The economic benefits of trade facilitation: U.S. Customs and Border Protection’s Centers of Excellence and Expertise programme

• Author: Brett Shears,Charles Baschnagel,Bryan Roberts,Adam Rose,Fynnwin Prager
• DOI: http://doi.org/10.1111/twec.13009
• Date: 01 February 2021
• Published date: 01 February 2021

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wileyonlinelibrary.com/journal/twec World Econ. 2021;44:346–366.

© 2020 John Wiley & Sons Ltd

Received: 29 August 2019

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Revised: 30 March 2020

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Accepted: 13 July 2020

DOI: 10.1111/twec.13009

ORIGINAL ARTICLE

The economic benefits of trade facilitation: U.S.

Customs and Border Protection’s Centers of

Excellence and Expertise programme

BryanRoberts1

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FynnwinPrager2

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CharlesBaschnagel3

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AdamRose4

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BrettShears5

1Institute for Defense Analyses, Alexandria, Virginia

2California State University, Dominguez Hills, Carson, California

3Booz Allen Hamilton, McLean, Virginia

4CREATE, University of Southern California, Los Angeles, California

5Vote Allies, Los Angeles, California

Funding information

Science and Technology Directorate, Grant/Award Number: HSHQDC-13-J-00626

KEYWORDS

difference-in-differences, non-tariff barriers, port operations, programme evaluation, trade facilitation

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INTRODUCTION

Costs associated with moving goods across national borders are an important factor in international

trade business decisions and outcomes. Non-tariff barriers account for major elements of these costs

and include delays in shipping and customs processing, preparation and submission of documents to

customs authorities, and responding to custom authorities’ requests for information. National customs

authorities must balance the need to enforce trade laws through information gathering and inspections

with the costs that these activities impose on businesses and consumers.

In recent years, the customs authority of the United States, the Customs and Border Protection

agency (CBP), has introduced many initiatives to better facilitate trade and increase U.S. economic

competitiveness (CBP, 2013), while also allocating resources to address security threats and grow-

ing international trade flows. In the 1990s, CBP began the Automated Commercial Environment

(ACE) project, which facilitates trade and enforcement processing by moving paper-based forms to

electronic submissions. The Customs-Trade Partnership Against Terrorism (C-TPAT) programme,

initiated in November 2001, is a voluntary public–private partnership programme to encourage

importers, brokers and other cross-border trade stakeholders to strengthen supply chain security.

CBP regards C-TPAT members as low risk and is less likely to examine their shipments at ports

of entry.

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ROBERTS ET al.

The Center for Excellence and Expertise (CEE) initiative, launched in November 2010, is a part

of a broad system of U.S. “Trade Transformation” initiatives (see CBP, 2013). The CEEs are ten

distinct, yet collaborative, virtual “one-stop shops” for importers, intended to facilitate the postentry

phase of the trade process. Importing companies within each CEE sector maintain a single account

for imports at all ports of entry, rather than multiple accounts for each port. This should standardise

operating practices across ports, which had previously implemented national policies according to

local conditions, and reduce importer administration costs, as all shipment release cases can be pro-

cessed through one office rather than numerous ports. Each CEE coordinates import efforts for an

industry sector from a single location; the chosen locations reflect industry agglomerations or import

concentrations:

1. Agriculture & Prepared Products (Miami, FL),

2. Apparel, Footwear & Textiles (San Francisco, CA),

3. Automotive & Aerospace (Detroit, MI),

4. Base Metals (Chicago, IL),

5. Consumer Products & Mass Merchandising (Atlanta, GA),

6. Electronics (Los Angeles, CA),

7. Industrial & Manufacturing Materials (Buffalo, NY),

8. Machinery (Laredo, TX),

9. Petroleum, Natural Gas & Minerals (Houston, TX),

10. Pharmaceuticals, Health & Chemicals (New York, NY).

This paper presents statistical analysis of the economic benefits of the recent changes in customs

processing and trade facilitation implemented by U.S. CBP. This analysis uses a unique and very large

data set to conduct a Difference-In-Differences analysis that quantifies the impacts of various process

changes, and then monetises the value of those impacts using data from a multiyear survey of the U.S.

import industry. We present findings that can inform public officials and businesses in the areas of

international trade, freight and logistics, and portsand border crossings.

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Background

The U.S. import process begins with submission to CBP of shipment information before or soon after

goods leave the foreign port of shipment. CBP makes an initial assessment prior to arrival and then

scrutinises the shipment upon arrival with respect to U.S. trade laws—pertaining to illegal drugs,

counterfeits, goods violating safety or environmental standards; and inaccurate declaration of goods

with respect to type or value; as well as because of security threats. CBP conducts a physical examina-

tion of a shipment or files the CF-28 (“Request for Information”) form that requires further shipment

information from the importer. CBP then communicates its action through filing the CF-29 (“Notice

of Action”) form with the importer. The importer can rebut by filing the CF-19 (“Protest”) form with

CBP. After goods have been processed and have entered U.S. territory, CBP can review import docu-

ments and require new customs payments, or the goods can be returned to the border and, if necessary,

expelled or destroyed.

For some good types, other U.S. government agencies play an important role in examination deci-

sions. The agencies are termed “partner government agencies” (PGAs) and work in conjunction with

CBP or independently from it to identify import shipments that should be subject to physical