STATEMENT OF ROBERT M. TOBIAS, NATIONAL PRESIDENT, THE NATIONAL TREASURY EMPLOYEES UNION, WASHINGTON, DC Senator DANFORTH. Mr. Tobias. Mr. TOBIAS. Thank you very much, Mr. Chairman. I am very pleased to appear today to discuss the U.S. Customs Service authorization for fiscal year 1987. The over-extended condition of the Customs Service has now reached a critical stage. We have appeared before this subcommittee for the past 6 years and described a worsening situation. The subcommittee has responded. Last year, it authorized 800 additional positions for Customs and 623 positions were appropriated in the continuing resolution. Unfortunately, these positions were wiped out by a Gramm-Rudman cut of $31 million. Recently, in the debate on the fiscal year 1987 budget resolution, the Senate approved an additional $150 million for Customs to restore 1,547 positions lost through Gramm-Rudman and other cuts proposed by the administration, plus an additional 850 positions to strengthen enforcement. We wish to express our appreciation very much so to the members of this subcommittee and to the Senate for your consistent support of an effective Customs Service. Let me summarize for you the dimensions of the enforcement crisis facing the U.S. Customs Service. Nearly $40 billion annually in illegal imports are now entering the country, and it is growing. Second, foreign exporters and domestic importers are virtually on an honor system. Seventy percent of entry documents filed with Customs are being accepted as filed, no questions asked. Ninetyeight percent of 4 million containerized shipments annually enter the country without inspection. Third, illegal imports are costing the Nation an estimated half million jobs and $8 to $12 billion in lost GNP each year. Of the jobs lost, 144,000 are in textiles and apparel, 51,000 are in leather goods, 76,000 in electronics, and 42,000 are in motor vehicles and auto parts. Fourth, Customs would be collecting billions more in revenue if import specialists and inspectors were able to verify the accuracy of more entries. Fifth, from Miami in the East to San Ysidro in the West, our country has lost control of its borders to drug traffickers. Today, Mexico has emerged along side Florida and the gulf coast as a major corridor of entry and our Southwest is awash in drugs. About 2,500 flights a year are being made to transport dangerous drugs into the country. Only 2 percent are being intercepted. Interdiction is the job of the Customs Service and the Coast Guard with support from some Defense Department assets. But the paltry resources made available are not commensurate with the threat. In fiscal year 1987 budget an increase of only $34 million for interdiction is provided for the Coast Guard. And this amount is exactly offset by reductions in the proposal for the U.S. Customs Service. The Customs workload has increased dramatically in recent years. Between 1980 and 1985, imports increased 44 percent and dutiable entries more than doubled. However, resources have remained static. NTEU strongly supports automation and modernization of the Customs Service. We believe the computer can be used as a tool to enable the inspector import specialist team, the backbone of the enforcement, to apply it skills effectively. The essence of trade law enforcement is verification of data contained in entries. Verification requires fiscal inspection and review of backup documents to determine classification, value and admissibility. The new systems Customs is introducing do not provide for verification. They undermine the inspector import specialist team, and they amount to a policy of nonenforcement. We strongly renew our call for a thorough congressional investigation of Customs commercial enforcement systems with a view to ensuring that the trade laws of our country are properly enforced. In conclusion, Mr. Chairman, I would like to note that this year Congress will conduct a major review of the Nation's trade laws. We hope enforcement will be an important part of this review. Our trade laws are not self-enforcing. They have to be policed in order to be effective. The crisis in Customs enforcement is costing the Nation dearly. We stand ready to work with this subcommittee to find urgently needed solutions. Thank you very much, Mr. Chairman. Senator DANFORTH. Thank you all. [The prepared written statement of Mr. Tobias follows:] NTEU The National Treasury Employees Union STATEMENT OF ROBERT M. TOBIAS NATIONAL PRESIDENT NATIONAL TREASURY EMPLOYEES UNION TO THE SUBCOMMITTEE ON INTERNATIONAL TRADE HONORABLE JOHN C. DANFORTH, CHAIRMAN AUTHORIZATIONS FOR THE UNITED STATES SENATE May 12, 1986 1730 K Street, N. W. Suite 1101 Washington, D.C. 20006 • (202) 785-4411 Mr. Chairman And Members of the Subcommittee: I am Robert M. Tobias, National President of the National Treasury Employees Union. NTEU is the exclusive reprsentative of over 120,000 Federal workers, including virtually all employees of the U.S. Customs Service worldwide. With me are Patrick Smith, NTEU Director of Legislation, and Paul Suplizio, Legislative Consultant. On behalf of the thousands of dedicated men and women who enforce the trade laws of our country and collect essential revenue for the Federal government, I am pleased to appear before you to testify on the FY 1987 appropriation for the U.S. Customs Service. Customs Funding Should Be Increased In the FY 1986 Continuing Resolution, Congress approved 623 new positions for Customs and directed that staffing be maintained at the 14,041 level. The 623 positions were wiped out by Gramm-Rudman cuts of $31 million and 777 positions for salaries and expenses, and $4 million for the narcotics air interdiction program. NTEU supports the FY 1986 Urgent Supplemental Appropriation as approved by the House Appropriations Committee, which restores the Gramm-Rudman cut of $35 million. This will result in additional budget receipts from improved compliance with the Customs laws of $1.3 billion during FY 1986-1990, according to CBO data presented to the Budget Committee last year. The President's budget request would result in a reduction in force (RIF) of 770 Customs officers in FY 1987, including 400 Inspectors and Import Specialists, despite the fact that commercial fraud and narcotics traffic are at all-time high levels, and that Customs is a revenue-producing agency which returns $20 for dollar appropriated. Counting the Gramm-Rudman cut, the Administration's request is $56 million and 1,547 positions below the level that Congress deemed essential in the FY 1986 Continuing Resolution. every For FY 1987, NTEU recommends that $56 million and 1,547 positions be added to the Administration's request to maintain the level of the FY 1986 Continuing Resolution, and that an additional $21 million and 600 positions be provided to adequately enforce the nation's drug and trade laws. of the 600 new positions, 134 are required to collect billions of dollars in new export and import fees earmarked for the harbor maintenance trust fund established by the Port And Waterways bills (H.R.6 and S.1567) that have passed both bodies. The remaining positions would be applied to commercial cargo enforcement, where Customs is woefully understaffed, and would yield additional of $735 million during FY 1987-1989. NTEU's budget recommendations are summarized in Table 1. revenue Gramm-Rudman entails Large Costs The adverse impact of across-the-board budget cuts on revenue-producing agencies such as Customs is illustrated by the Gramm-Rudman cut of $35 million imposed for FY 1986. Last year, the Congressional Budget Office estimated that 800 additional positions applied to improve compliance in entry processing, duty collection, and cargo inspection would yield additional budget receipts of $1.315 billion over three years. Since this year's Gramm-Rudman cut is approximately the same size (777 positions) as the CBO estimate, a revenue loss of $1.3 billion will be incurred in FY 1986-1988 as a direct result of this $35 million cut. It is not anticipated that Customs would have no further requirement for these positions after FY 1988.. Rather, since workload is increasing, they would undoubtedly continue to be required through 1991 and beyond. According to CBO, these 800 positions would continue to generate revenue at the rate of $615 million annually. The total revenue forgeone during the six-year time span of Gramm-Rudman, FY 1986-1991, would thus be $3 billion as a result of a single $35 million cut in FY 1986. (Table 13). Moreover, additional costs are incurred by society from an increased volume of illegal imports when Customs staff is cut. Illegal imports result in lower output by U.S. firms and lower employment by import-competing industries. This loss of job and output translate into reduced tax receipts for the Federal government. NTEU has made estimates, presented in Tables 2 and 3, of the output and employment losses associated with illegal imports. Based on these estimates, we have |