Customs Service Modernization

The Customs Modernization and Informed Compliance Act fundamentally changed the relationship between importers and the Customs Service by making the importers legally responsible for declaring the value, classification, and rate of duty applicable to merchandise being imported into the United States. Customs is responsible for determining the final classification and value of imported merchandise. The act also gave Customs and importers a shared responsibility for ensuring compliance with trade laws. To carry out these new responsibilities, Customs has developed an informed compliance strategy. This report (1) assesses the status of Customs' implementation of the informed compliance strategy and (2) determines whether trade compliance under the new program has improved.

GAO noted that: (1) compliance data suggest the key initiatives and actions that make up Customs' informed compliance strategy have not yet produced the benefits that were expected; (2) among the reasons for these results may be that Customs has not implemented three of the key initiatives and actions to the extent or at the pace that it had expected; (3) two of the five are fully operational; (4) three have been implemented but have not yet reached many of the intended importers; (5) in responding to noncompliant importers, Customs has had limited success in increasing compliance; (6) its efforts to raise compliance rates in selected industries led to an initial increase in the rates, followed by a decrease, and ended with the fiscal year 1998 compliance rates falling below Customs' goal; (7) Customs cited the lack of sufficient staff resources as a major reason for shortfalls in implementing the compliance assessment and account management programs to the extent or at the pace intended; (8) Customs also noted that as it implemented the compliance measurement system and introduced new analytical tools, staff have become more astute at finding noncompliance; (9) although Customs has monitored and evaluated certain aspects of the key initiatives and actions, it has not evaluated, nor does it have a plan to evaluate, the impact on compliance of the overall informed compliance strategy; (10) however, such an evaluation seems appropriate to address the concerns raised by GAO's analysis of the impact of the compliance assessment initiative on the compliance rates for 59 importers; (11) the overall improvement in these importers' compliance rates after compliance assessment was less than Customs expected; and (12) the limited extent or pace of implementation of some aspects of the strategy and GAO's findings concerning compliance rates for the 59 importers raise fundamental questions about informed compliance strategy.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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