September 9, 1998

The Honorable William V. Roth Jr.
Chairman, U.S. Senate Finance Committee
Washington, D.C. 20510

Dear Mr. Chairman:

The Joint Industry Group ("JIG"), a coalition of one hundred thirty Fortune 500 companies, trade associations, professional firms, and individuals actively engaged in international trade, and particularly on Customs practices, procedures and policies, respectfully requests that the Senate Finance Committee consider and report favorably on legislation proposed by the Department of the Treasury which would give the Secretary of the Treasury authority to prescribe by regulation an alternative interest accounting methodology based upon aggregate data when imported merchandise is entered into the United States under any periodic or account-based entry process such as the filing of import activity summary statements or reconciliation entries.

The JIG has long been a proponent of more business-like procedures for the handling of goods entering the United States and has worked cooperatively with the Customs Service to develop a post-importation process for insuring the accuracy of information reported to Customs. This new approach is referred to as "Reconciliation" in the amendments to the customs law contained in Title VI - Customs Modernization of Public law 103-182. In developing the prototype Reconciliation program, both the Customs Service and industry have identified a provision in 19 U.S.C. 1505, which requires that interest on duties owed either by or to the government run from each deposit date for each entry, as a major obstacle to the successful implementation of this promising approach. This rigid transaction-based requirement effectively nullifies the benefits of the Reconciliation program.

In the testimony of Ronald D. Schoof, JIG Vice-Chairman, before your Committee on September 3, 1998, we expressed concern about Customs-proposed legislation which would cure this defect in the law and would give the Treasury Department authority to promulgate regulations for an interest accounting method based on aggregate data rather than on an entry-by entry basis. As Mr. Schoof noted in his testimony, our concern was not with whether the legislation was needed -- that fact is conceded -- our concern was based on a lack of understanding on how Customs would implement the legislative authority it requested. We now have had the opportunity to confer with senior Customs officials on this very important matter and understand that Customs intends to propose an interest accounting methodology for the "Aggregate Reconciliation" that would calculate interest on the entire amount of adjusted duties, taxes, and fees, as if they had been due on the midpoint date of the period covered by the Reconciliation. We understand that this legislation gives Customs a significant grant of authority in determining the methodology for calculating interest upon aggregate data and request that Customs be required to notify this committee if it proposes any change from the midpoint date calculation that it currently supports. With this caveat, we can now fully support the Treasury-proposed legislation for curing this problem. We urge speedy adoption of the proposed amendment inasmuch as the initial reconciliation prototype is scheduled to go into effect next month.

Should you have any questions about our comments or wish to consult further with us about this matter, please contact me at (202) 296-3355.

Sincerely,

Richard H. Abbey
Chairman, Import Programs Committee

cc: Faryar Shirzad
Senate Finance Committee Staff

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