COMPUTER STEPS

hings may be starting to look up on the Customs computer front. But they're only starting. There's a long way to go before the potentially explosive issue is resolved, and the trade community would be unwise to slacken its efforts in that direction. As a matter of fact, broader and deeper efforts are needed.

The issue, of course, is the need to replace the decrepit computer system that the Customs Service uses to process the $1 trillion worth of imports that flow into the United States each year.The efficient performance of that task is critical to American businesses that use imported parts and products in these days of just-in-time delivery systems.

It's also important to the federal government itself. Customs currently collects $20 billion a year in duties on that flow of imports (not to mention another $3 billion in user fees and excise taxes). That makes it second only to the Internal Revenue Service as a generator of income for the federal treasury.

Yet the Clinton administration has displayed an astoundingly offhand attitude toward the critical cog in this revenue-producing machinery: Customs' computer system, known as the Automated Commercial System.

The system dates back some 17 years. If it were human, it would almost be voting age. As a computer, it's a dinosaur. And it's a failing one. It's running at 96 percent capacity, and it already has been through two major brown-outs and several minor ones. If it crashes before a replacement system is ready, Customs will have to go back to processing imports with pen and paper.

Customs wants to replace ACS with a sophisticated new system called the Automated Commercial Environment, ACE for short. It will take some four years to build, and the total cost of the project over that period is now estimated at $1.5 billion.

Problem is, until very recently there was disagreement within the administration about the need for the new system. There was also criticism by the General Accounting Office of Customs' ability to manage development of the new system. In a nutshell, there was no rush to replace the sputtering ACS system; witness the fact that no money was allocated for ACE for fiscal year 2000.

The good news, Customs Commissioner Raymond Kelly told Journal of Commerce staffers in an interview last week, is that there's a growing consensus in Washington that the new ACE system is needed. Kelly and his staff have worked hard to build awareness over the last year, as has the trade community. Meanwhile, Customs' chief information officer, Woody Hall, led a revision of ACE's architecture that won resounding approval from GAO.

Customs' parent, the Treasury Department, has even found $3 million in its budget in recent days to keep a pilot effort, the National Customs Automation Prototype, alive this year.

Going forward, the administration has included $210 million for ACE in its proposed budget for 2001 - plus $123 million for life support for the old computer system - and support in Congress appears to be building.

Unfortunately, a look at the budget shows that there's bad news, too. The Clinton administration, as it has from the beginning, wants the ACE money to come from so-called user fees on importers. Never mind that importers already pay some $900 million in a user charge called the merchandise processing fee - the proceeds from which go not to Customs, but to the federal government's general treasury.

The administration's obstinate insistence on a user fee is a sadly short-sighted position. It undercuts the official recognition given to the importance of the Customs-computer issue, or at least makes that recognition look very grudging. In effect, it says to the nation's trade community, ''OK, OK, you can have a new computer - but you're going to pay for it.''

That's a curious attitude toward the ball bearing on which a major source of government revenue turns. The cost of the new computer system over the four years - $1.5 billion - equals 7.5 percent of the import duties the system will process in a single year. Is that too much for the government to pay to keep those duties coming? On a broader level, is that too much for the government to pay to ensure an efficient flow of goods in an era when just-in-time delivery systems underpin the American economy?

The trade community is taking a realistic, no-nonsense approach to the latest developments. It's pleased at the steps that have been taken - and cognizant that more and bigger steps are needed.

The Coalition for Customs Automation Funding, an organization of more than 200 companies and trade groups, is working hard to sell Congress on the need to fund ACE without so-called user fees. It appears to be having some success. But it must keep up and intensify its efforts.

The coalition should also broaden those efforts by including not just trade and logistics officials, but also top executives at the major corporations that belong to it. Otherwise it's too easy for lawmakers and bureaucrats to dismiss this as a technical trade issue. And it isn't - as business, labor, consumers and politicians will all find out if Customs' old computer system crashes before the new one replaces it.

For the full story: Log In, Register for Free or Subscribe