May 06,1999


WASHINGTON -- Senate Finance Committee Chairman William V. Roth, Jr. (R-DE) today announced that the Finance Committee will begin a series of oversight hearings on the U.S. Customs Service on Thursday, May 13, 1999, at 10:00 a.m. in Room 215 Dirksen Senate Office Building. The hearing will focus on Customs commercial operations, particularly the threat to U.S. commerce from delays in replacing the antiquated Customs computer system and delays U.S. businesses face in moving goods and passengers through Customs processing at various ports of entry around the country. The series will continue on May 18 and 25.

Expected to testify before the Committee on May 13 are:


The Honorable Raymond Kelly, Commissioner of the United States Customs Service, Washington, D.C.;

The Honorable James Johnson, Under Secretary for Enforcement, Department of the Treasury, Washington, D.C.


George Bardos, Executive Vice President, Vastera; Dulles, VA

Ty Bordner, Director of Application Consulting, Vastera; Dulles, VA

Randoph C. Hite, Associate Director, Governmentwide and Defense Information Systems, Accounting and Information Management Division, U.S. General Accounting Office, Washington, D.C.

Kevin Smith, Director Customs Administration, General Motors Corporation; Detroit, MI


Morgan Kinghorn, Partner, PriceWaterhouseCoopers, LLP; Fairfax, VA

Malcolm McLouth, Deputy Executive Director for Business Development, Canaveral Port Authority; Cape Canaveral, FL

James D. Phillips, Executive Director, Canadian-Amercian Border Trade Alliance; Lewiston, NY

Sam F. Vale, Chair, Border Trade Alliance, Rio Grande City, TX


In 1998, the Finance Committee held hearings and reported out legislation authorizing additional appropriations for the Customs Service. That legislation also signaled the start of a process of oversight of the Customs Service that was designed to assess how Customs was performing its principal missions of facilitating the movement of legitimate commerce through the nation's ports of entry and interdicting the flow of illicit goods, particularly narcotics. The oversight process was also designed to assess Customs' performance in managing its own affairs.

The hearing scheduled for May 13 will be the first in a series of three hearings that address each of those broad issue areas -- Customs' commerical operations, its enforcement efforts, and its internal management. The May 13 hearing will highlight two issues that pose a significant threat to the free flow of commerce. The first is the continuing problems experienced with Customs' current computer system, know as the Automated Commercial System (ACS), which continues to experience major disruptions, or "brown outs," that force the shutdown of the entire system. The second is the recurring problem of personnel shortages at key ports of entry causing hours-long delays in the processing of both cargo and passengers. In a world where American competitiveness frequently depends on just in time delivery, delays caused either by failures in Customs' computer system or the lack of adequate personnel at key ports of entry can undermine the ability of U.S. business to compete effectively in world commerce and deliver the benefits of international trade to the U.S. consumer.

Customs has faced difficulties in addressing those challenges. In fiscal year 1999, Customs' enacted budget appropriation totaled about $2.1 billion, including an emergency supplemental. Customs' budget has remained essentially flat in real terms during the past 10 years and has actually declined slightly during the past 5 years. In his fiscal year 2000 budget, the President has requested about $1.9 billion for Customs, of which $312 million is from proposed user fees.

In fiscal year 1998, Customs processed 135 million conveyances (vehicles, trucks, aircraft, and vessels); 19.7 million commercial entries; and 460 million air, land, and sea passengers. Customs also seized 1.1 million pounds of drugs (cocaine, heroin, and marijuana), 164,000 pounds of other controlled substances, and $368 million in cash and other monetary instruments and collected about $22 billion in tariff duties, user fees, excise taxes and other assessments.

Putting Customs' workload in context, in fiscal year 1989, the value of imports and exports totaled about $1.1 trillion (20% of gross domestic product). By fiscal year 1998, the value of imports and exports totaled about $2.1 trillion (24% of gross domestic product), essentially doubling in nominal terms. Customs estimates that trade volume and passenger traffic will grow at about a 10% annual clip, reaching $2.6 trillion and about 500 million, respectively, in fiscal year 2000.

Given those facts, Customs faces the challenge of adapting itself to dramatic changes in its operating environment and responding convincingly to criticisms of its operations from a variety of sources, including Congress and business. Customs' traditional mission of essentially collecting duty revenue for the government has given way to two new--and often contradictory--responsibilities. First, to facilitate the flow of international trade that is growing in volume. Second, to aggressively combat drug smugglers and other violators of customs and other laws at ports of entry. Accordingly, the Committee's oversight process will focus on Customs' fulfillment of its twin responsibilities, together with an overview of the fundamental management issues that confront a large government agency with a complex mission. The Committee's ultimate goal is to report out and pass legislation that would address the issues emerging from the oversight process.

The Committee's oversight of Customs involves a multi-pronged approach and intends to be an ongoing proposition. The oversight process consists of pursuing four parallel tracks:

reviewing Customs' core operations and activities;

conducting a series of hearings;

drafting reauthorization legislation; and

implementing a follow-up process.

The review of operations and activities focuses on three broad areas or "themes"-- commercial, enforcement, and management--and intends to establish a baseline assessment of the operational and management challenges confronting Customs. The hearings--paralleling the three broad themes--intend to build on the information developed during the review phase and bring into focus the issues that are in need of effective performance benchmarks. The legislation intends, as necessary, to clarify the Committee's expectations regarding Customs' implementation of the Modernization Act, amend substantive customs laws, solidify the institutional and cultural change being implemented, and authorize appropriations to carry out Customs' operations. The follow-up process intends to ensure the sustainability of Customs' actions in response to the Committee's concerns and establish a mechanism for continued and multilayered oversight