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GAO: Customs Not Tracking Some Imports

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By Allan Holmes May 18, 2007

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The Customs and Border Protection is not properly tracking whether foreign goods sent into the United States under a federal program allowing the goods to delay payment of duties and inspection are in fact being assessed duties and being inspected at another port, according to a Government Accountability Office report.

Under the in-bond system, some foreign companies sending imports to the United States are allowed to delay duties and inspections until the goods reach another port. Many of these imports include goods that eventually will leave the United States bound for another country. The program was designed to keep goods moving quickly through crowded U.S. seaports, where infrastructures have not been able to keep up with a dramatic increase in imports. (The value of U.S. imports more than doubled in an eight-year period, from $881 billion in fiscal 1998 to an estimated $1.82 trillion in fiscal 2006, GAO reported.)

Under the in-bond program, the CBP must charge duties and inspect the goods if necessary when the goods reach another, less busy, port, reconciling the charges and inspections with the importer's in-bond documents in a computer system. But many of the documents are not reconciled, GAO charged. At the Newark, N.J., port, more than three-quarters of all in-bond shipments were unreconciled, and some ports, such as Los Angeles, the port with the largest amount of in-bond shipments, could not provide any data on how many in-bond shipments remained unreconciled.

GAO concluded that the large percentage of in-bond shipments that are not reconciled means a loss of revenue, a potential for fraudulent goods being dumped on the U.S. market and ultimately a security risk. "Lack of accurate information on the value of in-bond cargo prevents CBP from accurately determining the extent of any lost revenue," GAO reported.

CBP agents use information systems to reconcile the documents. Agents will be able to use a new trade system called the Automated Commercial Environment (ACE) is expected to improve the process but is not expected to be ready for more than eight years, GAO reports. Development of the system, however, has been plagued by numerous problems. In its report, GAO wrote "that CBP faces long-standing management challenges and new risks associated with the development of ACE."

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