1. Role of the Broker~ Regulatory Revision COAC Trade Facilitation Subcommittee October 4, 2011

2.  The Role of the Broker-Broker Regulatory Revision Workgroup was established January 2011 by CBP in partnership with the National Customs Brokers and Forwarders Association of America (NCBFAA) to work collaboratively to develop solutions to meet the challenges of 21 st Century commerce as it relates to their vital role.  The Workgroup has met for several sessions the explore solutions within the following major topics: Role of the Broker~ Regulatory Revision 2  Expanded broker role  Regulatory modernization  Broker responsibilities  Penalty regime/  Professionalism disciplinary actions

3. The Workgroup is proposing concepts that will:  Expand the role of the broker to meet the challenges of 21 st Century global trade  Leverage broker relationships to extend the opportunity for small and medium enterprises to be recognized as trusted partners  Ensure licenses brokers exercise due diligence in conducting customs business  Increase the value of a customs broker license  Increase efficiencies for both the trade and CBP Goals 3

4. 4. Modernization  Revamp status reporting – replace with bi-annual reporting via ACE Portal  Provide for reporting of continuing education reporting via ACE Portal  Allow at-will upload of employee data into ACE  Allow alternative permit qualification  Web-based exam application process 5. Penalty Regime  Propose statute language to allow for immediate suspension of license (threats to national security), pending review of case, with due process 4 Highlights of Proposed Options 1. Expanded Role  “Pre-certification” of C-TPAT applicants”  Pre-application support for ISA applicants 2. Broker Responsibilities  Establish requirement for importers to present bona fides  Require broker to obtain evidence  Broker must receive POA directly from importer or another broker  Customs business is to be conducted within the U.S. Customs Territory 3. Professionalism  Continuing education requirement to maintain active license

5. 5 Expanded Broker Role Pre-certification of applicants for C-TPAT Fast-track of importer’s application Allows CBP resources to be redeployed Additional touch points (expanding pool of applicants) Expands business potential Complements other business services Expands career paths and competencies for brokerage Reduces costs to CBP Pre-application support for ISA applicants Leverages existing relationship with clients Potential for ongoing assistance with importers in meeting program requirements Facilitates reducing the “haystack”

6. 6 Broker Responsibilities More robust importer validation Establish requirement for importers to present bona fides Requires broker to obtain evidence of bona fides Shared responsibility for validating importers’ identify Strengthens the standard to fix accountability to true party of interest Should reduce incidents of identify theft Power of attorney (POA) Broker must receive POA directly from importer or another licensed broker to perform customs business on behalf of importer Increased broker visibility to client Reduces surety risk Customs business Definition modified to require Customs business to be conducted within the U.S. Customs Territory

7. 7 Professionalism Enhance customhouse broker licensing criteria Continuing education requirement to maintain active license Increased value of license Overall increased professionalism from which the trade community and CBP should benefit Revamp status reporting Replace manual triennial reporting with bi-annual status reporting via ACE Portal Allow at-will upload of employee data into ACE Portal – minimizes brokers’ administrative burden Clarify which employees must be reported-”duties performed…within the definition of customs business” Collect only minimal employee data that CBP actively uses Link continuing education reporting with bi-annual reportingModernization

8. 8 Modernization (continued) Allow alternative permit qualification Modernize permit framework to allow for alternative qualification acquisition Rational approach for providing responsible supervision and control Reduce reliance on waiver process Equal access via transparency of alternative qualification criteria Greater flexibility in broker resource planning Eliminate unnecessary costs Web-based exam application process Allow exam applicant to apply and self-schedule via web application Less administrative burden for CBP service ports Increase security of personally identifiable information Automation of exam result notification Propose examination to be offered once per calendar year to decrease administrative costs for CBP

9. 9 Penalty Regime/Disciplinary Actions Propose revision of 19 U.S.C. 1641 language Propose language to authorize immediate suspension of license (threats to national security), pending review of case Provide due process provision Focus on bad actor’s license revocation rather than filer code remediation Broker penalty regime Undertake comprehensive review of the broker penalty process and associated penalty amounts Analyze current application of penalty provision Conduct training for CBP field operators

10.  Finalize proposal to present to Commissioner Bersin in October 2011  Prepare regulatory package and propose language for 19 U.S.C. § 1641 statutory changes  Launch the expanded broker role—C-TPAT and ISA during 1 st quarter FY 2012 10 Next Steps

11. Contact Information: Stephen Hilsen Director Office of International Trade stephen.hilsen@dhs.gov