SMEs and State Export Promotion Efforts to Benefit from Bill Signed by Obama

This article originally appeared in Global Trade on March 18, 2016.

On February 24, 2016, President Obama signed the “Trade Facilitation and Trade Enforcement Act of 2015.” This is the first major customs legislation since the 1993 Customs Modernization Act.

The law updates U.S. customs laws to facilitate legitimate trade and strengthens trade enforcement. On the trade enforcement side of the equation it includes provisions to investigate evasion of antidumping and countervailing duty orders and to enhance U.S. Customs and Border Protection’s (CBP) ability to combat counterfeit imports and to protect intellectual property rights. It also has provisions to address concerns about potentially disreputable importers of record. The law statutorily establishes CBP within the Department of Homeland Security and authorizes the Centers for Excellence and Expertise (CEEs). It provides support for CBP’s automation systems, the Automated Commercial Environment (ACE) and the International Trade Data System (ITDS).

The law encourages CBP to consolidate the two CBP partnership programs, the Customs-Trade Partnership Against Terrorism (C-TPAT) and the Importer Self-Assessment (ISA) program and to provide participants with “commercially significant and measurable trade benefits.” The benefit specifically mentioned in the law is preclearance of merchandise for those importers that show the highest levels of compliance. The law amends the drawback statute and contains a number of miscellaneous customs provisions, including a raised de minimis for very low value shipments that can be entered without the payment of duties. It also expresses a sense of Congress expressing a commitment to reinstituting the miscellaneous tariff bill legislative process.

Title V, referred to as the “Small Business Trade Enhancement Act of 2015” or the “State Trade Coordination Act,” may provide an important boost to state and local international trade economic development programs. In particular, the law authorizes grants for state trade expansion programs at $30 million a year through fiscal year 2020. It makes matching-fund awards to states to assist small businesses enter and succeed in the global marketplace. The grants to the states are for programs that support eligible small business concerns that wish to export by helping them with: participation in foreign trade missions; a subscription to services provided by the U.S. Department of Commerce; the payment of website fees; the design of marketing media; trade show exhibition; participation in training workshops; reverse trade missions; and procurement of consultancy services (after consultation with the U.S. Department of Commerce to avoid duplication).

This type of assistance can be very helpful to small businesses who do not have the financial resources for marketing and consultancy services useful critical to successful engagement in foreign markets.

The customs law seeks to improve coordination between the federal government and the states and local governments on export promotion and export financing and to reduce duplication of effort and overlapping functions. It establishes a working group selected by the Secretary of the U.S. Department of Commerce of representatives from state trade agencies representing regionally diverse areas.

The law also directs the Secretary of Commerce, in coordination with representatives of state trade promotion agencies, to develop a comprehensive plan to integrate resources and strategies of state trade promotion agencies into the overall federal trade promotion program.

The law directs a federal working group to identify a diverse group of small businesses, representatives of small businesses, or a combination thereof, to provide the working group the views of small businesses in the manufacturing, services, and agriculture industries on the potential effects of a trade agreement for which the president has provided notification of the president’s intent to enter into negotiations. These provisions are aimed at ensuring that small businesses are not harmed by and are able to take advantage of new trade agreements.

In sum, the new customs law contains measures to help SMEs and state export promotion efforts which should not be overlooked.