by M. Sigmund Shapiro
June 16, 1999
When I first started in this business in the late Jurassic era,
my dad would caution me to beware of the Customs Special Agent. At
the same time, he would regale me with stories of Christmas parties
thrown at the Customs Bureau (in those days) headquarters in
Washington, to which all were invited- importers and brokers alike.
These soirees often culminated in a crap game at the Wardman Park
Hotel, just across the street, where a blanket was spread out on the
floor of a hotel room for the convenience of the participants. For
fear of damaging their legendary status, I won’t mention the names
of the Commissioners, deputies and assistants who wore out the knees
of their suits during the heat of play.
This conflicting image of the Service has followed it from 1789
onward, as enforcement and facilitation have done a pas de deux
depending on conditions, economic, political or perhaps even
digestive.
When my father feared the agents, it was for good reason. Paper
documentation had to be exact, and Customs valuation bore the threat
of heavy sanctions. If goods were found to be undervalued, there was
an automatic penalty of one percent for each one percent of under
valuation. And, since duty rates were high, classification was
carefully scrutinized and invoice descriptions were looked at with a
jaundiced eye.
Things changed after World War II. In our desire to rehabilitate
Europe, imports flooded in, but Customs scarcely looked at them.
So-called "department store goods" invoices could be several inches
thick, and importers looked for the best duty rate. Customs was, as
usual, short handed and could barely keep up with the flood. Entries
were liquidated "no change" just to get rid of them. One rarely saw
"ornamented" wearing apparel. Everything was non-ornamented to avoid
the higher duty.
The pendulum swung back the other way during the Nixon years,
bringing the specter of penalties back into focus. Chinese goods
mismarked as coming from Macao or Hong Kong were prevalent. And drug
intervention fell primarily on the shoulders of Customs (who,
naturally, were still short of help). Seizures proliferated and
petitions for relief entered an endless bureaucratic maze.
The passage of the Customs Modernization Act was another sea
change. Customs maneuvered to place a gorilla, not a monkey on the
back of the unwary importer. No longer was the classification what
the importer felt was right, to be changed by Customs if necessary.
It was now the primary obligation of the importer to "get it right".
And, since the government was becoming "paperless" virtually the
whole paper burden was transferred to the importer; with appropriate
fines, starting at $10,000 for each document that couldn’t be found!
Trade is becoming more complex with multinationals making
valuation difficult. Components are being sourced from different
parts of the world making country of origin marking virtually
impossible and, in my opinion, redundant and unnecessary. Duties are
disappearing making quotas and other agency admissibility tests the
coin of the realm. Protectionism is rising, to the detriment of
everyone, especially the underdeveloped countries who are forced to
defend every dumping or countervailing duty attack.
Perhaps, however, in this age of compliance audits, strategic
examinations, CAT teams, Customs account managers and overzealous
Customs agents, the process (not just the ACS system) might get
overloaded, and another Customs reorganization will simplify things.
But even then, I doubt the crap games will come back.
