Strengthening Customs Enforcement

Customs reform is long overdue. Systemic inefficiencies, loopholes, insufficient enforcement mechanisms, and outdated processes have created opportunities for malign actors to evade Federal law. Examples of noncompliance include undervaluing imports, withholding critical information about IORs and the goods being imported, and avoiding payment of duties through various arrangements and schemes. These actions threaten national security, undermine foreign relations, disadvantage domestic businesses, and harm Americans.

The United States must strengthen its customs enforcement through comprehensive reform, including through agency action and legislation. Such reform should focus on protecting national security, promoting lawful trade, ensuring the timely collection of duties, modernizing systems and processes, bolstering compliance mechanisms, increasing transparency, and protecting Americans and the domestic economy.

(i) requiring that an IOR maintain at all times 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 with U.S. customs and trade laws, and increasing the minimum required bond coverage for an IOR;

(ii) requiring that an IOR be designated and reported to CBP, and that a bond, or sufficient tangible domestic assets, or both, be required, for all formal entries under 19 U.S.C. 1484 and informal entries under regulations promulgated pursuant to 19 U.S.C. 1498; and

(iii) requiring that an IOR 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.

(b)(i) Pursuant to 19 U.S.C. 66, 1484, 1498, 1623, 1624, and 4320, and any other applicable law, the Secretary shall promptly issue, amend, modify, or rescind any relevant regulation, policy, or guidance to prohibit a foreign IOR from filing informal entry under regulations promulgated pursuant to 19 U.S.C. 1498.

(ii) These prohibitions for informal entry are necessary for foreign IORs importing low-value articles because such IORs are not similarly situated to U.S. IORs. This is in part due to the substantially higher volumes of low-value articles that are imported by foreign individuals and companies that are less familiar with U.S. customs and trade laws and that face lower penalty amounts and financial consequences for noncompliance where penalty amounts are correlated to value. It is critically important that the United States be able to counter these challenges through meaningful and effective enforcement actions. The United States faces substantial barriers when seeking to enforce U.S. customs and trade laws against foreign actors like foreign IORs, particularly when assets, operations, and key individuals are located overseas. Prohibiting the filing of informal entries for foreign IORs puts all IORs on equal footing and is necessary to treat IORs equally based on their individualized circumstances and in order to protect U.S. revenue and domestic industry, protect American consumers, strengthen national security, and maintain foreign relations. In any event, I determine that it is not in the interests of national security or practicable to treat foreign IORs equally to U.S. IORs in the informal entry environment.

(c)(i) Pursuant to 19 U.S.C. 66, 1484, 1498, 1623, 1624, and 4320, and any other applicable law, the Secretary shall promptly issue, amend, modify, or rescind any relevant regulation, policy, or guidance to require for formal entry under 19 U.S.C. 1484 that a foreign IOR: (1) may not rely on a continuous bond to meet the bond requirements for entry, except as permitted by CBP when the foreign IOR has demonstrated that the revenue would be fully protected and that compliance with the laws, regulations, and instructions enforced by CBP would be assured; and (2) be validated in CBP's Customs Trade Partnership Against Terrorism (CTPAT), if determined by CBP to be eligible, or use a CTPAT validated and licensed customs broker to file entries with CBP.

(ii) These additional requirements for formal entry are necessary for foreign IORs because such IORs are not similarly situated to U.S. IORs. The United States faces substantial barriers when seeking to enforce U.S. customs and trade laws against foreign actors like foreign IORs, particularly when assets, operations, and key individuals are located overseas. Principles such as the revenue rule reinforce why it is important for the United States to impose heightened requirements against foreign IORs, which can more easily evade payment of amounts owed and other consequences for noncompliance with U.S. customs and trade laws. Foreign IORs may exploit U.S. customs and trade laws and refuse to pay their customs debts, knowing the challenges posed by international enforcement of domestic customs laws and regulations. Because these challenges are not present for U.S. IORs, the additional requirements for formal entry for foreign IORs put all IORs on equal footing and are necessary to treat IORs equally based on their individualized circumstances and in order to protect U.S. revenue and domestic industry, protect American consumers, strengthen national security, and maintain foreign relations. Moreover, I determine the current conditions of entry produce, in practice, unequal treatment of U.S. IORs when compared to foreign IORs. In any event, I determine that it is not practicable to treat foreign IORs equally to U.S. IORs, at least not in the respect detailed in subsection (b) of this section.

(d) Within 180 days of the date of this order, the Secretary shall require all IORs to maintain “good standing” with CBP, and CBP shall define “good standing” based on the IOR's and its affiliates' history of compliance with U.S. customs and trade laws and regulations and payment of required customs liabilities, among other relevant considerations. For example, IORs that have been found by CBP to have illegally imported fentanyl, nitazene, or other illicit substances or contraband, including precursor chemicals for the purposes of manufacturing illicit substances, shall, consistent with applicable law, not be in “good standing” with CBP. IORs not in “good standing” with CBP shall not be allowed to import into the United States or otherwise conduct activities directly related to the importation of goods, including designating a customs broker to act as IOR on their behalf.

(e) Within 180 days of the date of this order, the Secretary shall update the IOR registry consistent with the policy of this order. These updates shall include removing inactive IORs; confirming active IORs are compliant with all applicable regulations and disclosures; and creating risk-based tiers for IORs based on compliance history, enforcement actions, and audit results, among other things.

(f) Within 180 days of the date of this order, the Secretary 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 of IORs, customs brokers, custodians of bonded merchandise, and freight forwarders.

(b) Within 90 days of the date of this order, the Secretary shall take steps to establish a requirement mandating the 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.

(b) The Secretary and the Attorney General shall take all appropriate action to prioritize the enforcement of Federal law relating to importations involving products produced by forced labor, and importations involving misclassification, undervaluation, and illegal transshipment, including investigations conducted pursuant to the Enforce and Protect Act (Public Law 114-125).

(c) Within 90 days of the date of this order, the Secretary shall take steps to revise all mitigation standards consistent with the policy of this order. These revisions shall include establishing a minimum penalty floor of not less than 50 percent of the assessed penalty, absent exceptional circumstances that materially impact national security; establishing a minimum liquidated damages floor; and eliminating mitigation for repeat offenders.

(a) The term “U.S. IOR” means an IOR that, in the case of an individual, is a United States citizen or a lawful permanent resident, and in the case of an entity, is organized under the laws of the United States, is located in the United States, and has at all times controlling beneficial owner(s) who are United States citizens or lawful permanent residents; or, in the case of an entity, owns a significant amount of real property in the United States, as determined by the Secretary.

(b) The term “foreign IOR” means an IOR that does not meet the definition of “U.S. IOR”—in the case of an individual, is not a United States citizen or a lawful permanent resident, and in the case of an entity, is not organized under the laws of the United States, not located in the United States, does not have at all times controlling beneficial owner(s) who are United States citizens or lawful permanent residents, or does not own a significant amount of real property in the United States, as determined by the Secretary.

(c) For purposes of the definitions of “U.S. IOR” and “foreign IOR,” the Secretary shall provide further guidance concerning the meaning of the term “located in the United States,” and such guidance shall prioritize preventing entities from using shell companies, sham transactions, or artificial corporate or organizational structuring in an attempt to qualify as a U.S. IOR. At a minimum, to be “located in the United States” an entity must have:

(i) its principal place of business in the United States;

(ii) a physical presence where significant business activity is conducted in the United States; and

(iii) sufficient tangible assets located in the United States, taking into account the size and scale of the overall operations of the company and whether the entity is an instrumentality of a foreign manufacturer without a substantial United States presence.

(i) the authority granted by law to an executive department or agency, or the head thereof; or

(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.

(b) This order shall be implemented consistent with applicable law, including the Administrative Procedure Act, and subject to the availability of appropriations.

(c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.

(d) The costs for publication of this order shall be borne by the Department of Homeland Security.