Tuesday, April 16, 2002

United States House of Representatives
Washington, DC 20515

Dear Representative:

On behalf of the undersigned companies and associations, we oppose any legislation that extends the Customs Service Merchandise Processing Fee (MPF) and diverts any portion of the fees collected to fund programs unrelated to the work of the U.S. Customs Service. According to Section 13031 of the Consolidated Omnibus Budget Reconciliation Act of 1985, MPF money is designated to offset the cost of Customs commercial operations. On several separate occasions in the 107th Congress, bills have been introduced which attempt to use this fee to fund programs, such as the Patient Bill of Rights. At this point in time, Customs needs all the money it collects from the MPF to protect the U.S. borders and facilitate trade.

The MPF, which collects close to $1 billion a year from U.S. companies, is a fee that importers must pay for the privilege of processing imports and paying tariffs (taxes). Essentially, it is a fee required in order to pay a tax. The Treasury Department's Customs Advisory Committee (COAC) is currently working on ways to restructure the fee, which is set to expire in 2003. The trade community expects the House Ways & Means and Senate Finance Committees to look at the restructuring issue this year. A straight extension, will negate all of the work the Customs advisory committee and the Congressional committees have done and will do this year.

Senate staff have claimed that the money collected by extending the MPF will not directly fund non-Customs related initiatives, but is merely a "scoring matter," that is procedural in nature without any long-term effect. We disagree. MPF funds should be restricted so that they only offset Customs programs for the purposes of Congressional budget rules. We oppose any extension of MPF that does not earmark those funds exclusively to offset the costs of Customs commercial operations.

If the Customs Service is to continue collecting this user fee, it MUST directly fund improvements to Customs processing, including the Automated Commercial Environment (ACE) and other U.S. Customs initiatives urgently needed to improve the trade process. Improving Customs' ability to handle trade will become more critical as the amount of commerce entering the United States continues at a double-digit rate of growth.

Extending the MPF as presently structured to fund non-Customs programs will most assuredly lead to challenges at the World Trade Organization (WTO), which are likely to succeed. In the late 1980's, a GATT panel found that the user-fee was GATT-illegal because the amounts collected exceeded the cost of Customs processing. In response, the U.S. placed caps on the fee, but the decision clearly showed the critical importance of linking the fee to Customs commercial operations.

Therefore, we strongly urge that the user fee extender not be included in any non-Customs related legislation that comes before the Congress and that the enabling legislation extending the fee be amended to expressly prohibit the diversion of the collected fees for any purpose other than funding the costs of Customs commercial operations. We thank you for your consideration and attention.

Sincerely,

3M
Adduci, Mastriani & Schaumberg, LLP
Advanced Micro Devices, Inc.
AeA
Agilent Technologies
Airfreight Warehouse Corporation
Akin, Gump, Strauss, Hauer & Feld, LLP
American Apparel and Footwear Association
American Chemistry Council
American Institute for International Steel
American Textile Manufacturers Institute
Archer Daniels Midland Co.
Arent, Fox, Kintner, Plotkin & Kahn
Arter & Hadden
Arthur Andersen, LLP
Arthur Cherry Associates
Association of International Automobile Manufacturers
Aventis Pharmaceuticals, Inc.
Avon Products, Inc.
Baker & McKenzie
Baker Botts LLP
Barnes, Richardson & Colburn
Bayer Corporation
Best Buy Co., Inc.
Big Lots Stores, Inc.
Broker Power, Inc.
C.H. Powell Company
Case Corporation
Caterpillar Inc.
CNF Transportation
Coalition of New England Companies for Trade (CONECT)
Columbia Sportswear Company
Compaq
Comstock & Theakston, Inc.
Consolidated Freightways
Corning, Inc.
Crate & Barrel
DaimlerChrysler
Dan Trade, Inc.
Dassault Falcon Jet Corporation
Deere & Company
Delphi Corporation
DHL Airways, Inc.
DISCUS
Dorsey & Whitney
DuPont
E.I. DuPont de Nemours & Co.
Emerson Process Management
Emery Customs Brokers
Expeditors International of Washington, Inc.
F.H. Kaysing Co. of Wichita
Family Dollar Stores, Inc.
Federal Express
Federated Department Stores
Ford Motor Company
Foreign Trade Association of Southern California
Gap Inc.
General Electric
General Motors Corporation
Gibson, Dunn & Crutcher LLP
Global Customs Advisors
Hapag-Lloyd America Inc.
Hasbro International
Hewlett-Packard
Hitachi America, Ltd.
Intel Corporation
International Business Machines
International Mass Retail Association
International Warehouse Logistics Association
J.C. Penney Company, Inc.
JBC International
Katten Muchin Zavis Rosenman
Ken Kumm
Kent & O'Connor
Kmart Corporation
KPMG LLP
Law Offices of George R. Tuttle
Levi Strauss & Co.
Limited Distribution Services
Liz Claiborne, Inc.
Lowe's Companies, Inc.
MAERSK Sealand
Matsushita Electric Corporation
Microsoft, Inc.
Miller & Chevalier
Miller & Company P.C.
Motorola, Inc.
National Association of Foreign Trade Zones
National Association of Manufacturers
National Electrical Manufacturers Association
National Retail Federation
NCBFAA
Neville Peterson LLP
NextLinx Corporation
Nortel Networks
Oracle
Oxford Industries, Inc.
P&O Nedlloyd Limited
Pacific Coast Council
Pacific Coast Council of Customs Brokers and Freight Forwarders Association
Parker & Company
Patton Boggs
Pfizer
Phoenix Intl. Freight Services, Ltd.
Powell, Goldstein, Frazer & Murphy, LLP
PricewaterhouseCooopers LLP
Qiva
RadioShack
Reebok International
Roadway Express, Inc.
Rode & Qualey
Rohm and Haas
Rolls-Royce North America
Ross & Hardies
Sandler, Travis & Rosenberg, P.A.
Sara Lee Knit Products
Sears Roebuck and Co.
Shea & Gardner
Solectron
Sonnenschein, Nath & Rosenthal
Square D Company
Stein, Shostak, Shostak, & O'Hara
Subaru of America, Inc.
Sun Microsystems, Inc.
Target Corporation
Tech Data
Texas Instruments, Inc.
TG North America Corp.
The Dow Chemical Company
The Limited, Inc.
The Procter & Gamble Distributing Co.
Tower Group International
Toyota Tsusho America
Unz & Company
UPS Customhouse Brokerage
Vanity Fair Intimates, L.P.
Vastera
Vorys, Sater, Seymour and Pease LLP
Washington International Insurance Co.
West Gulf Maritime Association
Weyerhaeuser
Willson International Inc