Expert Expects Expedited Timeline on Customs Enforcement
While the exact regulations that will come out of the June 3 executive order on customs enforcement are unknown, it could lead to more rejections of Form 5106s and more automated CF 28s as a means of increased vetting and enforcement, said Marcus Eeman, senior global customs manager at Flexport, on a June 5 webinar.
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Eeman said he expects an expedited timeline for provisions within the 90-day implementation deadline, which includes the submission of documentation the foreign exporter was required to submit to the foreign country.
He said he thinks the “state of emergency” that President Donald Trump declared when he imposed the International Emergency Economic Powers Act tariffs last year could be a reason to waive the comment period for any regulatory changes prompted by the order.
“We still need to see what exactly those regulations are, what they actually propose, but I would expect some changes this year,” he said.
As enforcement and importer vetting is expected to go up, Eeman posed the question of whether to expect CBP getting more staffing, and thus how much of the vetting will fall onto the broker. Eeman said he expects fewer automatic approvals of Form 5106s taking place, and that CBP will take a closer look at approving the forms.
“As part of that, I think they may even go out to try to look at some of these principal places of business,” he said.
As of now, he said he’s never had a 5106 rejected. Similarly, he said he expects more automated CF 28s, as far as company set-ups, value and export documentation.
"CF 28s are increasing and pretty quick, and a lot of them seem ... maybe AI sloppy in some ways, where they're just looking, going fishing more than actually targeting,” he said.
As far as declaring value on exports, Eeman said that foreign companies will often over-inflate the value of their export in the origin country to get a value-added tax refund, and then lower the value by the time they enter the U.S. He said he doesn’t think CBP will examine this on every entry, but may ask about it more often.
Some requirements, Eeman said, aren't known yet. He said he thinks that the newly required tangible assets may include a U.S. bank account, as U.S. bank accounts fall under federal regulations, so it’s harder for companies to hide things. Overall, the U.S. is looking for a real physical presence.
However, he said it’s not clear what exactly a sufficient tangible asset is, and a lot of speculation remains. The executive order said the importer of record must maintain a “minimum level of tangible domestic assets, bonding, or both as determined by U.S. Customs and Border Protection (CBP) to be necessary to ensure compliance,” but gave no specific examples.