ROLE OF CUSTOMS' IMPORT SPECIALISTS

Our March 1985 report--U.S. Customs Service: Import Specialists' Duties and Reviews of Entry Documentation (GAO/GGD-85-45)--was undertaken at the request of the Subcommittee on International Trade, Senate Committee on Finance. Import specialists are responsible for determining whether importers and/or their brokers have properly classified and valued imported products, correctly calculated duties owed, and provided all data and documents required to admit merchandise into the country. Classification of imported goods determines the tariff rate and is the basis for enforcing quota and other merchandise

restrictions.

We analyzed the results of import specialists' reviews of entry documents to ensure that the importers or their brokers had properly classified the imported product, correctly calculated duties owed, and provided the required documents. Our review was conducted at two of the largest Customs' districts--New York Seaport and Los Angeles District.

We concluded that most of the import documentation submitted to Customs and reviewed by import specialists were determined to be error free. The import specialists in New York found errors in 7 percent of the entries they reviewed while the import specialist in Los Angeles discovered errors in 4 percent of the entries reviewed. We also reported that errors discovered by import

specialists in fiscal year 1983 affecting duties and taxes resulted in $25 million in additional assessments compared to $22 million in refunds to importers.

We were asked to perform this review because the Subcommittee was concerned that Customs was deemphasizing its commercial operations. As I mentioned earlier, the number of shipments entering the United States increased 67 percent between 1979 and 1986. In fiscal year 1986, Customs had 927 import specialists' positions to process the workload, or about 299 fewer than in fiscal year 1979. Customs states that it is not deemphasizing commercial operations but is able to reduce the number of import specialists through increased use of technology, automation, and increased selectivity.

Mr. Chairman, this concludes my statement.

I would be happy to

respond to any questions you have at this time.

Mr. BANKS. Mr. CHAIRMAN.

The CHAIRMAN. Mr. Banks, I was originally very much impressed with the Administration's statement about the war against drugs, and trying to stop drugs from coming across that border. I was born and reared on that border, and it is a long one, and it is obviously an unguarded one. There is an incredible amount of traffic going across there.

So, I was very pleased to see the Administration saying that they were going to do their utmost to try to interdict that drug traffic. Many doubt drug interdiction effort.

And now, you are talking about slashing personnel. I note you are requesting to postpone until next year $32 million already appropriated for air interdiction. Is the Administration serious about trying to stop drugs coming into this country? It seems totally contradictory to me, that on the one side you get the rhetoric and what we are going to do about it, and then you cut back, in effect, on the enforcement. Would you speak to that?

Mr. BANKS. Yes, sir. Mr. Chairman, we are indeed serious about enforcing the laws against illicit narcotics coming into this nation. And we have made a commitment within the budget that has been presented that indicates that we are not going to cut back on our enforcement commitment. We are going to retain levels that we have offered before, and that the primary reductions are going to be commercial.

The CHAIRMAN. How can you maintain that when you cut back on the personnel?

Mr. BANKS. There are going to be some reductions in the commercial areas to compensate for those reductions, in order to alleviate the deficit problem in the United States.

The CHAIRMAN. When you examine such a small percentage of those things coming in, isn't there obviously a greater chance that drugs will be introduced into this country?

Mr. BANKS. Mr. Chairman, in actual fact, we have increased the number of examinations along the southwest border. We are probably doing a better job than we have done before, in terms of interdicting narcotics coming across through Mexico.

The CHAIRMAN. Well, we were hearing just a moment ago from the General Accounting Office that a very small percentage of those things were inspected coming in. What is the percentage?

Mr. BANKS. Sir, the percentage that we are inspecting of general cargo coming into the United States is approximately 20 percent. Now, we are doing intensive inspections, 100 percent devaning, of approximately 2 to 3 percent of the ocean containers that come in. It is a judgmental issue as to the extent of an examination that is going to take place on any particular importation.

The CHAIRMAN. I've been through Customs a couple of times in recent weeks. Every time I go through I have some Customs officer pull me aside and say to me, you know, we are having a terrible time trying to do what work we have to do, and doing it responsibly. Don't let them cut us back more than they are.

Every year we have seen the Administration come in, and they call for large cutbacks in appropriations, personnel for the Customs Service, and every year the Congress restores it. Now what does that yo-yo effect do to the morale of your employees?

Mr. BANKS. Well, sir, there are always some questions. However, in the final analysis, we have indeed increased the number of Customs employees over the last few years. And, from a bottom-line effect, that is what they see.

The CHAIRMAN. And that's been because the Congress has insisted on it.

Mr. BANKS. That's absolutely been a factor, sir.

The CHAIRMAN. Two weeks ago, I held hearings in south Texas on the Customs Service. As I addressed this question to the gentleman from the General Accounting Office, I had a Customs broker in Brownsville who testified he had to travel 200 miles to go to Laredo to meet with an import specialist. That was because the import specialist in Brownsville had been eliminated.

Is that an example of the sort of streamlining that the Customs Office is bringing about? Does the budget call for that type of action? What do you suggest in the way of trying to provide services to the customer? Do you think that that's doing it?

Mr. BANKS. Mr. Chairman, we do have one import specialist in Brownsville. He has been sick for an extended period of time. We are trying to provide reasonable service out of our Laredo office. There are individual and unusual circumstances in which it would require an importer or broker to physically visit with an import specialist. For the most part, these issues can be handled over the phone. Especially with our automated systems acting as a repository of information, there is less and less demand for physical visiting between importers and import specialists.

The CHAIRMAN. Well, he cited an example to me. I said, why can't you just handle it over the phone? Why do they have to see it? And he said, well you get into situations where there is a question of whether it was cut or whether it was trimmed. Frankly, I don't know the difference.

But he seemed to, and I guess the specialist in Customs is supposed to understand that. I'm not sure how many of those, but apparently enough to cause him real concern and real problems in doing his job.

Mr. BANKS. Well, sir, it is an individual circumstance, and admittedly, if he just returned from making a 200 mile trip, he would raise that issue. But once we have made that decision as to the proper classification of that merchandise, there would be no reason for that importer or broker to have to visit with an import specialist again on that issue.

The CHAIRMAN. Well, there was some question of his credibility because he talked about traveling up there at 55 miles an hour. [Laughter.]

Otherwise, I thought his testimony was quite good.

Mr. BANKS. We try to get responses back faster than that, Mr. Chairman.

The CHAIRMAN. Senator Danforth.

Senator DANFORTH. Mr. Chairman, I really don't have any questions. This is like watching the same movie every year, the hearing that we have on the Customs Service authorization. I think we could just rerun the whole film of it and have about the same thing happen. It is always the case that the Administration comes up with budget requests that we on the committee feel are inadequate.

I must say, I don't understand how we can maintain an effective drug program and an effective trade program, and at the same time cut the number of Customs Service personnel. I think that you, Mr. Chairman, have pretty well covered that. I'm sure that Mr. Banks has pretty well answered that, unless you have something else that you would like to add, Mr. Banks.

Mr. BANKS. Senator, we have introduced a lot of innovative procedures. Our automation system, our automated commercial system is making tremendous strides in being able to really identify high-risk cargo. The work that we are doing and the operational changes to centralize and to gain more productivity out of our people has led us to what we believe are greater and greater successes through the years.

Despite personnel issues, we feel we are doing a better job for the United States.

Senator DANFORTH. Thank you.

The CHAIRMAN. I have no further questions. Thank you very much.

Mr. BANKS. Thank you, Mr. Chairman.

The CHAIRMAN. That ends the hearing for today.

[Whereupon, at 11:22 a.m., the hearing was concluded.]