Customs launches import system

The Customs Service last week switched on the first module of a new computer system that will better track imports, amid pleas from the international trade industry that Congress help find money for the mammoth modernization project and spare private firms higher trade fees.

On May 4, Customs used its Automated Commercial Environment (ACE) for the first time to clear imports that were brought by truck across the Canadian and Mexican borders by five automobile and clothing manufacturers. The installation, called the National Customs Automation Program Prototype, is the prelude to a six-year transformation of the agency's legacy systems.

Customs plans to spend more than $50 million next year to begin replacing its custom-written mainframe applications with Microsoft Corp. Windows NT- and Unix-based software and relational databases. ACE will integrate, for the first time, the information that Customs collects on businesses' international trade activities, making it easier to target inspections and track traders' payments of duties, taxes and fees. Agency employees will use World Wide Web browsers to view the data and run their applications.

Traders generally support ACE because it would reduce their paperwork and speed up Customs clearance of imported goods, especially for routine shipments. Tom Collins, a customs re-engineering supervisor with Ford Motor Co., said company suppliers ship as many as 1,300 truckloads of auto parts across the border every day. "If shipments get hung up at the border, we could close assembly plants," he said.

With the initial ACE release last week, firms shipping by truck through Detroit; Laredo, Texas; and Port Huron, Mich., can transmit all the information Customs needs about the firms' cargoes in advance. With access to more data ahead of time, Customs agents can determine whether to inspect the transport before it arrives, and trucks that require no inspection can be waved through.

Expansion Expected

So far, the "big three'' U.S. automobile makers as well as clothing maker Levi-Strauss and auto parts manufacturer Robert Bosch are using the system. Robert McNamara, chief operating officer of Customs, said ACE will be expanded to other locations and will include other importers as the agency's computing infrastructure is upgraded.

ACE could cost a total of $350 million, and Customs will spend another $400 million on an underlying agencywide architecture. But the Clinton administration has proposed paying for the first major upgrade next year using only

$8 million from Customs' budget, with the rest of the money coming from an increase in the so-called merchandise processing fee that importers pay when they bring goods into the country.

"We are adamantly opposed to this [being financed] through a user fee," said Barry Nemmers, chairman of the Customs Committee of the American Association of Exporters and Importers, at an April 30 hearing of the House Ways and Means Committee's Subcommittee on Trade. Nemmers said if the United States applies a fee to fund its computer upgrades, other countries will do the same, thereby raising businesses' export costs.

Customs charges importers 0.21 percent of the value of the goods they ship into the United States, which generates more than $800 million a year in revenue. Customs officials are proposing to raise the import fee to 0.25 percent to pay for ACE.

"A decision was made that the people who benefited from the automation should help pay for it," said Samuel Banks, acting commissioner of Customs. "We need a new system," he said, because the existing Automated Commercial System, built 14 years ago, "is operating at virtually maximum capacity."

Industry is hoping House leaders will defuse the proposed fee increase by including money for systems modernization in a Customs funding bill introduced April 30 by trade subcommittee chairman Rep. Philip Crane (R-Ill.), according to James Clawson, chief executive officer of international business consulting firm JBC International. Crane's bill would authorize $933 million for drug interdiction— $202 million more than President Clinton has asked for— but as the bill stands now, the money would go largely toward paying for new inspectors, agents and inspection equipment, not computers.

Crane believes Customs programs such as modernization and tightened drug-interdiction efforts can be funded without raising import fees. "I am confident that the bill will be paid for from other sources without...burdening U.S. business with additional costs," he said after the hearing.

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