Advisory Committee on Supply Chain Competitiveness: April 2021 Meeting Transcript

Advisory Committee on Supply Chain Competitiveness (ACSCC)

Via Webex

Thursday, April 22, 2021
8:41 am CT
Moderator: Richard Boll 

MEETING TRANSCRIPT

Coordinator: Thank you for standing by. All parties have been placed in listen only mode for today’s call. Today’s call is also being recorded. If anyone disagrees you may disconnect at this time. It is now my pleasure to turn the call over to your host, Mr. Richard Boll. Thank you. And you may begin.

Richard Boll: Good morning everybody. Sorry about the little delay but we’re all set now for the meeting. I’ll make my quick notes. Everyone should know that the call is being recorded and we will be getting a transcription as well and it will also be put up on our website within the next couple of weeks.

So just be aware that this is an open meeting and it will be recorded. Thank you. And now I’ll pass it over to Rick Blasgen.

Rick Blasgen: Thanks, Rich. Welcome everybody. I really appreciate your time today. It’s been a heck of a time. A lot of action since the last time we met, so no shortage of topics to discuss as we all know. And I think the committee is alive and well and there’s a lot of great work going on. And we do want to hear from a number of people today which I think is helpful in terms of where we’re going with our committee and how our committee can achieve its mission.

That’s increasing the competitiveness of the United States through our supply chains that we all run and enjoy. So with that said, I just again want to welcome everybody. It’s a special day. We do have the Secretary who will be with us. And I think that’s fantastic for us all to understand and be part of as well.

So let me turn it over to our Vice Chair, Rick Gabrielson for a couple of comments. And then we’ll hear again from Rich for some housekeeping and then turn it over to Heather Sykes.

Rick Gabrielson: Great. Thanks, Rick. I’m going to keep mine real brief because we’re running a little bit behind already. We want to stay on schedule today, but I want to welcome everybody. It’s, you know, a great agenda for today. We’re very excited that we have the Secretary with us, which is wonderful.

And I’m sure that we’ll come away from that session with a good bit of things to work on as a group. So with that, I’ll turn it back over to Rich. Rich?

Richard Boll: Hello? I’m sorry. I kicked off there for a sec. I already pretty much gave my beginning. So let’s start off and let’s get Heather Sykes to be able to give the intro and I appreciate everyone being on today’s call. Thank you.

Heather Sykes: Thank you, Rich. Good morning. My name is Heather Sykes and I’m the new Director for the Office of Supply Chain Professional and Business Services. It’s a pleasure to be here with all of you today. In my new position I lead the International Trade Administration team that promotes and implements policies and programs that foster the competitiveness of U.S. supply chain and of professional business services exporters in sectors such as education, architecture, engineering and construction, and legal and accounting services.

I bring 20 years of federal government experience in international trade to this position, including trade facilitation, U.S. industry competitiveness issues, and customs modernization. As most of you already know, for having worked with them over the years, I lead the excellent team, the excellent coordinators for this ACSCC and its subcommittees, Richard Boll, Eugene Alford, Russell Adise, and Caroline Kaufman.

I know that the ACSCC is a highly effective group with members representing industry, academia and other organizations and that you are all well poised to provide actionable recommendations to the Secretary. Your recommendations are very important. They help to support U.S. export growth and national economic competitiveness. They encourage innovation, facilitate the movement of goods, and improve the competitiveness of U.S. supply chains for goods and services in the domestic and global economy.

Now more than ever, we appreciate everything that you and the companies and organizations you represent, do to ensure the proper operation of U.S. supply chains. And we look forward to continuing to work with you to address the policy concerns and challenges that you face both domestically and internationally.

Now I would like to introduce Deputy Assistant Secretary for Services, Christopher Hoff.

Christopher Hoff: Thanks, Heather. And somebody wave your arms if you can’t hear me well. But - I’m so - good. I’m so pleased to be back with you today for a committee meeting. We will focus on the many important supply chain developments that have taken place over the three months since we last met. I had the privilege of joining you when it was my first full week at Commerce, three months ago.

So it’s good to be back. And it is an important time in the supply chain industry around the world, here in the U.S. More Americans than ever, now understand the critical need for effective supply chain. Because before the pandemic the constant motion of supply chains and workforces from many of your organizations may have been by design, largely invisible to the average American.

And yet supply chain industry workers ensured that our shelves were stocked, our online orders were delivered quickly, and our goods were transported seamlessly around the world and we didn’t worry about essential goods and access to them. And COVID-19 has been made at least two things clear - one, the importance of national economic security of maintaining strong resilient supply chains, and two, the importance of supply chains to our daily lives.

And at the beginning of his presidency, President Biden made it clear that supply chain competitiveness, resiliency, and American workers, are at the center of our Administration’s economic policy agenda. And the February 24th Executive Order on America’s supply chain underscored our Administration’s commitment to strengthening U.S. supply chains.

The Executive Order launched a comprehensive review of supply chains and directed federal agencies including us here at the Department of Commerce, to identify ways to secure U.S. supply chains against the range of risks and vulnerabilities.

And the members of this committee and the organizations you represent, lay an important role in this effort to secure and ensure the competitiveness of U.S. supply chains. So we look forward to actively engaging with you and we greatly value your input and recommendations ad we conduct this review and continue to work toward (unintelligible).

So I’m so proud to welcome Heather Sykes who you’ve just heard from, as our new Office Director for the Office of Supply Chain Professional and Business Services. She is fantastic and she is now an additional advocate for the work you do in this committee and the recommendations we develop through it.

So I’ll stop here by thanking all of you committee members, for your participation on this committee. And we may have a momentary delay as we’re waiting for the Secretary to join, but without further ado, I would like to turn the floor over to her and her staff, as she joins us. And I will check back in with Eugene and Rich to - and Heather to see whether she is in the process of getting on. But she’ll be with us momentarily if not.

Rick Blasgen: Well thanks Chris. We appreciate that - your opening comments there and specifically, the part about how supply chains are important.

Richard Boll: Are you guys all set up for the - okay, I appreciate it. There’s been some little issue with stuff like that.

Rick Blasgen: I can hear - I’m hearing Rich…

((Crosstalk))

Heather Sykes: …on mic.

Richard Boll: This is Rich. I just got a hold of the Secretary (unintelligible) she’s ending a call right now and she’ll be on momentarily.

Christopher Hoff: Perfect. Thanks Rich.

Heather Sykes: Thank you, Rich.

Richard Boll: Okay.

Christopher Hoff: Rick, I think we interrupted you. You were saying something.

Rick Gabrielson: I’m sorry?

Rick Blasgen: Yes. I was just commenting on - no, this is…

Rick Gabrielson: Oh.

Rick Blasgen: …Rick Blasgen. I was just commenting on what Chris had said about the importance of supply chains. Those of us who have been in this world for 30 years maybe or more now, kind of understood it. And finally, our mission, our discipline is now at the forefront. And they’re no longer this mystery. So I think that’s important.

And having the Commerce Department’s support really does help industry and all of us on this committee as well as those that we deal with, make the general public understand the importance of it and our committee does the global competitiveness of it. So it’s great to hear your comments, Chris. We appreciate that. And Heather as well. It’s good to have that support.

Christopher Hoff: Absolutely true. I mean all of that. We all became acutely aware of supply chains and pinch points in the supply chains. And we all got (unintelligible) and there were runs on a great many essential things. And we realized that Amazon was not delivering our packages by magic. And that there were…

Rick Blasgen: Right.

Christopher Hoff: …these shortages.

Rick Blasgen: Well during these meetings I always use my analogy of the wire between the switch and the light. You flip the switch, a light goes on, you don’t really know how. Just magic happens. And this is kind of what our supply chain has been over the years.

Heather Sykes: No. Of course. A lot of the work that you do is behind the scenes, you know, so we don’t see it day to day. But yes, since the pandemic definitely brought it to light, you know, and the work that you do is so important. And so we need to work to address, you know, any challenges or issues that you’re facing. And we’re definitely here to assist with that process and to be sure that we can address those issues. So thank you.

Rick Blasgen: Terrific. Terrific.

Man: Great. Thank you.

Christopher Hoff: Yes. I won’t distract too much from the meeting, but while we’re waiting a moment for the Secretary, I love this Office of Supply Chain. One of the other offices that I oversee is the Office of Digital services industries. And so we are renegotiating this new U.S. privacy shield and have got some responsibility for that as well.

But it has been very exciting. You know, not for great reasons, but supply chain is at the very top of the Department’s agenda, at the Administration’s agenda too. So there are two very forefront issues that I get to work on. And I’m very glad to be here with you today for this one. A nice break from privacy shields.

Rick Blasgen: Do you find when you talk to folks, Heather and Chris, is their general interest in truly understanding, you know, how products move and, you know, how if it’s imported from another country networks and, you know, are people generally interested in it now as opposed to before?

Christopher Hoff: Yes. I mean I’ll give you my political two cents on that first. I think the people on the, as we colloquially refer to them as 5th floor, the political - where the Secretary’s office is, are quite interested and quite aware. I don’t think it took much persuasion to get the Secretary to join us today for this meeting.

So there’s, her and her advisors around her have, are asking good questions and do want to seem to know how all of these things work. And we have, you know, there’s a - I’m Services, Deputy Assistant Secretary for Services. There’s a Deputy Assistant Secretary for Manufacturing, Monica Gorman, who is dealing with another piece of supply chain and critical goods in that supply chain.

So - and it is a topic of frequent conversation around here for sure. So I really do think that there is as much interest on the inside of this that may appear that it’s starting to be on the outside.

Heather Sykes: So yes, I’ll echo that. There’s definitely a lot of interest in supply chain issues including the supply chain, you know, (unintelligible) and transportation issues right now. So we’re hearing a lot. We’re getting a, you know, a lot of feedback, a lot of, you know, going on at the White House level and, you know, in Congress as well, dealing with supply chain.

So yes, your issues are definitely at the forefront of what we’re looking at right now. So thank you.

Rick Blasgen: That’s great. Well, you know, I think we’ve been around since 2011 now, our committee, and it’s been quite a run and we’ve made many recommendations to the Administration. So in your roles if there’s anything that you think that would be helpful for our committee to focus on, don’t hesitate to get that to us.

You know, we’re doing everything that we can from an industry professional standpoint, to think about the connections between all of our modes of transportation and the infrastructure that supports it, the technology and so on. But there may be things that you see from the Commerce perspective that hey, maybe that committee on advisory - supply chain advisory committee can take a look at this.

We do have quite a few people from all over the supply chain world, who have a lot of knowledge and a lot of interest in helping our country do its job and do it through supply chain excellence that we’re here for you as well.

Richard Boll: I hate to break in. I hate to break in real quickly. Sandy?

Coordinator: Yes?

Richard Boll: There is a number the Secretary may be calling in from. It’s (202) 710…

Coordinator: Yes. She’s in.

Richard Boll: …04 - okay.

Coordinator: Yes. She’s coming in right now. I just…

Richard Boll: Okay. Thank you.

Coordinator: …am waiting for her to finish.

Christopher Hoff: All right.

Heather Sykes: Thank you.

Coordinator: Just - I’ll tell you when I move her in.

Richard Boll: Thank you.

Christopher Hoff: Just so that Rich and Rick - that Rick - Rich and Eugene on our team and Russ and Caroline, they have been very good at reminding everybody in the building that this committee is well poised to advise. So they’re doing a great job advocating for you.

Richard Boll: Great.

Rick Blasgen: Yes. Thank you.

Secretary Gina Raimondo: Hello?

Richard Boll: Hello.

Christopher Hoff: This is Chris Hoff, Deputy Assistant Secretary for Services. And we have the chairs of the committee and they just gave you a warm welcome. And so we appreciate you being here. And the floor is all yours.

Secretary Gina Raimondo: Okay. Good morning everyone. I can see you. I’m sorry that you can’t see me, although you’re getting the better half by not seeing me and just hearing a bit from me. So in any event, I am excited to be with you. A key component of my work and really a huge priority and focus area, is on supply chain work and the job creation that goes along with investing in our supply chains.

So as I have said numerous times, shoring up our supply chain is an issue of economic security where we have the opportunity to create, you know, millions of jobs. But it’s also an issue of national security. The fact that we have as a country over the past 20 years, allowed certain areas of our supply chain to erode or in some cases just disappear, particularly amongst small and medium sized companies, it’s a really problem; it’s a real vulnerability.

And when we are at a point in time that we need to access certain metals, certain materials, certain pharmaceuticals, certain tools quite frankly last year, PPE, ventilators, it’s a scary place to be if we can’t access those products in America.

So, you know, the President obviously agrees with that; has signed the Executive Order. The American Jobs Plan will strongly help support economic growth by not only improving infrastructure and revitalizing manufacturing, but big investments in the supply chain, it contemplates $50 billion fund for semiconductors, another $50 billion fund for critical supply chains, substantial investments in R&D, substantial investments in manufacturing USA, and manufacturing expansion partnership.

So the President’s plan is bold necessarily, because we have fallen behind. And, you know, we feel that it’s time to catch up and that’s why his plan calls for such big investments. So I’m happy to answer questions, continue talking on different topics, but the main thing I wanted to express was that the Department of Commerce shares your priorities, investments in infrastructure, investments in workforce, investments in supply chain, investments in port and port infrastructure and other logistic infrastructure.

We’re going to be spending a lot of time on this and, you know, what we’re doing now frankly, is trying to get the President’s plan passed through Congress so that we can get the necessary funds and authorities that we need, in order to make progress on all of these topics.

Rick Blasgen: Great. Well Madam Secretary, my name’s Rick Blasgen. I’m the Chair of this committee. And I want to thank you for spending the time with us today. It’s so meaningful to us that this committee does its job and delivers against its mission of helping the U.S. increase its global competitiveness from the supply chain standpoint.

So some of the topics that you outlined that are of concern to industry. And, you know, if I could just ask a question or two. You mentioned the American Jobs Plan. How will we prioritize projects of national significance, to increase the flow of U.S. commerce? I know it’s early in the process, but any thoughts to how we might prioritize those?

Secretary Gina Raimondo: Well so we - there are a number of pieces of infrastructure in America that are in such disrepair that they are unsafe - roads, bridges, ports, port infrastructure, trains, train lines, certain airports. So, you know, I think there’ll be a focus on safety and also commerce. You know, highest trafficked areas, highest trafficked intersections, highest trafficked in most poorest repair ports.

And so it’ll be - again, it’s just neglect. It’s just years of neglect, not enough maintenance. The focus will be on fixing first if it can be fixed. That’s less expensive. We’ll fix it. If we can’t, we’ll rebuild it. But it’ll be a combination of safety and commerce in order to make sure that all of our infrastructure is modern and safe and capable of handling enhanced commerce.

Rick Blasgen: That will certain be used to our discipline here for sure. So thank you. I know our Vice-Chair, Rick Gabrielson also had a question for you. Rick, let me turn it over to you.

Rick Gabrielson: Thank you, Rick. Thank you, Madam Secretary for spending time with us today. We greatly appreciate having you with us. And a follow up question maybe to (unintelligible) and just a critical product standpoint and then the pandemic I think really (unintelligible) everybody even though (unintelligible) year had been long, the supply chain for many years is fragile in the supply chain, and the disruption had a huge impact on most organizations in terms of (unintelligible) in and out of our country.

But knowing that there are critical products that are critical for our security and safety of the country - you mentioned some - semiconductors, pharma products, (unintelligible). How do we provide these (unintelligible) that you started to talk about, for organizations, to even bring that back to us in U.S. territories so we’re not overdependent on one country?

Secretary Gina Raimondo: Rick, I am so sorry, you cut out in the middle and I missed some of the question.

Rick Gabrielson: Gosh, I’m sorry. (Unintelligible). Knowing that supply chains are so fragile and we learned a lot in terms of the pandemic and how fragile they are, and there are critical products like pharma products, semiconductors, (unintelligible) that we’ve become very dependent on one country. And you touched…

Secretary Gina Raimondo: Yes.

Rick Gabrielson: …a little bit on the sense of how do we provide enough incentives to bring that either back to the U.S. so we’re not overdependent on one country, or U.S. (unintelligible) in order to begin to address that?

Secretary Gina Raimondo: Yes. Got it. Okay. So first of all, we agree. The Biden Administration, the Presidents himself, agrees with you that this is a top priority and a top concern and a top vulnerability. And as you point out, often it’s one country and too often, that one country is China which is a serious strategic competitor, not always a friend.

And there are - we think about it in two ways, offense and defense. Offense is making more in America which is why as I said, the President’s Jobs Package calls for massive investment in semiconductor supply. You know, we need to incentivize companies to build fabs in America.

Another $50 billion to shore up critical supplies, same thing. Incentivizing companies to build manufacturing operations in America, training workers. You know, the semiconductor industry has an aging workforce. We need to train folks so they have the technical skills.

So some of it is just big investment in America, American workforce, American talent, American companies or non-U.S. companies who will put in operation here so that we have capacity here. The other piece of it is, you know, being thoughtful about our defensive tools - tariffs, export controls and the like, to, you know, make sure we have a level playing field so that American companies and small and medium sized companies in the supply chain have a chance, you know, they have a level playing field and they can be successful in America.

We’ve lost almost I think 30% of our small and medium sized manufacturing companies in America in the past 20 plus years. They went out of business. They couldn’t compete. So we also have to use our tools to level the playing field so that they can compete and China just doesn’t flood our market with, you know, so much cheap goods that our companies can’t be competitive.

Rick Gabrielson: Okay. Thank you.

Rick Blasgen: You know, I also think that we had a question from Gene Seroka. Gene as you may know Madam Secretary, is a leader at our Los Angeles ports and has been involved in global trade for some time now. Gene - Operator, can we allow Gene to ask a question, Gene Seroka?

Richard Boll: Is that possible Sandy?

Gene Seroka: Can you guys hear me?

Rick Blasgen: Yes, Gene. Go ahead.

Gene Seroka: Good morning Madam Secretary. Gene Seroka from the Port of Los Angeles. There is…

Secretary Gina Raimondo: Good morning.

Gene Seroka: There is a lot to like about the American Jobs Plan. And just as you outlined, covering the gamut from sourcing to capacity, resiliency in the supply chain, the dollars being proposed are a dream for us, including the $17 billion on ports.

But I think with the announcement the President made today, concerning cutting our greenhouse gases by 50% the year 2030, it opens up other avenues as well, for our transportation and port sector, including the $174 billion for electrification, the $100 billion for digital industrial technology, and then $50 billion for grid resiliency across the board.

So I think it’s opened up some new avenues for ports which we are happy to join in that conversation. My question is around U.S. exports. And while we still have about 9 million Americans out of work, mostly due to the pandemic, and some of the policies from the previous administration, exports have underperformed generally over the past two years.

Do you see an opportunity to help our farmers, manufacturers broadly in automotive sectors, among others, by creating a national export strategy in combination with the other investments that the Administration has graciously offered?

Secretary Gina Raimondo: Absolutely. And this is an area that we plan to focus on at Commerce, with the ITA. We agree with and recognize what you said around declining exports. Again, it’s particularly an issue for smaller companies. By the way, it’s especially an issue for smaller companies that are women and minority owned. And the President’s been clear that we have to build back more equitably.

So yes, is the answer. I think there is opportunity. Commerce has a number of programs, initiatives, technical assistance that we can provide. We have the foreign and commercial service. I’ve also talked with Secretary Blinken about working with the State Department on an export strategy and leveraging all the resources of the federal government.

So absolutely. And I would say we - I would welcome your ideas, your suggestions, your specific strategies and tactics, for what you think we should do in order to first of all, drive the strategy but also implement it.

Gene Seroka: Fantastic. Music to our ears. And we’ll work closely with your staff. Thank you, Secretary.

Rick Blasgen: Thank you, Gene. Also, Norm Schenk is with us and I know Norm had a question he’d like to ask, Madam Secretary. So Norm, are you with us?

Norman Schenk: Yes, if I’m live. Can you hear me?

Rick Blasgen: We can.

Norman Schenk: Okay. Great. Well good morning Madam Secretary and welcome and congratulations on your new position. I just completed 35 years with UPS and so most of my background is related to borders and international. Certainly the pandemic has many challenges but it also had a lot of positives and some identified some areas of improvement.

And during the pandemic, first with PPE and now with the vaccine distribution, both U.S. and globally, I think we saw that supply chains overall did very well in the movement of PPE and now vaccines throughout the world are going pretty well because people understand the urgency and there’s been some easing of some of the requirements that are out there for that, to help make that happen.

So my question relates to how do we take some of these things that were identified as good working solutions during a pandemic, and then implement those into the everyday life related to supply chains? And how it directly correlates I think is with the interaction and cooperation between the other agencies.

So I’m wondering how you would see that interaction taking place between commerce, transportation, labor? I would certainly include Department of Homeland Security and Customs Border Protection. Because part of it as well is protecting the borders from illicit goods and IPR.

So again, you know, how do you see that working together? And then a second question I’ll slide that in, it’s a super short one, is do you see any changes being considered with respect to the China tariffs? So thank you.

Secretary Gina Raimondo: Yes. So two quick things. You know, the best part about this Administration as far as I can tell, is that it’s a real team. We are working, you know, really well together. And I think that the, you know, we will - we are already, you know, engaged in the interagency process.

You know, on the Jobs Package the President has kind of designated five of us as the Jobs Cabinet. And we are working as such, as a team, in the Jobs Cabinet. On your second question, I think maybe is the answer. We are right now, undergoing a whole of government review of our strategy as it relates to China including tariffs.

And so I think it’s fair to say there may be changes. But it’s early for me to say what those changes might be. I can tell you this. We are - we believe we need to take a very aggressive posture as it relates to China, and do what we need to do in order to counter their anticompetitive actions.

So I don’t have anything to announce. We’re in the process. It’s a White House led process, in combination with Commerce, DOD, State, etc. And tariffs will be a piece of the discussion around our China strategy.

Norman Schenk: Thank you.

Rick Blasgen: Thanks, Norm. We want to be respectful of your time Madam Secretary. One last question regarding our committee. And it was also wonderful to hear about the departments working together. As you know, in our world of supply chain management, in order to get products to market we have to have manufacturing looking at transportation, looking at the sales organization, marketing organization and such, for that horizontal flow of inventory and information.

From a government standpoint it would be important and helpful for that to happen even in a more let’s say design state. So if there are things that our committee can do to help and be supportive we’d like to hear directly from you and your team around what those might be.

You know, we think we make recommendations around the best interest of the country and its ability to increase its competitiveness from a supply chain standpoint. But having the Department of Commerce along with its colleagues tell us hey, here are some things that we’re thinking about down the road; we’d love to get into that and support that agenda as well.

Secretary Gina Raimondo: Very good. We will do that. I think Chris is on this call and we can follow up.

Christopher Hoff: We definitely will.

Rick Blasgen: Great. Well Madam Secretary, thank you very much for the good work that you’re doing and for spending some time with our group. I know we’re a little bit over our time, but we want to thank you for that. And if there are any closing thoughts please provide us those now. But thank you very much.

Secretary Gina Raimondo: The only closing thought I have is that we look forward to working closely with you. And I am wide open to your ideas. You’re on the ground. I mean what you said is right. You know the barriers. You know where you have the infrastructure needs. You know where you have logistics needs. You know where our tariff strategy is helping versus hurting.

So I would just encourage you to stay in close touch with us so we can work together.

Rick Blasgen: We sure will. We sure will.

Secretary Gina Raimondo: Thank you for having me.

Rick Blasgen: Well thank you very much. We appreciate it.

Rick Gabrielson: Thank you.

Christopher Hoff: Thank you Madam Secretary.

Secretary Gina Raimondo: Bye-bye.

Christopher Hoff: Well I will stay on the line but I’m going to go off camera now that I’m not - I’m done with my remarks, I’ll turn it back over. I’ll still sit.

Rick Gabrielson: Okay.

Rick Blasgen: All right, Chris. Chris and Heather, thank you. Thank you guys for…

Heather Sykes: Thank you.

Rick Blasgen: …joining us. We appreciate it.

Rick Gabrielson: Thank you.

Rick Blasgen: Okay. Well that was great. I appreciate that. She actually was able to spend 10-15 minutes more with us than what was on the agenda. So that was great. Rich, without any further ado I guess we’d continue to go through our agenda here. Next on the agenda is workforce development with Anne Strauss-Wieder. Anne, are you with us?

Anne Strauss-Wieder: Can we do an audio check? Can you hear me?

Rick Blasgen: Yes, we can.

Richard Boll: Yes. Yes.

Anne Strauss-Wieder: Good morning everyone…

Richard Boll: And quickly - okay. Continue. I’m sorry, Anne.

Anne Strauss-Wieder: Good morning. I think we just heard from the Secretary that workforce has never been more crucial, first in terms of building domestic production capability and also efficiently and safely moving goods and products, both within the U.S. imports and exports.

The second part is although the jobs numbers are looking much better, we still have so many people out of the work in the country. And this is also an opportunity as people consider their next career and job opportunities, to perhaps have them pivot into the jobs we need in production and supply chain.

So because we have a lot of new people joining us today, what have we done in terms of the workforce subcommittee? Well we’ve identified that we need to market and attract people; let them know about the variety of opportunities in supply chain. We have to look at training, including apprenticeships.

We look at how to retain employees and also accessibility, particularly with distribution and production jobs. Because if they can’t get easily from where they live to where they work, they’re not going to consider the job opportunity. We have looked at the grave shortages of truck drivers as well as what’s needed in production and distribution opportunities.

So where are we going from here? We’re doing two elements. One is a top down, the second is a bottom up. In terms of upcoming activity and this really builds on what the Secretary just said, the teamwork is as a subcommittee and we’re going to be having monthly meetings, hearing from all of the federal agencies involved in workforce development, whether we’re talking Department of Education, Department of Labor, Department of Transportation, Department of Defense, and bringing them together so that we can really harness the federal resources to make all this happen.

And then that bottom up approach - and that is hearing from organizations and communities that have developed very effective practices for accomplishing this and figuring out how to encourage their use throughout the U.S. So at this point and in an effort to bring us back on track, I’ll stop there Rick and Rick and Rich. And I’ll also open it up to anyone else on the workforce subcommittee.

But we do recognize how important it is and we look forward to working with the full committee, to make all this happen. Thank you.

Rick Blasgen: Thanks, Anne. Anyone have questions for Anne? So Anne, we don’t have any imminent recommendations coming out of the group for the next meeting, or between now and the next meeting, is that correct?

Anne Strauss-Wieder: That is correct. We’re going to focus on first finding all the best contacts across federal agencies and then figuring out the best actions that can take place. So we’ll first start with developing that team effort and meshing it with the efforts of the Department of Commerce. And then we hope to have…

Rick Blasgen: Okay.

Anne Strauss-Wieder: …recommendations potentially for if not the next meeting, then certainly by the fall meeting. But we want them to be actionable Rick, in line with what you’ve just mentioned. We know we need to move quickly. Efforts have been made already. BARDA has invested billions of dollars both in terms of the current vaccine efforts, but also in terms of building domestic capabilities moving into the future.

And we recognize as the Secretary noted, the issues in supply chain. And further note as I think Gene Seroka may have mentioned, it’s not just the physical infrastructure, it’s the information technology and also looking at some of the regulatory considerations as Norm mentioned.

But we know that workforce is a key element to make all this happen.

Rick Blasgen: Okay. Thank you, Anne. And finally, any last questions or comments for Anne and her team? Rich, just so I know, I don’t believe everyone is live with their audio, right, so we’re going to have to watch for folks who want to have a question?

Richard Boll: Yes. Do you want to open it up for the line for questions, for Anne right now? We can do that.

Rick Blasgen: No. I just want to know if anybody does have a question…

((Crosstalk))

Rick Blasgen: …put their hand down if they have.

Richard Boll: All right. Sandy, can you explain to the viewers, the people on the call how to be able to enter or get into the queue for questions?

Coordinator: Absolutely. If you would like to ask a question on the phone please unmute your phone, hit star 1 and record your name clearly when prompted. Again, that’s star 1 to ask a question on the phone. One moment to see if we have questions.

Rick Blasgen: Okay. Sounds like we don’t.

Coordinator: We may have one queuing up. One moment.

Rick Blasgen: All right.

Coordinator: And it’s from Brandon Fried. Your line is open.

Brandon Fried: Thank you and good morning everyone. Anne, thanks for the report this morning. I’ve noticed in the last I’d say three to four weeks, a significant uptick in my members expressing concern about a lack of warehouse, available warehouse labor, obviously truck drivers and any support staff relating to supply chain fulfillment and transportation of goods.

I’m wondering what the group things as to why we might be seeing this uptick and a lack of available labor. Several of my members have said that it’s probably a direct result of increased unemployment aid by the states as well as the recent stimulus payments to workers.

And I’m just curious to ascertain from the group what people’s feelings are that might be causing this uptick.

Anne Strauss-Wieder: Brandon? If I can start by addressing some of that - first of all, the whole idea of letting people know about these job opportunities and these career opportunities. Letting him know there is a career path available that is a nice one salary wise in the supply chain industry, being a pilot, being a driver, and the various types of occupations needed in a distribution center or production operation, from trades to logistical professionals.

So we have to let people know about these opportunities and really dive deep into underrepresented demographics. Because sometimes they just do not know. The second is training and removing any obstacles to training or career paths in that area. So really helping them get the training they need that matches up with what the facilities and the employers and others need.

I know Norm, you’re retired from UPS. UPS has an apprenticeship program. There are other programs like that around the country. There is a concern about the wages and what’s being offered. I was in a seminar yesterday where one of the distribution professionals noted that to attract people they have to offer a minimum of $19.00 an hour to get them into their distribution centers.

And there is a concern still about the safety in terms of the pandemic, at transportation facilities. Now that is improving quite a bit with the rollout of the vaccines and all the safety precautions. But there’s still a little bit of concern about that workforce safety.

And that as has also been mentioned about, you know, what’s required of taking care of your family - once schools get back in a normal routine it’s not so erratic whether it’s in person, at home, then people can see whether they can to go work as they need to.

So we’re really in an evolving situation. But Brandon, as you pointed out, it’s so critical and we really just have to get out there and market the opportunities, let people know about them, recruit them, retain them, and so forth. And let me open it up to others on the committee who’ve been involved with this as well.

Rick Gabrielson: Anne, I should say, I think Walter Kemmsies is trying to ask a question. We should open it up for him.

Coordinator: And we also have another one on the phone.

Rick Gabrielson: Okay.

Coordinator: The question we have on the phone is from Tony Luberto. Your line is open.

Tony Luberto: Thank you. Thank you, Anne. My name’s Tony Luberto. I’m from the Small Business Administration. My question is regarding tying the federal government efforts into academia resources to initiate their ability to network with communities, research and development, workforce planning and their programs, in these arenas - logistics, supply chain.

Has there been any work efforts in those lines? Thank you.

Anne Strauss-Wieder: There are some examples on the local level and this is what we mean by also looking from the bottom up of good examples of this. I’ll speak to one in the New York/New Jersey area which ironically, is meeting right now at the same time, through the Council in Port Performance.

They have the workforce development implementation team which brings together businesses, terminal operators, academic institutions, public agencies, all geared towards helping find workers, recruit them, and get them into the jobs needed.

I believe there are programs out in LA/Long Beach that Gene may be able to talk to; down in Houston; and throughout the U.S. So most of these are on a regional basis. And our goal also is in focusing our subcommittee on what happening at the federal government, is all of the resources available there that can help amplify these efforts on a regional level.

Tony Luberto: Thank you.

Coordinator: And again, that is star 1 if you have any…

Rick Gabrielson: Can you open it up for questions…

Coordinator: …questions on the phone.

Rick Gabrielson: …(unintelligible) Walter. Yes. Walter Kemmsies is trying to ask a question if you can open up his line please.

Coordinator: If you can hit - if he can hit star 1 it’ll place him right in the queue.

Rick Gabrielson: Great.

Coordinator: One moment. And we have a question from Jason Craig. Your line is open. Hi. If you queued up for a question, your line is open.

Richard Boll: You might have to go off mute, Jason.

Jason Craig: There you go. Thank you. I just want to comment on the issue of workforce that Brandon talked about in warehouses. I’m the Chair of the Minnesota Freight Advisory Committee and actually we had an executive committee meeting yesterday about this issue.

A large parcel company recently implemented a new facility in Rogers, Minnesota just outside of Minneapolis, anticipating they could attract quite a bit of workforce. But they found very quickly that the issue of transportation was a significant barrier. So I think nationwide it’s something that we’re seeing.

We’ve built these huge DCs in the suburbs and oftentimes a car is a requirement to - for the workforce to access them. I think that requires us all to think a little bit differently about the potential for relocating these DCs in the cities where the distribution is, or providing better transportation options to the DCs that are often in far flung suburbs.

So just a quick comment on that, that we discussed yesterday, ironically.

Anne Strauss-Wieder: It’s a really good point and one of the reasons we have looked at accessibility. It’s that last mile connectivity. Can you get from where you live to where you work? Because people will pull out their phones and they’ll bring it up in their mapping program and they’ll look at the options.

It’s also consideration for these distribution and production operations because if you do a Google flyover it’ll see all of the associate parking, which points to folks having to use autos. Now there are some examples of public/private funding for Transportation Management Associations, TMAs that do provide last mile connectivity for workforce in line with shifts.

But again, that is a practice that’s specific to different regions and why we’re looking at a federal level, whether there’s a way of encouraging that additional connectivity. Because we are in an age where the location of those job opportunities is changing substantially from how it’s been in the past. So really good point being brought up. Thank you.

Rick Blasgen: Did Walter get queued up yet, Walter Kemmsies?

Rick Gabrielson: Walter’s question got answered, he said.

Rick Blasgen: Oh, okay. All right. Any other…

Coordinator: And I currently have no other questions in queue.

Rick Blasgen: Okay. All right. Anne, any closing thoughts then?

Anne Strauss-Wieder: I think we’ve heard from the questions just how persuasive an argument there is to focus on workforce. And look forward to hearing about some of the best practices and the opportunities and sharing those with some of the organizations who’ve been on the phone with us today.

I did also want to note that the labor unions are a part of these conversations as well. And so it is very much a group effort, a team effort thinking through how to get the workforce we need to fill these open positions. And again, a tremendous opportunity as people really think through, as they pivot in their careers right now, how can we market these opportunities; train them up; and get them into the jobs we need?

So Rick, Rick, and Rich, thank you so much again. And thank you very much to the subcommittee.

Rick Gabrielson: Great. Thank you, Anne.

Richard Boll: Thank you, Anne.

Rick Blasgen: Rick, let me turn it over to you to introduce our next speaker. I know you’re close to this effort. I thought you might want to comment on the presentation.

Rick Gabrielson: Yes. Thanks much, Rick. I certainly will. And maybe while I’m doing that Rich, if you would get Thomas connected and hooked up that would be great. I see he’s online, but I think he’s (unintelligible). So maybe you can get him hooked up.

Richard Boll: Yes. Sandy, can you take care of that for us?

Coordinator: I’m sorry, what was that?

Rick Gabrielson: Thank you.

Richard Boll: Thomas Bagge, can you…

Coordinator: His line is open.

Richard Boll: …hook him up or…

Coordinator: He’s in the speakers’ conference.

Richard Boll: Okay. Thank you.

Coordinator: And his line is open.

((Crosstalk))

Thomas Bagge: Thank you very much. I am here. So thanks…

Rick Gabrielson: Okay.

Thomas Bagge: …Rick and Rich.

Rick Gabrielson: Let me just tee up a couple of thoughts or comments before I turn it over. One of the things that came to light during the pandemic was a real opportunity in need, to be able to share information back and forth between different groups. Gene’s talked about it a number of times.

It really brought the highlight, you know, lack of visibility and connectivity, (unintelligible) a lot of shippers. And Thomas is here today with DCSA, Digital Container Shipping Association, to go through and talk about the standards and the need for standards. And (unintelligible) probably and I know (John Bowman) (unintelligible).

But the banking industry is very fragmented as is the ocean container shipping group (unintelligible). And banking went through and developed what we call SWIFT, not enabling you today, if you’re banking (unintelligible) you go to any bank or any restaurant or establishment and it’s all universal. And they did that through standards.

And what Thomas and the team are focused on is to go through and begin to work at putting that foundation (unintelligible), develop those standards that enable you to build upon that, to be able to have a lot of connectivity improving (unintelligible) through the efforts of the (unintelligible). So I’ll turn it over to Thomas and let him talk to the team. Thomas?

Thomas Bagge: Thank you very much, Rick. And thank you very much for the opportunity to speak today. I just have a sort of a question regarding my slides. I am not able to share them using the WebEx app, ESO. So hopefully if you haven’t received them already we’ll make sure that they are circulated afterwards.

But let me just start out by acknowledging the unsustainable and very painful situation that is seen multiple places in the U.S. regarding supply chains. I can only imagine the impact that has to trades and local businesses all over, in the conditions that we see especially on the U.S. West Coast but likely the ripple effects that we see throughout the U.S.

As Rick said, my name is Thomas Bagge. I am the CEO of Digital Container Shipping Association. And we are an association that’s made up of nine of the ten largest container shipping carriers in the world and we represent about 75% to 80% of the world’s containerized trade.

And our work is essentially as Rick mentioned in his introduction, our role is to make sure that digital, or let me put it in another way, that the digital leg of the container industry that we try and bring them up to the level that we see with telco, with banking, with retail, and with so many other industries.

And I’ll be sort of fairly blunt in my comments about the industry and I hope you appreciate and just the confidentiality of what I’m sharing. We are a traditional industry. It’s not a first mover. But nonetheless, I think it’s more important to be a little bit straightforward about what we believe needs to happen in the industry.

But I’m sure you will also appreciate that I have to go back to my investors and ask for funding from these companies. Just as - before I start, just a little bit about my own background. I spent 23 years with A.P. Moller - Maersk in a number of different positions ranging primarily from finance to mergers and acquisition strategy.

But I’ve also worked very closely with the executive team there for a number of years in setting strategies and rolling out the scaled transformation programs, primarily on digital. I ended my career there in 2019 and I joined the Digital Container Shipping Association of which Maersk owns 25%. And as I said, in a role to bring digitalization to the wider logistics industry but in particular, to the container shipping industry.

If I talk a little bit about the situation in the container industry, the container shipping industry is far behind when it comes to digitalization. And unless something significant changes they will continue to be so because as an industry they spend less than - less on technology than most other digitally advanced industries.

There’s been let’s say some promising developments as of late. I think we see many jurisdictions that are trying to promote in the wake of COVID-19, a larger acceptance of digital documents and not only having physical documents.

So we are seeing some promising developments and we are also seeing that maybe in the more commercial which we of course cannot work in as a carrier group, but in getting quotes online, getting space, equipment, guarantees. But the day to day management remains very labor intensive. It is expensive and it delivers far below par on customer experience compared to the more digital industries that we know of.

And that’s what made five of these carriers come together and establish our association in April of 2019. As such we are a carrier funded organization, which is difficult because I have to push them hard enough to make progress but not hard enough to be let’s say, they have to be able to follow what we do as well.

And therefore, what we try to do is we work with a large number of shippers all over the world; we work with ports; we work with intermodal providers to see whether we can’t create an economic or sorry, a logistical and economic ecosystem that sort of revolves around the standards that we do.

And if I talk a little bit about our vision for what we do, you know, our goal is to enable the digitalization of global trade at a macro level. And we do that by creating syndicated solutions that all of our members are committed to implementing.

So the way we work is we have a stand in the organization, but we work on a number of different topics - be it cybersecurity; be it the electronic documentation; be it just in time port call; be it the enablement of smart containers or IOT enabled containers. And all our members they come to these workshops with subject matter experts to contribute.

And then on the side we work with large technology service providers to the industry, like, Oracle and IBM, Tradewind in New York and of course many, many, many others. And one example of the work we’ve done is we’ve created a track and trace API that works for all nine member companies that might be very benign considering that we all trade our passes online every day. But nonetheless in the container shipping industry that is in fact a huge step forward whereas a U.S. container shipper you would otherwise have to have nine individual connections with those carriers.

So the hope of what we’re trying to do here is trying to foster a digital status similar to what we’ve seen with Swift in the creation of the i-band codes which essentially enables us to do banking from home or similar to what we’ve seen in TELECO that allows us to bring our phones all over the world, download our messages when we were allowed to travel. It is the same principle that we are trying to do here.

And on the call – on the matters of cybersecurity maybe that is a particular interest to our carriers. But that is of course a more internal fix for some of the things where I noted from the agenda you have the U.S. and customs and border protection agency as well on your agenda. And I could, you know, this is one of the agencies that we are working with to say the combination of an electronic documentation and smart containers would be a vast benefit to them in their targeting process for identifying containers that have been open outside permitted areas in the supply chain.

So that’s the highlight of what we are trying to do with our association and with that I’ll just open up the - maybe to Rick if you want to give any additional comment to our work or of course I’ll be more than happy to take any questions you have.

Richard Boll: You’re on mute Rick.

Rick Gabrielson: Sorry I didn’t want any feedback on my phone. Let’s go through and take some questions first and then I’ll do a wrap up when we’re done Thomas.

Thomas Bagge: Okay.

Rick Gabrielson: Sandy could you please open up the Q&A please for us, thank you. Sandy.

Coordinator: Thank you. We would now like to open the phone lines for any questions. If anyone does have a question please hit Star 1, unmute your phone and record your name when prompted. Again that’s Star 1 to ask a question. One moment to see if we have questions. And it looks like our first one is from Brandon Fried your line is open.

Brandon Fried: Hi and Thomas thank you very much for coming and addressing the committee today. You know I represent the airfreight borders. And we have always been challenged in our side of the business with coming to a digital standard and wrestling with the automation issue. What have been some of the impediments on the ocean side that these maritime companies have been experiencing? What are some of the challenges that you’re going through right now?

Thomas Bagge: Thanks for the question Brandon. I think frankly there’s quite a number of challenges. I think there are some dynamics in the industry that’s very different from airfreight in the sense that we represent 80% - 75 to 80% of the gold transportation but that’s only nine players. In the airfreight industry I’m not quite sure how many members are out there. But of course it’s different dynamics.

And there has been a tendency because they are so asset heavy these companies that they must fill their vessels at any cost necessary. And that has traditionally meant any commercial deal you can strike is acceptable. And that’s probably why we see such huge problems on demerge and dissension because you can – for many of them you can try any commercial deal.

And that has led to a very, very fragmented system landscape, no standards which is really the underscore of all of what we’re talking about today. And therefore that’s been – you need really a coalition to move. And because some of them sit with fairly market shares they have simply been putting each other, you know, in check if you will. I don’t know if that makes sense to you Brandon. I hope that answers the question.

Brandon Fried: It does, thank you.

Coordinator: Our next question comes from Walter Kemmsies you may go ahead.

Walter Kemmsies: Thank you. Can you hear me okay?

Richard Boll: Yes.
 

Thomas Bagge: Yes.

Walter Kemmsies: Okay. So two questions. The first one is which of the top 10 carriers is not included? And the second question is in reference to the financial pandemic of 2008, 2009, it really hurt the freight movement industry and many owners of cargo because, you know, banks failed. You know Wall Street, all the banks went under. In Europe a large number of banks went under. We all had to go in and give them billions of dollars just to get them back on their feet. And one of the consequences is we didn’t have enough capacity to issue letters of credit so that things could be put on ships, like, cars and containers.

Is there some way to put the currency element or are there plans to consider if we do CSA and kind deter us a little bit about not having another, you know, financial crisis taking everybody out at least in our industry? Thank you.

Thomas Bagge: Thank you for the question Walter. So to answer your first question the carrier was not part of our association is Costco from China. What we do I should stress – I should have stressed that in the opening is all our work is open source. And it is available to anybody that wants to download it whether you’re a programmer and you want to go on Schwager or (unintelligible) or whether you just have an interest you can go on our website and read it. You know our interest it is genuinely, you know, a wish to digitalize the industry. And that’s, you know, everything’s for free.

So Costco we hope of course the day too will look at what we do and to try to (unintelligible) this industry. And in respect of your second question I absolutely recognize and recall the problems of the financial crisis. As such maybe I should say that we work very closely with the International Chamber of Commerce because we know that the letter of credit process which was also challenged during COVID it is absolutely essential to world trade. 
So I’m not sure how we can from our association help mitigate banks going on because I think there’s many separate initiatives on making sure that they straighten that down the sheets and so on. But I would say that I think we have a really, really good working relationship with the International Chamber of Commerce. And they are very supportive of our industry to the point that we are talking about being on each other’s governor’s box.

Walter Kemmsies: Thank you very much. That’s very encouraging to hear.

Coordinator: Next question comes from Gene Seroka you may go ahead.

Gene Seroka: Gene Seroka Port of L.A. Thomas good to have you with us today, thank you. We have a lot of the same thoughts. About 90% of all the cargo that comes into L.A. is now digitized through our port community system. It took a lot of effort but also incentives to drive behavior to get folks to join. Most of them were really scared about us selling data. Haven’t sold a character yet. But we too, like, you believe in setting standards so no matter who the underlying service provider company, et cetera, they’re happy to join and understand what ultimately our mutual customer wants to see and how they can best be enabled in their supply chain.

It’s my conviction that we would not be in as bad of a shape here in southern California if we had more participants in digitization. At its worst point we had 40 ships offshore, supply chains clogged up for various reasons. But nobody’s talking to each other other than being real nice publicly. We’ve been working with (Henning) a lot your COO especially through the OECD. What can we do better to engage with your organization to see if we can proliferate this great opportunity because we cannot let this crisis go to waste?

Thomas Bagge: Thanks for that question Gene and thanks, you know, for engaging with OECD and the team in Paris and (Henning) on these things. So I really believe in the fact that we need to create some outside pressure. As I said in my opening these companies are complex. One thing is that the CIO sit on my supervisory board. They fought me but that doesn’t necessarily mean that their commercial or their operational teams are willing to report everything we do.

So that’s partly why we are working with the shippers to see if we can’t unite. And I think frankly from a port – from a terminal operation or a port authority standpoint there is also something we can do to put pressure on the carriers to harmonize the way they work because I only think if we stand united that we can make this happen. There is no, you know, Hamburg coming alone or Amsterdam coming alone or the Port of Long Beach or L.A. coming alone. It won’t – they are big companies and they’re complex companies. So I frankly think that we have to sort of unify the port – the terminal operators as well which we are trying to do and also bring them into the game.

Gene Seroka: Great, thanks. Well work with you on that as well. Absolutely tops thanks.

Thomas Bagge: Thanks Gene.

Rick Gabrielson: Other questions?

Coordinator: At this time there are no additional questions in the queue.

Rick Gabrielson: Okay great. Let me do a quick wrap up if I could and then maybe some last words from Thomas. But, you know, you mentioned it’s open source. And I had to cut out for a little bit. But I wanted to stress that they are platform neutral or agnostic which is really important. And Gene he asked a great question what can we do. The ask that I would have is got to change behaviors, got to increase awareness. There’s a real opportunity whether you are a port or terminal operator, a shipping association or an actual shipper themselves. To create that awareness and that’s to get to the commercial teams at the carriers asking questions about digitization and what they’re doing and what they know about it. And don’t be surprised if some of them may not, you know, be real familiar with it because they may have been focused in other areas right now.

But begin to hit that drumbeat as I call it and to create the awareness and reasons for why we need it – to share that information. You said it best Gene where, you know, we had the crisis and let’s not let it go to waste. This is a real opportunity to really change the industry. Thomas I’ll turn it back over to you for any closing remarks.

Thomas Bagge: Thanks Rick. Well I’ll just go by thanking everybody for the opportunity and for the questions. There’s a massive opportunity. I frankly – I haven’t been more optimistic about what’s going on in the container industry. And I’ll say that in spite of the current issues there has never been so much collaboration as we have seen in the past 24 months of our existence.

I spent 24 years with Maersk and I saw very little. What I see now is that there’s a willingness. But I also see that there’s a need for outside pressure whether it is governmental bodies especially the customers but of course also terminal operators, port authorities and so on. So I really just implore everybody to join in. And I’m sure I’ll share my contact details in the deck that I plan to present as well. And thanks again for the opportunity.

Rick Blasgen: Well Thomas thank you. We appreciate that and Rick thanks for bringing it to the forefront. It’s a good topic and I’m glad our committee is taking a look at that. So I’m sure we’ll continue to get updates on the process and the progress. Thank you. Next up Nellie Abernathy who is the Deputy Director for the Office of Policy and Strategic Planning here at Commerce. Nellie I believe you are with us and we’ll turn it over to you. Well Sandy if we can release Nellie Abernathy to speak that would be great.

Coordinator: She should be able to now.

Nellie Abernathy: Can you hear me?

Richard Boll: We can. Thanks Nellie.

Nellie Abernathy: Excellent. And is there a way – do you have authority to release my video as well or is there something I need to do on my end?

Richard Boll: Sandy any way for her to share the screen?

Coordinator: Just one moment I will find her and make her a presenter and…

Richard Boll: Terrific.

Coordinator: …she can upload it and…

Nellie Abernathy: Oh excellent, thank you so much.

Coordinator: There you go, you’re welcome.

Nellie Abernathy: Can you see my deck now?

Coordinator: You need to go down and hit share. Do you see it along the bottom and then upload your screen.

Nellie Abernathy: My deck doesn’t seem to be working. I’m sorry to make everyone…

Richard Boll: There’s a little box there Nellie at the bottom.

Nellie Abernathy: Yes it just actually disconnected me from WebEx when I tried to share. So now I think I’m just on the phone only. Apologies.

Coordinator: We show you still not – no you’re not. I show you still on Nellie.

Richard Boll: Yes I do as well. So maybe somebody could move the presentation.

Nellie Abernathy: Yes I will email the deck to you right now Richard.

Eugene Alford: Hi this is Eugene Alford. Sandy if you give me back the lead on this I can share…

Coordinator: Okay.

Eugene Alford: …it.

Nellie Abernathy: Okay. Well anyway I’ll share this and they can, you know, we can catch up as need be. But thank you so much for inviting me to speak today. I am dual headed at the Department of Commerce and the National Economic Council. And the focus of my work has been on the manufacturing industrial base and specifically on supply chain resiliency. And we have – I’ll walk through a couple of high-level initiatives that we are working on at the NEC and include partnership with commerce.

But I wanted to start and I don’t know if you can see the slides at this point but I’m on Slide – what’s called Slide 3 on why supply chains. And I don’t think I need to really spend much time talking to this group about why we’re concerned with supply chains. The COVID crisis obviously highlighted many vulnerabilities in our supply chain. But the reality is that these had been - I’m sure many of you certainly many of us had been concerned about these vulnerabilities long before the COVID crisis revealed them to the broader population.

And what our concerns are focused both on economic and national security. But also the longer term – that we have seen the challenges that arise when there are shortages. But also the longer term loss of innovation and manufacturing capacity in the U.S.

So what are some of the challenges that we’ve identified? Of course it’s the consolidation outsourcing and offshoring of some of our manufacturing capabilities. One thing we’ve seen create challenges in the COVID pandemic is the just in time inventory practices just didn’t give us a lot of wiggle room. Declining investment in domestic manufacturing capacity particularly amongst SMEs. And then the climate related in geopolitical threats. So those are very high level. There’s many other challenges and I’m hoping to hear from you.

But then also this administration is viewing numerous opportunities in shoring up our supply chain. There’s of course the National Security and Economic Security Imperative that were revealed in the crisis.

Eugene Alford: Yes and she didn’t specifically say too – she said yes okay.

Nellie Abernathy: Sorry did someone have a question? Okay. But we also think there’s a huge opportunity to increase our domestic competitiveness. And to support good paying jobs with strong labor standards, broaden geographic investment, grow some of our small, medium and minority owned businesses and also advance clean industry. So there’s risks and challenges here but also lots of opportunities.

I’m going to move onto the next slide. And just to ground the conversation I have found it incredibly useful to review the recommendations of this committee that came out in July of 2020. And they’re very much aligned with our work. So I’m just putting them up here in case anyone wants to – needs a reminder around the kinds of actions that should be taken to immediately address recovery and resilience. And that report was very helpful, thank you very much. We have used it to help define some of our next steps in the administration.

So I’m going to go to the next slide. One of the first actions I think it was late February that the president tucked through Executive Order 14017 was to do the work suggested of identifying critical products and risks in critical sectors. So he directed an interagency group to conduct 4, 100-day reviews of key products that include pharmaceuticals and active pharmaceutical – sorry that should say ingredients not agreements. That’s being run by HHS and FDA. Critical minerals including rare earth. That’s being run by the Department of Defense. Semi-conductors and advanced packaging being run by the Department of Commerce. And large capacity batteries such as those used in EVs. And that’s being run by DOE.

And in each of these reports the agencies are tasked with identifying mapping the supply chain, identifying key risks and vulnerabilities and making a series of recommendation on how we might address or mitigate those risks. These are product specific and they were designed to be an essentially quick and dirty analysis to provide us with direction to take the actions immediately. So I have seen the work. It’s excellent. It’s not going to tackle all the challenges in the supply chain for each of these goods in terms of some of the inputs or distribution obstacles. It’s not going to necessarily do the deep dive on the structural factors underlying the shortages. It’s not what they’re designed to do. They’re going to provide a roadmap for how we can proceed in the short term.

Then we have these one-year reviews of six sectors. And these will really take into account the broad range of factors including transportation and logistics, distribution, each step of the supply chain within these sectors. And some of the longer-term drivers that have caused vulnerability and risk. And these one-year reviews cover six broad sectors – the defense industrial base, public health and biological preparedness industrial base, information and communication technology industrial base, energy sector, transportation sector and food and agricultural commodity sector.

In addition to directing the interagency to conduct these reviews the executive order also directs the government to commit to a regular at least every four-year review process of supply chain resiliency. So this is a long-term exercise not something that we view as we do it in response to COVID and then we’re done.

Which brings me to another key tranche of work that the administration is thinking about in terms of shoring up domestic supply chains. And that’s making the critical investments we need in areas where we know we have weaknesses. And again I think this maps well with some of the recommendations from this committee. The American Jobs Plan directs a significant amount of investment towards key supply chain priorities that include transportation, infrastructure. It also includes manufacturing and supply chain preparedness more broadly and then of course workforce development that can be complementary to both those two sectors identified above both the transportation infrastructure and the manufacturing sectors.

Finally I wanted to take a moment to dig into one of the proposals in the American Jobs Plan which is the Critical Supply Chain Resiliency Program because it’s just so directly targeted at the challenges and opportunities this committee is concerned with. The administration has proposed a new Office of the Department of Commerce that would coordinate across agencies to monitor and invest in critical supply chain gaps.

So again there would be two functions there. One is really a monitoring function to continue the kind of analysis that we’re doing the supply chain reviews that I mentioned. And work with the private sector to identify what might be the right measures or metrics for supply chain resilience and provide that kind of insight for both the private sector and the government into where we think there are weaknesses. So we don’t just have to wait for the next crisis to reveal our vulnerabilities but rather we can proactively identify areas of vulnerability and then build in capacity again proactively.

The second function is more of an investment function or where we would anticipate partnering closely with the private sector to address the vulnerabilities identified above whether that’s through low-cost financing and investment mechanisms or suggesting demand side policies to support domestic or diversified international investment or investing in technical assistance and workforce training. We do see these two functions working closely together.

So that is – I’m now on Slide 8 where I just have a couple of questions that I would love to hear feedback from this committee. But I also welcome any questions for me. One of the recommendations from the committee last July was to introduce incentives to promote domestic production. And we are thinking about that question very concretely right now. And I would love to hear any feedback on what kind of incentives would be most effective.

And then I also would love to hear from you the best way for us to engage the expertise here on an ongoing basis. These are not just 100-day reviews. These are going to be priorities for the administration, for the president, for the commerce secretary for the foreseeable future. So I really view this as the beginning of a longer-term conversation.

Thanks so much Richard and Eugene you should just let me know how to turn it back to you.

Richard Boll: Well thank you very much Nellie appreciate it. This is Rich and I appreciate your presentation. I know our committee would definitely want to engage with you in the future of course. Do any of the Rick’s have any questions and we can go to questions from the committee as well. Would that be okay for your Nellie?

Nellie Abernathy: Absolutely. I’m just sorry I can’t see you call but please go ahead.

Rick Gabreielson: Rich I’ve got one maybe quick question and Nellie I don’t pretend to have all the details on this. But a lot of years ago Puerto Rico was very large into producing pharmaceuticals because there were incentives never put in place. I don’t know the details of what they were but they were fairly effective. And it was, you know, near shore and it was very effective. Is that a possibility to go back and relook at what happened back then and to see if that’s an opportunity to replicate some of those kinds of incentives to see if it would make sense as a way to bring part of that pharmaceutical industry back into the U.S.?

Nellie Abernathy: Absolutely it’s an excellent point and one that I will take to our colleagues at HHS and FDA. And hopefully they’re already doing that smart analysis. But if not we will certainly encourage them to do so. And then indeed I know how effective it was because one of the risks we’ve heard about is that during Hurricane Maria we did experience massive shortages in critical medicines because of the effectiveness of those incentives to direct the industry to Puerto Rico.

Man: Great, thank you.

Nellie Abernathy: Thank you.

Richard Boll: Another question – open it up. Can we open up the lines please Sandy for questions please?

Coordinator: Yes, certainly. As a reminder to ask a question please press Star 1, record your name so you can be introduced. If you’d like to disconnect the question please press Star 2. So one moment and I’ll bring up the first question. The first question is from Walter Kemmsies you may go ahead.

Walter Kemmsies: Thank you. I really appreciate your presentation. And I’m actually on one of the teams that hopes to be collected by the USDA to review the food supply chain issues that arose during COVID virus. We’re actually – we’re approaching this really well at the public sector level. I have two questions for you. One of them is how are headquartered companies being treated under Executive Order 14017? They do (unintelligible) manufactured in the U.S. and they distribute it in the U.S. but they’re under influence from their headquarters’ home country. And the second are export supply chains going to be reviewed as well because through the pandemic and as well as now exporters have had extraordinary difficulty obtaining containers to put their goods in to sell them to other countries. It’s the main reason why our exports took a hit. Thank you.

Nellie Abernathy: Thank you very much for your questions. And to the first question 14017 is not focused only on domestic production. What we’re really talking about is supply chain resiliency. And many of the pools we will actually be considering include diversifying import partners or collaborating with allies on pieces of the supply chain.

So we know that we’re – it would not be possible not personally do I think it would be advisable to think that we are going to produce everything we need in this country with American owned factories. What we want to do is make sure that we’re not exposed to an inordinate risk because we rely on adversarial nations or, you know, just, like, one single source that can be easily impacted by disruption.

So first I want to be clear on that. Second, in terms of foreign owned firms with domestic manufacturing footprints we really haven’t thought about making a distinction there. And I will be interested to see what the agencies propose.

But for example I can say that one question visa vie semiconductors is if you are saying that you want to make investments in leading edge semiconductor technology, you know, you only have two foreign owned firms that have the capacity at the leading edge right now to produce the most high tech chip. So that might be an area where you would say we want those produced locally. And if it’s going to be for foreign on firm that’s fine.

Walter Kemmsies: Well, thank you.

Nellie Abernathy: And sorry your second question on exports. The initial reviews look at the specific product markets. And then the others will look at the whole sectors. And so in those cases where export markets are relevant we are certainly reviewing that. And I’ll just say another example from the semiconductor industry is the U.S. is exporter of the equipment that’s used in semiconductor factories. And so the export market for that equipment is a critical piece of the supply chain and that is something we’re looking at.

Walter Kemmsies: Great, thank you.

Nellie Abernathy: Thank you.

Richard Boll: Other questions?

Coordinator: A question comes from Leslie Blakey you may go ahead.

Leslie Blakey: Thank you. Thank you Nellie very much for coming to talk to us and I particular am interested in the coordination on the American Jobs Plan because our organization the Coalition for America’s Gateway and Trade Corridors is very, very supportive of the freight infrastructure focus in the American Jobs Plan. We really though want to emphasize that freight infrastructure across supply chains is multimodal and very much interconnected. And needs to be thought of as a system of systems. And one of the problems with the American Jobs Plan as it’s been presented thus far is that it’s very modally focused.

I also want to point out that besides the modal of focus which really of course within the Department of Transportation is the presiding agency over said infrastructure and all the modal divisions in the Department of Transportation don’t necessarily talk to each other all that much. And then added to that is the overly of complication that we need to as we are building transportation infrastructure or improving the transportation infrastructure, we also need to be building in broadband and energy supply.

So I would really like to encourage the Department of Commerce since you are working with other agencies to discuss how the various agencies’ energy, FCC, the various components in addition to the Department of Transportation can develop cost modal applications for using these substantial funds that are in the American Jobs Plan for infrastructure to basically sort of multitask and accomplish a broader approach than just laying concrete for a road or providing for a single modal interchange or simple transportation project. I don’t mean to say really simple they’re not. But we need to be doing more than just one thing at a time.

And so I’m hoping that you by way of a question can talk about how the leadership of the White House can get more coordination among the agencies to provide for the systems of supply chain infrastructure.

Nellie Abernathy: Yes, thank you so much. It’s an incredibly helpful comment. And I’m just thinking as I was making these slides last night and cutting and pasting from various materials to emphasize a few of the investments we’re making in transportation. I unfortunately did not cut and paste the bullet that essentially said something along the lines of doing our transportation infrastructure better right which is to say that the leadership at the White House certainly is as invested in increasing the funding for critical projects as it is in increasing the efficacy of our project planning processes.

It’s not my detailed area of expertise. If you haven’t had an opportunity to connect with folks from the Department of Transportation or from their leadership at the White House, I would be happy to if you send me some materials I can forward those along and see what I can do to facilitate that conversation.

Leslie Blakey: Thank you.

Richard Boll: I think we have Jon Gold as one last question because we are a little bit over our time here and we want to get to Michael and Darren and Ryan so Jon.

Operator: Yes, one moment he’s not queued up so let me open his line.

Richard Boll: Thank you.

Coordinator: One second please. Jon you may go ahead your line is open now.

Jonathan Gold: Great, thank you very much. Rich thanks for the (unintelligible) question. Thank you very much for the presentation. Just two quick things. One, I want to second the comment about for a holistic view of the freight policy. You know this is one of the things that we’ve been pushing for quite a while. We certainly talked to DOT and Congress and, you know, we’ve got to get beyond kind of the still pipe modal approach to this.

And, you know, as witnessing now in the supply chain, you know, things are breaking down at one spot and it’s impacting the rest of the country and there are congestion issues impacting L.A. (unintelligible). And I applaud Gene for everything he’s trying to do out there. But we’ve got issues impacting, you know, the entire supply chain and the whole that breaks down. So having that holistic view is critically important if you’re looking at, you know the plan on how do we make sure utilizing our freight system as efficiently as possible.

The other question I just want to raise on the incentives for, you know, shifting sourcing I think, you know, we all recognize how complex the supply chain is and how difficult it is to shift sourcing around for a variety of reasons. Taking a look at, you know, the current trade agreements we have, future trade agreements, you know, the fact that we have GFT – the (unintelligible) departments in the trade bill has expired. I mean those are all things that help incentivize companies with their sourcing options. Also looking at how do we, you know, reduce some of those programs to allow for other products that might be disqualified currently who participate in those efforts as well.

So hopefully that’s something the administration’s looking at for incentives for sourcing is, you know, indeed to get more free trade agreements but also looking at our current practice programs and how do we better utilize those programs.

Nellie Abernathy: Absolutely and thank you for raising that. These reviews that I mentioned are designed to help us identify a really all of government approach to these questions. To your point these are incredibly complex ecosystems and we understand the investments I highlighted are necessary but not sufficient. We can’t simply provide a lot of loans for manufacturers and leave it at that. We need to think about regulatory policy, demand policy, international policy. And so that’s all on the table. And again I welcome any follow up feedback on how you think we should be moving on those directions.

Richard Boll: Great. Well Nellie let us thank you very much for your time today and your presentation - really good information. As you can see there’s a lot of interest in what you’re doing. So hopefully we’ll welcome you back and you’ll be able to share with us how your progress is going along.

Nellie Abernathy: I would very much appreciate that. Thank you all so much for your time and please don’t hesitate to follow up.

Richard Boll: Terrific. Thank you. And now we’d like to turn it over to our colleagues over at the Department of Transportation and Mike Shapiro, Darren Timothy and Ryan Endorf. Michael I’ll turn it over to you and you can take things from there.

Mike Shapiro: Great…

((Crosstalk))

Richard Boll: Sandy.

Mike Shapiro: Okay.

Coordinator: Yes.

Mike Shapiro: Great. Well thanks so much for the great presentation by Nellie who I know is leading a ton of these efforts on the supply chain at large not only in the Department of Commerce. And there’s a few people who are more thoughtful that these kind of long-term questions of how do we take on some of the challenges of restoring American manufacturing and securing our supply chain creating economic strain.

So speaking I know there was just a question raised about this about the Department of Transportation’s efforts and would love to speak to that. And it really is a priority for our secretary, for our deputy secretary who was kind of concerned earlier this week and across our modes where we’re not only implementing this Executive Order No. 14017 on America’s supply chain. But thinking about the president’s American Jobs Plan as well as related executive orders on Buy American which are obviously interrelated here.

So, you know, obviously as Nellie explained there’s several 100-day reports and then six one-year assessments of critical supply chain. And DOT is tasked with one of those one-year reports assessing supply chains for the transportation industrial base and particularly how supply chains for critical and essential components and subcomponents depend on our transportation system.

We’re currently thinking about the scope of this report and then particularly what elements of the transportation industrial base should cover whether that includes infrastructure construction in vehicles such as cars and trucks, airplane, vessels, et cetera as well as some of the questions that John thoughtfully raised about the supply chain in terms of freight and logistics movement and incorporating that information onto how all of that affects our economic strength and national security.

You know and to that point, you know, we’re intending as I think other agencies have and will continue to do to issue a request for comment in the federal register in the coming weeks to solicit public feedback, stakeholder feedback on the required elements of the assessment as defined in the executive order.

So we really appreciate everyone’s interest in this topic and would like to work collaboratively with the advisory committee as well as the individual organizations as we draft this assessment. And some of the required elements of this report go well beyond our kind of internal jurisdiction. So we’ll definitely be seeking input from other federal agencies as well as stakeholders and the public in completing – in those task areas.

We’re also working to support other federal agencies in analyzing how the transportation system contributes to critical supply chain such as semiconductors led by the Department of Commerce and obviously batteries led by the Department of Energy. We’ve also been closely monitoring the kind of situation with port congestion especially on the West Coast.

And over the past several weeks have been meeting with many stakeholders involved to understand the issues and factors contributing to the current situation and finding out how we can be of assistance in coordination with other federal partners. And we really understand the importance to the overall economy of needing goods and materials through our nation’s ports.

Mike Shapiro: And then on other DOT updates obviously, you know, we’re working, you know, as part of the jobs cabinet on President Biden’s American Jobs Plan which will create millions of good paying jobs and rebuild our country’s infrastructure and position us to, you know, strongly from a national security perspective. That plan invests not only $620 billion across our transportation system but it invests a great deal of money in reshoring manufacturing, basic research and innovation to kind of think about how we can secure our supply chain.

And so as we kind of make a number of the, you know, grants under current law and think about those grant programs within the department, all of that will be oriented towards making our infrastructure more resilient, our kind of supply chains more secure from a national security climate perspective as well. And making sure that, you know, as we’re not only implementing the American Jobs Plan and hopefully passing it through Congress, as we’re issuing funding opportunities for programs, like, BUILD, programs, like, INFRA we’re building in criteria to make sure that they’re supporting projects of regional and national economic significance as well as our overall supply chain.

So we’re really excited to hear feedback. We’re trying to coordinate across modes and get their input into the supply chain process as well as our kind of Buy America executive order implementation as well and really welcome the opportunity to present the advisory committee and are going to be providing continued opportunities not only here but through public comment opportunities and request for comment to have further input as we’re developing these reports.

So really appreciate the opportunity to present. I don’t know if Ryan and Darren who are regular participants have any follow up comments on that but really appreciate the opportunity here.

Richard Boll: Ryan, Darren any comments?

Darren Timothey: No but we are – Ryan and I are both unfortunately Michael’s going to have to separate in just a few minutes. But Ryan and I can stay on longer and address any questions people might have.

Richard Boll: All right. With that let us open it up for questions. Do you have any questions for Michael or Darren or Ryan from the group?

Rick Gabrielson: Hey Rich this is Rick. I’ve got one quick one while we’re meeting…

Richard Boll: Yes.

Rick Gabrielson: …for either Michael, Darren, or Ryan. Knowing that we likely have more projects than we will have funds to support even though it’s a large number, how do you go through or have you given some thought to how you go through and prioritize those regional or national projects of significance in order to fund and support those projects that have the largest economic payback?

Mike Shapiro: It’s a really good question and it’s something we deal with in both our existing grant programs, like, INFRA and BUILD which was recently, you know, previously known as TIGER and recently updated to be called RAISE which is focused, you know, on climate and equity. And then also as folks may know the American Jobs Plan calls for transformational projects that would fund projects that are too large and too complex for existing programs.

And the motivation for that is that those programs BUILD and INFRA are tremendously oversubscribed. Believe that since 2009 when they were, you know, initially created for example the TIGER and BUILD Program has had about $175 billion worth of applications and only given about $9 billion worth in grants.

So I think we look at when we’re either thinking about how we refine the criteria for those programs or create new programs like this one for transformative projects that are kind of interstate or more complex than the BUILD and INFRA Programs take on. As we create the criteria regional or anything of national economic significance is a major priority there.

And thinking about the impact on congestion, the impact on freight travel, the impact on the ability of a kind of really important project to transform the economic competitiveness of an entire region or the entire country is something that we really focus on. You look at certain bridges or certain project supports, you know, as much as, you know, 3% of GDP might go over kind of critical bridges. And that’s what we look at when we’re talking about kind of economic significance.

I think another set of principles that we like to build into – that we like to build into all of our programs is just a focus on some of the core values of the Biden Administration and the Transportation Department around, you know, our first priority being safety. Also focusing on climate and resilience. It’s Earth Day today and, you know, making a significant impact on that so we’re future proofing our transportation infrastructure and supply chains for climate change is really important.

We also look at a focus on equity and making sure that everyone’s kind of benefiting from these major investments that we’re making. And we also focus on innovation and transformation both in project delivery and, you know, some of the innovations that we’re incorporating to have the performance in these projects.

So those are kind of some of the criteria both in the existing programs and the new ones we’re proposing in the American Jobs Plan to make sure that we’re, you know, kind of investing in the most impactful projects going forward and really appreciate the question, thank you.

Rick Gabrielson: Other questions from anyone on the committee? Sandy have you set up for the questions please?

Coordinator: Yes, thank you. If you’d like to ask a question please press Star 1, unmute your phone and record your name. If you wish to withdraw your question, please press Star 2. One moment while we wait for the first question to come in. Our first question is from James Cooper you may go ahead.

James Cooper: Actually my question was for the last speaker. I’m sorry I should have pressed Star 2.

Coordinator: That’s fine. We’ll just go to the next one. The next question is for Leslie Blakey you may go ahead.

Leslie Blakey: Yes, hi Michael, Darren and Ryan. This is Leslie Blakey from the Coalition for America’s Gateway and Trade Corridors. And really appreciate you all coming to speak to us today. One of the things that – I just asked this question of the last speaker because and I’m going to repeat it because I think it’s very, very important that there be a great deal of cross agency, cross departmental communication and coordination as you all put together the American Jobs Plan and the resources that it brings in order to achieve multiple policy purposes with that funding.

Things, like, co-location of broadband infrastructure along transportation right of ways for example which requires a great deal of coordination and the same thing applies to co-location of electrification lines to provide for heavy vehicle charging infrastructure along transportation right of ways and as we’re building transportation facilities.

As the Canadian Department of Transportation TransCanada once said to our group it costs a lawyer a mile to do this kind of work. And we really need to have federal government leading in helping states achieve the multiple needs along with transportation infrastructures we build.

So I want to ask that you work with the White House and across agencies to facilitate and simplify the process which brings me to my real question next. I mean I’d love for you to comment on that. But also our group for at least a decade now has been recommending the facilitation by the White House and by the U.S. D.O.T. in speeding permitting especially for supply chain infrastructure projects. And a great deal of progress has been made. We’ve given recommendations to the Department of Commerce on this before.

A great deal of progress has been made on this. But I do not want to sound at all like I am ignoring the imperatives of the climate. But it’s really important as we push for better outcomes climate wise that we not back slide on permit of processing and reviews that go through quickly can be accomplished with a very speedy timeframe in order to get these projects in the ground.

And the Obama Administration started a dashboard for project permitting which is a great step. The last administration also put an emphasis on permits – the seed of permitting. And so we just want for you all to make sure that that voice is really heard in the processing of transportation project permitting as well as other types of electrification and broadband and other types of infrastructure that needs to go through concurrently.

Ryan Endorf: This is Ryan.

Rick Gabrielson: Thanks for that input, appreciate those thoughts. And certainly the administration has outlined a very aggressive plan for investing in American infrastructure. And we’ll be looking for ways I think to really be able to accomplish all these goals simultaneously of protecting the environment, ensuring equitable access to our nation’s transportation and our nation’s future really while also moving very strongly forward in delivering these projects.

Ryan Endorf: I think – this is Ryan. The only thing I would add in response to the first points you made I think is that the supply chain EO I think is a good example that’s going to require a lot of interagency collaboration. I’m thinking specifically about our particular report on the transportation industrial base. Certainly we have some background on that. But particularly in the manufacturing let’s say the automobile industry we’d need to definitely be working closely with the Department of Commerce. We met with them for this week as well as other agencies to make sure that we have some of that insight that we, you know, traditionally have in house. And similarly I think as other agencies are working on their one year reports, you know, they’re going to need to comment on how the transportation system impacts the supply chains for those critical and essential goods and so we need to stay working closely with them as for other types of products as well.

Man: Thank you, any final questions from the committee? Any…

Coordinator: I have one more question on line.

Man: Okay.

Libby Ogard: Hi this is Libby Ogard with Prime Focus LLC and I wanted to know if there is any effort or thought put into creating a dedicated funding source for the expansion of truck parking. I know truck parking tends to be something that the states done as opposed to Feds but was wondering if it might be carved out or have a set aside designation within the job/infrastructure bill.

Man: Well that’s certainly an interesting idea. I think we’ll - I appreciate that input and I’ll be happy to take that back and, you know, present that to folks in the department.

Libby Ogard: Thank you.

Coordinator: There are no additional questions in the queue.

Man: Well thank you and Michael, Darren and Ryan I want you all for your continued collaboration with us. It’s important that we maintain these strong relationships to accomplish both of our missions so on behalf of our committee we thank you guys.

Man: Thank you for having us.

Man: Thanks everybody.

Man: So Rick we’re a little behind, only eight minutes but let us turn it over to you for the freight movement committee.

Rick Gabrielson: Thanks hopefully we can make up a little bit of time. Everybody should have received a copy of the recommendation that our subcommittee had been focusing on and put together for your review. We did not get any feedback on it but essentially what we have focused on is the pandemic and Covid-19 really illustrated the importance that all of our ports and own gateways have, you know, for all commerce in the country and global freight movement.

Any, you know, disruptions that we see in that certainly has got an impact and I think it’s fair to say that in a number of our gateways where we’ve been challenged with labor because of Covid and other factors it does have an impact on it and we certainly can’t afford our economy to have. So we have put together a recommendation that the secretary shared with the president that focuses on ensuring there’s a priority given to front line workers that serve our ports and all gateways frankly. And that they’re fully vaccinated against Covid so that’s longshore, it’s warehouse, it’s truck drivers — it’s all of those connections, it’s airports.

And so we’ve put that recommendation together and again it was approved. And then unanimously by the freight subcommittee and we wanted to present it to the full committee to look at this, adopt it and then move that up to the secretary. Any comments from anybody?

Man: Sandy can we do the Q&A is there for us thank you.

Coordinator: If you’d like - as a reminder to task a question please press Star 1, unmute your phone and record your name. One moment while we wait for any questions to come in.

Our first question comes from Walter Kemmsies, you may go ahead.

Walter Kemmsies: Yes Rick just in the last few days the - getting the vaccine has been opened up to the entire country. I haven’t had the chance to review the wording but are we emphasizing the use of this - just making sure that the supply is plentiful available where these guys so they can now, you know, get the vaccine without restrictions.

And secondarily it would occur to me later is that we wanted to make sure that the person that, you know, keeps these guys is priority because, you know, we can’t have another wave come this winter according to the CDC.

Rick Gabrielson: Thank you Walter. In our letter we do talk about e-surge that would take place, would have an impact. And that while states are responsible for administering it as we all know it is a priority given to our ports and gates eventually as is critical workers. So we definitely want to cover that too.

Walter Kemmsies: Okay great.

Rick Gabrielson: Other questions?

Coordinator: This time there are no further questions but one moment I think there is one coming in. Our next question is from Michael Podue, you may go ahead.

Michael Podue: Yes good morning everybody, Mike here. Hey listen I Rick and Rick and the whole subcommittee you guys did great work on this letter. I just I mean for us here on the West Coast it’s been a priority from the onset of the coronavirus breakout and, you know, we’ve been on this. It’s good to see we need this across the country though here on the West Coast with the help of Gene Seroka and Mario Cordero, the city and LA and Long Beach.

You know, we were able to get the vaccine for all of our members here on the West Coast. So but I think for on the national strategy this is long overdue and I just wanted to give you guys praise for doing the good work in putting this letter out, thank you.

Rick Gabrielson: Thanks Mike we appreciate it. And I know that Gene and other, Roger and others are doing everything that they can to take care of the workers at the ports so thank you much.

Michael Podue: Yes (unintelligible).

Rick Gabrielson: Other comments before we call for a motion to vote?

Coordinator: There are no additional questions in the queue.

Rick Gabrielson: Thank you so Rich procedurally do we call for a motion to adopt this and then how do we vote with and given our side of it.

Richard Boll: And Sandy is there a way of doing a vote through this process or how does that work?

Coordinator: I can open all the lines if you’ d like.

Richard Boll: Do you want to do that? How about we open up all the lines, is that the way you think we should do it Rick and then just get votes from the members?

Rick Gabrielson: (Unintelligible) yes just call for a quick vote and then go from there.

Coordinator: Okay one moment please while I open the lines.

Coordinator: All the lines are open. If you - please remember to mute yourself if you’re not speaking to cut down on the noise but all the lines are open now.

Rick Gabrielson: Thanks do we have a motion from someone to adopt the letter as written?

Brandon Fried: Yes this is Brandon Fried, I’d like to make a motion to adopt the letter as written.

Rick Gabrielson: Thank you Brandon. Do we have a second.

Walter Kemmsies: This is Walter Kemmsies I second it.

Rick Gabrielson: Thank you Walter. All those in favor say aye.

Group: Aye.

Rick Gabrielson: I love the delayed response. Any opposed? Great thank you much for everybody on the committee and the group that worked on this. I think this is a very important recommendation that secretary can send up to the president. So it’s well needed so thanks much everybody. And with that if you want to re-mute those that we need to Sandy we can do that and then I can cover the rest of the items that our subcommittee began.

Coordinator: They’re all - they’re back on mute.

Rick Gabrielson: Cool thank you. You know, it’s really interesting that the conversations that we’ve had today, you know, especially on American Jobs Act kind of dovetails into the things that we felt as a subcommittee that we wanted to focus on (unintelligible) engage probably parts of the broader committee because it is pretty expansive. But let me try to walk through these, the ones we’ve got identified so far.

Under the American Jobs Act and this is one that (unintelligible) that I thought, you know, she covered part of it earlier in the comments that she was making to one of our speakers but its, you know, infrastructure recommendation specifically tracks supply chain infrastructure, freight infrastructure but along with how all the systems are interconnected. And there’s a relatively small window of time in order for us I think as a group to get together and make some recommendations that we can send up so time is of the essence. But that’s one that we are focused on as a group is pretty broad but we think we can take a stab at that.

On the export front Gene teed it up with our D2 subgroup but looking at what we need to do to stimulate exports growth including infrastructure and centers to help support that growth. So Gene teed that went up.

One that we have brought up before is in one of our former white papers but I think there’s a renewed interest in trying to go through and how do you make the U.S. competitive. And so whether we need to do (unintelligible) territories (unintelligible). Example (unintelligible) on pharmaceuticals (unintelligible) topics.

Walter asked what lessons do you learn from the pandemic, you know, the fragility of our supply chain and what steps do you take from it now to learn from that. So in the event that we have some of the black swan that takes place that we haven’t thought of yet we’re in a much better position from a ground preparation standpoint.

And then one that Jim had recently brought up that the team hasn’t talked about yet but we’ll talk about in our next call is chassis. And if we (unintelligible) with chassis in the U.S., some of those types of tariffs is there a role that we can play within that arena. And I’ve not talked with Jim yet, he just sent it to me because he wasn’t able to make it today but I wanted to go through them and at least recognize that that came in from the subcommittee.

So a lot of new topics that we’re focused on and I think the conversations that we had today with the secretary and others I think highlights the fact that I think we’re going in the right direction. Questions by anybody or comments or thoughts? And if not we can break for lunch.

Rick Blasgen: All right thanks Rick, thanks everybody. It was a great morning I think, I believe so and I hope that you all agree. But appreciate everybody’s participation. We are scheduled to be on lunch break here until 1:00 pm Eastern Time so with that we’ll look forward to hearing from our other speakers who are on the agenda there. So thanks everybody and we’ll see you back here at 1 o’clock Eastern Time.

Rick Gabrielson: Thanks much.

Man: Thank you.

BREAK

Man: Hello Sandy are you still on?

Coordinator: You’re welcome and you may begin.

Rick Blasgen: Well welcome back everybody, hope everybody had a good lunch. Again we’ve got a really great agenda ahead of our afternoon here so without any further ado let me turn it over to Omari Wooden and Kiesha Downs. Omari and Kiesha take it away.

Omari Wooden: All right thank you very much and good afternoon. As stated my name is Omari Wooden. I oversee the data user and data respondent outreach at the U.S. Census Bureau which in summary is I oversee a lot of the training webinars that we put out for businesses that we also specifically for this call put out for the trade community.

I also work very closely and I’d like to introduce but many of you already know Kiesha Downs, she is the Chief of the regulations area so when it comes to regulations, anything that comes out with foreign trade regulations her office is pretty much responsible for that. So when it comes to voluntary self-disclosures, national interest and terminations, questions about the regulations she is the expert in that particular field. So she is on the call with me as well today so I just wanted to also introduce to some and share with many.

But what I will do is today I’m going to be discussing the status of the Puerto Rico advanced notice of proposed rulemaking as it relates to the EEI, electronic export information filing requirements between the U.S. and Puerto Rico and U.S. and Virgin Islands. So what I wanted to do was give a status of that notice of proposed rulemaking, give you some input on the information we received and also give you all an opportunity to ask questions if you have any. So I’ll go ahead and get started.

So as stated the notice of the advanced, let me be clear, the advanced notice of proposed rulemaking for electronic export filing information filing requirements between the U.S. and Puerto and the U.S. and Virgin Islands solved a particular goal of this advanced notice of proposed rulemaking was to receive public comments on the possible removal of the filing requirement for shipments or movements between the U.S. and Puerto Rico and the U.S. and the Virgin Islands.

So as it exists today under the Foreign Trade Regulations movement between these different locations is required to be reported in the automated export system as an electronic export filing information record. So what this advanced notice was to do was to receive or to request public comments from the trade, from organizations, from anyone interested in the impact of the filing requirements between the U.S. and Puerto Rico and the U.S. and Virgin Islands.

And that’s exactly what we wanted to do, we wanted to get input from not only the trade community we wanted to give impact from government agencies, we wanted to get thoughts and feedback from anyone again that this ultimately touched.

The Federal Register was released on September 17, 2020. The public comment period ended on November 16. In total we received 93 letters and emails which accounted for approximately or more than 130 individual comments.

And what Kiesha and her staff did was they collected all of the comments and then they organized all the comments based on those that encouraged, so I’ll make sure that I say not a double negative but those who encouraged the filing requirement to continue and then there were those who required or wished for the filing requirement to be removed.

So again that’s what the goal of the ANPRM, the advanced notice was to get comments back not necessarily to say now that we have comments we will make a decision but to also really get comments back to assess the impact if we were to remove this requirement from the filing requirement in the automated export system.

So information we received back based on those 130-plus comments they basically broke into a grouping of different themes that we saw. We saw the statistical need and this was in the area of those entities that were interested in keeping the EEI filing requirement between U.S. and Puerto Rico and U.S. and Virgin Islands. So we saw that response on the statistical need and the benefits of the detailed data that we’re getting through the electronic export information.

We also saw comments that were encouraging for the enforcement where now we can have visibility or as particularly enforcement agencies can have visibility into movement between these different locations. So those were on the areas of keeping the filing requirements in place.

Then on the other side we had those that said okay, you know, we would prefer to remove this filing requirement. There were responses of inequality and this was seen as an unfair treatment towards U.S. territories as Puerto Rico and U.S. Virgin Islands are. Also we received comments where there was an additional cost for these particular types of movements.

We also saw responses referring to increased burden, feeling that the movements between again U.S. and Puerto Rico and U.S. and Virgin Islands was increasing burden and that was a concern, again for those that were interested in removing the filing requirement.

And then also this was kind of both a keep the filing requirement and remove the filing requirement we found that on both sides also the consideration of an alternative data source. So if the information that’s captured in EEI can it also be captured in another location, can it be captured in something that is already being captured. So that again was one of those comments we received as well that both can be shown as we can use an alternative data source or can we not and then that can also then be dependent upon whether or not we keep the filing requirement in place.

Now one of the things throughout this process we received responses from trade associations, logistics companies, government entities in Puerto Rico, in the United States, in the Virgin Islands, telecom providers, manufacturers, distributors, economists and individuals. So we received a wide range of response types from entities that had an interest in this particular filing requirement, again both good and bad, those that wanted to keep it and those that wanted to remove it.

And again going back to some of the themes that those that wanted to keep it in terms of the statistical need, the level of detail that is provided in the EEI, the historical data, some of the methodology, the detailed information that is now also provided to the government of Puerto Rico that they are able to access through the electronic export information.

One of the larger stakeholders of this data is the Bureau of Economic Analysis, BEA, and the way that they use this information to help compile information for the government of Puerto Rico. So those are some of the responses and some of the detailed information that they saw.

In terms of enforcement for keeping the requirement well there are many cases where there are trans shipments between the Americas, Europe and Puerto Rico in some cases there are situations where these avenues are used for trans shipments for illicit shipments, illicit products. So again having the visibility of that through electronic export reporting was something that one of the comments that we had received that is also a benefit of why they thought we should keep it.

Now on the other side to possibly remove or get rid of this requirement again I talked about an unfair treatment of U.S. territories where again Puerto Rico and U.S. Virgin Islands are treated as something that is outside of the U.S. territories. So for example what is the difference between moving goods between Georgia and Texas, what’s the difference between moving good between California and Hawaii where again especially California and Hawaii where you’ve got a large distance, you’ve got obviously a large body of water so that was one of the considerations in that as well to say this is an unfair treatment and we would like to consider it being removed based on that particular requirement.

Again the increased burden. There are no filing or movement requirements in terms of EEI filing for a movement between California and Hawaii as Kiesha Downs and her staff can attest. We regularly get questions about movements between California to Alaska well that’s still a movement that’s destined to the United States so again one of the concerns was that increased burden even though this is something that is technically moving within the United States territory.

And then just a few other comments to mention, again the added cost because now again going back to the additional movement now you have additional filing and additional requirement. Now this is an increased cost for those in Puerto Rico, those that are moving cargo to Puerto Rico to and from Puerto Rico, that again was one of the comments that we received.

And then one of the particular things just to mention out is the alternative dataset. A question that came in or comments that came in is can this information be found in other forms that may already be captured, one. One of the questions also too is can this can this be captured in something that doesn’t exists currently to date. So those are some of the things that we are also considering when it comes to determining an alternative dataset.

We’ve been working very closely with BEA. We’ve been working closely with the government of Puerto Rico to consider what options there are or what options exists as it relates to alternative datasets.

All right so the next steps, just a summary and then I’ll open it up for questions to see if anyone has questions. And also too I’ll make sure I leave my contact information so if anyone has questions they can contact me directly after today’s conference.

But the next steps we continue to work with BEA, we continue to work with the government of Puerto Rico again to determine what are the next steps going forward. So we appreciate the comments that we received back from the trade community and we are not taking those comments into consideration as we are looking at alternatives, what’s the greatest level of impact, how is this going to affect current processes. And then we will then have to then make a decision from that point going forward.

But again that was the purpose of why we originally issued an advanced notice of proposed rulemaking and not a notice of proposed rulemaking because we wanted to get feedback. That was the goal, that was always the goal from the beginning to get feedback from those that are affected, those positively and negatively.

So we received comments that said no we need this. This requirements should be in place, this is still helpful for us. And then we also as we expected heard that this is not something we want, please get rid of it as soon as possible. But again we took all that information in, we’re dissecting that, we’re even working with our research area to measure some of the impacts of the filing requirements between these different locations.

So the next steps will be for us to continue to work with BEA to determine what are the best solutions going forward. And then once we come to that determination we’ll be sure to reach out to the trade community to state what those alternatives are going to be. And then we will then come out with a notice of proposed rulemaking determining whatever we decide to do.

So but actually let me clarify that because I can, even though Kiesha’s not next to me I can feel Kiesha’s probably thinking if we don’t change the requirements then we would not issue a notice of proposed rulemaking so let me just clarify that statement. So if the requirement stays in place then we would not be coming back out with a notice of proposed rulemaking so let me just - I just wanted to clarify that statement. If something does change we will certainly put out something in the Federal Register to inform the trade community if anything has changed.

So that’s just an update. At this point I will open it up for questions if anyone has any questions for myself or Kiesha.

Man: Thanks Omari…

Richard Boll: Hey Sandy can you open it up for questions and answers if it’s - or Missy.

Coordinator: Yes sir it’s Missy and if you would like to ask a question over the phone again that’s Star followed by 1. Please make sure that your phone is unmuted and record your name when prompted. If you wish to withdraw your question you can press Star 2.

First question comes from Michael Mullin, your line is open.

Michael Mullin: Hi Omari and Kiesha and thanks very much for taking the time to get together with us today. This is Mike Mullin from the Express Association of America. Two of you are probably not surprised to hear the first question from me but I just wanted to make a couple of points.

I mean you’re going about this in a very careful deliberative way and that’s absolutely the right way to do it. And I think, you know, the way that as you said you’ve collected input from a wide range of stakeholders is that’s absolutely the first step that needed to be done in this process. And I think we’ve all learned a lot from looking at those responses. And only about 2/3 of them were on the public docket so you have a little additional information there.

But there’s just a couple of comments I wanted to make on this is of all those different people that you listed that responded I think there’s a certain sense in which you have to ascribe a kind of a different weight to some of those responses than to others.

A researcher at the University of Puerto Rico who wants to keep the requirement in place for his own personal reasons to do the research he’s doing, you know, I mean how you balance that against the response you got from us which, you know, my three members have an annual revenue of $220 billion and they employ 1.5 million people.

A couple of the other associations that recommended removing the requirement were the National Marine Manufacturing Association, they have 3100 members. The Retail Industry Leaders Association they have 200 members including all major U.S. retailers. The National Retail Federation has over 2000 members with over $3 trillion of annual revenue. John Gold can correct me if I have those numbers wrong.

So I think, you know, an awful lot of the responses you got, in fact I would say the majority that were on the public document for people who wanted to keep the requirement were from individuals, private sector individuals who wanted to keep the requirement in place because it helped them with their job or it, or they were making a profit off it in some way.

Now the other comment I wanted to make is that I thought perhaps the most interesting response I read was from the Office of Insular Affairs at the Department of the Interior and they said they receive an annual report from BEA that’s based on the FT895 reports that you provide of some of which incorporate the EEI data for the Virgin Islands. This office OIA doesn’t deal with Puerto Rico. And this annual report they get from you is used to calculate the Virgin Islands’ GDP and other economic statistics.

But in addition to the Virgin Islands this office is also responsible for Guam, the Marianas and American Samoa but as I said not Puerto Rico. Their input stated that they received BEA reports on these other territories that are also based on the Census’ FT895 reports that obviously use non-EEI source trade data and that those are critical inputs for their requirements and apparently are sufficient for their needs. And they also said that an annual frequency of FT895 data would suffice.

So I think it’s clear from that that Census is capable of producing FT895 reports on various locations only two of which rely on the trade community providing this high cost transaction by transaction EEI data. And those Census FT895 reports meet the needs of government agencies for calculating GDP and other economic analysis.

So I think the only conclusion you could draw from that is that the reports that Census is producing that do not rely on the EEI sources but are relying on some alternative to that data or a wealth of information in addition to that data I guess is the way to describe it, but that’s the alternative to the EEI data that you’re getting on Puerto Rico and the Virgin Islands.

There’s apparently sufficient economic data out there in the public sector on Guam and the Marianas and the American Samoa that you can produce very effective FT895 reports on those territories without using the EEI data.

So I guess those were the two main points that I wanted to make. And as has been repeatedly pointed out including by governors of Puerto Rico the EEI requirement is a burden that reduces the effectiveness of supply chains supporting the Puerto Rican economy and the Islands trade relations with the mainland.

And I guess one more thing I’d say just in response to a point you made is I’m not sure I get this issue on trans shipments. If these are goods coming from outside the United States and its territories CBP is getting full manifest and entry data on those shipments if the first place they touch U.S. soil is Puerto Rico or the Virgin Islands. So I’m not sure why the EEI data on a movement between the Islands and the United States would add anything to those - to the information CBP already has.

I know the port director in San Juan has said he doesn’t want this information clogging up his systems because he views it correctly as goods moving domestically within the United States.

Rick Blasgen: Well let’s see if Omari and Kiesha can comment on some of those things Mike. Thanks for that input. Omari?

Omari Wooden: Yes so Mike so thank you for that comment. The first part of that is one of the things that we have to do as we’re putting out a notice to your original point to your first point is we do have to weigh all of those things in mind. We do have to consider the volume of those, the comments. We have to weigh all these things into consideration which again goes back to my original point of taking all this analysis in.

For example BEA is one of the biggest data users of this particular dataset. One of the elements of the enforcement agencies this was a comment that they had provided. So this is something that we do have to take into consideration in addition to the trade community saying well we’re moving this cargo, you know, you’ve got to get rid of this. We have to consider all of these.

So that’s why one of the things from my perspective and I can probably at least speak on behalf of Kiesha to that is that’s why we’re treading lightly through this. That’s why we want to make sure that we’re making that accurate decision because Kiesha and I have both been through situations where we’ve proposed regulatory changes and there’s been enough of a vocal response to certain changes that we assumed would have been straightforward and then we then had to weigh those responses based on what we thought would have been something that would have been straightforward or simple.

So to your point yes we have to weigh all of those things into consideration. We have to also weigh those enforcement agencies. We also have to weigh other agencies that do use this information to find out how this is going to be impactful for them. So that was the first thing that I did want to respond to.

And the comments of the detailed information those are the discussions that we’re continuing to have with these other agencies. All of these entities are having these conversations. These are the conversations that we’re having with BEA to say hey would this dataset work for you yes or no. How does this work for you.

Government of Puerto Rico what are your alternatives because we’ve also seen some situations in the past where once that requirement is removed that particular location says, you know what we really wished we had got still capture that data because now we lost the detail. We don’t have that detail anymore. So those are all the things that we consider in given the historical nature of what Census has captured for different possessions over decades.

So not sure if that’s answering your question because I know it’s more of a comment but we are certainly taking all these things into consideration which again is why we are trying to make sure that we’re going through this process methodically, making sure that we’re taking into account stakeholders in terms of the trade community and stakeholders in terms of government entities that are also using this information.

Michael Mullin: Okay totally reasonable. I understand what you’re doing and like I said I think the process is a good one.

At one point I think it was a previous discussion this group might have had with Lucas Hitt who I understand is no longer at BEA, I think it was him who mentioned that you were revitalizing this working group that’s looking at this issue because a lot of the players have changed with the new administration and everything and it sounds like you are well along in that process which is great. He mentioned that at one point you’d want to pull the private sector into those discussions as well. Is that still sort of part of your plan?

Omari Wooden: Not sure that was his position of it because I think one of the things from - and the current position is government of Puerto Rico, BEA - or I say government of Puerto Rico and the government official entities and say okay what do we want to do first. What are our alternatives? What are our options? So I don’t recall that being an option. It’s something we can consider but I don’t recall that being something that we had discussed in our group meetings.

Michael Mullin: Oh that’s not part of your plan?

Omari Wooden: I’m not sure. I will have to talk with my leadership for that.

Michael Mullin: Okay.

Omari Wooden: What I don’t want to do is say we’re not doing it and I don’t want to say yes we are doing it because then it’ll be a invitation of why haven’t we been invited yet because Omari said we were invited. So I need to talk to my leadership Nick Orsini our Associate Director to get his input on that and then we can determine what the next steps will be from there.

Michael Mullin: Okay well my final comment I promise is I would just hope that maybe you could do that at some point in the future, you know, before it gets to an NPRM process or a decision not to issue an NPRM before it gets to that process that you did have a sit down with, you know, a broad scope of the trade and other private sector stakeholders that are involved.

Omari Wooden: Right fair enough, that’s a fair consideration because it will be hearing from - because again just like a comment period we’re hearing from both sides. So we’re hearing from the pros and we’re hearing from the cons. So I don’t see why that wouldn’t be a reasonable request.

So I think probably we’ll just have to figure out what the best route for that is but again I will make sure I want to talk to my leadership for what their consideration for those next steps would be.

Michael Mullin: Sounds good.

Rick Blasgen: Great thanks Mike. Other questions in the last few minutes here with - yes please go on.

Coordinator: Yes next question comes from Norman, your line is open.

Norman Schenk: Yes thank you this is Norm Schenkand thank you for the recap Omari. I certainly Mike Mullin articulated a lot of the key points so I don’t want to repeat on that.

But I did want to mention a couple things as chair of the subcommittee that’s been working on this and I think we originally brought it up it was close to four years ago so in understanding that there’s, you know, there’s always changing and leadership in that has taken some time.

But, you know, a couple of other things I would add very briefly one of the questions that we’ve asked repeatedly is what value does this data even provide. And other than, you know, some with all due respect, people that do analysis we really haven’t been able - been told what specific tangible value it provide. And I’m not an economist but if you look at the numbers for Puerto Rico with respect to trade they really haven’t changed that much. So, you know, unless there is something glaringly going to change that maybe would be part of the consideration what that would be.

And then the other thing is in terms of alternative mechanisms it’s not a perfect match but Puerto Rico I believe has the Hacienda tax which would cover a part of it. So again one of the rhetorical question to you not for today is I think part of the analysis should be for somebody to say what tangible value that provides.

And the second thing is this says significant cost to the trade and the supply chain, certainly the manufacturers, the service providers that have to move it and do the reporting and ultimately the consumer. And I’m not trying to put an idea in Mike’s head but if you look at, you know, RELA, Manufacturers Association of Express Carriers they put a letter campaign to customers saying hey they’re doing it, they’ve got five of these and five of these pros and cons, you know, you would deluged, I mean deluged with letters looking to get rid of it.

So I just wanted to make those comments. And my question is you mentioned timeline, is it possible to be a little more specific in terms of what you see as the timeline moving forward, thank you.

Omari Wooden: Thank you for your question. Unfortunately I don’t. I can’t give a timeline because I am not sure. One of the things again working with Kiesha for years a lot of times we will do seasonal updates or we’ll say we’re targeting spring of 2022 or something like that. I just can’t - I don’t have any sense of time right now.

As soon as I do have a sense of time or maybe those next steps to Mike’s part about let’s bring in the trade and have some conversations, I will certainly share but I really don’t. And I - it would be unfair for me to even make up a time. So I appreciate your question but I do not have a reasonable time.

Norman Schenk: Okay thank you. Well I’m sure we’ll be providing gentle reminders moving along on this issue because it is important not only to our members of this advisory group but more importantly to, you know, the many individuals, consumers, particularly small businesses that may be impacted so thank you very much.

Omari Wooden: Yes thank you.

Rick Blasgen: Norm any other questions…

Coordinator: I show no further questions - I’m showing no further questions in queue at this time.

Rick Blasgen: Okay great. Well Omari and Kiesha, thanks very much for your open and honest communication and collaboration with our team. We really appreciate it thank you.

Omari Wooden: Sure thing. And I’ll just say I will leave my email so my email is Omari, O-M-A-R-I dot S, like Sam, dot Wooden, W-O-O-D-E-N, at census.gov. So that’s omari.s.wooden@census.gov. I already know Mike Mullin has my email so if anybody didn’t get it just give him a call and I’m sure he’ll share it with you quickly. So yes but thank you again, thank you all for the opportunity to share.

Man: Thanks Omari.

Man: Thanks guys.

Omari Wooden: All right thank you.

Rick Blasgen: So next we’re going to move on to Garrett Wright. Garrett’s the Director of Trade Modernization and he’s on the phone here with us and his team. So Garrett let me turn it over to you.

Garrett Wright: Hey thank you so much. Can you hear me okay?

Man: We can.

Man: Yes.

Garrett Wright: Perfect, perfect. And I had sent a kind of a one-pager slick earlier if there’s any way to throw that on the screen as a visual. If not that’s okay I speak around it.

Richard Boll: I think we can probably put that up. Eugene will work on that.

Garrett Wright: Okay.

Eugene Alford: Garrett so what is it called, and so I got several from CBP.

Garrett Wright: I’m sorry what was that last…

Eugene Alford: What is the name of the file since I got several files from CBP and I’m happy to put it up.

Garrett Wright: Sure I think it might have been called something trade week, 21CCF Trade Week along those lines.

Eugene Alford: Got it, putting it up right now.

Garret Wright: Great thank you. Okay so good afternoon everyone. Again my name is Garrett Wright, I’m the Director for Trade Modernization in the Office of Trade. I started in this role back in January so I’m not familiar history with this group. I do understand that we briefed last year at some point. So what I figured I do today is just give just kind of a high level overview of 21CCF and what we’re looking at and what the operational drivers are and what our primary focus is today.

So 21CCF is a CBP comprehensive trade modernization strategy. It encompasses the legal, the regulatory and the policy changes that we’re working towards today and tomorrow’s trade challenges while, you know, also propelling the U.S. forward in leading trade transformation.

And that’s important to note because there is a global push right now to modernize around trade and I’m sure my colleague Vinny Annunziato will cover this in his presentation but China in particular is doing a lot by way of exploring blockchain and other emerging technologies, pushing for data standard recognition through the World Customs Organization and more.

So for the benefit of U.S. consumers and domestic businesses in our economy in general we really want to position the United States to drive global trade transformation and we can do that starting with the right legal authorities. On the other hand we won’t get very far with that and we’re a little hamstrung in that regard and I’ll get to that in a bit. That is one of the primary thrusts of 21CCF right now at least in the near term.

What we’re working towards longer term with 21CCF is a future state where, you know, because we have greater visibility and a global supply chain and because we have access to better and more accurate data, you know, we’re able to clear legitimate goods more quickly as an agency. So, like, facilitating the flow of lawful trade while also allocating our resources more effectively towards areas of high risk. And in doing so helping domestic industries and businesses compete on a more level playing field, ensuring that goods entering the United States are safe and were produced using ethical methods and standards. And that collectively we as a whole of trade are leading the charge on innovative trading practices.

As it stands today we struggle with a lot of that for a number of reasons that are largely rooted in legal limitation. So we are bound to and operate under legal authority Title 19USC of the 93 Mod Act specifically, you know, that are 28 years old at this point right. These legal authorities made a lot of sense when trade volumes were just a fraction of what they are today, when supply chains were much less complicated and when shipments were primarily containerized versus the millions of small potentially high risk packages that we now process each and every day.

And tomorrow, you know, today and tomorrow’s environments trade landscape, you know, our current legal authorities just are not sufficient. And they create a tremendous amount of operational strain for the agency and for our front line. And likewise they adversely impact trade and our partner government agencies.

So, you know, for instance just by virtue of our legal authorities we have very little visibility in the global supply chain. We don’t see marketplaces. We don’t see foreign sellers. We don’t see where materials were sourced. Trade violations as they exist in, you know, occur in country of origin are largely hidden to us because we just don’t see that information that data in a lot of cases.

We only really start to gain supply chain visibility as goods are being loaded for transport or even as depending on the mode of transportation. And what that does is it’s create a narrow window of visibility, national security threat, consumer safety risk, et cetera. Moreover, you know, with data and information we do receive is in many cases from parties that are three or more layers removed. So we run into issues that with data integrity and data quality.

We’re limited in how we use the data that we receive and how we share it with our trade partners to help them manage risks better within their own supply chain acknowledging that our jurisdiction begins and ends at the border. So that’s on the front end of the importation process.

On the back end, you know, we run into a lot of challenges holding the right parties accountable. We run into challenges directly accessing the information that we need to make enforcement decisions. And our penalty processes are such that it is exceedingly difficult for us to deliver consequences that are timely and that deter bad actors and change behavior right and so the list goes on.

There is a lot of amazing work that the agency is doing today to modernize trade within our existing legal and regulatory framework and I’m excited actually for you to hear about a lot of that work from my colleagues this afternoon. Unfortunately I apologize I have to drop for another commitment right after my portion.

But as we were putting to paper, I’m sorry putting pen to paper on that 21CCF future state I shared with you a second ago it became pretty apparent to us that some of the biggest barriers to that future state are in fact our underlying legal authorities who as I noted earlier that is the near term focus for 21CCF right now is identifying and developing drafts, sort of working language around what we think to be the right legislative updates to remove modernization barriers, to eliminate outdated requirements and to provide for sufficient legal flexibility to implement that 21CCF vision over time.

As we’re going about this effort we’re looking at updates that fall within five key bucket areas right, what we view broadly as our most salient challenges, impediments to trade modernization. So, you know, we’re looking at updates that improve the timeliness and the quality of data that we receive or is made available to us so that we can start to reengineer our entry processes so that we are able to clear lawful trade more quickly. And Vinny will talk I’m sure a lot more about that during his portion of this.

We’re looking at updates that expand our ability to share more information with trade and clarify how we use data ourselves right. So that we as a whole of trade sort of trade network can better manage supply chain risk. We’re looking at updates that increase our visibility into modern supply chains so that we’re able to better identify and hold the right trade actors accountable for violative behavior.

We’re looking at updates that streamline our penalty processes right, so that we’re creating this more predictable enforcement environment and that when we do use enforcement it’s effective, it’s timely. And then we’re looking at exploring, you know, alternative sources of funding above and beyond our annual appropriation structure so that we can better support our trade infrastructure needs. And what I mean by that is largely our single window ace, you know, staffing enhancements, anything that supports the trade mission.

So we as of yesterday kicked off a 21CCF government industry taskforce to help us out with tis legislative effort. This group comprises brokers, express carriers, sureties, marketplaces, importers — the full gamut of trade roles and equities including our own in-house subject matter experts and program leads.

And the goal of this group is to between now and the end of July hopefully work through these challenge areas, these five challenge area buckets one by one to discuss, to validate and refine as refinements are needed what we’ve developed as starting point legislative concepts. The end state that we’re aiming for here is something that trade as a whole can get behind and help support because, you know, it reflects all of our interests and equities.

So very excited to see that project through. I think that was probably a lot of unpack and like I said I have a hard stop at 2:00 so I wanted to pause there and open it up to comments and questions if any.

Coordinator: Yes sir…

((Crosstalk))

Coordinator: Yes sir if again if you would like to ask a question or make a comment please press Star followed by 1. First question or comment comes from Norman, your line is open sir.

Norman Schenk: Yes hi Garrett and thank you for the overview. I’ll start by saying to the full committee that, you know, with respect to this project CBP has been very transparent. Several of us that are on the committee have, you know, had initial reviews and/or meetings along the way so we certainly appreciate the transparency of the group.

I’ll just make a couple of comments Garrett with respect to this. And certainly understanding the points many of the challenges have been out there and certainly with respect to CBP strategy looking at our committee even though it’s a U.S.-based advisory group many of us have strong international ties so anything that CBP does historically many other countries around the world adopt so, you know, hopefully you’re keeping a global perspective on that one and certainly the need for harmonized standards so that again companies that are multinational companies and they don’t have to, you know, deal with, you know, over 200 different sets of regulations, requirements and all that.

With respect to the taskforce we think that’s good and I don’t know if it’s possible for any of our members to be part of that if possible. But, you know, one of the things as our group is we have a really diverse group of many talented people excluding myself on that that really know a lot about global supply chains.

And that when - sometimes with working groups when you have different parts and CBP has done some phenomenal job from a, you know, a bucket perspective but at the end of the day when it comes to the supply chain we have to connect the dots and everything has to work together to provide a smooth, efficient and compliant supply chain. So that would be one thing from a committee perspective is that, you know, hopefully you’re looking at, you know, how do you connect the dots so that all this works together.

This morning when we heard from the secretary she had picked up on, she used the word incentives and, you know, one of things you’re looking at is penalties and catching the bad guys but historically with many agencies there’s not a lot out there to reward those that are doing more and/or willing to do more. So I don’t want to jump ahead to the blockchain when we dovetail artificial intelligence on that but I don’t know if you can - this would be one question for you, are you looking at part of this that instead of CVP having to fix everything, are the ways that the private sector by doing more can receive incentives that would help with the supply chain.

And then my last comment is you mentioned some of the other programs, and I’ll touch on it a little bit later, but just wanted to mention while you’re on the call, Single Window, CBP absolutely did their part by building the Single Window. Our committee was involved in recommendation that came from the former Secretary on that. And CBP absolutely did their part.

Practically speaking, the Single Window is just a database and, quite frankly, speaking from a border perspective, the borders are worse today because of Single Window, not better. Because what’s happening is some of the other agencies — not CBP — but some of the other agencies are saying, “Oh, this is great. We’ve got Single Window. Let’s have more data to do it.

So, again, it’s just we talked about the timeliness and quality and integrity of data from a supply chain perspective. There’s too much reliance on data instead of what’s behind the data and looking at that.

So, I’ll leave my comments there. I didn’t really have a direct question, but I don’t know if you have any response to any of those. Thank you.

Garrett Wright: No and thank you so much for your comments. And there’s a lot there. So, I’ll try to address as much as I can.

So, on the representation with the Task Force, with the sidebar on what that would look like, but would be happy to, you know, to explore what makes sense there.

I mean, you know, it benefits us as a whole, in trade, it benefits us as an Agency to make sure that we’ve got the right representation. The equity’s plugged in on a separate, so let’s touch base on that.

To your point about incentives, yes, I completely understand. I mean, we have that interesting dual whole mission of facilitation and enforcement that we’re always trying to balance. You know, I think with this idea, and I’m sure Vinny will touch on this in better detail than I, but the idea with this sort of reimagined, re-engineered entry state is that there would be incentives associated with that.

So, this would be — at least as we’re looking at it today — and more of a, you know, opt-in opportunity where an importer could open up their supply chains to CBP, where that data is either being transmitted or otherwise being made available to us. And just by virtue of us having access to information and visibility into global supply chains and data as it materializes, the idea is that we would be able to start piecing together admit trade related decisions much sooner than we can today.

And what I’d like to see us work towards as an agency and as a whole of trade is really, you know, pushing the needle in terms of, you know, clearing or at least notionally clearing shipments before they even leave county of exit and issue a risk. We have the opportunity that they can correct whatever they need to correct.

So, that is, you’re absolutely right. There has to be some level of incentive for this to work. And I think that earlier ingestion of data and using it to make earlier decisions equating to earlier clearance times is going to be part of that discussion. So, I hope that helps answer some of your comments.

Norman Schenk: Thank you again for your, thanks for your transparency. I again want to reiterate to the group, since this group was first put together, the outreach was really good. And certainly, there’s some challenges, but, you know, if you get all the right things and we end up connecting the dots, the opportunities will be really beneficial to the supply chain. So, thank you, Garret.

Garrett Wright: Yes, no problem. Thank you.

Richard Boll: Thanks, Any other questions?

Coordinator: Yes, sir. Next question comes from Nick. Your line is open.

Nick Vyas: Thanks for an amazing insight that you presented, and I’m Nick Vyas. I’m the Executive Director at the Center for Global Supply Chain Management at University of Southern California.

And I briefly want to touch on the comment that you made about how China is driving the standardization approach on these things. I think it’s deeper than that.

What I have seen and we do tremendous research in this area at the Center is that One Belt One Road, which was about 15, 17 years ago, the physical infrastructure, over the last 10 years, China has focused immensely on building the digital infrastructure along with the 2035 driving the standards on the grade.

You mentioned about some of the initiatives you have done. But what is the overall so the collaborative approach rather that’s taking a U.S.-centric approach but like working with our allies in Europe, we have some sort of collaborative ways to build those standards, build those digital capabilities so that the like-minded trade partners can really help each other but benefit in a much more superior way.

And the reason I bring this up is because I’m, the community I’m creating built up lately on the blockchain, what we call the (GEAR) Initiative, they don’t and I don’t see us sitting at the table having these conversations with them.

So, it was sort of a wrapped around questions based on the comments. Appreciate your perspective.

Garrett Wright: Yes, of course, and I’ll be honest; when it comes to blockchain and what’s going on in that environment, I am not the smartest in the room, and I wonder if my colleague, Vinny, is on the line. Vinny, are you on the line? And if so, do you have a good response to that?

Nick Vyas: Yes, I know Vinny is doing blockchain, but I just wanted to use that as an example of working with the allies. But I mean this was, obviously, this is an emerging space of PIML, both the predictive and descriptive data.

And with these capabilities which, what we’re leading in terms of the research, how — I mean, I’m just sort of asking both the questions as to do we think there’s a value for us to create a collaborative structure where we can, with our allies, and come up with some solid bullet points on what other capabilities and how do we employ these things in the larger community so it’s not just a U.S.-centric approach, but also, the rest of allies, how we can work together on this.

Garrett Wright: Yes. Well, I would say, I mean, my first-blush response to that is, yes, absolutely. Whatever we’re doing, there should be some level of coordination and collaboration with our close international allies. And that kind of goes back to some of the comments that I think Norm had was sort of connecting the dots to international global level.

I am not aware, myself, of any information on, you know, new and emerging technologies, although I am sure that there has been plenty of communication. And I will, if Vinny’s not on the line, I will queue him up so that he speaks to that specifically.

Nick Vyas: Thank you.

Garrett Wright: You bet.

Richard Boll: Any other questions for Garrett before we move on?

Coordinator: Our next question comes from Michael Mullin. You may go ahead.

Michael Mullin: Hi, Garrett. It’s Michael Mullin from the Express Association of American. I think we might have met once in the past.

But the question I wanted to ask you was whether the Post Office, or maybe the Postal Inspection Service, is a member of the 21st CCF Task Force. And anticipating that answer to that question might be No, I would just encourage you to get them involved.

The Post Office on a daily basis is bringing into the United States triple the volume of the three large express package companies put together, and if you’re not including them in this, you’re missing a huge slice of the international logistics process. And certainly, there is nobody who would benefit from modernization more than they would.

Garrett Wright: Yes, and that is nice to hear from you, Mike. That is a really good point, and that is not the first time that it came up. I think, initially, the way that we were looking at this is, you know, the real thrust behind a lot of this reimagined entry concept is more in line with our formal entry process. And as you know, you know, we don’t really see formal entries in the mail environment.

But that’s not to say that there isn’t a need for modernization in the de minimis environment, which is where we see the bulk of those international mail shipments. So, to your point, you know, I’m in agreement. I think that it would be good. So, I will take that for action.

Richard Boll: Other questions?

Coordinator: Okay, the next question comes from Jonathan Gold. You may go ahead.

Mr. Gold? Please check your mute button.

I’m sorry, Mr. Gold. We’re unable to hear you.

I’m sorry. We’re still unable to hear you. I’m going to disconnect, and if you’d like to queue up one more time, that would be fine.

Richard Boll: Maybe while we’re waiting for Jon to either come back in, is there anybody else who’s got a question that you see?

Coordinator: At this time, there is no one else in the queue.

Richard Boll: Okay. And…

Coordinator: I can open Jonathan’s line if we needed to.

Richard Boll: So, why don’t you open Jon’s line so he can ask his question?

Coordinator: Okay. That’s fine.

Richard Boll: Thank you. Yes. And if you can, open Vincent Annunziato’s line too, please.

Coordinator: Jonathan — well, Vincent, please press Star-zero.

And Jonathan, you may go ahead. Your line is open.

Just one moment, Jonathan is signaling.

Garrett Wright: If by chance, we can’t get to Jon’s question, then I will make note to reach out to Jon separately.

Richard Boll: Okay, it seems like that’s what’s going to have to happen, I think.

Garrett Wright: Okay. Not a problem.

And I do have my hard stop, so if it’s okay with you, I might go ahead and jump off here.

Richard Boll: That’s fine. We can start with Mr…

((Crosstalk))

Coordinator: Jonathan, can you hear us now, Jonathan? His line is open, and I could not even hear him when he signaled.

Richard Boll: Okay. Well, we can move on. We can get Jon’s question and pass it on.

Coordinator: Okay.

Garret Wright: All right. Well, hey, thanks again, everyone for the opportunity, and Jon, if you can hear me, I’m going to reach out to you on the side, so you all have a wonderful rest of the day.

Jonathan Gold: Okay, Garrett, I’m sorry I couldn’t get in and help you out before when I was on mute, so.

Coordinator: Jonathan is in now.

Jonathan Gold: Can you guys hear me okay?

Richard Boll: Yes.

Garrett Wright: Yes. Is that Jonathan?

Richard Boll: So, are we moving on to Vincent, or Jon? Jon Gold, can you hear us and do you have a question, still?

I guess not.

Okay, I think we need to go with the blockchain, I think is next.

Norman Schenk: Yes.

Richard Boll: Is Vince online?

Coordinator: Okay, it’s — Vincent is online. Please press Star-zero so we can open the line. Okay, just one moment.

Richard Boll: Hello, Vincent?

Coordinator: Just one moment. I can’t seem to find him. Here he is. Here’s Jonathan again, so just a second. Yes, Jonathan, this is Sandy. Jonathan? Jonathan, I can’t hear you. On you on mute again?

Richard Boll: We’re going to have to move from Jonathan. I don’t think it’s working for him right now.

Coordinator: No, I don’t think so either.

Richard Boll: Let’s move on to Vincent.

Coordinator: Vincent has never pressed Star-zero.

Richard Boll: Hello, Sandy?

Craig Clark: Rich, this is Craig. I’m sorry to jump in, but Vincent has pressed Star-zero and he’s still unable to be heard.

Richard Boll: I wonder if there’s an issue now because Jon had a problem and then so did Vincent.

Craig Clark: Yes.

Richard Boll: Sandy, did you hear that?

No Sandy?

Craig Clark: Rich, she ducked out when she was trying to bring people into the…

((Crosstalk))

Richard Boll: Okay. It’s part of a…

((Crosstalk))

Rick Blasgen: Rich, should we move, if Therese Randazzo is with us, should we move to Therese’s comment? Therese’s comment first?

Richard Boll: Should, yes. Might as well.

Rick Blasgen: Therese, can you hear us?

Therese Randazzo: I can hear you. Are you able to hear me?

Rick Blasgen: We are.

Richard Boll: Yes. If you’re okay, maybe we should move on to your commentary, and then we’ll try to go back to Vincent.

Therese Randazzo: Sure. I’m happy to do that.

Good afternoon, everyone. I’m Therese Randazzo. I am the Director of the Forced Labor Division within CBP’s Office of Trade.

Glad I have the opportunity to speak a little bit with you this afternoon about our Forced Labor Enforcement. I know it’s a very hot topic these days, among a lot of importers, particularly those in the textile and apparel and garment industries, as well as, I think, palm oil, too.

So, under 19 U.S.C. §1307, the importation of goods made in whole or in part with forced labor — and that includes prison labor and forced child labor and indentured labor under penal sanction — are prohibited entry into the United States.

So, CBP investigates potential forced labor in the U.S. supply chains. Our (importing) there is somewhat unique around the world with Canada and Mexico, you’ll be implemented in the process of implementing prohibitions on goods produced with forced labor at their borders. But other than that, I think that right now, CBP is pretty much alone in this space.

So, how do we go about enforcing 1307? I’ll give you a very high-level sort of overview of this because I think probably some of you are already familiar with it.

But CBP receives allegations – information on prospective forced labor conditions, alleged forced labor conditions around the world from a variety of sources.

We review that information and corroborate it through research, and speaking to witnesses, etc., and through various other ways, we corroborate the information that is presented to us. And if we are able to establish reasonable suspicion that these goods were made with forced labor, we will issue a Withhold Release Order.

Withhold Release Orders can apply — and always apply — to a particular country and a particular product. Sometimes they apply to specific manufacturers or individual facilities. Other times they may be regional in nature, such as what we had with the Xinjiang regional WRO on cotton and tomatoes bought in China, or they may be countries like such as the situation with tobacco grown in Malawi.

When we have a higher level of proof, then we are able to establish probable cause to believe that forced labor conditions exist, then we would issue a Finding. Our investigations, whether regardless of whether we said Withhold Release Order or a Finding, are based on The International Labor Organization has now indicated the forced labor.

I’m not going to go into those right now, but if you would like more information on those, there is a brochure on the ILO’s Website that describes those and gives examples of each.

If you’re looking at risk in a supply chain, I would suggest that it might be helpful to take a look at those indicators because those are the things that you would want to be looking for in the supply chain if you want to be looking at the same types of things that CBP would be looking at when we’re considering whether to issue a Withhold Release Order or a Finding. So, and a list of our current WROs and Findings is available on the Forced Labor page on CBP.gov.

So, once we issue a WRO or a Finding, well, what happens next? So, if we’re talking about a WRO, then that is actually an instruction to all the Ports of Entry to detain goods that fall within the scope of the WRO.

With a Finding, I do know we detain the goods, or we may seize the goods, depending on that particular finding. So, this is done on a case-by-case basis. So, we can probably hold on a Finding that was issued on the 29th of March. In that case, we had sufficient evidence that the goods were produced with forced labor, and at a place or a very specific facility – those specific set of facilities, so a particular manufacturer and subsidiaries.

So, in that case, we are seizing goods, departing goods, when they arrive rather than detaining them. But in other cases of WROs, if we awarded them to a Finding, then those we might still continue to detain the goods.

So, if they’re detaining the goods, like we’re doing with the WROs, the importer, then, has three months to provide information to CBP that would establish that the goods were admissible. Alternatively, the importer at any time between the arrival of the merchandise and the end of the three-month period can export the goods to any place outside of the United States.

If you opt to submit evidence or the importer does nothing, then at the end of the three months, CBP will either — well let me back up rather than present this in a confusing fashion.

So, if we have – so we have the three-month period in which the importer can provide evidence. So, the importer would respond to the detention notice by providing information to show that the goods are not made with forced labor.

The type of information that’s required — because this is a question we get all the time — we don’t proscribe that because it varies depending on the particular Withhold Release Order, the particular product, the particular manufacturer and the importer’s — specific supply chain for that good.

So, importers can provide whatever information they think would be helpful in establishing that the goods are not made with forced labor. How far back in the supply chain you have to go depends on the particular WRO.

So, if you’re talking about, for example, like I mentioned the top one, WRO, you won’t need to go back to the top one, to it’s allowed basically the entity that made the goods and shipped them to the United States.

If we’re talking about the Xinjiang regional WRO, for example, then we’re talking about cotton or tomatoes that are grown in the Xinjiang region, so we’re going all the way back to the source of raw material. So, in that scenario, you would need to be able to trace, provide documentation tracing the supply chain from the raw cotton all the way through – from the production of raw cotton all the way through to the final product that is imported into the U.S.

Because there are issues with commingling, for example, of the cotton, in — that’s grown in Xinjiang with other cotton in China. So, just merely showing that the cotton is not grown in Xinjiang is not sufficient.

So, if you get to the end of that three-month period, CBP must make a determination as to whether to release the goods or exclude the goods. If the evidence provided is sufficient, then CBP would release the goods. If the evidence provided is not sufficient to show that – to overcome the suspicion that the goods were made of forced labor, then the goods would be excluded from entry.

Once the goods are excluded, the importer has 60 days to either export the goods. If the goods are not re-exported, and there is no protest filed, then CBP would proceed to seize – just to seizure of those goods.

Looking more broadly at WROs and Findings, in addition to an importer looking to establish admissibility, we also look – there’s also a possibility of modification or revocation of the WRO.

This generally is done by the foreign — this is a request made to CBP by the foreign entity, and what this means is that if they’re going to make them modify a WRO, it means that the foreign target of the WRO, the foreign entity on which, well, to which the order applies, is able to show that they have remediated all of the forced labor indicated that we identified.

So, any of those 11 ILO indicators that CBP identified in issuing the WRO or the Finding, they must demonstrate that all of those forced labor conditions have been remediated and no longer exist.

If they’re able to do that, then we would modify the WRO to suspend enforcement for that particular entity. If they are able to show — and this is highly — this is pretty unlikely — but if they’re able to show that forced labor conditions never existed, then we would revoke the WRO.

So, right now, we’re seeing mostly – we’re seeing many more revocations than and not a lot — but we’re seeing more revocations — I’m sorry, more modifications than revocations. And I just wanted to clarify that language that they’re going back, you know, revocation and modification, well, we move in slightly different moves.

So, that’s the terminology that we’re using now. That’s what those mean. There is a fact sheet on the Forced Labor page on CBP’s Website. And that explains the process for modification or revocation on a WRO or a Finding in more detail. An importer can make that request.

But generally speaking, the importer’s not going to be able to provide sufficient information without the cooperation of the foreign entity to get a modification or a revocation of the WRO. Generally, importers are seeking admissibility of specific shipments.

So, also wanted to let you know, importers have an obligation, as I’m sure everybody – probably everybody on this call knows, to exercise reasonable care. This is part of – this is back to those Customs Modernization Act of the 1990s that was part of NAFTA.

So, we – that reasonable care obligation does extend to forced labor and as you look at CBP’s Informed Compliance publication on Reasonable Care, there is a section in there that applies to Forced Labor.

There is also additional resources that I would refer importers who are looking to establish social compliance programs to ensure that the supply chain is free of forced labor. We particularly refer importers to the Department of Labor’s Supply Chain Application and Website. It lays out how to go about establishing a social compliance program, how to implement it, and how to monitor it to make sure that it’s being followed, not just by your company but also by other entities in the supply chain.

What we frequently find is that among importers that have social compliance programs in place, they usually only extend to the first or the second tier of the supply chain. That might be falling on back insufficient to enable the importer to provide documentation to show that goods are admissible under your WRO where the target entity is near the end of the supply chain. It’s the entity that actually exports to the United States or ships – and manufactures and ships the goods to the United States.

But if it’s a situation where the targeted entity is much further back in the supply chain — for example for producing your raw material, then — and then there’s a lengthy production process that goes after that, then that type of a social compliance program is not going to be sufficient.

So, we’d encourage importers to look at their particular supply chains and where supply chains forced labor might occurring so that you establish an appropriate program that would enable you to either avoid the process of being caught up in a WRO or a Finding, or if you do, being able to have the information readily available to show that the goods are admissible.

In terms of looking at work, I mentioned looking at the ILO’s 11 indicators and working to see if you see those in a supply chain. I would also advise looking at the, of course, the WROs and Findings in CBP.gov.

But also, other sources that you can look at are the Department of Labor’s list of goods produced with forced and child labor. It lists countries and products around the world that are made with forced labor. Not all of those are imported into the United States, but it’s a place to give you at least some real insight into it.

The Department of State also publishes online the Trafficking Persons Report. That is really geared more to looking at the actions that foreign governments are taking to the adequacy of action by foreign governments to prevent human trafficking and forced labor, but it does give insight into the accounts of forced labor in other countries.

Then, of course, there is media reporting and numerous reports by nongovernmental organizations and some of society organizations regarding forced labor. So, if you’re looking for list indicators, those are going to be quite listed go.

With that, I will stop there, and happy to take questions.

Richard Boll: Okay, thank you, Therese. Any questions? Will you please open up the line, Sandy?

Coordinator: Yes. As a reminder, if you’d like to ask a question, please press Star-1 to ask your question, unmute your phone, and record your name.

Okay, we have Jon Gold. So, one moment. Mr. Gold, you may go ahead.

Jonathan Gold: Okay, thank you. Can you hear me?

Coordinator: Yes.

((Crosstalk))

Jonathan Gold: Sorry. Therese, thanks, as always for the update and your presentation. I mean, I just want to reinforce, you know, discussions that we’ve had previously about the need to continue to collaborate and partner with industry on these issues. We know how complex they are, and for everybody — not just CBP, but the industry as well.

We know there are still a lot of challenges with how the WRO is being implemented, challenges with how companies are able to provide what you believe is sufficient information to get out of a detention.

And I think just there needs to be a lot of work done for partnering for achieving this goal. And I think there are a lot of opportunities there and, you know, we had those discussions and just want to reinforce the need for that collaborative approach on this issue as we’ve done with other issues in the past.

Therese Randazzo: Thanks, Jon, for the comment. And yes, you’re right. We had that discussion on this, and it is something that we are, you know, we are meeting regularly with you with several groups that you got here but that you participate in. We also have a COAC force with a working group as well that we meet with regularly as well as, you know, conversations with individual importers, et cetera.

All right, so I hear some scenarios, and the information is harder to come by because they use supply chains in the current business practices are not structured in a way that makes it easy to do, to produce this type of information.

I think in many respects what’s often reported, it seems to me is needed is more of a mechanism that would allow either for identity to be full of raw materials or identity to be reserved for raw materials because this is where we run into most of the challenges.

Or secondly, we – as we’re looking at this, and sort of welcome the trade community’s input and thoughts on this we’re looking at, you know, the viability of various tracing technologies and tools to help us with this informing enforcement to make the profits easier both for the trade and CBP.

Jonathan Gold: Right. Just to follow up on the tracing tools of technologies, again, I think this is where that collaboration partnering with industry on Pilot projects is critical. You know, I’ve brought up in the past…

Therese Randazzo: Right.

Jonathan Gold: …you know the work we did well over a decade ago on things like these trade devices and things like that. Bringing the trade in to understand how these technologies actually work in practice in the field is critically important because as, you know, many of the importers are testing the technologies themselves. And they can tell you about the, you know, the positives, negatives, the costs, scalability, all those things that are critically important for this.

So, again, I just want to reiterate the need for Pilot programs on the issues.

Therese Randazzo: Right. Well, I mean, you know, even without a Pilot program, if importers are doing this type of work on their own, we do welcome the — we’d be interested in hearing from the entities that are doing the testing because we would be able to evaluate the testing that’s being done and determine whether or not that would be acceptable in the eyes of, you know, not mine, because I’m not a scientist.

But if we would look to our laboratories to review that testing that’s going on because testing protocols and things like that that are being done and, you know, if there are, you know, allied in it, or something that we can certainly look at that as a means of extraditing the admissibility in the review process and understand that there are costs involved, et cetera, that need to be taken into consideration on the trade side.

But that it is something that we are willing to work on, and so if your importers do have a particular technology that you all like and that you all support, we’d be, we’re certainly open to talking to learn more about that in the end and looking at how that might work.

Coordinator: There are no questions…

No, there are no additional questions in the queue.

Richard Boll: All right. Therese, thank you very, very much. We appreciate your time.

Therese Randazzo: Thank you. And thanks, Jon.

Rick Blasgen: So, we, we’re going to like of all the supply chains broke, we’re flexible regarding our lineup here. So, right now, we want to hear from Laurie. Is Laurie on the line? Laurie Dempsey?

Coordinator: If Laurie Dempsey’s on the line, will she please press Star-zero.

Just one moment.

Laurie Dempsey: Okay, thank you.

Richard Boll: All right. Hello, Laurie?

Laurie Dempsey: Hi. Can you all hear me?

Richard Boll: Yes. Laurie, go right ahead.

Go right ahead, Laurie.

Coordinator: Just one moment. Let me do something.

((Crosstalk))

Coordinator: Laurie, can you hear us, now? Okay. Go right ahead.

Laurie Dempsey: Great. Oh, thank you. So, we’ve got two different tests: Section 321 Data Pilot, which is getting at kind of interdicting pirate shipments and helping to meet PSS risk a little bit better in the de minimis environment; and then, the Entry Type 86 Test, which enables CBP to collect PGA message sets or PGA data for de minimis shipments.

So, I’m going to start out talking first about the Section 321 Data Pilot and kind of where we are with that. We kicked that off in July of 2019. And the goal was really to get more specific information about the nature and the origin of Section 321 shipments.

In this, we — Garrett talked about the Task Force earlier. This is another good example of partnership. And we developed the Section 321 Pilot in conjunction with industry as part of a Task Force as well. So, great example there of us sharing and being transparent around what CBP is doing.

So, the Pilot tested accepting advanced data directly from non-traditional e-commerce actors, such as online platforms, and then matching that against the information that CBP received from our traditional carriers to try and get better at segmenting risk.

And you know, one of the things that we really wanted to make sure about when we were doing this is not to have – not to collect a bunch of additional data elements. We wanted to be deliberate and thoughtful about the type of information that would be most helpful to CBP and that industry would actually be able to provide to us.

So, you know, some examples of this were getting at more enhanced product descriptions. So, if you have more information about what was in the box as well as a marketplace listing or a product picture.

And then a couple other pieces of information that have been very helpful to us are seller information and then buyer information. Oftentimes in the de minimis world, that information is not provided. So, this Pilot enables the platforms to provide that additional information.

Then, the Type 86 test really gets at enabling us to electronically collect other Agency requirements via the PD message set in Single Window. And that, one of the kind of unintended benefits of that also was that we were able to automate our air cargo clearance times. So, we’re seeing benefits from both tests in different ways.

With the Section 321 Data Pilot, the hold times for some of the participants have been drastically reduced because CBP is getting the information ahead of time, and then we’re also able to rather than conduct an exam, just use the additional information that was provided along with the shipment, and enabled the officers to make a determination about release without having to examine the shipment.

And Type 86, we actually did a trade survey, and it’s having time savings and cost savings from both trade and CBP because of that quicker release time. So, cargo is not sitting around for 5-to-6 days until, you know, waiting for a manual release from CBP.

And just to give you an idea about the volumes, between the two Pilots, going back to July 2019 when both started, actually, we’ve received nearly 400 million shipments; 141 million were classified as Section 321 Data Pilot, and close to 240 million entry Type 86 transactions, which is enormous when you compare that to the commercial side.

That’s like I think we were around 40 million shipments a year. So, really, kind of staggering numbers there and we expect those to continue to climb with all the online shopping that folks are doing lately.

And so, right now, the Section 321 Data Pilot is set to expire this coming August — August 2021. We do plan to extend that as well as expand it. Right now, it’s only limited to nine participants for administrative review. So, we’re working on those two things right now.

And then, we’re also looking at how we kind of square the circle between the two Pilots and asking, well, what does it look like, going forward? Because we don’t want these Pilots to go on indefinitely. So, we’re taking a look at that right now.

So, that was super-high level. I guess I can take a pause and see if there are any questions.

Coordinator: Once again, if you’d like to ask a question, please press Star-1, unmute your phone, and record your name.

Richard Boll: Questions for Laurie?

Coordinator: There are no questions at this time.

Richard Boll: All right. Laurie, any final comments? So, thank you for sharing that with us.

Laurie Dempsey: No, just thank you for giving me the opportunity to provide the update, and if folks have comments after the fact, I’m always happy to address them.

Rick Blasgen: All right. Well, thank you. Thanks, Laurie.

Next, I believe we’re going to hear from Queena Fan. Queena, you with us?

Queena Fan: All right. Can you hear me?

Rick Blasgen: Yes, we can. Go right ahead.

Queena Fan: Hi. Good afternoon, everybody. I am Queena Fan. I’m the Director of the USMCA Center.

As you all know, CBP is the primary government U.S. Agency for implementing the USMCA, which entered into force on July 1, 2020. So, as U.S. has always has a free trade agreement, and especially the USMCA, CBP works very closely with our fellow government agencies such as the Department of Commerce, Treasury, Labor and the U.S. Trade Representative because we really want to ensure a comprehensive, consistent and transparent transition from NAFTA to the USMCA.

So, recognizing the scope and the breadth and the magnitude of the USMCA, we recently established the USMCA Center, which I lead, in March 2020 in the midst of the COVID-19 pandemic and with everything else that was going on during that timeframe.

So, one of the main purposes of the Center is to make sure we coordinate all of those policies experts within CBP and with CBP stakeholders to address any questions and to support the development also of the very time-sensitive regulations that we have ongoing at this time here.

So, as we all know, the transition from NAFTA to the USMCA has really attracted a large amount of trade. So, I’m just going to give a few numbers to compare here between the Fiscal Years of 2017-2019.

Employers calling NAFTA got preferential treatment for nearly 80% of all imports that were bound from Canada and Mexico – over $800 billion here. And so, right now for the USMCA preferential claims since implementation here, we’re pretty much on track for a number of different things.

We’re looking at over $300 billion in USMCA preferential claims that entered. And we know that Canada and Mexico are two of the USA’s largest trading partners here and even in the past two years accounting for about 30% of total U.S. trade.

So, we’re looking at huge numbers here and huge amounts of volumes in trade, as you all are specifically aware of what’s going on, especially in the supply chain area here.

The USMCA was important because it was U.S. government’s Agency also trying to bring a lot of the NAFTA from the 1990s. So, when we were all listening to dialogs with — I’m pretty sure a lot of us had our AOL site subscription to how our ordering all our stuff online on our phones today here.

So, the U.S. government made a conscious effort to modernize this agreement. So, they tackled a lot of new areas that had never been really included in a free trade agreement, which includes, as Therese earlier went over, forced labor environment.

Looking at our relationship with Canada and Mexico, particularly on the IPR ex officio, investing in the automotive goods sector here. So, I mention the regulations. We are currently on track to issue the domestic regulations no later than July 1st – July 1st of this year.

So, one of the big things I see is because we’re looking at tackling is what we keep calling new and novel automotive place of origin, which they truly are here. There was a huge effort to make sure that North America inputs were incorporated to a trade agreement, so increasing the regional value content from 62.5-to-75%, introducing the concept of a labor value content for having goods sourced from highly-paying manufacturing facilities in North America.

And also, field/land opportunity requirements. So, 70% of producers in your procurement must come from North America sources. This has impacted a lot of major companies, especially in the automotive sector, so it’s huge knowing these provisions, where the trade after – what – 225-plus years have to shift to a USMCA, as well as CBP making sure that our personnel is on top of these new provisions and regulations to properly facilitate and enforce.

So, we noticed that especially in automotive production, a lot of changes have also generated a lot of questions. So, it’s a famous point here that I got a USMCA Webpage of CBP.gov, but also I have a team that actively monitors the email box. That’s USMCA@CBP.dhs.gov where we answer specific questions as well.

So, we’ve got that. But as I mentioned earlier, USMCA also includes a robust Labor chapter that outlines many new commitments related to things like, you know, like issues, the associations, human trafficking, migrant worker protections, workplace discrimination — which are handled by a lot of my colleagues in other Agencies, such as DOL.

So, especially DOL’s International Labor here’s there. So, we’re really pulling in our colleagues there, and the wage and hours group here, we’ve got to move the board in the automotive areas. But CBP is working with our DOL partners to make sure and ready to assist with any issues.

But as Therese covered a lot of forced labor, USMCA trades obligation for all parties to prohibit imports that came from forced labor. We’re ready to see that in the future, and we’re working before it; we’re actively working with Canada and Mexico to make sure that they have a full understanding of that and to be able to come into their obligations for this area as well.

So, I mentioned that we have our Website here for the trade community that needs additional information. Our Website has numerous components of guidance resources available. On that, we have our implementing instructions. We also have additional addendums because Congress has passed, late December, the Consolidated Appropriations Act of 2021.

And one that made technical collection on merchandise processing, fully funded, and treatment of FTEs, and they made it retroactive to July 1st. We also have in that 47 different fact sheets covering a whole gamut of different areas on our Website.

So, encourage you guys to check that out if needed. There’s informational videos. We’ve got Spanish and French translations in there, if you all want to test your Spanish and French, and also we have a Chat Bot, a smart way for folks to quickly be able to type in and they can get a quick answer without having to go through the email wait or try to get a POC at the Port here.

Yes, so what we’re doing, we’ll continue to do here in 2021 is continue to engage with the trade team and the associations, private sector, and with our partners here to make sure that we’re tackling. And if you have any questions about the USMCA. Already so far we’ve done over 80 engagements and, counting association booths, we have covered over 8000 attendees. But that’s not enough here. We want to continue to do that, and we will continue to do so as well here.

And we have also continued – we’ve also rolled in a lot of bilingual links that the trade community has already asked the CBP for those available on our Customs link online search system.

So, looking ahead in the next few months, here, just not only the regulations for July 1st we anticipate questions, and we will be engaging with individuals and associations to be able to help address any outstanding questions in two turns.

So, I’m going to pause here to see if anybody has any questions.

Richard Boll: Great. Queena, questions?

Coordinator: If you’d like to ask a question at this time, please press Star-zero — not Star-zero; Star-1, unmute your phone and record your name.

There are no questions at this time in the queue.

Rick Blasgen: All right. Queena, thank you very much. We appreciate your participation today with us.

Queena Fan: Thank you for the opportunity. Have a great day.

Rick Blagen: Thanks, Queena.

Let’s go back to Vincent. Vincent, can you hear us and are you able to get through now?

Vincent Annunziato: I think I’ve achieved both.

Richard Boll: There we go.

Vincent Annunziato: All right. Great to be here. Do you guys have my presentation ready to put it up because I had a couple of slides that would be easier for the audience. And if not, I will just go forward.

Rick Blasgen: We’ll hear from Rich or Eugene on that.

Richard Boll: Well…

((Crosstalk))

Vincent Annunziato: Well, let me introduce myself and then as we’re waiting for things to get posted I’ll work my way into the presentation.

So, my name is Vincent. I’m the Director for the Business Transformation and Innovation Division, and most of you, if you’ve heard from me — because I have been on a couple of these calls before — would have known me for the PGA message set and caller release on ACE.

If you could move me to the next slide, please.

I’ve been in control of the innovation, or I should say, I took over the innovation spot. It’s now going on three years. It’s been actually one of the best jobs I’ve ever had in government. I love this position, taking a lot of the experiences that I had from the ACE and able to apply it to a lot of the new technology that’s coming in. And as you know, we’ve been studying blockchain. So, I’m going to move this right into that discussion.

Next slide, please.

So, in the beginning, when we were testing out blockchain, again, hype was crazy. You would have thought it was solving world hunger, world peace. We needed to understand what this technology did, what its role would be with government.

And we really started to look at not just blockchain, but just the concepts behind decentralized or distributed data. I will tell you that distributed ledger technology is a broader form of blockchain. Blockchain is a very specific technology. And then you’d probably be surprised to hear that the government is actually pivoting away from — or I should say CBP is pivoting away from blockchain at this point for a number of reasons and moving more towards interoperability.

The concepts here are that when you do a blockchain project, you really need to have a specific business use case that you want to use, or else you’re going to be spending more money needlessly than you need to.

The other things is that to make sure that you understand this, and I’ll review this quite succinctly, but one of the reasons why we’re moving into interoperability is not to not invest in blockchain, but to allow private sector — all of you — to invest in the technologies that you would like to use in order to communicate with the government.

So, blockchain is one answer. Distributed ledger technology, in some cases, gives you the same bang for the buck for a lot less money. In some cases, you may want to use your legacy system, or maybe in other cases, you want to use a more modernized system with concepts of technologies that we haven’t even gotten to. What we’re doing is we’re using a standards-based approach and this is what’s allowing us to open up.

All right. Let me move into the next slide, please.

All right. So, we are doing a tremendous amount of work for the 21st-century framework, which you heard earlier from Garrett. And that work is in tandem, not just with the legal areas, but also with we’re working with trade through the COAC to figure out what we can do in this new world.

If you take a look at this graphic, you know, we’ll say we did a study last year, and we actually did an exercise where we built out process flows with the trade looking at what the new world might look like. And we found in — as we were going through it — that we’re not part of the first third. And if you look — the first third of the supply chain, you look at this graphic, it might even be more.

We’re not, you know, knowledgeable about what’s going on when the manufacturers are making orders, when somebody is making orders from those manufacturers, and then all of the relevant in-betweens. You know, the supply is moving to the manufacturer; the manufacturer moving a finish good to the carrier.

So, this opened up a whole lot of discussion in this area because ultimately, I think somebody said it before; it may have been Norm — we need to connect the dots. And if we don’t do that, it doesn’t matter what technology we use, we’re always going to be operating from behind.

One of the things that we’re really starting to think about is a new term. And if you have your pen out, I would highly recommend understanding this. But that is, what is a digital twin?

A digital twin is a representation of the physical item. So, we need to know three things when we want to know digital twin. We want to know what the product is; we want to know who’s in control; and we want to know where it is. If you solve those three things, you’ve not only benefitted the government, but you’ve benefitted yourselves on the private sector side.

Why would I make such a statement? Because obviously, we when we did some tests — and we did a consumer test, by the way. Consumers these days are savvy. There’s not just looking for the best price. In a lot of cases, they’re looking for the best quality.

And we call this soft law enforcement on the innovation side. The fact that a user or — sorry, in this case, a consumer — would want to know where the product is coming from and that it’s legitimate is going to be, I think, the battlegrounds of the future.

The better we get at this, the smaller we make this world, the more you’re going to see consumers interact. In fact, on one of our proof of concepts, we did something — and I’ll just use Nike as an example.

We were able on the entry to distinguish between who the license holder was, whether it was a retailer or a manufacturer or the importer, using a legal entity identifier. And then, when that came in, into our blockchain product — the software — we were actually able to have what’s called a verifiable credential, which I’ll explain shortly, issued by the owner of the license that says that the company that was bringing that in is legitimate.

Now that helps us because it think about it from the perspective of the U.S. having to look at 180 degrees and figure out where that needle in the haystack is. And now you cut that down to 30 degrees, because we’re getting verified legitimacy. It’s a whole different ballgame.

And right away, I hope that what you’re thinking about right now is facilitation, because for the first time in my career, I’m seeing facilitation, and security rise at the same level with some of the technologies that we’re looking at in the way we’re trying to handle the future. So it’s very good.

So let me come back to the consumer approach that I was talking about earlier and why this is important. Using a blockchain or DLT technology, or whatever it happens to be, the government can’t legitimize a product, but the end user or I should say, I’m sorry, I’m confusing terms right now, but the owner can.

So in the Nike case, if I wanted to know if I bought a legitimate pair of sneakers, I could scan something even at point of sale, or earlier, when I’m looking at it with my phone, have it go through the government system, and actually hit the owner and the owner can say, yes, this is a legitimate piece.

Take that a step further at point of sale, when things are sold, and you have that communication there. And then the consumer is then able to get maybe a special coupon for an added buy on or something like that. I’m just making this up. I’m just saying this possibility exists.

And then even more downstream, what if that consumer had some kind of credential that said, this is a legitimate product, and they bought maybe a Gucci bag, and now they’re selling it secondhand to somebody, and they can now show legitimacy.

This is the kind of world that we’re starting to see form and I believe that it’s already available to us, in a lot of cases, because of the way technology exists. I’m going to give you one more example maybe more appropriate for all of you.

But one of the things that we’re starting to think about is on the manufacturing end. What if there was a way as things are rolling off the manufacturing line of us being able to set an ended — individual number, a unique number to that product, and then follow it all the way into the U.S.

That would mean if they made the exact replica off in a back room exact, we would be able to pick up immediately whether or not it was black market goods. These are the kinds of things that I’m seeing in the innovation world and I want to expand on and we’re starting to expand on and the rest of this is going to be devoted to showing you how we’re getting there. So let me go to the next slide.

All right. So one of the reasons why we’re moving away from blockchain is that what we don’t want to do and I’m — if you’re following this, this is one of the problems that blockchain has is that you have to do an awful lot of customization if Company A and Company B are investing into blockchain and there are two different blockchains.

For the most part, what’s happening is the companies want you to invest in their software, and then use it all the way across your supply chain, so everybody’s forced into it, or they’ll charge you the expense of having to make that customization. We’re trying to remove that layer.

So there is a lot of value in blockchain. I don’t want anybody to think that I’m not interested in it, it really can serve great purposes, especially if you need consensus, but you have to understand certain things about it.

First of all, trust doesn’t mean that you trust that I’m a government official, or you trust your family member to do the right thing. It’s simply a comparison of data that that origin of data has not been tampered with. Keep that in mind.

Immutability doesn’t mean that you can’t put in updates, it just means that the data is solid when it comes in and it can’t be changed, once it hits that ledger, right. So again, if you’ve put really bad data on there, and you put it on blockchain, it’s just going to be really safe, bad data. Keep that in mind.

We’re looking into some things on entity identification, which I think are outstanding, so I’ll talk about that in a minute. Tracking is one of the biggest things that we’ve seen with blockchain and that’s something that we’re after on the government side. So we’re hoping that a lot of these software’s that are coming up, will be able to take advantage of the data coming off of those so that we can get at least 1/3 of the digital twin, and especially when it pertains to origin.

That’s very important for customs purposes, so that we know the proper duty rates and to make sure that goods are coming from the right area.

The biggest thing that blockchain good for us and reason why I always hold on to the slide is that middle piece of group input. This is one of the biggest changes that you’ll see in what the government is starting to look at and I think it’s very encouraging especially for the private sector.

The supply chain in the old days, what we get is one bucket gets everything thrown into it, usually a broker or even a self-filer, everything gets thrown in and then everything from the outside is papers being dumped in, rekeyed, it gets a bit messy and complicated.

In the New World, what we’re hoping will happen is that we’ll take the team sport of data, and everybody who is on the supply chain in some way, shape or form will supply data to us so that we can get to the digital twin.

And again, I feel like now — I feel like I see this happening in a couple of different sectors and you’ll see that later on in the slide. It’s not so much that we’re looking to change the foundation of our collection, it’s really the way in which we’re collecting it, which is changing and that’s what I think is exciting. Next slide, please.

So again, what we’re trying to do is create a layer and this is where I think a lot of you may have interest if you’re investing in blockchains. Our interoperability standards are already with the WBC and what we’re doing is we’re allowing blockchain to blockchain communication, or even other systems to communicate with CVP.

If you sign up with what we’re doing, and you back it, and start getting interested in, we got some big companies now that are getting involved, a number of them.

Also, other countries are starting to get involved and we’re really leading the way in this area. You can get completely interoperable and make it so that if that person spent $10 million on their blockchain, and another company spent $10 million, you would put one layer in and you’d be able to communicate with any blockchain.

We actually proved this in our second POC, which I believe was done in 2018 and or it have been 2019, excuse me. And we showed that blockchain to blockchain communication could occur. And we can accept truth from one blockchain into another, not just at the data level, but at the blockchain to blockchain level.

So we’re really leading the world in this particular area and it’s pretty amazing to be out front, the way we are. You can move to the next slide.

All right. I don’t want to get too in depth with this, so I’m going to just briefly go through this. I’m going to start with the middle one. Now, you’ll see W3C on the bottom of the first two standards and then you’ll see on the third one, that we’re on a path.

There was actually a battleground for standards by standards organizations that wanted to get this third one, and we think it’s going to fall more to the W3C.

Now, what’s important to understand here is that W3C is an internationally run private sector standards group. So these standards that I’m talking to you about, and I’ll keep it very business-y, these standards are actually with international working groups, and they are being worked on as we speak, they’ve been accepted.

Major companies, large companies, governments are involved in this W3C Working Group at a technical level. So the first piece is to decentralized identifier, very interesting to me and maybe to all of you is acronym, it’s called the DID. These DIDS are great.

There are so many of them that you could probably, jokingly, I was told by technical cover every molecule on earth with it. A decentralized identifier is a unique ID number most like a passport number or a license number, right, that uniquely identifies the entity, whether it’s a company or a person.

What’s so interesting about it is it comes with the public private airing. So that I can show up on any network and once you recognize me, you can show — you can recognize me on any other network that I’m on. But the big thing here is that I have a private key, you can’t steal my identity.

Now, if I were to give you a business example, this would be like handing an ID number to a police officer. Let’s say that Norm since Norm made that great statement before on PGA did and I will respond to that Norm.

Let’s use Norm. Norm, pulls me over, I give him an ID number, it’s not going to be enough, obviously, right? So he’s going to ask for my license, the license of the verifiable credentials. So he would have a picture of me, he would be able to see some of my attributes.

These VCs are great at giving off that kind of information. You can imagine this with a company, you can imagine this as a product, you can imagine this with a person. But having that license is not enough.

And this is the clincher is that with a verifiable credential, you can actually get a third party authorization, meaning Norm would be able to see that the DMV is validating that my driver’s license is legitimate. So now that norm has All three things, he has unique ID number, he has a license, which describes my attributes and then he’s got a note from the DMV and by the way, this can be handled in phones, iPhones as well, or any phones.

Mobile phones that are out there, in your wallet digital wallet, you can actually verify the legitimacy. Those three things make this very credible and helpful to everyone involved, that you’ve got a legitimate person, or legitimate business.

It’s starting to get adopted, banks are looking at it, charge cards are looking at it, it’s starting to get really looked at very closely. And we just I believe, there’s some retail stores now that are starting to use this as well, to help them identify whether somebody is as of age, so this is growing exponentially.

The last piece is the — it’s called Privacy and Credential Lifecycle Management, which is now the third or fourth name that’s been used, we have encrypted vault and all these other things, but this is where we’ve ended up right now.

And this is the ability to exchange data with a very key term that I want you all to be pleased about hearing about which is called a need to know. We obviously if the government has to worry about trade secrets, we have to worry about privacy, this is exceptionally important.

So that if Norm and I were doing business together, and he only wanted me to see the data coming at me, or he usually sees the post office box. If you had a post office box, you can give me a letter inside that post office box or to take it out look at it and put it back when I’m done.

So think about that in terms of a firewall, the trade is able to exchange secure keys with the entities that it wants to including the government and open up that data to them without exposing it to everybody else. So in this case, what’s slightly different is that the trade member would retain control over the data and who it’s submitting to.

So it keeps it much more safe utilizing whatever they have behind their firewall, and they’re already securing. So it’s a very, very interesting piece on this and I hope that if any of you are interested in the W3C standards, getting involved there that you’ll do so.

But also if you’re interested in what we’re doing, I have a way that you can hook up with us and get involved with testing and stuff like that. Next slide, please.

All right, this is just a pictorial graph, it’s not completely accurate. We have a number of projects going forward right now in the blockchain distributed ledger space that I believe will move to production as early as 2023, and potentially 2024.

The reason why I’m bringing this up is just to show you that we’ve got another— a number of companies with mixed technologies that are able to communicate with each other with those standards that I just mentioned before.

These are probably — this is probably the most successful way that the government will go forward with enabling companies to use blockchain as opposed to forcing them into one software, and then forcing the trade onto that software.

So we’ll be able to take any number of ways, and it leaves it open to the trades to decide where they want to invest and I think this is a very strong and powerful tool. Can we go to the next slide?

So as I mentioned, we’ve got a number of projects moving forward into the 21st century vision. And you can see by the green lines here, that we’re starting with baby steps.

So pipeline oil and steel are actually the first two output pipeline gas is so close. And what it does that we put it onto the green line area. But what this does is it starts to open us up to what we call pre-arrival, pre-release data, which is getting the data much earlier than we get now.

It’s opening us up to new entities on the — that we’ve never been able to deal with before and what we’re doing is a data linkage to ACE. So in the beginning, it’s not going to be really processed data, but it will be data that instead of submitting valid validation activities, or snail mail to get information which can take as long as 60 days, the data will actually be ready at the point that we know that the trade node of data is starting to move into the U.S. and we’re actually able to track it.

This is very important for us because now the data since it’s already available, the operational users are able to go in and just make a decision based on that data.

Interestingly, when I did the two proof of concepts, and I’ve been around a long time I’ll be 25 years this December in customs This was the first time that I ever had field operators say to me at 100%, if this is the future, this is what we want. I mean, it was unbelievable.

I usually get one or two naysayers who are very pessimistic and on our proof of concepts it was like Nirvana. This is what we want, this is going to help us do our job better.

If you notice the purple food safety and ecommerce, both of those were from an industry day that we conducted where we did a 10 by 10. Ten minutes on to pitch, 10 minutes for government to ask questions, and then we voted. This was a mixture of trade participants, and government officials, including the PGAs and we got on food safety, that was the winning pitch by Walmart and e commerce, that was the pitch by FedEx.

Both those companies won. They were voted on by both the government and the private sector as the two going forward, so we are acting on that. Now I think it was asked by Norm, what do they get? What do they get, what does the trade get?

Well, if you are participating in this, obviously, earlier messaging, and were looking to bifurcate the messaging away from just CVP being an ownership of it. So you can conceivably get an FDA response earlier than CVP or you can get some — one of the agencies on the USDA to actually come in and give you an earlier response, so the planning is much better in this case.

Now, I will make the statement, not everybody is going to be able to do this all right away, so we’re not kicking people out of ACE, we’re not taking those who invested in ACE and forcing them into this new system, but I do see a steady movement towards this in the future. So I just want to cover that.

I don’t want to get into the other things that we’re doing here, these are pieces that we’ve been looking at.

There was a mention of China. I will say with China we — one of the things that we want is not just to take the lead on standards, but keep the standards open so that everybody has a say in it, as opposed to getting closed down and potentially having one group control everything, that would not be good for anybody.

Our standards are open they are — have private sector involvement and it’s been a very, very good way of handling things. Next.

All right. So how we do this right now is you’re involved with HFS&T. By the way, they are really the technical right arm of what we’ve been doing at standards. They’ve been in the space almost six years now and as you can see, these are the pieces that we move forward.

We are now actually starting to change phases again, so recontract to companies. At every phase, we can either say yea or nay to those companies that are working for us and if we don’t like them, we can fire them and hire somebody else.

They can also say, “Hey, we don’t want to go and continue with this because we don’t see any commercial viability,”. The companies that we hire are usually small companies. So when they come in, they’re looking to not only sign up with the government and build a government off the shelf system, but they also come in and look for commercial viability.

Now a big thing here that I want to tell you is that we are actually making these, so forcing them to be so open that another company could come in and do the same work and replace them.

So we’re not into vendor locking in any way shape, or form, which is what I worry about with some of the blockchain programs going on. But also we’re walking the talk here and making sure that if we hire a company, we don’t have vendor lock in and can’t switch out.

I will tell you from experience, I have dealt with that for years and years ever since I’ve been on ACE and we are still fighting to this day to get out from certain platforms because of the vendor lock in. It’s very costly, very expensive. All right. Let me move to the next slide, so I can get in here and please keep me honest on time, folks, because I don’t know when I started. If you need to just cut in, let me know.

Pipeline, a very interesting piece. We are getting down to the spigots of where the oil is coming out of in Canada. We have Canadian interest here, so they’ve been talking with us as well. From the point of origin, believe it or not, you’ll be able to track the data even if it’s sold in the open market until it’s finally brought in to the U.S.

We are seeing a lot of improvements in this area for an area that has not really had a lot of exposure to automation. We’re looking at ways to even accommodate the bond movements so to automation as well. Again, importer opens up their supply chain, and we can see all the way down the line, who’s in control and what’s happening.

I will tell you that having seen these projects, it’s amazing to me how much smaller that world becomes because you can visually have a visual of where things are at and what’s happening and who’s in control. It’s a much, much tighter system, one that is much better than the way that we’ve currently been doing things, where we’re just taking in entries, and a lot of times doing guesswork.

Let me go to the next one. Next slide. Here it is again, under the same type of scenario, very, very interesting that we’re getting some of the mill certificates off of this. So we’re actually in a way, probably starting to standardize.

I have meetings going on with other countries, Mexico is just starting to engage with us and we’re looking for foreign suppliers. This is a really good piece that I think is actually going to extend even beyond the bulk steel that we’re looking at right now. How do you get a steel certificate to say that something’s a legitimate grade, you know, if you’re importing car parts, for instance? This could hook up with it.

But we’re seeing the movements from the steel companies, we’re having the mill certificates that are certified, right on the transactions. It’s being shared amongst the importers, and those looking to seek it into the U.S. and the government.

So this is another really good piece where the data is much earlier in the process and then what we do is we connect it to an either an entry, or a bill or an inbound, whatever it happens to be. So that when it shows up in our system on ACE, we have immediate ties into that data and it can be reviewed. Next piece, please. Next presentation, presentation, slides. I can’t even say slides.

Natural gas. Pretty much the same thing. We’re only in the beginning stages of this, it will rely on a lot of the infrastructure that we’ve already used on the pipeline to use. So it’s not hard for us to get from one to the other.

Interestingly, we’re not measuring molecules, but we can get a better view of where this is originating from, and whether there’s imports that are starting to sneak in, so that’s actually very good for us. Next slide.

E-commerce. This one is — could potentially even take us a step further than where we are now. What this ecommerce project is doing that’s a little bit different than what you’re seeing in today’s world, is it’s really making it a bit more transparent, so that everybody on the supply chain can actually see what’s happening without colliding.

This piece is actually again, we’re running this with FedEx, and the concept is how do we get from the point that the seller puts the product up, registering that product with us, and then us getting to even know origin data, and then follow that in?

What’s interesting here is that I believe at some point, you may even be able to get a CT Pat Aveo out of this for people who are, you know, doing a large volume of sales that are constant and legitimate. So I think this is a potential here for growing in the future as well. And we think this is actually going to be very good for consumers in the long run. Next slide.

Food safety. I love this piece. This is building off of the Walmart food safety program that I think we’ve done with IBM, not that I think, what I know is done with IBM, and they did a very good job. In fact, salmonella poisoning if you were following that used to take weeks and months to get that stuff off the shelves, and now it’s taking minutes and hours, so it’s a great, great project.

We’ve got a lot of participation in here, including FDA, we’ve got Agricultural Marketing Service and APHIS is also involved. FDA is very, very big on this. Now, I want to open up the door here, I’m sure there will be some questions.

But what’s so interesting about this is in the old world, we use a classification and we can’t get to the box. We don’t know how the classification lines up with what’s in the box from an entry right. In the new world we’ll actually know down to the shipment level. how that’s going to line up.

So it makes it much easier for us to put a hold on a specific box. So if you had 100 boxes and we held the box, you’d be able to let 99 of them go and we only have to look at one, a very, very interesting aspect here.

We also believe that having built a single window, I know how complicated the data can be, because of all the loops, you’re taking on 998 lines of data up to 9999 lines of PGA data. Because the data is more succinct, you will have less, less complexity and certainly less duplication of data by going this route and having the data upfront and following in a digital twin scenario.

So I think, based on my lessons from single window, this is going to be a much stronger way of doing things. And if you think about a winning for a second, when the data comes in the data hits the government system, it’s going to be spread out to all of the government PGAs at the same time.

It takes CVP out of that centralized loop and we’re having a lot of discussions on how to do that and allowing for the other agencies to come in, grab that data, and then respond at will. We think based on what we’re doing, that what you’re going to see is earlier data is going to equal earlier messaging, and more secure data as we move through.

So we think this is very, very exciting — what we’re doing here and, you know, to be at this point in my career, and being able to lay the foundation for this is quite an honor. Next slide, please. All right.

So I guess I’ll open it up for questions. I don’t know if Norm wants me to go back in and talk a little bit about what he asked, but whoever has questions, I’m happy to answer.

Coordinator: As a reminder…

Vincent Annunziato: Please go head.

Coordinator: Okay, as a reminder, to ask a question, please press Star 1, unmute your phone and record your name. Once again, that is Star 1, unmute your phone and record your name. Our first question comes from Nick, you may go ahead.

Nick Vyas: Hey Vincent, Nick Vyas USC. Great to see your presentation. If you recall, in 2018 — I’m doing very well. Thank you.

I know if you remember 2018, you and I we did the presentation called Western Custom Broker associations in Palm Springs.

Vincent Annunziato: Yeah, since then, I was in my book there Nick.

Nick Vyas: I think that’s always on my neck. Time flies, doesn’t it? No, I’ve got to tell you. I want to congratulate the progress from that presentation to what you and I spoke about the blockchain and the supply chain, but what specific works within the government is commendable. You have done some incredible progress in all forums since then.

So I want to congratulate before I provide my two questions. So the question number one, not well deserved. Question number one, you know, you talked about the data verifications, and the data capturing with portability, but we still seems to have a huge friction in supply chain, with intermediary and third party verification that happens all along.

How do you see the role of IoT that optimizes that? That’s a one. And how do you see that being integrated within the work that you’re doing? And then the second is this whole digital currency, crypto on the one side, but now in China is coming to the digital currency.

And I know there is some talk about how do we verify the source of funding along the supply chain? Can you shed the light on those two issues and how do you view this as part of the innovation capability that you guys are looking at the government side?

Vincent Annunziato: Absolutely. And Nick, by the way, when I retire, I’m writing a book on all this, so just letting you know.

Nick Vyas: Hey, you may want to collaborate because I’m just getting ready to publish the second book edition.

Vincent Annunziato: Good for you, my friend. Good for you. So on the IoT end, I absolutely think there is going to be a very strong role.

And, you know, I never want to I’m not ever bashing blockchain. I’m just saying for the government’s perspective, I think it’s a much stronger and better technique for us to be enablers, as opposed to promoters, especially when it comes to the software.

The IoT scenario really offers us, and especially in the private sector a chance to get just in time information across the board. And it would, I think, align very nicely with the blockchain as a backbone program to assess that data, and even keep it credible.

There is some interesting stuff that I’ve seen and I don’t know how far it’s gotten, where they can actually go in, and maybe even develop a program that guarantees you that that initial transmission is legitimate.

Okay. And so I think that a mixture of those technologies is definitely in the future and we’re seeing some of that in some way. For instance, if you have a frozen container that has to maintain a temperature, those readings are very important.

You know, the problems that you run into are operational right now. So if you go into the hole of a ship, how do you read those things on an ongoing basis, it may take a little while through technology to catch up so that they can open up the door, maybe their satellite transmissions or something like that, or ways of being able to let those signals go out in real time.

But absent that, certainly, when I’ve done some experimentation, Nick, that we were we had a ship arrival system, where you could not communicate with the internet, as soon as it hit the port, and it did hit the internet, it would release that information to us, so we were good with that as well. So maybe that’s a way to adopt some of it.

So definitely big on the IoT, it should be integrated, especially if you’re using blockchain, especially for securing those transmissions.

On the area of crypto, I am not an expert in crypto, The Treasury is ultimately going to open that door to whether or not crypto is going to be utilized. I am very interested though, in banking, and payments. And I do believe that faster ways of being able to pay seem to be happening.

And if any of you are part of the 21st century vision, I can’t give you detail because it’s still under a nondisclosure. But I can say at a high level, one of the things that we’re trying to do is get this information upfront, so that the only thing you’re doing after arrival, barring having to make changes is paying at the line.

And if you can pay at the line. It makes it a lot, I think a lot simpler approach, and certainly more closely related to the systems that are out there. Nick, I hope I did a good job of answering your questions. And that’s helpful.

Nick Vyas: Melvin said you did again, brilliant work. I look forward to staying in touch buddy.

Vincent Annunziato: Thank you. Thank you for reading your book, by the way.

Melzie Wilson: Hi, it’s Melzie. Can you hear me?

Vincent Annunziato: Yes.

Melzie Wilson: Hi Vinny it’s Melzie. How are you?

Vincent Annunziato: Melzie, how are you? I haven’t heard from you in a long time.

Melzie Wilson: I know it has been. I have a question.

Vincent Annunziato: So when we look at blockchain, we’re really looking at you know, the world. You know, this is the next greatest platform of connectivity. How much engaged or how is customs working from a perspective from the World Customs Organization with other countries and I asked that in relation to a conversation I had with a client this morning and their export business to Egypt and their clients use the blockchain.

So what we’re trying to do — so first of all, I don’t necessarily think that every company is going to use blockchain. As I mentioned earlier, the distributed ledger technology is very powerful, it’s less expensive. I think there are other technologies that are already engaged where companies may be slow to pick up blockchain because they can do with blockchain does just with maybe slightly lesser security in certain respects, so I think it’s going to be a mixed bag.

As far as the worldwide scenarios is going just so you understand. Canada recently sent out an RFP with us, and they are utilizing our standards. I’ve been talking to the Border five, I gave information over to the G20. I was in front of the Asian Arctic Economic Council on promoting what we’re doing.

And we are always trying to follow the standards, the data standards that are already out there that are, you know, through the WCO and GS1. In fact, we’ve been doing a lot of work with GS1 in that area.

So we are really taking a global position, not a position of centrist. We’re really trying to expand out, that’s one of the reasons why I’m so excited about the work is because we are putting that message out there.

So one area I’m having trouble is that a lot of the countries don’t understand and I know this for a fact that when they make that investment because you’ll see some of the software companies moving like third world countries right into blockchain.

So what they don’t understand is that scenario of really, entrapment that I fear. If they don’t open up their software to the standards that I’m talking about, they’re going to lock themselves in, and they’re going to have a problem.

So that’s why I’m harping on the architectural side of the interoperability, which I’m glad Nick recognized, because we are making what DHS FCT has done in this area, Melzie is just, it’s incredible. So we’re just being the mouthpiece for it.

Melzie Wilson: Right. Grant, Fred, and Cindy have been great about giving us some feedback, so it’s really good.

Vincent Annunziato: I was joking with somebody on this and I said, if the government gets what we want to be able to do that a lot of these companies are going to start naming children after me. So, I’m being pretentious of course, but…

Melzie Wilson: Right. You forget, you’re the father of entry summary as well.

Vincent Annunziato: No. Part of release and PPA investment. The entry summary is Monica Crockett.

Melzie Wilson: Oh, okay. I thought it was you. I was giving you credit.

So, I anxiously look forward to your book. As I asked, I think the first time I saw this presentation, as Nick noted, as well I think about four years ago and I asked you then if you were going to write a book, because you were the first person to explain this to me, and I fully understood. So I look forward to it.

Vincent Annunziato: Thank you. Thank you. It’s good hearing from you again Melzie. Now, the other questions.

Coordinator: The next question comes from Shari Diaz, you may go ahead.

Shari Diaz: Hi Vincent, this is Shari and as (COVID) closer, (unintelligible). So thank you…

Vincent Annunziato: Oh, you’re in trouble then Shari. You’re in trouble.

Shari Diaz: Not at all. Not at all. And I will join everyone here in commending you on the work and really driving, you know, bringing the right level of technology to the right problem, because that’s something that a lot of folks, you know, (unintelligible).

I would love to probably debate (unintelligible) about what you think is the difference between blockchain and distributed ledger technology, but not fear – not here.

Vincent Annunziato: Good. Because you’re going to get an earful on that one.

Shari Diaz: Okay. Okay. But I think on the on the point of interoperability, there’s no, you know, that is paramount in the position that you are in and across blockchain, communities and ecosystems, for sure. And I think it’s less, to be honest, it’s less about the technology, and more about the process workflow and the data standard.

Because you can push data around in lots of ways. Some of them are more secure than others, you can validate data in lots of ways. But I wouldn’t, you know, I would like to understand your thinking in terms of where you’re choosing a technology versus where you are really defining a data format and a workflow that technology providers should adopt, if that makes sense.

Vincent Annunziato: Shari, what I’m doing that’s different is that I am making an interoperable across all levels of technology. So that means that if IBM comes in and says, “Hey, we’ve got this great business case, and we’re hooking up with you,” you’ll be able to communicate with me if you use my interoperable standards, right.

I won’t debate with you. I’ve been doing this, you know, for not blockchain, but I’ve been doing development for 17 years. It all starts from a good business case. In fact, I’ll even argue that you can even get to the legal framework unless you have a business case. Right? You don’t just start legal.

So the problem that I’ve been seeing, and again, IBM, by the way, has been very strong supporter with us at the W3C, okay. So I, you know, I would commend you on that Microsoft, has been there as well.

Shari Diaz: Yeah.

Vincent Annunziato: But the interoperability piece, what it’s doing is it’s stopping entrapment. And what I’m seeing in this case is that yeah, you can make statements about, we can get drag data across, but when you start moving blockchain to blockchain, what’s happening is you’re into a customization arena, that’s very expensive.

And what I’m afraid of is that it’s going to slow market adoption, if the large companies such as yourselves don’t adopt the interoperability standards, although I am seeing some changes in that area.

I think at a high level conceptually, I think the software companies have definitely been watching it. I think, on the other level, though, down at the ground level, that we’re not getting support we need. So interoperability is primary. I can’t even do business with somebody because I contract with my agency with my OIT components, not to do business unless the interoperability piece is actually adhered to. So that’s the first step to doing business with the U.S. government on the supply chain.

And again, my big thing is, yeah, you can talk data, we can talk, business cases, all we want. But unless those systems connect without a huge amount of customization, I want to do at one time, I want to bring in market adaptability, and I want to lower the cost overall for everybody so that I can get to the smaller mediums that can participate in the large blockchain project.

So like I said, if you want to meet me any time, I have been in contact with IBM. I know a great many of you over there, and I enjoyed the discussion. Yeah, thank you.

Shari Diaz: Yeah, thank you.

Rick Blasgen: Vincent, this is (unintelligible). I hate to do this, this is a great discussion, but we will have a hard cutoff at four o’clock and we have three groups that we have to get in. So yeah, good content.

Vincent Annunziato: I can go for four hours if I needed to.

Rick Blasgen: Yeah. It was good content. So we’ll wrap the questions up with Vincent, and maybe if the folks have got additional questions, they can email, and shoot it to you and that would fantastic so. So is Lea-Ann ready?

Richard Boll: I know she…

Vincent Annunziato: Hey, I just want to say thank you, by the way. I’ve got to run but thank you very much, everyone.

Rick Blasgen: Thank you so much. Great job.

Vincent Annunziato: Thank you.

Rick Blasgen: Great job.

Coordinator: Lea-Ann is in and her line is open.

Lea-Ann Bigelow: Yes.

Rick Blasgen: Thank you.

Lee-Ann Bigelow: Hi. Is it my turn?

Rick Blasgen: Hi Lea-Ann go right ahead.

Richard Boll: It is. Thank you.

Melzie Wilson: Hi. I know, we’re running a little bit behind I believe. So I’ll get to the topics. I’m very fortunate to have Nick. His role is Vice Chair, but I’m going to state he’s going to be my co-chair, because of his great depth of knowledge in this area of innovation, especially as it relates to technology.

So I’m very fortunate to have him with me, as well as other key contributors on our subcommittee. In looking at where we’re going to position ourselves under the new administration, we see there are several areas of opportunity from a short term perspective and then we looked at medium and long term perspective.

In the short term area, we see a dialogue, to digitize signatures being adapted, that we feel will be beneficial, especially seeing struggles and obstacles in this past year and present situation of deployment away from offices and the inability to sign documents.

So we feel that in working with CBP, getting some type of directive issued in accepting digitized signatures would be something that would be very beneficial. One thing that I think that Nick has brought up is looking at the e-bills of lading really goes in line with what Vinny just presented to us in blockchain.

There’s a lot of opportunity to change our approach to our work if we could get electronic bills of lading for ocean.

Two key focuses from our administration is the American Jobs Plan, as well as the White House executive order on America’s supply chain, that we feel that there is an opportunity not just to look at innovation, but work with the trade and regulatory subcommittee and the transportation committee with positive innovations and supporting that role in assisting the secretary.

One of the things that is a hot item is looking at our seaports and airports, in the role of congestion, and how we can use technology capabilities. We’ve talked about earlier container imbalances and having some input with infrastructure in solving some of these problems. So of course, again, working with our other subcommittees and solutions in these areas.

In the medium long-term issues, we have the infamous CBD (aids) punch list that has grown. I will be socializing that. We had some updates the other day from the NCB FAA. Force labor issues is a key topics with customs and the government that we may have some input and some ideas in that area to socialize.

And looking at Climate Action Plan sustainability, many of our companies are investing vast amounts of money in electrical technologies vehicles in order to support sustainability.

Blockchain that Vinny just worked on, and others just presented on and other emerging technologies is a primetime to be a part of it and ensure that all of us as experts representing our specific trade can have a substantial input in supporting this, benchmarking U.S. technology and progress, as well as time in technology in the future FTA.

So really, updating the way FTAs are handled today, from a very manual copy paper to more of an electronic progressive technology usage. And just being able to map U.S. digital footprints is one of the ones that Nick wanted to see.

Nick, do you have any further comments than just me covering our hot, our short, our medium and long term?

Rick Gabrielson: Hey, Melzie, I hate to do this, but we’ve skipped over Lee-Ann. You jumped in. So we still need to get one more update from customs. So…

Melzie Wilson: Oh, I’m sorry. I thought I heard Melzie. I am so sorry. I thought I heard Melzie.

Rick Blasgen: That’s okay. Okay. It’s Lea-Ann. Is Lea-Ann still available?

Lea-Ann Bigelow: I’m here, but I have to say, I’m enjoying your update and I certainly don’t want to interrupt.

I think what I would offer to the group because I know, we’ve had some fascinating presentations, and I always love hearing about the work that Vinny is doing as well.

What I would offer is, you know, I have provided the deck that talks a little bit more about where we are with the Google Business Identifier Initiative. And I think it’s been about a year since I last briefed CA, AC FCC on this initiative.

So there is some new, there are some new developments, but I’d be happy to come back next quarter and talk a little bit more about it. And perhaps in the meantime, you can review the materials.

And if there are any specific questions I can plan to elaborate on those because I know we’re getting short on time. And like I said, I think Melzie’s update was really good. I don’t want to cut you off.

Melzie Wilson: Again, I apologize.

Lea-Ann Bigelow: No worries. So I’ll leave it to you get, the host and chair, you know, glad to come back next time you meet. This is a long-range project and we will not have posted any kind of public solicitations for volunteers for the pilot, I think before next quarter. So they’ll still be time to share that information with you.

Richard Boll: Lea-Ann, this is Rich with the Department of Commerce, I would like to be able to hear your presentation, and please give what you’re going to be able to do - we should be fine.

Lee-Ann Bigelow: Okay. Alright. Well, I absolutely appreciate it. I just want to make sure we still have the time. So, with that said…

Richard Boll: You’re welcome.

Lea-Ann Bigelow: Great. Okay, well, with that said I’ll launch right in. As I mentioned, I think I shared — the last update I shared with ACSCC about the GBI as we call it was about a year and a half ago, certainly pre-COVID because I know I came to the Commerce building in person.

But this is — we’ve been moving right along. Hopefully, I will get the some of the kudos that Vinny got for actually making some progress and ironing out some of the wrinkles that we perceived in the project early on. And I’m really happy to be here to update you about today. Could you go to the next slide, please?

So some of you may remember, the global business identifiers is something that we’ve launched under the border interagency Executive Council, which is really our interagency decision making council for all agencies with authorities at the border.

And that was — it was launched in 2017 as a mere concept at that point, but we did know that the solution we were looking for had to had to meet certain objectives.

One of them was that we wanted to improve the U.S. government’s ability to effectively identify high risk shipments. We already do good work there, but we can always improve our identification of high risk. And also we want to further improve the facilitation of legitimate trade.

A single unique identifier solution will help us do that and we don’t have one at the moment. We also want to create a common language between one U.S. government and the trade and what we mean by that is really using existing identifiers that are already in the marketplace.

These are often common coined and used very commonly, by trade entities already. What we’d also like to do is improve our data quality and efficiency. Frankly, the reason that we launched this project is because we have something that is a bit like an identifier. It’s called the Manufacturer Shipper Identification or the MID.

And we have somewhat notorious and extensive pain points associated with it. It’s not unique, so it does not help us uniquely identify or really identify foreign entities. We don’t manage the MID. The MID is an automated identifier that’s generated based on a combination of different data points about an importer that self-provided data points.

It’s not something that we spend resources managing, unlike the entity management companies that I’ll talk about a little bit — in a little bit. So we know that that that MID is not sufficient, and ultimately, we want to improve U.S. Customs Import Export processes.

And of course, increased visibility into the mass volume of shipments that we receive and more visibility into the supply chain. And I know this committee is very, very concerned about supply chain issues.

So ultimately, what we’re looking for is something that will identify the legal business entities, their different business locations, and addresses, as well as the various functions and supply chain roles. Next slide, please.

So I know this was a question that came up, I think from the committee membership. We are — we’re interested in testing the current identifiers that we found to be most suited – but most closely suited to our objectives.

And so we are going to test three entity identifiers that are currently in the marketplace. We do not intend, I can see that very clearly, I don’t believe there has ever been an intention and we are not currently intending to permanently collect all three. This is purely an evaluative proof of concept.

We are going to be testing all three of these identifiers to see how they intermingle and what value they bring us towards the objectives I already covered.

So the three that we are going to test are the DUNS number, the Glenn from — managed by GS1, on the legal entity identifier managed by Gleiss.

Interestingly enough, Vinny talked earlier about GS1 and I don’t know that he mentioned Gleiss, but as he certainly has in other presentations, because Vinny has been partnering with both GS1 and Gleiss to use their unique identifiers, not just the Glenn and GS1 case but also the G10 in blockchain pilots and in other emerging technology experiments that we are running at CDP.

So the partnership that we enjoy with those two organizations is very strong and has applicability outside of the global business identifier project. Dun and Bradstreet also has been a long-term partner of many of our interagency working group members on the global business identifier.

So currently we have — we actually have 18 partner government agencies that are represented on the global business identifier working group. And many of those as I said, have used the DUNS number or use it currently in their business practices. Slide three, please or next slide, I should say.

We’re already on slide 3. So what exactly is this test that we’re going to run? We’re not calling it a pilot. We are calling it an evaluation to proof of concept that is much more apt a description because at this stage, we have not come to any conclusions about which of these identifiers is going to be most useful.

So we plan to launch this epoch in the latter part of 2021, probably the very final month 2021 to test these three identifiers and figure out what the optimal combination will be to meet U.S. government needs.

So, in its current design, the epoch will operate in the single window, so in ACE. It will collect all three identifiers under consideration and will require and this is where it’s going to be really a commitment on the part of the volunteers, because we’re also, not only are we testing which of these three identifiers are most useful, we’re also testing where they’re going to be most useful.

So we’d like them submitted for the manufacturer, and/or producer, shipper, and seller. So again, we’re going to get this constellation of data on the backend that we will be able to do analysis with and hopefully it match up against our performance indicators for the pilot for this evaluate to proof of concept.

We’re looking to do two phases. The first phase certainly will be implemented in the spring of 2022. So probably launch at the very, very end of 2021 and run through spring of 2022.

The second phase, to be very honest with you, I don’t think our timeline is a certain about that. The second phase will be more of an entry summary proof of concept. The first phase is all about cargo release and targeting.

So I would say also, this is a common question that we get part of participation in this value to proof of concept will also be a condition that we will not be holding cargo purely based on any kind of GBI submission.

So what I mean by that is that if there’s a false GBI entry, or an entry that doesn’t quite jive for the GBI, the data field, we will probably provide some kind of a soft advisory to those who are — to those importers who are submitting data, but there will be no hard holds with cargo as a result purely of the GBI.

There may be holds because of other things that vary — all the other reasons that we would hold cargo, but not because of the GBI and I know that has been a concern for those that are interested in participating in the pilot. Next slide, please.

So as I mentioned, we are undergoing a test and we do have a pretty comprehensive suite of performance metrics and measures that will support our assessment of the potential operational and trade facilitative impacts that we need to be looking at, so both quantitative and qualitative. We’re continuously improving this list.

We haven’t quite yet — we haven’t launched the pilot yet, so we’re going to be working on this list of performance measures all the way up to launch and probably during as well as we start to learn more about what we’re seeing. But the metrics will closely aligned to the six goals that we have for the pilot.

We obviously want to improve quality, the data quality on foreign entities, we want to ensure that our U.S. government partners have access to this data and can access it easily, we want to understand, you know the cost effectiveness of the solution really, what is the burden on CBP on trade on, our interagency partners of looking at this, any kind of global business identifier solution, ensure that we’re complying with us laws.

And one of the things that might make — might require a little bit more explanation is this goal of instituting a global managed identification system. So institutions is really one of the trickiest things. We understand that.

We work with the world Customs Organization, part of the — in the safe working group. We know that trade or identification has been really a pursuit for some time, internationally and there have been there’s been no consensus other than the 10 framework, that trade or identification number framework under the WTO, which is very broad.

And essentially says that the number must be beneath a certain number of digits, and has to be alphanumeric and, you know, the uniqueness is also a part of that framework, but other than that, there’s a lot of room to swim in.

And so part of the institution and institutionalization is also going to be obtaining buy in from foreign partners. So, I know this is part of the presentation a little bit later, but I don’t think I’m going to have time to go through the slides.

So I will simply say, we are working both with the WCO and with the border five, to sort out where the commonalities are, and whether this is something that other countries might be willing to adopt. And also, if it’s feasible for them to adopt over time, if the entity identifiers we’re testing are able to be registered for and obtained in all foreign nations that will eventually want to import into the United States. Next slide, please.

So very briefly, the scope of the epoch currently. We are looking to involve countries, the countries that are seen here, border five, because we are for one reason we’re working with these border five countries on trader identifications part of the border of the future initiative under the border five.

So they were natural partners here and showed great interest. Other countries of interest are China, France, Mexico, Vietnam, Italy, and Singapore is certainly a country of interest. We may need to wait until a second phase to include them, the readiness — their readiness to participate is somewhat in question.

We have product categories here also that present higher risk categories of commodities that we would like to, to involve in the scope of the pilots.

They’re also not just higher risk, but they happen to be commodity types that are regulated in many different agencies, which also adds to what we want in terms of a complex data set and it helps us prove out the value of these numbers to many different agencies reviewing cargo. Next slide, please.

So what are some of the benefits that we anticipate? We clearly — were clearly hoping that this, this pilot is going to bring U.S. government benefits, that’s an easy question for us to answer. We want to understand who is who, in terms of every transaction coming in into the United States.

We want to improve data quality, the uniqueness and adherence to international standards, as I mentioned. We are very interested in in the targeting and risk assessment capabilities of the GBI.

And for trade, we believe that this pilot, obviously is going to offer the opportunity to test and give feedback on the GBI scope. So there’s incentive we hope for trade entities to participate in our pilots. As we see this rolling out, we also believe this is an opportunity for trade to manage and validate its own data.

So unlike a schema — a schematic where customs would manage the data and create its own identification number and really manage that number, and this is through the Gleiss Foundation and GS1 and Dun and Bradstreet there is an opportunity to manage the information through those entities and really keep track of and validate the underlying data sets to these identifiers.

We also are really looking at solutions that would provide broad sector coverage and we do hope there will be facilitation benefits for participation. So actually, if you could go to the next slide.

This actually pertains a little bit to what we hoped might be some of those facilitation and streamlining benefits. So, as some of you may be aware, the U.S. government already manages many different identification, classification, and identification schemes. These listed here are a few, not all. These listed here are those that we’ve identified that may be most directly impacted and potentially streamlined by the global business identifier.

It will take time, this is not going to be overnight. But we do feel that there is an investment to be made across the government and our government partners agree in one identification scheme. That may allow other agencies to lean more on this single global business identifier and less on some of these more tailored and specific numbering schemes, which cost money for each agency to manage.

So we do hope that the streamlining is going to be real, certainly are getting that indication from our interagency partners. And, you know, I think that what we’re also trying to do, although CBP has only some control of this, is prevent further proliferation of the very, very focused identification schemes in the government.

The GBI is actually quite broad. As I’ve mentioned before, it’s not sector specific, but each identifier has many different underlying data fields that are somewhat duplicative of these independent identification systems. So we’re hopeful that the streamlining will occur over time.

So, the next slide, what is going to be required? Actually, if I think this is much more about what’s actually going to happen in the system. I think I might have mentioned this before that this is the trade will submit via ACE and via the CBP automated broker interface.

There will be a federal register notice, of course, and that will provide even more granularity about how to participate, the timeline, commitment and what the criteria for participation are. Next slide, please.

So how can you get involved? We’re hoping that there is interest and this is this is a little bit on how you can get involved. If you conduct business in any of the countries of origin that I mentioned in this scope and you imported a product associated with the scope, that is – that’s a primary criteria.

We want and encourage participation from companies of all sizes. We really do want a diverse set that will help us with our evaluation. It is not going to be something that we’re just working with very large trade entities, we want the smaller trade entities to sign up and volunteer and work with us on this.

We also are working I think, with some success with the identifier management companies to potentially offer these IDs at a reduced price to epoch participants. So there is for all three, the DUNS, the (GLIN) and the LEI, a price — there is a fee for registration for these numbers if you don’t already have them and we are looking to get a reduced price for the purposes of this pilot.

And all three have told us that that that is something that they are considering and we’re working with them on that. So once we’re identified — once we’ve identified the launch date, we also are working with these entity companies to get up PSC so that you can more easily sign up and then just through their regular customer interfaces. Next slide, please.

I think I already talked about both the WCO and the border five. We continue to engage internationally.

And so this last slide that I’ll leave you with and thank you for the time again today. Some of the existing initiatives as they synergize with the GBI.

So, the blockchain projects that we are running and CBP and will continue to work on in the future, they all require verifiable credentials. They all require some kind of identification to be provided to make up the actual distributed ledger.

And so we do believe that this effort is complimentary and these identifications are IDs that we are testing. We have already used the LEI and the G10, I believe in our IPR blockchain proof of concept that closed at the end of 2019 and we’re looking to do more in this area.

And we feel that with e commerce, Amazon already requires the use of the G10 for listing of product. That is a GS1 managed number and GS1 once you’ve registered for one type of number, the G10 in the case of Amazon listed products, you can also for at no additional cost receive additional GS1 standards such as the (Glint) so that is definitely a good synergy that we’re seeing with the EAC already ecommerce vendors can participate in this pilot.

So, that’s really all I have to say. It’s a lot. I know. And thank you for the time. And welcome any questions if we have time for them.

Rick Blagen: Thanks, Lea-Anne. That was fantastic. We only have a minute or two before we have to get one last presentation. But there is a burning question. Maybe we can get to one quickly. If not, Lea-Anne), hopefully, you’ll accept questions from us via email, if we can have your information through Rich.

Lea-Ann Bigelow: Definitely.

Richard Boll: If anybody who has any, if anybody has any questions, just submit to me, and I’ll pass him on. That’d be great. Thank you.

Rick Blagen: Lea-Ann, thank you very, very much. We really appreciate it. Thanks for being flexible.

Lea-Ann Bigelow: No, thank you.

Rick Blasgen: Thanks Lea-Ann. We only have a few minutes. But Norm I know that you might have a couple of things to say. I apologize one, for the short time, but please.

Norm Schenk: Okay. Do I have access? Can you hear me?

Richard Boll: Yes.

Norm Schenk: Okay. All right. I won’t talk in my Kentucky voice, the slow mode, I’ll talk in city voice and knock it all out in less than two minutes.

You know, many of the speakers today came out of our subcommittee workgroup and we probably bit off a little more trying to squeeze it all in the one meeting. So I apologize that we had to compress some of those. But I think it was really helpful in that I’m just going to make a couple of comments on the last two speakers and kind of as the advertisement for more people to join our committee if they so do.

Vincent, I’m a raving fan in terms of all the stuff, the high energy and all the technology that’s in there. You know, again, one of the concerns is the reliance on data. And we got to get away from this, add more data, add more data, add more data, and look at other ways to accomplish the same goals, like with blockchain, which has some good uses, but the use of artificial intelligence, so that’s one aspect of that.

Lea-Ann gave a great presentation on that. I sit in the meetings at the WTO. There’s no agreement from anybody, lots of good talk, two thirds of the countries at the WCO are learning how to walk, so this is just so far out for them.

But a couple of concerns on the – with the global identifier is, and this is a major one, small and medium sized businesses are going to be left completely out of this, because they don’t even have these kind of numbers and this is one of the barriers at the WTO to force companies to buy a number to use it to move goods is really problematic.

So we got to be continued to think about the small and medium sized businesses. The second, which for another topic is CTPAT, the authorized economic operator programs, less than 1/10 of one, less than 1/10 of 1% of all the businesses in the world belong to an EO program like CT pet, it’s not getting traction. So one of the questions is, why isn’t there an au number that can be used in lieu of all other this.

So, we had a lot of the other topics on the data pilot, entry type 86 is good. There was a couple things we couldn’t get through today time didn’t allow, but they’re also looking at possibly requiring an HS number for low value shipments, which is really problematic. And also looking at adding conditional data elements, possibly for the marketplace companies, which makes some sense.

But at the same time, it could — if a marketplace doesn’t transmit it, you couldn’t build enough warehouses for the Express carriers to hold that.

So in closing, if I get myself out of breath, I’m trying to get it all in less than two minutes, is, you know, we have some really good things going on. I genuinely have to thank all the CVP speakers because their transparency and willingness to have discussions we tried to — we actually had a committee meeting offline with CVB to try and consent, condense the time on that.

So we’ve got a lot of work ahead of us, but we have some great opportunities. And I’ll go back to a point that I keep making, great intentions, sometimes lead to unintended consequences. And we really have to think at the end of the day, when we connect all the dots into the supply chain, what’s going to work and does it fit in not just for the trade and regulatory committee.

But if you look at rich — the transportation and all that, it all has to weave together. So we got lots we can do together and that’s less than two minutes. So I’ll leave it at that. Thank you.

Rick Gabrielson: That was great, Norm. Thank you so much. A lot going on.

We may get cut off here but in the sense that we don’t I just want to thank all of our speakers as well. I thought it was a lot of great information, a lot of really good updates and we can probably put together a really solid agenda for our next meeting in June.

Rich. Rick Blasgen are you still there. Any closing comments from you?

Rick Blasgen: And all I’ve got to say, as you know, we’ll be working on the June meeting and then I think it’ll be virtual. And then in October, we’ll have to reevaluate. I think the next one will be virtual.

I think Rick had to jump off but do send us your feedback. Again, I apologize. It’s kind of hard to get everybody to go around the room and have a final word, but that you will understand that but if you do have feedback, or things that you want to make sure we include on the next agenda, send us an email, we’ll definitely include that.

So thank you, everybody. I really appreciate your focus and your time today. A great job by all the speakers and all the folks who had a hand in putting together the agenda, and for all the workgroups.

Rich, I guess you had a word.

Richard Boll: Yes, thank you all for attending. And, you know, we’ll get back to you — let’s keep in touch between now and of course, our June meeting.

Rick Blasgen: Thanks, everybody.

Coordinator: Thank you all for joining. You may now disconnect. Have a wonderful rest of your day.

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