt LLP was presented the 2017 “Captain of Indus-try” Award by Bill Skinner, Association President aboard the Aqua Azul annual dinner cruise.

This award is bestowed on an individu-al member who has given generously of their time and commitment to the associa-

tion over the years. Robert Silverman con-tinues to provide customs counsel expertise to our association.

Mr. Silverman is one of the Firm's found-ing members and heads the Firm's litiga-tion group and regarded as one of the fore-most footwear classification experts in the United States and has been involved in all major footwear controversies affecting im-ports for over 30 years. These issues have included development of the foxing guide-lines, unisex footwear standards, and

standards for classifying plastic coated leather upper footwear.

Robert Silverman routinely assists clients across a wide variety of industries in struc-turing import transactions to minimize customs duties, ensure regulatory compli-ance and eliminate penalty exposure. He represents companies during audits involv-ing classification, valuation and eligibility under Free Trade Agreements such as

NAFTA, CAFTA, AGOA, GSP, etc. He also counsels clients in connection with Cus-toms investigations, seizures, exclusions, penalty and liquidated damages assess-ments.

Prior to entering into private practice, Mr. Silverman served as a trial attorney in the Customs Section of the Civil Division of the US Department of Justice where he repre-sented US Customs in proceedings before the Court of International Trade, Federal District Courts, and the Court of Appeals for the Federal Circuit.

Captain of Industry Award

“I have been

Customs counsel

to the Associa-

tion for over 20

years and it is

nice to know

that the Associa-

tion appreciates

the efforts that I

and my law firm

have been able

to put forth for

the group.” Bob

Silverman

“Captain of Industry” Award for the Association’s Hall of Fame

In 2016 the New York New Jersey Foreign Freight Forwarders and Brokers Association Board of Governors initiated

the “Captain of Industry” Award for its Hall of Fame. The award recognizes members who have given generously of

their time and commitment to the association over the years. The award is presented each year in June at the Dinner

Cruise, a suitable locale for a Captain’s award. The recipient is presented with an award and additionally is granted

lifelong membership in the association.



Government Affairs Conference Re-Cap

September 12, 2107

Members of the NY/NJ Foreign Freight Forwarders and Bro-kers Association just returned from the NCBFAA's Annual Gov-ernment Affairs Conference, taking place from September 9—12, 2017. Monday's schedule was packed with 12 informational sessions, with one fea-turing FMC Commis-sioner Rebecca Dye, one given by Douglas Stern, and one discussing the topic of Section 321(t). A highlight of Monday's events was the report by Acting CBP Commis-sioner McAleenan for progress of CBP initia-tives during our lunch session.

After a session with upper-level leadership of CBP, the members went to the Hill to speak to our Congressional members. The NY/NJFFFBA had one of the larger numbers of Congressional appoint-ments at the GAC with a total of twenty-two appointments spread across New Jersey (10), New York (10) and Pennsylvania (2).

The positions addressed by our members included "Key Issues in NAFTA Renegotiation" and "The Customs Business Fairness

Act". Local members Charles Riley (John A. Steer) and David Corn (C. J. Holt) were instrumental in arranging a meeting with Representative Peter King of New York (R-2nd) to discuss pos-sible sponsorship of the Customs Business Fairness Act. I am glad to report that the Representative Peter King just advised us

that he agreed to spon-sor this important legis-lation that will prevent bankruptcy trustees from being able to "claw back" duties from Cus-toms Brokers within 90 days of a bankruptcy filing. The NY/NJFFFBA will be reach-ing out to our members to communicate support of this critical legislation from your local Congres-sional Representatives.

Please review the NCBFAA Position Pa-pers on the Customs Business Fairness Act and the Key Issues in NAFTA Renegotia-tion.

By Charles Riley, Chairman of the Board John A. Steer Company

From left are Charles Riley, John A. Steer Company; Representative Thomas Suozzi,

Representative-NY 3rd District and Robert Stein, Mohawk Global Logistics

The GAC provides opportunities for us to be heard. If you have the chance to attend the conference and to educate staff on Cap-itol Hill, then support can be garnered for issues that may im-pact your everyday livelihood. One thing’s for sure, if you don’t speak up, you know that nothing will happen.

From my own experience, when I met with my Congressman to discuss a drawback issue (that affects all of our clients), I made sure to explain the impact on American companies and specifi-cally those businesses in his district. After some back-and-forth correspondence, he signed on to a letter with 13 other members of the House of Representative to be a supportive voice for our concern. If we had not taken the initiative, he would not have signed on.

If 2017 was not your year to join us on the Hill, then be sure to sign up for the 2018 conference, as there is always a chance to learn something new, to collaborate with others in your indus-try, and to speak up to make a difference for your future. After all, what do you have to lose? Maybe the question should really

be, what am I missing by not being there?

Dave Corn Vice President Comstock & Theakston, Inc. Drawback Specialists Since 1894 NYNJFFF&BA Treasurer and Government Affairs Chairman Email: [email protected]

Join Us On The Hill 2018


VOLUME LXX PAGE 11

NCBFAA Position Paper: The Customs Business Fairness Act

NCBFAA Position Paper

The Customs Business Fairness Act

Customs brokers are seeking a technical change in the bankruptcy laws to provide relief for customs brokers who have paid duties and taxes to Customs and Border Protection (CBP) on behalf of importer-clients who file for bankruptcy.

Customs Brokers and the Payment of Duties: The customs broker plays an important role in the duty payment process at the border and U.S. ports. Under current trade law, there is generally a 10 to 45 business day period be-tween the release of imported merchandise by CBP and submission of the estimated payment of duties and taxes. Li-censed customs brokers are often called upon to either advance the payment of these estimated duties/taxes on behalf of the importer or to guarantee payment to the government through its ACH (automated clearing house) account. In effect, customs brokers serve as a pass-through entity, or conduit, for the collecting and payment of duties/taxes. This payment method has become a standard business practice.

Collectively, customs brokers are responsible for remitting an estimated $10 billion a year in duty and fee payments due from importers. From the government's perspective, it is far easier to collect the initial duties from a finite number of licensed customs brokers than a hundred thousand individual importers. The government is significantly advan-taged by this system, where the prompt payment of billions of dollars in duties is facilitated. This expedites the pay-ment of revenues to the government and allows the flow of trade to continue unimpeded.

Importers and Bankruptcy: When an importer-client files bankruptcy, the most immediate and troublesome threat is an action by the bankruptcy trustee or debtor to recover payments made to/through the customs broker to CBP by the importer in the 90-day period prior to the filing of the bankruptcy petition. This can amount to substantial amounts of money --often well into the six-figure range. This so-called "claw back" period is allowed under Section 547 of the Bankruptcy Code to avoid preferential treatment to any one creditor. In these circumstances, the customs bro-ker is required to pay to the trustee any monies received from the debtor (or advanced to CBP by the broker on the debtor/importer's behalf) during the 90-day period prior to the bankruptcy filing.

Subrogation in Bankruptcy: Generally, when a creditor pays a debtor's debt owed to another creditor (for exam-ple, the US government), the paying creditor is subrogated to the rights of the creditor receiving payment In effect, the paying creditor can "stand in the shoes" of the receiving creditor. Since CBP is granted a "priority" under the Bank-ruptcy Code for claims against a bankrupt importer, any payment directly to the agency from the importer during the 90-day claw-back period would not be considered a preferential payment If a customs broker could be subrogated to the priority rights of CBP, any payments from the importer to CBP via the customs broker during the 90-day period would likewise no longer be subject to a preference payment recovery action. Recognizing the value of customs bro-kers' role in advancing duty payments, Customs itself attempted several years ago to assign its priority status under the Bankruptcy Code to customs brokers through regulation --an effort that was deemed by the courts to exceed the agency's authority, saying it was up to Congress to make changes in the Bankruptcy Code.

Proposed Technical Bill: Subrogation rights are derived from common law and ordinarily would come into play, except for the fact that Section 507(d) of the Bankruptcy Code specifically disallows subrogation with respect to many of the enumerated priorities. NCBFAA, therefore, proposes a technical amendment to Section 507(d) to permit subro-gation rights for customs brokers who have received from the debtor or paid duties and taxes to the government on behalf of a bankrupt importer.



NCBFAA Position Paper: Key Issues in NAFTA Renegotiation

NCBFAA Position Paper

Key Issues in NAFTA Renegotiation

The De Minimis Dilemma: Raising the Section 321 de minimis value threshold in the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA) was proposed as a means of facilitating trade, primarily among the NAFTA coun-tries. This was however a unilateral gesture, a step taken only by the U.S., without negotiation or without a corre-sponding concession by others. In fact, we are advised that Canada and Mexico have determined that their interests call for retention of substantially lower levels for de minimis shipments. This has created incentives to ship goods to the U.S., both via e-commerce and in traditional trade, in quantities qualifying for de minimis treatment. We under-stand that this has led to an increase in distribution centers being located outside the U.S. in order to reduce delivery times and costs, and provide a location for re-packaging volumes of higher value merchandise into small de minimis quantities.

The de minimis levels among the NAFTA countries must be harmonized. Differing levels provide significant advantage to exportations from Canada and Mexico with their lower thresholds and their proximity to the United States. Yet the consequences are even greater than this. Goods entering the U.S. under the de minimis threshold not only enter free of duty and tax, but with reduced data requirements, minimal scrutiny and accelerated speed in crossing our borders. The multiple dimensions of the expanded de minimis threshold are yet to be fully understood. We do know, however, of its impact on such areas as:

The Trade Deficit: To address the trade deficit, all trade must be counted. The expanded Section 321 creates a growing volume of 'invisible" trade that cannot be ignored.

Enforcement: Whether it's enforcing the rules of origin to ensure that the benefits of NAFT A accrue only to North American products, preventing counterfeit goods from entering the U.S. or stopping unsafe or illicit products from crossing the border, CBP must have some visibility into the trade entering under Section 321 in order to implement risk management techniques and targeting. Without that, the expanded Section 321 threatens to become a back-door portal for anyone out to skirt U.S. trade laws.

NCBFAA urges U.S. negotiators to pursue a common NAFTA de minimis level and a simplified 321 entry type (to in-clude the 10-digit HTS, name of shipper and consignee, country of origin and quantity -both manifest and HTS level quantities) for de minimis shipments. Section 321 declarations made using the manifest should also require the 10-digit HTS to allow CBP to properly target for AD/CVD and all Partner Government Agency data requirements. With the simplified 321 entry filed electronically in ACE, CBP will have sufficient data to screen de minimis shipments for anomalies, thereby providing the basis for further scrutiny.

Drawback: Duty drawback is a valuable export promotion program where a refund is granted by the U.S. Govern-ment for duties, taxes and other fees that have been paid for imported products which then serve as inputs in the pro-duction of U.S. manufactured goods that are later exported. This is also granted where the imported good is substitut-ed for the same or similar US-made product that is later exported. Article 303 of the existing agreement contains re-strictions on the use of substitution drawback and duty deferral for goods exchanged between the U.S., Canada and Mexico. [Only the U.S.-Chile FTA contains comparable restrictions.] Goods exported to Mexico and Canada from other countries with which Mexico and Canada have FT As receive better treatment for their exports than do U.S. exporters, creating an unfair playing fl9ld for U.S. manufacturers, exporters and workers. Subsequent to NAFT A going into ef-

(Continued on page 13)


VOLUME LXX PAGE 13

NCBFAA Position Paper: Key Issues in NAFTA Renegotiation

fect, Canada and Mexico implemented programs that circumvented these restrictions for those manufacturers needing targeted duty rate reductions for inputs used in specific export industries. This puts U.S. exporters at a disadvantage when competing for sales of U.S. products in Mexico and Canada. NCBFAA recommends that our negotiators adopt a strong position for removal of these restrictions in the upcoming negotiations.

Trade Facilitation and Customs Procedures: A top priority for negotiators is to modernize and harmonize cus-toms procedures among the three countries. For example, both Canada and the U.S. allow importers to make correc-tions to entries after the data has been filed initially (so-called "post-entry" corrections). Mexico does not allow such corrections. The procedure can be employed when data needs to be corrected or updated, enhancing entry accuracy. Trade facilitation Improvements should also include:

Coordinated inspection and release at the border;

Harmonizing and Simplifying data sharing and reducing red tape. When NAFT A took effect, most Cus-toms forms were paper-based. NAFT A countries should undertake a strong commitment to a fully auto-mated, paperless entry processing system. With full automation, we would have the opportunity to align the format and content of data elements required at the border, eliminating redundancies, creating greater regulatory coherence and simplifying the cross border trade process.

Whatever substantive changes in the Rules of Origin may be considered, negotiators should seek to simpli-fy the rules of origin procedurally. The rules of origin have proven to be painfully complex and difficult to administer for customs brokers, particularly for our small and medium clients who are importing products subject to these complex determinations. This makes it especially daunting for these companies to conduct their business, to the point that they may forego claiming NAFTA benefits because of the complexity of the rule of origin requirements.

*****

We urge you to contact the members and staff of the House Ways and Means Committee or the Senate Finance Com-mittee to let them know of your interest in having the U.S. negotiating team address these concerns about NAFT A, with particular emphasis on the Section 321 de minimis issue and duty drawback.

(Continued from page 12)



2018 Dinner & Person of the Year

The NY NJ Foreign Freight Forwarders and

Brokers Association will be celebrating its

101st Annual Dinner and Person of

the Year Award on February 1, 2018.

This event is one of the largest internation-

al transportation functions in the United

States and is attended by executives and

representatives of the ocean carriers, for-

warders, brokers, terminal operators, gov-

ernment and the many ancillary industries.

You will not want to miss this event.

The Board is looking for members to get

involved in the planning of this event start-

ing now. There are many ways to partici-

pate, entertainment, sponsorship, ticket

sales and advertising.

Please contact our offices for more infor-

mation on how to be a part of the dinner

committee and brainstorm with your peers

to make this upcoming celebration a great

success.

Email: [email protected]

Phone: 732..741.1936

Web: www.nynjforwarders-brokers.org

Government Agencies Online Purchases

September 7, 2017

New legislation passed by the House of Representatives on July 14 contains lan-guage that would allow the Pentagon and federal agencies to buy directly from com-mercially run online marketplaces such as Amazon, OfficeMax, Home Depot and oth-er e-commerce retailers. The bill, H.R. 2810, is the National Defense Authorization Act for Fiscal Year 2018. It passed in the House 344 to 81. The Defense Acquisition Streamlining and Transparency Act, later merged into the Defense Authorization Act,

was designed to reduce bureaucracy and costs for the government. The Washington Post recently stated that House Armed Ser-vices Committee Chairman Mac Thornber-ry (R-Tex.) sponsored the bill, saying “Everybody understands what a difference Amazon has made…we’re trying to help DoD keep up with the changes in business practices with the goal of getting items fast-er, cheaper and keeping up with the chang-es in technology.”

Currently, agencies purchase goods through the General Services Administra-tion (GSA) through pre-negotiated con-

tracts. The GSA already manages an online purchasing service called GSA Advantage, but this bill would allow the government agencies to go directly through private re-tailers for their basic supplies. This is a major development that will inject a sub-stantial new stream of commerce and com-petition into the e-commerce arena. Even without this development, the Department of Commerce has reported that Americans purchase goods at the pace of $1.2 billion a day online, an amount which doubled in the last five years, and which is projected to double again in the next five. These projec-tions do not take into account this major development.

The bill was placed on the Senate calendar and is expected to be decided on in the coming weeks. Husch Blackwell will contin-ue to monitor this legislation and other e-commerce matters.

By Carlos Rodriguez, Partner

Hush Blackwell LLP

and Katherine Stubblefield

202.378.2365

[email protected]

“Everybody

understands

what a differ-

ence Amazon

has made…

we’re trying to

help DoD keep

up with the

changes in

business prac-

tices with the

goal of getting

items faster,

cheaper and

keeping up

with the

changes in

technology.”

Chairman Mac

Thornberry

(R-Tex)


VOLUME LXX PAGE 15

September 7, 2017

The largest capacity ship ever to pass under the newly raised Bayonne Bridge ushers in a new era for the port of New York and New Jersey.

As the new CMA CGM THEODORE ROO-SEVELT recently sailed under the Bayonne Bridge, linking New York and New Jersey,

guests of the Port Authority of New York and New Jersey witnessed the inaugural passage of a larger class of container ships

to call at the region’s busiest terminals.

Owned by French shipping group CMA CGM, the THEODORE ROOSEVELT is the largest capacity ship to ever visit the Port of New York and New Jersey. It can carry more than 14,400 TEUs, or 20-foot equiva-lent units. The ship is four times the size of the Statue of Liberty and the length of five football fields. The newly elevated Bayonne

Bridge will accommodate ships as large as 18,000 TEUs with its added navigation clearance.

Bill Skinner, President of WB Skinner, and attending the event as President of the New York/New Jersey Foreign Freight Forward-ers & Brokers Association, hailed the occa-sion as a new era for the region’s importers and shippers. “Completion of this mile-

stone project will help secure our competi-tive position as the premiere East Coast gateway for global shippers and interna-

tional trade.”

The Port Authority of New York and New Jersey spent $1.6 billion -- part of the “Raise the Roadway” project -- to raise the bridge’s roadway to 215 feet to allow larger vessels into the port. The investment will improve access and infrastructure in the nation’s third busiest port complex.

Raising of a Bridge

“Completion of

this milestone

project will

help secure our

competitive

position as the

premiere East

Coast gateway

for global

shippers and

international

trade.” Bill

Skinner, W.B.

Skinner, Inc.

The luncheon meetings are a great opportunity to connect with your peers, exchange infor-mation and hear current news concerning the import and ex-port industries. Each luncheon

meeting is accredit-ed by the NEI which gives attendees CCS/CES educa-tional credits with the NCBFAA.

Upcoming Seminar Luncheon Meeting

Date: October 18, 2017

Seminar: CBP Surveys and Audits

Seminar Start: 10 AM to 12 Noon

Presenter: Robert Silverman, Partner GDLSK

Luncheon Start: 12 Noon to 2 PM

Register: www.nynjforwarders-brokers.org

Follow us @NYNJFFFBA

NYNJFFF&BA PO BOX 8217

RED BANK, NJ 07701

732.741.1946

Documents

Newsletter - nynjforwarders-brokers.org · Why should all of this matter to you? If you or your cus-tomers have a drawback program, everything you know is about to change. Many members