Improving import clearance
Industry seeks more friendly FDA enforcement techniques.
By Eric Kulisch
US. Customs and Border Protection has several initiatives underway to streamline the entry of shipments that comply with U.S. trade requirements, but for many products that progress is undermined by frequent delays at the border caused by the Food and Drug Administration, according to trade association officials.
FDA officials say they have now agreed to several proposals advanced by the trade community to reduce import hassles.
“Trade facilitation is not in my mission. Public health protection is my mission,” John Verbeten, director of the operations and policy branch, said at the National Customs Brokers and Forwarders Association of America’s fall conference in Washington.
“That being said, I’d be a fool if I ignored how important trade facilitation is. It’s also not in my mission to hinder trade.
“So, we’re very sensitive to the issues that the regulated industry faces. And, from a purely selfish point of view, I know the more I do to facilitate trade, the fewer phone calls I get. And the fewer phone calls I get, the happier I am,” he said.
An industry working group, representing a broad range of importers and service providers, in May sent 17 recommendations to the FDA on practical steps it could quickly take to facilitate cross-border trade.
The FDA plans in the near future to start collecting two statistics to measure the effectiveness of targeting rules for identifying which shipments pose a potential compliance or health risk, and require inspection, Domenic Veneziano, director of import operations, said in an interview.
The new benchmarks are the percentage of all shipments being held at ports of entry to verify information, and of those held, what percentage of shipments end up actually being in violation of regulations.
Having the first number decline and the second number go up would be a sign of increasing efficiency in targeting suspect shipments, according to the working group.
The problem for importers and carriers is that FDA’s filters trap too much legitimate traffic without cause, increasing expense for shippers and their customers, Michael Mullen, executive director of the Express Association of America (EAA), explained at the NCBFAA event.
The FDA’s new screening engine, PREDICT, is supposed to be an upgrade from the legacy OASIS system, but not enough shipments get an automated “may proceed” designation, he said.
PREDICT, which was fully deployed around the nation in December 2011, assigns risk scores to products based on factors such as their source, type, and history. Verbeten said that a large portion of delayed releases is probably due to mismatched information.
Current estimates indicate that about 40 percent of FDA-regulated products are held, mostly for administrative reasons, the working group said in its recommendations. The figure is considerably higher than for other agencies with border clearance responsibilities.
The EAA, formed three years ago by the four largest integrated express companies — FedEx, UPS, DHL and TNT Express, presented a one-week snapshot of activity to the FDA showing that 52 percent of 16,000 regulated shipments moving through member networks were held for review.
One third of the 8,327 detained shipments were subsequently released, usually within several hours, without any further action by the importer or communication from FDA, such as a request for additional information or documentation.
Sixty-eight percent of the holds resulted from requests for missing documents, which resulted in release once they were provided.
Another 170 shipments, or 2 percent of the total, were inspected and then released.
Only 0.2 percent, or 14, of the 8,327 detained shipments were refused entry because they violated health or safety regulations. Non-compliant shipments represented 0.1 percent of the total volume of FDA-regulated goods transported during the week, according to the EAA data.
The average delay for release was two days.
“In some of your worlds that’s not too long. In the express world that is death,” Mullen said. “That is a missed delivery commitment, that’s a refund to the customer. And that’s an unacceptable number for us.”
CBP, by comparison, only inspects about 5 percent of ocean containers for security reasons.
“To stop 55 percent and only seize or refuse entry to 0.2 percent — something is out of whack,” Mullen said.
At the NCBFAA conference he urged the FDA to immediately adjust the targeting rules to cut the number of holds in half, especially for those shipments that eventually get released without any further submission of information.
FDA could also make adjustments to give automatic clearance to low-risk products, he added. The working group also said PREDICT should be quickly updated when new products have been approved for sale or removed from an FDA alert list so they aren’t inadvertently detained in port.
Veneziano said details on how to develop and use the new metrics will be worked out with the industry working group.
The FDA’s goal after a year was to evaluate PREDICT’s targeting and business rules for determining whether a shipment exceeds the risk threshold. Veneziano said the risk management group in the Office of the Commissioner, possibly with the help of an outside consultant, will initiate a study of the system’s utility in the first quarter of 2013 to strike a better balance between admissibility and smooth cargo flows.
“The way the rules are set up now you could hardly call it a risk management approach,” Mullen told American Shipper.
To alleviate delays associated with reviewing shipment documents and better utilize resources, the FDA will also adopt the industry recommendation to centralize the process instead of leaving it to each port. Veneziano said the agency needs to develop a concept of operation and share it with the industry working group before a small-scale pilot program can be launched. The industry group will be asked to nominate companies to participate in the program, he added.
Mullen said the pilot will begin early next year, with the four EAA members likely to be the initial participants (or three EAA members if the European Union approves the merger of UPS and TNT). The new unit could operate in the virtual world rather than being physically consolidated in one location. A centralized approach could include time limits for completing compliance reviews.
The industry working group said that waiting until after release to do document reviews would bring the number of shipments held at express consignment hubs and other ports to a more manageable level.
More consistent decision-making for resolving compliance issues is also expected to be one of the benefits of centralized entry reviews, industry and agency officials said. That would eliminate importer attempts to shop for more lenient border checkpoints to enter their goods through. With fewer port switches to flag as suspicious, PREDICT would offer fewer shipments for review, resulting in less work for FDA staff, according to the working group. And the business rules should be modified so that valid port changes do not cause PREDICT to give an entry a lower rating as long as the other parties to the transaction remain the same, it added.
“The routing of the freight regarding what flight or truck or port of clearance is determined by the carrier. The importer has no control over how and where their freight is routed,” the working group’s memo said.
A centralized review process would also ensure enough volume to justify assigning staff outside normal working hours to accommodate night and weekend shipments, thereby eliminating a backlog that occurs every Monday or on holiday weekends, it said.
Verbeten said the FDA intends to develop a more uniform regulatory procedures manual so that companies know what to expect at each port of entry.
The working group listed a reduction in hold times as one of its priorities. Fresh produce shipments held to determine admissibility, for example, average 6.6 days in storage until a decision.
Veneziano confirmed the FDA is working on developing a system for measuring the timeliness of release decisions, from the point of detention, by inspectors at the district level.
“We think that’s good because some FDA ports are just more efficient than others. So we’ll be able to identify some ports that have best practices that can be instituted across the agency,” Mullen said in an interview.
The industry panel also called for centralizing the agency’s databases so that all offices have access to decisions by compliance officers in other ports, pending actions, as well as the history of the product, manufacturer, importer and other factors. Other recommendations to speed up import processing include developing standardized review guidelines by commodity for each port so all parties clearly understand the documentation and entry requirements, and developing better analytical tools and mobile laboratory facilities.
The working group also complained that the FDA can take a week or more before deciding to refuse a shipment, which can lead to product spoilage due to the lack of refrigerated warehouse space at many border crossings or airports. It said the FDA should complete its document review, preferably within 24 hours, and notify the importer whether it needs to take a sample, inspect or refuse entry.
The agency should also do a better job explaining to the importer and customs broker the reasons for the refusal so they can fix the problem on future shipments, it added.
The FDA last March stood up its International Trade Auxiliary Communication System (ITACS) which allows companies to electronically transmit documents and directly link to a customs entry line. They can also use the Web-based system to inform the agency that a shipment is available for inspection, or sampling, and to receive status updates on admissibility decisions.
Veneziano said once a security system is built into ITACS individuals will be able to access their account and print FDA refusal notices rather than waiting to receive them by mail, observe why a shipment is being reviewed and link to the laboratory doing the sampling.
The industry working group expressed concern that many importers are unaware of how to take advantage of the new communications and management system and asked FDA to conduct webinars and presentations in conjunction with trade associations to educate the trade community.
Mullen said the industry also wants ITACS to have the capability to accept responses to information requests so that importers don’t have to send e-mails to FDA officials.
ITACS and PREDICT should also be fully compatible with the International Trade Data System being developed by CBP as the single window for submitting data to all government agencies with security or regulatory jurisdiction at the border, the industry panel said.
The industry panel also called for more flexible sampling procedures that would expand the practice in some ports of allowing a shipment that is stopped for a sample to move to an importer’s location within a 50-mile radius of the entry port while the review is completed.
It asked the FDA to establish a trusted trader program by building on the Voluntary Qualified Importer Program that is still under development. VQIP, which resembles CBP’s Customs-Trade Partnership Against Terrorism, will give lower scores to companies that have a demonstrated history of compliance and strong supply chain controls, resulting in a decreased probability that their products will be pulled for sampling by FDA inspectors. The industry experts suggested nearly a dozen benefits that could be included in a known shipper program, such as exemption from user fees related to FDA border clearance since VQIP importers do not require FDA action at the border, less frequent random sampling and exemption from inspections.
The FDA has also promised to develop better procedures for auditing the electronic data submissions of importers and to provide more frequent updates about its activities, Veneziano said. Outreach is especially important as free trade agreements boost imports from new shippers who will be subject to FDA rules and new rulemakings to implement the Food Modernization Safety Act, the advisory panel said.
Ultimately, the FDA needs legislation that puts trade facilitation into the FDA mission, Mullen said.