Customs pendulum swings toward enforcement

About five years ago I wrote a piece for our company Web site recounting the ebbs and flows of Customs administration and enforcement programs over the years. This is an update.

When I first started working in our company, my father warned me to beware of the Customs "special agent." This figure of ultimate authority combined enforcement with every other aspect of Customs mission with the efficiency and zeal of Torquemada. The average customs broker trembled at his presence since a minimal oversight could result in a maximal penalty.

(At the same time, Customs threw a Christmas party every year to which all were invited - importers and brokers alike. These soirees usually culminated in a craps game at the Wardman Park Hotel - just across the street.)

This conflicting image of Customs has followed it from 1789 onward as enforcement and facilitation have done a pas de deux depending on economic or political conditions.

The Trade Agreements Act of 1934 softened the pain of the Tariff Act of 1930, and as duties were reduced, so was enforcement overkill, especially after World War II, when U.S. foreign policy was to build up Europe. As a result of the increased imports from that area, Customs tacitly ignored such previously paramount considerations as classification and value, and importers soon got the message.

The pendulum swung back during the Nixon years with the advent of the import surcharge and the interdiction of illegal imports from China and other communist countries. In addition, Customs' role in drug smuggling was increased so seizures proliferated, and petitions for relief entered an endless bureaucratic maze.

The passage of the Customs Modernization Act in the'90s brought more sea changes, with greater responsibility being placed on the importer to "get it right." He and the broker enjoyed another luxury: Customs wanted to be paperless, so the burden of holding the paper was transferred to the public, with the appropriate application of heavy sanctions if a document couldn't be produced promptly.

At the same time, trade became more complex with multinationals making valuation difficult. Country-of-origin marking became impossible to determine, duties were coming down, and quotas were replacing them. Anti-dumping cases and protectionism was becoming way of life. Customs' burden became heavier.

Until Sept. 11.

The name of the game today is cargo security, and with Customs now a part of Homeland Security, its mission is drastically altered. All efforts since that fateful day have been concentrated on preventing a breakdown in international trade and cargo security at the same time. And it looks like it's been successful, since there have been no events since then. Yet one must wonder whether it is our efforts or the lack of motive of our enemies that have made it so. But what alternative do we have?

In the meantime, however, other Customs operations have virtually come to a halt. The Office of Rules and Regulations has no more traditional backlogs. With better screening techniques, import specialists and inspectors are less involved. Importers are being recruited to take part - along with their trading partners - in the traditional roles that the inspectors once had. Classification and value are on the back burner.

At this point, it's hard to tell when and how the Customs pendulum of enforcement-facilitation will swing, but I doubt that the craps games will come back.

Sig Shapiro

Chief executive

Samuel Shapiro & Co.