Non-CHB Licensees Say "Broker Ed" & Work Rules Best Suited for Permits

(The COAC¹ Broker Subcommittee and CBP’s "Role of the Broker-Broker Regulatory Revision" Workgroup (a partnership with NCBFAA²) have been reviewing the role of the broker, specifically with regards to an (1) expanded role for the broker, (2) broker responsibilities, (3) professionalism, (4) regulatory modernization, and (5) penalty regime. CBP is expected to finalize its recommendations (as informed by COAC input) and submit them to Commissioner Bersin in October 2011.)

Could Expand "Responsible Supervision & Control" to Include Annual Education Reqs

The brokers state that some of the issues CBP has identified³ in defining the role of the broker in the 21st century could be addressed by expanding the definition of “responsible supervision and control” as used in 19 CFR 111.19 (on permits) and 111.28 (on responsible supervision) to include minimum annual education requirements. Brokers who are found not to exercise responsible supervision and control should be fined or found not to meet the requirements for permits.⁴

Training Hours Could be Noted in Triennial & Permit Reports Sent to CBP

According to the brokers' input, many brokerage companies already provide internal and external training and education opportunities for their employees and track the hours spent in education and training. If continuing education is required, they suggest these hours could be included on triennial reports and reports submitted to CBP as part of the permit process. Licensed customs brokers who do not work for brokerage companies typically also have opportunities for education and training, both internal and external.

Education Reqs for Half of Licensees who Don't Work for CHBs Are Questioned

The brokers note, however, that any requirement for continuing education should take into account that approximately half of the licensed brokers do not work for a permitted Brokerage company. They question the need for continuing education credits since most licensed brokers working for importers and consultants are involved in classification, value, special programs, etc. which are required to keep the importer compliant or the consultant knowledgeable enough to properly serve clients.

“Role of Broker” Reform Ideas Would Increase Burdens on CHBs and Importers

Additionally, many of the proposals raised during discussions with the Role of the Broker subcommittee, such as the minimum education requirements, would increase the burden on brokerage companies and on importers and consulting companies that do not act as brokers for other entities, but do employ licensed customs brokers. Therefore, the brokers state that a generally recognized return on investment would be needed to pursue such requirements.

NCBFAA May Not Be the Proper Vehicle for Tracking Education Requirements

The brokers agree that NCBFAA’s education branch, NEI, is not the proper vehicle for tracking the educational requirements of all brokers, as NCBFAA represents brokerage companies. The brokers state that while brokerage, importing, and consultant companies are frequently on the same side of trade issues, they may also have conflicting viewpoints. Therefore, representation of the entire group by one party could result in conflicts of interest. If a third party is chosen to track educational requirements, they state it must be neutral and should have no attachment (however limited) to potential political lobbying with respect to trade compliance related matters.

A “Work First” Rule for the Broker Exam Has Problems

The brokers state that any requirement that an individual must first have work or professional experience before sitting for the broker’s exam, or obtaining their license, must be fairly expansive in terms of defining what qualifies as relevant experience.

The goal should not be to require that a candidate have actually worked in a permitted customs broker’s operation, as many of the functions performed in non-brokerage companies (such as trade compliance, international transportation management, internal audit, and global sourcing) provide ample opportunities for one to become familiar with international trade and customs issues.

If a stricter requirement were put in place (one that could only be satisfied by work experience at a brokerage), the brokers state that the number of licensed brokers working at importers and other companies would likely decrease, and overall awareness of and advocacy for trade compliance would suffer.

More Stringent Rules & Reqs Should be for Permit Holders, Not Individual Licensees

The brokers suggest that there should be more stringent rules on the permitting process and continuing requirements for the permit holders that are separate and distinct from the anticipated changes for individual licensed customs brokers.

¹CBP's Commercial Operation Advisory Committee

²National Customs Brokers and Forwarders Association of America

³In CBP's report on "Defining the Role of the Broker in the 21st Century"

⁴The brokers note, however, that some of the current problems CBP has identified, such as abuse of the power of attorney (POA), were not necessarily the result of lack of education, but more likely “bad actors” who are looking to circumvent the system. The brokers state that those parties will exist despite increased requirements for education as they are likely working outside the regulations anyway.

(See ITT's Online Archives or 09/01/11 and 08/25/11 news, 11090120 and 11082510, for BP summaries announcing the availability of this document and of CBP and COAC members' discussion on the broker revision product at the August 18 COAC meeting.)