ADVISORY
FROM THE COMMITTEE ON WAYS AND MEANS

Subcommittee on Trade

Crane Announces Hearing on Trade
Agency Budget Authorizations and Other Customs Issues

Congressman Philip M. Crane (R-IL), Chairman, Subcommittee on Trade of the Committee on Ways and Means, today announced that the Subcommittee will hold a hearing on budget authorizations for fiscal years (FY) 2002 and 2003 for the U.S. Customs Service (Customs), U.S. International Trade Commission (ITC), Office of the United States Trade Representative (USTR), and on other Customs issues. The hearing will take place on Tuesday, July 17, 2001, in the main Committee hearing room, 1100 Longworth House Office Building, beginning at 10:00 a.m.

Oral testimony at this hearing will be heard from both invited and public witnesses. Witnesses are expected to include representatives from Customs, ITC and USTR. However, any individual or organization not scheduled for an oral appearance may submit a written statement for consideration by the Committee or for inclusion in the printed record of the hearing.

BACKGROUND:

Budget Authorizations:

On May 9, 2001, the House passed H. Con. Res. 83 and established funding levels to accommodate the President's budget proposal. The President's budget proposal provided FY 2002 funding for ITC at $51 million, USTR at $31 million, and Customs at $2.7 billion (of which $257 million is designated for Customs automation). Additional legislative assumptions contained in the budget are described below.

Other Customs Issues:

Customs Automation: The current Customs automation system, the Automated Commercial System (ACS), is an aging 16-year-old system which has experienced several "brownouts." ACS is operating on the average at 90 percent to 95 percent of its capacity, which is above its design specifications, creating difficulties in accommodating surges in the filing of Customs entry documentation that may occur daily or seasonally. Many observers, including Customs, have said that ACS is headed for a major system crash which may have an adverse impact on trade. It is likely that any serious failure of ACS would have widespread economic effects on U.S. businesses all along the supply chain including manufacturers, suppliers, brokers, and retailers.

Customs plans to replace ACS with the Automated Commercial Environment (ACE) over the next four to seven years depending on funding. Some of the main differences between ACS and ACE are that ACE will use a single integrated system, modern standards, processes, techniques and language, and will be compatible with commercial software. By contrast, ACS does not have an integrated system, uses outdated techniques and languages, and cannot use commercially compatible software. Maintaining the adequate funding for ACE will save taxpayers $130 million in annual ACS life support funding and allow for many important system improvements that are not supportable by ACS.

There are several issues for the Subcommittee to consider relating to ACE: (1) the cost of ACE, projected to be over $1 billion, (2) the need for additional funding for ACE in the FY 2002 budget, (3) the question of whether Customs' ACE design and architecture will meet future requirements, and (4) the role of the trade industry in building ACE.

Entry Revision Process (ERP): ERP is a plan under development to improve the procedures for allowing goods to enter the United States and be processed by Customs. Since passage of the 1996 Customs Modernization Act, Customs and the import community have been searching for ways to implement the Act by making entry of goods faster, cheaper, and easier. Studies by industry have shown that the costs of Customs administration can be as high as 5 percent of the costs of the goods sold. Many businesses rely upon just-in-time manufacturing and have a need for the entry process to better reflect modern ways of doing business. All agree that the current transaction-based method of operations no longer makes sense, and we must move to a simplified, account-based system. Issues for the Subcommittee to address involve whether Customs is appropriately fashioning a revised entry process to take full advantage of ACE and to meet the requirements of the modern business environment.

Compensation System for Customs Officers: Customs fees created by the Consolidated Omnibus Budget Reconciliation Act (COBRA) fund overtime and premium pay for Customs officers. The original overtime pay system for Customs inspectors was created by the Act of February 13, 1911, known as the "1911 Act." Section 13811 of the Omnibus Budget Reconciliation Act of 1993 (P.L. 103-66), known as the Customs Officer Pay Reform amendments, amended the 1911 Act in an attempt to eliminate abuses and mismanagement of the prior system. The reforms were intended to limit overtime and premium pay for Customs inspectors and canine officers to hours of work actually performed.

In the 106^th Congress, Chairman Crane introduced H.R. 1833, "The Trade Agency Authorization Act," which included budget authorizations for the ITC, USTR, and Customs and made reforms to Customs overtime and premium pay. H.R. 1833 was approved by the House on May 25, 1999, by a vote of 410-2. The Senate approved a modified version of the trade agency authorization that did not include provisions on Customs overtime and premium pay. No further action was taken.

In announcing the hearing, Chairman Crane stated: "As we approach the next millennium, we must make sure that our trade agencies have the tools they need to get their job done and done right, and maintain the capability to vigorously enforce our anti-drug and trade laws. However, we must do this in the most cost-effective manner, continuing to pursue needed reforms at Customs and elsewhere to ensure that the taxpayers who pay for these services are getting their money's worth."

FOCUS OF THE HEARING:

The hearing will focus on budget authorizations for fiscal years 2002 and 2003 for Customs, ITC, and USTR. In addition, the hearing will address other Customs issues, including: Customs automation and modernization efforts and the mechanisms needed to fund them, the progress of Customs Entry Revision Project, the progress in implementing the Trade and Development Act of 2000 (the Africa Growth and Opportunity Act and the United States-Caribbean Basin Trade Partnership Act), the compensation system for Customs officers, drug enforcement issues, and general Customs oversight issues.

DETAILS FOR SUBMISSIONS OF REQUESTS TO BE HEARD:

Requests to be heard at the hearing must be made by telephone to Traci Altman or Bill Covey at (202) 225-1721 no later than the close of business, Wednesday July 11, 2001. The telephone request should be followed by a formal written request to Allison Giles, Chief of Staff, Committee on Ways and Means, U.S. House of Representatives, 1102 Longworth House Office Building, Washington, D.C. 20515. The staff of the Subcommittee on Trade will notify by telephone those scheduled to appear as soon as possible after the filing deadline. Any questions concerning a scheduled appearance should be directed to the Subcommittee on Trade staff at (202) 225-6649.

In view of the limited time available to hear witnesses, the Subcommittee may not be able to accommodate all requests to be heard. Those persons and organizations not scheduled for an oral appearance are encouraged to submit written statements for the record of the hearing. All persons requesting to be heard, whether they are scheduled for oral testimony or not, will be notified as soon as possible after the filing deadline.

Witnesses scheduled to present oral testimony are required to summarize briefly their written statements in no more than five minutes. THE FIVE-MINUTE RULE WILL BE STRICTLY ENFORCED. The full written statement of each witness will be included in the printed record, in accordance with House Rules.

In order to assure the most productive use of the limited amount of time available to question witnesses, all witnesses scheduled to appear before the Subcommittee are required to submit 200 copies, along with an IBM compatible 3.5-inch diskette in WordPerfect or MS Word format, of their prepared statement for review by Members prior to the hearing. Testimony should arrive at the Subcommittee on Trade office, room 1104 Longworth House Office Building, no later than close of business on Friday, July 13, 2001. Failure to do so may result in the witness being denied the opportunity to testify in person.

WRITTEN STATEMENTS IN LIEU OF PERSONAL APPEARANCE:

Any person or organization wishing to submit a written statement for the printed record of the hearing should submit six (6) single-spaced copies of their statement, along with an IBM compatible 3.5-inch diskette in WordPerfect or MS Word format, with their name, address, and hearing date noted on a label, by the close of business, Thursday, July 31, 2001, to Allison Giles, Chief of Staff, Committee on Ways and Means, U.S. House of Representatives, 1102 Longworth House Office Building, Washington, D.C. 20515. If those filing written statements wish to have their statements distributed to the press and interested public at the hearing, they may deliver 200 additional copies for this purpose to the Subcommittee on Trade office, room 1104 Longworth House Office Building, by close of business the day before the hearing.

FORMATTING REQUIREMENTS:

Each statement presented for printing to the Committee by a witness, any written statement or exhibit submitted for the printed record or any written comments in response to a request for written comments must conform to the guidelines listed below. Any statement or exhibit not in compliance with these guidelines will not be printed, but will be maintained in the Committee files for review and use by the Committee.

1. All statements and any accompanying exhibits for printing must be submitted on an IBM compatible 3.5-inch diskette in WordPerfect or MS Word format, typed in single space and may not exceed a total of 10 pages including attachments. Witnesses are advised that the Committee will rely on electronic submissions for printing the official hearing record.

2. Copies of whole documents submitted as exhibit material will not be accepted for printing. Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material not meeting these specifications will be maintained in the Committee files for review and use by the Committee.

3. A witness appearing at a public hearing, or submitting a statement for the record of a public hearing, or submitting written comments in response to a published request for comments by the Committee, must include on his statement or submission a list of all clients, persons, or organizations on whose behalf the witness appears.

4. A supplemental sheet must accompany each statement listing the name, company, address, telephone and fax numbers where the witness or the designated representative may be reached. This supplemental sheet will not be included in the printed record.

The above restrictions and limitations apply only to material being submitted for printing. Statements and exhibits or supplementary material submitted solely for distribution to the Members, the press, and the public during the course of a public hearing may be submitted in other forms.

Note: All Committee advisories and news releases are available on the World Wide Web at "http://waysandmeans.house.gov".

The Committee seeks to make its facilities accessible to persons with disabilities. If you are in need of special accommodations, please call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four business days notice is requested). Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above.