Trade Community Seeking Delay in ACE Transition for Drawback and Reconciliation

Friday, September 02, 2016 | Sandler, Travis & Rosenberg Trade Report 

Trade associations are again asking U.S. Customs and Border Protection to delay the deployment of Automated Commercial Environment functionality that they say neither side is ready for. The Trade Leadership Council of the Trade Support Network and the American Association of Exporters and Importers are both concerned about the Oct. 1 deadline for filing drawback and reconciliation entries in ACE.

In separate letters, the TLC and AAEI stated that with only about a month before the mandatory ACE date most of the elements required for implementation to be successful have not been achieved. Reconciliation and drawback record sets have been developed by CBP, the letters said, but testing has only just begun and software provider access to the certification environment is still not complete. CBP is also still developing business rules and policies and has yet to promulgate any regulatory changes, which are necessary to set up systems to file under new ACE requirements that are substantially different than under the Automated Commercial System. In addition, the training of CBP personnel is not expected to take place until a week or two before the mandatory date. The letters deemed this situation “very concerning” because reconciliation and drawback are inherently complex processes that are also very paper-intensive and will thus require “significant changes” to transition to ACE.

The current plan to implement both processes in production while simultaneously mandating use in ACE and eliminating filings in ACS is “clearly premature,” the TLC letter said, and will have a “substantial” impact on filers. For drawback, claimants face statutory deadlines for filing claims and many will be forced to file completely on paper to protect those deadlines if they cannot file in ACE, resulting in significant expense for both the trade and CBP. For reconciliation, the timing of the Oct. 1 transition to ACE “could not be worse.” The letters explained that many importers file reconciliation in September and October to comply with the deadline for flagged entries to be “closed out” within 21 months and that importers unable to file in ACE on Oct. 1 could face liquidated damages claims for missing filing deadlines.

The AAEI letter also criticized CBP for not officially notifying the trade community of two other changes set to take effect Oct. 1, the elimination of both blanket flagging for reconciliation and Importer Trade Activity (ITRAC) reports that provide information used to file prior disclosures, generate compliance reports, etc.

Given these issues, and recalling that CBP heeded similar trade industry concerns about ACE implementation in 2015, which allowed for “a more orderly roll out of the various entry types in ACE,” both the TLC and AAEI called on CBP to take the following steps.

  • immediately make drawback and reconciliation filings available fully in the certification environment so that software providers, filers and claimants can test the electronic processes and provide CBP with feedback to ensure that these systems work correctly before ACS filings are shut down
  • implement drawback and reconciliation in the ACE production environment on Oct. 1 to allow companies that are ready to file to begin testing the system in production
  • allow at least 60 days of testing in production before any mandatory date and the termination of ACS filings
  • issue business rules, policies, and regulatory changes at least 60 days before the mandatory date
  • train CBP personnel at least 60 days before the mandatory date and allow them to work claims in production to reinforce this training and ensure that the systems and business process coordinate properly

For more information, please contact OCEANAIR Compliance at (781) 286-2700 or