Monday, May 4, 2015

Loose (Customs) Lips Sink Ship(ment)s

The import or export of goods through a U.S. port of entry is challenging enough for shippers, but the inability of Customs to preserve confidential shipping information makes transit through a U.S. port even more unnerving.

A vessel manifest contains much information that might be confidential to an importer or exporter, including the identity of trademarks, goods, quantities and consignees. How helpful would it be to Pepsi, for example, to learn the quantity and sourcing of sugar shipped by Coca Cola? Or, for addidas to learn of Nike's recent shipments. You get the idea.

Certainly, information in a shipping manifest is important data for Custom's regulatory control purposes. At the same time, the public release of the vessel manifest information, that may contain a trade secret which should be kept secret, can lead to unfair competition and anti-competitive effects.

But U.S. law recognizes that the shipping information is generally subject to public disclosure. As Customs explains --
"According to privacy statute, 19 CFR 103.31 (d), the public is allowed to collect manifest data at every port of entry. Reporters collect and publish names of importers from vessel manifest data unless an importer/shipper requests confidentiality."
Customs does permit vessel manifest data that is confidential to be treated confidentially. Confidential information will not be sold by Customs to publishers provided that an importer or exporter files a form with Customs identifying the "names and numbers" to be kept secret. This confidential information can include the names of importers, exporters, consignees and trademarks. In theory.

But whether vessel manifest data is truly confidential depends on whether Customs timely processes the confidentiality request. Currently, Customs is incredibly S L O W to input these requests into its system. The Customs website cautions that it may take "60 - 90 days" to process these requests. Don't believe this. In reality, it has been taking up to six months!

Customs is really sorry about this delay and has been sending this notice recently to upset shippers:
"This is to acknowledge that U.S. Customs and Border Protection (CBP) has received and processed your vessel manifest confidentiality request. We have been understaffed and have a backlog of requests that we are working. Thank you for your patience."
Customs has the staff to sell the vessel manifest information to publishers, but does not have the staff to filter out confidential shipping information from public disclosure.


This coming week, President Obama will be in Portland, Oregon attending an event at Nike's world headquarters, seeking to boost support for his free trade policies. Oregon's Senator Ron Wyden, the Senate's free trade siren, will likely be in attendance providing support. But, why would any importer or exporter prefer to ship through a U.S. port when Customs cannot timely do its job and prevent public dissemination of confidential shipping data? Perhaps the President should fix Customs as the first step in improving free trade. Because the wrongful disclosure by Customs of trade secrets means that, as a practical matter, trading with the U.S. may have regrettable consequences.

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