```

[Senate Executive Report 109-2]
[From the U.S. Government Publishing Office]

109th Congress                                              Exec. Rept.
                                 SENATE
 1st Session                                                      109-2

======================================================================

 
PROTOCOL OF AMENDMENT TO THE INTERNATIONAL CONVENTION ON SIMPLIFICATION 
      AND HARMONIZATION OF CUSTOMS PROCEDURES (TREATY DOC. 108-6).

                                _______
                                

                 July 28, 2005.--Ordered to be printed

                                _______
                                

          Mr. Lugar, from the Committee on Foreign Relations,
                        submitted the following

                              R E P O R T

                    [To accompany Treaty Doc. 108-6]

    The Committee on Foreign Relations, to which was referred 
the Protocol of Amendment to the International Convention on 
Simplification and Harmonization of Customs Procedures (Treaty 
Doc. 108-6) (hereafter ``Protocol''), done at Brussels on June 
26, 1999, having considered the same, reports favorably thereon 
with reservations as indicated in the resolution of advice and 
consent, and recommends that the Senate give its advice and 
consent to accession thereto, including certain Specified 
Annexes, as set forth in this report and the accompanying 
resolution of advice and consent.

                                CONTENTS

                                                                   Page

  I. Purpose..........................................................1
 II. Background.......................................................2
III. Summary of Key Provisions of the Protocol........................2
 IV. Implementing Legislation.........................................3
  V. Committee Action.................................................3
 VI. Committee Recommendation and Comments............................3
VII. Text of Resolution of Advice and Consent to Accession............4

                               I. Purpose

    The Protocol amends a 1973 Customs Convention (the 
``original Convention'') in force since 1974 that has 63 
parties, including the United States and many of its largest 
trading partners, and has served as the main international 
framework for customs procedures. Since 1984, when the United 
States became a party to the original Convention, the growth of 
international trade and advancements in technology have made 
the original Convention outdated. The Protocol modernizes the 
original Convention and further harmonizes customs procedures 
without compromising standards of customs control.

                             II. Background

    The Protocol was adopted by the members of the World 
Customs Organization following four years of study and 
deliberation. The United States participated actively in the 
negotiations, working with interested private sector groups. 
The Protocol will enter into force three months after forty of 
the parties to the original Convention have indicated their 
consent to be bound. To date, 38 parties have done so, 
including the European Community and 22 EC member states.

             III. Summary of Key Provisions of the Protocol

    A detailed article-by-article discussion of the Protocol 
may be found in the Letter of Submittal from the Secretary of 
State to the President, which is reprinted in full in Treaty 
Document 108-6. A summary of the key provisions of the Protocol 
is set forth below.
    The Protocol requires parties to implement standardized 
customs procedures that are simple, transparent, predictable 
and efficient. It calls for Parties to continuously modernize 
their customs procedures; to apply their customs procedures 
predictably, consistently, and transparently; to make available 
information on their customs laws, regulations, guidelines, and 
practices; to adopt modern techniques, such as risk management, 
audit-based controls, and the maximum use of information 
technology; to cooperate with the customs authorities of other 
countries; to implement relevant international standards; and 
to provide a transparent system of administrative and judicial 
review of customs decisions.
    The Protocol replaces all of the Annexes to the original 
Convention with a General Annex binding on all parties and ten 
Specific Annexes that address more specialized customs 
procedures. Accession to the Protocol binds parties to the 
amended Convention and the General Annex, and parties may 
accept any of the ten Specific Annexes or chapters of such 
annexes.
    The General Annex contains general principles and 
definitions, as well as standards for core customs functions 
such as collection of duties and taxes, risk management, the 
use of information technology, pre-arrival processing, 
transparency of customs regulations, appeals procedures, and 
consultation between customs and industry. Standards must 
generally be implemented within 36 months of entry into force, 
while the implementation period for ``transitional standards'' 
is 60 months. The Specific Annexes contain standards and 
``recommended practices'' governing areas such as warehousing, 
transit, and temporary admission. Although the term 
``recommended practice'' might be read to be non-binding, in 
fact, unless a party enters a reservation to the applicable 
Recommended Practice, it is considered to be a binding legal 
obligation under Articles 12(2) and 13(3) of the Convention as 
amended by the Protocol.
    U.S. industry was consulted throughout the negotiation 
process and has expressed its strong support for U.S. 
accession. The Executive Branch has testified that the new 
Protocol will have no financial impact on U.S. customs 
infrastructure or operations.

                      IV. Implementing Legislation

    No implementing legislation is required for the Convention.

                          V. Committee Action

    The Committee on Foreign Relations held a public hearing on 
the Protocol on June 17, 2004, at which it heard testimony from 
representatives of the Department of State and the Bureau of 
Customs and Border Protection of the Department of Homeland 
Security (S. Hrg. 108-721). On July 26, 2005, the Committee 
considered the Protocol and ordered it favorably reported by 
voice vote, with the recommendation that the Senate give its 
advice and consent to its accession, including certain Specific 
Annexes, subject to the reservations contained in the 
resolution of advice and consent.

               VI. Committee Recommendation and Comments

    The Committee on Foreign Relations believes that the 
proposed Protocol is in the interest of the United States and 
urges the Senate to act promptly to give advice and consent to 
its accession, including certain Specific Annexes, subject to 
the reservations contained in the resolution of advice and 
consent.
    By establishing more predictable, standard, and harmonized 
customs procedures governing cross-border trade transactions, 
accession to the Protocol is expected to facilitate greater 
economic growth, increased foreign investment, and stimulation 
of U.S. exports. In addition, the Protocol provides security 
and anti-corruption benefits. For example, the requirement that 
parties use and standardize information technology will 
facilitate the U.S. security initiative to collect advance 
information related to inbound cargo and passengers. Moreover, 
by increasing transparency in customs procedures, the Protocol 
will reduce the possibility for corruption in foreign customs 
practices.
    The Committee agrees with the recommendation of the 
Executive Branch that the United States accept in their 
entirety Specific Annexes A (arrival of goods in a customs 
territory), B (importation), C (exportation), D (customs 
warehouses and free zones), E (transit), and G (temporary 
admission), and chapters 1-3 of Specific Annex F (processing), 
and chapters 3-5 of Specific Annex J (special procedures). The 
Executive Branch initially recommended that the United States 
also accept Specific Annex H and Specific Annex J, Chapter 1. 
However, in light of questions raised by the Committee in 
connection with the hearing, the Executive Branch determined 
that it was not clear that the standards contained therein on 
personal searches of travelers were consistent with U.S. law 
and practice. As a result, the Executive Branch recommended 
that the United States not accept Specific Annex H and Chapter 
1 of Specific Annex J. The Committee agrees with this 
recommendation.
    The Committee recommends that the Senate's advice and 
consent be made subject to reservations to certain recommended 
practices contained in Specific Annexes A, B, D, E, F, G, and 
J, as proposed by the Executive Branch. These reservations will 
ensure that the obligations undertaken by the United States are 
consistent with existing U.S. law and procedures, and obviate 
the need for implementing legislation. The text of these 
reservations is contained in the enclosure to the report of the 
Secretary of State contained in Treaty Doc. 108-6. Due to the 
length and technical nature of these reservations, the 
Committee has incorporated them by reference to the Secretary's 
report. Since, as noted above, the Committee recommends that 
the United States not accept Chapter 1 of Specific Annex J, the 
Committee has not included a reference to the reservation to a 
recommended practice in that chapter that is contained in the 
enclosure to the Secretary's report.

       VII. Text of Resolution of Advice and Consent to Accession

    Resolved (two-thirds of the Senators present concurring 
therein),

    The Senate advises and consents to the accession to the 
Protocol of Amendment to the International Convention on the 
Simplification and Harmonization of Customs Procedures (the 
``Protocol'') done at Brussels on June 26, 1999 (Treaty Doc. 
108-6), including Specific Annexes A, B, C, D, E, and G; 
Chapters 1, 2 and 3 of Specific Annex F; and Chapters 3, 4 and 
5 of Specific Annex J; subject to the reservations to certain 
Recommended Practices (as set forth in the enclosure to the 
report of the Secretary of State in Treaty Doc. 108-6) in 
Specific Annex A, Chapters 1 and 2; Specific Annex B, Chapters 
2 and 3; Specific Annex D, Chapters 1 and 2; Specific Annex E, 
Chapters 1 and 2; Specific Annex F, Chapters 1, 2 and 3; 
Specific Annex G, Chapter 1; and Specific Annex J, Chapter 4.


```