Joe: We talked a lot about IOR registry earlier, and you can recap as much as you'd like down here. But there is also a point in there that we didn't talk too much about, which is the removal of
inactive IORs. Want to talk about that some?
Anthony: So, there... we need clarification on the function of this registry, first and foremost, right? That is a big thing. And we want to know what the process that the secretary is going to use to update this registry. That's number 2. Number 3: who's going to be responsible to maintain... first of all, create, then maintain, and then all these updates to this registry. Is it going to be CBP? Is it going to be us? You know, they're definitely... this definitely differentiates from the 5106 database. We're pretty confident that that's going to be the way moving forward. So, we want to understand should CBP consider the
5106 record that was created and allow the... number to act as part of this registry or not? You know, we need clarity on that. I think we would like to see that happen as far as the registry is concerned. And, you know, again... creating the tier system is, I think, is pretty... pretty important if they can do that, as well.
Joe: Moving on then, we were going to look at the
vetting requirements for entities engaging in importation of goods. I think I hit pause on you a little bit earlier when you were talking about it on the vetting requirements. So these have not been explicitly laid out yet. What would you like to see as far as you mentioned databases that CBP has access to that you...
Anthony: I did. I did. And you know what I would like to see? Okay. So, as far as the vetting process is concerned, right, I mentioned earlier that the
customs brokers have been doing this for quite some time. I want to say, approximately ten years, right? And we get the IRS documentation to back up the EIN number to prove that the EIN number is accurate, the address matches. We also go to the Secretary of States to make sure that the company exists, the address is correct, it's in the location, etc., etc. So, we're doing all of these things already. So we want to know what else do we need to do, and what else are we going to be held accountable for. But, again,
CBP has a lot of data like databases that we don't have access to. However, why don't we go into something where... we're also vetting the offices of the company. So why don't we go into something like the Global Entry or the TSA PreCheck, where the companies have to register themselves on a... "login.gov," for argument's sake, and, you know, it'll be like a denied party screenings. The companies will register themselves, and all the information will be available. Because, right now, CBP has some databases that are not available to customs brokers and the rest of the trade community. So we want to suggest CBP make those readily available for us so we have tools, and... you know what? Creating a database for... importers to register themselves, I think solves a lot of the issue. But we're going to see how this plays out, I mean, you know... ...conducting these new importer reviews and verifications is not a quick timeframe. We'd like it to be a quick timeframe. There are processes that we may be implementing here at R+L to help out with that process and to make the timeline, you know, quicker for the new registrations. But, you know, we need to stay in line with what this executive order is going to do down the road.
Joe: Absolutely. Looks like what the association is trying to do here is just getting ahead of all the problems in defining the scope of these orders, and they have good reason to anticipate these issues because it's probably a longstanding pattern from CBP that's just the back and forth of, you know, one organization trying to catch up with the government telling them what to do and everybody else trying to play catch-up to the organization and so on and so forth, and it rolls on downhill.
Anthony: Absolutely. And, again, like, if they do something like a clear... ...you know, or "Global Entry". I'm not saying call it that. The TSA Precheck, there's a background check. It's already done. And they have the resources to do it, and then you make that available to the public... not the public, but you make it available to the trade, like customs brokers, for sure.
Joe: And once brokers... ideally, if brokers have access to that information, that's going to make it easier for them to do their job of assisting importers through these issues. Later on, I'm going to take some time to research what kind of information is in those databases. We may end up producing an article with some guidance on what information should be prepared if those databases become available because, if they do, it's going to make it easier for your customs broker to help you. If they don't, knowing what information you should have ahead of time is going to be essential in not slowing down whatever process CBP does decide to go with. But, with that being said, CBP again, what responses have we seen directly from them so far in terms of
CSMSs or any kind of actions that you could, you know, officially or maybe even vaguely interpret as being related to this order?
Anthony: So very little at this point in time. You know, there's been a CSMS or two about it, but nothing real definitive, and nothing that clears up any of the things that we discussed today or any of the questions that the Broker's Association had put into it and the suggestions. But I will say there is... upcoming webinars about this enforcement. So I think they're going to start to... roll it out in webinars that CBP holds. So I'll be attending those webinars as well to gain as much information and... about these enforcement requirements as possible.
Joe: And we will do our best to contextualize that information in a way that assists you, the importer, broker, trade community member, so that you're able to apply that information on a day-to-day basis, and...
Anthony: Absolutely.
Joe: ...the changes. That's what we're here for. So let's go ahead and recap what we've talked about here a little bit by way of the timeline, so we can keep this very, very top level. June 3rd: the executive order was issued, and that was to establish a policy to strengthen Customs Enforcement through increased importer accountability, enhanced revenue collection, modernization of CBP processes, and stronger enforcement against customs fraud. That happened on June 3rd. Within 45 days, submit legislative recommendations to the President for additional Customs enforcement authorities. That's kind of where we are right now, Anthony. So we don't know, necessarily, what the details of that communication are.
Anthony: No, right now, the Secretary's in consultation with the Director of Office and Management and Budget, and they're just talking right now, and we don't have any information. They're also speaking with the other relevant agencies, so nothing has come out further since that legislation. Nothing's further come out since the executive order.
Joe: So the good news is that everybody knows the exact same amount of information right at this moment.
Anthony: Nothing. [laughter]
Joe: But, going forward, within 90 days, implementation of whatever these enhanced requirements are is ordered. So, within 90 days, that puts us at the beginning of September. In context, as... given your history in the trade community, with these orders coming in September, do they overlap with any other significant, say, seasonal changes in customs brokerage, like, say we're close to Christmas. Then are we going to be seeing those orders coincide with, say, large importation orders to stock Christmas shelves?
Anthony: No, no, because these orders are basically within the 90 days. It's... it's going to be establishing some sort of requirement... mandating, you know, submission of documentation. So, I think it's more... it's not going to be... relative to actual shipments at that particular time. It's going to be more of
documentation, information about the exporters. So it's not going to hold up shipments. So I don't think these requirements to submit regarding the foreign exporters and the foreign customs and the administration's prior tax boarding, I don't think that it's going to have an effect or holding up the shipments. One of the things that we want to understand is, as a broker, the association, you know, all the brokers is, you know, what are these requirements to submit these documentations going to be, and this is unanswered. So that's why I say... it's definitely not going to be required to submit with the customs entry because that would be... with suggestion, it doesn't. Because that would be ludicrous. Only upon request. So, again, Joe, I don't think it's going to have anything to do with the Christmas rush or anything like that.
Joe: Okay, so, good news is it's complicated enough on its own without adding complication to other circumstances that importers are used to dealing with on a year-by-year basis right now, you'd say?
Anthony: Correct. Absolutely. It's... not going to slow down progress, for sure.
Joe: If anybody was looking for a silver lining, there it is. Within 180 days, the revision of Importer of Record regulations by increasing minimum bond requirements. Now we're talking about increasing
minimum bond requirements within 180 days from June 3rd puts us right at the beginning of January 2027. I think I talked to you earlier in the week about speculation as to, given your experience, what you'd, like, maybe anticipate those
bond requirement changes looking like. I want to give you an opportunity to really get creative here and use your... everything you know to kind of expand on this because customs bonds are kind of what we do around here.
Anthony: Yeah, we do... we do a lot of customs bonds, for sure. I... you have a $50,000 minimum currently right now. And you have a lot of small companies that do a handful of shipments their duty doesn't even exceed past $10-, $15-, $20,000. So I don't know if they're actually going to. My speculation is they're not going to increase the minimum amount of a bond. However, if they did, I don't think it's going to be $60-, $75-. I think they're just going to go right to $100,000. Which, you know, in... for all intents and purposes, I think that is going to have an effect on these small importers where they're going to just say, "You know what? I'll just pay the
single entry bond," as opposed to... except if you're, obviously, a foreign importer, you're going to need a bond. But the domestic importers, they're just going to pay a single entry bonds and pay that fee, as opposed to taking out $100,000 bond and sureties. And... one of the people that we didn't talk about that was going to be affected by this was sureties.
Joe: Let's take a moment for that, then, sure.
Anthony: And the sureties... they're going to be affected, as well, because, if they do increase the minimum threshold of a bond, especially on these small importers, you know, we do our own vetting process, but the
sureties also do their own vetting process. And their vetting process is basically debt to equity. They want to know that you're not going to default. Yeah. Their vetting process is... a little similar to us, but it's also a little different. They're more concerned about the financials. So the bigger the bond, the more financial information that the surety company wants. And they really won't approve a continuous bond of significant amount without, you know, prior audited year company financials. So, if a company was looking to take out a big bond in 2026, they want to see your audited financials in 2025. That's it. There's no way around it. And if you can't provide that... well, I shouldn't say there's no way around it. There might be an alternative or two. But, other than... not providing those financials, the surety is going to ask for full collateral of the bond in way of cash or letter of credit. So they are very... they want to make sure that debt to equity is good enough that you're not going to default on payment to customs because what happens is, what the surety is, is guaranteed payment to customs. And, for them to give guaranteed payment, they want to make sure that they're going to get paid.
Joe: Would you say that these orders represent a strengthening of the barrier of entry into... like the... importing industry in general?
Anthony: Absolutely. That's the whole idea of it, is to strengthening the
barrier of importing into that. It's definitely changing. It's going to be changing.
Joe: Like, by direct result, the barrier on a foreign IOR is obvious, but I do think there's even an indirect result that, say, where... I'm just going to throw a number out... where $10,000 might have been... enough to get your ball rolling in the past, now it's going to be closer to $20,000 to make sure that you've got all of your ducks in a row, and that you're able to have, you know, enough financial backing and surety to prove that you're not going to default where, in the past, you may have been able to get by with a good business plan, luck, and a prayer. That's just not going to work for people in the past, is it?
Anthony: No. You can try that if you're just importing something to start a business. But if you're importing to... importing is going to be a business, $20,000 may not even be enough anymore. It may be even... bigger than that, especially if you are going to ramp up quickly.
Joe: Yeah, I was presenting those figures as, basically, like, you know, here's the number that sounds big but, like, double it. And, maybe, that's not even enough anymore.
Anthony: No. No. It might be much higher than that because there's a lot of costs associated with it.
Joe: So, the rate at which things change also increases, and that's why it's so important to have a broker on your side these days, especially.
Anthony: No, absolutely. Absolutely. You have to have a broker. Importers do
self-file. I highly, highly do not recommend self-filing. Even hiring customs brokers to self-file for you is not a great plan. You want to have oversight of your broker, not oversight of yourself.
Joe: That is a good piece of wisdom to hang on to.
Disclaimer: The information shared on "Very Importing People" is for general, educational, and informational purposes only. Customs regulations and requirements can vary based on the specific circumstances of an import, and may change over time. This podcast is not legal advice, and should not be relied upon as guidance for a specific transaction. Importers remain responsible for exercising reasonable care and complying with applicable laws and regulations. For questions about your specific shipment or importing situation, consult a qualified customs professional or legal counsel.
