Proposed AES Filing Requirement Would Be Costly, Industry Tells Census
The Census Bureau has received mostly opposing comments on a proposal for a new country of origin data element in the Automated Export System but hasn’t yet made a decision about whether to move forward with the change, said Kiesha Downs, chief of the agency’s Foreign Trade Division’s regulations branch. The rule (see 2112140033), which would require U.S. exporters of foreign-produced goods to declare the country of origin (COO) for their item in AES, could lead to costly compliance challenges (see 2201040044), companies and trade groups recently told the agency.
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Downs, speaking during a March 14 Regulations and Procedures Technical Advisory Committee meeting, said commenters were mostly critical of the burden the proposed requirement would place on exporters, particularly small businesses. She also said commenters thought Census didn’t adequately explain how the additional reporting requirement would help the government.
Census is still “taking a hard look” at the comments and hasn’t yet made a decision, Downs added. “We really are just in a position where we have to decide whether or not this statistical need” outweighs the industry “impact that is being presented to us.”
The rule, proposed in December, would add too much of an “administrative burden” on exporters, the National Foreign Trade Council said in comments released by Census last month. Many companies source their parts from multiple countries of origin, the council said, so the proposed rule would for those companies “necessitate substantial and expensive changes to the management of their inventories and information technology infrastructure.”
The Business Alliance for Customs Modernization said Census is underestimating how much of a financial burden the new requirement would impose on exporters. The alliance pointed to the proposed rule, which said the requirement “will not create any economic impact” on companies. “We do not believe that assertion is accurate and, instead, that complying with the proposed amendments will be costly,” the alliance said. Exporters would need to “reconfigure their systems to capture and store the newly requested data,” the group said, and for companies that don’t already record origin data, this "reprogramming would be particularly, even prohibitively, expensive.”
The rule would also impose significant training costs on some companies, Autos Drive America said. The group said its members would “need to undertake extensive training” and “roll out their new systems to supply chain partners, including carriers, brokers, and freight forwarders, who in turn would need to undergo training and testing.” The increased training would likely lead to more “human error,” the organization said, which could result in more red flags in AES that could take up Census’ time and resources. “In short,” Autos Drive America said, “the proposed COO conditional data element would necessitate extensive and expensive adjustments throughout our member companies, their supply chains, and within Census itself.”
Other commenters asked Census to try to use import data to capture some country of origin information, but Downs said that isn’t possible. “In a perfect world, if exports and imports were communicating with each other in [the Automated Commercial Environment], it would be a field that we would need to capture,” she said. “And I think we're a little bit down the road from that capability.”
If Census follows through with the rule, the agency should at least roll out the changes in a “phased implementation approach” to allow industry time to comply, the American Association of Exporters and Importers said. The phased approach should last “over a period of not less than one (1) year," the group said, starting with an “awareness” campaign and ending with an enforced requirement.
But AAEI also stressed that it opposes the requirement, which would be costly. The change would “add another layer of origin derivation to an already complex and crowded environment,” AAEI said, “and implementing this rule would require a multitude of programming changes with significant costs to companies’ internal systems.”