JIG Comments on HR 4337--May 19, 2000

May 19, 2000

Mr. A.L. Singleton
Chief of Staff
Committee on Ways and Means
U.S. House of Representatives
1102 Longworth House Office Building
Washington, DC 20515

Re: Request for Written Comments on H.R. 4337

Dear Mr. Singleton:

The Joint Industry Group (JIG) appreciates the opportunity to comment on this bill to amend the customs laws of the United States relating to certain importation procedures. The JIG supports H.R. 4337, which will promote full implementation of the Customs Modernization and Informed Compliance Act (the "Mod Act") and will make other technical and conforming amendments to U.S. customs laws.

JIG is a coalition of more than one hundred and sixty members representing Fortune 500 companies, brokers, importers, exporters, trade associations, and law firms actively involved in international trade. JIG membership represents over $350 billion in annual trade.

From 1989 to 1993, the JIG led the business community's effort to modernize the customs entry process, which culminated in the Mod Act in 1993. During those four years, the importing community had extensive negotiations with Congress and all concerned Executive Branch agencies, including the Customs Service and Census Bureau, to insure that the legislation reflected a carefully balanced compromise, under which all sides would realize some of the improvements for which they had bargained.

In major part, the compromise which was ultimately accepted required the trade community to be responsible for the classification and valuation of imported merchandise and the exercise of "reasonable care" in the import process, in exchange for the Government streamlining and fully automating the commercial operations of the U.S. Customs Service and fully implementing a system of "informed compliance" to insure that importers are aware of the Customs Service's requirements. More than six years later, many of the improvements which the trade community bargained for, particularly those relating to electronic data transmission and periodic reporting, have not been implemented at all, or only partially implemented.

Sections 1 through 5 of H.R. 4337 are designed to provide a clear mandate to the Customs Service to follow through on these long-delayed promises and commitments contained in the Mod Act. The remaining sections of the bill are technical and conforming amendments that address problems that have surfaced during Mod Act implementation.

H.R. 4337 will promote full implementation of the following modern, cost-effective and business-like concepts contained in the Mod Act:

· Filing of essential data for cargo release

The bill clarifies that upon arrival of goods, only such information as is necessary to enable the Customs Service to determine whether the goods may be admitted should be required. All other information necessary to fix duties, etc., would be provided later after release of the goods. The Customs Service enforces myriad laws on behalf of other federal agencies regarding the admissibility of goods, and the bill does not change existing procedures in that regard, and does not restrict Customs' authority to examine goods presented for entry into the United States.

· Periodic filing of entry data in aggregate form

The Mod Act first introduced the concepts of Importer Activity Summary Statement (IASS) and Reconciliation. As indicated in the House Report on that legislation, Congress clearly contemplated that these concepts would permit aggregate, periodic entry data reporting:

The introduction into the law of two new provisions, the import activity summary statement and the reconciliation, will permit importers and customs brokers which are capable of interacting with Customs in an electronic mode to handle Customs transactions in a more business-like way, reducing paperwork and many of the administrative costs. The import activity summary statement is the electronic transmission, periodically, of the information now contained in individual entry summaries. Major U.S. companies will increase their competitiveness through cost reduction by being able to submit information in batch form. House Report 103-361(I)(emphasis added).

Despite this clear mandate, Customs has never implemented IASS. While the agency has implemented Reconciliation, it is currently only in prototype form and has proven to be so cumbersome and limited as designed by Customs that there is a disincentive for importers to use it. H.R. 4337 is intended to require Customs to implement the business-like aggregated data reporting that Congress and the business community expected via the Mod Act.

· Periodic payment of duties, taxes, and fees

The bill clarifies that, along with aggregate data reporting, importers may elect to make payments of duties, taxes, and fees on a periodic, aggregate basis. This simply delivers on another aspect of IASS that has not been implemented at all.

Taken together, the provisions summarized above would further the Mod Act goal of transitioning away from the outmoded transaction-based model of customs commercial operations to an account-based system. Importantly, H.R. 4337 would not impede the government's authority and responsibility in examination and inspection of goods, and the collection of revenue and trade statistics. Other provisions of the bill contain technical amendments that we believe are non-controversial. For these reasons, the JIG supports enactment of this proposed legislation.

Sincerely,

Ron Schoof
Chairman, Joint Industry Group