TRADERS URGED TO ‘GET INVOLVED’ IN CUSTOMS’ COMPUTER UPDATE
Byline: Jennifer Owens
NEW YORK — Four years with little movement on Congress’s mandate to modernize U.S. Customs have left importers frustrated and federal overseers suspicious of whether the agency can update its computer systems on its own, said panelists at a trade conference held here last week.
But acting Customs commissioner Sam Banks, speaking to more than 550 traders at this year’s International Trade Convention and Exhibition sponsored by the American Association of Exporters & Importers, said the trade community must involve itself with the agency’s automation plans. Said Banks, “You may stand opposed, but you can’t be a bystander in this. There are no innocent bystanders in this.”
The two-day conference ran through Tuesday at the Marriott Marquis.
The “get-involved” theme was echoed by top Congressional staffers, who urged traders to seek administrative support for its funding. Walter Raheb, a trade specialist for the House Ways & Means Committee, said, for example, that while Congressional appropriators have not been extremely generous to Customs’ automation expenses — doling out about $45 million over the last four or five years — the administration also has not been bold in asking for more revenue.
“You really need to emphasize to the administration that these [automation plans] are going to generate savings to Customs and your companies,” Raheb said.
Nevertheless, Raheb warned that neither Congress nor the General Accounting Office — which has been asked by Congress to investigate Customs’ modernization plans — is certain whether the agency can handle developing new automated systems itself, as mandated by the Customs Modernization Act of 1994, known commonly as the Mod Act. Recently, Customs estimated its automation price tag at $800 million with a due date of 2004.
“Customs isn’t in the business of automation,” Raheb said, adding that Congress and the GAO also question whether Customs has the capability to oversee an outside contractor for the program known as Automated Commercial Environment, or ACE.
Simply put, while Customs may want to automate, “they need to do a better job explaining what they need the money for,” Raheb said. And yet, he said, support remains in Congress for helping Customs retool for the future.
Said Raheb, “We think Customs needs some additional funding to move this forward.”
To pay for automation, Customs has proposed increasing its merchandise processing fee to 0.25 percent of the value of formal cargo entries into the U.S. from 0.21 percent. Customs says the increase would initially generate $74 million a year for automation, increasing to as much as $110 million in the years to come. Such an increase is expected to cost a midsized importer at least $200,000 more annually, however, and it was roundly opposed by participants at this year’s AAEI conference. Many expressed concern that the fee’s increased revenue would not go directly to automation, but would be lost to the general budget.
Banks argued, however, that legislation for the increase could dedicate the additional revenue for automation as well as mandate certain performance goals for Customs. “I wouldn’t have it any other way,” he said.
Expecting to be replaced in about three weeks by commissioner designate Raymond Kelly, Banks acknowledged that Customs has taken much too long implementing the Mod Act and said if he were a trader, he, too, would oppose the merchandising fee increase.
So, he asked the importers to help prioritize what should be done first and to help find creative funding solutions. “What do you want to see happen?”
Banks stressed that while Customs may not have the funding for ACE yet, it will proceed with improving its existing and aging computer system. “It may not satisfy all the bean counters in the GAO,” he said. “But we have a defined plan, and we’re in the process of delivering on it.”
That plan includes finishing by October a reworking of all of Customs regulations to fit the Mod Act, something traders have been awaiting for four years. The plan also includes reprogramming all Customs computers to solve the agency’s Year 2000 problem before the millennium, as well as working to maintain the existing computer system, which some critics expect will crash this summer due to increased trade volume.
“It isn’t going to be easy, and it isn’t going to be cheap,” Banks said of maintaining its computers. “But it’s the responsible thing to do until we have something better to replace it with.”
In the meantime, he said, Customs will continue to roll out limited automation programs, while still seeking funding for a total ACE package. Said Banks: “We’re going to implement ACE as fast as we can get the funding for it.”
On general matters of trade, Grant Aldonis, international trade counsel for the Senate Finance Committee, said the committee is planning a review of all U.S. trade policies, beginning with committee hearings on macro-economic trade issues set to begin in the next two weeks. Aldonis said the committee will review the costs and benefits of all U.S. trade programs as well as their goals. The committee also wants to clean up any loopholes or flaws it may find in past trade agreements, he said.
Aldonis said the Senate review was prompted by acrimonious debates in the House about the recent unsuccessful negotiations of the administration’s request for fast-track authority in developing new trade agreements. Under fast track, Congress can only approve or reject such agreements but not amend them, and the authority is seen as a necessity when it comes to hammering out trade pacts.
“There was a significant lack of trust on the House side, and this was bipartisan,” he said. The goal of the Senate committee hearings, he said, will be to build a consensus among legislators on U.S. trade policy.