ACE – Finishing the Core and Developing New Capabilities MODERATOR: Myra Reynolds ITSA General Counsel/Sandler, Travis & Rosenberg, PA PANELISTS: Cindy Allen Monica Crockett Randy Mitchell James Swanson VP, Regulatory Affairs & Compliance FedEx Director, Entry Summary, Accounts & Revenue (ESAR), CBP Director, Commercial Operations, Revenue & Entry Division, CBP Director, Cargo Security and Controls, Cargo & Conveyance Security, CBP

ACE: Finishing Core Trade Processing and Developing New Capabilities Cindy Allen, VP, Regulatory Affairs and Compliance, FedEx Monica Crockett, Director, Entry Summary, Accounts & Revenue (ESAR), CBP Randy Mitchell, Director, Commercial Operations, Revenue and Entry Division, CBP James Swanson, Director, Cargo Security and Controls, Cargo and Conveyance Security, CBP Moderator: Myra Reynolds, Director of Corporate Import Compliance, John S. James Co. ACE: Finishing Core Trade Processing and Developing New Capabilities 04/04/2017

Single Window Implementation via ACE May 2016 Finalized migration of Automated Export System (AES) and AESDirect portal from U.S. Census July 23, 2016 ACE mandatory for remaining entry and entry summary types. March 31, 2016 ACE mandatory for filing select entry summary types without PGA data. December 31, 2016 Executive Order 13659 Streamlining the Export/Import Process for America’s Business deadline August 2015 Began rollout of PGA pilots 2015 2016 2017 May 1, 2015 ACE mandatory for all electronic manifest filings February 28, 2016 CBP accelerated divestment of the legacy Automated Commercial System (ACS) May 28, 2016 ACE mandatory for additional entry types, and entry and entry summaries for type 06 entries. TBD 2017 ACE mandatory for all remaining electronic portions of the CBP cargo process August 27, 2016 ACE mandatory for electronic protests

Path to ACE Core Trade Processing Coordination & Development Developed 5.3+ million lines of code Automated more than 250 paper forms Conducted targeted phone calls to 1,000+ trade filers across the country Coordinated with 40+ vendors to update software in support of their customers Trained 7,500 CBP field users Published over 100 Federal Register Notices to support required policy and legacy framework Legacy Systems Divested 2014 2015 2016 2017 May 2015 Retired Automated Manifest System (AMS) with transition of air manifest into ACE. March 2014 Retired Automated Export System (AES) with transition of export manifest into ACE. May 2016 Worked with U.S. Census to integrate the final component of export filings, via the portal, into ACE and retired the legacy AESDirect. TBD 2017 ACE becomes CBP’s system of record for all trade processing transactions.

Determining Post-Core Automation Priorities Step 1: Compile requirements Compile list of automation requirements from trade partners, CBP, and Partner Government Agencies Step 2: Map requirements Map requirements to agency strategic goals for FY17 and legislative mandates Step 3: Prioritize Leverage governance bodies to adjudicate and prioritize future automation capabilities and identify funding

NCBFAA ACE Request List Charles will do the introductions for presenters, then turn the presentation over to Jon Kent

NCBFAA ACE Request List Issue What this is What Trade is asking for Benefit to Trade Benefit to CBP Status Release or Entry/Entry Summary Release Date Update Issues The way the system tells importers and brokers that the freight is released. This also controls the date that duty payment is due. Stability in the system to address multiple problems in this area to determine an accurate date. Accurate dates to ensure penalties are not issued in error due to this issue. Assurance that the freight is release lawfully, and duty is paid timely CBP issued programming fixes, but all issues are not resolved. ID procedures versus entry procedures Elected date of entry SE field 11 Declaration ate of duty payment selection typically used on the northern border which is outlined in law. An automated process for this declaration, which is now manual Trackable and traceable requests for declaration Ability to automatically determine the compliance with the law. Open Messaging Clarity The automated messages sent to the trade to determine the action CBP or another govt agency has taken on a file/entry basis A clear concise message that indicates what actions that the trade should take to address CBP's requests or actions, rather than codes or unclear general messages. Clear instructions enable actions to expeditiously address concerns and get information to CBP receipt of the needed information to address issues eliminating additional contacts and unnecessary requests. Charles will do the introductions for presenters, then turn the presentation over to Jon Kent

NCBFAA ACE Request List Issue What this is What Trade is asking for Benefit to Trade Benefit to CBP The ability to release manifested goods at the lower level of shipment, rather than just at the consolidated level. This exists in the air environment already. The ability to be extended to all modes of transportation Reduced storage costs and reliable information in the supply chain Increased visibility into the supply chain to identify risks at a lower level than currently able. When a carrier inadvertently leaves cargo off the manifest, the broker is unable to file an automated entry and receive the automated release. The ability to file an automated entry even if the carrier neglected to manifest the goods. Allowing for an automated process, rather than a manual one which companies are challenged to support in the automated environment. Automated processing including targeting abilities, electronic tracking and identification of these shipments. Temporary imports must be designated for exam or exam waiver upon export. This occurs at time of release Electronic designation of the exam determination at time of import release Trackable responses to ensure compliance risk based reporting information to ensure compliance ACE programming changes made and policy issued The de Minimis entry/release process. Currently this is only automated in truck manifest and air courier hub manifest applications The ability to release di Minimis goods electronically in ABI. Level playing field, ability to screen other government agency subject goods Automated information to complete risk based targeting Informal entries of low value goods that are consolidated together in the courier hubs Electronic capabilities to transmit the release and entry summary, and automated payment of these entries. Electronic records, processes and streamlined information Charles will do the introductions for presenters, then turn the presentation over to Jon Kent

NCBFAA ACE Request List Issue What this is What Trade is asking for Benefit to Trade Benefit to CBP The current capabilities of the system is 999 lines or a Megabyte of data a larger line limit as was identified in the earlier phases of ACE development (9,999 lines) and high MB limits No need to break up file transmission which cause additional costs and time Ability to process shipments in their entirety rather than as smaller parts of the shipment. The systems experience delays in processing at peak times during the day. These events are not considered "downtime" but do cause delays at the borders. A stable system with predictability in ensuring a level of performance commensurate with the private sector Reduced follow up due to system issues. Elimination of penalties. Less impact to officers at the borders. Reduced follow up due to system issues. Less impact than previously experienced Carriers arrive at ports other than the expected port due to many issues. Currently the system prevents the data from some types of freight to be transferred to the new port Ability to transfer data from one port to another if the carriers arrive at a port other than the expected port. The other government agencies data should also be transferrable. Elimination of duplicate data entry due to a carrier arrival issue. The ability to transfer previous targeting results from the original transmission to the new entry port. If freight is not released within 15 days after arrival of the freight, it is transferred to the general warehouse requiring additional steps to release, and costs of storage to be covered. Correct calculation of the date that this is measured by in all modes of transportation. Reduced additional follow up to prove the correct date based on carrier arrival records, many times in a manual fashion. Correct information to ensure Enforcement actions are warranted. Reduced research to respond to the trade. Charles will do the introductions for presenters, then turn the presentation over to Jon Kent

NCBFAA ACE Request List Issue What this is What Trade is asking for Benefit to Trade Benefit to CBP Status Remote Location Filing (RLF) has allowed the trade to structure their business activities in a manner that makes sense for their business. However there are payment limitations. The ability to remove an RLF entry from the statement and pay it via another automated method. Reduced manual payments, ability to meet guidelines without penalty unnecessarily. Reduced processing times for checks, visibility and to the payment. The ability to transmit invoice information to CBP to support shipment analysis and review. Many times this information originates with the shipper, seller or importer. Reinstatement of this ability in an automated fashion. It was eliminated in ACE. Reduces manual processes such as printing and scanning's forms which represent electronic data. Allows truly electronic process. Ability to screen electronic data rather than scanned paper forms, allowing further automated processes. The release and entry of warehouse entries of goods which take advantage of this regulatory option for importation. An electronic entry and release capability for the warehouse withdrawal. This is currently not automated. Automate a process that allows the withdrawal of the goods. Ability to screen electronic data rather than manual forms, allowing further automated risk and targeting evaluation. The new functionality to support the process of requesting refunds for goods that have been exported or destroyed as allowed by statute. Ensure that the drawback process is completely automated without manual information required for all processes. There are several major issues with the current ability An electronic system that is stable, works as intended without additional work required to facilitate the process due to system issues. Ability to screen electronic data rather than manual forms, and reduced time to research and facilitate the process problems due to a system issue. Charles will do the introductions for presenters, then turn the presentation over to Jon Kent

NCBFAA ACE Request List Currency Conversion The tables that calculate currency at the time of importation were eliminated within ACE. The currency conversation that CBP regulations outline should be available in the ACE system. Automated process with predictable results rather than reliance on non-government data to calculate the value. Predicable and reliable currency conversation rates that are correct based on data provided. Reduced research time for CBP. RLF-pay type 1 Remote Location Filing (RLF) has allowed the trade to structure their business activities in a manner that makes sense for their business. However there are payment limitations. The ability to remove an RLF entry from the statement and pay it via another automated method. Reduced manual payments, ability to meet guidelines without penalty unnecessarily. Reduced processing times for checks, visibility and to the payment. Automated invoice interface (AII) The ability to transmit invoice information to CBP to support shipment analysis and review. Many times this information originates with the shipper, seller or importer. Reinstatement of this ability in an automated fashion. It was eliminated in ACE. Reduces manual processes such as printing and scanning's forms which represent electronic data. Allows truly electronic process. Ability to screen electronic data rather than scanned paper forms, allowing further automated processes. Warehouse withdrawals The release and entry of warehouse entries of goods which take advantage of this regulatory option for importation. An electronic entry and release capability for the warehouse withdrawal. This is currently not automated. Automate a process that allows the withdrawal of the goods. Ability to screen electronic data rather than manual forms, allowing further automated risk and targeting evaluation. Charles will do the introductions for presenters, then turn the presentation over to Jon Kent

NCBFAA ACE Request List Drawback The new functionality to support the process of requesting refunds for goods that have been exported or destroyed as allowed by statute. Ensure that the drawback process is completely automated without manual information required for all processes. There are several major issues with the current ability An electronic system that is stable, works as intended without additional work required to facilitate the process due to system issues. Ability to screen electronic data rather than manual forms, and reduced time to research and facilitate the process problems due to a system issue. Reconciliation The process of flagging goods that have estimated information at time of release, allowing for further clarification to CBP after the information is known. Further automated tools that ensure this process works in the electronic environment. There are several major issues with the current ability. Post Summary Corrections for payment of additional duty later than 270 days Currently the system limits the ability of trade to make electronic payments for corrections past the 270 day mark. The ability to facilitate payments at all times, regardless of the point in the process. Reduced manual payments, ability to meet guidelines without penalty unnecessarily. Reduced processing times for checks, visibility and to the payment. Protest in ABI not just the Portal The protest module was only built in the ACE Portal application and not in the ABI application which brokers utilize. Protest ability built and deployed in ABI to facilitate the filing by the majority of the participants. Automating a process that builds upon records already transmitted to CBP in the ACE ABI environment, rather than duplicate the input efforts outside of already existing electronic records. Linkage within ACE to the ABI records directly from the ABI filer. Charles will do the introductions for presenters, then turn the presentation over to Jon Kent

NCBFAA ACE Request List Protest Receipt Message When the trade files a protest in the new ACE Portal application, there is no acknowledgment of receipt. Messages from the system to ensure that the protest is received timely. Ensures compliance with the filing deadlines as outlined in the law. Reports for visibility Brokerage company reports are not available to brokers in the normal course of management and review as they were previously in ACS. An ACE replacement for the broker management reports in the ACE environment. Ability to work with CBP to ensure ongoing compliance with broker responsibilities Available analysis that is currently pulled manually by local officers to ensure statistics for review purposes. ITRAC status Currently due to questionable reliability of payment, refund, corrections, and missing information the ACE Portal reports that were on the ITRAC reports, the current ACE reports are not seen as reliable for internal compliance use by the trade. Current ITRAC should remain available until such time that the ACE portal reports are accurate and reflect all needed information already available through the ITRAC. Ability to work with CBP to ensure ongoing compliance with the importer's responsibilities Complete data to review and analyze an importer for compliance and risk purposes. Paperless Statement Type 1, no revenue collection Currently the trade is required to track and submit a non revenue statement of entries for payment. Elimination of this process without penalty as no review is collected at this time. Reduced processing and paperwork without a revenue implication. Charles will do the introductions for presenters, then turn the presentation over to Jon Kent