Co-Authored by Sharath Patil
Section 641 of the Tariff Act of 1930 provides that individuals and business entities must hold a valid customs broker’s license and permit to transact customs business on behalf of others. The statute also sets forth standards for the issuance of broker licenses and permits; provides for disciplinary action against brokers in the form of suspension or revocation of such licenses and permits; and provides for the assessment of monetary penalties against other persons for conducting customs business without the required broker’s license. Section 641 also authorized the Secretary of the Treasury to prescribe rules and regulations relating to the customs business of brokers as may be necessary to protect importers and the revenue of the United States.
Under 19 U.S.C. 1641(b)(4), a customs broker has the statutory duty to exercise responsible supervision and control over the customs business that he or she conducts. Maintaining current knowledge and competence is an inherent part of the statutory duty of the customs broker. A customs broker reasonably can be expected to uphold such responsible supervision over his or her employees and control over his or her customs business only by acquiring and maintaining the knowledge of customs and related laws.
The U.S. Customs and Border Protection (“CBP”) is responsible for administering licensing for customs brokers. All prospective customs brokers must pass a broker exam prepared by CBP, which is designed to determine the individual’s knowledge of customs and related laws, regulations and procedures, bookkeeping, accounting, and all other appropriate matters necessary to render valuable service to importers and exporters. After passing the customs broker exam, CBP investigates whether an applicant is qualified for a broker’s license, taking into account information provided by the applicant and other aspects pertaining to the applicant such as his or her business integrity. Following the issuance of a license, a broker administratively maintains a license primarily through the payment of fees and the submissions of reports and notifications required by 19 CFR 111.30.
While the broker exam provides a good initial indication of an applicant’s knowledge, it is, by necessity, limited in scope. The broker exam only captures a state of customs and related laws at a certain point in time and a person’s knowledge of such laws at a single point in time. The broker exam also does not test for any of the requirements of the approximately 50 Partner Government Agencies (“PGAs”) involved in regulating imports and exports. The complex nature of trade and the ever-changing and expanding requirements to comply with U.S. and international law require that a customs broker maintain a high level of functional and accessible knowledge to stay efficient and compliant over time.
U.S. Customs Considering Continuing Education Requirements
CBP is considering the promulgation of regulations to create a framework of continuing education requirements in order to maintain a high standard of professionalism in the customs broker industry. CBP’s goal with the publication of this advanced notice of proposed rulemaking (“ANPRM”) is to gather information and data from the broker industry in order to analyze and identify information that would help CBP in considering whether, and if so what type of, mandatory requirements would be beneficial for the trade community and CBP. CBP believes that requiring customs brokers to take continuing education courses would enhance the credibility and value of a customs broker’s license and improve a broker’s skills, performance, and productivity. CBP also believes that this would increase client service and compliance with the customs laws, which would protect the revenue of the United States and the trade community.
CBP believes that the vigorous pace and expanding scope of international trade require a more stringent continuing education framework for those individuals involved in the international trade process. Regular continuing education is a professional requirement for many dynamic professions, such as the accounting, legal, and medical industries. CBP believes that maintaining a high level of professionalism of the licensed customs broker is essential for safety, security, efficiency, and trade compliance.
Public Comments Requested
Based on CBP’s proposed rules published on the Federal Register notice, CBP seeks public comment on one or more of the following questions:
- How many hours of continuing education would be required?
Question 1. Is 40 hours over 3 years an appropriate level of continuing education directly related to the import and export of goods into and out of the United States? Why or why not? If you disagree, please indicate in your answer what would be a preferred level and your rationale.
- What types of activities should be considered appropriate to qualify as continuing education?
Question 2. In addition to the opportunities offered by CBP and other government agencies as mentioned above, are you aware of other training or coursework that would likely qualify for a continuing education requirement? Please describe those opportunities in detail.
Question 3. Are you part of a brokerage or a company that employs licensed customs brokers? Please provide or describe any training materials or training policies that the company has that would likely qualify as continuing education for a licensed customs broker. If you do provide any training materials or training policies and deem any of the content to be confidential commercial information under 6 CFR 5.7, please submit your materials only as a written/paper submission as listed in the ADDRESSES section above. Please estimate the costs of providing this training on an annual basis.
Question 4. Are you a broker in a small business or do you live/work in a remote area of the country? Would you be able to avail yourself of internet-based training, webinars, or in-person trainings offered by a third party in order to meet a mandatory training requirement?
Question 5. Do you believe you would already meet the possible continuing education requirement (40 hours over 3 years) based on the activities you may be already engaged in that you believe would qualify as continuing education?
- Does all continuing education have to relate to international trade?
Question 6. If a continuing education requirement is established, should there be different categories, and if so, how should those be weighted? For example, should continuing education be categorized as “CBP procedures and requirements”, “other government agency requirements”, and “specific areas related to international trade”, and should there be a certain number of courses within each category that must be taken?
- Do all brokers need to comply with continuing education requirements?
Question 7. Are there any categories of individuals holding licenses whom you feel CBP should exempt from the continuing education requirement?
- How should continuing education be tracked?
Question 8. If a continuing education requirement were put in place, license holders would need to track their hours. Should CBP require a certain method for tracking the educational requirements and what kind of documentation should CBP require from license holders for purposes of verification?
- How should completed education be reported to CBP?
Question 9. Is self-certification in ACE, while concurrently filing the triennial report, the most efficient way for customs brokers to report their compliance to CBP with the possible continuing education requirement or is there another method for reporting preferred? Would enforcement of the continuing education requirement by requesting additional documentation from a random sample of customs brokers be an appropriate method? Why or why not? Are there any other ways of enforcing broker compliance that are preferred? If so, why?
- What happens if continuing education is not reported to CBP?
Question 10. What do you think is an appropriate disciplinary action for failing to complete a continuing education requirement?
Question 11. Is linking the reporting of the continuing education requirement to the individual license triennial report the most efficient way to communicate compliance without placing undue burden on customs brokers? If not, what alternative means would you recommend and why?
Question 12. Is 120 days to take corrective action to obtain the necessary continuing education credits a reasonable period of time? Please explain in your response why you believe the time period should be shorter or longer.
Question 13. What do you think is an appropriate disciplinary action for failing to report a customs broker’s compliance with a continuing education requirement?
- Should continuing education requirements apply during voluntary suspension?
Question 14. Should customs brokers with their licenses in voluntary suspension be required to meet the continuing education mandate while their licenses are in suspension?
Question 15. Should customs brokers with their licenses in voluntary suspension be required to meet the continuing education mandate before their licenses can be reactivated?
Question 16. Should customs brokers, who have been voluntarily suspended, be required to complete a certain number of continuing education credits the first year after re-activation, and if so, how many?
Question 17. Should CBP differentiate the reactivation requirements based on the nature of the suspension, i.e., a voluntary suspension versus involuntary suspension? If so, how, and why?
- What could the accreditation process look like?
Question 18. Should informational content that CBP currently provides (webinars, local and national events, industry trade days, etc.) automatically be considered eligible for credit toward a mandatory education requirement?
Question 19. Should CBP require accreditation? Why or why not? If yes, should CBP create a framework to accredit education provided by non-government entities?
Question 20. Would an established accreditation process help control the quality of the content of the various activities that would be eligible for continued education credit?
Question 21. Should CBP pursue a formal accreditation program with a third-party accreditor, or should CBP be the accrediting party?
Question 22. How many entities should be approved to accredit content for a continuing education requirement (providing a range is acceptable)? Please provide details on your perspective.
Question 23. Is the above list of criteria to become an approved accreditor of continuing education reasonable? Should additional criteria be added?
Question 24. If your company or organization is interested in becoming an approved accreditor, can you estimate the time it would take to put together an application based on the above criteria? If you or your organization deem this information business sensitive, please submit your materials only as a written/paper submission as listed in the ADDRESSES section above.
Question 25. Should accreditors be able to self-approve their own activities and course content?
Question 26. Should CBP charge a fee to entities who wish to apply to become approved accreditors?
Question 27. Should CBP set a limit on the amount an accreditor can charge for course/activity approval?
Question 28. Given all the considerations raised above and the various questions posed regarding a potential framework for continuing education, CBP would like comments on whether continuing education should be required at all, and whether there are other measures that CBP could take to ensure a high level of integrity and expertise in the broker community.
- Costs and Benefits of a Future Rule
Question 29. To what extent do you as a customs broker or employer of brokers already satisfy the potential requirements (40 hours over 3 years) voluntarily or via company policy? Do you believe this is representative of the customs broker industry as a whole? Why or why not? Please provide examples of how you already fulfill the potential requirements.
Question 30. What is the number of hours currently spent on training in total by you as a customs broker or by customs brokers employed by you in an average year?
Question 31. Of the existing training options for customs brokers, how many hours are supplied in-house by employers of customs brokers, externally by Federal Government agencies, and by third-party providers, in an average year? What types of training options are you as a customs broker taking advantage of?
Question 32. Is the training for customs brokers that you provide or consume general, specific to a particular topic, or does it vary depending on the current work environment?
Question 33. Are the trainings for customs brokers that are currently provided accredited by some organization? If so, please provide the names of the organizations that accredit the trainings.
Question 34. Do employers and employees find these trainings for customs brokers to be beneficial? If yes, can you provide any examples of when training may have prevented or mitigated a negative outcome in a trade process? If no, can you explain how you as a customs broker or employer of customs brokers currently keep abreast of the ever-changing and expanding requirements to comply with U.S. and international law and other knowledge to stay efficient and compliant over time?
Question 35. If you are an employer of customs brokers, and the continuing education requirement were to be put in place, would you continue your current approach to education or make changes? If you would change, please explain the changes you might make and if you would increase or decrease the use of in-house, third-party, or Federal Government-produced sources of training?
Question 36. How often do you as a customs broker or employer of customs brokers currently attend events requiring travel, and how would a possible continuing education requirement affect the amount of travel, for you or your company?
Question 37. Can you provide information on the benefits and efficacy of mandatory continuing education for customs brokers and free trainings provided by CBP and other PGAs?
Question 38. In general, how often do you as a customs broker or your customs broker employees take advantage of these government-provided training resources?
Question 39. If you are considered a small business, what would the impacts be to your company of the potential continuing education framework for customs brokers?
Question 40. Should small businesses that struggle to meet continuing education requirements for customs brokers, due to new costs, receive accommodations in the form of discounts or exemptions?
Question 41. What types of costs do you or your company incur to maintain records of the completion of employee trainings? How high are these costs? If you or your company does not currently maintain training records, what types of costs would you incur to do so?
Question 42. If you are an individually-licensed customs broker, what would you consider reasonable costs per hour of continuing education, if you had to pay out of your own pocket? Would you take more trainings if the cost were discounted for small businesses?
- Potential Costs of a Future Rule
Question 43. Are there any additional qualitative costs, monetary costs, or time expenditures of continuing education for customs brokers that you would like to provide?
- Potential Benefits of a Future Rule
Question 44. Are there any additional qualitative benefits, monetary cost savings, or time savings of continuing education for customs brokers that you would like to provide, in addition to the benefits described in the Background section above?
Diaz Trade Law has extensive expertise on customs broker licensing matters and in preparing and submitting comments for rulemaking. Please reach out to us if you would like to submit comments to CBP informing the agency of your business’ recommendations for continuing education for licensed customs brokers. Comments are due December 28, 2020. Diaz Trade Law can be reached at email@example.com and 305-456-3830.