Trump EO Would Set New IOR Requirements, Restrict Foreign IORs From Entry

The order also would prohibit imports by importers of record that aren’t in “good standing” with CBP, and establish “enhanced vetting procedures” for importers, brokers, freight forwarders and others connected to the import process, among other things.

Timelines set in the executive order are staggered, and many of the provisions only mandate that government agencies, including CBP, “take steps” toward implementing them.

The order directs DHS to “promptly” revise its regulations and policies to ban foreign IORs from using informal entry and restrict their ability to file formal entries. While stopping short of an outright ban on formal entries, the order says foreign IORs must be validated under the Customs Trade Partnership Against Terrorism or use a CTPAT-validated customs broker.

It also says foreign IORs won’t be able to use a continuous bond for formal entries unless permitted by CBP after demonstrating to the agency that revenue would be protected and compliance with CBP requirements is “assured.”

The order defines foreign IORs as individuals that aren’t U.S. citizens or permanent residents, or entities that aren’t “organized under the laws of the U.S.,” aren’t located in the U.S., and that don’t have a controlling beneficial owner that is a U.S. citizen or permanent resident, or don’t “own a significant amount of real property” in the U.S., as determined by DHS.

The order said DHS will “provide further guidance” on the meaning of the term “located in the United States.” But at a minimum, the entity must have its principal place of business in the U.S., a physical presence where “significant business activity is conducted” in the U.S., and “sufficient tangible assets” located in the U.S., taking into account the size and scale of operations and foreign ownership.

On the other hand, the order only says DHS must “take steps” within 180 days to revise IOR eligibility requirements. Those revisions include requiring that an IOR “maintain at all times a minimum level of tangible domestic assets, bonding, or both” to ensure compliance with U.S. laws, and requiring a bond “or sufficient tangible domestic assets” for all formal and informal entries.

IORs would also have to “provide to CBP additional data and identification information, including anticipated import volumes, year organized, ownership and beneficial ownership disclosures, business affiliation disclosures, and domestic asset disclosures, and any other data that CBP deems necessary.”

Also within 180 days, DHS “shall require” that all IORs maintain “good standing” with CBP, including a history of compliance and payment. The order specifically identifies IORs that have imported fentanyl and fentanyl precursors as not in “good standing.” IORs not in “good standing” won’t be allowed to import or “otherwise conduct activities directly related to the importation of goods,” including designating a customs broker to be IOR on their behalf.

Also within 180 days, DHS “shall update” the “IOR registry” in a way that is “consistent with the policy of this order.” That includes “disclosures; and creating risk-based tiers for IORs based on compliance history, enforcement actions, and audit results, among other things.”

And within 180 days, DHS “shall” establish “enhanced vetting procedures, including recurrent vetting,” for all individuals and entities “seeking to conduct activities directly related to the importation of goods,” including foreign IORs, affiliates or IORs, customs brokers, custodians of bonded merchandise and freight forwarders.

The order appears to mandate additional import documentation requirements, though it sets no time frame for doing so, saying only that DHS must “take steps” to establish them. Those new requirements would include certifications of compliance with “critical supply chain requirements,” including the Countering America’s Adversaries Through Sanctions Act, as well as the disclosure of foreign tax and global business identifiers.

Those documentation requirements also would include “detailed information about the imported good’s supply chain and production methods, such as the manufacturer’s product identifier (e.g., model or style number) or key specifications (e.g., composition, grade, or size).”

The order does set a time frame for one requirement. Within 90 days, DHS will “take steps” to require submission of “any documentation or information that the foreign exporter was required to submit to the foreign customs administration prior to exporting to the United States.”

Finally, the executive order includes several provisions for increased enforcement. Within 90 days, DHS will “take steps” to revise mitigation standards, including by establishing a penalty floor of “not less than 50%” for mitigation.

The order also more generally directs DHS to “take any action” it deems necessary to “bolster” enforcement,” including “enforcing liquidated damages claims against bonds for noncompliance; restricting in-bond utilization; increasing audits; and imposing maximum penalties for brokers who, for example, fail to conduct due diligence, repeatedly represent noncompliant clients, or fail to cooperate in a timely manner with requests for information by CBP.”

And within 90 days, DHS “shall” take actions to “expedite and enhance the seizure and disposal of non-compliant imports,” including by increasing bond requirements for high-risk shipments and eliminating “regulatory burdens to voluntary abandonment.”

Under the executive order, DHS, the Office of Management and Budget and other agencies will submit to the president recommendations for legislation to strengthen customs enforcement.

“Customs reform is long overdue,” said a White House fact sheet released alongside the executive order. “Systemic inefficiencies, loopholes, insufficient enforcement mechanisms, and outdated processes have created opportunities for malign actors to evade federal law,” it said.

“The Order addresses these longstanding concerns through comprehensive reform focused on protecting national security, promoting lawful trade, ensuring the timely collection of duties, modernizing systems and processes, bolstering compliance mechanisms, and protecting Americans and the domestic economy,” the fact sheet said.