Customs Update: Seeking smarter inspections
(Published in the Journal of Commerce Mar 9, 2004)

Did you see it? Were you shocked? Could you believe the timing?

No, not the "costume malfunction" at the Super Bowl. The statement by the Transportation Security Administration that it was considering asking importers to provide invoice information about the goods they are importing because, in the view of TSA, manifest information as relied upon by Customs and Border Protection is inadequate.

While any reasonable international trader must agree that the veracity of manifest data is questionable when it comes to accurately describing the goods being shipped, is requiring the filing of invoice data the answer?

No!

While certainly shippers should have the option to provide transaction details to Customs as a means of expediting the release of their goods, it doesn't take a genius to figure out that those who want to bring items into the U.S. which are a threat will simply buy off someone at the receiving end or use the cover of their own American company so that invoice data will correspond with the mis-description on the manifest.

Democrats, in this election year, clamor for 100 percent examination of cargo, but don't explain how it will be paid for or staffed. One hundred percent examinations of any sort are not the solution. The cost and delay are simply not acceptable. Customs also has a long history proving the examination of an arbitrary amount of cargo is a wasted effort. The statute requiring physical examination of 10 percent of all cargo was done away with through the Mod Act, primarily because the agency was wasting time looking at a set amount of cargo without finding irregularities. Why look at all cargo when you can identify higher risk shipments and focus on them? One large company recently estimated that if 100 percent of its cargo was examined, it would require an additional 180,000 man-hours at a cost of $1.7 billion dollars per year, never mind the loss of use of the money involved.

To anyone who is an international trader, in being realistic, we surely must admit the current system is based on the good faith of the person who fills out the paperwork. Certainly such an approach doesn't really make the U.S. any more secure now than it was before Sept. 11. We all support the efforts of Customs to collect more information to support its risk analyses. We all want to be safe in our everyday lives. Quite properly, Customs recognizes the need to distinguish between cargo which does and cargo which does not pose a threat to national security. Obviously, one way to do that is through programs such as the Customs -Trade Partnership Against Terrorism (C-TPAT) and the Container Security Initiative (CSI), but more really does need to be done and now. But what?

What is needed is a national consensus that terrorism is an international problem and so requires international solutions. But those of us who have been around international organizations also know that takes time. In fact, often it seems the time required is interminable, but that is how government by consensus operates. So, what to do in the meantime?

Well, how about mixing things up? Right now, through CSI, Customs picks and chooses the containers to examine at the port of origin based on intelligence it gathers from a variety of sources. How about adding another source of intelligence? Many of the large freight forwarders are willing to consider investing in X-ray equipment. The idea behind this concept is the equipment would be installed at origin. The necessary personnel would be hired and trained and then 100 percent of the cargo that forwarder transports would be X-rayed prior to loading. The equipment standards, along with the standards which apply to the hiring, retentions, and training as well as operating the equipment would have to be agreed upon, plus the criteria for reporting and record-keeping. The results would, of course, be shared with Customs. For those forwarders not in a position to invest the $1 million or more for each piece of equipment, there are discussions about forming consortia. What is holding up implementation? Well, in exchange for such an investment, these forwarders want something in return, namely, expedited clearance of their cargo upon arrival in the U.S. Trust but verify must naturally remain the guiding principal, so periodic inspections of this pre-screened cargo is expected. The stumbling block to this idea taking hold is the quandary faced by Customs regarding implementation.

While there is no question that any shipment could be compromised, the fact remains that the industry security programs in place right now all favor large corporations which are, quite properly, already committed to protecting their brand names. The single biggest shortcoming in the current structure is none of these programs are geared to smaller companies, where the real risk presents itself. If forwarder X-raying were available, even through consortia, C-TPAT would be a meaningful program for the little and midsized companies.

Maybe we in industry can come up with some realistic means for this to work. Is forwarder X-raying a good idea? How should it be implemented? How should the results be integrated into Customs' scoring of shipments for inspection? What would your company be willing to do if it was a forwarder and could join a consortium? If you are a shipper or importer, would you be willing to pay an additional amount to have your goods X-rayed by your forwarder if you received expedited release upon arrival? If so, how much?

Send your comments and ideas to rodriguez@rorlaw.com and we'll consider the options together.