CT Strategies’ Allen Gina was invited to speak with Scott Miller, Bill Reinsch, and Andrew Schwartz on The Trade Guys podcast about U.S. Customs and Border Protection’s (CBP) role in the trade world. Mr. Gina drew upon over 30 years of experience as both a uniformed officer in the field and as a Senior Executive at CBP headquarters to share insight on a range of topics pertaining to government-industry partnership, tariff implementation, and cross-border e-commerce.
Listen to the podcast episode here:
- CSIS: http://bit.ly/2QluopR
- Apple Podcasts: https://apple.co/36ivAjs
- Spotify: https://spoti.fi/2QjznYj
[1:28] Defining CBP’s role in trade
In public discourse, CBP is often discussed in terms of its role in national security and involvement with immigration issues. However, Mr. Gina carefully points out that CBP is also responsible for requirements related to trade, including the collection of taxes and duties. CBP ensures compliance with trade regulations and enforces tariffs.
[3:15] The changing use of tariffs
In the past, tariffs were primarily used to protect domestic industry. In the present day, large-scale importation and the rise of multinational companies have rendered protectionist policies difficult if not impossible to apply. Mr. Gina noted that the current administration’s usage of tariffs represented a departure from earlier protectionist applications. Instead, he observed, present-day tariffs are often used as a tool to ensure other countries comply with U.S. interests.
[8:33] Implementation and Enforcement of Tariffs
The Trade Guys expressed curiosity about the procedures and actions that occur at an operational level when a tariff is imposed. According to Mr. Gina, the first step in the process is automated, with tariffs being entered into the computer. CBP functions as part of the Executive Branch, and as a result, the agency responds to the direction of the White House. He emphasized that immediate decisions, including acts as simple as a Tweet, can disrupt trade enforcement. When threats of tariffs are made, industry must respond accordingly. Mr. Gina noted the significant opportunity cost for legitimate U.S. businesses who must react to changes in tariffs, and he stressed the trade community’s strong desire for predictability and transparency.
[15:00] Enforcement of Tariffs, Continued
After implementing a tariff, CBP must prepare to stop those who attempt to circumvent it. Methods for avoiding tariffs include misclassifying items or disguising their country of origin. CBP’s sophisticated risk-based targeting allows for the detection of contraband. Additionally, the agency’s implementation of non-intrusive inspection (NII) equipment allows the agency to physically examine only 3% of cargo crossing the border. CT Strategies is committed to advancing innovative solutions and products such as NII that mutually benefit CBP and private industry.
[22:35] Trade Enabling and Public-Private Partnership
Mr. Gina told the story of one of his greatest accomplishments during his time in public service – altering the CBP mission statement. At the time, the agency’s mission statement read: “to safeguard America’s borders thereby protecting the public from dangerous people and materials while enhancing the Nation’s global economic competitiveness by facilitating legitimate trade and travel.” Mr. Gina was responsible for replacing the word “facilitating” with “enabling.” In his view, CBP Officers do not simply “facilitate” trade by “waving things through,” but instead play an active role in enabling trade and working in cooperation with the trade community.
Mr. Gina returned frequently to the theme of cooperation and partnership between CBP and private industry. Both government and the private sector share a mutual interest in preventing nefarious activity and ensuring that legitimate trade benefits from a competitive advantage.
[24:50] Private Sector Collaboration
He spoke at length about the critical need for collaboration with private industry, noting that no customs agency in the world understands the trade environment as well as the parties actively engaged in trade and commerce. He asserted that Customs organizations should learn from the trade community and share enforcement objectives, an act he calls “bi-directional education.” Mr. Gina speaks from his own experience in arguing that U.S. Customs became more sophisticated in its enforcement when it began to rely on information provided by the trade community. The goal of this process is to ultimately reach “co-creation,” a process in which private industry and Customs work together to design enforcement protocols and procedures. CT Strategies helps its clients navigate private-public sector relationships to contribute to the Customs environment and engage in this co-creation process.
For those who wish to gain a better understanding of the complexities of tariff policy, Mr. Gina suggests reading the Congressional Research Service’s 2018 paper entitled “U.S. Tariff Policy: Overview.”
[27:17] The Changing Trade Landscape and the Complexity of the Supply Chain & E-Commerce
Mr. Gina described the challenges in managing the rapidly shifting, complex trade landscape, noting that the supply “chain” may be better described as a supply “network” given its level of complexity. Specifically, he cited e-commerce as one of the major disruptive forces altering the trade environment. These changes create new opportunities for illicit activity and enforcement challenges, requiring CBP to adapt its processes and regulations in order to keep up.
This has been a major challenge for the agency, as cyclical development and the rapidly increasing pace of change in the supply chain cause ideas to become outdated by the time they are implemented. Mr. Gina mentioned that one of the issues that keeps him up at night is the lengthy, burdensome process required to evoke legislative change.
In response to the fast-paced changes in the trade and supply chain environment, CBP’s Commissioner and Executive Assistant Commissioner of the Office of Trade Brenda Smith advanced the 21st Century Customs Framework, an initiative aimed to position CBP to best address the 21st century trade environment.
[32:14] The New De Minimis
The de minimis value, the value under which duties are collected on an item, was previously set at $200. Collecting duties on all items valued under $200 began to cost the government more in administrative processes than the amount received in duties, and as a result, the government raised the de minimis value to $800. Some companies began to circumvent the de minimis by shipping containers to a third country and breaking down the container into smaller shipments valued under $800 before importing them into the United States.
Mr. Gina and the CT Strategies team understand the challenges and complexities of the 21st century trade environment, from governmental initiatives and policy to industry and supply chain issues. We are uniquely equipped to assist companies seeking innovative insight, advisory services, and technology applications to address border management, supply chain, and port operations challenges in the U.S. and around the world. For more information, contact us at info@ct-strategies.com.
Mr. Gina and CT Strategies would like to thank The Trade Guys for having him as a guest.
