by M. Sigmund Shapiro
December 12, 2003

At a recent trade symposium conducted by the U. S. Bureau of Customs and Homeland Security, Commissioner Bonner explained in great detail the recently announced “smart container” initiative. By utilizing more secure unremovable seals, and installing sensors inside the container, Customs feels more confident that, along with other profile information supplied by the importer, there is less chance of chemical or biological weapons being introduced into the country. The initiative will be rolled out within the next few months with the hope that the process will become the norm.

Customs told the audience that importers joining this effort would benefit by minimizing the need for physical examination of many of their shipments. No doubt it will, since Customs would by and large bypass these “secure” containers. I raised a question with Deputy Commissioner Browning as to whether this change of focus would increase the possibility of entry hanky-panky with regard to classification, valuation or quota status.

Coincidentally, a recent article in a trade publication concerning the In-Bond process, underscored demonstrated the complexity of two programs.. Customs is, in a word, “in a box”.

Customs tried a few years ago to attack the In Bond process after former Commissioner Von Raab attempted to eliminate it entirely. There were meetings. There was a Straw Man proposal that was quickly blown away. There followed a creaking Tin Man modification, but like the Cowardly Lion, the attempt receded from view, with only minor computer enhancements. Essentially In Bond remains a manual process. Importers demanded that In Bond survive. And survive it must in several areas.

  1. Master In Bond-the movement of a ship’s entire cargo from a seaport to the interior U.S. is essential to the mini-landbridge operation.
  2. Movement of individual container goods transiting the U.S. for shipment abroad is an integral part of international trade.

Neither of these procedures can be eliminated without causing havoc in commerce across the U.S.

Other In Bond techniques however lend themselves to possible modification. For example, people seeking to delay duty payment until the goods reach their doorstep will benefit from the monthly duty payment deferrals and might find In Bond to be less useful.

Importers seeking to defer duty and tax payments until after the goods are withdrawn from bonded warehouses in interior ports could be accommodated with examination of the cargo at the first port of arrival.

The issue of goods going “around the flagpole” instead of being exported across land borders becomes a smuggling issue and should be treated accordingly.

So the two issues, in bond and cargo security are intertwined, and seem to lead to more, not less container examinations. It appears only a matter of time that Customs might order examination of all In Bond shipments with the exception of Master In Bond. This would seem to be overkill.

Customs concerns for security would, in part, be satisfied with a nationwide “smart box” process. The enterprising smuggler or “misclassifier”, using a “smart box” could elude Customs scrutiny whether or not In Bond was utilized. Customs says that other intelligence they glean from invoices, inquiries, the parties to the transactions and past history will give them a profile. But if an invoice from a regular shipper to a regular receiver shows non-quota goods and the box contains quota goods…?

It seems to me that, as “smart” boxes take hold, Customs will have to be smarter, without disrupting normal commerce.