Customs Veteran’s Candid Take on Turbulent Trade Policies

Machine Operated Script:

Annik  

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Andy  

Going to have a great show to talk about this chaos that’s been going on recent I mean, it has been crazy on how fast things have been changing regarding trade policies, regarding, you know, government expenditures, regarding just different things in the world. And so we’re going to get into that in just a second. But Lalo, anything you want to start off with before we get into this?

Lalo  

just for reference, policies and announcements and everything we’re hearing right now in the news, and not necessarily just in the news. I mean, it’s actually happening in DC is they’re coming out so quickly, and they’re changing so quickly that as a show, as a podcast. We’re trying to get these out as best and as timely as possible, but just for reference, just so that everybody knows, just for reference, this show is being recorded on Valentine’s Day on february 14, and what we’re going to talk about is as of this day, and we’re going to try very hard to release it like a few days after, speaking of which, I mean, I’m just really excited to have managed to create a good friendship here with a podcast with our next guest, in the sense that if you would have asked me, 2345, years ago, that we would have a podcast where we would have a a consistent host, I mean, not host guest on our show that was in charge of the whole darn shebang. Let’s call it, you know, of all of customs, I would say, Yeah, you’re dreaming, dude. You know it’s like, but anyway, but we’re very privileged and honored to have Mr. Alan Bersin back on our show, as we had him multiple times, and looking forward to talking about trying to see his perspective on what is going on. And what if he was in the hot seat right now. What if he was the CBP Commissioner? You know what? What would be going on? How are things going to evolve, etc, you know, and so, so I’m really excited for this because, I mean, we’ve had someone who’s been there before. 

Alan Bersin 

So yeah, thank you Andy and Lalo for your your kind words. It’s a friendship by prize, and it is an exciting time now for all the all the apparent chaos and the disruption, it is a time that is right up the alley of simply trade. I think it’s a period of obvious, obvious change, but I think we’re also dealing with a very sophisticated group of men and women who have who have been on the border and been in charge of managing trade for a while, and while the policies have been coming in a fast and furious pace, they haven’t yet settled in. So I think the attitude that CBP is just steady as we go. We were adjusting to a new administration with a new set of priorities and a disruptive manner of implementing them. But it’s something I think that’s very exciting for many of the people and the professionals at CBP, as well as you know, the pressure the employee, the employee pressures that are being felt all over the government, not so much, I think being felt that CBP, where there’s a understanding that both the migration management and trade management that you’re Going to need, the people in place there, but I think it’s a, it’s a it’s an exciting period at CBP, but one in which many adjustments going to have to be made. 

Lalo  

Well, we should explore a little bit about that. What you just said, Alan, in that the proposed Commissioner for CBP is the former chief of border patrol, correct? Rodney Scott, yes. Ronnie Scott, yes, sir. And because of that, I mean, how do you see that? I mean, it seems like there’s more emphasis on immigration than customs. Or how are you looking at that?

Alan Bersin 

So there’s no question Lalo that this administration coming in as a result of the situation at the border in terms of migration, has made that the essential priority for Customs and Border Protection, and indeed for all of the Department of Homeland Security for that matter, at the same time, this is an administration that is also very much geared to the trade environment, whether it’s the tariff policies or the discussion of increased revenues. I think there’s a real understanding that the blue shirts right ports of entry at CBP are a critical part of the agency. So yes, no question that migration and the control of migration at the border is the is the top priority, but I don’t think certainly not the way that it affected the country or the agency after 911 when trade really dropped off the agenda. I don’t see that happening

Lalo  

here. Question, when I first reached out to you, I was very curious, because I’m really bad about and I’m and I have a hard time understanding like when it comes to the government and laws and regulations and I mean and just the way that the government really operates. I’m pretty clueless on stuff like that, but I did reach out to you, and I asked you about the proposed idea from President Trump on bringing the USTR under the Department of Commerce, a move that has also been done by former presidents, you know, trying to be done by former presidents, but it’s always pushed back by Congress, especially because it would, it seems to indicate that it’s going to take away the tariff making powers or abilities from Congress, and strip that away from them, and moving it over to to the Department of Commerce. So what I mean, even as recent as, I think yesterday, I believe one of the if it was a press conference or something, somebody said that now that the Department of Commerce is responsible for that which it’s really technically not true, right? I mean, because it requires an act of Congress for that to become true, correct?

Alan Bersin 

Typically, there is executive authority to issue and levy tariffs, but that is always based on a legislative authorization that’s been given by Congress. But to your point of which agency, where agencies ought to be placed and who would have control, you’re also right that Congress has tended, over the years to be balkanized. That is, different committees have different relationships with different parts of the executive, and they try to protect that relationship so that they can influence policy, I think, in terms of the reorganization that would coordinate what Congress is doing and what USTR is doing that President Trump is in a position to do that in the sense that the entire Congress is and the executive is aligned in terms of party allegiance. The Republicans control both houses of Congress, that there is a majority on the street court that’s attributable to President Trump’s appointments. So I don’t, I actually don’t see the this idea of reorganizing the deck chairs as being so critical, because, as we’re seeing in the way in which the administration has gotten gotten started, they’re operating by executive orders. What happens in the courts is yet to be seen across the board, but there is no real objection Congress to this activity because of the the loyalty, like it or not, of the leadership in both the House and Senate to to the Trump White House,

Lalo  

correct. Yeah, yeah. And so I guess you bring up a really good point, because you said, they’re all executive orders, and we’re still yet to see what the courts are going to rule and everything, I mean, so I guess this is a very good point. We’ve had guests in the past couple of weeks, three weeks. I mean, since, since everybody started hearing about all these, you know, executive orders, who have very wisely advised to not react to any of the tweets or the or the or the announcements, because it could very well mean that it’s not going to happen, right? Or it’ll happen in a very different way. I guess that that that is almost what you’re saying here. Also, you know, it’s like they’re pretty much executive orders. Doesn’t necessarily mean. We’re going to jump into them right away. We’ve

Alan Bersin 

seen that. It’s both with regard to President Trump style, which is to really exaggerate, make statements that seem outrageous, but you have to really get get under them and understand what the problem is that he’s addressing. So you’ve got to see that unfold, as for example, in the tariffs on Canada and Mexico imposed on day one but suspended on day two. And as negotiations take over, to see where in fact, these deals will be made. But it’s also to your point, Lalo, the courts which which have take time. You can’t get a lawsuit filed, and they can’t be operating in the same pace that the President’s Ministry of executive orders. So I think we definitely want to wait to see what how the courts react, what the reaction of the White House is to adverse court rulings. And just steady as we go. You know, the President was elected, many would argue to do exactly what he’s doing is to disrupt the way in which Washington was conducting business. Now like that, or not unlike 2016 the President received a majority of the popular vote and an overwhelming victory in the electoral college. So this is something that is, it’s new and it’s unsettling, but we should also seek to see what opportunities exist to get some things done that weren’t possible in the banks. Let

Lalo  

me ask you this. I mean, because I know, I mean, here at global Training Center, obviously that’s our job. That’s what we do, is we do training. I mean, that’s what our job is, and ours. The reason global Training Center exists is, I mean, obviously, besides putting together this podcast, the main reason is, the main revenue making part is to provide training and and on all the rules, regulations, etc. So that’s what we do day in day out. But so here’s a bunch of questions that people ask, which we have no real answer for, because there’s, I don’t know what your opinion might be, but here’s a really good one that we get asked because of Mexico and Canada potential terrorists coming in on March the fourth. I think that’s the date. Yeah, I’m pretty sure that’s it. March the fourth, they’re asking, but that doesn’t apply to my product. If it applies to usmca, correct? And we’re like, no, it pretty much, it’s erasing everything on usmca, and we’re going with a 25% tariff on any products coming in. What is your understanding on that? Is that even legal? Is that even great? I mean, I know you’re not 100% lawmaker or anything like that, but I mean, what is your opinion on that?

Alan Bersin 

So, so it’s, it’s certainly not consistent with spirit of the usmca. The purpose of trade agreements like that was to reduce and eliminate tariffs and encourage trade. But again, we shouldn’t jump to the conclusion that those tariffs are coming into into effect if, if they are imposed by executive action, then they will supersede terms of enforcement, the US, they will supersede the the provisions of the free trade agreements. You know, there’ll be there’ll be lots of adverse political commentary on it. There’ll be challenges, I’m sure, under the dispute resolution mechanisms in the agreement. There’ll be other challenges, but that assumes that this is going to happen, and I would, I would tend to project at this point, because I think President Trump, while he threatens the tariffs, it’s a means it is mined to a different end, which would need to address issues, whether it’s in the case of Mexico, organized Crime and fentanyl and migration cooperation, or whether reducing the the surplus, trade surplus between the countries, I mean, all of these things are, are the purposes. What President Trump’s done that is so unsettling to so many people is that he’s actually conflated trade with other issues. Issues with non trade issues, whether it’s migration or control of fentanyl, and that’s just the new fact of life. But I wouldn’t jump to the conclusion and that this is going to be indeed what what happens? I think much more likely we’ll see a further series of agreements between Mexico and the United States on the one hand, and in different ways, between Canada and and the United States and the other. But what I would urge both Canada and Mexico to do is rather than be entirely defensive, is to actually seize the initiative to put big ideas on the table, things that would help not only their country, but North America as a whole, and and to really try to use this as an opportunity to negotiate all of those big ideas that In the past really wouldn’t get the first base. Yeah,

Lalo  

and I see that, what you said. And I into to Canada and Mexico’s credit. I do see some effort in their site, right? I mean, like Mexico sent 10,000 troops to the border Canada put together a plan where they’re going to be spending, and I’m sorry I don’t remember the billions of dollars that they said they were going to be spending on border security and trying to, you know, tighten that up a little bit more. But I do, I do, like also, I know the President of Mexico, she’s, she’s pretty sassy, and she’s really, you know, trying to see this as I know he’s using this as a negotiating tactic. So let’s see what we can do. You know, that’s that. That’s the message I get from some of her, her, her, you know, speeches, or whatever she might be talking, you know, in any of her press conferences. So, so that’s, that’s good news on that. So absolutely.

Alan Bersin 

But you know what I would say, Lalo, in the responses that you recorded, that you referred to, yes, Mexico said 10,000 troops. Canada’s putting further border security issues in and appointing a fentanyl czar. But I’m talking about actually going beyond that, stay, go beyond the ballpark that the Presidents defined, and get to issues like, for example, pre clearance. I mean, why? Why not talk about, why pre clearance? That would have a lot more cooperation between Mexican and US Customs on targeting. They could work together to keep Chinese precursors from coming into Mexico. But if you have this kind of cooperation between Mexican and Mexican border management agencies and CBP, I think what you see is a identify, identification, many cases in which Mexico is not collecting duties that are coming that are due. Then, because of misclassification, we could also then use this, not only to develop trusted networks of traders. But we can, we can pre clear things at the factory floor, and really use this as an opportunity to to expedite lawful trade travel, both from Canada and Mexico into the US and vice versa. So I’m saying go beyond. Go beyond the negotiating issues that the President set be responsive, if you can, but there are big opportunities here for to advance North American interests on both us northern and southern borders. You

Lalo  

totally agree, yeah, that’s, that’s obviously, yeah, that’s a really good perspective that, of course, me and my, my little bubble here, I’m not not looking at, but that’s, that’s, that’s what we have you on the show Alan.

Alan Bersin 

I It’s, you know, this is, this is a disruptive time. Is we know, we, human beings, don’t like change. But this is a time in which you have to look at the at the possibilities in which we can accomplish big things. And Canada and the United States, and Mexico and the United States have huge shared interests. They’re our largest trade partners now. We all have an interest in in in properly monitoring Chinese penetration of the US, of the North American trade production corridors. This is, this is an area where we can, we can cooperate, and we ought to, frankly for the benefit. Of North America and each of its core countries,

Lalo  

correct? Yeah, I agree. And what about China? I mean, they’re, they’re the third most mentioned here on tarots and everything. Do you feel that our communication with them is similar to what we’re what maybe Trump and his administration are trying to get out of Mexico and Canada, or is that like a whole different ball game? I mean, yeah, I

Alan Bersin 

think the situation between the US relationship with China and and the US relationship in North America are quite different. In fact, over the last generation, the rise of China has been a, in many ways, the most remarkable transformation that’s taken place, and then in world history, a lot of that rise under Deng Xiaoping is was done in a peaceful that’s it with the an idea of growing and becoming more a lead economy, to be sure, but also to do so in concert with existing world order. It’s become clear under Xi Jinping, I think that, you know, China is a rising power, and the challenge that it raises to the US, one that both the Biden administration and the Trump administration, perhaps the only thing they they agreed on, 2016 on, is that China has become a a country that needs to be countered. Now, that doesn’t mean that we should seek to contain the rise of China. It is definitely a, you know, a huge factor in world affairs, and will be, in fact, it’s only been in the last 200 years that China was was on its back for most of world history because of the size of its population, it had the largest economy in the world, and it it has a place in the world we should not see as something we want to contain. What we do want to do, I think, though, is we do want to redress the imbalance that’s existing as as the West, particularly the United States, helped China increase its and carry off the economic miracle that’s taken place there, we haven’t seen the reciprocal openness on the part of China to opening up its market to the United States in or the West in ways that would be reciprocal. We haven’t seen the kind of respect for intellectual property that needs to be built into any self respecting or mutually self respecting new relationship. The big challenge Lalo over the next generation, in my mind, is, how do we keep the trade competition, what is definitely going to be a competitive situation between the United States and China from degenerating into a diplomatic and military conflict between the two countries that would be a catastrophe for both countries and the world, but there’s definitely the need to reshape the way in which we’ve been dealing with China trade policy. Yeah,

Lalo  

totally agree on you, on that, on the on the any military implications that that might be, especially when you also factor in the situation with Taiwan and and how we want to protect that, and China insists on on, on taking that over as well, and, and I guess we certainly see that a lot also with other territories, like what’s going on in Israel and Gaza, and going on with with Russia and and Ukraine, you know, just figuring out what they’re gonna do with territories. But let me just jump into this also, and let me ask you on you, you kind of talked about are, you’re discussing a little bit about the I’m having trouble with the word reciprocity, or the reciprocal of trade, you know, of terrors us matching what others are doing to us and our dean. If Andy were here, and by the way, everybody apologize, Andy did start the show, and for some reason, either his internet went out or something happened and he just dropped off. And apologies for that. But if Andy were here, he would probably be bringing up the fact that you know how US products are not treated equally or fairly throughout the world, not. Going to go into all those details, or anything other than the understanding that we all understand and know that that that that is a fact. So recently, there was a and remind me what it was, it was either proposal or an investigation of what for us to look at how we can address that and do the reciprocal tariffs. Correct is that, is that, what, I think that was just announced yesterday, or something by President Trump, yeah.

Alan Bersin 

Well, listen, I think we, we learned, ever since the depression and the experience that we had with the the smooth, holy Tariff Act at 1930 that you know, tariffs in the should be avoided, if at all possible. That, in fact, free trade, which is fueled globalization, mostly for the good, although they’ve been downsides. To be sure, you know, is, is, A has been very beneficial for millions and millions of people in the world have benefited from globalization. It’s been uneven, and that’s part of what we have to address going forward. And I think what President Trump is seeking to address, but tariffs and retaliatory tariffs are actually not a good development if you could avoid it. What President Trump, I think, is saying is that if there are imbalances in the trade, if a country’s market is not open, or if regulations is such that us, producers and and and businesses don’t have equal opportunities of access, then that’s not going to be tolerated, and it will be tariffs placed on goods imported into this country. But again, you know that I hope, and I think the main intent is to cause changes in the way in which countries treat us business, rather than for the sake simply of punishing other countries. That remains to be seen, and we need to see this play out, it’s going to be much more complicated in my in my view, to accomplish this with China than it is with North America and even with Europe. The recent round of the tariffs has been articulated directed to to the EU, to the European Unions, but steady as we go. Well, let’s wait what the reactions are, and businesses will have to react, but I don’t think it’s going to be from one day to the next. I think we’re going to see a long series of negotiations with China, and we’ll see how the leaders policy makers actually resolve this and avoid something be mutually self destructive.

Lalo  

Well, okay, so now let me go back to my original statement that I said, Let’s pretend, or let’s say you you were in the hot seat right now. You were the one, and you’re the commissioner today. We all know CBP job is not to make policy, but to enforce it correct. Okay? So because of that, what? What your strategy or what do you what would you be thinking right now? I mean, you here, you are looking at enforcing, and you’re this is very close and dear to you because of your relationship with like Altana and forced labor than you being in China quite often, actually. So enforcement of forced labor, enforcement of like now de minimis, right? I mean, because, because now that is coming in, what about the steel and steel and aluminum tariffs now going down to a point where, even if my product is not evident, that it’s classified under steel or aluminum, let’s say this mouse here, but let’s say this, this mouse has some steel or aluminum, I’m going to be taxed or tariff on, on the what is aluminum or steel? So now we’re talking about several level deeps of of tracing that product and making sure that you’re declaring what is steel is you can pay tariffs, at least. That’s the way I understand it. And sorry if I if I misinterpreting that. So what I’m trying to say is, now you’re looking at a workforce that you currently have, that you have geared up to maybe enforce whatever you thought you were going into, but now you have two or three times the work where. Where are the Where do you feel is the focus and now, like, where’s the enforcement going to be? Where is it like, what? I guess I just kind of want to pick your brain and see what do you feel you might be doing today. I mean, obviously trying to hire more people, but, I mean, but then there’s also the the Elon Musk and Trump idea of reducing the federal workforce. So, I mean, how is this is going to all work into it? I mean, I guess again, let’s, let’s look into your little, you know, crystal ball, or what would you think, what might be you might be doing. So

Alan Bersin 

this is a, this is, this is the kind of scenario planning that the agency goes through, I think, pretty routinely when when faced with policy changes, what’s different now is you’re getting a large number of potential policy changes, none of which have yet been finalized. So to speak, you’ve got a lot of motion, but not a lot of things that have yet been set for implementation. But CPPs become very sophisticated on the trade front in understanding which ports of entry actually handle, which imports. What the nature of the business of the major ports are, what the Port of Long Beach does, what the Port of New York and New Jersey does at Port Elizabeth, what Savannah does, what Houston does in all of this, we have teams that have been organized to deal with very different products being brought into different places in the country, we have centers of excellence that have become quite proficient in understanding this. So I think the the organization is capable of being able to organize and be prepared to implement their responses as these policies actually take take shape and are implemented, there will be lag times, to be sure, in the same way that it took probably a year, a year and a half before the week of forced labor protection act was being enforced regularly by customs and border protection. But Lalo, this is, this is the the agencies developed a certain capacity to deal with this. The planning can be done on a regional basis and on a port by port basis, in ways that I think, will be responsive to the needs when these policies are actually implemented, and we know that what the policy landscape looks like with a lot more certainty than we do today.

Lalo  

Great. No, no, yeah. So that was more like on my The reason I was asking is just to just take a look at that and how, you know, like, what the future challenges might be, what are current challenges? And it perfectly answered. Thank you. Thank you for that. It’s just again, it’s just, it piques my curiosity and trying to figure out, so how are we gonna, like, address all this, you know, and a lot of us prepare for, okay, this is the plan we’re going to we now know that we saw last year in 2024 that there was a dramatic increase in, like, forced labor and forced forced labor enforcements. And you know, is that going to continue? Is it going to diminish, you know, things like that. You know, how are, how is both the industry and, you know, government going to prepare for, for, for any of these new challenges. Ellen, I don’t want to take too much more of your time, but, I mean, do you feel that we might have missed anything or that we should cover and well, how do you feel that that if you have any other final statements or anything that you might want to make. Yeah.

Alan Bersin 

So two points in terms of change, the largest challenge will come if, in fact, the de minimis changes are made permanent and are implemented. That’s been the largest change, I think, in the trade world over the last number of years. Lala, we now see coming into the United States. 4 million packages a day are being small packages a day are coming in. And if the de minimis rules are changed, which apparently, I think they will be, and should be, in some ways, both to prevent fraud and abuse, but also to monitor more what’s being shipped into the country without manifests, without a whole lot of information. That’s going to take a major change at Customs Border Protection and in the trade community, where we start to see the. But requirements that packages be identified, at least not with a full manifest, but at least with enough information to permit cpp to make judgments about the risk that the package may present. So I think that’s a big change, and one that the agency has been confronted with that I think is working on. And then the second point that I would make is that, you know, this agency is very, very critical to what to the trade world, and it’s improved dramatically in its communication with the private sector. You know, I think you know, if you look over the last decade, the communication that takes place between the private sector and and the regulators CBP and elsewhere, has increased dramatically in the CBP context. That needs to continue. I think what we’re going to see over the next phase, regardless of what becomes what policies actually are ultimately implemented, is that we have to get away from the adversarial relationship on the American side between the public and private sectors. We need to see a new cooperation. We need to move away from the gotcha attitude terms of trade enforcement. And this is, I think, a major long term shift that CBP is moving toward and the private sector as well. So just to wrap up, I’d say in the short term, the biggest challenge is going to be in the E commerce and the small package business faced by CBP, and in the midterm and long term, it’s moving from a adversarial relationship to a cooperative one in which the roles of both regulator and regulated are respected, but there’s a lot more communication between these major actors in the public and private sectors,

Lalo  

okay, yeah, and I do see a little bit on that second point that you made. I do see a little bit more of that. I mean, we as a podcast are even being reached out by CVP to come on and talk about certain you know, just points or, I mean, like, like, like, free on forced labor, or even the continued education requirement, you know, things like that. And they do want to do more public outreach. And thank goodness for that, because I would love nothing more than to have a government people also on my podcast to be the the front line on communicating this information to, to folks you know and and at the same time, I don’t know if you’re going to be at the at the, what do they call it now, trade Summit? I guess they call it in May.

Alan Bersin 

Yeah, no, I will. I haven’t been there in a couple of years, but this would be a very important year to be there, because by May, we’re going to start seeing some of these policies will take shape, because decisions will have been made following the negotiations and and CBP will be right in the in this, in the In the vortex of all of these pages.

Lalo  

Yeah, exactly. So for anybody listening, it’s not the details are still not out, other than it’ll be in May, 1 week in May, I believe, like the third, fourth and fifth or something like that. Apologies if those are not the dates, but it is the first week in May. It is in New Orleans, but there’s still no formal way of registering, and there’s no formal way of booking your rooms or anything like that. But I kind of brought that up only Alan, because that I feel is also a way how CBP is reaching out and doing that public outreach. They invite like, for example, us. They invited us to possibly moderate or be part of the presenters, you know, which, historically, like you said, it was more government talking to you and telling you what they’re doing and not not collaborating in that sense. But it has changed a lot. Personally, I see it that way. I mean, whether somebody else sees it a different way or not, you know, apologies, but you know, that’s what I’m seeing. That’s how it’s working out on my end, and it’s looking good to that extent, but good points there. And Alan, well, thank you. I mean, I can’t thank you enough. I mean, I we always say this. We can spend a couple hours talking to you, and hopefully we see you at the trade symposium. Maybe I’ll grab a seat with you and turn on the camera and we’ll talk, you know, and we’ll, we’ll, we’ll get others like Cindy Allen, or, you know, some of your former colleagues, to just sit around in the table and just talk. That would be a really interesting conversation, you know, just to hit the recorder and and see what we could we can grab, but if we do see you out there, that’d be amazing. So, but anyway, but thank you again. You’re always so grateful with your time and or generous. I’m sorry. You’re always so generous with your time, and we really appreciate that. And you know, I know you’re traveling abroad, so you know, hopefully you continue to enjoy your time out, traveling outside the country

Alan Bersin 

will do la long and thank you to the service you and Andy provide.

Lalo  

Thank you, sir. You have a great afternoon and safe travels and again, hopefully we’ll see you soon. In person, you.