ACE Non-participation Raises “a Red Flag” for U.S. Customs

The current customs and trade landscape is, for considerations relating to national security, economic competitiveness, unfair/illicit trade, supply chain dynamics, human rights, climate change, and consumer protection, more complex and fraught with risk than ever. This characterization is manifest in the terms and/or requirements of recently introduced legislative initiatives (TFTEA, EAPA, UFLPA, etc.), regional agreements (USMCA), administrative processes, prohibitions, and programs (exclusion requests, Russia and Belarus-focused EOs/Directives, CTPAT, etc.), compliance considerations (supply chain mapping, exclusion availability screening, origin determinations, etc.), and special tariffs (Sections 301, 232, and 201). It is also, on a more fundamental level, borne out by the sharp rise in audits and enforcement actions. The cost of getting customs and trade compliance wrong is high and can include supply chain disruptions and delays, unanticipated costs (i.e., duties, fees, and expenses), penalties and seizures, and even, in the eyes of CBP and PGAs, the deterioration of a company’s risk profile. It goes without saying that importers and exporters should, in this constantly evolving and aggressive regulatory environment, be doing everything possible to maximize customs and trade compliance and demonstrate “reasonable care.”

An easy and rewarding measure that members of the trade community can take in this regard involves opening and using an Automated Commercial Environment (ACE) account. Borne of the U.S. International Trade Data System (1996), Customs Modernization Act (1993), Safe Port Act (2006), and E.O. 13659’s (2014) call to modernize import and export processing pursuant to the creation of a “Single Window,” ACE was designed to provide a secure, real-time, web-based system of record for facilitating legitimate trade, enhancing border security, and improving interconnectivity between CBP, PGAs, and the trade. To date, the system has experienced substantial growth (it is, at this point, processing trillions of dollars of imports and exports each year) and widespread approval (account owner and user satisfaction levels have, as reflected in surveys conducted by CBP between 2014 and 2020, remained consistently on the order of 70-80%).

The ACE system has, since the decommissioning of the legacy Automated Commercial System (ACS), developed along two distinct yet complementary interaction tracks. Both of these are well-supported with live (call-in) and online (videos, manuals, etc.) sources of guidance. The first, the ACE/EDI track, offers account owners and users who submit an LOI, subscribe to specialized software, and satisfy rigorous VPN connectivity/interconnectivity security requirements, robust functionality, especially in connection with filings. This track will be the focus of a separate blog post.

The second track, referred to as the ACE Secure Data Portal (ACE Portal), is free to the trade and requires nothing more than a broadband Internet connection, a PDF viewer, and the usual suite of MS Office products. As it wraps up the first of four modernization phases to be carried out over the next six months, the ACE Portal provides account owners and users the following core import- and export-related capabilities:

  • Filing of select advance visibility documents and data (ISF data elements for low volume filers, truck manifests, and electronic in-bonds)
  • Filing of select PGA forms (CBP is currently working to integrate approximately 47 PGAs into ACE, an undertaking that will have a significant de-siloing effect)
  • Filing of blanket certifications and declarations (for example, certificates of non-reimbursement, importer affidavits, etc.)
  • Filing of vessel manifest confidentiality requests
  • Filing of protests and post-importation claims
  • Receiving and responding to CBP requests and notices (CF 28s, CF 29s, and CF 4647s)
  • Accessing and running a diverse, customizable set of reports (this feature essentially does away with the need to request, purchase, and wait for ITRAC reports)
  • Accessing and managing periodic monthly statement information

While the ACE Portal does not offer all the functionality available to ACE/EDI account owners and users (portal account owners and users are not able, for example, to file unlimited ISF data, non-truck manifests, entries, entry summaries, post-summary corrections (PSCs), reconciliations, drawback claims, etc.), it nonetheless opens the door to a lot of account owner/user benefits.

For CBP and PGAs, these benefits include:

  • Improved trade flow visibility. This in turn, allows for better risk identification/targeting, a more efficient deployment of human resources, enhanced admissibility determinations, and strengthened border security.
  • Reduced reliance on paper records and manual/paper-based processes. Per a 2018 GAO study, this ACE Portal benefit contributes to faster transaction processing, lower labor and storage costs, and fewer supply chain disruptions.
  • Enhanced alignment of contemporary business practices and technology, consistent with the vision articulated by 21CCF.
  • Streamlined coordination and collaboration between CBP, PGAs, and the trade.

The trade, on the other hand, experiences the following ACE Portal-derived benefits:

  • The ability to analyze the content of monthly, quarterly, and annual reports, with an eye to preemptively identifying problems/discrepancies and monitoring operations
  • The ability to conduct in-house audits for the purpose of ensuring accuracy/completeness and achieving a high-level of readiness for subsequent government inquiries/communications
  • The ability to expedite trade entry/clearance processes, thereby facilitating the conservation of a company’s temporal, labor, and financial resources
  • The ability to interact more effectively with CBP and PGAs
  • The ability to bolster compliance
  • The ability to demonstrate reasonable care

It has not, for some time, been “business as usual” in the customs and trade space. To the extent CBP has, as one official put it at a recent customs-focused conference, been “unleashed,” this is unlikely to change in the foreseeable future. ACE is, as the backbone of the U.S. government’s import/export processing and risk management activities, at the heart of modern customs and trade practice. The system’s significance is underscored by another CBP official’s observation that an importer or exporter’s non-participation in ACE raises, in her eyes, a “red flag.” With nothing to lose and everything to gain, importers and exporters who are serious about satisfying their obligation of reasonable care will ensure that this essential tool is a permanent addition to their customs and trade compliance toolbox.