United States General Accounting Office

GAO Report to the Chairman, Subcommittee

on the Postal Service, Committee on

Government Reform and Oversight

House of Representatives

June 1998 U.S. POSTAL SERVICE

Competitive Concerns

About Global Package

Link Service

GAO/GGD-98-104

GAO United States

General Accounting Office

Washington, D.C. 20548

General Government Division

B-277945 

June 5, 1998

The Honorable John M. McHugh

Chairman, Subcommittee on the Postal Service

Committee on Government Reform and Oversight

House of Representatives

Dear Mr. Chairman:

This report responds to your July 22, 1997, request that we review the U.S. Postal Service’s

(USPS) Global Package Link (GPL) service, an international parcel delivery service that the Postal

Service started in 1995. This request was made in response to concerns by private express

carriers that GPL parcels were subject to fewer customs clearance requirements and received

preferential customs treatment overseas, giving USPS an unfair competitive advantage in

providing international parcel delivery service. The primary objective of our review was to

determine whether differences existed in the customs treatment for GPL and private express

carrier parcels by foreign customs services in Canada, Japan, and the United Kingdom—the

three countries where GPL service was primarily being provided in 1997.

As agreed with the Subcommittee, unless you publicly announce its contents earlier, we plan no

further distribution of this report until 15 days after its issue date. At that time, we will send

copies of this report to the Ranking Minority Member of your Subcommittee, the appropriations

committees, other postal oversight committees in Congress, Representative Anne Northup, the

Postmaster General, and other interested parties. Copies will also be made available to others

upon request.

Major contributors to this report are listed in appendix IX. If you have any questions concerning

this report, please call me or Teresa Anderson, Assistant Director, on (202) 512-8387.

Sincerely yours,

Bernard L. Ungar

Director, Government Business

 Operations Issues
Executive Summary

Purpose Increased demand for consumer goods worldwide has intensified

competition between private express carriers and postal services in

providing international parcel delivery service. The carriers have raised

long-standing concerns about trade barriers that they say hinder their

ability to provide consumers with cost-effective and timely delivery of

parcels. In particular, difficulties in clearing shipments through customs

abroad were cited in a recent GAO survey of U.S. all-cargo airlines as one of

the most pervasive problems that impairs their competitiveness.1

During the summer of 1997, representatives from Federal Express

Corporation (FedEx) and United Parcel Service (UPS) raised concerns to

Congress about one of the U.S. Postal Service’s (USPS) international parcel

delivery services, Global Package Link (GPL). They were concerned that

USPS has used its governmental status with foreign governments to give GPL

parcels preferential customs treatment—including reduced customs fees

and faster customs clearance—over private express parcels. In addition,

private carriers indicated that the additional expenses they incur to

comply with customs requirements that do not apply to USPS give the

Postal Service an unfair competitive advantage. USPS officials replied that

GPL was designed to meet the needs of its customers by providing direct

marketers (mailers of catalog merchandise such as apparel) with an

economical and simplified means of shipping goods internationally,

particularly with respect to the automation of customs information. USPS

officials also stated that they had made no special arrangements with

foreign governments that would give GPL parcels preferential customs

treatment.

In response to these concerns, the Chairman of the House Subcommittee

on the Postal Service, House Committee on Government Reform and

Oversight, asked GAO to review several issues related to the

competitiveness of the international mail market. To accommodate

resource limitations, GAO agreed with the Subcommittee to address these

issues in a series of reviews. In this first review, GAO’s primary objective

was to determine whether differences existed in customs treatment for the

portion of the international mail market involving GPL and private express

carrier parcels, including the customs requirements, processes, and

practices of foreign customs services in Canada, Japan, and the United

Kingdom (U.K.)—the three countries where USPS was primarily providing

GPL service in 1997. In addition, in this report, GAO discusses some issues

related to addressing concerns about GPL’s perceived competitive

1

See GAO’s report, International Aviation: DOT’s Efforts to Promote U.S. Air Cargo Carriers’ Interests

(GAO/RCED-97-13, Oct. 18, 1996).

Page 2 GAO/GGD-98-104 Global Package Link Service
Executive Summary

advantages. We did not review customs treatment of other, non-GPL

international postal services, which may have differed from customs

treatment of GPL parcels. Further, although other government

requirements may apply related to both imports and exports, such as those

regarding airline security and shipments of restricted and prohibited

goods, the focus of this review included only customs requirements. In a

separate review, GAO is addressing other issues related to the Postal

Service’s role and U.S. representation in the international postal

organization, the Universal Postal Union (UPU). In a future review, GAO

plans to examine issues related to the Postal Service’s pricing and

allocation of costs for its GPL service.

Background GPL parcel service is one of several international mail services offered by

USPS. According to USPS, GPL was designed as a parcel delivery service that

would make it easier and more economical for direct marketers to export

bulk shipments of merchandise internationally.2

 During 1997, GPL

customers were primarily direct marketers, U.S. companies whose

businesses mainly involved mailing high-volume shipments of catalog

merchandise, such as apparel, to consumers in other countries. First

introduced in Japan in 1995, the service is now available for parcel

shipments to 10 countries.3

 However, in fiscal year 1997, GPL was operating

primarily in only three countries—Canada, Japan, and the United

Kingdom—and generated gross revenues of about $33.5 million.4

 In fiscal

year 1997, USPS shipped a total of about 2 million GPL parcels to Canada,

Japan, and the United Kingdom; almost all of the parcels were shipped to

Japan. GPL parcels represented less than 1 percent of the total number of

parcels shipped to Canada by the three major carriers and USPS via GPL

service combined, about 60 percent of those shipped to Japan, and about

2 percent of those shipped to the United Kingdom in 1997.5

 In fiscal year

1997, the GPL service as a whole accounted for less than 1 percent of the

Postal Service’s total outgoing international mail volume.

2

See appendix I for a chronology of GPL services.

3

The 10 countries are Brazil, Canada, Chile, China (GPL service to Hong Kong was established before

Hong Kong’s reversion to China), France, Germany, Japan, Mexico, Singapore, and the United

Kingdom.

4

During the final months of 1997, USPS also sent some GPL parcels to Mexico and China.

5

Although GAO obtained data on the number of parcels shipped by USPS and the three major private

competitors to Canada, Japan, and the United Kingdom, parcels also may have been shipped via other

private express carriers and USPS services to those three countries.

Page 3 GAO/GGD-98-104 Global Package Link Service
Executive Summary

Upon arrival in the destination countries, both postal and private express

parcels are subject to clearance by foreign customs officials. Customs

services monitor the arrival and departure of shipments of goods through

their clearance processes at ports-of-entry. To obtain clearance of goods,

shippers must fulfill the customs requirements of the destination country,

including proper import documentation and payment of any applicable

duties and taxes.

To identify whether customs treatment differed for GPL parcels and similar

private express parcels, GAO compared (1) the customs statutory and

regulatory requirements; and (2) the operational practices and processes

for importing merchandise through GPL or through private express carriers

into Canada, Japan, and the United Kingdom. Some of the differences in

customs treatment could not be linked to written requirements. Rather,

officials from the private express carriers, USPS, and foreign customs and

postal agencies described them to GAO as the operational practices and

processes that were followed. GAO also asked these officials to verify its

descriptions of the processes and the legal basis for foreign customs

clearance of imported GPL and private express parcels. The information on

private express clearance processes discussed in this report was obtained

from three private express carriers, DHL Airways (DHL), FedEx, and UPS,

because they were identified as being the largest competitors with USPS for

parcel delivery services to the three foreign countries in this review.

Results in Brief The delivery and customs clearance processes for GPL and private express

parcels in Canada, Japan, and the United Kingdom were based primarily

on the domestic import requirements applicable to mail and parcels

imported by private carriers in those countries. All three countries had

separate customs clearance processes and requirements for mail and

parcels imported by private express carriers. Under U.S. law, the private

express carriers were required to submit their parcels to U.S. Customs for

inspection prior to export, but USPS was not subject to this requirement for

its outbound parcels.

Differences in foreign customs treatment of GPL and private express

parcels were greatest in Japan, where private express carriers were

subject to requirements regarding the preparation of shipping

documentation and payment of duties and taxes on their parcels that did

not apply to GPL parcels. In the United Kingdom, USPS was providing

certain shipping data to the customs service on GPL parcels that was

similar to the information that carriers were required to provide. In

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Executive Summary

Canada, GPL and private express parcels were subject to the same

requirements because GPL parcels were being delivered for USPS by a

private express carrier there.

Regarding two major areas of concern to the carriers, GAO found no

evidence that GPL parcels received preferential treatment over private

express parcels in terms of (1) the speed of customs clearance in any of

the three countries or (2) the assessment of duties and taxes in Canada

and the United Kingdom. On behalf of individual importers, USPS was

paying duties and taxes on GPL parcels shipped to Canada and the United

Kingdom. GAO was unable to determine whether duties and taxes were

assessed on dutiable GPL parcels shipped to Japan because (1) USPS did not

have records on payment of duties and taxes on GPL parcels shipped to

Japan, because the recipients of postal parcels in Japan are responsible for

paying applicable duties and taxes; and (2) Japan Customs did not provide

statistics on the amount of duties and taxes that recipients paid on GPL

parcels.

GAO found that the private express carriers followed similar delivery and

customs clearance processes for parcels shipped from the United States to

the three countries in its review. However, USPS’ delivery and customs

clearance processes for GPL parcels differed among the three countries.

The differences reflected USPS’ use of different types of GPL delivery agents,

which were subject to different sets of requirements within the countries.

In Japan and the United Kingdom, GPL parcels were delivered by those

countries’ postal services and were treated as mail under customs law. In

Canada, GPL parcels were delivered by a private express carrier and were

subject to the customs laws that applied to private carriers for importing

goods.

The private express industry has commented that differences in customs

clearance requirements for postal and privately shipped parcels result in

more work and higher costs for the carriers, placing them at a

disadvantage in competing with USPS to provide international parcel

delivery service. However, USPS officials noted that they also incur costs

that the private carriers do not, such as meeting their obligations to

provide delivery service to persons in all communities of the United States

and to member countries of the Universal Postal Union. In addition,

businesses that ship their goods internationally, as well as USPS and the

carriers, stressed the importance of having competitive choices that

provide alternatives in the cost and speed of international shipping

services for consumers.

Page 5 GAO/GGD-98-104 Global Package Link Service
Executive Summary

The carriers have urged Congress to protect fair competition by enacting

legislation that would require USPS to compete on the same terms,

particularly for customs treatment, as private carriers. This proposal raises

several questions, such as (1) whether international parcels delivered by

postal services and private carriers should be subject to the same

requirements and customs treatment, (2) if so, what requirements would

be appropriate to apply to international parcels, and (3) how the

requirements should be implemented.

GAO’s Analysis

Differences in

Customs Treatment

for GPL and Private

Express Parcels

Shipped to Canada,

Japan, and the United

Kingdom

GAO identified 11 major categories of customs requirements and practices

that potentially differed between the private express carriers and USPS in

shipping parcels to Canada, Japan, and the United Kingdom. The 11

categories, only the first of which involved U.S. law, included (1) U.S.

Customs inspection of outbound parcels, (2) preparation of import

shipping documentation, (3) electronic submission of shipping data,

(4) use of licensed customs brokers, (5) calculation of duties and taxes,

(6) the timing of payment of duties and taxes, (7) payment for customs

clearance outside of regular business hours, (8) posting of bonds or other

security to customs services for storage facilities, (9) retention of shipping

records, (10) liability for the importation of restricted or prohibited parcel

contents, and (11) liability for incorrect or missing customs declarations.

According to customs officials in the United States and the countries in

GAO’s review, different requirements and processes for postal and

commercial imports evolved over time, and the requirements were not

intended to be the same. They said that historically, more requirements

have been imposed on commercial cargo than on postal parcels because

cargo tended to be high-value merchandise shipped from one company to

another, but postal parcels tended to be low-value items for personal

consumption. In addition, the Customs officials said that with the

development of the direct marketing industry through catalog sales and,

more recently, through on-line computer orders, these distinctions have

been blurred as consumers transact their purchases of merchandise goods

directly from businesses and have the goods delivered to their residences.

The need for faster clearance has also prompted the private carriers to

request special customs requirements that would provide expedited

clearance.

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Executive Summary

Table 1 summarizes the requirements and practices in shipping GPL and

private express parcels to Canada, Japan, and the United Kingdom in the

11 major categories. The table also indicates areas where USPS and the

carriers performed the task but were not required to do so by law or

regulation.

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Table 1: Comparison of Requirements and Practices for Shipping Parcels to GPL Destination Countries

Canada Japan United Kingdom

GPL destination countries

Requirements/practices GPLa

Private

carrier GPL

Private

carrier GPL

Private

carrier

Submit outbound parcels for customs

inspectionb √ √ √

Prepare import shipping documentation √ √ √ √

Enter shipping data into foreign customs

services’ computers

Use licensed customs brokers

Calculate duties and taxes √ √ √c d

Pay or secure duties and taxes before

Customs’ release to delivery agent √ √ e √ √

Pay for customs clearance outside of regular

business hours √ √ √ √f √

Post bonds or provide other security to

customs services for storage facilities √ √ √

Retain shipping records √ √ √ √

Importer liability for parcel contents √ √ √ √ √ √

Importer liability for incorrect or missing

declarations √ √ √ √ √

Legend

√ Required/Applicable

 Practice

aGPL parcels were imported into and delivered within Canada for USPS by a private express

carrier and were therefore required to meet the same customs requirements as were imports by

private carriers.

bUSPS officials noted that the Postal Inspection Service inspects some outgoing international

parcels prior to export using search warrants.

cIn practice, duties and taxes are in most cases calculated by Japan Customs’ computer system

on the basis of data entered by the importers/brokers.

dIn the United Kingdom, duties and taxes are calculated by H.M. Customs’ computers on the

basis of data provided by the carriers.

eIn Japan, recipients of postal parcels are not to receive parcels until the duties and taxes are

paid.

f

H.M. Customs officials said that although Parcelforce would be liable for customs clearance

outside of regular business hours, customs clearance for GPL parcels is normally done during

regular business hours.

Source: GAO analysis of information from postal and customs officials, laws, and regulations in

Canada, Japan, the United Kingdom and the United States.

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Executive Summary

Differences in Customs

Treatment for GPL and

Private Express Parcels

Shipped to Japan

Customs treatment of GPL and private express parcels shipped from the

United States to Japan was determined largely by Japanese law, which

prescribed different sets of requirements for postal and private express

parcels. Under Japanese law, postal parcels were exempt from the major

requirements that applied to private express parcels. Appendix III

provides the basis in Japanese law for the different requirements. Also

affecting customs treatment were the carriers’ different valuations of

certain imported goods, which provided the basis for determining the

amount of duties and taxes owed.

Private express carriers or their brokers were subject to significantly more

requirements than were USPS and the Japan Postal Bureau in shipping their

parcels from the United States to Japan. U.S. law subjected private express

parcels to customs inspection prior to export, but outbound postal parcels

were not subject to this requirement. Under Japanese law, the carriers or

their brokers were required to provide detailed shipping documentation,

calculate duties and taxes, pay or secure payment of duties and taxes

before Customs’ release to the delivery agent, and retain shipping records.

In addition, the carriers or their brokers were subject to liabilities for

importing restricted or prohibited parcel contents and for incorrect or

missing customs declarations. They also paid for customs clearance

outside of regular business hours to expedite parcel clearance. Although

not required to by law, the carriers entered most of their import shipping

data into Japan Customs’ computer system. By contrast, USPS or the Japan

Postal Bureau were not subject to these requirements or practices with

respect to GPL parcels, with the exception of the postal service’s potential

liability for restricted or prohibited parcel contents.

In shipping parcels from the United States to Japan, USPS and the private

express carriers followed different delivery and customs clearance

processes. A major process difference involved the delivery agents used by

USPS and the carriers in Japan. USPS paid the Japan Postal Bureau to deliver

GPL parcels within Japan. In comparison, employees of the three major

private express carriers, or their Japanese business partners, delivered

their parcels from the United States to recipients within Japan. Further,

although private express parcels were typically cleared at airport facilities,

customs clearance at the Japan Postal Bureau facility that received the

most GPL parcels was located in downtown Tokyo, about 2 hours from the

New Tokyo International (Narita) Airport, where the parcels arrived from

the United States.

Page 9 GAO/GGD-98-104 Global Package Link Service
Executive Summary

According to Japan Customs officials, GPL and private express parcels

received the same customs treatment. From information provided by USPS

and Japan Customs, GAO found no evidence that GPL parcels received

preferential treatment by Japan Customs over private express parcels with

respect to the speed of customs clearance. Data provided by USPS indicated

that in 1997, clearance of GPL parcels in Japan took an average of 2.17 days;

according to Japan Customs, private express parcels were normally

cleared within 2 hours. The carriers reported that customs clearance in

Japan generally took between 2 and 5 hours for parcels not held for

inspection.

Japan Customs is responsible for assessing duties and taxes on imported

postal parcels, including GPL parcels. Private carriers calculated the duties

and taxes on imported parcels, which were later verified by Japan

Customs. The carriers indicated that because they or their brokers

calculated and paid duties and taxes on parcels imported into Japan, their

records prove that they pay 100 percent of applicable duties and taxes.

The carriers were concerned that they have lost direct marketers as

customers because of a perception that duties and taxes were not always

assessed on dutiable postal parcels in Japan.

Japan Customs officials, however, said that duties and taxes were being

assessed on all dutiable parcels imported from the United States. GAO was

unable to determine whether duties and taxes were assessed on dutiable

GPL parcels shipped to Japan because (1) USPS did not have records on

payment of duties and taxes on GPL parcels shipped to Japan, because the

recipients of postal parcels in Japan are responsible for paying applicable

duties and taxes; and (2) Japan Customs did not provide statistics on the

amount of duties and taxes that recipients paid on GPL parcels.

Japanese law addresses how imported goods should be valued for the

purposes of assessing duties and taxes. However, because of different

valuations of imported goods by private carriers or their brokers,

differences existed in the amounts of duties and taxes paid on some postal

and private express parcels. The carriers reported that the Japan Customs

Bureau rarely, if ever, adjusted their calculations of duties and taxes on

imported parcels.

Japanese law allowed imported goods to be valued at their wholesale,

rather than retail, values if the goods are deemed to be for the personal

use of the importer or are a gift to a person who is a resident in Japan and

are deemed to be for the personal use of the recipient of the gift. In

Page 10 GAO/GGD-98-104 Global Package Link Service
Executive Summary

assessing the customs value of goods, Japan Customs officials said

imported parcels from direct marketers that are addressed to an

individual, in many cases, qualified as goods deemed to be for the

importers’ personal use and could be valued at their wholesale, rather than

retail, values.

Japan Customs officials said wholesale valuations could be applied for

both GPL and private express parcels containing goods from direct

marketers for the recipients’ personal use, and they applied a standard

60-percent valuation of GPL parcels’ retail value to calculate wholesale

values. With regard to private express parcels, GAO found that the carriers

were valuing their imported goods differently, which could affect the

amount of duties and taxes owed on their imported parcels. Of the three

major private express carriers GAO contacted for this study, one carrier

indicated that it was calculating duties and taxes on only imported

mail-order goods on the basis of wholesale values of the goods. Another

said that it was using wholesale valuations for both imported mail-order

goods and gifts. The third carrier was not using wholesale valuations for

any of its imported goods as a basis for calculating duties and taxes.

Differences in Customs

Treatment for GPL and

Private Express Parcels

Shipped to the United

Kingdom

The customs treatment of GPL and private express parcels being shipped

from the United States to the United Kingdom was governed by legal

requirements applicable in the United Kingdom, which included U.K. and

European Union (EU) laws and regulations. USPS’ provision of certain

shipping data to the customs service in the United Kingdom on GPL parcels,

while not required by law, served to lessen the extent of differences in

customs treatment of postal and private express parcels in the United

Kingdom.

USPS and the private express carriers followed different processes for

delivering parcels from the United States to the United Kingdom, reflecting

the use of different delivery agents. Within the United Kingdom, GPL

parcels were delivered by Parcelforce, a for-profit subsidiary of Royal

Mail, the United Kingdom’s postal service. By contrast, the three major

private express carriers, or their contracted local delivery companies,

delivered their parcels within the United Kingdom.

As in Japan, private express carriers in the United Kingdom were subject

to requirements that did not apply to postal services. In the United

Kingdom, carriers or their brokers were required to pay or secure duties

and taxes before customs clearance, provide security to the customs

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Executive Summary

service for storage facilities, and retain shipping records. They also paid

for customs clearance outside of regular business hours to expedite parcel

clearance. By contrast, USPS and Parcelforce were not required to pay or

secure duties and taxes before customs clearance, post bonds or other

security to the customs service for storage facilities, or retain shipping

records; and did not normally have GPL parcels cleared outside of regular

business hours. Both the carriers and the postal service in the United

Kingdom were subject to liabilities for importing restricted or prohibited

goods and for incorrect or missing customs declarations. Although

Parcelforce was not required by law to maintain records on GPL parcels,

Parcelforce officials said they planned to keep records on GPL shipments

for 5 years.

USPS was providing electronic shipping data on GPL parcels to Parcelforce

for access by H.M. Customs officials. The content of USPS’ shipping data on

GPL parcels was similar to the information that the carriers provided to

H.M. Customs on their parcels.6 USPS provided documentation indicating

that it paid duties and taxes on GPL parcels shipped to the United Kingdom

in 1997. USPS officials said that they offered to follow these procedures in

establishing GPL service to the United Kingdom. Appendix IV provides the

basis in U.K. and EU law for the requirements.

The only apparent difference in customs treatment of postal and private

express parcels in the United Kingdom related to the reported speed of

customs clearance. USPS did not have exact data indicating how long

customs clearance took in the United Kingdom, but USPS officials said that

GPL parcels were normally cleared within the same day that they arrived in

the United Kingdom. Customs officials in the United Kingdom indicated

carrier parcels are cleared on average in 2 hours.7

Differences in Customs

Treatment for GPL and

Private Express Parcels

Shipped to Canada

The treatment of GPL and private express parcels being shipped from the

United States to Canada was determined by Canadian law. Although

Canadian law prescribed different sets of requirements for postal and

private express carrier parcels, GPL parcels were delivered for USPS by a

private express carrier in Canada and thus were subject to the same

requirements that private express carriers must follow, according to

6

In providing comments on a draft of this report, Japan Customs indicated that it planned to develop

an import information system in cooperation with USPS that is similar to the one used in the United

Kingdom.

7

The carriers said that under new simplified procedures, customs clearance occurred immediately

upon arrival for certain imported goods.

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Canadian customs officials. These requirements included the preparation

of shipping documentation, calculation of duties and taxes,8

 posting of

security to the customs service for storage facilities, retention of shipping

records, and payment for customs clearance outside of regular business

hours. According to Revenue Canada, which serves as Canada’s customs

service, the importers of parcels in Canada were subject to potential

liabilities for the importation of restricted or prohibited parcel contents,

and the importers or their brokers were subject to liabilities for missing or

incorrect customs declarations. Appendix V provides the basis in

Canadian law regarding importing requirements for postal and private

express parcels.

Issues Related to Making

Customs Requirements

More Similar

Issues related to fair competition involve weighing how USPS and its

private sector competitors can compete, given their different requirements

and obligations. The potential implications of whether to apply the same

requirements, under what terms, and how to apply the same requirements

for both USPS and the carriers may include a number of factors, including

those raised by the U.S. and foreign postal and customs services, private

express carriers, shippers, and consumers. The private express industry

has commented that it wants a “level playing field” with USPS in providing

international parcel delivery service by having Congress apply the same

customs requirements on USPS and the carriers. The carriers also noted the

benefits that simplification of customs formalities for low-value shipments

could have for all international commerce. USPS officials noted that the

Postal Service incurs costs that the private carriers do not, such as

meeting its obligations to provide delivery service to persons in all

communities of the United States and to member countries of UPU.

Moreover, businesses that ship their goods internationally, as well as USPS

and the carriers, stressed the importance of having competitive choices

that provide alternatives in the cost and speed of international shipping

services for consumers.

In urging that the same international customs clearance requirements

should be applied to USPS and the private carriers, the carriers have raised

fundamental questions about the fairness of competing with a government

entity that is providing a businesslike service. The carriers commented

that competing with a government entity that is subject to fewer customs

requirements and lower associated costs distorts the competitive

marketplace. Depending upon what types of competitive international

8

USPS provided documentation indicating that it paid duties and taxes on GPL parcels shipped to

Canada in 1997.

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Executive Summary

postal products would be subject to the same requirements, postal

services are concerned that requiring USPS and the private carriers to

follow the same requirements could affect the simplified process that was

intended for mail sent from household to household internationally.

Another consideration is the potential impact on shippers, such as the

direct marketing industry, who would like to have a choice of different

types, costs, and speeds of delivery services to respond to their customers’

demands for their goods.

Determining how to make customs requirements the same would involve

several considerations. Changes in U.S. law by themselves would not

equalize customs treatment for postal and private express parcels under

foreign law. Further, additional analysis would be needed to determine

whether making customs requirements the same would conflict with

current international agreements, such as those involving UPU service

obligations, and whether such changes would impose additional workload

burdens on postal and customs services worldwide.

With respect to U.S. law, opportunities may exist to change customs

treatment of parcels imported into the United States. Negotiations

between USPS and the U.S. Customs Service regarding the treatment of

future GPL service incoming to the United States involve discussions of

issues such as manifesting requirements and payment of duties and taxes.

Moreover, in considering what requirements might be appropriate,

additional opportunities may exist to build on national and international

proposals to simplify and expedite customs clearance procedures

worldwide. Such opportunities include reducing paperwork and increasing

the dutiable de minimis—the value threshold at which imported goods are

subject to duties and taxes—which could benefit both USPS and the private

express carriers.

Agency Comments GAO requested comments on a draft of this report from 10 organizations,

including USPS; Treasury and the U.S. Customs Service; the governments of

Canada, Japan, and the United Kingdom; as well as the private express

carriers included in its review—DHL, FedEx, and UPS; and the trade

association Air Courier Conference of America (ACCA). GAO received

written comments from three organizations—ACCA, USPS, and Revenue

Canada; Treasury and U.S. Customs chose not to provide comments. The

private express carriers chose to submit their comments together through

ACCA’s written comments. GAO’s summary of agency comments and

response are included at the ends of chapters 2 and 3. The customs

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services of Canada, Japan, and the United Kingdom provided technical

comments, which are incorporated in appropriate sections throughout the

report.

The comments GAO received generally agreed with the facts presented in

the report on the differences in the requirements and procedures for

customs clearance of GPL and private express carrier parcels in the three

countries in its review. However, USPS and ACCA had different

interpretations of the report’s message and different perspectives on the

policy implications of these differences. GAO made changes where

appropriate to clarify its message.

Page 15 GAO/GGD-98-104 Global Package Link Service
Contents

Executive Summary 2

Chapter 1 

Introduction

20

Overview of USPS’ GPL Service 20

Overview of Private Express Carrier Services 26

Overview of Customs Clearance Process 27

Objectives, Scope, and Methodology 32

Chapter 2 

Differences in

Customs Treatment

for GPL and Private

Express Carrier

Parcels Shipped to

Canada, Japan, and

the United Kingdom

36

Differences in Customs Treatment for GPL and Private Express

Parcels Shipped to Japan

40

Differences in Customs Treatment for GPL and Private Express

Parcels Shipped to the United Kingdom

51

Differences in Customs Treatment for GPL and Private Express

Parcels Shipped to Canada

59

Agency Comments 67

Chapter 3 

Issues Related to

Addressing

Differences in

Requirements for

Postal and Private

Express Parcels

70

Views on Applying the Same Requirements 71

Potential Implications and Means of Applying the Same

Requirements

72

Conclusions 77

Agency Comments 78

Appendixes Appendix I: Chronology of GPL Service 80

Appendix II: Documentation for International Parcel Shipments:

GPL Label, Commercial Invoice, and Air Waybill

87

Appendix III: Legal Requirements for Importing Parcels Into

Japan

92

Appendix IV: Legal Requirements for Importing Parcels Into the

United Kingdom

95

Appendix V: Legal Requirements for Importing Parcels Into

Canada

98

Appendix VI: Comments From USPS 101

Page 16 GAO/GGD-98-104 Global Package Link Service
Contents

Appendix VII: Comments From ACCA 103

Appendix VIII: Comments From Revenue Canada 125

Appendix IX: Major Contributors to This Report 126

Glossary 127

Tables Table 1: Comparison of Requirements and Practices for Shipping

Parcels to GPL Destination Countries

8

Table 1.1: Key Elements of GPL Service to Canada, Japan, and the

United Kingdom

24

Table 1.2: Duties and Taxes Applicable to Imported Parcels in

Canada, Japan, the United Kingdom, and the United States

28

Table 2.1: Comparison of Requirements and Practices for

Shipping Parcels to GPL Destination Countries

39

Table II.1: Key Elements of GPL Label, Commercial Invoice, and

Air Waybill

88

Table III.1: Legal Requirements for Importing Parcels into Japan 92

Table IV.1: Legal Requirements for Importing Parcels into the

United Kingdom

95

Figures Figure 1.1: U.S. Merchandise Exports to Canada, Japan, and the

United Kingdom in 1996

22

Figure 1.2: Overview of U.S. Customs Import Clearance

Processes for Postal and Private Express Shipments

31

Figure 2.1: Preparation of GPL and Private Express Carrier

Parcels Prior to Export From the United States to Japan

42

Figure 2.2: GPL and Private Express Carrier Parcel Delivery and

Customs Clearance in Japan

44

Figure 2.3: Preparation of GPL and Private Express Carrier

Parcels Prior to Export From the United States to the United

Kingdom

54

Figure 2.4: GPL and Private Express Carrier Parcel Delivery and

Customs Clearance in the United Kingdom

56

Figure 2.5: Preparation of GPL and Private Express Carrier

Parcels Prior to Export From the United States to Canada

62

Figure 2.6: GPL and Private Express Carrier Parcel Delivery and

Customs Clearance in Canada

64

Figure II.1: GPL Label for Japan 89

Figure II.2: Commercial Invoice 90

Figure II.3: Air Waybill 91

Page 17 GAO/GGD-98-104 Global Package Link Service
Contents

Abbreviations

ACCA Air Courier Conference of America

COMTIS Customs Overseas Mail Tax Information System

CPAS Customs Pre-Advisory System

CHIEF Customs Handling of Import and Export Freight (U.K.)

C.I.F. Cost, insurance, and freight

DHL DHL Airways, Inc.

DMA Direct Marketing Association

DTI Direct Trader Input

ECU European Currency Unit

EMS Express Mail International Service

EU European Union

FedEx Federal Express Corporation

GPL Global Package Link

IBU International Business Unit

IPCS International Package Consignment Service

ISAL International Surface Airlift

LVS Low-Value Shipment Program (Canada)

NACCS Nippon Automated Cargo Clearance System (Japan)

UPS United Parcel Service

UPU Universal Postal Union

USPS United States Postal Service

VAT Value Added Tax

Page 18 GAO/GGD-98-104 Global Package Link Service
Page 19 GAO/GGD-98-104 Global Package Link Service
Chapter 1 

Introduction

Increased demand for consumer goods worldwide has intensified

competition between private express carriers and postal services for

providing international parcel delivery services.1

 Private carriers have

expressed long-standing concerns about trade barriers, such as foreign

customs’ clearance requirements that they say hinder their ability to

provide cost-effective and timely delivery of parcels.2

 More recently, the

carriers have raised competitive concerns about the U.S. Postal Service’s

(USPS) Global Package Link (GPL) service, which USPS established in 1995 to

provide mailers of catalog merchandise, such as apparel, with an

economical and simplified means of shipping goods internationally.

In the summer of 1997, representatives from Federal Express Corporation

(FedEx) and United Parcel Service (UPS) raised concerns to Congress about

GPL, alleging that USPS has used its governmental status with foreign

governments to give GPL parcels preferential treatment. In particular, the

carriers indicated GPL parcels received reduced customs fees and faster

customs clearance over private express parcels. USPS officials replied that

GPL service was designed to provide direct marketers with an economical

and simplified means of shipping goods internationally, particularly with

respect to the automation of customs information. USPS indicated that it

had not made any special arrangements with foreign governments to give

GPL parcels preferential customs treatment over private express parcels.

This report responds to a request from the Chairman of the Subcommittee

on the Postal Service, House Committee on Government Reform and

Oversight, that we review whether differences existed in the customs

treatment for GPL and private express carrier parcels sent to Canada,

Japan, and the United Kingdom—the three countries where USPS was

primarily providing GPL service in 1997.

Overview of USPS’

GPL Service

GPL was designed as a bulk delivery service that would make it easier and

more economical for companies to ship parcels containing merchandise

internationally. During 1997, GPL customers were primarily direct

marketers—mailers of catalog merchandise. First introduced under the

name International Package Consignment Service (IPCS) to Japan in 1995,

and renamed Global Package Link in 1997, the service is now available for

1

The carriers also deliver freight, but this report focuses on parcel delivery service that is comparable

to GPL service.

2

See GAO’s report, International Aviation: DOT’s Efforts to Promote U.S. Air Cargo Carriers’ Interests

(GAO/RCED-97-13, Oct. 18, 1996). The three private express carriers that were involved in this GPL

review were included in the 1996 report.

Page 20 GAO/GGD-98-104 Global Package Link Service
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Introduction

parcel shipments to 10 countries.3 However, in fiscal year 1997, GPL was

operating primarily in only three countries—Canada, Japan, and the

United Kingdom.4

Responsibility for implementing GPL and other international mail services

lies with the USPS’ International Business Unit (IBU). According to USPS, IBU

was started in 1995 with the vision of becoming within the next few

years—and no later than 2005—the “leading global supplier of direct

marketing and package delivery services and related business transactions

to business customers worldwide.” According to IBU officials, GPL

destinations were selected after customers expressed an interest in

shipping there or USPS decided that certain shipping opportunities existed.

Although GPL currently operates only as an outbound delivery service for

U.S. companies, USPS also plans to offer inbound services to foreign

companies in GPL countries that want to ship products to the United States.

GPL Volume and Revenue GPL is one of several international mailing services offered by USPS.

5

 In

fiscal year 1997, USPS shipped about 2 million parcels via GPL service,

almost all of which were shipped to Japan. GPL parcels represented less

than 1 percent of USPS’ total outgoing international mail volume of almost 1

billion pieces in fiscal year 1997. GPL gross revenues for fiscal year 1997

were $33.5 million, an increase of about 13.5 percent over fiscal year 1996,

when GPL generated $29.5 million in gross revenue.

The number of GPL parcels being sent to different countries may be

affected by several key factors, including currency fluctuations and

cultural preferences for U.S. goods. Exports of U.S. goods sold by direct

marketers6

 to Japan, for example, increased substantially in recent years

but have leveled off recently as the U.S. dollar has increased in strength

3

The 10 countries are Brazil, Canada, Chile, China (GPL service to Hong Kong was established before

Hong Kong’s reversion to China), France, Germany, Japan, Mexico, Singapore, and the United

Kingdom. A several-month delay normally occurs between the time GPL service is announced to a new

destination and when shipments actually begin. The length of the delay depends upon how long it

takes to enlist U.S. direct marketing companies as customers and establish the necessary start-up

operations.

4

During the final months of 1997, USPS also sent some GPL parcels to Mexico and China.

5

Traditionally, the international mail market has included letter mail, printed matter, and parcel post

for households and businesses. Revenues from international mailing services are derived primarily

from airmail; surface mail; Express Mail International Service (EMS); International Surface Airlift

(ISAL); and foreign postal transactions, such as terminal dues (payments made to and by foreign postal

services for handling and delivering international mail) and other related fees. Total international mail

generated $1.61 billion in revenue in fiscal year 1997, compared to $1.65 billion in 1996, a decrease of

2.4 percent.

6

Direct marketers defined themselves as businesses that sell goods directly to consumers.

Page 21 GAO/GGD-98-104 Global Package Link Service
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Introduction

against the Japanese yen, according to the American Chamber of

Commerce in Japan. The U.S. Department of Commerce reports that U.S.

merchandise represents 80 to 90 percent of the value of total personal

imports in Japan. Direct marketers have estimated the value of personal

imports in Japan to represent sales of $1 billion to $1.5 billion annually. On

the basis of catalog requests at direct marketing promotions in Tokyo and

Osaka, Japan, Japanese consumers prefer goods such as apparel;

sports/outdoor equipment; videos, cassettes, compact discs, and books;

and hobby merchandise.

Generally, GPL mailers said that their success in overseas markets

depended on their ability to offer unique and high-quality goods at

favorable prices, including shipping charges. As shown in figure 1.1,

Canada, Japan, and the United Kingdom together account for about

one-third of the value of merchandise goods exported from the United

States, according to 1996 Commerce Department figures.

Figure 1.1: U.S. Merchandise Exports

to Canada, Japan, and the United

Kingdom in 1996

62.9%

21.4%

10.8% Japan

Canada

United Kingdom 4.9%

Other

Note: In 1996, total merchandise exports equaled $624.8 billion.

Other: The rest of the world.

Source: Department of Commerce.

GPL Start-Up Process A new GPL customer is required, among other things, to sign an agreement

with USPS that it will (1) mail at least 10,000 parcels a year to 1 or more

Page 22 GAO/GGD-98-104 Global Package Link Service
Chapter 1 

Introduction

destination countries;7 (2) agree to link its information systems with those

of USPS, enabling the customer and USPS to generate reciprocal data

transmissions concerning the parcels; (3) meet certain shipping

preparation requirements; and (4) designate USPS as its carrier of choice

for each country to which it sends GPL parcels.8

 For new GPL customers,

USPS creates an electronic data link between it and the customer and

installs proprietary software known as the Customs Pre-Advisory System

(CPAS) to capture shipping data.9

 For new GPL countries, USPS creates an

electronic data link with its delivery agents—usually the foreign postal

services. USPS may determine the harmonized tariff codes for the mailers,

depending upon the destination country’s customs clearance

requirements.10 GPL mailers provide data into CPAS about product origin,

description, and value for the system to generate mailing labels, and in

some countries, calculate applicable duties and taxes.

Key Elements of GPL

Service to Canada, Japan,

and the United Kingdom

USPS offers different levels of GPL service to Canada, Japan, and the United

Kingdom, depending upon customers’ needs regarding delivery speed,

parcel tracking, and insurance. Customers are also bound to parcel weight

and size limitations, depending on destination. Shipping rates vary by

country, and customers are eligible for certain volume discounts. As

shown in table 1.1, GPL service includes two to three levels for each of the

three countries (e.g., premium, standard, and economy), with parcels

generally scheduled for delivery within 2 to 10 business days, depending

upon destination; time-definite delivery is not guaranteed to any GPL

country.

7

USPS also allows wholesalers to participate in GPL agreements by combining shipments from

companies with fewer than 10,000 parcels.

8

“Carrier of choice” means that GPL customers agree to use USPS as their carrier unless the parcel

recipients specifically chose another carrier.

9

CPAS is operated by a USPS contractor called DynCorp. GPL customers transmit the following data to

DynCorp: addresses of mailers and recipients, number of items being shipped, description and value of

individual items, and total value and weight.

10Catalog harmonization is the process of assigning international Harmonized Tariff Schedule codes to

each product offered in the mailer’s catalog. The codes are used to determine the applicable tariffs

(also referred to as duties) and taxes due in the destination country. Harmonized tariff codes are not

needed for GPL parcels being sent to Japan; Japan Customs determines the codes.

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Table 1.1: Key Elements of GPL Service to Canada, Japan, and the United Kingdom

Service level

Size and weight

limitationsa Delivery optionsb Insurance coverage Trackingc

Canada

GPL Premium:

Parcels are transported from

GPL processing centers to

Canada overnight, where

parcels are cleared through

customs and released to the

delivery agent.

Maximum length: 60 inches

Maximum length/girth

combined: 108 inches.

Maximum weight: 66 lbs.

Minimum length/width:

large enough for necessary

customs/delivery label.

Normal delivery is 2 to 3

business days after

dispatch from customer’s

plant to final delivery,

depending on location.

Insured up to U.S.$500

against loss, at no

additional cost, but not

against delayed delivery. 

Through

delivery.

GPL Standard:

Parcels are transported to

Canada overnight (same as

GPL premium), where

parcels are cleared through

customs and released to the

delivery agent. Ground

transportation is used to

deliver parcels to final

Canadian destination.

(as above) Normal delivery 3 to 6

business days after

dispatch from customer’s

plant to final delivery,

depending on location;

may take as long as 8

days.b

Insured for the declared

value, up to U.S.$100, but

not against delayed

delivery. Optional coverage

of U.S.$100-$1,000

available for additional cost.

(as above)

Japan

GPL Premium:

Parcels are transported to

Japan by air, where they are

entered into Japan Post’s

domestic mail system for

delivery.

Maximum length: 60 inches

Maximum length/girth

combined: 108 inches.

Maximum weight: 44 lbs.

Minimum length/width:

large enough for necessary

customs/delivery label.

Within 3 to 4 business days

after dispatch from

customer’s plant.

Insured up to U.S.$500

against loss, at no

additional cost, but not

against delayed delivery.

Through

delivery.

GPL Premium Oversize:

(extension of GPL Premium

service):

Parcels are transported to

Japan by air, where they are

entered into a private

express carrier’s delivery

system.

GPL Premium packages

whose length is more than

60 inches up to a

combined length/girth of

108 inches.

GPL Premium packages

weighing more than 44

pounds up to a maximum

of 70 pounds. 

Delivery to be within 3 to 4

business days after

dispatch from customer’s

plant.

Insured up to U.S.$500

against loss, at no

additional cost, but not

against delayed delivery.

(as above)

(continued)

Page 24 GAO/GGD-98-104 Global Package Link Service
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Introduction

Service level

Size and weight

limitationsa Delivery optionsb Insurance coverage Trackingc

GPL Standard:

Parcels are transported to

Japan by air, where they are

entered into Japan Post’s

domestic mail system for

delivery.

Maximum length: 60 inches

Maximum length/girth

combined: 108 inches 

Maximum weight: 66 lbs.

Minimum length/width:

large enough for necessary

customs/delivery label.

Delivery to be within 7 to 10

business days after

dispatch from customer’s

plant.

No insurance coverage

available.

Confirmation of

dispatch from

GPL processing

facility only.

United Kingdomd

GPL Premium:

Parcels are transported to

the U.K. by air, where they

are transferred for delivery to

Parcelforce for local delivery .

Maximum length: 60 inches

Maximum length/girth

combined: 108 inches.

Maximum weight: 66 lbs.

Minimum length/width:

large enough for necessary

customs/delivery label.

3rd business day after

dispatch from customer’s

facility to final delivery.

Insured up to $500 against

loss, at no additional cost,

but not against delayed

delivery.

Through

delivery.

GPL Standard:

Parcels are transported to

the U.K. by air, where they

are transferred for delivery to

Parcelforce for local delivery .

(as above) 4th business day after

dispatch from customer’s

facility to final delivery.

(as above) (as above)

GPL Economy:

Parcels are transported to

the U.K. by air, where they

are transferred to

Parcelforce for local delivery.

(as above) 5th or 6th business day

after dispatch from

customer’s facility to final

delivery.

Insured at an additional

cost, but not against

delayed delivery.

Available to

hand-over to

Parcelforce in

the U.K.

Note: Return service is available from all three countries. Depending on the country, the shipper

or the recipient is responsible for returning merchandise to the designated returns center.

Generally, duties may be refunded if customers did not receive what they ordered.

aMaximum sizes vary for certain other countries in the GPL program. All packages must be large

enough to accommodate the necessary labels and customs labels on the address side.

bDelivery options vary according to the destination country. For Canadian addresses in the

Maritimes and extreme northern territories, delivery times could be as long as 8 days. Shippers

have the option of having USPS transport parcels to a GPL processing center.

cParcels are scanned, for tracking and tracing purposes, using the unique barcode affixed to

each parcel.

dIncludes Great Britain and Northern Ireland.

Source: Federal Register and USPS.

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GPL parcels are processed at and exported from USPS’ GPL processing

centers located in New York, Chicago, Dallas, Miami, and San Francisco as

well as the Air Mail Center in Seattle. GPL parcels sent to Canada are also

processed at a USPS facility in Buffalo, NY. According to USPS, it is required

by law to use only U.S. commercial airlines for transporting parcels

overseas. In 9 of 10 GPL countries, foreign postal services deliver GPL

parcels for USPS.

Overview of Private

Express Carrier

Services

Private express carriers have many different types of customers and offer

various delivery services both domestically and internationally, depending

upon shippers’ needs. For the purposes of this review, we focused on

private express services involving the shipment of parcels of a size and

weight similar to GPL parcels sent to the three countries in our review.11

Nevertheless, differences may exist between some features of the

international delivery services provided by postal and private express

carriers, such as time-definite delivery guarantees and door-to-door

service, which make an exact comparison impossible. For example,

private express services generally provide for guaranteed scheduled

delivery within 1 to 4 business days, compared to 2 to 10 business days for

delivery of GPL parcels, depending on the destination. Also, private express

carriers generally have responsibility for their parcels throughout the

international delivery process, but foreign postal services deliver most GPL

parcels for USPS in other countries.12 Differences may also exist in the

tracking services available for GPL and private express parcels.

Volume, Value, and Weight

of GPL and Private

Express Parcels Shipped to

Canada, Japan, and the

United Kingdom in 1997

Private express carrier officials said that no published data exist on their

market shares to Canada, Japan, and the United Kingdom. However, at our

request, DHL, FedEx, and UPS provided data on the combined number of

parcels that they shipped to Canada, Japan, and the United Kingdom in

1997, excluding documents and freight. USPS provided similar data on GPL

parcels shipped to those countries in 1997.

DHL, FedEx, and UPS provided data indicating that they sent a total of about

8 million parcels to Canada, Japan, and the United Kingdom in 1997. GPL

parcels represented less than 1 percent of the total number of parcels sent

to Canada by the three major carriers and USPS via GPL, about 60 percent of

11See table 1.1 for the size and weight limitations for GPL service to Canada, Japan, and the United

Kingdom.

12GPL parcels are delivered in Canada by Purolator, a private express carrier that is partially owned by

Canada Post.

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those sent to Japan, and about 2 percent of those sent to the United

Kingdom.13

USPS and the three carriers also reported differences in the average weight

and value of GPL and private express parcels. USPS reported that the

average weight of GPL parcels sent to Japan, for example, was about 3

pounds; the private express carriers reported that the average weight of

their parcels to Japan was about 21 pounds. Further, USPS reported that the

average value of GPL parcels to Japan was about $120; the average value of

parcels shipped by the private express carriers to Japan was about $900.

Overview of Customs

Clearance Process

Governments generally establish export and import control laws for

national security and foreign policy purposes, to generate revenue, and to

protect domestic industries and their citizens. Customs organizations are

typically charged with ensuring that all goods and persons entering and

exiting their countries comply with customs laws and regulations, as well

as with facilitating the prompt and efficient movement of international

goods. To ensure compliance, customs services monitor the arrival and

departure of shipments of goods through their clearance processes. The

export process normally consists of seeking permission from customs

services to export goods. This may involve a process of listing goods on a

manifest for presentation to the customs services for export clearance.

The import process involves the inspection of goods for admissibility and

the assessment and collection of any applicable duties and fees.

Duties, also known as tariffs, are charges that a government imposes on

the goods that are brought into the country. Using a Harmonized Tariff

Schedule, each country can establish its own rates, which may vary with

the type of goods and sometimes with the country of origin. In addition,

fees or taxes, such as the Value Added Tax (VAT) in European Union

countries, also may be assessed. Table 1.2 shows the duties and taxes

applicable to imported parcels in the three countries and the United

States.

13Although we obtained data on the number of parcels sent by USPS and the three major private

competitors to Canada, Japan, and the United Kingdom, parcels also may have been sent via other

private express carriers and USPS services to those three countries.

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Table 1.2: Duties and Taxes Applicable to Imported Parcels in Canada, Japan, the United Kingdom, and the United States

Canada Japan United Kingdom United States

Duty Duty on goods more than

$20 Canadian in 

value (about U.S. $14a);

rates vary by item.

Duty on goods more than

¥10,000 in value (about

U.S. $80b); rates vary by

item.

Duty on goods from

non-European Union

countries more than 22

European Currency Units

(ECU)in value (about £18

or about U.S. $30c); rates

vary by item.

Duty on goods more than

$200 in value; rates vary by

item.

Tax 7 percent federal goods

and services taxd

5 percent consumption tax 17.5 percent Value Added

Tax

aAssuming that $1 U.S.=$1.4 Canadian.

bAssuming that $1=¥125. (¥ = yen)

cAssuming that $1=£.6. (£ = British pound)

dRevenue Canada collects a harmonized sales tax on “casual goods” addressed to recipients in

Nova Scotia, New Brunswick, and Newfoundland. “Casual goods” means any goods other than

those imported for sale or for any commercial, industrial, occupational, institutional, or other like

use. The harmonized sales tax of 15 percent comprises a federal component of 7 percent and a

provincial component of 8 per cent. Revenue Canada has also signed agreements with Quebec

and Manitoba to collect their provincial sales taxes on casual goods, which are 7.5 percent and

7 percent, respectively.

Note: Other taxes on specific imported commodities, such as tobacco, may apply.

Source: Canadian, Japanese, U.K., and U.S. law and customs officials.

Historically, customs clearance requirements and procedures have

developed along separate tracks for postal and cargo shipments. In the

United States, customs requirements for clearance of postal items are

affected by a postal law (39 U.S.C. 3623) that protects certain mail of

domestic origin from inspection without a search warrant. Customs

treatment of international mail parcels originated decades ago, when the

need to handle large volumes of international mail prompted customs and

postal administrations to work closely together to simplify forms and

streamline their procedures for handling mail and parcels.

According to customs officials in the United States and the countries in

our review, different requirements and processes for postal and

commercial imports evolved over time, and the requirements were not

intended to be the same. They said that historically, more requirements

have been imposed on commercial cargo than on postal parcels. Customs

clearance for international mail parcels was intended to be simple for

individuals sending parcels to other individuals overseas. International

mail primarily consisted of written letters and low-value packages

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containing items for personal consumption. International express cargo,

on the other hand, tended to be time-sensitive shipments being sent from a

company in one country to a company in another country for the purpose

of generating revenue.

Because of the differences in the nature and value of the items entering a

country by mail versus commercial cargo, most countries established

different customs requirements and procedures for these two different

types of shipments. However, with the development of the direct

marketing industry through catalog sales and, more recently, through

on-line computer orders, the historical distinctions between mail parcels

and cargo have been blurred, as consumers increasingly purchase

merchandise goods directly from businesses and have the goods delivered

to their residences.

The Universal Postal Union (UPU), an agency of the United Nations that

governs international postal service, also established customs procedures

for international mail.14 Under a UPU international agreement, the Universal

Postal Convention, member countries are provided with a standard

declaration form to prepare parcels for international shipment. On the

declaration form, mailers provide information about a parcel’s contents,

weight, and value, as well as the mailer’s and recipient’s names and

addresses.

Private express carriers began importing and exporting shipments into and

out of the United States in the late 1960s and early 1970s as a small

industry responding to the geographic dispersion of industries and

organizations. Initially, the industry provided door-to-door service for

documents. Cargo shipments were not part of express consignment

shipments during the early years because regulatory barriers prevented

rapid effective movement of packages.

During the latter 1970s, private express carriers began the practice of

importing courier-accompanied parcels into the United States via

commercial airlines. Initially, the U.S. Customs Service did not recognize

the private express industry as a separate entity and treated private

express shipments as passenger baggage or normal air cargo. In 1987, after

repeated requests by the private express carriers to be treated as a

separate and special industry, the Customs Service recognized the need to

14Currently, 189 countries are UPU members, including Canada, Japan, Great Britain, Northern Ireland,

and the United States. Countries that signed the Universal Postal Convention agreed to universal

service obligations that include accepting mail from other countries and delivering international mail

to its final destination.

Page 29 GAO/GGD-98-104 Global Package Link Service
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address the growing private express industry. In May 1989, U.S. Customs

published regulations (19 C.F.R. Part 128) recognizing the special needs of

the private express industry. These regulations provided definitions and

guidelines addressing private express procedures, which included

application procedures and requirements that the carriers provide advance

manifest information and reimburse U.S. Customs for expedited

clearances, and required the express facility to be highly automated.

Although we will discuss differences between foreign customs clearance

requirements and processes for postal and private express carrier

shipments in chapter 2, figure 1.2 is a general overview of the major steps

involved in U.S. Customs clearance. This general overview is intended to

explain the basic steps in the customs clearance process. The differences

between customs clearance requirements for postal and private carriers in

the United States was the subject of a report being prepared by the U.S.

Customs Service in 1998 for the House and Senate Appropriations

Committees.15

15U.S. Customs Service, A Review of Customs Treatment: International Mail and Express Consignment

Shipments. As of May 15, 1998, U.S. Customs had not yet issued this report.

Page 30 GAO/GGD-98-104 Global Package Link Service
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Figure 1.2: Overview of U.S. Customs

Import Clearance Processes for Postal

and Private Express Shipments U.S. Customs Import Clearance

 In foreign country, 

shipper prepares documentation

for parcel to be sent to the 

United States.

1

 Customs reviews shipment 

declaration completed by shipper 

and inspects for admissibility.

 Customs assesses duties and 

taxes on parcel.

Customs releases parcel 

to USPS for delivery and collection 

of duties and taxes owed. 

 USPS delivers parcel to U.S. 

recipient and collects applicable 

duties and taxes.

 Parcel shipment arrives in the 

United States and is moved to 

Customs-approved postal facility.

Postal shipment

 

 Customs reviews declaration by 

customs broker and inspects for 

content admissibility.

 Carrier's broker facilitates 

payment of applicable duties and 

taxes to Customs.

 Licensed customs broker 

completes customs declaration, using 

shipping documentation, and

 calculates duties and taxes.

Carrier shipment

 Customs releases

 parcel to carrier, which delivers parcel 

to U.S. recipient.

 USPS remits to Customs duties 

and taxes collected from recipient.

6

2

3

4

5

7

6

2

3

4

5

7

8

 Customs verifies duties and taxes 

owed on parcel.

 Parcel shipment arrives in the 

United States and is moved to bonded 

facility pending Customs clearance.

Carrier provides U.S. Customs

 with manifest information prior to 

shipment arrival.

Source: U.S. Customs and USPS regulations.

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Objectives, Scope,

and Methodology

In 1996, we reported to the Chairman of the Subcommittee on the Postal

Service, House Committee on Government Reform and Oversight, the

major unresolved issues in the international mail market, including

concerns about unfair competition by private carriers.16 During the

summer of 1997, representatives from the largest U.S. private express

carriers expressed concerns to Congress about GPL, alleging that USPS

(1) received preferential customs treatment, (2) used its governmental

status to negotiate special arrangements with other governments, and

(3) charged shipping rates that did not cover all of its operational and

administrative costs for GPL service. In response to these concerns, the

Chairman of the House Subcommittee on the Postal Service requested that

we review several issues related to the competitiveness of the

international mail market. To accommodate resource limitations, we

agreed to address these issues in a series of reviews.

In this first review, our primary objective was to determine whether

differences existed in the customs requirements for the portion of the

international mail market involving GPL and private express carrier parcels.

We agreed to review the requirements for and customs treatment of GPL

and private express parcels being sent to Canada, Japan, and the United

Kingdom—the three primary countries where GPL service was being

provided in 1997. In this report, we also discuss some issues related to

addressing concerns about GPL’s perceived competitive advantages. We did

not review customs treatment of other, non-GPL international postal

services, which may have differed from customs treatment of GPL parcels.

Further, although other government requirements that are related to both

imports and exports may apply, such as those regarding airline security

and shipments of restricted and prohibited goods, the focus of this review

included only customs requirements. In a separate review, we are

examining issues related to the Postal Service’s role and U.S.

representation in UPU. In a future review, we plan to look at issues related

to the Postal Service’s pricing and allocation of costs for its GPL service.

To identify whether customs treatment differed for GPL parcels and similar

private express parcels, we compared (1) the customs statutory and

regulatory requirements17 and (2) the operational practices and processes

for importing merchandise through GPL or through private express carriers

16See GAO’s report U.S. Postal Service: Unresolved Issues in the International Mail Market

(GAO/GGD-96-51, Mar. 11, 1996).

17These requirements pertained only to shipments of low-value items not requiring formal customs

entry. Formal customs entry is required in the United States on imports valued at more than $1,250; in

Canada, more than $1,600 Canadian (about $1,142 U.S.); in Japan, more than ¥100,000 (about $800

U.S.); and in the United Kingdom, more than £2,000 (about $3,333 U.S.).

Page 32 GAO/GGD-98-104 Global Package Link Service
Chapter 1 

Introduction

into each of the three foreign countries. We were assisted in our analysis

of the legal requirements in Japan by Dr. Sung Yoon Cho, Assistant Chief

of the Far Eastern Law Division at the Library of Congress. Some of the

differences in customs treatment could not be linked to written

requirements. Rather, officials from the private express carriers, USPS, and

foreign customs and postal services described them to us as the

operational practices and processes that were followed.

To obtain detailed information about GPL service to the three countries in

our review, we interviewed USPS officials responsible for implementing and

administering GPL. We met with officials at the U.S. Customs Service to

better understand differences in U.S. Customs clearance of postal and

commercial shipments. We interviewed government officials at the Japan

Postal Bureau and the Japan Customs Bureau in Tokyo and Osaka, Japan;

Parcelforce and H.M. Customs and Excise officials in London; and

Revenue Canada officials in Ottawa to understand the customs clearance

processes and requirements in each country. We talked to officials at

Purolator and PBB Global Logistics, respectively, which handle delivery

and customs clearance of GPL parcels shipped to Canada. We also asked

these officials to verify our descriptions of the processes and the legal

citations for foreign customs clearance of imported GPL and private

express parcels.

The information on private express clearance processes discussed in this

report was obtained from three private express carriers (DHL, FedEx, and

UPS) because they were identified as being the largest competitors with

USPS for parcel delivery services to Canada, Japan, and the United

Kingdom. We interviewed officials of the three private express carriers in

the United States, as well as their employees involved in customs

processing in Japan and the United Kingdom, to better understand their

shipping and clearance processes and their concerns related to the

competitiveness of these processes. In addition, we talked to

representatives of other private international delivery companies,

including Airborne and Global Mail Ltd., as well as the Air Courier

Conference of America (ACCA), a trade association whose members are

domestic and international air courier and air express companies

operating in the United States, to determine if any additional concerns by

USPS competitors about GPL customs treatment existed.

We also interviewed several U.S. direct marketers, including GPL

customers and customers of the private express companies, to learn what

factors were important to them in determining how they would export

Page 33 GAO/GGD-98-104 Global Package Link Service
Chapter 1 

Introduction

their shipments. Finally, we interviewed officials at the U.S. Department of

Commerce, the U.S. Embassy in Japan, the U.S. Chamber of Commerce in

Japan, the Direct Marketing Association, and the Mail Order Association to

better understand the direct marketing industry’s concerns about the

competitiveness of international delivery services.

To better understand customs clearance processing for GPL and

commercial carrier shipments, we observed the various stages of the

customs clearance processes, including the procedures involved before

parcel shipments leave the United States and the procedures involved in

foreign customs clearance, for both GPL and private express carrier

shipments. Our visits to observe pre-export activities that occur in the

United States included a U.S. mailer’s facility where catalog orders are

processed; a GPL processing facility at John F. Kennedy International

Airport in New York; as well as the processing centers of the three major

private express carriers located in Memphis, TN; Louisville, KY; and at

Kennedy Airport in New York. In addition, our observations of customs

clearance processes included the postal and commercial clearance

facilities at Kennedy Airport in New York; Heathrow, Stansted, and East

Midlands Airports in the United Kingdom; and the New Tokyo

International (Narita) and Osaka Kansai International Airports in Japan.

The purpose of these visits was to obtain a basic understanding of the

customs clearance process, but the visits were not intended to serve as an

independent verification of whether the foreign customs clearance

processes were appropriately implemented as described by foreign

customs officials. Further, we did not have audit authority that would have

provided access to records of foreign customs services and would have

allowed us to verify the collection of duties and taxes on imported parcels

from the United States. We considered options to address concerns raised

by USPS competitors about whether duties and fees were being

appropriately assessed on GPL packages. However, such options as sending

comparable GPL and private express parcels as a test to measure

differences in customs treatment or examining foreign governments’

customs records were not deemed feasible for a variety of reasons,

including methodological and resource limitations. Further, because GPL

service currently involves only the export of parcels from the United

States to other countries, we did not assess U.S. import customs clearance

processes.

We did not verify data provided by USPS or the carriers. USPS provided data

on the number of GPL parcels shipped to Canada, Japan, and the United

Page 34 GAO/GGD-98-104 Global Package Link Service
Chapter 1 

Introduction

Kingdom in 1997; the number of which were dutiable; and their average

weight and value. USPS also provided documentation on the payment of

duties and taxes in Canada and the United Kingdom for GPL parcels in

1997. The carriers provided 1997 data on their costs of complying with

requirements for shipping parcels from the United States to Canada,

Japan, and the United Kingdom. In addition, the carriers provided data on

the number of parcels that they sent to those three countries, as well as

average parcel weight and value in 1997.

We requested comments on a draft of this report from USPS, the

Department of the Treasury and U.S. Customs Service; the governments of

Canada, Japan, and the United Kingdom; ACCA; DHL; FedEx; and UPS. We

received written comments from three organizations—ACCA, USPS, and

Revenue Canada; Treasury and U.S. Customs chose not to provide

comments. The private express carriers chose to submit their comments

together through ACCA’s written comments. The written comments are

reprinted in appendixes VI through VIII. A summary of the comments and

our response are provided at the ends of chapters 2 and 3. The customs

services of Canada, Japan, and the United Kingdom provided technical

comments, which are incorporated throughout the report where

appropriate. We did our work primarily in Washington, D.C., Japan, and

the United Kingdom, as well as other locations identified in this chapter,

from August 1997 through May 1998, in accordance with generally

accepted government auditing standards.

Page 35 GAO/GGD-98-104 Global Package Link Service
Chapter 2 

Differences in Customs Treatment for GPL

and Private Express Carrier Parcels Shipped

to Canada, Japan, and the United Kingdom

Legal differences in foreign customs treatment of postal and private

express parcels existed in all three countries. Differences in foreign

customs treatment of GPL and private express parcels were greatest in

Japan, where private express carriers were subject to requirements

regarding the preparation of shipping documentation and payment of

duties and taxes for their parcels that did not apply to GPL parcels. In the

United Kingdom, USPS was providing certain shipping data to the customs

service on GPL parcels that were similar to the information that the carriers

were required to provide. However, differences remained in the

requirements applicable to importing postal and private express parcels

into the United Kingdom. In Canada, GPL and private express parcels were

subject to the same requirements because GPL parcels were being

delivered for USPS by a private express carrier there.

Regarding two major areas of concern to the carriers, we found no

evidence that GPL parcels received preferential treatment over private

express parcels in terms of (1) the speed of customs clearance in all three

countries and (2) the assessment and collection of applicable duties and

taxes in Canada and the United Kingdom. On behalf of individual

importers, USPS was paying duties and taxes on GPL parcels shipped to

Canada and the United Kingdom. We were unable to determine whether

duties and taxes were assessed on dutiable GPL parcels shipped to Japan

because (1) USPS did not have records on payment of duties and taxes on

GPL parcels shipped to Japan, because the recipients of postal parcels in

Japan are responsible for paying applicable duties and taxes; and

(2) Japan Customs did not provide statistics on the amount of duties and

taxes that recipients paid on GPL parcels.

The delivery and customs clearance processes for GPL and private express

parcels in Canada, Japan, and the United Kingdom were based primarily

on the domestic import requirements applicable to mail and goods

imported by private carriers in those countries. U.S. law subjected private

express parcels to customs inspection prior to export, but outbound postal

parcels were not subject to this requirement. Private express carriers must

file manifests1

 on outbound parcels with U.S. Customs, which the agency

uses to select certain parcels for inspection.2

1

As indicated in 19 C.F.R. 122.75, the manifests for goods transported by aircraft generally must list all

cargo and, for each item, show the air waybill number or marks and numbers on the packages and

identify the type of goods.

2

Carriers routinely screen and inspect some of their parcels for contraband before they are presented

to U.S. Customs for inspection.

Page 36 GAO/GGD-98-104 Global Package Link Service
Chapter 2 

Differences in Customs Treatment for GPL

and Private Express Carrier Parcels Shipped

to Canada, Japan, and the United Kingdom

We found that the private express carriers followed similar delivery

processes for shipments from the United States to the three countries in

our review. Generally, the laws of the importing countries required the

carriers to provide detailed data and supporting documentation on their

shipments, such as air waybills, manifests, harmonized tariff codes, and

invoices. The carriers were also responsible for paying applicable duties

and taxes on their imported parcels. However, USPS’ delivery and customs

clearance processes for GPL parcels differed among the three countries.

The differences reflected USPS’ use of different types of GPL delivery agents,

which were subject to different sets of requirements within the three

countries. In Japan and the United Kingdom, GPL parcels were delivered by

those countries’ postal services and were treated as mail under their

customs laws.3

 In Canada, GPL parcels were delivered by a private express

company and were thus subject to Canadian customs laws that applied to

private carriers for importing goods. The importing requirements for

postal and private express parcels in the three countries are detailed in

appendices III through V.

Different foreign legal requirements also affected how USPS handled GPL

parcels being shipped from the United States to Canada, Japan, and the

United Kingdom. In Japan, for example, USPS was only required to affix GPL

parcels with labels containing basic customs declaration information as

prescribed by UPU; the labels were generated by USPS’ automated data

information system, CPAS. Further, USPS was not required to calculate or

pay duties and taxes on GPL parcels shipped to Japan because, under

Japanese law, duties and taxes on postal parcels were calculated by Japan

Customs and paid by the parcel recipients. By contrast, in the United

Kingdom, USPS was providing customs information similar to that provided

by private express carriers as well as calculating and paying duties and

taxes owed on GPL parcels. In providing comments on a draft of this report,

Japan Customs said that it was planning to introduce an import

information system in cooperation with USPS similar to that used in the

United Kingdom. In Canada, where GPL parcels were being delivered by a

private express carrier and cleared through customs by a broker, USPS was

providing customs information similar to that required from private

express carriers, in addition to calculating and paying duties and taxes.4

3

Oversize GPL parcels were delivered by a private express carrier for USPS in Japan.

4

In Canada, private express carriers are not required to provide international air waybills on U.S.

imports. Further, invoices are not required to be provided on imports with values less than $1,600

(Canadian) under the low-value shipment program (see p. 98).

Page 37 GAO/GGD-98-104 Global Package Link Service
Chapter 2 

Differences in Customs Treatment for GPL

and Private Express Carrier Parcels Shipped

to Canada, Japan, and the United Kingdom

We reviewed the applicability of customs requirements to private express

and GPL parcels shipped from the United States to Canada, Japan, and the

United Kingdom by interviewing customs officials and reviewing the

relevant laws and regulations. In the process, we identified 11 major

categories of requirements that potentially differed between the carriers

and postal services. The 11 categories, only the first of which involved U.S.

law, included (1) U.S. Customs inspection of outbound parcels,

(2) preparation of import shipping documentation, (3) electronic

submission of shipping data, (4) use of licensed customs brokers,

(5) calculation of duties and taxes, (6) the timing of payment of duties and

taxes, (7) payment for customs clearance outside of regular business

hours, (8) posting of bonds or other security to customs services for

storage facilities, (9) retention of shipping records, (10) liability for

importation of restricted or prohibited parcel contents, and (11) liability

for incorrect or missing customs declarations.

Table 2.1 summarizes our findings regarding the requirements and

practices in shipping GPL and private express parcels to Canada, Japan,

and the United Kingdom in the 11 major categories.

Page 38 GAO/GGD-98-104 Global Package Link Service
Chapter 2 

Differences in Customs Treatment for GPL

and Private Express Carrier Parcels Shipped

to Canada, Japan, and the United Kingdom

Table 2.1: Comparison of Requirements and Practices for Shipping Parcels to GPL Destination Countries

Canada Japan United Kingdom

GPL destination countries

Requirements/practices GPLa

Private

carrier GPL

Private

carrier GPL

Private

carrier

Outbound inspection of shipments:

Outbound parcels are subject to inspection

by U.S. Customs before departing the United

States.b √ √ √

Import shipping documentation:

A manifest or list of goods must be presented

to foreign customs services for import

clearance. √ √ √ √

Entering shipping data into foreign

customs services’ computers:

Importer/broker must enter shipping data into

foreign customs’ computer systems for entry.

Use of licensed customs brokers:

Importer must use licensed customs brokers

to submit shipping documentation.

Calculation of duties and taxes:

Importer/broker must calculate duties and

taxes to be verified by foreign customs

services. √ √ √c d

Timing of payment of duties and taxes:

Duties and taxes must be paid or secured

prior to Customs’ release of shipment to

delivery agent. √ √ e √ √

Customs service charges:

Importer/broker must pay for customs

clearance outside of regular business hours. √ √ √ √f √

Posting of bonds or security:

Importer/broker must post bonds or provide

other security to customs services for storage

facilities. √ √ √

Shipping records retention:

Importer/broker must maintain shipping

records on parcels for 3 to 7 years. √ √ √ √

Liability for parcel contents:

Importer/broker is subject to liabilities for

restricted or prohibited contents contained in

parcels. √ √ √ √ √ √

Liability for incorrect or missing

declarations:

Importer/broker is subject to liabilities for fines

for incorrect or missing customs declarations. √ √ √ √ √

(Table notes on next page)

Page 39 GAO/GGD-98-104 Global Package Link Service
Chapter 2 

Differences in Customs Treatment for GPL

and Private Express Carrier Parcels Shipped

to Canada, Japan, and the United Kingdom

Legend:

√ Required/Applicable

 Practice

aGPL parcels were imported into and delivered within Canada by a private express carrier and

were therefore required to meet the same customs requirements as were imports by private

carriers.

bUSPS officials noted that the Postal Inspection Service inspects some outgoing international

parcels prior to export using search warrants.

cIn practice, duties and taxes are in most cases calculated by Japan Customs’ computer system,

the Nippon Automated Cargo Clearance System (NACCS), on the basis of data entered by the

importer/brokers.

dIn the United Kingdom, most duties and taxes are calculated by H.M. Customs’ computer

system, the Customs Handling of Import and Export Freight (CHIEF), on the basis of data

provided by the carriers.

eIn Japan, recipients of postal parcels are not to receive parcels until the duties and taxes are

paid.

f

H.M. Customs officials said that although Parcelforce would be liable for customs clearance

outside of regular business hours, customs clearance for GPL parcels is normally done during

regular business hours.

Source: GAO analysis of information from customs and postal officials, laws, and regulations in

Canada, Japan, the United Kingdom, and the United States.

Differences in

Customs Treatment

for GPL and Private

Express Parcels

Shipped to Japan

Customs treatment of GPL and private express parcels shipped from the

United States to Japan was determined largely by Japanese law, which

prescribed different sets of requirements for postal and private express

parcels. Under Japanese law, postal parcels were exempt from the major

requirements that applied to private express parcels. Also affecting

customs treatment were the carriers’ different valuations of certain

imported goods, which provided the basis for determining the amount of

duties and taxes owed.

Differences in Customs

Requirements and

Processes for GPL and

Private Express Parcels

Shipped to Japan

Private express carriers or their brokers were subject to significantly more

requirements than were USPS and the Japan Postal Bureau in shipping their

parcels from the United States to Japan. U.S. law subjected private express

parcels to customs inspection prior to export, but outbound postal parcels

were not subject to this requirement. Under Japanese law, the carriers or

their brokers were required to provide detailed shipping documentation,

calculate duties and taxes, pay or secure payment of duties and taxes

before Customs’ release to the delivery agent, and retain shipping records.

In addition, the carriers or their brokers could be liable for fines and

Page 40 GAO/GGD-98-104 Global Package Link Service
Chapter 2 

Differences in Customs Treatment for GPL

and Private Express Carrier Parcels Shipped

to Canada, Japan, and the United Kingdom

penalties regarding the importation of restricted or prohibited parcel

contents and for incorrect or missing customs declarations. They also paid

for customs clearance outside of regular business hours to expedite parcel

clearance. Although not required to by law, the carriers entered most of

their import shipping data into Japan Customs’ computer system. By

contrast, USPS and the Japan Postal Bureau were not subject to these

requirements and practices with regard to GPL parcels, with the exception

of the postal services’ potential liability for restricted or prohibited parcel

contents.

In shipping parcels from the United States to Japan, USPS and the private

express carriers followed different delivery and customs clearance

processes. A major process difference involved the delivery agents used by

USPS and the carriers in Japan. USPS paid the Japan Postal Bureau to deliver

GPL parcels within Japan. In comparison, employees of the three major

private express carriers, or their Japanese business partners, delivered

their parcels from the United States to recipients within Japan. Further,

although private express parcels were typically cleared at airport facilities,

customs clearance at the Japan Postal Bureau facility that received the

most GPL parcels was located in downtown Tokyo, about 2 hours from the

New Tokyo International (Narita) Airport, where the parcels arrived from

the United States.

Differences in the delivery and customs clearance processes for GPL and

private express parcels reflected different sets of requirements contained

in Japanese law applicable to postal and private express parcels. Appendix

III summarizes the Japanese laws and regulations that provide the basis

for the different requirements. Figures 2.1 through 2.2 show the

preparation, delivery, and customs clearance processes for GPL and private

express parcels to Japan.

Page 41 GAO/GGD-98-104 Global Package Link Service
Chapter 2 

Differences in Customs Treatment for GPL

and Private Express Carrier Parcels Shipped

to Canada, Japan, and the United Kingdom

Figure 2.1: Preparation of GPL and Private Express Carrier Parcels Prior to Export From the United States to Japan

U.S. Postal Service (GPL) U.S. Customs

U.S. shipper signs agreement with 

USPS/GPL program.

DynCorp establishes computer 

interfaces. USPS arranges for

processing and transportation. 

Global Package Link

 DynCorp receives data files, edits 

file information, and electronically 

transmits the files to a GPL 

processing center/

 CPAS workstation.

4

5

 Shipper prepares/seals parcels 

and creates/applies a unique 

barcode on each of the parcels. 

 When parcels arrive at center, 

USPS employees use CPAS 

workstation to scan parcel barcodes 

and create/apply customs declaration 

(labels) to parcels.

5 Shipper (1) transfers parcels to 

USPS for GPL processing and

 (2) electronically transmits data 

files on each parcel to DynCorp.

 DynCorp establishes computer 

interface with the Japan Postal Bureau for 

EMS tracking only; no parcel data is 

electronically transmitted to Japan.

 U.S. shipper receives order from 

Japanese customer and (1) creates a 

data file; and (2) collects payment for 

merchandise, shipping/handling fees, 

but not customs duties/taxes. 

1

2

3

5

6 Postal employees separate GPL 

parcels by value into 2 groups:

those below and those above 

$300, and put them into shipping 

containers for transport to Japan.

 Postal employees enter 

flight/dispatch information into 

CPAS and transport the separate 

shipping containers to an American 

flag air carrier.

7

 American flag carrier transports 

containers of GPL parcels 

to Japan.

8

U.S. Shipper

Pursuant to postal law, which restricts 

the inspection of mail, U.S. Customs 

does not inspect outgoing international 

mail parcel contents.

Page 42 GAO/GGD-98-104 Global Package Link Service
Chapter 2 

Differences in Customs Treatment for GPL

and Private Express Carrier Parcels Shipped

to Canada, Japan, and the United Kingdom

U.S. Shipper Private Express Carrier U.S. Customs

Private Express Carrier

 Carrier ensures that required 

documents have been completed 

and parcel contents can be both 

exported from U.S./imported into Japan.

U.S. shipper receives order from 

Japanese customer and (1) creates a 

data file; and (2) collects payment for 

merchandise, shipping/handling fees, 

and possibly customs duties/taxes. 

International air carrier 

transports shipment 

to Japan.

10

Shipper transfers parcels to a 

private express carrier for 

international transport, customs 

clearance, and delivery in Japan.

 After U.S. Customs releases 

shipment (parcels), carrier's 

employees load it on an 

international aircraft to Japan.

 After receiving required 

documents, U.S. Customs reviews 

them to determine whether contents 

of parcels are exportable. 

 Customs then notifies carrier 

whether parcels are (1) cleared for 

export or (2) subject to inspection.

 Carrier forwards flight 

declarations and other required 

documents to U.S. Customs 

pending export clearance.

 Carrier receives parcels at its 

processing facility and scans 

barcodes. Customs declaration 

documents are received from the 

shipper--in electronic form or hard copy.

 Shipper (1) prepares parcels, 

(2) prepares customs declaration 

forms, and (3) creates/applies 

barcodes for tracking/tracing 

purposes.

1 4

2

3

5

6 7

9 8

 While shipment is in transit, 

carrier transmits customs clearance 

data to its Japanese brokerage 

operations electronically and by fax.

11

Source: GAO analysis of information from the U.S. Customs Service, USPS, DHL, FedEx, and

UPS.

Page 43 GAO/GGD-98-104 Global Package Link Service
Chapter 2 

Differences in Customs Treatment for GPL

and Private Express Carrier Parcels Shipped

to Canada, Japan, and the United Kingdom

Figure 2.2: GPL and Private Express Carrier Parcel Delivery and Customs Clearance in Japan

Japan Customs Japanese Customer

Global Package Link

Japan Postal Bureau

 Postal Bureau accepts delivery 

of shipment and presents parcels 

to Japan Customs. 

10

 Japan Customs then releases 

the parcels to the Postal Bureau 

for delivery and collection of 

applicable duties/taxes.

In Japan, aircraft arrives and

ground handling crew unloads/delivers

containers of GPL parcels to the 

Japan Postal Bureau (Postal Bureau).

 Postal Bureau receives released

parcels from Customs and attaches two 

customs forms: Statement of Duty 

Payment and Notice of Assessment of 

Duties and Taxes on Postal Matters 

(if duties owed).a

 Japan Customs (Customs) 

receives parcels from Postal Bureau, 

reviews customs declaration, and 

inspects for admissibility.

 Japan Customs assesses duties 

and the consumption tax (5%) on 

goods that exceed 10,000 yen 

in value.

16 Parcels assessed 10,000 yen 

or less in duties/taxes are delivered 

directly to Japanese customers, who 

pay customs duties/charges/taxes on 

the spot.

 Parcels assessed more than

 10,000 yen in duties/taxes are held 

at local post offices, where customers 

(after notification) go to pay customs 

duties/charges/taxes before either 

collecting parcels or having 

them delivered. 

 Postal Bureau remits to the 

Bank of Japan the duties/taxes 

collected and to Customs the Notice of 

Collection of Duties and Taxes. 

 Postal Bureau enters parcels into 

domestic mailstream. It (1) delivers 

parcels assessed 10,000 yen or less 

in duties/taxes and (2) holds those 

assessed more than 10,000 yen in 

duties/taxes at local post offices and 

notifies customers. 

The Postal Bureau charges a 200-yen fee for a

GPL package on which duties and/or taxes are levied.

a

11

12

13

14

15

17

9

Page 44 GAO/GGD-98-104 Global Package Link Service
Chapter 2 

Differences in Customs Treatment for GPL

and Private Express Carrier Parcels Shipped

to Canada, Japan, and the United Kingdom

Japan Customs Japanese Customer

Private Express Carrier

Carrier's Broker

 In Japan, carrier's broker receives/

reviews customs information to prepare

for customs clearance and inputs data 

on each parcel into NACCS, which 

automatically calculates the amount of

duties and taxes.

 Aircraft arrives and (1) airline 

employees enter master air waybill 

data into NACCS, (2) ground crew 

transports shipment to a warehouse, 

and (3) warehouse operator inputs air 

waybill data into NACCS. 

 NACCS assigns one of three 

clearance statuses for each parcel:

(1) cleared, (2) needs more 

information, and (3) needs inspection. 

Japan Customs informs broker of each 

parcel's clearance status and amount 

of duties/taxes owed.

14

 Japan Customs notifies broker that 

the parcels are cleared for delivery into 

Japan. Payment of duties/taxes must 

be paid or secured prior to clearance.

Broker (1) submits the 

requested parcels and information 

and (2) pays duties/taxes owed to 

Japan Customs.

 Broker then notifies carrier of 

customs clearance, and carrier enters 

parcels into its local delivery system.

19 Japanese customers receive 

parcels via carrier's local 

delivery system.

12

13

16

18

17

15

 Japan Customs/NACCS receives 

shipment data from aircraft 

employees and warehouse operator, 

reviews all data and documents, and 

assesses duties/taxes.

14

Source: GAO analysis of information from Japan Customs, Japan Postal Bureau, USPS, DHL,

FedEx, and UPS.

Page 45 GAO/GGD-98-104 Global Package Link Service
Chapter 2 

Differences in Customs Treatment for GPL

and Private Express Carrier Parcels Shipped

to Canada, Japan, and the United Kingdom

A comparison of the delivery processes for postal and private express

parcels in Japan illustrates the differences in the roles of brokers, who

handled customs clearance for the carriers; and of the Japan Postal

Bureau, which presented GPL parcels to the Japan Customs Bureau for

customs clearance (see GPL steps 9 through 17 and carrier steps 12 through

19 of fig. 2.2).5

 The carriers were not required by law in Japan to use

licensed customs brokers. However, in practice, the carriers believed it

was necessary to use brokers to comply with the requirements for

preparing the information needed for customs clearance, including air

waybills, manifests, harmonized tariff codes, and invoices. Japanese law

did not allow the Postal Bureau to act as a licensed broker. Further,

Japanese law exempted the Postal Bureau from submitting documentation

on its imported mail that the private carriers were required to provide.6

Under Japanese law, the carriers, on behalf of individual importers, were

required to pay or secure payment of duties and taxes on imported parcels

before Customs’ release to the delivery agent.7

 In comparison, Japanese

law exempted postal parcels from the requirement that importers pay

duties and taxes before customs clearance. However, recipients of postal

parcels were required to pay duties and taxes upon delivery at their doors

or at the post office before receiving their parcels from the Postal Bureau

(see step 16 of fig. 2.2 for both GPL and carriers). In addition, recipients of

dutiable GPL parcels were charged a 200-yen fee8

 by the Japan Postal

Bureau when it collected applicable duties and taxes, but recipients of

private express parcels were not subject to this fee. According to Japan

Customs officials, the basis for charging recipients of dutiable postal

parcels a 200-yen fee is contained in provisions of the Universal Postal

Convention and the International Postal Rules.9

The carriers’ brokers in Japan were not required by law to enter parcel

data into the Nippon Automated Cargo Clearance System (NACCS), Japan

5

The private express carrier that delivered oversize GPL parcels to Japan used a broker for customs

clearance.

6

Japan Customs did require that postal parcels be affixed with a customs declaration label containing

information about contents and value, as prescribed under UPU. However, postal parcels were not

required to be shipped with harmonized tariff codes. The Japan Postal Bureau also required USPS to

provide it with information concerning the number of GPL parcels contained in a shipment.

7

Japan Customs deducted duties and other import-related taxes from the carriers’ bank accounts

established for that purpose when the carriers operate as customs brokers. Customs also periodically

bills the carriers for customs inspections outside of regular business hours.

8

About $1.60, assuming that $1=¥125.

9

Article 32 of the Universal Postal Convention and Article 85 of the International Postal Rules.

Page 46 GAO/GGD-98-104 Global Package Link Service
Chapter 2 

Differences in Customs Treatment for GPL

and Private Express Carrier Parcels Shipped

to Canada, Japan, and the United Kingdom

Customs’ computerized customs clearance system (step 12 of fig. 2.2 for

carriers). However, to speed customs clearance, the three carriers said

they entered between 70 percent to 100 percent of their import data into

NACCS, which automatically calculated duties and taxes. With respect to

GPL parcels, Japanese law did not require submission of postal data into

NACCS. Instead, Japan Customs employees entered data on dutiable postal

parcels (values and tariff codes) into a separate computer system called

the Customs Overseas Mail Tax Information System (COMTIS), which

determined the duties and taxes.

Brokers were required to hold the carriers’ goods in facilities under the

control of or approved by Japan Customs before customs clearance, but

they were not required to post bonds in connection with those facilities

(step 13 of fig. 2.2 for carriers). GPL parcels were held in postal facilities for

customs clearance (step 10 of fig. 2.2 for GPL), and Japan Post was not

required to post bonds to secure the parcels.

Japanese law also required private carriers’ brokers to pay for customs

clearance outside of regular business hours.10 The carriers indicated that

charges for customs clearance outside of regular business hours were

often incurred because of limits on the number of shipments that could be

cleared within an hour in Japan. Japan Customs officials said that GPL

parcels were not cleared outside of regular business hours. Further,

Japanese law did not subject the Japan Postal Bureau to payment for

customs clearance of mail outside of regular business hours.

In addition, under Japanese law, carriers’ brokers were subject to a

requirement to maintain customs clearance records on their parcels for 3

years. No similar provision of law applied to records of postal items.

According to Japan Customs, Japanese law imposes fines and penalties

against any persons, whether postal services or private carriers, for

importing prohibited goods if they are knowledgeable about the illegal

parcel contents.

A Japanese law implemented in October 1997 subjected importers in Japan

to an additional 10- to 15-percent tax for filing an incorrect customs

declaration, or failing to file one, without a proper reason. This law did not

apply to the postal services.

10Regulations implementing this law require that outside of regular business hours on weekdays or at

other times during weekends and holidays, a fee of ¥7,800 (about $62 at an exchange rate of ¥125 per

dollar) per hour per customs official is charged from 10 p.m. to 5 a.m., and ¥7,400 (about $59) per hour

per customs official from 5 a.m. to 10 p.m.

Page 47 GAO/GGD-98-104 Global Package Link Service
Chapter 2 

Differences in Customs Treatment for GPL

and Private Express Carrier Parcels Shipped

to Canada, Japan, and the United Kingdom

Differences in Operational

Practices and Processes

for Shipping GPL and

Private Express Parcels to

Japan

Japan Customs is responsible for calculating duties and taxes on imported

postal parcels, including GPL parcels. On the other hand, private carriers or

their brokers must calculate duties and taxes on their imported parcels

based on applicable law. These calculations of duties and taxes by the

carriers are later verified by Japan Customs. The carriers indicated that

because they or their brokers calculated duties and taxes on parcels

imported into Japan, their records prove they pay 100 percent of

applicable duties and taxes. The carriers were concerned that they have

lost direct marketers as customers because of a perception that duties and

taxes were not always assessed on dutiable postal parcels in Japan.

Japan Customs officials, however, said that GPL and private express

parcels received the same customs treatment. In addition, the officials said

that duties and taxes were being assessed on all dutiable parcels from the

United States. In providing comments on a draft of this report, Japan

Customs emphasized that postal parcels, including GPL parcels, were

subject to full inspection. We were unable to determine whether duties

and taxes were assessed on dutiable GPL parcels shipped to Japan because

(1) USPS did not have records on payment of duties and taxes on GPL

parcels shipped to Japan, because the recipients of postal parcels in Japan

are responsible for paying applicable duties and taxes; and (2) Japan

Customs did not provide statistics on the amount of duties and taxes that

recipients paid on GPL parcels.

On the basis of information provided by USPS and Japan Customs and our

observations, we found no evidence that GPL parcels received preferential

treatment over private express parcels with respect to the speed of

customs clearance. However, because of different valuations of imported

goods by private carriers or their brokers in Japan, differences existed in

the amounts of duties and taxes paid on some postal and private express

parcels. Finally, we were unable to determine the significance of USPS’

sorting GPL parcels destined for Japan by value—a practice that we

observed at USPS’ GPL facility at John F. Kennedy International Airport in

New York.

Assessment and Collection of

Duties and Taxes

Japan Customs indicated that it collected 1.1 trillion yen in customs duties

and 2.1 trillion yen in internal consumption taxes in 1996,11 but it did not

maintain specific statistics reflecting the amount of duties collected on GPL

parcels or the number of dutiable parcels. USPS data indicated that about

44 percent of the GPL parcels shipped to Japan in 1997 would have been

11About $8.8 billion and $16.8 billion, respectively, at an exchange rate of ¥125 per dollar.

Page 48 GAO/GGD-98-104 Global Package Link Service
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Differences in Customs Treatment for GPL

and Private Express Carrier Parcels Shipped

to Canada, Japan, and the United Kingdom

dutiable.12 During our tour of the International Post Office in Tokyo, where

many GPL parcels are processed, we observed Japan Customs officials

inspecting and assessing duties on some GPL parcels.

Japanese law allowed imported goods to be valued at their wholesale,

rather than retail, values if the goods were deemed to be for the personal

use of the importer or were a gift to a person who is a resident in Japan

and the goods were deemed to be for the personal use of the recipient of

the gift.13 In assessing the customs value of goods, Japan Customs officials

said that imported parcels from direct marketers that are addressed to an

individual, in many cases, qualified as goods deemed to be for the

importers’ personal use and could be valued at their wholesale, rather than

retail, values. The officials said that the government’s objective in

assessing duties and taxes on mail-order goods based on their wholesale

values was to benefit Japanese consumers.

Japan Customs officials said wholesale valuations could be applied for

both GPL and private express parcels containing goods from direct

marketers for the recipients’ personal use, and they applied a standard

60-percent valuation of GPL parcels’ retail value to calculate wholesale

values. Japan Customs officials said that their formula for calculating the

wholesale value of mail-order goods was not a written policy, regulation,

or law. The officials said that this formula for calculating the wholesale

values of goods from direct marketers was based on their review of

catalogs from mail-order companies that sell similar goods. In addition, the

officials said that if the information was not available, the carriers or their

brokers could consult with them to calculate the wholesale value using

standard profit margins.

Japan Customs officials said that because most, if not all, GPL parcels are

shipped by direct marketers, after inspection they considered GPL parcels

to be for personal use and assessed duties and taxes on them on the basis

of their wholesale values. With regard to private express parcels, we found

that the carriers were valuing certain imported goods differently, which

could affect the amount of duties and taxes owed on their imported

parcels. Of the three major private express carriers we contacted for this

study, one carrier indicated that it was calculating duties and taxes on only

imported mail-order goods on the basis of wholesale values of the goods.

12USPS assumed that the dutiable de minimis (the value threshold at which imported goods are subject

to duties and taxes) for GPL parcels in Japan was $100 in 1997. The dutiable de minimis in Japan is

¥10,000, the equivalent of about $80 at an exchange rate of ¥125 per dollar.

13Art. 4-6 of Japanese Customs Tariff Law, Law No. 54, April 15, 1910, as last amended by Law No. 5,

March 26, 1997.

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Differences in Customs Treatment for GPL

and Private Express Carrier Parcels Shipped

to Canada, Japan, and the United Kingdom

Another said that it was using wholesale valuations for both imported

mail-order goods and gifts. The third carrier was not using wholesale

valuations for any of its imported goods as a basis for calculating duties

and taxes.

The carriers’ valuation of imported goods was important because their

parcel values provided the basis for calculating duties and taxes; however,

Japan Customs assessed the value and calculated duties and taxes on

postal parcels. The carriers indicated that Japan Customs rarely, if ever,

adjusted the carriers’ calculations of duties and taxes to reflect the

wholesale values of imported goods. In providing comments on a draft of

this report, Japan Customs indicated that under the carriers’

“self-assessment” system, private express parcels were exempt from full

inspection. Further, Japan Customs indicated that under the

self-assessment system, the carriers’ import declarations were considered

to be correct and would be adjusted only at the time of inspection.

Speed of Customs Clearance We found no evidence that GPL parcels received preferential treatment by

Japan Customs in terms of the speed of clearance. Indeed, it appeared that

private express parcels were cleared significantly faster than were GPL

parcels. According to Japan Customs, private express parcels were

normally cleared in Japan within 2 hours. They also said that carriers’

import requirements made it possible to clear private express parcels at

the fastest possible speed. The carriers reported that customs clearance in

Japan generally took between 2 and 5 hours for their parcels not held for

inspection. Japan Customs officials said that it did not maintain records on

customs clearance times for GPL parcels, but they also said that most GPL

parcels were released to the Postal Bureau within the same day that they

were received.14 Data provided by USPS indicated that in 1997, clearance of

GPL parcels in Japan took an average of 2.17 days.

USPS Sorting GPL Parcels by

Value

During a tour of USPS’ GPL facility at John F. Kennedy International Airport

in New York, where GPL parcels are prepared for shipment to Japan, we

observed USPS employees sorting GPL parcels into two categories: those

with a value of $300 or less and those with a value of more than $300. USPS

officials said that they were sorting the parcels by value at the request of

Japan Post on behalf of Japan Customs, but Japan Customs officials said

that they had not requested USPS to do so. In commenting on a draft of this

report, Japan Customs indicated that it had requested USPS to sort the

parcels by destination, but not by value. If GPL parcels arrived in Japan

14USPS officials said that customs clearance for dutiable GPL parcels took longer than 1

day—sometimes up to 2 weeks—during the Christmas season, but that Japan Customs had agreed to

provide extra resources to clear them.

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Differences in Customs Treatment for GPL

and Private Express Carrier Parcels Shipped

to Canada, Japan, and the United Kingdom

sorted into those less than and those more than $300 in value, they would

not, however, be separated into those that were dutiable and nondutiable.

At an exchange rate of about 125 yen per dollar, the dutiable threshold for

GPL parcels would be $133, on the basis of their wholesale valuation.15 We

were unable to determine the significance of this sorting practice.16

Differences in

Customs Treatment

for GPL and Private

Express Parcels

Shipped to the United

Kingdom

The customs treatment of GPL and private express parcels being shipped

from the United States to the United Kingdom was governed primarily by

legal requirements applicable in the United Kingdom, which included U.K.

and European Union (EU) laws and regulations. USPS’ provision of certain

shipping data to the customs service in the United Kingdom on GPL parcels,

although not required by law, served to lessen the extent of operational

differences in the treatment of postal and private express parcels in the

United Kingdom. However, differences remained in the requirements

applicable to imported postal and private express parcels.

Differences in

Requirements and

Processes for GPL and

Private Express Parcels

Shipped to the United

Kingdom

As in Japan, private express carriers in the United Kingdom were subject

to requirements that did not apply to postal services. In the United

Kingdom, carriers or their brokers were required to pay or secure duties

and taxes before customs clearance, provide security to the customs

service for storage facilities, and retain shipping records. They also paid

for customs clearance outside of regular business hours to expedite parcel

clearance. By contrast, USPS and its delivery agent for GPL parcels in the

United Kingdom were not required to pay or secure duties and taxes

before customs clearance, post bonds or other security to the customs

service for storage facilities, or retain shipping records, and did not

normally have GPL parcels cleared outside of regular business hours. Both

the carriers and the postal service in the United Kingdom were subject to

liabilities for illegal parcels contents and for incorrect or missing customs

declarations.17

USPS was providing electronic shipping data on GPL parcels to its delivery

agent in the United Kingdom for access by Her Majesty’s Customs and

Excise (H.M. Customs) officials. The content of USPS’ shipping data on GPL

15¥10,000 (dutiable de minimis)/.6 (wholesale valuation)=¥16,666, or about $133.

16The carriers have suggested that in practice, the dutiable de minimis for postal parcels in Japan is

¥30,000, or about $240, and that they would like to be subject to the same de minimis for their

imported parcels.

17H.M. Customs said that postal personnel could be held liable for illegal parcel contents in appropriate

circumstances. Further, they said that the law governing incorrect and missing customs declarations

could also apply to postal personnel.

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Differences in Customs Treatment for GPL

and Private Express Carrier Parcels Shipped

to Canada, Japan, and the United Kingdom

parcels was similar to that provided to H.M. Customs by the carriers on

their parcels.18 Further, USPS was paying duties and taxes on GPL parcels

shipped to the United Kingdom. USPS officials said that they offered to

follow these procedures in establishing GPL service to the United Kingdom.

USPS and the private express carriers followed different processes for

delivering parcels from the United States to the United Kingdom, reflecting

the use of different delivery agents. Within the United Kingdom, USPS paid

Parcelforce, a for-profit subsidiary of Royal Mail, the United Kingdom’s

postal service, to deliver GPL parcels. By contrast, employees of the three

major private express carriers delivered their parcels or contracted with

local delivery companies within the United Kingdom.

Differences in the delivery and customs processes for GPL and private

express parcels to the United Kingdom reflected different sets of

requirements contained in EU and U.K. laws and regulations applicable to

postal and private express carriers. Appendix IV summarizes these laws

and regulations. Figures 2.3 and 2.4 show the preparation and delivery and

customs clearance processes for GPL and private express parcels shipped

to the United Kingdom.

18USPS was not providing invoices to H.M. Customs on GPL parcels. USPS officials said that the list

provided to H.M. Customs included information about parcel contents and values, which constituted

an invoice.

Page 52 GAO/GGD-98-104 Global Package Link Service
Chapter 2 

Differences in Customs Treatment for GPL

and Private Express Carrier Parcels Shipped

to Canada, Japan, and the United Kingdom

Page 53 GAO/GGD-98-104 Global Package Link Service
Chapter 2 

Differences in Customs Treatment for GPL

and Private Express Carrier Parcels Shipped

to Canada, Japan, and the United Kingdom

Figure 2.3: Preparation of GPL and Private Express Carrier Parcels Prior to Export From the United States to the United

Kingdom

DynCorp harmonizes catalogs and 

establishes computer interfaces. USPS 

arranges for processing and transportation. 

U.S. Postal Service (GPL) U.S. Customs

U.S. shipper signs agreement with 

USPS/GPL program.

Global Package Link

U.S. Shipper

1 4 DynCorp receives data file, edits 

file information, and electronically 

transmits the files to the GPL 

processing center/CPAS 

workstation.

5

 U.S. shipper receives order from 

U.K. customer and (1) creates data 

file and (2) collects payment for 

merchandise, shipping/handling, and 

customs duties/taxes.

 Shipper (1) transfers parcels to 

USPS for GPL processing and (2) 

electronically transmits data files on 

each parcel to DynCorp.

 Shipper prepares/seals parcels

 and creates/applies a unique barcode 

on each of the parcels. 

2

3

 When parcels arrive at center, 

USPS employees use CPAS 

workstations to scan parcel barcodes 

and create/apply customs declarations 

(labels) to parcels.

 USPS employees place parcels 

into shipping containers/bags for 

transport to the UK.

5

6

 USPS employees enter 

flight/dispatch information into 

CPAS and transport the containers to 

an American flag air carrier.

7

Pursuant to postal law, which restricts 

the inspection of mail, U.S. Customs 

does not inspect outgoing international 

mail parcel contents.

While shipment is in transit, 

DynCorp electronically transmits customs 

clearance data to Parcelforce in the U.K. 

9

 American flag carrier 

transports containers of 

GPL parcels to the U.K.

8

Page 54 GAO/GGD-98-104 Global Package Link Service
Chapter 2 

Differences in Customs Treatment for GPL

and Private Express Carrier Parcels Shipped

to Canada, Japan, and the United Kingdom

U.S. Shipper Private Express Carrier U.S. Customs

 Shipper transfers parcels to private 

express carrier for international 

transport, customs clearance, and 

delivery in the U.K.

3

Carrier employees ensure that 

required documents have been 

completed and parcel contents can be 

both exported from U.S./imported 

into the U.K.

5

6 After receiving required 

documents, U.S. Customs reviews 

them to determine whether contents of 

parcels are exportable. 

7

5

 After U.S. Customs releases 

shipment (parcels), carrier's 

employees load it on an international 

aircraft to the U.K.

9 Customs then notifies carrier 

whether parcels are (1) cleared for 

export or (2) subject to inspection.

8

 U.S. shipper receives order from 

U.K. customer and (1) creates a data 

file; and (2) collects payment for 

merchandise, shipping/handling fees, 

and possibly customs duties/taxes.

1

 Shipper (1) prepares parcels, 

(2) prepares customs declaration 

forms, and (3) creates/applies barcode 

for tracking/tracing purposes.

2

 Carrier receives parcels at its 

processing facility and scans barcodes. 

Customs declaration documents are 

received from the shipper--in electronic 

form or hard copy.

4

Private Express Carrier

Carrier forwards flight

declarations and other required 

documents to U.S. Customs pending 

export clearance.

 International air 

carrier transports 

shipment to the U.K.

10

 While shipment is in transit, 

carrier transmits customs clearance 

data to its U.K. brokerage operations 

electronically and by fax. 

11

Source: GAO analysis of information from the U.S. Customs Service, USPS, DHL, FedEx, and

UPS.

Page 55 GAO/GGD-98-104 Global Package Link Service
Chapter 2 

Differences in Customs Treatment for GPL

and Private Express Carrier Parcels Shipped

to Canada, Japan, and the United Kingdom

Figure 2.4: GPL and Private Express Carrier Parcel Delivery and Customs Clearance in the United Kingdom

H.M. Customs U.K. Customer

Global Package Link

U.K. Parcelforce

In the U.K., using CPAS 

workstations, Parcelforce receives 

electronic files containing customs 

clearance information transmitted 

by DynCorp.

 Aircraft arrives and ground 

handling crew unloads/delivers 

shipment of GPL parcels 

to Parcelforce.

 Parcelforce accepts delivery 

of shipment and holds it for 

presentation to H.M. Customs.

 Using CPAS workstations, H.M. 

Customs receives electronic files 

(received via Parcelforce), which 

contain a CPAS calculation of 

customs duties/taxes.

 H.M. Customs reviews electronic 

files to verify customs duties/taxes 

have been correctly calculated and to 

identify parcels to inspect for 

admissibility.

 After plane arrives, H.M. Customs 

(1) completes its review of the 

CPAS files, (2) notifies Parcelforce 

which parcels it wishes to inspect, and 

(3) clears the remainder.

 Parcelforce pays customs duties 

and taxes and bills USPS for 

reimbursement. 

U.K. customers receive parcels 

delivered by Parcelforce 

employees. 

 Parcelforce receives Customs 

notification that parcels are cleared for 

delivery and then enters parcels into 

the appropriate mailstream 

for delivery. 

 H.M. Customs bills Parcelforce 

every 30 days for duties/taxes it is 

owed for parcels cleared.

10

13

14

16

19 18

17

15

12

11

Page 56 GAO/GGD-98-104 Global Package Link Service
Chapter 2 

Differences in Customs Treatment for GPL

and Private Express Carrier Parcels Shipped

to Canada, Japan, and the United Kingdom

Private Express Carrier H.M. Customs U.K. Customer

 In the U.K., carrier receives copy 

of documentation by fax, e-mail, and 

via its own computer system to 

prepare for customs clearance.

 Carrier, via an interface or other 

means, sends entry details to H.M. 

Customs' CHIEF system before 

shipment arrival. 

 CHIEF processes/validates the 

data and (1) allocates an entry number, 

date, and time; (2) calculates 

duties/taxes due; (3) assigns the entry 

status of "Hold Pending Arrival," and (4) 

notifies the carrier of entry status. 

 Carrier (1) presents to Customs 

hard-copy import entry and 

supporting documentation, as well as 

the "Acceptance Advice Message" 

generated on its system after 

notification by CHIEF of entry status; 

and (2) pays duties/taxes.

 Aircraft arrives and (1) ground 

handling crew unloads the parcels and 

delivers them to the airlines' transit 

shed, (2) shipment is recorded, and 

(3) a systems message advises CHIEF 

that "Hold Entry Consignments" have 

arrived.

 CHIEF validates the new entries 

and revalidates the Hold entries. If 

validation is successful, it (1) allocates 

an entry number/date to new entries, 

(2) calculates duties/taxes due for all 

entries, (3) assigns clearance status, 

and (4) notifies carrier via systems 

message.

 Customs personnel review

 the import declaration/carry out any 

inspections. After formalities 

completed, entries are cleared on 

CHIEF. (Actual clearance is when 

payment of duties/taxes has been made 

or secured.) 

U.K. customers receive parcels 

via carrier's local delivery system. 

 After systems message releases 

parcels from transit shed, carrier 

enters parcels into its local delivery 

system.

Private Express Carrier

20

18

16

14

12

13

15

17

19

Source: GAO analysis of information from USPS, H.M. Customs, Parcelforce, DHL, FedEx, and

UPS.

Page 57 GAO/GGD-98-104 Global Package Link Service
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Differences in Customs Treatment for GPL

and Private Express Carrier Parcels Shipped

to Canada, Japan, and the United Kingdom

Although not required by law, USPS was providing data electronically to

Parcelforce about GPL parcels being shipped from the United States to the

United Kingdom. These data, which were accessible by H.M. Customs

from Parcelforce, included the parcel contents, values, harmonized tariff

codes, and an initial calculation of duties and taxes owed on GPL parcels.19

The carriers were required to provide some additional documentation on

their parcel shipments, including air waybills and invoices, that USPS and

Parcelforce were not required to provide.

To speed customs clearance, the carriers entered most parcel data into the

computer systems of H.M. Customs, although they were not required to do

so. The private carriers’ data were provided initially to a system called

Direct Trader Input (DTI)20 for reformatting and retransmitting to H.M.

Customs’ computer system, the Customs Handling of Import and Export

Freight (CHIEF), which processed entry data. Parcelforce was not required

to submit data on imported mail, including GPL parcels, to DTI or CHIEF.

Although not required by law, Parcelforce was paying duties and taxes on

GPL parcels, rather than collecting payment from the recipients at the door

or post office, as is the practice with other dutiable postal parcels.21

Parcelforce billed USPS for the duties and taxes, and USPS collected those

amounts from GPL customers. H.M. Customs billed Parcelforce monthly for

duties and taxes incurred on GPL parcels. The private carriers were

required to pay or secure duties and taxes before customs clearance.

However, H.M. Customs officials said that in practice, most importers or

their brokers have a deferment account, which allows duties to be paid by

the 15th day of the following month in which the goods were imported.

Further, in April 1997, the United Kingdom initiated a pilot program to

simplify customs clearance procedures for some types of private express

shipments, as permitted under EU law. Under these procedures, carriers

have up to a month after the goods have been imported to pay duties and

taxes. DHL, FedEx, and UPS were participating in this pilot program.

19Parcelforce officials referred to USPS’ data as a “list,” compared to the carriers’ “manifest” regarding

their shipments.

20DTI is an interface between carrier/broker (trade) systems and CHIEF. The DTI system also

maintains a central database that contains records of all expected/actual arrivals, which fulfills a legal

requirement to report the landing of goods and their location to Customs. When an entry is sent via

DTI, it is matched with the inventory record.

21Under EU law, all parcels imported from outside the EU that were more than 22 European Currency

Units (ECUs) in value, about £18, or about $30 ($1=£.6), were subject to duty and taxes. Parcels that

were gifts valued at less than 45 ECUs, or about £36, were duty-free.

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and Private Express Carrier Parcels Shipped

to Canada, Japan, and the United Kingdom

Until the goods are cleared, H.M. Customs may require the carriers to

provide security over any facility that has been approved for temporary

storage. Parcelforce was not required to provide security for goods before

customs clearance on GPL parcels, which were held in postal facilities until

customs clearance.

Carriers were also required to maintain shipping documentation for at

least 3 years and up to 4 years. Although Parcelforce was not required by

law to maintain records on GPL parcels, Parcelforce officials said they

planned to keep records on GPL shipments for 5 years.

Differences in Operational

Practices and Processes

for Shipping GPL and

Private Express Parcels to

the United Kingdom

USPS officials said that as a result of its electronic submission of shipping

data to H.M. Customs, which included the values and contents of GPL

parcels, as well as applicable duties and taxes, all duties and taxes were

being paid on dutiable GPL parcels being shipped to the United Kingdom.

USPS officials provided data indicating that over 90 percent of the GPL

parcels shipped from the United States to the United Kingdom in 1997

were dutiable.22 In addition, USPS provided documentation indicating that it

paid duties and taxes on GPL parcels shipped to the United Kingdom in

1997.

The only apparent difference in customs treatment of postal and private

express parcels in the United Kingdom related to the speed of customs

clearance. USPS did not have exact data indicating how long customs

clearance took in the United Kingdom, but USPS officials said that GPL

parcels were normally cleared within the same day that they arrived in the

United Kingdom. An H.M. Customs official said that private express

parcels were cleared, on average, in 2 hours. However, the carriers said

that under new simplified procedures, customs clearance occurred

immediately upon arrival for certain imported goods.

Differences in

Customs Treatment

for GPL and Private

Express Parcels

Shipped to Canada

The treatment of GPL and private express parcels being shipped from the

United States to Canada was determined by Canadian law applicable to

imports of goods by private carriers into Canada. Although Canadian law

prescribed different sets of requirements for postal and private express

carrier parcels, USPS chose to have its GPL parcels delivered by a private

express carrier in Canada. According to Revenue Canada, GPL parcels were

therefore treated as goods imported by private express carriers.

22USPS assumed that the dutiable de minimis for GPL parcels in the United Kingdom was about $25 in

1997.

Page 59 GAO/GGD-98-104 Global Package Link Service
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Differences in Customs Treatment for GPL

and Private Express Carrier Parcels Shipped

to Canada, Japan, and the United Kingdom

Differences in

Requirements and

Processes for GPL and

Private Express Parcels

Shipped to Canada

Although GPL parcels shipped from the United States to Canada originated

as mail in the United States, they were treated as private express parcels in

Canada and were subject to the same requirements. These requirements

included the preparation of shipping documentation, calculation of duties

and taxes, posting of security for storage facilities, retention of shipping

records, payment for customs clearance outside of regular business hours,

and potential liability for restricted or prohibited parcel contents and for

incorrect or missing customs declarations. Appendix V summarizes the

Canadian laws and regulations that provide the basis for the requirements.

Figures 2.5 and 2.6 show the preparation, delivery, and customs clearance

processes for GPL and private express parcels to Canada.

Page 60 GAO/GGD-98-104 Global Package Link Service
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Differences in Customs Treatment for GPL

and Private Express Carrier Parcels Shipped

to Canada, Japan, and the United Kingdom

Page 61 GAO/GGD-98-104 Global Package Link Service
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Differences in Customs Treatment for GPL

and Private Express Carrier Parcels Shipped

to Canada, Japan, and the United Kingdom

Figure 2.5: Preparation of GPL and Private Express Carrier Parcels Prior to Export From the United States to Canada

U.S. Postal Service (GPL) U.S. Customs

Global Package Link

U.S. Shipper

5

Pursuant to postal law, which restricts 

the inspection of mail, U.S. Customs 

does not inspect outgoing international 

mail parcel contents.

 DynCorp harmonizes catalogs and 

establishes computer interfaces; USPS 

arranges for processing and 

transportation. 

 Shipper prepares/seals parcels

and creates/applies a unique barcode

on each of the parcels. 

U.S. shipper signs agreement with 

USPS/GPL program.

 Shipper (1) transfers parcels to 

USPS for GPL processing and 

(2) electronically transmits data files on 

each parcel to DynCorp. 

 DynCorp receives data files, edits 

file information, and electronically 

transmits the files to a GPL 

processing center/CPAS workstation.

 USPS employees put parcels into 

shipping containers/bags for 

transport to Canada.

 When parcels arrive at center, 

USPS employees use CPAS 

workstation to scan parcel barcodes 

and create/apply customs declarations 

(labels) to parcels.

 USPS transports shipment 

of GPL parcels by ground or air

transportation to Canada.

8

2

3

1

5

4

6

 USPS transports parcels to 

Canadian broker, PBB Global 

Logistics, for customs clearance.

7

 U.S. shipper receives order from

Canadian customer and (1) creates

a data file; and (2) collects payment

for merchandise, shipping/handling

fees, and possibly customs duties/taxes.

 While shipment is in transit, 

DynCorp electronically transmits 

customs clearance data to PBB.

9

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and Private Express Carrier Parcels Shipped

to Canada, Japan, and the United Kingdom

5

1

Private Express Carrier U.S. Customs

Private Express Carrier

U.S. Shipper

U.S. shipper receives order from 

Canadian customer and (1) creates a 

data file; and (2) collects payment for 

merchandise, shipping/handling fees, 

and possibly customs duties/taxes.

Shipper (1) prepares parcels, 

(2) prepares customs declaration 

forms, and (3) creates/applies barcode 

for tracking/tracing purposes. 

 Shipper transfers parcels to private 

express carrier for international 

transport, customs clearance, and 

delivery in Canada.

Carrier receives parcels at its 

processing facility and scans barcodes. 

Customs declaration documents are 

received from the shipper--in electronic 

form or hard copy.

 International air carrier or 

trucking company transports 

shipment to Canada.

 Carrier's employees ensure that 

required documents have been 

completed and parcel contents can be 

both exported from U.S./imported into 

Canada.

 Carrier forwards flight declarations 

and other required documents to 

U.S. Customs pending 

export clearance.

 After U.S. Customs releases 

shipment (parcels), carrier loads it on 

international aircraft or truck to 

Canada.

 U.S. Customs then notifies 

carrier whether parcels are

(1) cleared for export or (2) subject 

to inspection.

 After receiving required 

documents, U.S. Customs reviews 

them to determine whether contents 

of parcels are exportable. 

4

6

 While shipment is in transit, 

carrier transmits customs clearance 

data to its Canadian brokerage 

operations electronically and by fax. 

11

10

2

3 7

9 8

Source: GAO analysis of information from the U.S. Customs Service, USPS, DHL, FedEx, and

UPS.

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and Private Express Carrier Parcels Shipped

to Canada, Japan, and the United Kingdom

Figure 2.6: GPL and Private Express Carrier Parcel Delivery and Customs Clearance in Canada

Revenue Canada Canadian Customer

Global Package Link

PBB/Purolator

 In Canada, PBB receives

electronic files from DynCorp 

containing customs declaration 

information for each parcel.

 PBB receives parcels at its 

facility, which is jointly occupied by 

PBB and Purolator. 

 Using the CPAS files, PBB creates 

and sends copies of cargo/ release list 

to Revenue Canada.

 PBB removes those parcels from 

the shipment that are marked for 

inspection and returns the revised list 

to Revenue Canada.

 Revenue Canada receives 

cargo/release list and highlights any 

parcels that are to be inspected and 

then returns a copy of the list to PBB.

 Revenue Canada receives 

revised list and release-stamps 

one copy of the list as proof of release, 

returning it to PBB, and retains the 

second copy.

 PBB receives release-stamped list 

and notifies Purolator that parcels are 

cleared for release into Canada. 

Purolator then enters the parcels into 

its delivery system. 

 PBB (1) provides Revenue Canada 

with required entry documents and 

pays duties/fees and (2) invoices 

USPS for customs duties/taxes and 

Purolator for brokerage fees. 

 Canadian customer receives 

delivery of parcel via Purolator. If 

customer is outside Purolator's 

delivery area, final delivery is made 

by Canada Post.

11

15

 Revenue Canada receives the 

entry documents and payment of 

duties/taxes from PBB.

17

19

12

10

13

14

16

18

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and Private Express Carrier Parcels Shipped

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Revenue Canada Canadian Customer

Private Express Carrier

Private Express Carrier

 Carrier sends two copies of 

cargo/release list to Revenue Canada 

before or upon shipment arrival. 

 After shipment arrival, carrier 

removes those parcels from the 

shipment that are marked for 

inspection and returns the revised list 

to Revenue Canada.

 Revenue Canada receives 

revised list and release-stamps one 

copy of the list as proof of release, 

returning it to carrier, and retains the 

second copy.

 Revenue Canada receives 

cargo/release list and highlights any 

parcels that are to be inspected and 

then returns a copy of the list to 

carrier.

 Carrier enters parcels into its 

Canadian delivery system and makes 

delivery. 

 Carrier (Canadian operation) 

receives information on each 

parcel and creates two copies of a 

cargo/release list.

16

 Canadian customers receive 

parcels via carrier's local delivery 

system.

18

13

15

14

17

 Revenue Canada receives 

required customs entry documents 

and applicable duties/taxes owed. 

 Carrier provides release 20

information and supporting 

documentation for each parcel to 

customs broker, who completes 

customs entry.

19

12

Source: GAO analysis of information from USPS, Revenue Canada, Purolator, DHL, FedEx, and

UPS.

Page 65 GAO/GGD-98-104 Global Package Link Service
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and Private Express Carrier Parcels Shipped

to Canada, Japan, and the United Kingdom

According to Purolator,23 the private express company that delivered GPL

parcels for USPS in Canada, the only difference in the process between GPL

and its other parcels was in the level of automated shipping data provided

to Revenue Canada. Purolator indicated that USPS provided GPL data

electronically through CPAS, but the carrier’s other commercial customers

provided shipping documentation in both electronic and paper format.24 In

addition, Purolator indicated that CPAS provided harmonized tariff codes

on GPL parcels, but some of the carrier’s other commercial customers did

not provide the codes, requiring the broker to determine them. Revenue

Canada normally charges a $5 per parcel fee for Canada Post to collect

duties and taxes on imported postal parcels, but USPS avoids this fee on GPL

parcels because they are imported by a private carrier.

Purolator said that GPL parcels were being cleared through Revenue

Canada’s low-value shipment program, which allowed Purolator’s broker

to pay duties and taxes and provide harmonized codes after customs

clearance on goods valued at less than $1,600 Canadian as long as security

for payment was provided.25 Under this program, Revenue Canada used a

manifest to clear goods immediately, and Purolator’s broker could pay

duties and taxes later.26 USPS provided documentation indicating that it

paid duties and taxes on GPL parcels shipped to Canada in 1997.

According to Revenue Canada, the recipients of imported parcels in

Canada were subject to liabilities for importation of restricted or

prohibited contents, and the importers or their brokers were liable for

missing or incorrect customs declarations.

Operational Practices and

Processes for Shipping

GPL and Private Express

Parcels to Canada

USPS indicated that because it was submitting detailed shipping

documentation to Revenue Canada, including data on duties and taxes

owed, all duties and taxes on GPL parcels being shipped to Canada were

being paid. According to USPS, over 95 percent of GPL parcels shipped to

Canada in 1997 were dutiable.27 Purolator said that customs clearance for

23Purolator uses Canada Post to complete delivery of some GPL parcels in certain areas of Canada.

24Purolator said that its broker in Canada, PBB Global Logistics, receives the CPAS data and creates a

courier manifest that is submitted to Revenue Canada containing the shipper and consignees’ names

and addresses and description of goods, value, country of origin, and harmonized tariff codes.

25$1,600 Canadian is worth about $1,143 U.S., assuming that $1 U.S. = $1.4 Canadian.

26Under the low-value shipment program, customs declarations can be submitted up to the 24th day of

the month following the month in which the goods were released, and duties and taxes can be paid up

to the last business day of the month following the month in which the goods were released.

27USPS assumed that the dutiable de minimis for GPL parcels in Canada was about $14 U.S. in 1997.

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to Canada, Japan, and the United Kingdom

GPL and private express parcels is the same, ranging from 1/2 hour to 3

hours. USPS did not have data on how much time customs clearance took

for GPL parcels in Canada.

Agency Comments The comments we received from USPS, Revenue Canada, and ACCA

indicated general agreement with the facts presented in the report on the

differences in the requirements and procedures for customs clearance of

GPL and private express parcels in the three countries in our review.

Revenue Canada said that the report correctly described the key features

of its processing of GPL parcels. Although USPS and ACCA generally agreed

with the differences in customs requirements and procedures we

described, they had different interpretations of the differences in

requirements and procedures. ACCA also believed that the review’s

limitations should have been more carefully explained.

Comments Related to

Customs Treatment

In its comments, USPS said the report confirmed that no preferential

customs arrangements (“sweetheart deals”) benefitting the Postal Service

existed and that USPS enjoys no customs clearance advantage over private

express parcels. USPS said that rather than identifying sweetheart deals, the

report identified different, but not better, customs processes for postal

parcels, compared to private parcels. In addition, USPS said that its

competitors’ allegations that GPL service is fraught with unfair advantages

are erroneous. USPS also agreed with the concerns of its customers that

they would lose a competitive and attractive shipping option if GPL service

were made unavailable.

We did not confirm that sweetheart deals did not exist, as USPS indicated in

its comments. Instead, we reported that we found no evidence that GPL

parcels received preferential treatment over private express parcels in two

specific areas. However, we did observe some unexplained activities such

as the sorting of GPL parcels bound to Japan by value at USPS’ GPL

processing center in New York. Neither Japan Customs nor Japan Postal

officials acknowledged requesting this practice.

Although ACCA generally agreed with the stated differences in customs

treatment between GPL and privately transported parcels described in the

report, it suggested that additional clarification of the commercial

implications of the differences in customs treatment would be helpful,

such as the benefits from cost savings traceable to differences in customs

treatment. As we noted in the report, differences in customs requirements

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to Canada, Japan, and the United Kingdom

for GPL and private express parcels existed; and in some cases, there were

additional requirements for the private carriers. However, we did not

assess the advantages or disadvantages of these differences.

Comments Related to the

Scope of the Review

ACCA also noted that although the study’s focus on only the outbound leg of

GPL’s shipments was too limited and thus would not illuminate all aspects

of the issue related to whether USPS has an unfair competitive advantage in

providing international parcel delivery service, it was a good place to start.

ACCA raised four areas of concern. First, it noted that the customs

treatment of GPL parcels may not be entirely representative of all customs

treatment of international postal shipments. Second, ACCA said that the

report did not include customs treatment of parcels entering the United

States, particularly return merchandise, which ACCA indicated was

significant in terms of costs and service. Third, it stated that we did not

address the extent to which differences in customs treatment may result

from manipulation of international law by USPS. Further, ACCA noted

several points in this chapter that it believed deserved additional

clarification or research, including (1) the incidence of duty collection,

(2) a simplified classification system available to postal shipments in

Japan, (3) private carrier fees for customs clearance, and (4) legal

requirements for GPL in Canada.

On the first issue, we were asked by the requester to focus specifically on

GPL in response to concerns that the private carriers had raised regarding

GPL. Thus, we did not review customs procedures related to international

postal shipments other than GPL parcels, and we were not in a position to

comment on the relationship between GPL shipments and other

international postal shipments.

On the second issue, we asked the foreign customs officials and private

carriers for information related to merchandise returns, but we did not

receive enough information to discuss this issue in a meaningful way.

Thus, we did not discuss this issue.

Regarding the third issue, as ACCA indicated, we are currently reviewing

issues related to U.S. representation at UPU. However, we do not anticipate

the review will address ACCA’s assertion that UPU customs procedures are

the basis for most of the differences in customs treatment identified in this

report or whether USPS uses its position within UPU to manipulate customs

law and practices to its advantage.

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and Private Express Carrier Parcels Shipped

to Canada, Japan, and the United Kingdom

We also had some scoping limitations related to some of the areas in this

chapter where ACCA desired additional clarification. For example, the

private carriers believed that the incidence of duty collection for GPL

shipments is “substantially less than 100 percent for shipments entering

Japan.” As we explain in the Objectives, Scope, and Methodology section

in chapter 1, we did not have audit authority to examine the records of

foreign governments to verify the incidence of duty collection. We

obtained records from USPS indicating that it paid duties and taxes on GPL

parcels shipped to Canada and the United Kingdom, but USPS was not

responsible for duty payments in Japan. Further, as explained in chapter 1,

we did not conduct a limited test of customs treatment in Japan, as

suggested by ACCA, because of resource and methodological limitations.

From a methodological perspective, a limited test would not produce

reliable results that would be generalizable to the universe of all GPL

parcels sent from the United States to Japan.

ACCA also wanted the report to call more attention to the simplified

classification system in Japan, which it said was available only for postal

shipments. We reported the position of Japan Customs officials that the

simplified classification system applies to both postal and private carrier

parcels and cited the relevant provision of Japanese law.

ACCA also stated that private carriers pay for customs clearance services

outside of regular business hours in part because Customs authorities

generally refuse to provide dedicated staff at private carriers’ facilities

during normal business hours. We added information to this chapter that

the carriers indicated that Japan Customs limits the number of parcels that

can be cleared per hour. However, because we were not informed by the

carriers during our visit to Japan of their concern about insufficient

staffing for customs clearance, we did not discuss this matter with Japan

Customs.

Finally, ACCA suggested that table 2.1 show the application of customs

procedures to GPL in Canada as “practices” rather than “requirements.” We

discussed this issue with Revenue Canada officials, who said that the

designation should be “requirements” because, if USPS uses a private

carrier as its delivery agent, it must meet the requirements for private

carriers. Although ACCA is correct that USPS could choose to use Canada

Post to deliver GPL parcels in Canada, we relied on Revenue Canada

officials in this regard.

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Express Parcels

The private express industry has commented that differences in customs

clearance requirements for postal and privately shipped parcels result in

more work and higher costs for the carriers, placing them at a

disadvantage in competing with USPS to provide international parcel

delivery service. However, USPS officials noted that they also incur costs

that the private carriers do not, such as meeting their obligations to

provide delivery service to persons in all communities of the United States

and to member countries of UPU. In addition, businesses that ship their

goods internationally, as well as USPS and the carriers, stressed the

importance of having competitive choices that provide alternatives in the

cost and speed of international shipping services for consumers.

The carriers have urged Congress to protect fair competition by enacting

legislation that would require USPS to compete on the same terms,

particularly for customs treatment, as private carriers. This proposal raises

several questions related to GPL, such as (1) whether international parcels

delivered by postal services and private carriers should be subject to the

same requirements and customs treatment; (2) if so, what requirements

might be appropriate to apply to international parcels; and (3) how those

requirements should be implemented. Although we do not take a position

on whether the existing requirements or a change in policy would be

desirable, we discuss some potential implications that have been raised

and may be relevant to considering how these options could be

implemented.

Regarding the issue of whether the same customs requirements should be

applied to postal and privately shipped parcels, USPS and private carrier

officials have conflicting views about whether that would achieve a more

“level playing field.” Additional implications of applying the same

requirements include the potential effects on the costs and choices that

would be available to businesses and consumers, as well as the potential

impact on the workloads of U.S. and foreign postal and customs services.

If the same requirements were to be applied, many ongoing national and

international efforts aimed at streamlining customs procedures worldwide

could benefit both USPS and the private carriers in terms of how they

provide international parcel delivery services. Regarding how to

implement the same requirements, the U.S. government does not have

jurisdiction over foreign customs requirements; so changes involving

foreign requirements might need to be negotiated through bilateral or

multilateral agreements. Moreover, potential conflicts with current

international agreements would have to be considered.

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Views on Applying the

Same Requirements

The carriers have urged Congress to enact legislation aimed at applying

the same customs clearance requirements for USPS and the private express

industry. This could be achieved in several ways, such as (1) applying the

carriers’ requirements to competitive international postal products,

(2) allowing the carriers to follow the same requirements that apply to

competitive international postal products, (3) applying simplified

procedures to both postal and private express parcels, or (4) other

options. In this report, we do not attempt to provide a comprehensive

analysis of potential changes; but we present some of the issues in this

regard that were raised by stakeholders in the course of our review.

The carriers are concerned they must incur substantial costs to comply

with requirements that do not apply to USPS. At our request, DHL, FedEx, and

UPS calculated that they incurred over $110 million in costs to comply with

customs requirements in connection with delivering over 8 million parcels

to Canada, Japan, and the United Kingdom in 1997. The carriers indicated

that they incurred these costs in the following areas: (1) preparation,

transmission, and submission of shipping documentation; (2) use of

licensed customs brokers; (3) bonding or other security requirements;

(4) customs clearance services outside of regular business hours;

(5) records retention; (6) fines and penalties; (7) liability expenses; and

(8) expenses related to the payment of duties, taxes, and fees in the three

countries. We did not verify the cost data provided by the private express

carriers or obtain data on the costs that USPS incurred to provide GPL

service. We plan to evaluate the cost issues in a later review.

In response to the carriers’ concerns about the costs of complying with

customs clearance requirements, USPS officials said that they must incur

costs for public service obligations that the private carriers do not, such as

meeting their universal service delivery obligations. USPS’ universal service

obligations include delivering mail to persons in all communities in the

United States and mailing to the 189 countries of UPU. USPS also cited the

costs of maintaining a universal delivery infrastructure, including a large

number of unprofitable post offices, and offering customers uniform

prices. An official from the Direct Marketing Association (DMA),1

 which

represents direct marketers who ship their goods overseas, said that DMA

members want a choice of international carriers. In addition, the DMA

official said that GPL serves as an important means of simplifying the

shipment of goods internationally. The DMA official also said that the

advantages enjoyed by GPL customers—low-cost shipping and various

1

DMA represents more than 3,600 companies from the United States and 49 other countries that

include direct marketers, such as catalogers, financial services, and publishers.

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delivery speeds and automated customs clearance data—also should be

available to private carriers’ customers. An official from the Mail Order

Association2

 said that GPL was essential to serving overseas markets and

that his organization would like to see GPL expanded to additional

countries. Moreover, officials from several GPL customers said that

simplification of the customs process and lower shipping costs were the

primary reasons they used GPL to ship internationally. USPS and the carriers

also stressed the importance of competitive choices for shippers.

Potential Implications

and Means of

Applying the Same

Requirements

Determining whether and/or how to make customs requirements more

similar would involve considering the implications of any changes on the

postal and customs services, private express carriers, businesses, and

consumers. From the perspective of customs services, these implications

include the potential impact on their workload and efforts to implement

simplified procedures that facilitate timely and cost-effective customs

clearance while also allowing them to meet their law enforcement and

revenue collection responsibilities. Also, postal services would want to

ensure that they would be able to continue providing universal mail

service. Implementation of the same requirements would need to address

potential limitations due to lack of U.S. jurisdiction over importing

requirements of other countries and existing international agreements.

Potential Additional

Workload Burden

Depending upon the requirements and what types of competitive

international postal products were to be treated the same as private

express parcels, applying the same requirements to international postal

and privately shipped parcels could affect the workload of postal and

customs services worldwide, as well as individuals and businesses sending

mail to the United States. If the same requirements were applied, one

option would be to apply the private carriers’ requirements to USPS’

competitive international postal products; another option would be to

apply USPS’ requirements to the private carriers.

Currently, private express carriers must provide U.S. Customs with

manifests and supporting documentation, such as invoices, on goods

imported into the United States. According to USPS, requiring foreign postal

services to provide manifests and supporting documentation on parcels

being shipped to the United States under the first option could be a very

burdensome task. In 1996, USPS received about 714 million pieces of

2

The Mail Order Association represents four U.S. companies: L.L. Bean, Lands’ End, JC Penney, and

Spiegel.

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Express Parcels

incoming international mail, including about 4 million parcels, most of

which were sent from household to household.3 USPS officials also said that

most countries do not require that they be provided with manifests and

supporting documentation on incoming international mail.

Further, under the first option, U.S. Customs would need to determine the

potential impact on its resource allocation if all inbound and outbound

international postal parcels were subject to inspection, as are all private

express carriers’ parcels. When we asked U.S. Customs officials what

impact this could have on the agency’s workload, they said this issue had

not yet been fully analyzed. In a recently issued GAO report, we said that

U.S. Customs does not have an agencywide process for annually

determining its need for inspectional personnel for all of its cargo

operations and for allocating these personnel to commercial ports of

entry.4

 We recommended that such a process should include conducting

annual assessments to determine the appropriate staffing levels for its

operational activities related to processing cargo at commercial ports.

Depending on the option selected and the terms of applying the same

requirements on competitive international postal products and private

express carrier shipments, the implications regarding the procedures for

individuals and businesses who send mail to the United States are also a

consideration. Currently, senders of postal parcels to the United States

affix a simple customs declaration label to the parcels. If the same

requirements were imposed on competitive international postal products

incoming into the United States as currently apply to privately shipped

imports, individuals and businesses in other countries could be required to

provide additional data not currently provided on the customs declaration

labels. This data could include harmonized tariff codes, as well as

supporting documentation, such as invoices, for postal parcels sent to the

United States.

In providing comments on a draft of this report, the carriers said they

would like to have “postal-like simplicity” applied to the customs

treatment of privately transported low-value parcels. We did not receive

views on the feasibility of this option during the course of our review.

However, many of the same workload implications would need to be

considered, such as how U.S. Customs could expeditiously clear private

3

Data on the number of pieces of incoming international mail in 1997 are not yet available. In 1997,

USPS also handled about 1 billion pieces of outbound international mail, including at least 6 million

parcels.

4

Customs Service: Processing for Estimating and Allocating Inspectional Personnel (GAO/GGD-98-107,

April 30, 1998).

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Express Parcels

express parcels while applying the requirements that apply to postal

parcels.

As it plans to expand GPL service, USPS is engaged in discussions with the

U.S. Customs Service regarding future incoming service. Issues being

discussed include whether USPS would be required to present manifests of

incoming GPL parcels and how duties and taxes would be paid. With regard

to future incoming GPL service, USPS officials said that they were willing to

comply with many of the same requirements that private express carriers

must follow, such as preparing manifests and prepaying duties and taxes.

However, they indicated that providing invoices would be unnecessary

because CPAS data included parcel values. In addition, Postal Service

officials did not believe that USPS, as a government entity, could be subject

to the same liabilities and associated penalties as are private express

carriers.

USPS officials said that they would like to see their procedures for

providing shipping data electronically and paying duties and taxes in

Canada and the United Kingdom applied to GPL service in other countries,

including Japan. U.S. Customs’ strategic plan for 1997 through 2002

indicates that the United States is experiencing a period of unprecedented

growth in world trade and the value of trade imports is expected to double

over the next 5 years. To handle the increased volume of trade, U.S.

Customs is planning to expand the electronic transmission of data needed

by Customs, as well as permit the electronic payment of duties and taxes,

and take other measures.

National and International

Efforts to Develop

Efficient Customs

Procedures

Costs and workload burdens are a concern to all parties. Therefore, efforts

to find more efficient and cost-effective customs clearance procedures

could benefit all parties. International organizations and national

governments are attempting to simplify and standardize customs

procedures worldwide. These international efforts are relevant to the

debate over whether the same and which requirements should apply to GPL

and private express parcels because, as explained in chapter 2, most of the

requirements that apply to parcels exported from the United States are

imposed by the importing countries. All three countries in our review have

initiated or implemented procedures to speed the customs clearance

process and reduce the paperwork burdens on the carriers for low-value

imports.

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In 1993, Canada implemented its courier/low-value shipment program to

streamline the reporting, release, and accounting procedures for certain

goods valued at less than $1,600 Canadian.5

 Under the program, couriers

report the goods to Revenue Canada on a cargo/release list, which reduces

paperwork burden by eliminating the need to present a separate manifest

for each parcel. Revenue Canada said it usually receives the list before the

goods arrive. Prior to the arrival of goods, customs inspectors are to

review the cargo/release list and select any parcels to be examined.

Customs entry and accounting documentation must be presented by the

24th day of the month following the month of release, and the duties and

taxes must be paid by the last business day of that month. Revenue

Canada said it verifies compliance with customs laws through periodic

audits of importers and customs brokers and other checks.

In 1996, Japan Customs began allowing shippers to declare imported

shipments valued at no more than 100,000 yen without preparing an

invoice as long as the shipper maintains import records.6

 In addition,

carriers have the option of calculating duties on imports into Japan that

are valued at no more than 100,000 yen using single duty rates that are

selected from six categories, eliminating the time needed to determine

specific duty rates applicable to each item.7

 Another new program in Japan

allows shippers to clear some low-value imports on one air waybill.8

 We

asked Japan Customs officials whether they would like USPS to provide

certain shipping documentation on GPL parcels, such as harmonized tariff

codes, as private carriers do. In providing comments on this report, Japan

Customs indicated that it is preparing for the introduction of an import

information system with the cooperation of USPS that is similar to that used

in the United Kingdom.

In April 1997, the United Kingdom initiated a pilot program to simplify

customs clearance procedures for some types of private express

shipments.9

 H.M. Customs indicated that the program is aimed at reducing

paperwork requirements by allowing electronic submission of customs

5

About $1,143 U.S., assuming that $1 U.S.=$1.4 Canadian.

6

¥100,000=$800, assuming that $1=¥125.

7

A Japan Customs official said that under Art. 3-3 of Japan Customs Tariff Law, the simplified tariff is

applicable to both postal and private express parcels imported into Japan.

8

Low-value imports that qualify for consolidated customs clearance include person-to-person

shipments, catalog shipments approved by Japan Customs, and company-to-company shipments that

are approved and registered by Japan Customs.

9

The pilot ended on January 31, 1998, and the program was adopted.

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Express Parcels

declarations. In addition, under the simplified procedures, carriers may

pay duties and taxes the following month. According to the carriers

operating in the United Kingdom, the new program has reduced customs

clearance times for qualifying imports from about 2 hours to immediate

clearance upon arrival.

At the international level, organizations such as the World Customs

Organization are examining the issue of simplifying customs procedures

worldwide. Similarly, a project was initiated at the 1996 G-710 summit in

Lyon, France, to standardize and simplify customs procedures scheduled

to be completed in 1998. Two key proposals raised at the international

forums to streamline customs procedures included (1) reducing

paperwork requirements on imported goods and (2) increasing the

dutiable de minimis in various countries. In the three countries in our

review, imported nondutiable goods were subject to reduced paperwork

requirements for customs clearance. In U.S. dollars, the dutiable de

minimis was the equivalent of about $14 in Canada, about $30 in the

United Kingdom, about $80 in Japan, and $200 in the United States.11

According to the U.S. Embassy officials in Japan, increasing the dutiable

de minimis on imported goods has been the subject of ongoing

negotiations between the United States and Japan. One carrier said that

raising the dutiable de minimis in Japan from 10,000 yen to 30,000 yen, for

example, would increase its nondutiable imports from 40 to 80 percent.

Guidelines issued by the International Chamber of Commerce in 1996

regarding best practices recommended that customs services regularly

review dutiable de minimis levels to take into account such factors as

inflation.

Potential Conflicts With

International Postal

Agreements

The ability of the United States to apply the same international customs

requirements to both USPS and the private carriers may have some

limitations, due to the lack of U.S. jurisdiction over importing

requirements imposed by foreign governments and potential conflicts with

current international agreements on customs clearance. For example, a

UPU agreement prescribes specific procedures for member postal services

regarding customs declarations on postal parcels.12 These procedures

differ from the customs procedures that the private carriers are required

10The G-7 countries include Canada, Germany, France, Italy, Japan, the United Kingdom, and the

United States.

11Assuming that $1 U.S. is the equivalent of about $1.4 Canadian, ¥125, and £.6.

12Universal Postal Union Postal Parcels Agreement, Vol. 3, Art. 106.

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Express Parcels

to follow. Further, the UPU agreement provides that “postal administrations

shall accept no liability for customs declarations in whatever form these

are made or for decisions taken by the Customs on examination of parcels

submitted to customs control.”13 If USPS were subject to the same

requirements as the private carriers, this provision of the UPU agreement

could conflict with a requirement to subject USPS to liabilities for customs

declarations. Efforts to apply similar customs requirements may require

bilateral or multilateral agreements.

Conclusions The private express industry has commented that it wants Congress to

establish a “level playing field” with USPS in providing international parcel

delivery service by applying the same customs requirements on USPS and

the carriers. Issues related to fair competition involve weighing how USPS

and its private sector competitors can compete, given that different sets of

requirements and obligations currently exist. The potential implications of

whether to apply the same requirements, under what terms, and how to

implement the same requirements for both USPS and the carriers may

include a number of factors, including those raised by the U.S. and foreign

postal and customs services, private express carriers, shippers, and

consumers. USPS officials noted that they incur costs that the private

carriers do not, such as meeting their obligations to provide delivery

service to persons in all communities of the United States and to UPU

member countries. The carriers noted the benefits that simplification of

customs formalities for low value shipments could have for all

international commerce. Moreover, businesses that ship their goods

internationally stressed their need to have competitive choices that

provide alternatives in the cost and speed of international shipping

services for consumers.

In urging that the same international customs clearance requirements

should be applied to USPS and the private carriers, the carriers have raised

fundamental questions about the fairness of competing with a government

entity that is providing a businesslike service. The carriers believe that

competing with a government entity that is subject to fewer customs

requirements and lower associated costs distorts the competitive

marketplace. However, depending upon what types of competitive

international postal products would be subject to the same requirements,

postal services are concerned that requiring USPS and the private carriers

to follow the same requirements could affect the simplified process that

was intended for mail sent from household to household internationally.

13UPU Postal Parcels Agreement, Vol. 3, Art. 41-3.

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Express Parcels

Another consideration is the potential impact on shippers, such as the

direct marketing industry, who want to have a choice of different types,

costs, and speeds of delivery services to respond to their customers’

demands for their goods.

Determining how to make customs requirements the same would involve

several considerations. Changes in U.S. law by themselves would not

equalize customs treatment for postal and private express parcels under

foreign law. Bilateral or multilateral agreements with other countries may

also be necessary. Further, additional analysis would be needed to

determine whether making customs requirements the same would conflict

with current international agreements, such as those involving UPU service

obligations, and if such changes would impose additional workload

burdens on postal and customs services worldwide.

With respect to U.S. law, opportunities may exist to change customs

treatment of parcels imported into the United States. Negotiations

between USPS and the U.S. Customs Service regarding the treatment of

future GPL service incoming to the United States involve discussions of

such issues as manifesting requirements and payment of duties and taxes.

Moreover, in considering what requirements might be appropriate,

additional opportunities may exist to build on national and international

proposals discussed earlier in this chapter to simplify and expedite

customs clearance procedures worldwide. Such opportunities include

reducing paperwork and increasing the dutiable de minimis, which could

benefit both USPS and the private express carriers.

Agency Comments In its comments, ACCA said that this chapter did not develop a sound and

objective basis for evaluating the policy implications of the differences in

customs treatment. It appears that ACCA may have misinterpreted our

discussion of several issues in this chapter. We did not intend to take a

position on the policy issues that are discussed in this chapter or make

assumptions about the implications of changes in policy. Rather, our

intent was to identify some of the key issues that are being considered by

policymakers in Congress and that were raised during our review to

provide some perspective on the significance of the issues related to

differences in customs treatment. We modified this chapter to address

ACCA’s specific concerns.

ACCA raised four primary areas of concern about this chapter. First, it said

our report implied that the principle of equal application of the customs

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Express Parcels

laws, as advocated by the carriers, could result in adverse consequences,

such as eliminating the simplified clearance process that currently benefits

U.S. shippers. In discussing the potential implications of the principle of

equal application of customs laws, we were not taking a position on

whether existing requirements or a change in policy would be desirable.

Thus, we changed our discussion to make this clear where appropriate.

Second, ACCA said that our report assumed that a U.S. policy of equal

application of the customs laws could lead foreign customs authorities to

subject all postal shipments—or at least all GPL parcels—to the customs

procedures now applied to privately carried shipments. In this report, we

discussed options that were raised during the course of our review;

however, other options could be considered. One of the possibilities raised

in draft legislation was to apply the customs requirements for private

carriers to all competitive international postal products. ACCA indicated in

its comments that foreign governments would discover strong incentives

to extend simplified customs procedures to all U.S. direct marketing

shipments tendered by all U.S. carriers, provided that the carriers tender

the shipments in the same manner now employed by USPS. In providing

informal comments on a draft of this report, H.M. Customs said that

simplified procedures already could be used by anyone fulfilling its

requirements, but that customs inspectors would need shipment data in

advance, or at least at the time of importation, for inspection purposes. In

addition, the World Customs Organization is currently reviewing this issue.

Third, ACCA was concerned that by presenting USPS’ views on its universal

service obligations, our report helped to militate against a U.S. policy of

nondiscrimination in customs treatment for U.S. carriers. Although we

noted both USPS’ stated service obligations and the carriers’ business

choices, we did not take positions on their respective arguments. We

sought to provide a fair and balanced presentation of the often conflicting

interests and opinions associated with this issue.

Finally, ACCA said that our report exaggerated the legal difficulties

associated with implementing a U.S. policy requiring equal application of

customs procedures to U.S. based carriers. We disagree. We only pointed

out that potential limitations may exist in applying equal customs

requirements, including the lack of U.S. jurisdiction over foreign customs

laws. This discussion was presented not as obstacles, but as legal

considerations for implementing these policies.

Page 79 GAO/GGD-98-104 Global Package Link Service
Appendix I 

Chronology of GPL Service

Since the U.S. Postal Service (USPS) issued a notice in the Federal Register

in 1994 that it intended to initiate GPL service (formerly called International

Package Consignment Service (IPCS)) to Japan, the Postal Service has

made several amendments, changing Global Package Link (GPL)

requirements, the type of service, and destination countries offered. Listed

below is information from USPS’ Federal Register notices regarding GPL, in

chronological order from 1994 to the present.

December 22, 1994 Implementation of International Package Consignment Service

Action: Interim rule with request for comments.

USPS announces the implementation of IPCS, an international mail service

designed for mail-order companies sending merchandise parcels to other

countries. To use IPCS, customers will be required to mail at least 25,000

parcels a year to each country where it wants to use the service and agree

to link its information systems with those of the Postal Service so that USPS

can extract certain information about the customer’s parcel contents for

customs clearance and other purposes. Initially, the service will be

available only to Japan. Canada is to be added later as a destination

country.

Effective on December 1, 1994. (59 Fed. Reg. 65961 (1994))

December 1, 1995 Implementation of International Package Consignment Service 

Action: Amendment to interim rule.

Amendment to IPCS provides an additional entry option to IPCS mailers

whose plants are located more than 500 miles from the USPS processing

facility at the John F. Kennedy (JFK) International Airport in New York.

These mailers may now process their IPCS parcels using USPS-provided

workstations to sort and prepare the parcels. USPS will then verify and

accept the parcels at the mailers’ plants and transport the parcels by truck

to the nearest Postal Service air mail facility (AMF). From the AMF, USPS

dispatches the parcels directly to Japan, bypassing the JFK facility.

Effective on September 1, 1995. (60 Fed. Reg. 61660 (1995))

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Chronology of GPL Service

March 28, 1996 Implementation of International Package Consignment Service 

Action: Interim rule with request for comments.

Service now available to the United Kingdom and Canada (previously

available only to Japan). To use IPCS, customers are required to mail at

least 25,000 parcels per year to Canada or at least 10,000 parcels a year to

the United Kingdom. Two levels of service are offered to Canada, and

three levels of services are offered to the United Kingdom.

Effective on March 28, 1996. (61 Fed. Reg. 13765 (1996))

July 11, 1996 Implementation of International Package Consignment Service

Action: Amendment to interim rule for request for comments.

To use IPCS, customer must mail at least 25,000 parcels per year to Japan,

at least 25,000 parcels per year to Canada, or at least 10,000 per year to the

United Kingdom. This amendment provides an option for IPCS customers

who meet the minimum mailing requirements to enter additional parcels

for delivery in any other IPCS country of destination at reduced volume

thresholds, specifically 5,000 parcels per year.

Effective on July 11, 1996. (61 Fed. Reg. 36500 (1996))

July 30, 1996 Amendment to International Package Consignment Service to

Japan, Canada, and the United Kingdom

Action: Amendment to interim rule with request for comments.

In addition to its JFK facility, USPS is adding additional IPCS processing

facilities sites near the Dallas-Fort Worth International Airport and in

Chicago, Miami, San Francisco, and Seattle.

Effective on July 1, 1996. (61 Fed. Reg. 39592 (1996))

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Chronology of GPL Service

October 28, 1996 Amendment to International Package Consignment Service to

Japan, Canada, and the United Kingdom

Action: Amendment to interim rule with request for comments

USPS announces prices for “harmonizing” mailers’ products being delivered

via IPCS with customs classifications. All catalog harmonization performed

by USPS for the mailer will be billed to the mailer at a rate of $1.25 per item

(including any future items added to the catalog). The mailer has the

option of doing its own harmonization, provided the format used is

compatible with that of USPS’ Customs Pre-Advisory System (CPAS)

software.

Effective on October 30, 1996. (61 Fed. Reg. 55572 (1996))

January 6, 1997 IPCS Name Change to Global Package Link 

Action: Final rule.

USPS changed the name of IPCS to Global Package Link (GPL). After

considering comments to its March 28, 1996, request for comments

concerning interim regulations implementing IPCS, USPS adopted interim

regulations as amended, without substantive modification, for service to

Canada and the United Kingdom.

Effective on January 6, 1997. (61 Fed. Reg. 631 (1997))

January 13, 1997 Interim Rule for Global Package Link to Canada

Action: Interim rule with request for comments.

New GPL pricing for Canada will result in reduced rates from those

previously established. A new Ground Gateway GPL service is announced

for Canada; Buffalo has been added as a GPL processing center for ground

service only. Ground service available to any customer within a 500-mile

radius of the two gateway centers—Seattle, Washington; and Buffalo, New

York—and any other customer that can use a direct, existing Postal

Service transportation to one of the two gateways. Also, a merchandise

return service is being announced, along with prices, to any customer

using GPL to Canada.

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Chronology of GPL Service

Effective on January 13, 1997, except for the new ground gateway service

from Buffalo, which became effective on January 21, 1997. (61 Fed. Reg.

1674 (1997))

April 9, 1997 Implementation of Global Package Link Service: Brazil, Chile, and

Germany

Action: Interim rules with request for comments.

Brazil, Chile, and Germany added as destination countries. USPS also

announces that instead of the minimum volume requirements for each

country to which service is available, an annual minimum volume of 10,000

parcels to all countries is established. An interim rule for establishing a

merchandise return service for customers using the service to Japan and

the United Kingdom is also announced.

Effective on April 9, 1997. (62 Fed. Reg. 17072 (1997))

April 21, 1997 Global Package Link: Harmonization services

Action: Final Rule.

USPS will offer free catalog harmonization services for the first 2,500

catalog items presented for harmonization during first 12 months

following signing of GPL agreement. Any harmonization in excess of 2,500

items for each customer and/or after the first 12 months will be charged a

fee of $1.25 per item. Mailer has the option of doing its own

harmonization, provided the format used is compatible with that of the

Postal Service’s CPAS software.

Effective on April 21, 1997. (62 Fed. Reg. 19223 (1997))

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Chronology of GPL Service

May 8, 1997 Amendment to Interim Rule for Global Package Link: Japan

Action: Amendment to interim rule with request for comments.

The number of levels of service to Japan will be changed from three to

two. The discount rate structure offered Japan will be adjusted, and the

name for Express Service will be changed to Premium Service. Insurance

for the standard service will no longer be available.

Effective on June 8, 1997. (62 Fed. Reg. 25136 (1997))

May 9, 1997 Implementation of Global Package Link Service: China

Action: Interim rules with request for comments.

People’s Republic of China added as destination country. One level of

service is being offered initially in China and will be available only in the

cities of Beijing, Guangzhou, and Shanghai.

Effective on June 9, 1997. (62 Fed. Reg. 25515 (1997))

August 26, 1997 Implementation of Global Package Link Service: Mexico and

Singapore

Action: Interim rule with request for comments.

Mexico and Singapore added as destination countries. Initially, two levels

of service to Mexico and Singapore are being offered.

Effective on August 26, 1997. (62 Fed. Reg. 45160 (1997))

September 10, 1997 Implementation of Global Package Link Service: France

Action: Interim rules with request for comments.

France added as a destination country. Initially, one standard delivery is

available to France; Premium Service is under development and will be

available next year.

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Chronology of GPL Service

Effective on September 10, 1997. (62 Fed. Reg. 47558 (1997))

September 24, 1997 Implementation of Global Package Link Service: Hong Kong

Action: Interim rule with request for comments.

Hong Kong added as destination country. Initially, one level of service to

Hong Kong will be offered.

Effective on September 24, 1997. (62 Fed. Reg. 49915 (1997))

October 29, 1997 Discount for Mailer-Provided Transportation of Parcels to GPL

Facility

Action: Interim rule with request for comments.

USPS announces a discount for mailer-provided transportation of parcels to

a GPL processing facility and is adding a surcharge for USPS-provided

transportation for mailers located more than 500 miles from a GPL

processing facility. USPS also announced the elimination of the option for

mailers to process GPL parcels.

Effective on November 28, 1997. (62 Fed. Reg. 56074 (1997))

October 31, 1997 Interim Rule for Global Package Link to Canada

Action: Interim rule with request for comments.

USPS is offering Ground Courier service to Canada, called GPL Standard,

and eliminating Ground Gateway Service. USPS is also offering new pricing

for the GPL Standard service based on origin and destination. In most

cases, new pricing is a reduction in rates previously established.

Effective on October 31, 1997. (62 Fed. Reg. 58910 (1997))

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Chronology of GPL Service

February 25, 1998 Increase of Maximum Size and Weight Limits to Existing Global

Package Link to Japan

Action: Interim rules with request for comments.

Current size allowances for GPL and return services to Japan will be

increased to U.S. domestic limits. Customers wishing to send parcels to

Japan larger than the current size restrictions—44 pounds and maximum

length of 60 inches—may use GPL Premium Oversize service, an extension

of GPL Premium Service, with the same attributes as that service. The

Oversize service will include parcels longer than 60 inches on a side or

weighing more than 44 pounds up to 70 pounds. Length/girth combined to

be within 108 inches.

Effective on February 25, 1998. (63 Fed. Reg. 9420 (1998))

March 18, 1998 Implementation of New Market Opportunities Program

Action: Interim rule.

USPS proposes to adopt, as an interim rule, new rates and conditions of

mailing for the New Market Opportunities Program. This program is

designed to meet the needs of direct mail and mail-order companies

seeking to easily and cost effectively enter the international marketplace.

It is available for companies who wish to test sending catalogs and

merchandise to any or all of the GPL destination countries. Mailers will

send catalogs using the International Surface Air Lift or VALUEPOST

service and merchandise using GPL. To assist the mailers’ test in these

markets, USPS includes other services as part of the program, including

translation of order form and company information sheet into in-country

language; and advice on catalog layout, as well as mailing list companies,

call centers, and other resources in the destination countries.

Effective on March 18, 1998. (63 Fed. Reg. 13124 (1998))

Page 86 GAO/GGD-98-104 Global Package Link Service
Appendix II 

Documentation for International Parcel

Shipments: GPL Label, Commercial Invoice,

and Air Waybill

USPS affixes CPAS-generated mailing labels on GPL parcels. The GPL mailing

labels vary slightly according to destination country and contain the data

elements provided in table II.1. They also serve as customs declaration

forms in the importing countries. USPS also may transmit certain

information electronically via CPAS to foreign customs services, such as

harmonized tariff codes, depending upon the importing country’s

requirements.

Private express carriers send commercial invoices and air waybills with

their parcel shipments. A commercial invoice is generally considered to be

an itemized list of goods shipped specifying their price and terms of sale.

An air waybill, also known as a bill of lading, is a document used when

goods are transported by ship or air that serves as a receipt for the

shipper, indicating that the carrier has accepted the goods listed and has

obligated itself to transport the shipment to the destination. The elements

of commercial invoices and air waybills are listed below.

Samples of a GPL label, commercial invoice, and an air waybill are provided

on the following pages.

Page 87 GAO/GGD-98-104 Global Package Link Service
Appendix II 

Documentation for International Parcel

Shipments: GPL Label, Commercial Invoice,

and Air Waybill

Table II.1: Key Elements of GPL Label, Commercial Invoice, and Air Waybill

Document element GPL label Commercial invoice Carrier air waybill

Date • • •

Name and address of shipper • • •

Name and address of recipient • • •

Country of ultimate destination • • •

Description of each item in shipment • • •

Number of units of each item • • •

Total quantity • • •

Unit value of each item (in currency of purchase) • • •

Total invoice value (in currency of purchase) • • •

Total weight of parcel items • • •

Total number of parcels in shipment • •

Total weight of shipmenta • • •

Harmonized code for each item b • •

Country of manufacture (origin) of parcel items b • •

Terms of sale (e.g., C.I.F) •

Shipper’s signature • • •

aShipment may contain multiple parcels.

bHarmonized codes, country of manufacture, and country of origin are provided electronically to

Purolator/PBB in Canada and Parcelforce in the U.K. although they are not included on the GPL

label.

Source: GAO analysis of information provided by DHL, FedEx, UPS, and USPS.

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Appendix II 

Documentation for International Parcel

Shipments: GPL Label, Commercial Invoice,

and Air Waybill

Figure II.1: GPL Label for Japan

Name and

address of USPS

shipper

Name and

address of recipient

Total quantity

Item(s) description

USPS

shipper’s

signature

Country of

ultimate

destination

Total weight

$29.98 Total value

Source: USPS.

Page 89 GAO/GGD-98-104 Global Package Link Service
Appendix II 

Documentation for International Parcel

Shipments: GPL Label, Commercial Invoice,

and Air Waybill

Figure II.2: Commercial Invoice

Source: GAO-generated.

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Appendix II 

Documentation for International Parcel

Shipments: GPL Label, Commercial Invoice,

and Air Waybill

Figure II.3: Air Waybill

U.S. Shipper

U.S. Shipper

John Smith

000-00005

(703) 000-0000

(000) 000-0000

Company ABC

2-23-18 Izumi

6101 Stevenson Avenue

103 River Park - Izumi

Alexandria

Higashi-Ku

VA

0000001

USA

Japan

1 Coffee Mug $14.99 USA

1 T-Shirt (100% Cotton) $14.99 USA

$29.98 $29.98 USD

0000.5

0000.2

X

1 3 lbs. 2 oz.

X X

22304

05/15/98

05/20/98

From Broker Selection

Service

Packaging

Special Handling

Does this shipment contain dangerous goods?

TRANSPORTATION CHARGES PAID BY:

DUTIES AND TAXES PAID BY:cannot estimate Customs charges

By giving us your shipment, you agree to the conditions on the back of this Non-Negotiable Air Waybill.

Certain international treaties, including the Warsaw Convention, may apply to this shipment and limit our

liability for damage, loss or delay, as described in the Conditions of Contract.

Use of this Air Waybill constitutes your agreement to the Conditions of Contract on the back of this Air Waybill. The

terms and conditions of service may vary from country to country. Consult our local office for specific information.

These commodities, technology or software were exported from the United States in accordance with the

Export Administration Regulations. Diversion contrary to U.S. Law prohibited.

This is not authorization to deliver this shipment without a recipient signature.

(For Letter or Credit shipments only)

For all U.S. Export Shipments and Shipments between the U.S. and Puerto Rico

Specify Currency

(Excludes Customs charges)

Total

Not all options available to all destinations

Dry Ice

Tick here if goods are not in free circulation

and provide C.E. (For EU only)

Dry Ice, 9, UN 1845 x

29

kg.

CA Cargo Aircrat Only

(One box must be ticked)

(Enter account no. or Credit Card no. below)

Payment

Required Signature

To

Shipment Information

Your Internal Billing Refernece Information

(e.g. IN/VAT/EIN or

as locally required)

Date

Broker s Name

Credit

Card No.

Sender s

Signature:

Courier Receipt:

WARNING:

Exp.

Date

Date

Executed:

Date:

Not all options available

to all destinations Account No.

Account No.

Tracking Number

Tracking

Number

00000 000 00

00000 000 00

International Air Waybill

Private

Express

Carrier

0000 Form

I.D. No.

City/State/Province/Country

ZIP/Postal Code Phone Sender s

Name

Recipient s

Name

Total Packages

Total Declared

Value For Carriage

Commodity Description Harmonized Code Value for Customs Country of

Manufacture

Total

Weight

Specify Currency Total Value For Customs

lbs. lbs.

kgs. kgs.

DIM

Weight

State/

Province

State/

Province

ZIP/Postal

Code

ZIP/Postal

Code

Sender s

Account Number

Phone

Phone

Company

Company

Address

Address

Dept./Floor

Address

City

City

Country

Country

For HOLD check here For Saturday Delivery check here

International Broker Select

International One-Day

International Economy

International Priority

International Standard

Recipient s I.D. number for Customs purposes

(please print and press hard) Not available to all destinations

Not all services available to all destinations

(please print and press hard)

Cannot estimate Customs charges. All shipments can be subject to Customs charges.

For Harmonized Code #s over U.S. $2,500 or those which require

a U.S. Dept. of Commerce Validated Export License, attach a

completed Shipper s Export Declaration form and chck here.

If filing by SEC 30.39 FTSR, no SED

required, however, fill in CAS or SAS.

Letter

No Yes

Yes

Recipient

Recipient

Sender

Sender

Third Party

Third Party

Credit Card Cash/Check

(As per attached

Shipper s Delcaration)

(Shipper s Delcaration

not required)

Pack Other

X

X

X

X

X

X

Origin

U.S.A.

Destination

Japan

Country of

ultimate

destination

Name and

address of

U.S. shipper

Name and

address of

recipient

Total weight

Total quantity/

item description

U.S. shipper’s

signature

Harmonized code

Country of

manufacture

(origin)

Total value

Source: GAO-generated.

Page 91 GAO/GGD-98-104 Global Package Link Service
Appendix III 

Legal Requirements for Importing Parcels

Into Japan

We reviewed Japanese customs laws and regulations for importing postal

and private express parcels into Japan. Our primary source was Japan

Laws and Regulations Concerning Customs Duties and Customs

Procedures, Rev. 2, published by the Japan Tariff Association (1990). In

addition, at our request, a Japanese law expert from the Library of

Congress researched applicable Japanese customs laws and regulations,

as well as related legal commentary. Following our review, Japan Customs

officials reviewed our compilation of requirements, and we made changes

where needed.

Table III.1: Legal Requirements for Importing Parcels Into Japan

Customs requirements

Laws and regulations applicable to

postal parcels

Laws and regulations applicable to

private express carrier parcels

A. Import shipping documentation: 

A manifest or list of goods must be

presented to foreign customs services for

import clearance.

Not required

Art. 18, para. 2, of Customs Law exempts

postal articles from requirement to present

cargo manifest. See also 1 Kanzei Hoki

Seikai 280 (commentary on Customs law,

Tokyo, Nihon Kanzei Kyokai, 1992).

However, Article 3101 of the Rules for

Enforcement of the Universal Postal

Convention requires the exporter to affix a

customs declaration on postal parcels. 

Required

Art. 15, para. 2, of Customs Law requires

filing of a declaration inward, including

cargo manifest, with Customs.

Art. 13 of the Cabinet Order for the

Enforcement of Customs Law describes

information to be included in the

declaration inward, including place of

shipment, destination, mark, numbers,

descriptions, and quantities of goods. In

the case of commercial air cargo, the

airline employees can file the cargo

manifest with Customs by entering the

shipping data into the Nippon Automated

Cargo Clearance System for Air-Cargo

(NACCS).

B. Entering shipping data into foreign

customs services’ computers: 

Importer/broker must enter shipping data

into foreign customs’ computer systems for

entry.

Not required

Art. 76 of Customs Law exempts postal

articles from the requirements for filing

import declarations and invoices with

Customs. 

Not required

The Special Act of Customs Procedures

through the Electronic Data Processing

System authorizes the use of data

processing techniques in the submission of

declarations and other documents.

However, this is not a requirement.

(continued)

Page 92 GAO/GGD-98-104 Global Package Link Service
Appendix III 

Legal Requirements for Importing Parcels

Into Japan

Customs requirements

Laws and regulations applicable to

postal parcels

Laws and regulations applicable to

private express carrier parcels

C. Use of licensed customs brokers:

Importer must use licensed customs brokers

to submit shipping documentation.

Not required

Under Art. 76, para. 3, of Customs Law,

postal articles are presented to Customs by

Japan Post. 

Not required

Use of customs brokers is not required if

the importers themselves file the import

declarations. However, under the Law

Concerning Customs Business, Law. No.

122, Aug. 1, 1967, as last amended by Law

No. 91, May 12, 1995, any person

intending to submit shipping

documentation is required to obtain a

permit from Customs.

D. Calculation of duties and taxes:

Importer/broker must calculate duties and

taxes to be verified by foreign customs

services.

Not required

Under Art. 6-2, para. 2, of Customs Law,

the customs officer determines the tariff

classification and value of goods sent by

mail based on information from the

customs declaration or invoices attached.

Required

Under Art. 6-2 of Customs Law, the amount

of customs duties payable shall be

determined by the importer/broker. In

practice, duties and taxes are in most

cases calculated by NACCS on the basis

of import data entered into the system by

importers/brokers.

E. Timing of payment of duties and taxes:

Duties and taxes must be paid or secured

prior to Customs’ release of shipment to

delivery agent.

Not required

Art. 76 of the Customs Law exempts postal

articles from the requirement in Art. 72 that

duty be paid prior to release of goods to

the post office for delivery or collection.

Art. 77, para. 3, requires payment of

customs duty and tax by the person who is

to receive postal articles prior to release of

goods by the post office.

Required

Art. 72 of the Customs Law requires

payment of customs duty by the

importer/broker prior to release of goods by

Customs. However, under Art. 9-2 of the

Customs Law, the time limit for actual

payment of duty can be extended up to 3

months after cargo release with the deposit

of security.

F. Customs service charges: 

Importer/broker must pay for customs

clearance outside of normal business hours.

Not applicable

Art. 100 of the Customs Law does not

apply to postal articles, because the Postal

Bureau could not impose additional

charges on individual importers for

clearance outside of regular business

hours. In practice, GPL parcels were not

cleared outside of regular business hours.

Required

Art. 100 of the Customs Law requires

payment of fees to Customs for customs

clearance service outside of regular

business hours.

G. Posting of bonds or security: 

Importer/broker must post a bond or provide

other security to the customs service for

storage facilities.

Not required Not required

(continued)

Page 93 GAO/GGD-98-104 Global Package Link Service
Appendix III 

Legal Requirements for Importing Parcels

Into Japan

Customs requirements

Laws and regulations applicable to

postal parcels

Laws and regulations applicable to

private express carrier parcels

H. Shipping records retention: 

Importer/broker must maintain customs

clearance records on parcels.

Not required

Shipping records are not required for

postal articles.

Required

Importers are not required to maintain

shipping records on parcels. However,

under Art. 22, para. 1, of the law

concerning customs clearance and Art. 8,

para. 2, of its enforcement order, brokers

must maintain customs clearance records

of parcels for 3 years.

I. Liability for parcel contents:

Importer/broker is subject to liability for

illegal contents contained in parcels.

Applicable if knowledgeable about the

illegal parcel contents.

Art. 109 of the Customs Law provides

penalties for importing prohibited drugs,

firearms, counterfeit money, other antisocial

articles, and/or articles infringing upon

intellectual property rights. Potential

penalties range from fines of up to 5 million

yen and imprisonment for up to 5 years.

Applicable if importer/broker is

knowledgeable about the illegal parcel

contents.

Art. 109 of the Customs Law provides

penalties for importing prohibited drugs,

firearms, counterfeit money, other antisocial

articles, and/or articles infringing upon

intellectual property rights. Potential

penalties range from fines of up to 5 million

yen to imprisonment for up to 5 years.

J. Fines for incorrect or missing declarations: 

Importer/broker is subject to liability for fines

for incorrect or missing customs

declarations. 

Not applicable

Art. 76 of the Customs Law exempts postal

articles from the requirements that

importers file import declarations and

invoices with Customs. However, Art. 114

of the Customs Law subjects senders of

parcels to a fine of not more than ¥50,000

for making false certifications on the

customs declaration required by Postal

Convention Rules.

Applicable

Arts. 12-2 and 12-3 of the Customs Law, as

amended by Law No. 61, March 26, 1997

(effective Oct. 1, 1997), requires payment

of additional taxes at rates of 10 percent to

15 percent for incorrect or missing

declarations unless a “proper reason” for

such is found. Art. 113-2 of the Customs

Law provides for penalties of imprisonment

of not more than 1 year and not more than

¥100,000, or both, for serious offenses

relating to incorrect or missing declarations.

Page 94 GAO/GGD-98-104 Global Package Link Service
Appendix IV 

Legal Requirements for Importing Parcels

Into the United Kingdom

We reviewed European Union (EU) and United Kingdom customs laws and

regulations applicable to importing postal and private express parcels into

the United Kingdom. Our primary source was Butterworth’s Customs

Duties Handbook, published by Butterworth’s (London) 1995. Following

our review, Her Majesty’s Customs and Excise officials reviewed and

commented on a draft of our compilation of requirements, and we made

changes where needed.

Table IV.1: Legal Requirements for Importing Parcels Into the United Kingdom

Customs requirements

Laws and regulations applicable to

postal parcels

Laws and regulations applicable to

private express carrier parcels

A. Import shipping documentation: 

A manifest or list of goods must be

presented to foreign customs services for

import clearance.

Not required

Art. 237 of Commission Reg. 2454/93

require that imported postal parcels be

accompanied by a C1 and/or C2/CP3

declaration, (renumbered as CN22 and

CN23), but manifests or lists of postal

parcels are not required. See also Reg. 7 of

the Postal Packet Regs.

Required

Art. 43 of Council Reg. 92/2913 generally

requires presentation of a summary

declaration to Customs that contains

particulars necessary for the identification

of goods. Art. 44 of the Council Reg. allows

the customs authorities to permit the use of

any commercial or official document (i.e., a

manifest) as a summary declaration.

Importers also may be required to present

other documents to verify the accuracy of

particulars in declaration. See Art. 68 of

Council Reg.

B. Entering shipping data into foreign

customs services’ computers: 

Importer/broker must enter shipping data

into foreign customs’ computer systems for

entry.

Not required Not required

Art. 61 of Council Reg. 92/2913 and Arts.

4a, 183, & 222-224 of the Commission Reg.

2454/93 authorize the use of data

processing techniques in the submission of

declarations and other documents.

However, this is not a requirement;

declarations etc. could also be submitted

in writing, according to Art. 61 of Council

Reg. 92/2913.

C. Use of licensed customs brokers:

Importer must use licensed customs broker

to submit shipping documentation.

Not required Not required

Arts. 5 & 64 of Council Reg. 92/2913 and

Art. 178 of Commission Reg. 2454/93 allow

appointment of representatives for dealings

with customs authorities, require declarants

to be “established in the Community,” and

provide that the declarant must have his

residence or business in the customs

territory.

(continued)

Page 95 GAO/GGD-98-104 Global Package Link Service
Appendix IV 

Legal Requirements for Importing Parcels

Into the United Kingdom

Customs requirements

Laws and regulations applicable to

postal parcels

Laws and regulations applicable to

private express carrier parcels

D. Calculation of duties and taxes:

Importer/broker must calculate duties and

taxes to be verified by foreign customs

services.

Not required

Art. 217 of Council Reg. 92/2913 requires

Customs to calculate import duties and

authorizes the use of practical procedures

for entry in accounts.

Not required

Art. 217 of Council Reg. 92/2913 requires

Customs to calculate import duties and

authorizes the use of practical procedures

for entry in accounts.

E. Timing of payment of duties and taxes:

Duties and taxes must be paid or secured

prior to Customs’ release of shipment to

delivery agent.

Not required

Reg. 5 of the Postal Packet Regs. exempts

postal parcels from the requirement for

importers to pay or make security for

payment before goods are released.

Required

Art. 74 of Council Reg. 92/2913 and Sec.

43 & 44 of Customs and Excise

Management Act require importers to pay

or make security for payment before goods

are released.

F. Customs service charges: 

Importer/broker must pay for customs

clearance outside of normal business hours.

Applicable 

Art. 239 of Commission Reg. 2454/93

requires the declarant to pay costs

associated with the examination of goods

in places or at times other than those

appointed. Art. 237 of the Commission

Reg. 2454/93 allows Customs authorities to

require postal administrations to be the

declarant.

Applicable

Art. 239 of Commission Reg. 2454/93

requires the declarant to pay costs

associated with the examination of goods

in places or at times other than those

appointed.

G. Posting of bonds or other security: 

Importer/broker must post a bond or provide

other security for storage facilities.

Not required Required

Arts. 50 and 51 of Council Reg. 92/2913

require goods to be held in temporary

storage until cleared and authorize

Customs to require security. See also Sec.

157 of the Customs and Excise

Management Act.

H. Shipping records retention:

Importer/broker must maintain shipping

records on parcels.

Not required Required

Art. 16 of Council Reg. 92/2913 requires

that records be kept for at least 3 years.

Sec. 75A of the Customs & Excise

Management Act and Reg. 9 of the

Customs Traders Regs. provide that

records may be required to be kept for up

to 4 years.

I. Liability for parcel contents:

Importers/brokers are subject to liability for

illegal contents contained in parcels.

Applicable

Sec. 50 and Sch. 1 of the Customs &

Excise Management Act provide penalties

for the improper importing of prohibited or

restricted goods. Depending on the offense

and circumstances, penalties could range

from fines (i.e., 3 times the value of the

goods) to imprisonment for a term not

exceeding 14 years (for certain prohibited

drugs).

Applicable

Sec. 50 and Sch. 1 of the Customs &

Excise Management Act provide penalties

for the improper importing of prohibited or

restricted goods. Depending on the offense

and circumstances, penalties could range

from fines (i.e., 3 times the value of the

goods) to imprisonment for a term not

exceeding 14 years (for certain prohibited

drugs).

(continued)

Page 96 GAO/GGD-98-104 Global Package Link Service
Appendix IV 

Legal Requirements for Importing Parcels

Into the United Kingdom

Customs requirements

Laws and regulations applicable to

postal parcels

Laws and regulations applicable to

private express carrier parcels

J. Fines for incorrect or missing declarations: 

Importers/brokers are liable for fines for

incorrect or missing customs declarations. 

Could be applicable when importer/broker

provides customs declaration

Reg. 8 of the Customs Controls Regs.

provides penalties for failure to provide

customs declarations in the required form.

Sec. 167 of the Customs & Excise

Management Act provides penalties for

providing declarations that are untrue in

any material respect. Depending on the

offense and circumstances, penalties could

range from fines to imprisonment for a term

not exceeding 2 years.

Applicable

Reg. 8 of the Customs Controls Regs.

provides penalties for failure to provide

customs declarations in the required form.

Sec. 167 of the Customs & Excise

Management Act provides penalties for

providing declarations that are untrue in

any material respect. Depending on the

offense and circumstances, penalties could

range from fines to imprisonment for a term

not exceeding 2 years.

Note: Laws and regulations cited: European Economic Community Council Regulation No.

92/2913, Commission Regulation No. 2454/93, Customs and Excise Management Act (1979),

Post Office Act (1953), Postal Packet (Customs & Excise) Regulations (1986), Customs Controls

on Importation of Goods Regulations (1991), and Customs Traders (Accounts and Records)

Regulations (1995).

Page 97 GAO/GGD-98-104 Global Package Link Service
Appendix V 

Legal Requirements for Importing Parcels

Into Canada

We reviewed Canadian customs laws and regulations for importing postal

and private express parcels into Canada. Revenue Canada informed us

that it has three basic programs for processing parcels through Canadian

Customs: the mail program, the Courier/Low-Value Shipments Program

(LVS), and regular cargo program. The mail program is used to process

parcels that are presented to Customs by Canada Post. The LVS program is

used to process private express parcels if they are valued at less than

$1,600 Canadian. GPL parcels, as well as comparable private express carrier

parcels, are processed under LVS because GPL parcels are currently being

delivered by a private express carrier. We included legal requirements

under the mail program to provide a comparison of the two sets of

requirements.

Our primary source was the Customs Act (Departmental Consolidation,

November 1997). We also reviewed relevant regulations issued by Revenue

Canada. Following our review, Revenue Canada officials reviewed and

commented on a draft of our compilation of requirements, and we made

changes where needed.

Customs requirements

Laws and regulations applicable to

postal parcels

Laws and regulations applicable to

private express carrier parcels

A. Import shipping documentation: 

A manifest or list of goods must be

presented to foreign customs services for

import clearance.

Not required

Sec. 12 of the Customs Act provides that

generally, imported goods are required to

be reported to the customs office as

prescribed by regulation. Mail items are

required only to have a standard

declaration form attached. Customs

inspectors examine the declaration and, if

necessary, open the item to examine any

invoice enclosed or physically examine the

contents and the parcel. See Memorandum

D5-1-1 (April 21, 1997).

Required

Sec. 12 of the Customs Act provides that

generally, all imported goods are required

to be reported to the customs office as

prescribed by regulation.

Memorandum D-17-4-0 (Jan. 20, 1997,

concerning the Courier/Low Value

Shipment (LVS) Program-Low Value

Commercial Goods, provides that

presentation of a cargo release list meets

the reporting requirements under Section

12. The cargo/release list must include (1)

a unique identifier number generated by

the courier; (2) the consignee’s name and

address; (3) the importer’s name and

address; (4) the name of the shipper,

exporter, or vendor; (5) the quantity; (6) the

weight of the shipment; (7) the estimated

value for duty in Canadian dollars; (8) a

description of the goods; and (9) the

country of origin. Also, the cargo/release

list must contain the carrier code and

name, U.S. port of exit, vehicle

identification number, office of release, and

date.

(continued)

Page 98 GAO/GGD-98-104 Global Package Link Service
Appendix V 

Legal Requirements for Importing Parcels

Into Canada

Customs requirements

Laws and regulations applicable to

postal parcels

Laws and regulations applicable to

private express carrier parcels

B. Entering shipping data into foreign

customs services’ computers:

Importer/broker must enter shipping data

into foreign customs’ computer systems for

entry.

Not required

Postal items are presented to Customs by

Canada Post, and Customs inspectors

enter data. See Memorandum D5-1-1.

Not required

Under sec. 8.1 (3) of the Customs Act,

persons may be authorized to file forms

electronically but are not required to do so.

C. Use of licensed customs brokers:

Importer must use licensed brokers to

submit shipping data.

Not required

Postal items are presented to Customs by

Canada Post. See Memorandum D5-1-1.

Not required

For commercial goods imported under the

Courier/LVS program, importers must either

clear the goods themselves or use a

customs broker. If customs brokers are

used, they must hold a license under Sec.

9 of the Customs Act. See Memorandum

D17-4-0.

D. Calculation of duties and taxes:

Importer/broker must calculate duties and

taxes to be verified by foreign customs

services.

Not required

According to Sec. 24 of the Guidelines and

General Information Part of D5-1-1, the

customs inspector determines the tariff

classification and value of goods sent by

mail on the basis of information from the

customs declaration or invoices attached

and enters data into the postal Import

Control System.

Required

Memorandum D17-1-10 outlines how to

complete the form, which requires

importer/broker to calculate duties and

taxes.

E. Timing of payment of duties and taxes:

Duties and taxes must be paid or secured

prior to Customs’ release of shipment to

delivery agent.

Not required

Under the customs international mail

processing system, Canada post collects

the duties and taxes on behalf of Customs

before releasing the parcels to the

importer. Subsection 147.(1) and the

Customs Act provide authority for this

arrangement.

Required

Sec. 33 of the Customs Act states that

goods may be released prior to the

payment of duties in such circumstances

as may be prescribed and shall be paid

thereon within a prescribed time.

Memorandum D-17-1-0 allows for release

before payment with security.

F. Customs service charges: 

Importer/broker must pay for customs

clearance outside of normal business hours.

Not required Required

Regulations Respecting Special Customs

Services (Jan. 1, 1996) require payment for

clearance outside of regular business

hours.

G. Posting of bonds or other security:

Importer/broker must post a bond or provide

other security for storage facilities.

Not required Required

The Customs Sufferance Warehouse

Regulations, pursuant to Sec. 19 of the

Customs Act, requires posting of security

for such facilities.

(continued)

Page 99 GAO/GGD-98-104 Global Package Link Service
Appendix V 

Legal Requirements for Importing Parcels

Into Canada

Customs requirements

Laws and regulations applicable to

postal parcels

Laws and regulations applicable to

private express carrier parcels

H. Shipping records retention: 

Importer/broker must maintain shipping

records on parcels.

Not required Required

The records retention period for

commercial goods imported under the

Courier/LVS program is 6 years plus the

current year. See Sec. 2 of the Importers

Records Regulations (Memorandum

D17-1-21) and subsection 17(2) of the

Customs Brokers Licensing Regulations.

I. Liability for parcel contents:

Importers/brokers are subject to liability for

illegal contents contained in parcels.

Applicable

Importers are responsible for complying

with Canadian laws with regard to

controlled, restricted, or prohibited goods.

Applicable

Importers are responsible for complying

with Canadian laws with regard to

controlled, restricted, or prohibited goods.

Such goods are not eligible for importation

under the Courier/LVS program.

J. Fines for incorrect or missing declarations: 

Importers/brokers are subject to liabilities for

fines for incorrect or missing customs

declarations. 

Not applicable

However, under Sec. 12 of the Customs

Act, the sender of a parcel could be

subject to liability for failure to provide a

customs declaration.

Applicable

As specified in Sec. 3 of the Reporting of

Imported Goods Regulations, pursuant to

Sec. 12 of the Customs Act, failure to report

goods to Customs is subject to a penalty of

$400 per shipment.

Under Sec. 33.1 of the Customs Act, every

person who fails to account for imported

goods in accordance with law or regulation

is liable to a penalty of $100 for each failure.

Page 100 GAO/GGD-98-104 Global Package Link Service
Appendix VI 

Comments From USPS

Page 101 GAO/GGD-98-104 Global Package Link Service
Appendix VI 

Comments From USPS

Page 102 GAO/GGD-98-104 Global Package Link Service
Appendix VII 

Comments From ACCA

Note: GAO comments

supplementing those in the

report text appear at the

end of this appendix.

Page 103 GAO/GGD-98-104 Global Package Link Service
Appendix VII 

Comments From ACCA

Page 104 GAO/GGD-98-104 Global Package Link Service
Appendix VII 

Comments From ACCA

See comment 1.

Page 105 GAO/GGD-98-104 Global Package Link Service
Appendix VII 

Comments From ACCA

Now on p. 3.

Now on pps. 32-35.

Page 106 GAO/GGD-98-104 Global Package Link Service
Appendix VII 

Comments From ACCA

Now on p. 3.

Now on p. 29.

See comment 2.

Page 107 GAO/GGD-98-104 Global Package Link Service
Appendix VII 

Comments From ACCA

Now on p. 29.

See comment 3.

Now on p. 71.

Now on p. 21.

Now on p. 3.

Page 108 GAO/GGD-98-104 Global Package Link Service
Appendix VII 

Comments From ACCA

Now on p. 38.

Now on p. 48.

Page 109 GAO/GGD-98-104 Global Package Link Service
Appendix VII 

Comments From ACCA

Now on p. 50.

See comment 4.

Now on p. 33.

Now on p. 34.

Page 110 GAO/GGD-98-104 Global Package Link Service
Appendix VII 

Comments From ACCA

Now on p. 46.

See comment 5.

Now on p. 75.

Deleted.

Page 111 GAO/GGD-98-104 Global Package Link Service
Appendix VII 

Comments From ACCA

Now on p. 59.

Page 112 GAO/GGD-98-104 Global Package Link Service
Appendix VII 

Comments From ACCA

Now on p. 5.

Now on pps. 13-14.

Page 113 GAO/GGD-98-104 Global Package Link Service
Appendix VII 

Comments From ACCA

Now on p. 70.

Now on pps. 72-73.

Page 114 GAO/GGD-98-104 Global Package Link Service
Appendix VII 

Comments From ACCA

Now on p. 73.

Now on p. 77.

Page 115 GAO/GGD-98-104 Global Package Link Service
Appendix VII 

Comments From ACCA

Now on p. 77.

Now on p. 13.

Page 116 GAO/GGD-98-104 Global Package Link Service
Appendix VII 

Comments From ACCA

Page 117 GAO/GGD-98-104 Global Package Link Service
Appendix VII 

Comments From ACCA

Now on p. 5.

Now on p. 70.

Now on p. 71.

Now on p. 72.

Page 118 GAO/GGD-98-104 Global Package Link Service
Appendix VII 

Comments From ACCA

Now on p. 5.

Page 119 GAO/GGD-98-104 Global Package Link Service
Appendix VII 

Comments From ACCA

Now on pps. 71-72.

Page 120 GAO/GGD-98-104 Global Package Link Service
Appendix VII 

Comments From ACCA

Now on p. 14.

Now on p. 70.

Now on p. 72.

Now on pps. 76-77.

Page 121 GAO/GGD-98-104 Global Package Link Service
Appendix VII 

Comments From ACCA

Page 122 GAO/GGD-98-104 Global Package Link Service
Appendix VII 

Comments From ACCA

The following are GAO’s comments on specific issues included in the letter

dated May 8, 1998, from the Air Courier Conference of America (ACCA).

These comments include the views of DHL, FedEx, and UPS. Other issues that

were discussed in the letter have been included in the report text.

GAO Comment 1. In its letter, ACCA said that GPL service actually began a year earlier than

indicated in the report with a USPS service called International Customized

Mail (ICM). However, USPS’ Manager of Mail Order said that ICM was not

the beginning of GPL service, since ICM involved the sending of letters, not

parcels. Further, this USPS official said that USPS’ competitors with regard

to ICM were foreign postal services, not private express carriers.

2. ACCA said that we did not address the extent to which differences in

customs treatment for GPL parcels may be the result of USPS’ “manipulation

of international law.” We did not address this issue because it was outside

the scope of our review.

3. ACCA said that it would be helpful for the report to provide more

information about the commercial implications of differences in customs

treatment. ACCA noted cost differences in the carriers’ average cost of

complying with customs requirements and average GPL revenue. Within the

scope of this review, we did not attempt to compare carrier costs with USPS

revenues. We plan to make GPL cost issues the subject of a future review.

4. ACCA said we should have more thoroughly investigated the incidence of

duty collection on GPL parcels shipped to Japan, including questioning

direct marketers about whether duties were being collected on their

parcels imported into Japan. In fact, we did question some direct

marketers about this issue, but we were not informed that duties were not

being collected on dutiable GPL parcels being shipped to Japan.

5. ACCA questioned whether we relied on a verbal statement from a Japan

Customs official that the simplified tariff discussed in chapter 3 applied to

both postal and private express parcels. In fact, we posed this question in

an electronic message to a Japan Customs official who currently works in

the Japanese Embassy in Washington D.C., and received an electronic

written response that it applied to both postal and private express parcels

under Art. 3-3 of Japanese Customs Tariff Law. This official’s statement

was contained in a draft of this report that was provided to Japan

Customs, which did not disagree with this information. In addition, we

verified with our Japanese law expert at the Library of Congress that the

Page 123 GAO/GGD-98-104 Global Package Link Service
Appendix VII 

Comments From ACCA

law applied to both postal and private express parcels. Further, we

provided Japan Customs with a copy of a document furnished by a private

express carrier suggesting that the simplified tariff applied only to postal

parcels. Japan Customs officials responded that they did not know the

source of this document and reiterated that the simplified tariff applied to

both postal and private express parcels.

Page 124 GAO/GGD-98-104 Global Package Link Service
Appendix VIII 

Comments From Revenue Canada

Page 125 GAO/GGD-98-104 Global Package Link Service
Appendix IX 

Major Contributors to This Report

General Government

Division, Washington,

D.C.

Teresa L. Anderson, Assistant Director

Robert G. Homan, Evaluator-in-Charge

Melvin J. Horne, Senior Evaluator

Hazel J. Bailey, Communications Analyst

Martin de Alteriis, Senior Social Science Analyst

Office of General

Counsel, Washington

D.C.

Jill Poses Sayre, Senior Attorney

Page 126 GAO/GGD-98-104 Global Package Link Service
Glossary

Air Waybill A nonnegotiable instrument of air transport that serves as a receipt for the

shipper, indicating that the carrier has accepted the goods listed and

obligates itself to carry the consignment to the airport of destination

according to specified conditions. See also bill of lading.

Bill of Lading A document that establishes the terms of a contract between a shipper and

a transportation company under which freight is to be moved between

specified points for a specified charge. Usually prepared by the shipper on

forms issued by the carrier, it serves as a document of title, a contract of

carriage, and a receipt for goods. See also air waybill.

Bond An obligation made binding by a money guarantee; also the amount of the

money guarantee.

Broker An individual or firm licensed to enter and clear goods through Customs.

Also referred to as a customhouse broker.

Certificate of Origin A document, required by certain foreign countries for tariff purposes,

certifying the country of origin of specified goods.

C.I.F. Cost, insurance, and freight. A pricing term indicating that the cost of the

goods, insurance, and freight are included in the quoted price.

Commercial Invoice An itemized list of goods shipped specifying their price and terms of sale.

Consignment Delivery of merchandise from an exporter (the consignor) to an agent (the

consignee) under agreement that the agent sell the merchandise for the

account of the exporter.

Consumption Tax A consumption tax is levied on a taxpayer’s expenditures for goods and

services, rather than on an individual’s income.

Page 127 GAO/GGD-98-104 Global Package Link Service
Glossary

Customs The authorities designated to collect duties levied by a country on imports

and exports. The term also refers to the procedure involved in such

collection.

De Minimis Threshold value amount at which imported goods are subject to duties and

taxes. For example, the de minimis for imported parcels to Japan is

¥10,000 (U.S.$ 80). 1

Duty A tax imposed on imports by the Customs authority of a country. Also

called a tariff or a customs tariff, a customs tax collected on foreign

products to generate revenues or discourage imports. Normally, a

country’s tariff schedules specify the amount of duty chargeable to a given

class of imports. Duties are generally based on the value of the goods (ad

valorem duties) and/or some other factor, such as weight or quantity

(specific duties), or a combination of value and other factors (compound

duties).

European Currency Unit

(ECU)

The ECU is a currency basket comprising a predetermined amount of a

number of different currencies. ECUs include most of the EU currencies.

European Union (EU) Umbrella term referring to a “three-pillar” construction comprising the

European Community and two new pillars: Common Foreign and Security

Policy (including defense) and Justice and Home Affairs (notably

cooperation between police and other authorities). The EU is governed by

a five-part institutional system, including the European Commission; the

EU Council of Ministers; the European Parliament and the European Court

of Justice; and the Court of Auditors, which monitors EU budget spending.

Exchange Rate The price at which one country’s currency can be converted into

another’s. A wide range of factors influences exchange rates, which

generally change slightly each trading day; however, some rates are fixed

by agreement.

Excise Tax Tax on the sale or manufacture of a commodity, usually a luxury item.

Example: U.S. federal and state taxes on alcohol and tobacco.

1

Using an exchange rate of ¥125 per U.S. dollar.

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Glossary

Export License A government document that permits the licensee to export designated

goods to certain destinations.

Fee A sum paid or charged for a service; a sum can be a fixed amount.

Harmonized Tariff

Schedule

A standardized commodity description and coding system for commercial

products developed by the Customs Cooperation Council.

Manifest An instrument in writing that lists the individual shipments constituting

cargo.

Penalty A sum of money or right forfeited as a consequence of undesirable or

illegal conduct.

Tariff A tax on imports or exports, usually imposed either to raise revenue or to

protect domestic firms. A tariff may also be used to correct an imbalance

of payments. The money collected under tariffs is called a customs duty or

duty.

Universal Postal Union

(UPU)

The UPU is an agency of the United Nations that governs international

postal service; it also established some customs procedures for

international mail. In 1995, 189 countries were UPU members, including

Canada, Japan, the United Kingdom, and the United States. Countries that

signed the Universal Postal Convention agreed to accept mail from other

countries and to deliver the international mail to its final destination.

Value Added Tax (VAT) A consumption tax levied on the value added to a product at each stage of

its manufacturing cycle as well as at the time of purchase by the ultimate

consumer. The VAT is a fixture in European countries and a major source

of revenue for the EU.

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