Trade supporters oppose diversion of Customs fees in transportation bill

The Surface Transportation Reauthorization and Reform Act of 2015 attempts to fund highway and infrastructure spending while remaining budget neutral through a series of offsets, including the application of some customs user fees for highway aid.    Concern is growing among trade advocates about a provision in the long-term surface transportation bill currently being debated in the House that would divert money from border management to help pay for highway and infrastructure spending.
   On Tuesday, four House Democrats offered an amendment to the Surface Transportation Reauthorization and Reform (STRR) Act of 2015 to prevent a raid of the Customs account, but the provision was ultimately defeated by the House Rules Committee on procedural grounds.
   Language in a current draft of the bill now being debated by the full House would siphon off any increase in the collections of customs user fees associated with indexing the fee to inflation, and transfer the money to the Transportation Department’s highway account. The scheme is one of a series of offsets designed to pay for the $325 billion, six-year bill without increasing the budget deficit, a key goal of fiscal hawks. The provision would have diverted an estimated $5.7 billion in Customs fees over ten years for highway and infrastructure funding, according to the Congressional Budget Office.
   Importers are assessed an ad valorem fee on every shipment to help cover services provided by U.S. Customs and Border Protection to the private sector at ports of entry, including overtime for inspectors needed to help process growing trade volumes.
   The diversion of Customs funds is part of the DRIVE Act, passed by the Senate last summer, and is now being considered by the House Rules Committee as an addition to the STRR. Reps. Sander Levin, D-Mich., Bennie Thompson, D-Miss., Lucille Roybal-Allard, D-Calif., and Jim McDermott, D-Wash., offered their amendment as a blocking tactic.
   “The highway bill passed in the Senate breaks the longstanding precedent that funds created by the payment of Customs User Fees be used to pay for Customs-related expenses. Frustratingly, this break in precedent comes at a time when there is a staffing shortage of 1,811 Customs Officers across the U.S.,” the lawmakers said in a news release. “The funds generated by indexing Customs User Fees to inflation are desperately needed to ensure that our nation’s border is secure, mitigate long wait times at our border for both trade and travel, and ensure that the United States is in compliance with its international obligations. We urge the Rules Committee to adopt our amendment.”
   The American Association of Exporters and Importers has also weighed in with a letter to lawmakers, saying it supports highway infrastructure investment, but not at the expense of cross-border trade efficiency.
   “Diversion of user fees by Congress is essentially a ‘bait and switch’ which is a bad practice that will undermine the private sector’s support for user fees,” AAEI said in its written comments.
   The trade association went on to say that the move would turn the user fee into a tax, which would make it vulnerable to court challenges in the United States and possibly at the World Trade Organization as an unfair trade practice.
   The House is expected to vote this week on the STRR Act. The legislation, if passed, would then go to a conference committee where congressional negotiators would attempt to align it with the DRIVE Act, and send it to both chambers for a final vote.
   A surface transportation reauthorization longer than two years has not cleared Congress since 2005, in large part because of disagreement over how to pay for the investment at a time when the Highway Trust Fund is running a $16 billion annual shortfall as demand for capacity improvements and repairs increases.
   The Highway Trust Fund is funded by the per-gallon gasoline/diesel tax – another user fee – which has not been raised since 1993 and is not tied to inflation, despite falling receipts due to people driving more fuel-efficient cars.