An End-Game for T-TIP
9th Round of T-TIP Negotiations
April 23, 2015
Marianne Rowden
American Association of Exporters and Importers
AAEI Works with European Partners
FTAs Should Facilitate Trade Not Complexity
• Market access for all industry sectors in all FTA countries.
• Trade facilitation for “trusted traders.”
• Clarity for rules of origin.
• Simplicity in applying the rules.
• Harmonization among FTAs.
Major Issues to be Resolved
• Customs issues
• Drawback
• Trusted traders risk assessment
Recurring Customs Issues in FTAs
• Enforcement
•
•
•
•
Regulations implementing FTA
Auditor training
Verification
Recordkeeping
Why Drawback Should be Preserved in T-TIP?
• Multinationals rely on drawback for the their pricing structure
• Eliminating drawback will cause significant disruption in supply chains as
multinationals are forced to make sourcing changes that may involve
significant costs.
• Our T-TIP partner countries offer a much easier road to duty relief,
effectively obtaining drawback-like benefits.
• Our history with NAFTA shows that U.S. companies were harmed by the
elimination or complication of drawback while Mexican and Canadian
companies were not
• Let drawback “die on the vine” as duties are eliminated world wide. This
provides an incentive for all countries to bring other countries into FTAs.
Holistic Risk Management
• Horizontal Risk Management System
• Regulatory regime applicable to all industries to manage imports and exports
based on company internal controls
• Example: WCO SAFE Framework
• Authorized Economic Operator program for “low risk” traders
• E.U. and U.S. have a Mutual Recognition Agreement
• Sectorial Risk Management System
• Risk mitigation ranges from industry standards to strict liability regulation
• Negotiators to determine which risk management regime is appropriate for
the risk posed by the industry and the company
• Regulators should develop pilot projects with the private sector to reduce redundant
regulation
“Trusted
Trader”
Concept
• Concept predates 9/11, but has gained currency with governments after 9/11 to
describe a company which is:
• Highly compliant
• Good internal controls
• Mitigates risk
• “Authorized Economic Operator”
• “a party involved in the international movement of goods in whatever function that has
been approved by or on behalf of a national Customs administration as complying with
WCO or equivalent supply chain security standards. Authorized Economic Operators
include inter alia manufacturers, exporters, brokers, carriers, consolidators,
intermediaries, ports, airports, terminal operators, integrated operators, warehouses,
distributors.”
•
WCO “SAFE Framework of Standards to Secure and Facilitate Global Trade” adopted in June 2005 in Section 2.3
at p. 8.
• AEO programs are:
• Voluntary regimes
• Commitment to adopt good importer practices for security and compliance
• Trade facilitation benefits
Certified Compliant Commercial Entity (3CE)
• Companies that:
• Invest corporate resources (e.g., money, people, systems, etc.) into their
corporate compliance programs
• Demonstrate a strong commitment to ensuring commercial, security,
environmental/conservation, human rights, and product health and safety
compliance
• Represent a low compliance risk to the public
Elements of 3CE
• Assessing risk:
• How the agency perceives risk based on its statutory mission
• Focus on unacceptable or catastrophic risk
• What makes an importer higher or lower-risk to set up a 3CE importer risk
profile
Step 1: Identify the Agency
Step 2: Defining the Risk
• Admissibility of Goods
• Proper Calculation for Customs Revenue
Step 3: Importer Risk Assessment
Risk Factor 1
CEE Industry
SCORE 1 – 10
→
Risk Factor 1
Importer Experience
SCORE 1 – 10
→
Risk Factor 1
Number of Products
SCORE 1 – 10
↓
Risk Factor 1
Source Country Number
SCORE 1 – 10
←
Risk Factor 1
Number of Suppliers
SCORE 1 – 10
←
Risk Factor 1
Number of Entries
SCORE 1 – 10
→
Risk Factor 3
Source/Export Country
SCORE 1 – 10
→
Risk Factor 4
Compliance Risk
SCORE 1 – 10
↓
Risk Factor 2
Product Type
SCORE 1 – 10
↓
Importer Risk Score
Total _______
Step 4: Importer 3CE Risk Profile
C-TPAT MEMBERSHIP?
Yes (Tier 1)
Yes (Tier 2)
Yes (Tier 3)
No
AEO PROGRAM MEMBERSHIP?
Yes
No
OTHER PROGRAM MEMBERSHIP?
Yes
No
ADOPTION OF INDUSTRY BEST PRACTICES?
Yes (Nat’l)
Yes (Int’l)
Yes
Yes (Other)
No
No
AUDIT/TRANSACTIONAL RELEASE (COMPLIANCE RECORD)
Yes (Agency Audit)
Yes (3rd Party Audit)
Yes (Internal Audit)
3CE TIER
__________
No
(Yes Response Lowers Risk Score)
Benefits
• For the agencies:
• Program must be consistent with and support the agency’s enforcement
mission and mandate
• Allocate resources efficiently and effectively to counter the greatest risks
• Provides framework to facilitate and enhance the exchange of information
between and among agencies
• For importers:
•
•
•
•
Lower administrative and compliance costs
Efficient and expeditious trade facilitation
Lower business risk
Greater business predictability
Questions?