February 3, Deputy Secretary Alejandro Mayorkas U.S. Department of Homeland Security Washington, DC Dear Deputy Secretary Mayorkas:

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1 February 3, 2016 Deputy Secretary Alejandro Mayorkas U.S. Department of Homeland Security Washington, DC Dear Deputy Secretary Mayorkas: On behalf of the members of the American Association of Exporters and Importers, I write to request your assistance in supporting U.S. Customs and Border Protection (CBP) through the transition to the Automated Commercial Environment (ACE) that is scheduled to complete by February 28, CBP has been moving toward ACE Implementation for the better part of a decade, and we are eager to see the finalization of this project. However, we do not believe that either the trade community or CBP will be ready for a full transition by the end of February. There are currently about 25% of entries going though ACE. If the plan is to get to 100% by February 28 th, there would have to be a migration of almost 5% of entries a day to achieve that goal. This does not seem feasible to us. We ask that you direct CBP to release its contingency plans for ACE as soon as possible. We know that the carve outs discussed at the COAC meeting in January are excellent suggestions for keeping trade flowing and the recent request to freeze programming and then allow a 60 period of time before implementation is imperative for keeping trade moving. The system is currently too unstable to absorb both the continued changes and the huge increase in volume in such a short time. We have attached our most recent round of letters and comments on this matter, for which we have not received a response to date. The attached communications are full of ongoing issues, concerns, and questions. Additionally, the Customs Operations Advisory Committee (COAC) has noted that changes to ACE need at least 90 days before being required for new entries. As more programming is coming online, questions continue to come up about issues including commodity sub-types for the U.S. Food and Drug Administration (FDA), the Automated Export System (AES) to ACE conversion, and the ongoing addition of data points. Thank you for your assistance in this matter. Sincerely, Marianne Rowden President & CEO cc: Everett Eissenstat, Trade Counsel, Republican Staff, Senate Finance Committee Jayme White, Trade Counsel, Democratic Staff, Senate Finance Committee Angela Ellard, Chief Trade Counsel and Subcommittee on Trade Staff Director, House Ways and Means Committee Beth Baltzan, Trade Counsel, Democratic Staff, House Ways and Means Committee

2 November 11, 2015 Via Federal erulemaking Portal: Trade and Commercial Regulations Branch Regulations and Rulings Office of International Trade U.S. Customs and Border Protection 90 K St. NE, 10 th Floor Washington, DC Re: RIN 1515-AE03 Automated Commercial Environment (ACE) Fillings for Electronic Entry/Entry Summary (Cargo Release and Related Entry) Dear Sir or Madam: On behalf of the American Association of Exporters and Importers (AAEI), the Association respectfully submits the following comments for the above referenced proposed rule published in the Federal Register at 80 FR (October 13, 2015). I. Introduction AAEI has been a national voice for the international trade community in the United States since AAEI represents the entire spectrum of the international trade community across all industry sectors. Our members include manufacturers, importers, exporters, wholesalers, retailers and service providers to the industry, which is comprised of brokers, freight forwarders, trade advisors, insurers, security providers, transportation interests and ports. AAEI promotes fair and open trade policy. We advocate for companies engaged in international trade, supply chain security, export controls, non-tariff barriers, import safety and customs and border protection issues. AAEI is the premier trade organization representing those immediately engaged in and directly impacted by developments pertaining to international trade. We are recognized as technical experts regarding the day-to-day facilitation of trade. We have commented extensively on regulations promulgated by the U.S. Department of Commerce regarding export and import compliance practices and procedures.

3 II. ACE Interim Final Rule Comments AAEI supports the Administration s efforts and progress toward implementing ACE. Our members welcome the opportunity to comment, in a meaningful way, on the interim rule and look forward to a response from our comments. To begin our comments, we would like to note that we are unable to answer the questions laid out in the federal register notice as there is not enough information, testing and development of ACE to allow us a meaningful set of answers. We are, however, grateful to have the opportunity to present our current set of issues, questions and concerns with the ACE development schedule. A. General Comments a. It is recommend that CBP add definitions to the final rule to ensure there is a set and common understanding of all terms that can be referenced at the beginning to include the terms: electronic entry; authorized data interchange (and what forms this may include); electronic data interchange (EDI); core trade processing capabilities (and what is included in that term); electronic equivalent; hybrid filing. b. We would like to note that there is a huge risk, borne mostly by the trade, of mandating functionality that will not have been in production at all (quota entries, etc.) or mandating functionality that will have been in production for only months (FTZ entries, etc.). Four months is a short time frame to ensure all production scenarios, including PGA data collection for the electronic filing for the first time without having a back-up system in ACS to keep cargo moving should problems arise. Not providing any time for live testing of any quota entries could cause unforeseen, large, trade disrupting issues. c. We again request that prior to any new deadlines in the updated ACE schedule, specifically the new February 28th deadline, we request that CBP do the following before FULL MANDATORY USE for any functionality that will be included in the February deadline: Freeze programming specs six months before inclusion so the trade can program for ACE (which may not be possible without some flexibility in the currently scheduled deadline of February 28th); Finalize Business Rules to include PGA user guides; Deliver fully functional certification requirements with data that can be used for testing for a defined period of time; Fully train ABI Client Reps.; Fully train all operationally focused CBP officers/employees; Fully publish updated CATAIR chapters that accurately reflect functionality as it will be deployed; Provide an ACE certification environment that is stable, available and populated with data necessary for full testing and with a consistent and predictable down time, so that the trade can allocate resources appropriately for validating programming and procedures related to new ACE functionality; and Document and publish to the trade a contingency plan for program and/or system failures. B. Background Issues a. Section B Executive Order (page 61279) i. What is included in the term core trade processing capabilities that will be included in ACE by the end of 2016? ii. The Interim Final Rule indicates that the ACE system will be the primary system through which the trade will submit data. Does this imply that there are other systems that are anticipated to be required to transact international trade outside of ACE? If so, what are they? b. Section F Amendments to the CBP Regulations (page 61280) 2

4 i. This rule indicates that this will only terminate the test in regards to those automated entries and entry summaries that do not involve data from other ITDS agencies upon the effective date. Please specify which ITDS agencies are effective upon the date of this rule. ii. This rule indicates that ACS will no longer be available for entry and entry summary filings on February Please outline how ITDS data for those agencies currently filed in ACS (such as DOT and EPA data), will be accomplished on ACE entry summaries entry and entry summary filings if ACS is not available and DOT and EPA filings are not yet mandatory in ACE. c. Section H Proposal to Eliminate Hybrid Filing (page 61281) i. The example outlined in the first paragraph does not accurately reflect the variety of means that the trade community communicates. This outlines only one scenario. The final rule should address multiple scenarios and consider the implications of each in this rule. ii. Please define limited exceptions as it is referred to in this section. iii. As some ITDS Participating Government Agencies (PGAs) require hard copy documents, please address the scenario where under law an importer or a Customs Broker would have to file a paper document by law or policy of another agency. It is undesirable and overly burdensome for this to require a paper entry and entry summary. Any PGA that falls under this circumstance should fall under the exemption. iv. The circumstance where the ACE system at CBP, or a broker system is down requiring an entry to be filed manually to achieve cargo release in a manner needs to be addressed. The system downtime circumstances should be exempt from the no Hybrid rule. Filing the companion entry summary documentation in paper simply because a system was down at time of release should be exempt from this proposed regulation. Failure to issue an exception could result in hundreds or thousands of paper entry summaries for no other reason than an issue with a system that had resolved itself. v. There are many limited and specific exceptions where a paper document may be needed to be filed in a paper format in entry and entry summary filing scenarios. These are too numerous to identify in detail in these comments. If this policy is implemented, a national guideline should be issued to the trade and CBP outlining the format and requirements to request exceptions similar to those procedures used for Snow Day requests. Responses would need to be immediate in nature. vi. I would suggest that CBP outline a guideline where Non-Hybrid may be required as there are too many specific circumstances where one document may be required and put an undue burden on the system forcing a paper submission of the entry and entry summary needlessly due to limited circumstances. vii. Phased in compliance dates are needed for implementation of any types of all electronic requirements, including those that are affected by PGA regulatory requirements. viii. Recordkeeping requirements for Importers, Exporters, Customs Brokers, Container Freight Stations, Container Exam Stations, and all other trade entities that have access and require the electronic information for processing international trade must be outlined for this environment before a paperless process can be fully implemented. ix. If the process is to remain paperless throughout the entire supply chain, CBP should address the need for all entities to be automated to receive the data necessary to facilitate the movement of cargo in the supply chain. CBP must address those entities not directly involved in the filing of the entry and entry summary, which have to date refused to automate. x. What benefit is there to CBP and the PGAs to eliminate the hybrid entries? We understand that forcing fully electronic or paper as the only options could 3

5 push the PGAs and software vendors to speed up their implementations, but at what cost with respect to the quality of the final product? Will the PGAs or software vendors be forced to implement software without fully testing? AAEI worries that this approach may result in rushed work, errors and greater risks. xi. The ports are not currently able to process any significant volume of paper entries. Today paper entries are limited to individuals walking up to the counter at the port and some limited unusual circumstances. Does CBP have the staff with the necessary knowledge to process paper entries? If an entry is filed on paper the CBP officers or entry specialists will have to enter the data into ACE. The hybrid option allows the trade (brokers) to input the CBP data into ACE, the trade is already trained and able to do this; why move this burden to CBP? xii. If an entry is filed on paper the broker will likely enter the data in their system and print the forms, they will do the same as if they were filing a hybrid entry except they won t transmit the data. Instead, they will print a form for hand delivery to CBP and CBP would have to enter this data manually into ACE to release the shipment. What happens if CBP makes an error when entering the data from a paper filing? Who is responsible? xiii. Who will enter the PGA data into ACE if the entry is filed on paper, CBP or the PGA? If CBP, are they trained to enter PGA data into ACE? If the PGA data will be entered by the PGA are they prepared for this additional workload? How will CBP hand off the paper to the PGA? xiv. PGA entries often include admissibility issues, perishable commodities, environmental and product safety concerns and other highly sensitive issues. Requiring paper entries for these commodities could result in new and additional risks that could be avoided by keeping the current hybrid filing system. C. Statutory and Regulatory Requirements a. Section B. Executive Orders and (page 61281) i. The statement that the costs of making the required systems changes to meet CATAIR specifications to use ABI to transmit entries to ACE rather than to ACS are rather small is inaccurate. The trade sector has made a significant investment collectively over the past decade and will continue to invest in software changes to meet the demands of continuous changes that the implementation of ACE has required. As the private sector is not required to maintain costs in the same manner as the public sector, and due to privacy concerns, it is nearly impossible to determine an exact figure for human and software development capitol that the trade community has invested to date. It is not unreasonable to estimate it in the hundreds of millions collectively as an overall trade industry. Please note that due to the continued changes to the CATAIR and record sets, these costs are still rising. b. Section B. Executive Orders and (page 61282) i. Most importers who directly file with CBP also utilize software packages from software developers, and would follow many of the same procedures as other filers. Very few actually develop their own software for filing entries with CBP. ii. Software developers charge in a variety of ways for the use of their products. Many chose to build a new system for ACE, and charged the users for a new system rather than upgrade an older system. Costs increased to the end users due to a variety of reasons that are not understood or outlined in this rule. 1. Many developers anticipate covering the costs of the development of the ACE software by charging for the software as it is released because they consider it as new system development rather than an 4

6 update to an old system. For example, when ACE Air AMS was released and its use was mandatory, many filers were charged a higher rate for the use of ACE Air AMS. As such, costs increased for the use of ACE, as it was considered new software, not updated software. 2. Many different software fee structures did rise as a result of the ACE system, and continue to rise with each new ACE development due to the continual changes and need to offset the costs of development. 3. Many software packages do not consider training to be part of the package and is charged separately, increasing costs to the filers. 4. It is anticipated that each PGA message set development will have an associated cost associated with its development and use. iii. Many filers have customized solutions and have additional development costs that are incurred in addition to the packaged software solutions. Each of these filers will have to make modifications to their systems in addition to the software developers, making the 150 businesses a very inaccurate number. iv. It is inaccurate to say that software developers absorbed the additional costs of development without passing this on to their consumers. Most of this cost is in fact being past to the filers in the form of higher costs and fees. v. Many of the businesses have not made the changes to the software yet, and continue to struggle to keep up with the changes that CBP publishes to the CTAIR records in addition to the changes that the PGAs will require. vi. The estimates of costs are grossly underestimated. One large member firm estimated that the total cost to implement just the last phases of ACE to be $25 million in initial software investment, customization, customer education, customer software integration changes, employee training, and lost employee productivity time for testing and training. This is on top of already deployed ACE AMS changes that have already been implemented. It also does not take into account the time and resources required for programming and training for additional PGAs that have varying levels of complexity that cannot be measured at this time. c. CBP should consider regulatory flexibilities and these should be established based on actual need and not arbitrarily. For example some of the PGAs may meet the dates but some software vendors may not be able to program in time. If the PGA and software vendors meet their dates some of the brokers may not be able to implement on time. The flexibility may need to accommodate the PGA, the software vendor, the broker or another party in the chain. D. Logistics a. AAEI believes that the elimination of hybrid filings is an extreme measure that could have a severe impact on the economy and that a more moderate solution could provide the same results with less impact to the trade, CBP and the PGAs. CBP may be looking at the impact this will have on the trade without consideration for the significant impact it will have on CBP personnel responsible for handling the increase in paper filings. b. The PGAs could be pressured to release functionality that is not fully tested and not tested at all in a production environment. Consider quota entries that won t be available for testing in the production environment until the ACS system is turned off. If a quota entry has a PGA requirement we will have to hope it works because there is no opportunity for live testing. According to the software vendors the cert environment does not really work the same as the production environment; while the cert environment could allow for testing of a quota/pga entry the data is not available in the cert environment to adequately test. c. In the ACE environment forms 3461 and 7501 are no longer part of the system. In what form will the trade present cargo release and entry summary data to CBP? In 5

7 the event that paper entries are required for entries subject to PGA requirements how should the trade present the PGA data to CBP? d. How will the timing of paper entries work, can brokers file paper entries in advance and will CBP input the information quickly? Consider truck entries if trucks must wait for CBP to enter the data and target the shipments how long will the lines be? Will CBP allow filing of paper entries on the same time line as is currently allowed? If CBP is not able to keep up with the volume of paper entries, where will the cargo go? Will the GO warehouses be able to handle an increase in shipments? Similar issues could impact just-in-time assembly lines. e. Who will be responsible for issues, if software produces bad data and a PGA allows the bad data due to rushed programming; will the broker be responsible, will the importer? f. Has CBP or the PGAs done any analysis on the time or other savings from a fully electronic process? While in the long term the fully electronic process should reduce time and resources, we believe that in the short term the electronic process will require more time and resources than a hybrid process. It is also possible that a new electronic process could result in more overall time and resources. g. Consider a high volume importer who currently provides PGA data on paper and CBP data via EDI to their broker, how will they communicate the PGA data? Will they send the existing paper to the broker and require the broker to key in the data? Are the brokers prepared to take on this additional responsibility? Will the importer provide the data to the broker electronically? I don t believe any of these EDI interfaces have been developed, even if they have significant additional work will be required to key data by the importer or broker. h. While some flexibility may be necessary for smaller entities, larger entities may also need flexibility. Consider a large broker or importer faced with training a larger staff on new process and procedures in a short period of time, and with a need to key in a significant amount of data that currently resides on paper. An importer with thousands of PGA regulated products could be in a position where they will have to review thousands of paper documents and enter data for all products into a new system. III. Conclusion AAEI appreciates the opportunity to submit our member s concerns for your consideration. We would be happy to meet with you and your staff to discus in further detail. Sincerely, Marianne Rowden President & CEO 6

8 September 9, 2015 Via Commissioner Gil Kerlikowske U.S. Customs and Border Protection 1300 Pennsylvania Avenue, NW Washington, DC Re: ACE Implementation under the Updated Schedule Dear Commissioner Kerlikowske: On behalf of the American Association of Exporters and Importers (AAEI), we submit the following comments concerning U.S. Customs and Border Protection s (CBP) ongoing transition to ACE. Introduction AAEI has been a national voice for the international trade community in the United States since AAEI represents the entire spectrum of the international trade community across all industry sectors. Our members include manufacturers, importers, exporters, wholesalers, retailers and service providers to the industry, which is comprised of brokers, freight forwarders, trade advisors, insurers, security providers, transportation interests and ports. AAEI promotes fair and open trade policy. We advocate for companies engaged in international trade, supply chain security, export controls, non-tariff barriers, import safety and Customs and Border Protection issues. AAEI is the premier trade organization representing those immediately engaged in and directly impacted by developments pertaining to international trade. We are recognized as technical experts regarding the day-to-day facilitation of trade. We have commented extensively on regulations promulgated by the U.S. Customs and Border Protection Agency regarding export and import compliance practices and procedures. Comments AAEI writes to thank CBP for the recently announced modification of the ACE mandatory trade use deadline. It is a fact that the trade community would not have been ready to fully transition to ACE by this date. The public-private partnership that is ACE requires that both parties be able to operate in the ACE environment by an implementation deadline, and it was unrealistic to expect the trade to be programmed, tested and implemented for any changes that have come out after mid August. AAEI is grateful to CBP for proactively softening the original November 1 st deadline, but will emphasize again that readiness must trump an arbitrary calendar date for a full and complete transition to ACE if success is to be assured. Prior to any new deadlines in the updated ACE schedule, specifically the new February 28 th deadline, we request that CBP do the following for any functionality that will be included in the February deadline before FULL MANDATORY USE:

9 Freeze programming specs six months before inclusion so the trade can program for ACE (which may not be possible without some flexibility in the currently scheduled deadline of February 28 th ). Finalize Business Rules to include PGA user guides. Deliver fully functional certification requirements with data that can be used for testing for a defined period of time. Fully train ABI Client Reps. Fully train all operationally focused CBP officers/employees. Fully publish updated CATAIR chapters that accurately reflect functionality as it will be deployed. Provide an ACE certification environment that is stable and available with a consistent and predictable down time, so that the trade can allocate resources appropriately for validating programming and procedures related to new ACE functionality. Document and publish to the trade a contingency plan for program and/or system failures. AAEI would like to note that the trade can and should be ready on November 1, 2015 to implement anything that is in full production and is currently being widely used by the trade in production as of mid-august (entry types 01, 11, and 03, and only for entries that have absolutely no PGA requirements/involvement). We are willing to review and establish the final list of compulsory items to be included in the new deadline. Everything else will continue to require a 12 month extension of the mandate to code, test, and implement. We feel that both the Trade and CBP desire to avoid a big bang transition to ACE similar to the Australian deployment of their system several years ago, and we believe that these recommendations give us the best chance possible to achieve a smooth and seamless transition to ACE- the goal of all parties involved. The AAEI ACE Task Force is always available to meet with CBP and to review these and alternate suggestions. Sincerely, Marianne Rowden President & CEO 2