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The Honolulu Advertiser
Posted on: Monday, July 15, 2002

Customs gridlock feared

By Blair Pethel
Bloomberg News Service

WASHINGTON — U.S. companies ranging from General Motors Corp. to Sears, Roebuck & Co. are telling Congress that rushing to create a Department of Homeland Security may hurt the economy by slowing trade at U.S. borders.

The U.S. Customs Service, which oversees close to $1.9 trillion in trade annually through more than 300 U.S. ports of entry, is one of many agencies that would be consolidated into the new Cabinet-level agency coordinating homeland security under a plan that President Bush has presented to lawmakers.

Businesses — from manufacturers such as Ford Motor Co. and Boeing Co. that depend on imported parts to retailers such as Wal-Mart that buy product lines overseas — are worried that, under the new department, customs inspectors would focus on border security to the detriment of companies needing just-in-time shipments.

"Perhaps the single biggest issue "facing the new department would be "the unintended consequences" of diverting the Customs Service from its commercial role, said Jerry Cook, Sara Lee's vice president of international trade.

Many companies "depend on well-crafted, tightly knit schedules where things are monitored and people know where everything is at a

given moment," said Bill Reinsch, president of the National Foreign Trade Council, an exporters' association representing companies including Boeing Co. and Microsoft Corp.

Reinsch said that "an unexpected 12- to 24-hour holdup someplace causes a big problem."

The Customs Service annually processes more than 23 million commercial transactions and collects more than $23 billion in duties and fees.

Robert Bonner, the Customs Service's commissioner, said he has assured lawmakers and businesses that the agency takes its trade-facilitation role seriously and will continue to give it the highest priority.

"The president's bill pledges that the new Department of Homeland Security 'will ensure the speedy, orderly and efficient flow of lawful traffic in commerce,' " he said. "It's built right into the law."

Bush announced June 6 his plan to pull together 170,000 federal employees in more than 100 government agencies into a new department in the biggest government reorganization since 1947.

Customs, the Coast Guard, Secret Service, the Immigration and Naturalization Service and dozens of other agencies would be consolidated into the department under the plan.

The president said he wants Congress to approve the proposal this year.

While company officials didn't say they oppose transferring the Customs Service to the new security department, several said that rushing to create the department would cause problems.

"This is such a major undertaking that it should not be rushed through," said Jonathan Gold, head of trade policy at the International Mass Retail Association. "Why rush this through when you'll just end up with more problems?"

Gold, whose association represents companies such as Best Buy Co. and Ames Department Stores Inc., said many questions remain on how the agency would function, which congressional committees would have oversight, and how money would be appropriated.

"We just want to make sure that whatever is done is done correctly, and doesn't impede our ability to continue to trade and move goods," Gold said.

International commerce slowed to a crawl after the Sept. 11 attacks, as airplanes were grounded temporarily and border security tightened to its highest level.

Since then, even with the Customs Service on high alert, waiting times for customs clearance at U.S. entry ports have declined to pre-attack levels.

George Weise, a former Customs Service commissioner who's now vice president for global trade strategy at Vastera Inc., a trade-logistics company, said that throughout the years, there has been a "constant balancing" at Customs among its trade-facilitation, revenue-collection and law-enforcement responsibilities.

James Clawson, chairman of the Joint Industry Group that represents more than 160 U.S. companies including Caterpillar Inc., General Motors Corp. and FedEx Corp., recently told Congress that it's "the worst fear of many" that trade will be neglected in a department devoted to security and enforcement.

Customs' Bonner said that security and trade facilitation go hand in hand, and that he expects both to improve in the new department.

"One of the most fundamental responsibilities of the U.S. government is the security of the American people, and part of that function is protecting the U.S. economy and American livelihoods," he said.