Sureties Seeing Uptick in CBP Requests to Increase Bond Amounts
SAN DIEGO -- With the Centers of Excellence and Expertise handling more post-entry work, importers are seeing duty bills revised upward more often, which is leading to increased bond requirements, said Lisa Gelsomino, CEO of Avalon Risk Management, during the Western Cargo Conference on Oct. 14. When the duty bills are found to be wrong, CBP considers such improper declarations to be indicative of a higher-risk importer, which leads to a higher bonding requirement, she said. Other factors that could lead to an increased bond include fines, penalties and forfeitures, as well as surety payments, she said.
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While the formula CBP uses for such bonding requirements isn't new, there seems to be more enforcement, Gelsomino said. During a recent call among International Trade Surety Association members, other sureties reported similar changes, she said. "In fact, we've seen bonds as low as $50,000 being asked to be increased to $16 million, and in some instances, we are only given 24 hours' notice," she said. "We are working with the National Finance Center to be a bit more reasonable about that." Gelsomino advised attendees to always check CBP's formula, as the agency isn't always correct.
Importers will need to start taking a much closer look at entire supply chains in order to avoid detentions related to suspicions of forced labor involvement, said Troy Riley, executive director-Commercial Targeting and Enforcement at CBP, who spoke on the same panel. There's an ongoing effort to answer the question of "what can industry do in a leadership posture to help with this issue and be proactive in the sense of looking at their supply chain as they are setting it up," he said. The new attention on goods made by forced labor is a result of the customs reauthorization law, which ended a loophole that required CBP to consider domestic availability of imported goods when making admissibility decisions on such goods (see 1604220017).
There are some major worries within industry, Gelsomino said. Importers are concerned that there's a presumption of guilt when an allegation is made, she said. For example, Ikea is the subject of a recent complaint filed by members of the coalition Cotton Campaign (see 1604120031), which is against the use of forced labor by the cotton industry. The Cotton Campaign issued a press release at the same time the filing was made. Such public allegations raise a number issues for any importer that is "bringing in multiple products that doesn't necessarily know where those raw materials come from" because the law prohibits imports made "wholly or in part" through forced labor, Gelsomino said. Importers will "really need to dig deeper into the process," she said.
The forced labor changes"could potentially be a real problem for people," said Erik Smithweiss, a lawyer with Grunfeld Desiderio. One big issue is that "a competitor can go into customs and say 'we think that importer's supplier'" is making use of forced labor, he said. While such misuse is possible, CBP must look at allegations of slave labor "through a different lens" as a human rights issue, CBP's Riley said. CBP will look closely at both the alleged violator and the alleger to determine the reasonableness of an allegation, he said. The forced labor issue also seems to be a less likely venue to seek a competitive advantage than an antidumping or countervailing duty evasion claim, for example, he said.