AAEI, NCBFAA OPPOSE CUSTOMS PUBLISHING LIST OF IMPORTER PENALTIES

AAEI, NCBFAA OPPOSE CUSTOMS PUBLISHING LIST OF IMPORTER PENALTIES    In separate letters to Customs Commissioner Raymond W. Kelly, the American Association of Exporters and Importers and the National Customs Brokers and Forwarders Association of America have strongly opposed Customs' new policy of publishing the names of importers that violate U.S. import rules and the amount of penalties assessed and collected from these firms.
   The list, which may be viewed on Customs’ Web site at https://www.customs.ustreas.gov/news/fed-reg/notices/report1.pdf , provides the violator’s name, initial penalty amounts and the amount collected. Customs said it will publish the list semi-annually, January-June and July-December. The next list is scheduled for release in early 2001, the agency said.
   Customs said “the public interest will be better served by affirmatively disclosing most of the information identified in section 103.32 of the Customs Regulations for closed section 1592 cases resulting in collections.”
   Michael D. Laden, AAEI's chairman, said in his letter that publishing the list 'is a direct infringement on Customs' confidentiality obligations,' and 'is just bad policy.'
   'It's a list that draws no distinctions — from minor technical violations to instances of outright and egregious fraud,' wrote Peter Powell Sr., president of the NCBFAA.
   Laden and Powell both pointed out that the list lumps in minor penalty cases, or those of less than $5,000, and those companies which    voluntarily paid through prior disclosure, 'a vehicle that has been successful in heightening Customs compliance,' Laden said.
   Punishing those companies which have made prior disclosure 'can backfire if others are deterred from doing so in the future,' Powell said.
   In many cases, companies have reached a settlement with Customs 'solely to reduce the expense and risk of formal proceedings,' Powell said.
   'A great number of penalty settlements more accurately reflect companies' pragmatic cost/benefit analysis than actual wrongdoing,' Laden said.
   Many of the cases were 'are actually the result of innocent oversight or even clerical errors that should not have been brought under the penalty provision at the outset,' Laden said.
   'We see only a downside to the indiscriminate release of a list of violations that may harm some companies inappropriately,' Powell said.
   The AAEI and NCBFAA leaders also objected to the implementation of the policy without providing an opportunity for public comment.
   'No proposal was put forth,' Laden wrote in his letter to Kelly. 'No opportunity to comment was provided. The partnership spirit of the Mod Act was completely disregarded.'
   'This action may have been taken without comprehensive input from within headquarters,' Powell said. 'Certainly, it occurred without input from your partners in the trade community.'
   The published list showed that Customs assessed more than $22 million in fines in the first six months of 2000. After mitigation, the agency collected $13.4 million during that period.
   The disparity between the fines assessed and what Customs actually collected 'reveal tragic flaws in Customs' penalty assessment process,' Laden said. 'A $6 million assessed penalty that results in a mere $27,000 collection is a blazing red flag that the initial assessments are stratospherically removed from reality.'
   'The companies on this list imported hundreds of billions of dollars worth of merchandise during the noted time frame,' Laden said. 'The $22 million in assessed penalties is a paltry sum compared to what these companies paid in duties during the same period. … The message conveyed is that these companies are non-compliant, when, in fact, most are highly compliant.'