No Longer Borderline : Customs: The gatekeepers for much of Southern California have improved their reputation just in time to deal with new challenges.
It’s a November shipment of foreign-made toys--a crucial Christmas-season delivery for El Segundo-based Mattel Inc.--and 20% of the expected cargo is missing.
For Fermin Cuza, Mattel’s assistant treasurer for foreign trade services, it’s one of the most serious shipment delays since the nightmare years of the mid- and late-1980s, when local importers railed at the U.S. Customs Service for lacking the resources to promptly process a sharply rising tide of imports.
This time, however, Cuza isn’t breaking a sweat. Instead, he assumes that local Customs officials delayed the Mattel shipment and cargo of some other toy companies for a routine product-safety inspection.
Cuza’s reaction typifies importers’ new-found confidence in the local Customs Service. By adding personnel and computerizing many of its operations, Customs has improved its processing system and its reputation with importers and their brokers.
“I would have been alarmed five years ago,” Cuza said. “I would have assumed that the delay was due to inefficiency, poor management or lack of staffing at Customs. My attitude is different because the environment (at Customs) is very different.”
However, the local Customs Service--the gatekeepers for much of Southern California and Nevada trade--have cleared some major hurdles just in time to face new challenges. Now they must prepare to deal with a likely big increase in imports in a region that is already the busiest trade district in the nation. In addition, they must be prepared to investigate more and more allegations of illegal trade practices by China and other countries.
U.S. Customs Service headquarters in Washington last week asked their inspectors nationwide to look for certain machine tools produced in China’s Hubei province, the site of a suspected prison labor camp. The advisory was the latest in a series of alerts designed to help Customs officials find and seize goods produced by prison laborers. Prison-made imports are illegal in the United States.
Customs last month asked inspectors to withhold the release of other goods allegedly produced by prisoners in China--two types of socks from Beijing and any Chinese wrenches stamped “Elephant” or “Laodong.”
The prison labor issue is just one of many American trade grievances against China, which ran a $10.4-billion surplus in its U.S. trade last year. Federal Customs agents in New York and Los Angeles last September launched an unprecedented series of searches at 23 companies that import goods from China as part of a broad investigation into alleged export fraud by the Chinese government. One focus of the federal probe involves allegations that Chinese-controlled companies are circumventing quotas on apparel by falsely labeling clothes from China, creating the appearance that they were made elsewhere.
Much of the investigative burden falls on the local Customs Service district because about one-quarter of China’s U.S. exports pass through the Port of Los Angeles. Los Angeles District investigators, acting on a tip from Customs headquarters, late last year uncovered a scheme to disguise a shipment of Chinese sweaters as knitwear made in Macao. Customs subsequently discovered other false “Made in Macao” sweater shipments at other ports.
Now local Customs officials are investigating an alleged scheme to disguise Chinese-made womens’ garments as clothing originating in Mozambique. Since identifying the alleged Mozambique scheme earlier this year, local Customs have stepped up their efforts to find trade violations by China.
However, the Los Angeles Customs office has not been given additional hiring authority for this stronger interdiction effort. The local agency said it is coping by concentrating more on “high-risk” shipments, such as goods that have import restrictions or originate from certain countries.
“We have the same number of people involved in inspections,” explained John Heinrich, director of the Los Angeles District Customs Service. “But more of the inspectors are focusing on high-risk shipments from China.”
With a staff of nearly 700, Customs in fiscal year 1989 seized general merchandise valued at $57.3 million for various reasons ranging from product safety violations to dumping to quota transgressions. The staff size is about the same today, but merchandise seizures totaled $77 million in just the first three quarters of fiscal 1991.
The increases are a reflection of a greater emphasis on fraud detection and the rising value of imports in the district, which includes the ports of Los Angeles and Long Beach and two airports--Los Angeles International and McCarran International in Las Vegas.
To cope with with rising demands, the local Customs office will need more sophisticated computers and software, Heinrich said.
Hopefully, Congress will authorize funding for such technology in the near future, he added.
Local Customs officials note that technology was the key to overcoming its most recent workload crisis, and they say they believe that computerization is an answer to future challenges.
Reports of discontent among local importers and their brokers surfaced in 1985 when a coalition of brokers, agents who handle the paperwork and other delivery arrangements for importers joined forces with the Chamber of Commerce and ports of Los Angeles and Long Beach to press Customs to beef up its work force.
The problems and complaints escalated when the consulting firm of Booz, Allen & Hamilton Inc. of New York in 1987 issued a study concluding that U.S. Customs Service staffing of West Coast ports had not not kept pace with increasing traffic.
The study was commissioned by the Western States Coalition for Effective U.S. Customs Service, whose members include Los Angeles International Airport and the ports of Los Angeles, Long Beach, San Diego, San Francisco, Oakland, Seattle and Tacoma, Wash.
While regional Customs staffing was considered inadequate, the report was particularly critical of the Los Angeles District. For example, only 9% of cargo requiring general inspection cleared Customs within eight hours in the ports of the Los Angeles and Long Beach, compared to a 42% clearance rate for the entire West Coast, the report said.
Of goods requiring close examination by inspectors, none cleared Customs within eight hours in Los Angeles or Long Beach, while 16% did so in the region, according to the report.
Improvements came slowly. First, the local Customs office began to computerize some of its operations in 1986 and 1987.
“Before computerization, we were overwhelmed with paper work,” recalled Mary Rasmussen, assistant district director in charge of the computer entry division.
The local Customs office was then allowed to increase its staff by 100 in 1989. However, those measures were not enough initially. Import brokers held frequent meetings with Customs officials. Gripe sessions sometimes lasted three hours, Rasmussen recalled.
The breakthrough actually began in 1989, when a majority of local brokers began to take advantage of a national program allowing them to send computerized information on the nature and quantity of their incoming shipments to the Customs district office at the point of import entry. More and more container ships also began to electronically send data on their cargo and customers to Customs before actually arriving in Los Angeles District ports.
With advance information--the kind that could be reviewed and stored with the flick of a computer key--local Customs officials began to quickly decide which shipments required physical inspection, or paperwork, and which could be released without further review.
Today, about 35% of the cargo entering the Los Angeles District is approved for release on the basis of electronic communication and--except for an invoice submission that ends the process--without any paperwork. Only 7% of the cargo--the suspect or the high-risk--is actually examined.
Local import industry leaders are generally pleased with Customs operations this year.
Said Tom Teofilo, Los Angeles-based executive secretary of the Western States Coalition, which now includes some major importers as well major Pacific port authorities: “The steam ship lines tell us that the (automated) system is working. It took a little time to get off the ground . . . but it’s speeded up business.”
John Brady, president of the Los Angeles Customs and Freight Brokers Assn., expressed concern that some unscrupulous exporters or importers might prevent Customs from scrutinizing restricted goods by misidentifying items in its electronic communications.
However, some operators would try to circumvent any system “as long as there is money to be made,” Brady added. “Customs has made great strides.”
Meanwhile, Mattel’s Cuza is pleased because goods that were sometimes delivered three to five days after a ship’s port arrival in the 1980s are now generally transferred within a day.
“There’s still room for improvement,” he said. “I think we will see even more efficient service in the future--and that’s important because the trade flow will increase.”
What U.S. Customs Service Does
* Find and seize drugs and other contraband
* Collect duty charges and other fees on all imported merchandise
* Enforce trade provisions such as quotas limiting the amount of apparel that can be imported
* Detect and apprehend persons engaged in fraudulent trade practices such as shipping illegally copied copyrighted material.
Top Five Districts
Duties and taxes from fiscal year ended Sept. 30
San Francisco: $894 million
Chicago: 932 million
JFK Airport, N.Y.: $1.2 billion
Newark, N.J.: $2.8 billion
Los Angeles: $3.4 billion Source: U.S. Customs Service
