U.S. INDUSTRY WANTS MPF DEDICATED TO FUNDING CUSTOMS OPERATIONS
The U.S. shipping industry kicked off a lobbying effort on Capitol Hill this week to reform the way the government manages revenue generated from the merchandise processing fee imposed on imports.
The merchandise processing fee (MPF) was created under the 1985 Consolidated Omnibus Budget Reconciliation Act. The revenue from the fee was supposed to be used to offset the cost of the Customs Service’s commercial operations. While close to $1 billion a year is collected through MPF, the money has been used to fund non-Customs-related government programs.
MPF is scheduled to expire in 2003. Congress, however, is not expected to let it lapse. Already, bills have been introduced to use MPF to fund non-Customs initiatives, such as the Patient Bill of Rights.
“We strongly urge that the user fee extender not be included in any non-Customs related legislation that comes before the Congress, and that the enabling legislation extending the fee be amended to expressly prohibit the diversion of the collected fees for any purpose other than funding the costs of Customs commercial operations,” said more than 140 companies, trade groups and service providers in a letter to members of the House Ways and Means and Senate Finance Committees.
“If the Customs Service is to continue collecting this user fee, it must directly fund improvements to Customs processing, including the Automated Commercial Environment (ACE) and other U.S. Customs initiatives urgently needed to improve the trade process,” the group added. “Improving Customs’ ability to handle trade will become more critical as the amount of commerce entering the United States continues at a double-digit rate of growth.”
In defense of extending MPF, Senate staff said the money collected would not directly fund non-Customs related initiatives, but would be used as a “scoring matter” to pay for government programs. Industry rejects this argument.
The Treasury Department’s Customs Advisory Committee (COAC) is developing a plan for how to restructure MPF. House Ways and Means and Senate Finance Committees are expected to consider restructuring MPF later this year. “A straight extension will negate all the work the Customs advisory committee and the congressional committees have done and will do this year,” the group warned.
The group also warned that the World Trade Organization would challenge any use of MPF for non-Customs programs. In the late 1980s, a General Agreement on Tariffs and Trade panel found MPF to be illegal because the amounts exceeded the cost of U.S. Customs processing. The U.S. government protected the fee by placing caps on it.
“The (WTO) decision clearly showed the critical importance of linking the fee to Customs commercial operations,” the group’s letter said.