In order to avoid allegations (or even the appearance) of preferential treatment of individual business entities, CBP (and its predecessor agency, the U.S. Customs Service) have long preferred dealing with trade associations. In the area of customs surety, this preference intensified in the mid- to late-1980s, partially as a result of an extensive revamping of Customs Regulations provisions dealing with bonds. On February 18, 1985, sweeping changes to Part 113 took effect. Two of the most noteworthy changes to the customs bond structure and environment were:
- Replacement of over 60 bond and rider forms with a “universal bond form,” CF 301. Each of the old forms was specific to a certain type of transaction or activity and contained all applicable contract conditions. These forms were often several pages long. The new form CF 301 was reduced to one page but nevertheless designed to address all types of transactions/operations. The specific sort of transaction or operation to be secured was indicated by selecting an individual “Activity Code” listed on the form. Applicable bond conditions were incorporated by reference to the explicit regulatory provisions containing them in 19 C.F.R. § 113.
- Authority for Customs to “sanction” a surety alleged to be “significantly delinquent” in honoring obligations under its bonds. Prior to that time, only the Department of the Treasury itself could undertake to refuse to accept a surety’s bonds. Customs now had the ability to take unilateral action which could, practically speaking, put an individual surety company “out of business” for customs bond purposes.
With so much at stake in terms of their livelihood, customs sureties were more in need than ever of a vehicle to facilitate a meaningful dialog with Customs. Surety associations had long been in existence. The most prominent among these were the Surety Association of America (now known as the Surety and Fidelity Association of America) and the National Association of Surety Bond Producers. Membership in the former is limited to surety companies and in the latter to intermediaries (insurance agents and insurance brokers). However, customs bond operations constituted a miniscule portion of the business conducted by SFAA/NASBP members and their share of U.S. customs bond production was minor.
Another surety association had been established in the early 1980s. The American Surety Association (or TASA) was originally formed to protect and promote the interests of sureties and intermediaries writing bonds in connection with the Surety Bond Guarantee (SBG) program administered by the U.S. Small Business Administration. Though smaller than the two associations mentioned above, TASA was nevertheless national in scope. One of the founding members, John Filice, was active in the customs bond marketplace as well as having SBG involvement. Through the efforts of Mr. Filice, a Customs Bond Committee of TASA was formed in 1985. Original committee members included representatives of current ITSA member companies or their predecessors.
After the mid-1980s, additional (but largely regional) customs surety associations were formed. However, it was the organizations represented by TASA who accounted for a significant majority of the customs bonds written in the U.S. This was true of TASA membership then and is true of ITSA membership now.
In another development of significance, Customs moved to form the Customs/Surety Executive Committee in mid-2001. Originally consisting of CBP officials and representatives of four customs surety associations, CSEC was established in recognition of “the importance of a clear and cooperative relationship” between Customs and customs surety associations. TASA was a charter member of CSEC.
Largely as a result of changes in the SBG marketplace, non-customs membership of TASA had dwindled considerably as the 20th Century drew to a close. By 2004, TASA ceased to exist. The need for a productive dialog between CBP and the customs surety industry was nevertheless greater than ever. Hence, former TASA Customs Bond Committee members took steps to form a new association. On December 2, 2004, the International Trade Surety Association was incorporated in the state of Florida. ITSA’s first president was Michael M. Davenport. Mr. Davenport had served as chairman of the TASA Customs Bond Committee since the early 1990s. He continued as ITSA president until his retirement in 2015. For many years, as a representative of ITSA and TASA plus independently as an individual, Mike served on the Trade Support Network (as trade co-chair of the eBond Subcommittee of the Revenue Committee), on the TSN Trade Leadership Council, and as TLC Trade Ambassador. Mr. Davenport also served two terms as a member of the Advisory Committee on Customs Commercial Operations (COAC). Mr. Davenport’s contributions to the customs surety industry and the international trade community in general are immeasurable. It can also be rightly said that the institution of an electronic customs bond system (eBond) would not have taken place when it did without the tireless efforts over many years of Mr. Davenport, TASA, and ITSA.
Gilbert Lee Sandler has served as General Counsel to ITSA from its inception. Like Mr. Davenport, Mr. Sandler served two terms as a member of COAC. Mr. Sandler is widely recognized as an authority on customs law and has been a guiding light for ITSA and the surety industry for many years.
Other surety associations have played an important role in development of eBond and advancement of surety interests in the customs bond marketplace but ITSA members feel that the part they and their association have played in these processes has been a unique one.