Commissioner McAleenan Seeks COAC’s Expertise for Central American Challenges at D.C. Meeting

When members of the Commercial Customs Operations Advisory Committee, known as COAC, gathered in Washington, D.C., February 27, for their first public meeting in 2019, they were glad to be back. After the delay of the government shutdown, the trade advisory group returned energized and ready to provide their recommendations and guidance.

“While our direct interaction with our COAC partners was certainly impacted during the shutdown, we know that you continued to work through the difficult questions and efforts that we have underway,” said U.S. Customs and Border Protection Commissioner Kevin K. McAleenan, one of the government co-chairs of the meeting. “We appreciate your steadfast partnership and support during those five very long weeks.”

Before focusing on the agenda, McAleenan shared one of the agency’s most challenging issues and asked the COAC for help. “Many of you are well aware of the regional migration phenomenon that’s challenging the governments of Central America, especially the Northern Triangle—Guatemala, Honduras, and El Salvador—as well as our partners in the government of Mexico. This has really been a seismic shift in demographics of who is coming to our border and the challenges that it presents from a humanitarian perspective, from a medical perspective, and from properly managing and caring for those arriving at the U.S. southern border,” said McAleenan.

“From a CBP perspective, I’m committed to doing everything in our capacity to elevate these issues and the U.S. government response,” McAleenan said.  “What’s become clear to me in talking to leaders in the region is that supply chain barriers and an inefficiency in the movement of goods across the borders between Northern Triangle countries and between the Northern Triangle and the rest of the world are one of the most significant challenges to growth in Central America. Trade flows in the region are beset by poor and slow information exchange, limited coordination among border agencies, weak infrastructure and border control operations, customs delays, and the lack of a risk management or true trusted trade partnership approach among the authorities in the region.”

“I believe that along with Mexico and other international partners that the U.S. can help,” McAleenan said. “But to really make the effort effective, we need the strength of the U.S. private sector and the nongovernmental organizations that are committed to the region.  So we’re seeking the trade community and COAC’s ideas and expertise in this area, not just on an ad hoc basis in the engagements we’ve been having, but to apply the full strength of the COAC to the problem solving that we need in this arena.”

Speaking on behalf of the COAC, Lenny Feldman, a senior member of the Sandler, Travis & Rosenberg law firm and an advisory committee co-chair, expressed the trade community’s support. “Yes, Commissioner, COAC is ready for the challenge. We accept it and we look forward to taking part in that regard.”

At the meeting, 42 recommendations were presented and unanimously passed.  Nine of the recommendations pertained to developing a strategy to combat forced labor. “This was a high priority for the Commissioner,” said Lisa Gelsomino, president and CEO of Avalon Risk Management, an insurance brokerage firm, and the committee’s other co-chair.  “The investment that has to be made to identify forced labor within the supply chain and getting everyone on board to help with that cause is very important. So we encourage CBP to take the recommendations and make sure they’re incorporated,” she said.

Regulatory reform was another topic of discussion. Ten recommendations were passed. “Our group worked on Title 19 of the Code of Federal Regulations, and in particular to help identify CBP regulations that are outdated, obsolete, require paper-based processes, or make little operational sense in a modern business world,” said COAC member Madeleine Veigel, the director of customs for Expeditors International, a global logistics company.

Feldman, who co-chaired the Regulatory Reform Working Group, tallied the number of regulations that could be eliminated. “We found about 150 -170 sections that we think could be taken off tomorrow more or less,” he said.

Tim Skud, the U.S. Department of Treasury’s deputy assistant secretary of tax, trade, and tariff policy, who also co-chaired the meeting with Commissioner McAleenan, commended the Regulatory Reform Group’s efforts. “We want to find a way to make the regulations be useful without codifying ancient history,” said Skud.  “That’s another challenge that I’m sure we’ll appreciate your input on. But thanks very much for doing this. I know it was a lot of work and it’s appreciated.”

E-commerce was also discussed.  The working group focused on what e-commerce is and how it flows, and had one recommendation that passed. “We took the entire team and went through a mapping exercise to really envision all of the different permutations that happen when e-commerce comes into the country,” said COAC member Cindy Allen, the vice president of regulatory affairs and compliance for FedEx Trade Networks. The end result was a map. “This can be seen as a reference tool for future endeavors by CBP and the e-commerce world,” said Allen, who shared some of the group’s findings.

“Many times we see e-commerce being equated with courier or postal shipments and what we’ve discovered is it’s much larger than that,” said Allen. “While the courier and postal shipments account for a significant portion of e-commerce, as our spending habits as consumers have changed, as our selling habits as businesses have changed, e-commerce has changed,” she said. “We’re seeing new and different parties get into this that were unanticipated.  Not necessarily just the marketplaces that have come into this arena through the advent of having a catalogue in your pocket, but also other modes of transportation. We’re seeing a lot of commerce come in through trucks on the northern border. Some business on the southern border over rail and in ocean containers coming through the ports of the United States. This is significant because that really wasn’t seen as an anticipated model for e-commerce.”

Emerging technologies was also an area of discussion. “I just want to start off by saying, it’s not for us to make a decision on a technology, but to introduce it and to look at it for testing potential so that we can get a glimpse of what the future might bring,” said Vincent Annunziato, director of CBP’s Business Transformation and Innovation Division.  Annunziato shared results with the COAC from a proof of concept test CBP conducted with the North American Free Trade Agreement, NAFTA, and Dominican Republic-Central America Free Trade Agreement, CAFTA, to evaluate the application of blockchain technology. The proof of concept was a success, showing that blockchain technology would provide compelling operational benefits and cost savings. As a result, CBP will launch its second proof of concept test using blockchain technology with intellectual property rights at the end of March.

Annunziato also told the COAC about two studies CBP is overseeing. The first is a Department of Homeland Security sponsored study called Verifiable Credentials. “This is a way that the government or the private sector can identify that an organization is legitimate. It uses source data from other entities to prove that a person or a corporation is actually who they say they are,” said Annunziatio.  The second study, which is being conducted by the University of Houston and Texas A&M University, looks at the future of a blockchain world and how CBP would interact within it. “It provides a roadmap to see how things may change in supply chain technology going forward,” he said.

The COAC also passed recommendations on the in-bond process, procedures for petroleum pipeline carriers, and intellectual property rights protections.

COAC is a 20-member advisory committee that was established by Congress in 1987. The committee provides advice and recommendations to CBP and the Department of the Treasury on the commercial operations of CBP and trade-related interdepartmental functions.  Some of the issues that COAC focuses on include enhanced border and supply chain security, international efforts to harmonize customs practices and procedures, import safety, compliance, and modernization and automation processes used to facilitate trade.

The next COAC meeting is scheduled to be held in Laredo, Texas in May 2019.