Senate Committee Discusses Trade and Customs Policy

The Senate Subcommittee on International Trade, Customs, and Global Competitiveness held a hearing on Tuesday, May 21st titled “Examining Trade Enforcement and Entry of Merchandise at U.S. Ports.” The subcommittee invited the three panelists below to provide testimony: 

  • John Pickel, Senior Director for International Supply Chain Policy, National Foreign Trade Council 
  • James H. Paylor, Jr., Assistant General Organizer, International Longshoreman’s Association 
  • John Drake, Vice President for Transportation, Infrastructure, Supply Chain Policy, U.S. Chamber of Commerce  

Chair Thomas Carper (D-DE) opened the hearing by emphasizing the importance of the U.S. supply chain, noting that the U.S. exported $3 trillion and imported $4 trillion of goods last year. While the hearing was not focused on one particular event, the overall goal was to have a conversation about the balance between improving the U.S. supply chain and enhancing national security.  

U.S. Supply Chain 

In recent years, the U.S. supply chain has incurred numerous disruptions which have caused major ripples in the movement of goods and overall U.S. economy. Many of these events were mentioned within the hearing and included major events like the COVID-19 pandemic and corresponding backups at West Coast ports, the influx of immigrants at the southern border which has led to closure of railways and commercial ports, the war in Ukraine, and the recent collapse of the Francis Scott Key Bridge in Baltimore, among other things.  

Beyond what Drake referred to as “seemingly daily supply chain challenges,” the country has also seen rapidly increasing imports generally. Drake noted that there has been a tripling of goods entering the country in the last 25 years without a correlating increase in the personnel required to inspect and screen these loads. Simultaneously, goods movement and the stakeholders involved have changed in recent years. The proliferation of e-commerce, fulfillment centers, and warehouses have added new and continuously changing dynamics into U.S. supply chains. 

Customs and Border Protection  

Customs and Border Protection (CBP) is the primary entity responsible for inspecting incoming goods, coordinating operations with 47 additional agencies, at the more than 300 ports of entry (POEs) across the county. Additionally, the agency is tasked with screening incoming travelers. Following the September 11th terrorist attacks, the agency’s mission intensified. And in recent years, with the influx of immigrants to the Southern border of the U.S., the agency, already struggling with hiring and retention of employees, continues to feel the stress of trying to maintain adequate staffing levels across POEs – while monitoring trillions of dollars of goods and safeguarding the U.S. from external threats.  

CBP Efficiency, Data, and Technology 

Panel participants listed numerous ways in which the CBP screening process could be more efficient for the agencies and shippers alike, and these efforts primarily related to data, technology, and information sharing.  

On the data front, there were multiple mentions of inefficient or redundant data practices. Drake detailed duplicative data requirements which seemingly are not tied to a specific goal, as well as the need to collect data from new players in the shipping arena, like those in the e-commerce area mentioned above. The coordination of data collection activities across the many agencies involved in the process and the sharing of this information has the promise of expediting processes and creating more coordinated activities.  

Related to data is the opportunity to use emerging technologies like artificial intelligence (AI) to streamline some of the inspection process. While Pickel clarified in a back-and-forth with Senator John Cornyn (R-TX) that CBP inspectors will still be needed for the inspection process, he discussed the opportunities related to the use of AI in validating data. He used the example of images of the same truck crossing through a border POE multiple times and CBP staff relying on AI to note any anomalies in the images, rather than relying on a sight inspection by a border crossing agent.  

While demand at the border and other POEs is not decreasing, it was noted in the hearing that it would be incredibly challenging to keep pace with this demand solely through CBP staffing increases. The great task of goods inspection and border security requires a multi-pronged approach of staffing, technology, data sharing, and coordinated agency activities. 

Policy and Program Successes and Opportunities  

Policy 

Although funding has not been appropriated yet, in asking what else Congress can do to support CBP efforts and supply chain resilience, Senator Cornyn laid out some of the recent funding allocated for fiscal year 2024. This included $380 million for nonintrusive inspection equipment, $32 million for expanded lab capacity related to the Department of Homeland Security’s fentanyl initiative, and an additional 2,000 border agents which would bring the total to 22,000.  

Panelists expressed support for the recent appropriations as well as other legislation already enacted like the Uyghur Forced Labor Prevention Act (UFLPA) and the Trade Facilitation and Trade Enforcement Act (TFTEA). The UFLPA has taken strides to prohibit goods manufactured by forced labor in the People’s Republic of China, and TFTEA authorized CBP for the first time since 2003. 

For proposed legislation, the major topics of discussion were the Securing America’s Ports of Entries Act of 2023, which would authorize the appropriation of $136 million in 2024 and $157 million each year from 2025 through 2029 for Customs and Border Protection (CBP) to increase staffing at ports of entry, and the Customs Trade Partnership Against Terrorism (CTPAT) Pilot Program. The CTPAT Pilot Program would direct a pilot program to evaluate the benefit of the participation of third-party logistics providers in the existing CTPAT program. 

Programs 

Programmatically, the Trusted Trader Program has the potential to expedite shipping operations by creating partnerships between CBP and the shippers. In his testimony, Pickel discussed the need to lower the costs for participation in the program, and Drake reiterated that point in noting that the administrative burden cannot outweigh the benefits of participation. Increasing the dialogue between the federal government and private sector could resolve some of the associated issues. 

Finally, in enhancing the overall supply chain, Drake discussed the benefit of data sharing between entities through programs like the United States Department of Transportation’s (USDOT) FLOW initiative. Through this public-private partnership (PPP) initiative, USDOT takes data shared by the private sectors, aggregates and anonymizes the data, and returns it to private industry in a usable format. This innovative use of data informs the planning and decision-making process to increase efficiency.  

Big Picture 

While largely an overview of programs and ways to think about improving goods movement in the U.S., the hearing touched on some major themes within current supply chains. In the U.S. and globally, we are seeing shifts in how goods are moved, and recent disruptions have exposed the vulnerabilities within these supply chains.  

These slowdowns impact the economy and jobs around the U.S. and impact the nation’s global competitiveness. The border rail shutdowns in Eagle Pass, Texas discussed during the hearing are a prime example of the immediate and potential long-term costs of supply chain interruptions. According to the Borderplex Alliance, this railway connection moves an estimated 45 percent of the goods moved by rail between the U.S. and Mexico. At that time, Union Pacific estimated the daily losses at $200 million (though Drake thought that estimate was $5-10 million below the actual cost) in trade value. Not only does this slowdown cost the country in the short-term, but as shippers make decisions on locating businesses, the threat of bottlenecks at the southern border could deter investment in the western hemisphere – potentially creating additional reliance on countries like China.  

As supply chains and goods movement continue to evolve, the panel noted the importance of continuing conversations like this hearing to keep a channel of communication open between government and industry. A comprehensive understanding of how supply chains work, improvements in agency practices, technological improvements, and adequate funding and policies can enable the U.S. to better respond to future disruptions.  

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