Legislative and Government Affairs Position Paper of the Customs Brokers & Forwarders Association of Northern California (CBFANC) September 2010 Washington, D.C. For presentation during the 2010 Government Affairs Conference of the National Customs Brokers & Forwarders of America Assn (NCBFAA)
TABLE OF CONTENTS MISSION STATEMENT... PAGE 3 CLEAN TRUCKS (H.R.5697)... PAGE 4 Foreign Manufacturer s Legal Accountability Act (H.R.4678 /S.1606)... PAGE 5 CROSS-BORDER TRUCKING PILOT (NAFTA)... PAGE 7 FOOD SAFETY (S.510 / H.R.2479)... PAGE 8 2
Customs Brokers & Forwarders Association of Northern California (CBFANC) NCBFAA Government Affairs Conference Mission Statement CBFANC represents hundreds of companies involved in the lawful and secure movement of cargo through ports across Northern California, including the seaports of Oakland and San Francisco, airports in San Francisco, Oakland, San Jose, Sacramento and a vast array of other facilities in the region. Customs brokers help enforce regulations of the federal government and approximately 44 governmental agencies such as USDA, FDA, Fish & Wildlife, FCC, TTB and many others. We facilitate and promote communication between all parties involved such as Customs & Border Protection (CBP), ports, truckers, importers, cargo handlers, carriers, and numerous other companies and agencies. We are part of the solution. Our members facilitate legitimate commerce which provides thousands of jobs just in the San Francisco Bay Area, which sits on one of the biggest economic gateways of the world. We bring jobs to California especially on the export side of trade. We are helping President Obama meet his goal of doubling US exports in five years, but we need your help to ensure California s economic strength. As Congress addresses issues critical to our nation s security and the efficient flow of commerce, which is so vital to our economic prosperity, CBFANC comes to Washington, D.C. every year to share with you our bird s-eye view of the multifaceted logistics industry. Customs brokers have a stake in the effective enforcement of our nation s laws, which help promote safety, security and better economic conditions for us all. Our laws help prevent terrorist attacks, keep the borders secure, eliminate tainted goods from the nation s product and food supply, and keep out pests which could harm California s rich agricultural industry. This year our nation faces continued high unemployment, which has hit the logistics industry very hard. The ambitions of big labor have crippled exports all across the West Coast, and further threaten the efficient flow of commerce by proposing its own monopoly on the movement of goods in our harbors and at the borders. Food safety problems domestically continue to plague FDA and legislation to fix this agency instead impede legitimate commerce yet again. CBFANC hopes to offer our members views regarding these recent and increasing challenges facing our industry. Customs Brokers & Forwarders Association of Northern California (CBFANC) P.O. Box 26269, San Francisco CA 94126-6269 www.cbfanc.org 3
CLEAN TRUCKS (HARBOR POLLUTION), H.R.5967 CBFANC supports efforts to minimize air pollution at U.S. seaports. However, we oppose amending the Federal Aviation Administration Authorization Act (FAAAA) to allow local ports to make their own rules concerning the flow of interstate commerce and thus trump federal law. H.R.5967 The Clean Ports Act of 2010 would repeal the ban on local governments creating rules which regulate interstate commerce. This bill is a ploy to monopolize drayage all along the West Coast. By allowing local municipalities to ban owneroperator trucks, this bill would put thousands of hardworking voters out of work for the only purpose of enriching Teamster union dues. These citizen-voters who would face unemployment are primarily Hispanic and all are employed by small businesses. The seaport of Oakland is currently the nation s fourth largest port supplying tens of thousands of jobs. Passage of this bill would most likely triple drayage costs due to the monopoly it would create for the Teamsters. Be assured, foreign-owned steamship lines will move cargo to cheaper ports that s how business works. For proof, just look at the ports in the gulf and southern states that have been preparing for such a move by Congress. Even Customs and Border Protection has been moving personnel away from Oakland to account for the probable decrease in trade. Your help here is needed to end this folly. Be very clear, this means lost jobs for Northern California. Once those jobs go to the gulf and the South, they will not be brought back. Exports out of Oakland, forget about it. Cargo will move to the cheaper places to do business. If you think the Teamsters will continue to fund your re-election campaigns once they have secured a monopoly here, think again. What you will have are thousands of angry voters voting for your opponent. The long-term solution for you and continued employment is to support trade and commerce which creates jobs. If you really want to help end pollution, follow the Port of Seattle whose Northwest Ports Clean Air Strategy program contains no employee mandate, is far superior to the plan originally suggested in Los Angeles, has no extra fees, and improves air quality in the Puget Sound. The Port of Seattle wisely reflected on how the Port of Los Angeles was driving away business with high fees, and came up with a sound economic plan to gain business and improve its environment at the same time. The two are not mutually exclusive. Please do not allow business in Northern California to be driven away. Do not change the FAAAA to permit local ports to make their own rules. The federal standards regulating interstate commerce should stand. Reject H.R.5967. 4
Foreign Manufacturer s Legal Accountability Act (H.R.4678 /S.1606) CBFANC opposes H.R. 4678, the Foreign Manufacturers Legal Accountability Act. This bill would have the complicated effect of undermining U.S. job creation by unnecessarily increasing costs for American companies to source critical products and components. We oppose the unnecessary and unreasonable burden these bills place on American companies that rely on imports for competitive business models that create U.S. jobs. We agree with the sponsors of H.R. 4678 that foreign manufacturers should be legally accountable for injuries caused by products they sell in the United States. Nevertheless, this bill not only requires foreign manufacturers to have registered agents, it also requires American companies to confirm that their foreign suppliers have registered agents or face significant penalties including complete disruption of their supply chains through an import ban. Here are some facts associated with H.R. 4678: The bill treats companies disparately and thus creates two different legal standards. It fails to hold accountable the fly by night companies that are currently not subject to the U.S. legal system and are unable to be brought to court. The legislation is counterproductive, indiscriminately risking supplier relationships that are critical to U.S. companies, including manufacturers, retailers and agricultural producers that support millions of U.S. jobs. International conventions already exist to ensure service of process on foreign companies. The legislation would also violate a broad array of international agreements including the General Agreement on Tariffs and Trade (GATT), and the Hague Conventions as well as numerous treaties between the U.S. and foreign nations. U.S. consumers, who are harmed by defective products, can already bring legal action against foreign companies that have U.S. subsidiaries in the United States. But this bill does not distinguish between those entities that are already legally accountable and those that are not. The bill would invite other countries to reciprocate by imposing mirror legislation against U.S. exporting companies and imperil President Obama's goal of doubling U.S. exports within the next five years. This would create a great hardship for America s exporters to expand to overseas markets. This Act will turn the basis of the U.S. legal system upside down by requiring a company to admit guilt regardless of the facts. The bill states that the U.S. entity must promise to be "responsible for any liability" without making clear that liability is a legal conclusion that first has to actually be proven in a court of law. In effect, it suggests that companies making this certification are waiving their right to defend themselves against suits that allege defects in design, testing, assembly, manufacturing, warnings, labeling, inspection, and packaging. 5
The language also takes the scope of the liability well beyond personal injury cases by asking the U.S. entity to accept liability for "any other cause of action related to the covered product" -- language that is very broad and could potentially encompass, for example, contract disputes, suits under the antitrust laws, franchising disputes, and others. The trade industry is seeking a balanced enforcement mechanism that does not burden companies that rely on imports and exports and is consistent with a 21 st century approach to border management and trade facilitation. We are also asking to exclude foreign subsidiaries and other affiliates of U.S. headquartered companies, and the foreign parents and other affiliates of U.S. subsidiaries, from the requirement to register an agent and consent to jurisdiction. Any such company already has a U.S. corporate presence (the "U.S. legal person" in the language being offered) that can be sued in federal and state courts. The qualification "operating" is meant to exclude the possibility that a foreign manufacturer or producer could rely on a U.S. shell company to avoid the Act's requirements. This complex legislation has real potential to harm U.S. businesses and consumers in ways that are not completely understood by anyone. This requires greater caution and we encourage careful scrutiny when reviewing this bill. Otherwise, the ramifications of this bill will restrict both imports and exports, at a time when trade needs to expand, for the greater economic well-being of the country. This bill will not provide meaningful restitution to the public, since serving notice on a registered agent provides no ability to enforce a subsequent judgment. CBFANC urges you to reject this legislation. 6
CROSS-BORDER TRUCKING (NAFTA) PILOT Part of NAFTA stipulated that Mexican drivers would be allowed across the border to deliver goods cleared through Customs. Congress however ended the pilot program which permitted a small number of Mexican trucking companies to send their drivers onto U.S. roads pursuant to our NAFTA obligations. As we are all now painfully aware, the Mexican government has reacted within its rights to assign retaliatory tariffs to certain U.S. goods. These new tariffs hit the economy of Northern California extremely hard. Wine exports from our many districts are now subject to a 20% tariff. Other agricultural products are equally burdened. Clearly, the list of products targeted for higher tariffs was chosen to send a message to exactly those representatives who do not support the pilot program. In August, Mexico extended the product list targeted for punitive tariffs. The economy of Northern California is losing jobs to overseas competitors, who are now able to supply produce to Mexico more cheaply. Even if the tariffs are someday reduced, our exporters will remain at a competitive disadvantage compared with these new suppliers, which the U.S. Congress has allowed to siphon off our business. Congress has essentially aided in destroying American jobs, jobs which will not come back unless a new pilot is resumed before the end of this season s harvest, which is imminent. CBFANC supports NAFTA and the pilot program. As logistics providers, we know that allowing goods across the border seamlessly lowers costs to consumers. Currently, it takes at least four companies to move goods across our southern border when we do not allow Mexican drivers to cross; and this is before brokers on either side get involved. This unwieldy system raises prices to consumers who can now ill afford extra expenses. Department of Transportation studies report that during the pilot program, the Mexican trucks involved had better safety records than U.S. trucks. It does not make economic sense or increase safety to exclude Mexican trucks from U.S. roads. Clearly, safety standards must be met. But Teamster claims that the Mexican trucks allowed in during the pilot were unsafe are patently false. Please support a renewed Mexican trucking pilot program now. Next year will be too late. Tens of thousands of American jobs can be restored now by restoring a crossborder pilot this year. Currently, Senator Patty Murry of Washington has included language in the Fiscal Year 2011 Transportation, Housing and Urban Development (THUD) Appropriations bill that would call on the Administration to put forward a renewed cross-border pilot. We urge you to support such language and to urge the Administration to propose a renewed pilot program. 7
FOOD SAFETY (S.510 / H.R.2749) CBFANC supports increased funding for the Food & Drug Administration (FDA) to accomplish its critical goal of guarding America s food supply. Therefore, we support S.510 Durbin The FDA Food Safety Modernization Act. But we request two specific changes to this bipartisan bill before passage. First, we request clarification of the term broker in S.510. There are food brokers and there are customs brokers. Food brokers have a financial interest in importing food component ingredients. Customs brokers on the other hand have no financial interest in food transactions. As customs brokers, we transmit the data to FDA for imported food products. We work tirelessly with FDA to make import transactions correct and transparent. The term broker in S.510 should say food broker. Second, we request that any import certification be spelled out exactly in statute for FDA. Remember, FDA has been under-funded for decades. Its computer systems are shabby thanks to Congress s neglect. The food system cannot handle additional patchwork import declarations for food if the language of the otherwise thoughtful Senate bill is not clarified and made explicit to FDA. CBFANC does not support the misguided language of H.R.2749 Dingell The Food Safety Enhancement Act of 2009. If these bills go to conference, we hope you will support the language of the Senate bill after these two changes have been made. We know how under-funded our esteemed public servants at FDA have been for decades. We admire their work ethic, their mission and their tenacity. They deserve better. And CBFANC has been saying this to Congress for years. America s core food safety problem is domestic. S.510 recognizes these problems and addresses them. FDA is an agency of highly committed and intelligent scientists, lab technicians and inspectors. But you cannot give any agency especially one that has been so historically under-funded as FDA vague statutory requirements and expect them to promulgate regulations which will be handled easily by the trade. You need to spell out the import declaration very clearly after having consulted the trade, and come up with reasonable, workable, and successful rules. 8