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[Senate Hearing 114-625]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 114-625

                   OVERSIGHT OF THE U.S. CUSTOMS AND 
                        BORDER PROTECTION AGENCY

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

                                HEARING

                               before the

                          COMMITTEE ON FINANCE
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              MAY 11, 2016

                               __________

          
          
          
          
          
          
          
        
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

  
          
          
          
          
          
          
          
          
                                     

            Printed for the use of the Committee on Finance
                                   ______

                         U.S. GOVERNMENT PUBLISHING OFFICE 

25-314-PDF                     WASHINGTON : 2017 
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                          Washington, DC 20402-0001

                          COMMITTEE ON FINANCE

                     ORRIN G. HATCH, Utah, Chairman

CHUCK GRASSLEY, Iowa                 RON WYDEN, Oregon
MIKE CRAPO, Idaho                    CHARLES E. SCHUMER, New York
PAT ROBERTS, Kansas                  DEBBIE STABENOW, Michigan
MICHAEL B. ENZI, Wyoming             MARIA CANTWELL, Washington
JOHN CORNYN, Texas                   BILL NELSON, Florida
JOHN THUNE, South Dakota             ROBERT MENENDEZ, New Jersey
RICHARD BURR, North Carolina         THOMAS R. CARPER, Delaware
JOHNNY ISAKSON, Georgia              BENJAMIN L. CARDIN, Maryland
ROB PORTMAN, Ohio                    SHERROD BROWN, Ohio
PATRICK J. TOOMEY, Pennsylvania      MICHAEL F. BENNET, Colorado
DANIEL COATS, Indiana                ROBERT P. CASEY, Jr., Pennsylvania
DEAN HELLER, Nevada                  MARK R. WARNER, Virginia
TIM SCOTT, South Carolina

                     Chris Campbell, Staff Director

              Joshua Sheinkman, Democratic Staff Director

                                  (ii)

                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page
Hatch, Hon. Orrin G., a U.S. Senator from Utah, chairman, 
  Committee on Finance...........................................     1
Wyden, Hon. Ron, a U.S. Senator from Oregon......................     3

                         ADMINISTRATION WITNESS

Kerlikowske, Hon. R. Gil, Commissioner, Customs and Border 
  Protection, Department of Homeland Security, Washington, DC....     6

               ALPHABETICAL LISTING AND APPENDIX MATERIAL

Carper, Hon. Thomas R.:
    Prepared statement of the National Treasury Employees Union..    29
Hatch, Hon. Orrin G.:
    Opening statement............................................     1
    Prepared statement...........................................    34
Kerlikowske, Hon. R. Gil:
    Testimony....................................................     6
    Prepared statement...........................................    36
    Responses to questions from committee members................    43
Wyden, Hon. Ron:
    Opening statement............................................     3
    Prepared statement...........................................    87

                             Communications

American Council of Life Insurers (ACLI).........................    89
Express Association of America (EAA).............................    90

                                 (iii)

 
       OVERSIGHT OF THE U.S. CUSTOMS AND BORDER PROTECTION AGENCY

                              ----------                              

                        WEDNESDAY, MAY 11, 2016

                                       U.S. Senate,
                                      Committee on Finance,
                                                    Washington, DC.
    The hearing was convened, pursuant to notice, at 10:05 
a.m., in room SD-215, Dirksen Senate Office Building, Hon. 
Orrin G. Hatch (chairman of the committee) presiding.
    Present: Senators Grassley, Crapo, Cornyn, Isakson, 
Portman, Heller, Wyden, Stabenow, Cantwell, Menendez, Carper, 
Cardin, Brown, Bennet, and Casey.
    Also present: Republican Staff: Chris Campbell, Staff 
Director; Everett Eissenstat, Chief International Trade 
Counsel; Douglas Petersen, International Trade Counsel; and 
Andrew Rollo, Detailee. Democratic Staff: Elissa Alben, Senior 
Trade and Competitiveness Counsel; Greta Peisch, International 
Trade Counsel; and Jayme White, Chief Advisor for International 
Competitiveness and Innovation.

 OPENING STATEMENT OF HON. ORRIN G. HATCH, A U.S. SENATOR FROM 
              UTAH, CHAIRMAN, COMMITTEE ON FINANCE

    The Chairman. The committee will come to order. I would 
like to welcome everyone to our hearing this morning and 
welcome the Honorable Gil Kerlikowske, the Commissioner of U.S. 
Customs and Border Protection. The Commissioner last appeared 
before this committee during his confirmation hearing in 
January of 2014. A lot has happened since then, so we are happy 
to have the Commissioner here again today.
    The Finance Committee, and in fact the entire Congress, has 
been extremely active on trade over the past year and a half. 
Just last night, the Senate by unanimous consent passed the 
American Manufacturing Competitiveness Act, a bipartisan, 
bicameral bill that will provide tariff relief to American job 
creators by establishing a reform process for the consideration 
and passage of Miscellaneous Tariff Bills or MTBs.
    Once it is signed into law, this legislation will allow 
American manufacturers to lower their production costs on parts 
that cannot be found in the United States. This is absolutely 
essential if we want American companies to be able to compete 
effectively in the 21st-century global marketplace.
    Passage of the MTB bill is long overdue, and I am very 
pleased that we have finally gotten it through Congress and 
over to the President for his signature. Many members of the 
committee--on both sides of the aisle--worked to get this bill 
over the finish line. I want to commend everybody on the 
committee, especially Senators Portman, Burr, and Toomey, for 
their efforts, and others on the Democrat side as well, 
especially the ranking member and others.
    This MTB bill closely resembles legislation we reported out 
of the Finance Committee last year. In fact, it was just about 
a year ago that we began floor debate on several of our 
committee's trade bills that all eventually became law. One of 
those bills, the Trade Facilitation and Trade Enforcement Act 
of 2015, commonly referred to as the Customs bill, was signed 
into law on February 24th of this year.
    The passage and signing of the Customs bill marked the end 
of a legislative process that began almost 10 years ago and 
underwent many, many iterations. With the law now in place, CBP 
and other agencies have the tools necessary to ensure that 
America is able to compete in the world economy while also 
ensuring that our trading partners play by the rules.
    As we all know, CBP has the dual responsibility of 
facilitating legitimate trade and travel while also protecting 
the United States from illicit goods and inadmissible people, 
such as terrorists. This dual mission is vitally important to 
ensuring the strength of our economy and the security of our 
borders. The overarching goal of our Customs bill was to 
facilitate the efficient movement of low-risk and compliant 
goods to the marketplace while also allowing CBP to focus its 
resources on goods that could do harm to the economic or 
physical security of the United States.
    To that end, I would like to take a few minutes to discuss 
some specific ways that the recently passed law enhances and 
modernizes the way CBP operates.
    The new statute includes a number of elements that were 
designed to help facilitate trade. For example, the law 
requires CBP to consult with private-sector entities to 
identify commercially significant and measurable trade benefits 
for participants in public/private-sector partnership programs. 
It also raises the de minimis level from $200 to $800 and 
modernizes the duty drawback process.
    In addition, the new law provides a number of new 
enforcement tools. These tools include a new process at CBP, 
with strict deadlines and judicial review, for dealing with 
evasion of our antidumping and countervailing duties laws and a 
significant expansion of CBP's authorities to protect 
intellectual property rights at the border. Given the 
importance of intellectual property to our economy, these new 
authorities are long overdue, and they were among my top 
priorities in crafting and passing the Customs bill.
    On top of that, the law includes a codification of the 
Centers of Excellence and Expertise, which, among other things, 
ensures that the post-release process for goods coming into the 
United States will be aligned by industry rather than the port 
of entry where a shipment arrives. These Centers provide 
tailored support to unique trading environments and eliminate 
the need for importers to work with individuals at multiple 
ports of entry that may slow down legitimate trade with 
needless and duplicative inquiries. The Centers also allow CBP 
to enforce our trade and Customs laws uniformly on a nationwide 
basis and to prevent nefarious trade practices, including what 
some have called ``port shopping.''
    The new statute also provides the necessary authorization 
and funding to fully implement the Automated Commercial 
Environment, or ACE, and requires the completion of the 
International Trade Data System, or ITDS, by the end of this 
year. The completion of ACE and ITDS will allow for the 
electronic submission of all import requirements through a 
single window and process. Once fully implemented, this will 
simplify and streamline the submission of import documents, 
reducing the paperwork burden on the private sector and 
ensuring that the CBP has the data it needs to identify high-
risk imports and importers.
    Much has changed since 2003 when CBP was first established. 
The new law is the first comprehensive authorization of the 
agency since that time, and many of the improvements that CBP 
has made internally over the years have been codified in the 
statute, including increased coordination between the two 
offices primarily responsible for trade facilitation and trade 
enforcement, the Office of Trade and the Office of Field 
Operations. We included this codification to address concerns 
that many had expressed about CBP over the years, namely, that 
its security mission could overshadow its trade mission.
    There are many other significant provisions in this bill, 
several of which were championed by members of this committee 
on both sides. I hope we will have an opportunity to touch on 
some of those in more detail today.
    While most of us are pleased with these new changes in our 
Customs laws, simply providing new tools and putting new 
mandates in place will not, in and of itself, improve 
conditions on the ground. As with the passage of any new law 
dealing with any important government agency, congressional 
oversight is going to be key to ensuring that the statute is 
implemented in a manner that reflects our intent. That is why I 
have requested Commissioner Kerlikowske to appear before the 
committee today.
    With passage of the Customs bill, the Commissioner has many 
new authorities to implement. I am looking forward to hearing 
about how the Commissioner intends to use these authorities as 
well as a robust discussion of CBP's ongoing efforts to 
facilitate trade and enforce our laws.
    With that, I will now turn to Senator Wyden for any opening 
remarks he would care to make.
    [The prepared statement of Chairman Hatch appears in the 
appendix.]

             OPENING STATEMENT OF HON. RON WYDEN, 
                   A U.S. SENATOR FROM OREGON

    Senator Wyden. Thank you, Mr. Chairman.
    Across the world, trade cheats are looking for any way they 
can to break our trade laws and rip off American jobs. Customs 
and Border Protection is often our number-one defense against 
them. It is tasked with spotting the illegally dumped steel and 
solar technology, the counterfeit chainsaws and computer chips, 
before jobs are lost or economic damage is done.
    Earlier this year, the Finance Committee spearheaded the 
first big package of Customs legislation in decades as part of 
the Trade Enforcement Act. Back when the last overhaul was 
passed, our Customs agency was fighting a very different foe.
    Suffice it to say, Gil Kerlikowske comes from the Pacific 
Northwest and is an individual who has really reached out to 
this committee. I very much have appreciated it. I remember 
those days, because I was chair of the Trade Subcommittee here 
at the Finance Committee.
    Suffice it to say, those were days when it was a lot harder 
for foreign companies to evade duties by concealing their 
identities. Now the Internet makes it easier to move quickly 
and stay hidden in the shadows. Blocking counterfeit products 
from creeping into our market used to mean stopping the right 
shipping container. Now counterfeit products are often tougher 
to trace. They can be spread out in individual boxes shipped 
straight to the doorsteps of American homes.
    Since the last Customs overhaul, China shifted its unfair 
trade practices into overdrive. And in many cases, the old 
schemes to get past our trade laws and rip off American jobs 
have taken on a new spin. So, in the wake of the Trade 
Enforcement Act becoming law, this committee has an important 
role to play in ensuring that Customs and Border Protection is 
meeting the mark on its trade mission. This mission remains as 
critical as ever, even with CBP now under the Department of 
Homeland Security. It is all about focusing like a laser on 
enforcing our trade laws, protecting American workers, and 
defending our economy.
    I have indicated that I have spoken with Gil Kerlikowske on 
this issue and he has made it clear that he wants to make tough 
enforcement--tough, aggressive, strong enforcement of our trade 
laws--a top priority on his watch.
    The early signals are, this focus is producing concrete 
results. For example, our new legislation closed a truly 
outrageous old loophole in U.S. trade law that allowed for 
certain products made by slave or child labor to be imported to 
this country. Now, Mr. Commissioner, throwing this loophole 
into the trashcan was a priority for Senator Brown and me. The 
reason why that was particularly offensive is you had a 
doctrine known as consumptive demand where, basically, 
economics trumped human rights.
    To me, that is contrary to everything that the United 
States stands for. So I have been very glad to see that we are 
starting to see real action in terms of enforcing this trade 
law. I know the agency has taken action to stop the imports of 
soda ash and several other industrial products from two 
companies that were alleged to be using forced labor. That is 
not what our country is all about. That is why Senator Brown 
and I pushed so hard for that legislation. We are glad to see 
the agency moving to bring actions against these companies.
    Now, the agency has a variety of other tools to fight 
against the trade cheats, and our new Customs legislation added 
to the kit. I will be especially interested in hearing about 
CBP's plans to implement the ENFORCE Act, which gives the 
agency 6 months to put in place procedures to ensure that 
American workers are not injured by foreign products that are 
evading our laws.
    This has been particularly important because, on another 
front, when I was chairman, we set up a sting operation to 
catch people who were cheating. Basically, we were flooded with 
requests from people who wanted to evade our trade remedy laws.
    Finally, the agency has an important role to fight unfair 
competition and job loss by cracking down on duty evasion and 
bringing in revenue for taxpayers. CBP is also responsible for 
keeping illegally harvested timber out of our market and for 
protecting consumers from unsafe products. It is essential 
that, in the fight against trade cheats, each of these 
enforcement tools is fully implemented.
    We tried in the Trade Enforcement Act to say that we were 
really going to start a new day, Mr. Commissioner, a new day 
where we would have what I call ``trade done right,'' and the 
centerpiece of it is tougher and stronger and real enforcement 
of the trade laws. Otherwise, in this trade debate, people say, 
``I hear Congress is chasing a bunch of new trade deals and new 
trade agreements. How about enforcing, first, the laws that are 
on the books? You can talk to us about new trade laws in the 
future after you have been serious and aggressive and strong 
about enforcing the laws on the books.''
    I have been pleased that you are sending a signal that that 
is your top priority. We are glad to have you here, Mr. 
Commissioner, and obviously, members feel strongly about these 
issues. I look forward to our colleagues' comments.
    The Chairman. Well, thank you Senator Wyden.
    [The prepared statement of Senator Wyden appears in the 
appendix.]
    The Chairman. Once again, our witness today is U.S. Customs 
and Border Protection Commissioner Gil Kerlikowske.
    Mr. Kerlikowske was nominated to his current position by 
President Obama, and was sworn in March 7, 2014 to this 
position.
    He oversees an annual budget of more than $12 billion and 
manages more than 60,000 employees. Commissioner Kerlikowske's 
role is to oversee the dual CBP mission of protecting national 
security objectives and promoting economic prosperity and 
security.
    As Commissioner, he runs the largest Federal law 
enforcement agency and the second-largest revenue-collecting 
agency in the Federal Government. As the head of an agency with 
such broad authorities and responsibilities, Mr. Kerlikowske 
relies on the advice of experts in their respective areas while 
making determinations on issues that could range from the 
admissibility of a foreign traveler to the classification of 
the newest smart phone.
    Before his nomination to his current position, Mr. 
Kerlikowske served as Director of the White House Office of 
National Drug Control Policy. Prior to that, Mr. Kerlikowske 
spent 4 decades serving in various law enforcement and drug 
policy positions, including 9 years as Chief of Police for 
Seattle, WA; Deputy Director for the U.S. Department of Justice 
Office of Community Oriented Policing Services; Police 
Commissioner of Buffalo, NY; and a lengthy career as a law 
enforcement officer in the St. Petersburg, FL police 
department.
    Mr. Kerlikowske, we just want to welcome you to the 
committee. We are glad to have you here. So, we welcome you 
once again to the Finance Committee. Your full written 
statement will be placed in the record. I would invite you to 
summarize your testimony at this time.

STATEMENT OF HON. R. GIL KERLIKOWSKE, COMMISSIONER, CUSTOMS AND 
BORDER PROTECTION, DEPARTMENT OF HOMELAND SECURITY, WASHINGTON, 
                               DC

    Commissioner Kerlikowske. Well, thank you, Chairman Hatch, 
Ranking Member Wyden. It is an honor to be back with you and 
the members of the committee.
    In your opening statement and in the ranking member's 
opening statement, you covered quite a bit of many of the 
important things that I was going to mention. To say that it is 
a bit intimidating with the knowledge level of trade and 
intellectual property--I think Senator Portman, in his previous 
life, has forgotten more about trade issues than I will 
probably ever know.
    It is important for me to have promised at the confirmation 
hearing, in front of you several years ago, that as much as the 
security issues were absolutely primary for me, the border 
security issues, it was very clear that our economic security 
was of critical importance also. I think there was great 
concern expressed to members during the confirmation process 
that, as a former police chief, I would solely be focused on 
the border security issues and not recognize the importance of 
the trade issues and our economic security.
    I would like to tell you that I believe in the 2-plus years 
that I have had the job, I have made every effort to make sure 
that I am open to the trade community, that I recognize the 
importance of trade, that I recognize the importance of 
leveling the playing field.
    I would also tell you that, certainly, enforcing 500 U.S. 
trade laws for 47 Federal agencies, $2.4 trillion in imports, 
$40 billion in fees that are collected, $26 million of truck, 
rail, and sea cargo containers a year, and 328 ports of entry, 
only help to explain not only the importance, by also the 
complexity of this.
    During the 2-plus years that I have had the job, I think 
that trade transformation has been primary with me: how we will 
work with, communicate, and cooperate with the private sector, 
our other governmental agencies, and the consumers, has been 
absolutely important.
    You mentioned the Automated Commercial Environment or the 
Single Window which we are on track to complete at the end of 
this year, which will give all of those, not only partner 
government agencies, but all of the importers and exporters a 
view into where their property is and where things are. So it 
streamlines and automates the process. We have already 
implemented, I believe, seven of the eight key elements. It is 
progressing well. That is, again, a result of the partnership.
    Mr. Chairman, you mentioned the Centers of Excellence and 
Expertise, so I will not belabor that, but all 10 are up and 
running as of March of this year. It adds subject matter 
expertise in a variety of commodities such as automotive, 
electronics, pharmaceuticals, et cetera that, as you mentioned, 
apply to all 328 ports of entry.
    The act passed and signed into law is tremendously helpful 
for us in many areas. I think that coming from an enforcement 
background and being able to replicate enforcement priorities 
and strategies throughout the 60,000 members of Customs and 
Border Protection will only lead to a robust enforcement of the 
variety of laws and a strong utilization of the tools that have 
been provided.
    On March 29th and April 13th, I issued what are called 
withhold-release orders to two large shipments of chemical, 
fiber, and potassium products, all as a result of the 
reasonable suspicion standard that they were derived from 
forced labor in China. In other words, they were not allowed to 
be brought here to this country. You will see more of that.
    We have established a trade enforcement taskforce. I wanted 
to call it a SWAT team, but it is a trade enforcement taskforce 
whose sole objectives will be to look for and identify 
potential violations under that reasonable suspicion standard 
and to be able to take the appropriate action that is needed as 
well as pursue enforcement actions for anti-dumping violations.
    We will continue to work closely with the members of this 
committee and certainly with the staff. Having had the 
experience of working with a number of members who are 
currently in the President's Cabinet in my earlier position has 
made relationships strong and powerful in this area.
    So I appreciate the opportunity to be here.
    The Chairman. Well, thank you so much.
    [The prepared statement of Commissioner Kerlikowske appears 
in the appendix.]
    The Chairman. I think we will have some questions. I will 
turn to Senator Grassley first, then Senator Wyden.
    Senator Grassley. Mr. Director, earlier this year, the 
Washington Times reported that you told the Border Patrol 
agents to, quote, ``look for another job if their view is 
different from those of the Obama administration.'' You 
apparently made that comment in response to criticism by Border 
Patrol agents of a new ``catch and release'' policy for agents 
in the field.
    In testimony before the House Judiciary Committee, Brandon 
Judd, president of the National Border Patrol Council, claimed 
that agents were told not to do the paperwork to initiate 
removal proceedings before releasing unlawful border crossers. 
I want to quote Mr. Judd: ``It has been so embarrassing that 
DHS and the U.S. Attorney's Office have come up with a new 
policy. Simply put, the policy makes mandatory the release 
without an NTA of any person arrested by the Border Patrol for 
being in the country illegally as long as they do not have a 
previous felony arrest, conviction, or as long as they claim to 
have been continuously in the United States since January 2014. 
The operative word in this policy is `claim.' ''
    Such a remark and such a policy sends a signal to the men 
and women in the field protecting our borders that they are not 
valued and that their mission to secure the homeland is not 
taken seriously. So a very simple question: do you regret 
telling the agents to find a new job if they do not like the 
administration's immigration enforcement policies?
    Commissioner Kerlikowske. I will be happy to answer that 
question, but I would like to just for a second provide a 
little bit of the context. For 14 years, I ran two of the 
largest police departments in this country. Not every police 
officer agreed with every administrative decision or decisions 
that were made by Mayors and city council members.
    If you were unable to follow the rules and the regulations 
and the lawful and ethical authorities that were put forward--
if you were not able to do that, then you should not hold that 
position. You should look for something else. That is exactly 
the statement in that context that I would make to members of 
the United States Border Patrol, who by the way, I believe 
follow the rules, regulations, and laws as authoritatively as 
possible.
    During the 2-plus years that I have served in this 
position, the United States Border Patrol has not had a 
stronger supporter. So I would answer your question and say, 
no, in the context I explained, I do not regret my statement.
    Senator Grassley. Well, that is sad that you would not 
regret that, because what they want to do is protect our 
borders, and by this policy, they are not able to protect our 
borders.
    Back in November, I and House Chairman Goodlatte sent 
Secretary Johnson a letter asking about aliens from countries 
of concern, for example, Syria, Iraq, and Afghanistan, who have 
been apprehended while attempting to cross the U.S. border. The 
letter asked for information related to each such apprehension, 
including whether the alien made a claim of asylum, whether the 
alien was detained, and what, if any, relief from removal or 
immigration benefit the alien was granted. It is unacceptable 
that 4\1/2\ months have gone by and the department has not 
answered. So let me ask you: have Syrians been apprehended at 
the border in the last fiscal year? I can say the same things 
for Iraqis or Afghanis, but have any been apprehended?
    Commissioner Kerlikowske. Yes. There have been 
apprehensions. I think at the end of each fiscal year, when I 
take a look at the numbers, we apprehend people from well over 
100 different countries. So you are correct, Senator.
    Senator Grassley. Should we be concerned that terrorists 
posing as refugees are potentially slipping across the border?
    Commissioner Kerlikowske. I think we should be concerned 
about anyone attempting to enter the country illegally, and 
particularly from special interests countries where there could 
be even greater concern that they could be a threat. That is 
why we put into place many oversight mechanisms for the people 
who are apprehended.
    I know, Senator Grassley, that your letter is very 
important to Secretary Johnson. It is also a bit complex, 
because it does involve CBP, USCIS, and Immigration and Customs 
Enforcement.
    Senator Grassley. Whatever it takes--4 months. Do what you 
can to get us an answer as soon as possible.
    Commissioner Kerlikowske. I will.
    Senator Grassley. My last question: in July 2015, the 
Mexican drug lord, El Chapo, escaped from maximum security 
prison. He was recaptured by Mexican police in January of this 
year. El Chapo's daughter is a U.S. citizen, and she told the 
Guardian newspaper that the drug lord visited at her California 
residence twice in 2015, during the period that he was on the 
run from police after escape.
    Can you with 100-percent certainty say that these reports 
are false and that El Chapo did not enter the United States 
during the 7-month period after his escape from Mexican prison?
    Commissioner Kerlikowske. I can say that we looked into 
that very thoroughly. We had absolutely no piece of evidence 
other than her anecdotal remark to a reporter that he had 
entered the country, but I certainly cannot say with absolute 
authority that no, that never happened. We just never found any 
hint or scintilla of evidence that he ever did.
    Senator Grassley. I assume you interviewed the daughter?
    Commissioner Kerlikowske. I do not know whether the 
daughter was interviewed by Customs and Border Protection. That 
would actually be either through the FBI or through Immigration 
and Customs Enforcement, but I will be happy to ask if that was 
done.
    Senator Grassley. Yes, and if it has not been done, that is 
a sad comment.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator.
    Senator Wyden?
    Senator Wyden. Thank you, Mr. Chairman. Let us go to the 
ENFORCE Act, if we could, Commissioner. This was a special 
priority of mine. It was begun when I was chair of the 
subcommittee. Many colleagues on both sides of the aisle worked 
on this.
    What I was just stunned by was just how brazen some of 
these so-called ``trading partners'' have been with respect to 
trying to get around our trade laws. In China, for example, 
there were websites on how to avoid duties, how to avoid their 
legal responsibilities, and offers to provide services to carry 
this out.
    So you had the website, and then people on top of that were 
talking about how they could offer services. Basically, just 
scofflaws thumbing their nose at U.S. trade law enforcement 
because they knew they could get away with it, because too 
often they would look at trade enforcement and there was not 
any there.
    So that is what we began pushing back on when we wrote the 
law, and obviously, these past remedy laws were pretty much 
useless in protecting American jobs, so we wanted to turn the 
page and go to something different.
    Why don't you begin today by describing how you are going 
to implement the ENFORCE Act within the 180-day deadline. In 
other words, this is going to be a special priority of mine and 
of this committee. I think it would be very good if you would 
kind of go step-by-step. Obviously, you are going to have to 
have some conversations with the domestic industries directly 
impacted by evasion, but if you would, tell us step-by-step how 
you are going to implement the law.
    Commissioner Kerlikowske. So one is, I have made it very 
clear, and it has been very clear from not only this committee, 
but also from the intent of Congress, that a much more 
aggressive and assertive enforcement posture is needed within 
Customs and Border Protection. Announcing the fact that we have 
the Trade Remedy Law Enforcement Division, adding essentially a 
SWAT team within Customs and Border Protection to look for 
these violations, is important.
    We will plan on issuing an interim final rule within that 
180-day process. We have certainly heard quite a bit in my 
meetings with nongovernmental organizations and the 
stakeholders, some of whom are represented in this room, what 
they hope and would like to see that would be possible to give 
us a more forward-leaning posture when it comes to that 
enforcement.
    So the Trade Remedy Law Enforcement Division, the fact that 
we are communicating a change in the way we go about looking 
for these violations--too often I would see that we would 
request or want a position paper issued by a nongovernmental 
organization. I said, we do not need as much of a formal 
position as just give us a tip. Just give us the information 
and we will proceed with it, because not everyone is equipped 
or has the finances within the private sector to do that.
    So there are a host of duties that we have taken and a host 
of outreach mechanisms that we have taken to make sure that we 
are going to be doing the enforcement. I think our staff, my 
staff, has heard more than 100 times--at least 100 times--that 
we have to put points on the board. That means those withhold-
release orders, seizures, going after the money. And we can be 
much more aggressive than, in fact, we have been in the past, 
and we will be.
    Senator Wyden. And the point is, because I think--I have 
used that phrase, ``points on the board.'' The point is, you 
are not going to bring thousands and thousands of tough 
enforcement actions in the first 15 minutes. The point is to 
try to bring a handful of really well-targeted enforcement 
actions so that these rip-off artists say, it is a new day out 
there, that you cannot just brazenly violate the trade laws and 
expect to get away with it.
    I have sensed that that is your take as well. I appreciate 
it.
    Up to now, the agency has used what is called the ``e-
Allegations'' system to accept allegations of evasion. How does 
that system differ from ENFORCE as you see it?
    Commissioner Kerlikowske. So the e-Allegations system has 
been around for several years, and it allows more 
sophisticated, more knowledgeable organizations or stakeholders 
to give us the information electronically. I do not think that 
is much different than when we would get tips in a police 
department.
    There was one, I think, primary problem with the e-
Allegations system, and that is that--going back to my law 
enforcement experience--if your home was burglarized and we 
took a report and then we never told you what happened, what we 
were doing, what did the investigation produce, did we get your 
property back--if we never closed the loop with you, you would 
become very frustrated and maybe, perhaps, not report a crime 
again.
    I think that closing the loop with the people who provide 
the e-Allegations within the constraints of the law that we 
have to follow has been very important, and I think that the 
trade community has heard that message, and we are going to do 
a better job.
    Senator Wyden. One last question, if I might, on the 
implementation of the forced labor changes. As I indicated, I 
thought that the previous loophole was just offensive to all 
the values that the country stands for--this notion that 
somehow economics trumps human rights and concern for people 
who have been exploited in the past.
    As I understand it, nongovernmental organizations, and 
importers and others, are asking some questions as well on how 
this is going to be implemented. I can tell you that at home, 
in Oregon, I was particularly proud, because our chocolate 
industry is stepping up. A company called Tony's Chocolonely--
it was Chocolonely because he was the only person at that time, 
the only person in the chocolate industry, who was willing to 
say, I am not going to condone these forced- and slave-labor 
kind of practices. They are really stepping up.
    But there are a lot of questions from the nongovernmental 
organizations and importers on how you are going to implement 
the provision. So if you would, your thoughts on that.
    Commissioner Kerlikowske. Sure. Our standard of 
``reasonable suspicion'' is, frankly, a relatively lower 
moderate standard from the standard ``beyond and to the 
exclusion of every reasonable doubt.'' So we can make that 
decision, and of course, if that decision is incorrect--that in 
fact it was not produced from derived labor, prison labor--
there can be an appeal. We are certainly willing to listen and 
to go through the process of those appeals, but it is 
absolutely critical that we go beyond waiting for a petition, 
that we take the information that we need.
    I think I was never more moved in this process than just a 
couple of weeks ago when I issued the withhold/release orders. 
Those came about from Mr. Harry Wu, who just recently passed 
away, a renowned human rights activist and active in the 
Pacific Northwest, who was so pleased and proud of our actions.
    Senator Wyden. Thank you.
    The Chairman. Thank you.
    Senator Menendez?
    Senator Menendez. Thank you, Mr. Chairman. Mr. Chairman, 
the United States is the world's leader in trusted and 
recognized brands, the ones in demand, the ones that command 
the best prices and, therefore, the ones most vulnerable to 
knockoffs. It is our hard-earned reputation as a global 
economic and cultural leader that makes us a target. That makes 
protecting that reputation and the investments that we put into 
them so important.
    That is why I know that my colleagues are as shocked as I 
am by the latest report by the OECD showing that of nearly half 
a trillion dollars in global trade that is made up of 
counterfeited and pirated goods, the United States is the 
biggest victim of all, accounting for fully 20 percent of the 
knockoffs. Postal parcels are the top method of shipping these 
fake goods, amounting for 62 percent of seizures over 2011-
2013, reflecting the growing importance of online commerce and 
international trade and the ease of evading detection when 
using small packages.
    Now, this issue was first bought to my attention 2 years 
ago by families and businesses in New Jersey hurt by 
counterfeit prom and bridal dresses that they were tricked into 
purchasing online. They looked at one and they thought it was 
the same quality, but for far less money, and they purchased 
it.
    Now, I understand that online search engines, like Google, 
bear some responsibility, as they seem to aid and abet these 
counterfeiters by failing to police the use of copyright-
protected imagery in online ads. But CBP also has a duty to 
prevent fake products from entering our market. Now, the OECD 
has confirmed that counterfeit shipments are one of the biggest 
issues confronting our Customs and border enforcement system 
today.
    That is why I am pleased that the Customs bill that we 
passed included report language that I authored with you, Mr. 
Chairman, to raise the enforcement priority for counterfeit 
products, especially those that are marked as ``gifts'' to 
evade Customs duties and detection.
    Now, I have two samples here of packages which contain 
counterfeit dresses sent to U.S. Customs. Both of them were 
sent from a business address in Suzhou, China, and are clearly 
marked as gifts. So the question, Commissioner, that I have for 
you is, does a package marked as a gift that originates from a 
business address in a country like China, which is documented 
by CBP, the OECD, and other sources as being a major source of 
counterfeits, trigger any red flags for our agents? What is the 
typical screening process that these packages go through, and 
can you share with us what specific steps CBP is taking to deal 
with this in compliance with the report language issued by the 
committee?
    Commissioner Kerlikowske. Senator Menendez, I think you 
have clearly hit on one of the most difficult challenges we 
face right now with the absolute explosion of e-commerce. We 
have personnel at DHL and personnel in our international mail 
rooms, et cetera, but the volume and the flow are significant.
    Unlike manifests on containers coming into the United 
States, we do not get manifests on the shipping, on the port. I 
would tell you that the expertise is more of an art, in fact, 
than anything, but the expertise of the people whom we have 
assigned to these locations, plus the cooperation we get from 
the private sector and from the United States Postal Service, 
has been very helpful.
    So I could not tell you definitively that a package coming 
from China will automatically be taken out and then looked at 
or searched, but we do look at these things very carefully. 
Every single day, we detect everything from club drugs to not 
only the intellectual property rights violations as you just 
mentioned, but a variety of other things, including counterfeit 
identifications. More needs to be done though.
    Senator Menendez. Let me ask you, Commissioner--I 
appreciate that.
    I assume we use algorithms in shipping to decide which 
containers we are going to look at. We look at places and/or 
companies that we know consistently are producing counterfeited 
products and sending them as gifts. There must be some 
technological ability to at least begin to narrow the window 
and help us focus our agents' time in a way that is more 
effective. I would like to work with you on this, because I 
think it is incredibly important. We cannot afford to lose 20 
percent of half a trillion dollars.
    Commissioner Kerlikowske. Senator, I could not agree more. 
Thank you, and algorithms, country of origin, addresses of the 
shipper, who is the forwarder, if there is a broker involved--
and maybe with the de minimis we will see less of that. I look 
forward to working with your staff on this.
    Senator Menendez. Thank you.
    One final thing, Mr. Chairman: I am glad to see that, by 
unanimous consent, the MTBs were passed. But one of the things 
that was not included in there and that I would like the 
Commissioner to explain to members of the committee--CBP is 
statutorily barred from refunding erroneous collected duties 
from companies. So these are, in fact, companies that are told, 
you have to pay this duty. They pay it dutifully, and then they 
appeal. Then their appeals are upheld, and they say, yes, we 
charged you the wrong tariff or the wrong duties. Does CBP have 
any authority to right these wrongs without congressional 
action?
    Commissioner Kerlikowske. I think you caught me there, 
Senator. When the chairman mentioned that a certain amount of 
subject matter expertise exists far within CBP and not with me, 
on this issue, I am going to ask you----
    Senator Menendez. I see that you have subject matter 
authority sitting behind you that suggests that maybe my 
question is on point.
    Commissioner Kerlikowske. Okay.
    Senator Menendez. If that is the case, Mr. Chairman, I know 
that we collectively as Republicans and Democrats alike 
certainly want people to pay their fair taxes, but we do not 
want them to pay that which they are not responsible for. And 
when they do, and it is upheld that they have paid more than 
they should, then we should have the wherewithal to find a 
means--and I would hope to work with the chairman--to get these 
people reimbursed.
    I have companies in New Jersey that tell me, they paid as 
they were told, but they knew that it was wrong. They appealed, 
they won, but they cannot get reimbursed because they are 
statutorily barred from doing so.
    The Chairman. We have to work on that.
    Senator Menendez. Thank you, Mr. Chairman.
    The Chairman. Senator Carper, you are next.
    Senator Carper. Thanks so much.
    Commissioner, I want to thank you for your service.
    The Chairman. Senator, excuse me. I am going to have to go 
vote. Senator Brown will be next, then Senator Portman.
    Senator Carper. All right--thank you. Thanks, Mr. Chairman.
    Commissioner Kerlikowske, it is great to see you. Thank you 
for your service in so many different ways. It is a pleasure to 
work with you in my role--not just here, but also in the 
Homeland Security Committee, which I serve as the senior 
Democrat.
    I want us to be helpful to you. You have a tough job, and 
we want to make sure that we are being helpful to you and to 
the folks you lead. I have some concern about what seems to be 
some serious understaffing issues at CBP. Your own workforce 
staffing model shows the agency is down by, I think, about 
2,000 agents from what I understand you need. While Congress 
has provided funding in the past to hire a number of new 
officers, I understand that you have not been able to fill all 
of these slots or keep pace with retirements. Could you just 
take a minute and please discuss the challenges you face with 
respect to hiring? I am just going to keep your answers very 
short and crisp.
    Commissioner Kerlikowske. Every law enforcement agency I 
know, including Customs and Border Protection, is having some 
variety of difficulty hiring--State and local level. We have 
done a better job. You appropriated, Congress appropriated, for 
2,000 people. We are about 750 below that total.
    We have been working with members of Congress to include 
looking at the ages that we can hire people, either at an older 
age or letting them stay on longer. We have reduced the amount 
of time that it takes to process someone from well over 360 to 
400 days to about 160. We are going to move as aggressively as 
we can to fill those positions.
    Senator Carper. Thank you. I understand that there is a 
statutory requirement to polygraph all applicants, and that 
might be one source of significant delay. Is that the case? If 
so, is there some adjustment called for?
    Commissioner Kerlikowske. So we have been looking at and 
have made some adjustments, not in the quality or reducing our 
standards for hiring but, in fact, not taking as long on the 
polygraph examination, which can be up to 8 hours when, in 
fact, it would be someone whom we know we are not going to hire 
after the first 15 minutes of conversation during the 
polygraph, and we can move on to someone else.
    So the polygraph is important----
    Senator Carper. That is what my father would call ``good 
common sense.''
    Reimbursable service agreements--I understand that CBP has 
a pilot program that allows private entities such as airport 
authorities or others to reimburse CBP for the cost of 
additional hours of CBP inspections. As I understand it, there 
is growing demand for these agreements--more so than is allowed 
under current law.
    Could you just take a moment and discuss with us how these 
programs work and whether, in your view, they should be 
expanded? Again, just very briefly.
    Commissioner Kerlikowske. They can pay for additional 
services at land borders. As you know, in Philadelphia they pay 
for additional agricultural inspectors' overtime to cover 
produce coming in to make sure it is fresh. Unfortunately, we 
are capped when it comes to the number of airports that can be 
funded or apply for that or be accepted once a year. So we, 
actually, would be very appreciative of moving forward to 
having more of these organizations. As long as we are 
transparent about how many people you get for how many hours 
and how much it will cost, it seems that private business has 
been very accepting of this and recognizes the need.
    Senator Carper. Good. I am going to ask my staff to follow 
up with your folks on that, please.
    The third question I have relates to fees. In my view, 
things that are worth having are worth paying for. That 
includes inspection services by CBP, officers at ports of 
entry. For a number of years, I have supported the 
administration's proposal to raise, somewhat, the Customs fees 
to help pay for CBP officers. I was upset when Congress, last 
year, redirected some of the fee money as an offset for the 
transportation bill. I thought that was shameful.
    Do you agree that we should increase the fees, somewhat, 
that have traditionally been dedicated to CBP, and keep those 
fees reserved for that purpose, not for some other purpose? 
What impact would that have on staffing?
    Commissioner Kerlikowske. The President's budget request, 
even at the time it added the additional 2,000 Customs and 
Border Protection officers, also included funding for an 
additional 2,300, as our workload staffing models showed. Those 
2,300 would be paid for by fees, some of which have not been 
elevated in many years. I think it would be helpful to have 
that funding source go to Customs and Border Protection to 
essentially pay for the services that we render.
    Senator Carper. I have 20 seconds left. Just take those 20 
seconds. Give us one other idea of something that we need to 
do, we could do, under the legislative branch that would help 
make your folks more productive, more effective.
    Commissioner Kerlikowske. I think that the support for--we 
are looking, for example, at radios and vehicles, et cetera. 
Many of these things are not as well-funded as we are with 
personnel. We need to invest in technology, and we need to 
support the equipment that they need to do the job.
    Senator Carper. Thank you again. Thanks for your 
leadership.
    Senator Brown. Mr. Kerlikowske, thank you for joining us. 
Since the enactment of the Customs reauthorization, how many 
additional full-time employees have you tasked with ensuring 
that our ban on the importation of goods made with forced 
labor, to which Senator Wyden referred, is fully enforced?
    Commissioner Kerlikowske. We added an additional 24 people 
to the taskforce to begin that targeting process, but we are 
also, at our national targeting center, making sure that they 
are as wary about these types of violations as they have been 
about other types of things that could be harmful coming into 
the country. So we are starting out with the 24 people working 
through our targeting processes to enhance forced labor and 
anti-dumping enforcement.
    Senator Brown. Is it your goal to block all imports made 
with forced labor from coming into the U.S.?
    Commissioner Kerlikowske. Yes.
    Senator Brown. How do you plan to achieve that other than 
the number of employees? Talk that through briefly, please.
    Commissioner Kerlikowske. I think the history is, and 
certainly the outreach that not only we have done, but the 
outreach that the nongovernmental organizations have made to me 
as you know--and we very much appreciate you setting up a 
meeting here in the future with these organizations. They have, 
essentially, the boots on the ground in these foreign countries 
where they are incredibly knowledgeable about things that could 
be made with forced labor.
    We need their information. We need to be able to get back 
to them that we have acted upon their information, because that 
exchange is going to be critical. I think that is going to be 
important.
    The other part is that we just received authorization for 
nine additional foreign government attaches funded through the 
State Department. So the more people that we have overseas to 
learn about this information, the better we will be able to 
target.
    Senator Brown. Does that suggest, Mr. Kerlikowske, that you 
will self-initiate investigations into whether imports are made 
with forced labor, because CBP has never done that before. Do 
you plan to do that?
    Commissioner Kerlikowske. I do plan to do that. The 
response has always been that we want a petition, that we will 
assist in the petition to make sure that it meets all of the 
requirements. I want us to be leaning much more forward, and 
where we get information, we should be able to follow it up, 
and we should be able to utilize other investigative resources 
within the Department of Homeland Security and throughout the 
Federal Government to move aggressively on these, not just wait 
for the petition.
    Senator Brown. That is so important. This will not be done 
well without self-initiation. So thank you very much for your 
assertion there.
    One other issue I want to talk about is--in your 
estimation, what percentage of steel imports coming into the 
U.S. are evading antidumping or countervailing duties?
    Commissioner Kerlikowske. I cannot answer. I do not know 
the percentage, but I know that whether it is through live 
entry, or 
single-transaction bonds, or a variety of other mechanisms that 
we are utilizing right now, steel is at the top of the priority 
list. That was made clear to me last week in Salt Lake City, at 
the American Iron and Steel Institute Conference, by all of the 
members there.
    Senator Brown. It is very important to see what CBP can do 
to get that percentage down to zero. We know the number of jobs 
lost all over the--particularly the industrial Midwest, but 
throughout our economy, because of illegal dumping of steel.
    Commissioner Kerlikowske. And we are working with too, the 
United Kingdom and their issues with steel, the government of 
Mexico, the government of Canada, and also the government of 
Australia.
    Senator Brown. Thank you, and thank you for your work in 
your previous job too in my State and elsewhere. Thank you so 
much, Mr. Kerlikowske.
    Commissioner Kerlikowske. Thank you.
    Senator Portman [presiding]. Thank you, Senator Brown. And 
Senator Brown, thanks for your work on the slave labor import 
issue that is a part of this Customs bill, but also Senator 
Brown just talked about the steel side. Let me just make a 
specific point here.
    Senator Brown and I have worked on some cases together, 
including one that has to do with tubular product, called OCTG, 
Oil Country Tubular Goods. Companies in Ohio, like U.S. Steel, 
were very happy when we won a case that Senator Brown and I 
both supported, and we were able to put in place some relief.
    Now they are seeing evidence of fraud, circumvention, 
numerous Chinese websites actively promoting their ability to 
evade this specific tariff that is in place by falsifying the 
country of origin of 
Chinese-made pipe product. So it is happening right now as we 
talk.
    One of the things that we got into this legislation, as you 
know--I know Senator Brown supports it strongly as well--is the 
ENFORCE Act. I have been a supporter of the ENFORCE Act 
because, even when we are successful in these cases, if there 
is evasion, it still does not help the workers we represent. So 
Senator Brown and I got legislation through called the Level 
the Playing Field Act. It changes the way you deal with 
antidumping and countervailing duty cases, as you know. The 
Commerce Department, ITA, and ITC are now being asked to 
implement that. We are aggressively pursuing their 
implementation of that.
    That will help. It gets relief faster. It is more 
meaningful relief--shut down the business and fire people in 
order to get the relief you need--but it does not help if you 
do not have the ENFORCE Act enforced as well. The ENFORCE Act 
will keep people from evading that countervailing duty, duty, 
or antidumping duty by going to another country.
    I will give you another example. There are some folks at 
Pennex Aluminum in Leetonia, OH. Again, we helped them to win a 
countervailing duty case and an antidumping case against unfair 
Chinese aluminum exports. By the way, it allowed them to create 
more jobs and to invest $38 million in their plant. So this is 
a relatively small aluminum plant in Ohio that was able to 
benefit directly.
    Now they have a new concern. The Chinese aluminum producers 
are evading Customs duties by shipping their products through 
different countries, under different names.
    American Spring Wire employs 250 people in Bedford Heights, 
OH and can tell the same story. American Spring Wire was a 
successful petitioner in a trade case against China, and won 
significant duties on imports of steel wire from China. Chinese 
traders circumvented the orders by transshipping the wire 
through Malaysia. Imports from Malaysia, Mr. Commissioner, were 
nonexistent in 2008, like none. They increased to 4.7 million 
pounds in 2009, and then surged to 32.8 million pounds in 2010, 
while imports from China, by the way--because of the orders 
that were in place--declined.
    So this is happening, and these duty evaders are becoming 
more brazen every day. Just yesterday I received an e-mail from 
a group that specializes in duty evasion. Someone had passed it 
along to my office. The e-mail explains how the company, this 
duty evasion company, provides a professional trading solution 
to help Chinese exporters sneak their products past you, past 
the U.S. Customs Service, by routing them through Malaysia.
    So I am very concerned about this issue, because we can 
have great successes on the law, and yet they can evade. I 
guess one question I would ask of you is, we have given you the 
tools now, and specifically, CBP has the tools now to 
strengthen their investigations, to make it a de facto case, 
rather than having to prove intent. We have given you the tools 
you need. Are you putting them in place? I am told that last 
month some of your senior officials said that you do not expect 
to meet the deadline for implementing these regulations. I hope 
that is not true. Can you comment on that today? Are you guys 
going to meet the deadlines? Are we moving ahead with these 
regulations?
    Commissioner Kerlikowske. There are a number of deadlines 
that were included in the passage of the law. It is our 
intent--although there are several that are very challenging 
for quickly working and putting together--but it is my intent 
that we will meet those deadlines, including an interim final 
rule on the issue that was discussed earlier. So we would like 
to do that.
    Regardless of, right now, the importance on the rulemaking, 
our posture to do the enforcement and listen to, whether it is 
the wire companies in Alabama or Ohio, is very critical to us 
because of the transshipment issue. So we need to be more 
aggressive. We need to have better outreach, and we need to be 
able to take those tips and that information and move forward 
on the transshipment which we see.
    This is frustrating to me, as I know it is to you and the 
people you represent.
    Senator Portman. Yes, again, we are facing a real crisis in 
Ohio right now on steel. We know that there is over-capacity 
overseas. It is being dumped in America. We have been winning 
cases. Foreign steel imports have now taken a record 29 percent 
of the U.S. market share. That was 2015 numbers. We believe it 
is higher in 2016. We have had 13,500 layoffs in the last year, 
over 1,000 layoffs in Ohio alone, of steel workers.
    Outside of this effort to enforce the ENFORCE Act which we 
talked about today, what else have you been doing that could 
help the administration to address this steel import crisis, 
and is there coordination between what you are doing and what 
Commerce at ITA and what the ITC is doing?
    Commissioner Kerlikowske. I have now attended a number of 
meetings with Secretary Pritzker, Secretary Lew, and a number 
of others. I worked closely with Ambassador Froman before he 
became the USTR. So the coordination and the fact that we have 
embedded over at USTR someone from Customs and Border 
Protection all ensure, I think, better coordination.
    Also, very much, along with the President's Economic 
Advisor, Mr. Zients, we are very much onboard with our role in 
the enforcement side of this and moving as aggressively as we 
can as an organization to do the enforcement. Also as the 
ranking member had said, to send a message to those who would 
evade and also, of course, to send a message to the 
stakeholders, to the people who are most impacted and affected 
by this: (1) we are listening to them; (2) we are going to take 
their information; and (3) we are going to get back to them 
with what we found and what we are going to be doing to up the 
game when it comes to enforcement.
    Senator Portman. We need to see some of those actions. We 
need to see, as you say, that message being sent by actual 
successes and blocking what we know is going on. And I will 
provide you with this e-mail I received yesterday as just one 
example of what is happening in the real world. You are an 
enforcement guy. We expect you to enforce it strongly.
    By the way, Senator Brown, I missed you in Cleveland at our 
hearing, which was very sobering, about the prescription drug 
and heroine epidemic.
    Senator Casey?
    Senator Casey. Thanks very much.
    Commissioner, thank you for your testimony and for your 
public service, which did not just start with this job. I know 
you have been in law enforcement a long time. We appreciate 
that.
    I want to raise two basic issues with you, one that will 
focus on a question, the other is a brief statement, and I will 
follow it up more in writing.
    One of the biggest challenges we have specifically, as it 
relates to ISIS but also counterterrorism generally, is cutting 
off financing, shutting down their money. We took a good step 
in the right direction recently when the President signed into 
law a bill that I introduced in the Senate, the so-called 
``Protect and Preserve International Cultural Property Act.''
    Basically, the core of it is restricting the import of 
cultural artifacts that have been illicitly or illegally 
smuggled out of Syria. When they do that, they create a revenue 
stream.
    So that is a good step in the right direction. The 
administration, as you know, has taken a lot of steps to shut 
down financing, but we have to be dogged and vigilant on this 
because, if we do that, it is almost as important as any other 
part of our strategy. Part of your work will involve 
implementation of import restrictions as it relates to this. So 
I just urge you to do a couple of things.
    Number one, keep working on accelerating the training for 
your officers; number two, make sure you are sharing 
information and best practices as appropriate in this area and 
then partnering with nations on the front line. We have a lot 
of work to do on this. What I will do is follow up with a 
question for the record.
    The second issue is one that you have heard about already 
from both Ohio Senators and maybe others whom I missed. It is 
unfair, illegal competition from countries like China. In the 
case of China, they have engaged in state-sponsored, cyber-
enabled economic espionage--so, a higher sophistication of 
unfair competition.
    In 2015, there were over 12,000 steel industry layoffs 
announced. In 2014, steel imports to the U.S. increased by 36 
percent. Some of these numbers, I know you have heard. Then 
there is this transshipment issue which was raised before: 
Chinese manufacturers and distributors engaging in this 
transshipment of steel to the U.S. through third parties, 
whether it is Malaysia or Vietnam.
    I guess I would ask you, in light of existing authority, is 
there more that you need to be able to counteract that, more by 
way of authority, or more by way of tools or dollars?
    Commissioner Kerlikowske. I think at this point we are very 
engaged in making sure that we meet the deadlines of the 
authority that we have been given, but at the same time, we 
want to make the changes within the organization to look at 
that culture of being, frankly, much more aggressive or much 
more assertive on the investigative standpoint, using the 
authority of, essentially, reasonable suspicion to make that 
withhold/release order.
    I have made it clear that I would rather err on the side of 
issuing that order. Then in fact, if it was not as a result of 
derived goods, or antidumping, or countervailing duty issues, 
that they could very much appeal that and that would be 
satisfied. But I think the message that we are going to be 
using those authorities more assertively will send a powerful 
message to those who would violate our trade laws.
    Senator Casey. I think it is critical. We know that in a 
State like Pennsylvania--it is true of Ohio and a number of 
other States that are directly affected by this--you have folks 
who have worked their whole lives, developed a highly skilled 
workforce--and in the case of an individual--skills they have 
developed to make steel, to out-produce the world, to out-
innovate the world, and just when they are prepared to do that, 
that is when the unlevel playing field emerges and they get 
undercut in the most pernicious way imaginable.
    So just like I have continued to challenge folks like you 
on homeland security and shutting off financing, we ask you as 
well to be determined and vigilant on this issue of just 
insisting that China and countries like it play by the rules. I 
think that it is that simple. We may have a follow-up question 
on that as well. I will make sure that we get the first issue 
to you in writing.
    Thanks very much.
    Commissioner Kerlikowske. Thank you, Senator.
    Senator Portman. Thank you, Senator Casey. I appreciate you 
raising the issue of Ohio and Pennsylvania and the fact that we 
are looking for a level playing field. If we have that, we will 
be okay. But that means that, on the front lines, we have to 
continue to not just enforce current law, but enforce this new 
law, what we gave you in the new tools.
    Senator Isakson?
    Senator Isakson. Thank you very much, Senator Portman.
    Commissioner, first of all, Georgia, my home State, has the 
largest, busiest airport in the world, Hartsfield-Jackson, 
which just announced last week an expansion to a sixth runway 
which will increase the freight import coming into Hartsfield-
Jackson alone by 15 percent.
    We have the Port of Brunswick and the Port of Savannah. The 
Port of Brunswick is where most of the automobiles imported 
into the United States come through. The Port of Savannah has 
gone up by 52 percent in capacity since 2007 and is getting 
ready to go up another 33 percent because of the deepening of 
the harbor and the channel to 47 feet.
    While both ports give you high marks for the work that you 
have done, there is a serious question with regard to capacity. 
In Savannah, since 2007, while we have had an increase of 52 
percent of containers coming through, the level of CBP 
employees has stayed the same or actually dropped slightly, 
number one.
    Number two, in comparison to other ports, we have about the 
same number of personnel as the Port of Charleston with 1.9 
million containers, rather than 3.7 in Savannah, and 
Jacksonville with 926,000 containers, rather than our 3.7 
million.
    My point is, it appears the capacity is heavily limited 
because of the number of personnel vis-a-vis the work that is 
being done. Can you comment on that?
    Commissioner Kerlikowske. Sure. We do a workload staffing 
model when it comes to, particularly, the airports and to the 
seaports. The workload staffing model is based upon what 
exists.
    Although there are a number of ports--Charleston, Newark, 
and others--that are also doing the deepening, there are 
certainly some questions right now about capacity, for shipping 
to continue on at the level that it has been, given the 
widening of the Panama Canal.
    So we will look at that, and I will go back and talk with 
our staff about the numbers of people, because I know Savannah 
and the U.S. Attorney just recently had one of the largest 
settlements of, I think, over $15 million for furniture 
imported from China that was violating duties. So I know that 
it is an aggressive team down there, but if they do not meet 
the need to get that cargo in expeditiously and safely, then I 
will certainly get back to you.
    Senator Isakson. My question certainly is not quality of 
work. I have flown to the outer market with the Coastguard. I 
have seen the known shipper problem being worked. I have seen 
CBP people working. Our issue is only capacity, not the 
question of the quality of work.
    The second question is this. We have heard testimony from 
the State Department that they revoked 9,500 visas since 2001 
for foreign nationals coming into the United States, but we do 
not have a good exit strategy--I mean, a biometric exit visa 
process. The US-VISIT program does a good job coming in, but on 
exit from the country, what are we doing on biometric exit?
    Commissioner Kerlikowske. So biometric exit right now--I 
think we need to move a section in front of the bill right now 
that does the technology on biometric exit which exists in a 
different part of DHS to put it under my authority, because I 
need those tools and I need that equipment in order to move 
forward with biometric exit.
    We very much appreciate what Hartsfield-Jackson Airport 
did, being a test site for some of the new handheld detectors, 
because as you know, none of the airports is designed to have a 
facility or a location where we can easily check people with 
some type of biometrics: iris scan, facial recognition, 
portable fingerprint readers. None of those is designed to hold 
people. We want to make sure they are getting moved through 
quickly, but I think the technology is going to be the game-
changer, and the experiments at Hartsfield-Jackson will be a 
big help.
    Senator Isakson. Well, the people at Hartsfield-Jackson 
appreciated being focused on by your agency, and we appreciate 
that. I can personally testify, watching the VISIT program work 
on those coming into the country, that biometrically secure 
visa on entry is a perfect program and a great way for us to 
satisfy the American people. We are doing everything we can do 
to reduce the number of bad actors getting into the United 
States of America.
    Thank you for the work you do.
    Commissioner Kerlikowske. Thanks, Senator.
    Senator Portman. Senator Cantwell?
    Senator Cantwell. Commissioner Kerlikowske, great to see 
you. I too want to echo and thank you for all of your service 
in this administration and in the Northwest as well. So great 
to see you.
    One of the things that you, I am sure, understand is that 
Senator Collins and I gave U.S. Department of Homeland Security 
the authority to expand preclearance overseas. One of the 
things that we are doing is, obviously, moving our borders to 
those overseas airports so that we can do the kind of checking 
on preclearance before people get to the United States--so 
places like Turkey, Belgium, the U.K.
    So I do not know if you have an update about how that 
process is going and what airports you think that we really 
need to target. I know you mentioned the need for more 
technology, so I wanted to give you a chance to talk about what 
those needs are.
    Commissioner Kerlikowske. I would tell you that the 
expansion of preclearance is one that is very much appreciated, 
and I know even with Senator Isakson. During the time that 
preclearance was being considered in Abu Dhabi, that was 
important: for us to be able to go back and to make sure that 
as Congress and the law states, there must be American flag 
carriers at these locations. That is tremendously important 
from an economic viewpoint, but also from the fact that we 
received great cooperation with these American flag carriers.
    We are in negotiation with ten airports in nine countries. 
Secretary Johnson could not have a higher priority than 
preclearance. I believe by the end of this year that we will 
have two, if not three, countries signed on to preclearance. 
They certainly will not implement until, at least, the 
following year, but to sign those agreements pushing our 
borders out is helpful not only for the issue of security, but 
it is also helpful for the fact that those planes can then land 
as, essentially, a domestic flight.
    We are working very closely with Sea-Tac Airport as they 
design their new international terminal. What will the 
international terminal look like? This is the technology answer 
to your question. Will all of this space be needed? Will there 
be booths needed, or can more be done with mobile platforms? 
Can more be done with smaller amounts of equipment in order to 
clear people coming in through Customs?
    The design that we are doing with Sea-Tac is probably going 
to be one of those international terminals of the future. I 
think the technology--mobile passport control, global entry, 
automated passport control kiosks--those are the kinds of 
things that not only improve our safety and security, but they 
also improve people moving through more expeditiously.
    Senator Cantwell. I am sure you have seen the news that 
Sea-Tac has record growth, so we have had lots of issues about 
moving people. We are all for technology, and we are all for 
making sure that we are doing a better job at these overseas 
airports and making them more secure. Any thoughts on how that 
technology helps us?
    Commissioner Kerlikowske. The facial comparison is one. As 
you know, a Customs officer now looks at a very small picture--
the photograph on the passport--and compares it to the person. 
That picture can be up to 10 years old. It is not always easy 
to make sure that the person in the picture is the person in 
front of you.
    So at both Dulles Airport and also at JFK, we are doing 
experiments with facial comparison. It looks at the biometric 
chip. The person standing in front of the camera is compared to 
that biometric chip, and it gives us a percentage of how 
accurate that is. I can tell you that the accuracy with the 
electronic system far exceeds the accuracy of the human system.
    Senator Cantwell. Do you think we could get standardization 
with other countries on a biometric that is a retinal and 
fingerprint biometric standard?
    Commissioner Kerlikowske. I do not know. I will be headed 
overseas in another week and a half, and part of the 
discussions will be around information sharing.
    As you know, the EU just passed PNR: Passenger Name Record. 
So working together to share that information will be helpful, 
but I think the long-term future for safety and security of not 
just our country, but others, will be in that recognition of 
using biometrics that are interoperable.
    Senator Cantwell. I think you were still in the Northwest 
when we had the Ressam case where somebody cooked up an 
identity and went to three different countries before he came 
loaded with explosives to our Port Angeles, so to me getting 
standardization on those biometrics that are certain 
technologies, I think is very, very important, so thank you.
    Senator Portman. Thank you, Senator Cantwell.
    Senator Stabenow?
    Senator Stabenow. Thank you very much, Mr. Chairman.
    Welcome, Commissioner. I appreciate your being here today 
and, of course, representing Michigan, what you do is very 
important to us in a variety of ways.
    I wanted to speak specifically about things related to the 
auto industry. I hear more and more from auto parts 
manufacturers in Michigan about a rapidly growing trend in the 
importation of counterfeit auto parts. Counterfeit auto parts 
not only damage a brand's reputation, as you know--I have had 
very specific examples in Michigan where this has happened--but 
they pose serious safety risks to unsuspecting customers.
    The Federal Trade Commission estimates that counterfeit 
auto parts cost the industry about $12 billion a year in lost 
sales, including $3 billion in the U.S. alone. The FTC also 
estimates that the use of counterfeit parts has resulted in as 
many as 250,000 fewer manufacturing jobs.
    So this is very serious for us. I was wondering if you 
could talk about what the CBP is doing to address the issue, 
and what can we do in Congress that would be helpful?
    Commissioner Kerlikowske. Thank you, Senator. As you know, 
Secretary Johnson, I think, has made three trips to the Detroit 
and Port Huron areas. I think I have been up there three or 
four times.
    Recently, your staff was able to attend a town hall with 
the stakeholders in Detroit as we talked about the work of CBP 
and the city and also working closely with them. Because of the 
law that you have passed and the President signed, our 
commercial advisory, our stakeholders, are now enshrined in 
that law as a part of that.
    So we have several auto manufacturing organizations that 
are a part of that. They meet four times a year with me to talk 
about what are the critical and important issues. I have also 
heard from Congressman Levin and others on this, saying that 
they want to see what enforcement action we are going to take.
    So getting that information, being able to make sure that 
brake pads, and airbags, and other things that could be 
incredibly dangerous and are counterfeit, are not being allowed 
to be a part of this--that information comes from the people 
who are closest to the ground. I am sure I will be back before 
the end of this year, in Michigan. I think I am scheduled, 
actually, for another visit in September. I will make sure that 
I am reaching out to those manufacturers.
    Senator Stabenow. Do you feel like you are getting 
information in a timely way? Are you getting specific 
information, actionable information, that you can do something 
about?
    Commissioner Kerlikowske. So I think that the information 
that we get is helpful, and it is often quite timely. Then 
there becomes a definitional problem of ``actionable.'' Almost 
like ``actionable intelligence.''
    The problem for us has been that we were not as good about 
getting back to who provided the information and telling them 
that this was helpful. It is a lead, but right now it is not 
enough for us to move on. When they do not hear anything back, 
I think they get frustrated like, well, it just went into a 
black hole and nobody did anything with it.
    So I have made a concerted effort to make sure that our 
folks are getting back to the people who have made those 
complaints to let them know what we did with it. They deserve 
that.
    Senator Stabenow. Okay. Thank you. Finally, one other 
question. You mentioned Port Huron. By any measure, border 
crossings through Detroit are some of the busiest in the 
country, the busiest one in Detroit, Detroit-Windsor.
    I am pleased that we have the work going on now with the 
Gordie Howe International Bridge and our partners with Canada. 
This is going to be very important. However, Port Huron is also 
the third busiest crossing on the northern border in terms of 
value and shipments.
    Despite the critical importance of the bridge to the 
economy, the U.S. Customs plaza at the site is woefully 
inadequate to manage this high level of traffic. This is 
something I have worked on for years. We actually had dollars 
in the budget at one point to move forward, and then dollars 
got redirected.
    So an expansion of the plaza has been planned for over a 
decade. Unfortunately, the community has also been left hanging 
because plans started, land was acquired, and then everything 
stopped.
    There are a number of planned Customs projects, I know, 
across the country, but what is being done to address the 
backlog, and will you commit to working with me to make the 
Blue Water Bridge Customs plaza a priority?
    Commissioner Kerlikowske. I know that when Secretary 
Johnson was up there for the visit to the Blue Water Bridge, he 
also was asked and committed to making this a priority. As you 
know, whether it is the Peace Bridge in New York, or a number 
of other locations, some of our Customs infrastructure is in 
need of upgrading. If we are going to be able to move people 
and cargo through expeditiously, those locations need to be 
improved upon.
    I do not know the exact status right now of the facility at 
Port Huron, but I will be happy to get back to your staff on 
that. I would commit to you that I would be very engaged in 
trying to get this done. I was born in St. Joe, so maybe that 
helps.
    Senator Stabenow. Okay. And just finally, what can we do to 
help? What should Congress be doing to alleviate this backlog?
    Commissioner Kerlikowske. I think that looking at our 
infrastructure--and also it was mentioned earlier in a 
question--we need to make sure that we are not just investing 
in people or boots on the ground, but that we are investing in 
technology and that we are investing in some of the equipment 
that just has a life cycle or a lifespan that makes it 
difficult to utilize. So infrastructure, technology, and 
frankly, R&D in those areas, are as important in the long run.
    Our wait times, by the way, in international airports are 
down for people coming into this country, people clearing 
Customs. They would not be down if it was not for that infusion 
of technology.
    Senator Stabenow. Thank you.
    Senator Portman. Thank you, Senator Stabenow.
    Senator Carper?
    Senator Carper. Mr. Chairman, how are you?
    Senator Portman. I am well, thank you. I am glad you are 
back with us. Senator Carper was here previously to hear 
testimony.
    Senator Carper. Mr. Chairman, I would like to make a 
unanimous consent request for testimony for the record from the 
National Treasury Employees Union, which raises some important 
concerns about CBP funding and staffing levels--I would just 
ask unanimous consent, if there is no objection, that this be 
made a part of the record.
    Senator Portman. Without objection.
    [The statement appears in the appendix on p. 29.]
    Senator Carper. Thanks very much.
    I just could not get enough. I just wanted to come back and 
ask a couple of follow-up questions.
    The last question is going to be--I wanted to come back to 
the thing I just touched on before I had to run and vote. That 
is, what can we be doing? What can we be doing to be better 
partners with CBP and the Department of Homeland Security, 
folks who are a part of your team?
    I want to talk a little bit with you about opioids and 
synthetic drugs, something that our chair has more than a 
little bit of interest in, and so do I. I think we all do. The 
Homeland Security and Governmental Affairs Committee has had a 
number of hearings on the devastating impact of opioids and 
synthetic drugs on our communities. Many of these drugs are 
entering the U.S. from other countries, including through the 
U.S. mail.
    Can you discuss with us the challenges that CBP faces in 
trying to identify and intercept these shipments?
    Commissioner Kerlikowske. The e-commerce issues coming in 
through the United States Postal Service, international mail, 
or through the express carriers, the explosion of e-commerce, 
has made this a huge challenge. We do not see as much at all 
when it comes to the opioids because, quite frankly, they are 
manufactured here or they are shipped here quite legally, 
because they are legal drugs.
    I think Senator Portman and others--we could not be more 
familiar with the devastation that the opioids have caused. 
When I traveled with the Senator to the southern tier of Ohio 
in Appalachia, it was pretty devastating in some very poor 
communities.
    So the e-commerce and the search for counterfeit goods, for 
illegal drugs--we often see the club drugs people attempt to 
bring in through those locations. I think that has been the 
greatest challenge. I think we are going to have to do a lot 
more in the future.
    After the Yemen printer cartridge attempt, changes were 
made when it came to air commerce packages coming in, but I 
think we are going to have to look at a variety of other 
mechanisms and work closely. By the way, DHL, FedEx, and UPS 
are incredibly great partners. Our people are located in their 
facilities, et cetera. I think we will have to do more with the 
United States Postal Service on these issues, because the 
challenge in the explosion of 
e-commerce is going to also increase that potential.
    Senator Carper. Okay. Thank you. As you know, one of the 
things I focus on, as does Senator Portman--we like to focus 
not just on the symptoms of problems, but root causes. My view 
is, we need a national policy. Whoever is our next President, I 
think, should lead it. Just like we are going to have a 
moonshot with respect to cancer and trying to defeat cancer, we 
need something, I think, similar to that with national 
leadership with a lot of participation up and down the line, 
not just State, local, and Federal Government, but all kinds of 
nonprofits, the medical community, and so forth.
    Just give us a thought on a root cause. If you were in our 
shoes trying to do something on the root-cause side with 
respect to this epidemic of opioid and synthetic drugs, heroine 
abuse, what might be something we should be doing on the root-
cause side?
    Commissioner Kerlikowske. Well, I think everything is 
moving in the right direction. I think the CDC is looking at 
the mandating of training for doctors. We work with the 
hospitals to look at the accreditation process where the bar 
of--by saying that a patient must leave and that they are pain-
free is a bar that is a bit unreasonable, and, in my opinion, 
led to over-prescribing of opioids.
    I think that that spiral and the national attention--I 
think your hearing was the fourth hearing. From Phoenix to New 
Hampshire, et cetera, and Milwaukee, it is an epidemic on both 
heroine and opioid prescription drugs that is significant.
    I think it will only be reversed, not through interdiction 
and not through enforcement, but only be reversed through 
prevention programs, including a very robust effort by the 
educational community.
    Senator Carper. All right. Thanks. I have 5 seconds left. 
Just give us one good takeaway in terms of something we can 
do--you can repeat something you have already said--something 
we can do in the Congress to help enable you and your team.
    Commissioner Kerlikowske. Senator Stabenow beat you to that 
question, but I would say that research and development, the 
technology issues, and then supporting the infrastructure, all 
of the things that just are not boots on the ground, but are 
the things that support the boots on the ground and make them 
better and more efficient.
    Senator Carper. I call those force multipliers.
    Commissioner Kerlikowske. Those are key. Thank you.
    Senator Carper. Great. Thanks again for the leadership. 
Thanks for joining us today.
    Commissioner Kerlikowske. Thank you.
    Senator Portman. Thank you, Senator Carper. Senator Carper 
consistently talks about the root causes regardless of the 
issue. With regard to opioids, I would just say as we are 
having this hearing today, as you know, the House is 
considering legislation that is not as comprehensive as the 
legislation that passed the United States Senate on March 10th. 
One of the issues that needs to be strengthened, in my view, is 
on the prevention side, as you said; specifically, this issue 
of an awareness campaign as to the link between the 
prescription drugs, the narcotic pain pills, and the current 
heroine and prescription drug epidemic.
    Four of five heroin addicts who will overdose today--and 
one is dying every 12 minutes on average--will have started 
with prescription drugs, as you know from your previous 
experience. I appreciate your coming to southern Ohio--and we 
were seeing the tip of the iceberg. It turned out it has only 
grown since then. Although the pill mills have been largely 
shut down in that part of the country thanks to some of the 
work you helped me to do to get at the high-intensity drug 
trafficking area there in Adams County and Scioto County, the 
heroin has come in as a less-expensive, more-accessible 
alternative. The results are devastating, as you know.
    We did have a hearing on this, and we learned that one of 
the unfortunate realities is that fentanyl, which as you know 
is a synthetic heroin sometimes 50 times stronger, is being 
laced with heroin and is causing increasing deaths, 
particularly in my State of Ohio. We may lead the Nation in 
fentanyl overdoses, which is tragic, but it is coming in from 
China, primarily, and by the mail as you indicated, often to 
the United States, and is then being transshipped to Mexico and 
then brought back in in combination with, sometimes, heroin 
made to look like a prescription drug.
    That is precisely what is happening in my home State. It is 
something where we need to do more, as you said. I wonder if 
you could elaborate a little more on that in terms of what you 
could do at Customs and Border Protection to be able to stop 
this influx of heroin over the border.
    We believe that the vast majority is coming over the 
border, specifically with regard to fentanyl, which is again 
the synthetic which, as you say, is often in the U.S. mail 
system. What more could you do and what resources do you need 
to be able to do a better job of keeping this poison from 
coming into our country?
    Commissioner Kerlikowske. I think the fentanyl issue is one 
that is really--we are only seeing, I understand, the tip of 
the iceberg, as you know from State Medical Examiner 
information. Oftentimes overdoses are not always tested for 
fentanyl. So we do not always know whether it was an opioid 
prescription drug, whether it was heroin, or whether it was 
fentanyl, because of the testing. We do not have preliminary 
test kits for fentanyl like we do for heroin or cocaine. So 
that makes it a little bit difficult.
    The other great concern is the incredible danger to 
somebody who actually comes across the fentanyl, like one of 
our Customs and Border Protection officers, because of the 
absorption through the skin which can lead to fatalities. We 
also do not know about the legitimate fentanyl that is used as 
pain killers in hospitals, nursing homes, et cetera, how much 
is the diversion coming from them, but I think that it is very 
safe to say that the vast majority of the fentanyl is coming 
into the United States across our borders, not the diversion 
from hospitals, although that could be a source.
    So I think we need test kits. I think we need better 
information, but I also think that we need negotiation with the 
countries where it is being produced. We saw some success a 
couple of years ago on the synthetic drugs that were coming in 
from China and then being sprayed on grass and other things to 
be smoked that caused pretty significant devastation.
    China did assist us in reducing that problem by doing a 
better job of export control. I think we are going to need 
that, clearly, when it comes to fentanyl.
    Senator Portman. Are you doing that currently with regard 
to your relationship with these countries, whether it is China 
or other countries that are the source of some of these 
synthetic drugs that are being shipped across continents? Are 
you currently engaged in that?
    Commissioner Kerlikowske. I am not, and CBP is not as much 
as the Department of State and the INL, but our attaches in the 
other countries know that this is a significant issue. So that 
whole-of-government approach on dealing with this--which was 
somewhat successful on synthetics--may provide some 
opportunities.
    I will be talking with the Department of State INL and will 
be happy to share back with you exactly what is going on.
    Senator Portman. I would appreciate that. I do think, given 
your background on the issue of substance abuse and your 
background in law enforcement, that you have a particular 
strength here, and CBP has a particular expertise, to be able 
to partner with some of these countries as compared to INL, 
frankly. So I would hope you would get personally engaged, and 
if you could give me some indication of what they are doing 
currently and how you all could be more involved, I think that 
would be very helpful.
    We have a crisis. It is an epidemic, and it is something 
that requires all hands on deck. I think CBP has a huge role to 
play. Having said that, as you say, prevention, treatment, 
recovery, also need to be strengthened, which is what this 
legislation that passed the Senate provides, and the 
legislation passing the House today. There will be several 
bills that will be helpful.
    We would appreciate your continued advocacy within the 
administration for getting something done on this issue so that 
Congress can be a better partner with State and local 
governments and the nonprofits that are out there fighting this 
fight every single day.
    Thank you, Mr. Commissioner, for being here today. I 
appreciate everybody's participation in the hearing. As we all 
made clear today when talking about this Customs bill, this was 
an important bipartisan accomplishment.
    I talked a lot about the ENFORCE Act today and the need for 
us to administer that well. We hope that this committee will 
continue to work together on a bipartisan basis to make sure 
that the oversight is done properly and make sure that the bill 
is implemented as intended.
    I would ask that Senators submit any questions for the 
record by Wednesday, May 25, 2016. With that, this hearing is 
adjourned.
    [Whereupon, at 11:40 p.m., the hearing was concluded.]

                            A P P E N D I X

              Additional Material Submitted for the Record

                              ----------                              

                   Submitted by Hon. Thomas R. Carper

                    Statement of Anthony M. Reardon

                           National President

                   National Treasury Employees Union

            ``Keeping Pace With Trade, Travel, and Security:

           How Does Customs and Border Protection Prioritize

               and Improve Staffing and Infrastructure?''

            Before the House Committee on Homeland Security

              Subcommittee on Border and Maritime Security

                             April 19, 2016

    Chairman McSally, Ranking Member Vela, distinguished members of the 
subcommittee; thank you for the opportunity to provide this testimony. 
As President of the National Treasury Employees Union (NTEU), I have 
the honor of leading a union that represents over 25,000 Customs and 
Border Protection (CBP) Officers and trade enforcement specialists 
stationed at 328 land, sea, and air ports of entry across the United 
States (U.S.) and 16 Preclearance stations currently at Ireland, the 
Caribbean, Canada and United Arab Emirates airports.

    NTEU supports the Administration's Fiscal Year (FY) 2017 budget 
that provides $12.9 billion for Customs and Border Protection (CBP), an 
increase of 5.2% over FY 2016. In FY 2017, CBP plans to have onboard 
23,861 CBP Officers at the ports of entry--which achieves the hiring 
goal of 2,000 additional CBP Officers initially funded in FY 2014.

    The most recent results of CBP's Workload Staff Model (WSM)--
factoring in the additional 2,000 CBP Officers from the FY 2014 
appropriations--shows a need for an additional 2,107 CBP Officers 
through FY 2017. The Agriculture Resource Allocation Model (AgRAM) 
calculates a need for an additional 631 CBP Agriculture Specialists for 
a total of 3,045. CBP's FY 2017 budget submission seeks congressional 
approval to fund these 2,107 new CBP Officers through an increase in 
user fees, but includes no additional funding to address the current 
631 Agriculture Specialist staffing shortage.

    There is no greater roadblock to legitimate trade and travel 
efficiency than the lack of sufficient staff at the ports. Understaffed 
ports lead to long delays in commercial lanes as cargo waits to enter 
U.S. commerce and also creates a significant hardship for CBP 
employees.

    An example of the negative impact staffing shortages have on CBP 
Officers can be found at the San Ysidro port of entry where CBP has 
instituted involuntary temporary duty assignments (TDYs) to address a 
staffing crisis there. At John F. Kennedy (JFK) Airport, CBP has 
granted overtime exemptions to over one half of the workforce to allow 
managers to assign overtime to Officers that have reached the statutory 
overtime cap. Both involuntary overtime--resulting in 12 to 15 hour 
shifts, day after day, for months on end--and involuntary work 
assignments far from home disrupt CBP Officers' family life and destroy 
morale. Ongoing staff shortages directly contribute to CBP's perennial 
ranking at the very bottom of the Partnership for Public Service's 
``Best Places to Work'' Survey--314 out of 320 agency subcomponents on 
the latest survey.

    For years, NTEU has maintained that delays at the ports result in 
real losses to the U.S. economy. According to the U.S. Department of 
the Treasury, more than 50 million Americans work for companies that 
engage in international trade and, according to a University of 
Southern California (USC) study, ``The Impact on the Economy of Changes 
in Wait Times at the Ports of Entry,'' dated April 4, 2013, for every 
1,000 CBP Officers added, the U.S. can increase its gross domestic 
product (GDP) by $2 billion, which equates to 33 new private sector 
jobs per CBP Officer added. This analysis was supplemented by USC in 
its update entitled ``Analysis of Primary Inspection Wait Times at U.S. 
ports of Entry'' published on March 9, 2014. This study found that by 
adding 14 CBP Officers at 14 inspection sites in 4 international 
airports, the potential total net impact would be to increase annual 
GDP by as much as $11.8 million.

CBP Officer Hiring Challenges

    Of major concern to NTEU is that CBP continues to fall short in its 
authorized hiring efforts by approximately 800 of the 2,000 officers 
that were funded by Congress in 2014. According to CBP, they hope to 
have hired the 2,000 authorized by the second quarter of 2017. CBP 
contends that they are unable to find eligible applicants to fill the 
vacant positions.

    One factor that may be hindering hiring is that CBP is not 
utilizing available pay flexibilities, such as recruitment awards and 
special salary rates, to incentivize new and existing CBP Officers to 
seek vacant positions at these hard to fill ports, such as San Ysidro.

    NTEU and CBP are currently negotiating over the agency's proposal 
to draft CBP Officers to work involuntary TDYs at San Ysidro for longer 
than 90 days. CBP has made this proposal because its solicitation for 
volunteers to staff this TDY is no longer keeping up with what CBP 
believes to be its staffing requirements. Yet, while asserting that it 
would prefer to use volunteers and not involuntarily draft employees, 
CBP has rejected NTEU proposals that would incentivize employees to 
volunteer. For example, CBP has balked at offering any monetary 
incentives or seeking legislative changes to allow special hiring 
incentives such as student loan repayments to entice more individuals 
to apply to work in San Ysidro.

    To help address staffing shortages, NTEU is also exploring whether 
our members would be interested in CBP offering an entry level age 
waiver of 40 years and a mandatory retirement age waiver of 60 years as 
a means to attract a larger pool of potential applicants and to reduce 
attrition rates due to the statutory mandatory retirement at age 57 
years.

    Finally, the best recruiters are likely current CBP Officers. Let 
me rephrase that and say that current CBP Officers could be the best 
recruiters. Unfortunately, based on their experiences with the agency, 
many officers would never encourage their family members or friends to 
seek employment with CBP. That ought to be telling them something 
pretty important too. I have suggested to CBP leadership that they look 
at why this is the case.

    In its FY 2017 budget submission, CBP offered several proposals to 
mitigate the ongoing staffing shortage of 2,107 CBP Officers that will 
continue into FY 2017 and beyond. One of these proposals is to backfill 
50 CBP Officer attrition vacancies in FY 2017 with CBP Technicians in 
order to free up CBP Officers from administrative duties. NTEU supports 
the hiring of additional CBP Technicians to free up CBP Officers from 
administrative duties as long as CBP is not reducing the current 
onboard goal of 23,821 CBP Officers. However, CBP's proposal, as 
outlined in its FY 2017 budget submission, proposes a one for one 
replacement of 50 CBP Officer positions with 50 CBP Technicians. NTEU 
strongly opposes this proposal.

    CBP Technicians cannot ``backfill'' CBP Officer positions, because 
they are not qualified as CBP Officers. With an ongoing shortage of 
2,107 CBP Officers, hiring new CBP Officers should be CBP's priority. 
NTEU supports hiring additional CBP Technicians to give administrative 
support to CBP Officers, but strongly objects to CBP replacing CBP 
Officer positions made vacant through attrition with CBP Technicians.

    A funding proposal in the FY 2017 CBP budget submission that NTEU 
strongly supports is for Congress to authorize a $2.00 increase in 
immigration and customs user fees to fund the hiring of the 2,107 
additional CBP Officers needed to end the current CBP Officer staffing 
shortage.

    NTEU was disappointed that Congress, in last year's highway bill, 
indexed customs user fees to inflation, but diverted this fee increase 
to serve as an offset for highway and infrastructure funding, rather 
than to hire additional CBP Officers.

    By diverting the difference in the amount of customs user fees 
collected currently and the additional amount indexed to inflation to 
non-CBP related projects both increases the cost to the private sector 
by escalating the current level of customs user fees paid over the next 
10 years, and compels the private sector to separately fund--through 
Reimbursable Service Agreements (RSA)--CBP inspectional staffing and 
overtime. NTEU will work to redirect this $400 million a year funding 
stream back to CBP for its intended use--to pay for CBP inspection 
services provided to the user.

Reimbursable Service Agreements (RSA)

    In recent years, in order to find alternative sources of funding to 
address serious CBP Officers and Agriculture Specialist staffing 
shortages, CBP received authorization and has entered into RSAs with 
the private sector as well as with state and local government entities. 
These organizations reimburse CBP for additional inspection services 
including overtime pay and the hiring of new personnel that in the past 
has been paid for entirely by user fees or appropriated funding. 
According to CBP, since the program began in 2013, CBP has entered into 
agreements with 21 stakeholders, providing more than 112,000 additional 
processing hours for incoming commercial and cargo traffic at a cost of 
nearly $13 million to these public and private sector partners.

    Section 560 of the FY 2013 DHS appropriations bill authorized CBP 
to enter into five reimbursable fee agreements for a 5-year term with 
the City of El Paso land port of entry; the City of Houston Airport 
System; Dallas/Fort Worth International Airport; Miami-Dade County; and 
the South Texas Assets Consortium (STAC.) It should be noted that 
agricultural inspectional services are not eligible for reimbursement 
under the Section 560 program, as it is limited to ``customs and 
immigration'' inspectional services such as salaries, benefits, 
relocation expenses, travel costs and overtime as necessary at the City 
of El Paso land ports and solely to overtime at the three air ports of 
entry.

    An expansion of the Section 560 RSA CBP pilot program was 
authorized by Section 559 of the Consolidated Appropriations Act of 
2014 (Pub. L. 113-76). Section 559 expanded on the Section 560 RSAs by 
allowing for increased services at newly selected ports, to include 
customs, immigration, agricultural processing, and border security 
services. Because of the need for CBP Agriculture Specialists to 
process incoming produce, STAC quit the 560 program and applied for the 
559 program. Under Section 560, RSAs were limited to CBP Officer 
overtime and staffing, except in the air environment where only CBP 
Officer overtime reimbursement is allowed. Under both Section 560 and 
559, reimbursement for the hiring of additional CBP Officer and CBP 
Agriculture Specialist positions is allowed at sea and land ports, but 
only overtime reimbursement is allowed at airports.

    The new Section 559 has no restriction on the number of RSAs for 
sea and land ports and no limits on the terms of agreement for customs, 
agricultural processing, border security services and immigrations 
inspection-related services. These costs may include salaries, 
benefits, administration, transportation, relocation expenses and 
overtime expenses incurred as a result of the services requested.

NTEU's RSA Concerns

    NTEU believes that the RSA program would be entirely unnecessary if 
Congress authorized user fees collected to be indexed to inflation, 
with the additional funding provided by indexing being used as set 
forth in existing statute. NTEU also believes that the RSA program is a 
band aid approach and cannot replace the need for Congress to either 
authorize an increase in customs and immigration user fees indexed to 
inflation or to authorize increased appropriations to hire additional 
new CBP Officers to adequately address CBP staffing needs.

    Further, NTEU strongly believes that CBP should not enter into a 
RSA if it would negatively impact or alter services funded under any 
Appropriations Acts, or services provided from any Treasury account 
derived by the collection of fees. RSAs simply cannot replace CBP 
appropriated or user fee funding--making CBP a ``pay to play'' agency. 
NTEU remains concerned with CBP's new Preclearance expansion program 
that also relies heavily on ``pay to play.''

    NTEU also believes that the use of RSAs to fund CBP staffing 
shortages raises significant equity and other issues, which calls for 
an engaged Congress conducting active oversight.

    For example:

          How does CBP ensure that RSAs are not only available 
        to ports of entry with wealthy private sector partners? (When 
        RSAs were first considered, there was a proposal to require 30% 
        of the total RSA funds collected be reserved for ports with 
        greatest need, not just those that have partners with the 
        greatest ability to pay.)
          How does CBP ensure that RSA funds pay for the hiring 
        of new CBP Officer and Agriculture Specialist personnel and are 
        not simply used to pay for relocating existing CBP personnel 
        from other ports (robbing from Port A to staff Port B without 
        hiring additional staff)?
          How does CBP ensure a long-term public-private 
        funding stream? (When RSAs were first considered, there was a 
        proposal to have RSA pay up front for 10 years over 3 
        installments.)

    There are also some port locations where staffing shortages are so 
severe currently, that even entering into a RSA program may be 
problematic. In 2009, there were approximately 10.7 million 
international travelers processed at New York's JFK. By the end of 
2015, it is estimated that JFK will process 14.5 million passengers, a 
30% increase in mission critical work over a 6 year period. Over this 
same period, NTEU estimates that there has been a net gain of 
approximately 100 officers to process over 3.5 million additional 
travelers.

    For the last 2 years JFK management has received overtime cap 
waivers for CBP Officers compelling these officers to work 12, 13, or 
15 hour shifts day after day for months on end. Officers were required 
to come in additional hours before their standard shifts, to stay an 
indeterminate number of hours after their shifts (in the same day) and 
compelled to come in for more overtime hours on their regular days off 
as well.

    The majority of CBP Officers are already working all allowable 
overtime, much of which is involuntary. I want to be clear that all CBP 
Officers are aware that overtime assignments are an aspect of their 
jobs. However, long, extensive periods of overtime hours can severely 
disrupt an officer's family life, morale and ultimately his or her job 
performance protecting our nation.

    CBP is currently negotiating separate RSAs with British Airways and 
American Airways at JFK. In this situation where existing Officers' 
overtime at JFK is already stretched beyond their limits, the RSA 
should be restricted to hiring new CBP Officers, and not to simply 
expanding overtime hours.

    Another concern is that CBP continues to be a top-heavy management 
organization. In terms of real numbers, since its creation, the number 
of new managers has increased at a much higher rate than the number of 
new frontline CBP hires. CBP's own FY15 end of year workforce profile 
(dated 10/3/15), shows that the Supervisor to frontline employee ratio 
was 1 to 5.6 for the total CBP workforce, 1 to 5.7 for CBP Officers and 
1 to 6.6 for CBP Agriculture Specialists.

    The tremendous increase in CBP managers and supervisors has come at 
the expense of national security preparedness and frontline positions. 
Also, these highly paid management positions are straining the CBP 
budget. With the increased use of RSAs to fund additional CBP Officer 
new hires, NTEU urges that CBP return to a more balanced supervisor to 
frontline employee ratio.

Agriculture Specialist Staffing

    CBP employees also perform critically important agriculture 
inspections to prevent the entry of animal and plant pests or diseases 
at ports of entry. For years, NTEU has championed the CBP Agriculture 
Specialists' Agriculture Quality Inspection (AQI) mission within the 
agency and has fought for increased staffing to fulfill that mission. 
The U.S. agriculture sector is a crucial component of the American 
economy generating over $1 trillion in annual economic activity. 
According to the U.S. Department of Agriculture, foreign pests and 
diseases cost the American economy tens of billions of dollars 
annually. NTEU believes that staffing shortages and lack of mission 
priority for the critical work performed by CBP Agriculture Specialists 
and CBP Technicians assigned to the ports is a continuing threat to the 
U.S. economy.

    NTEU worked with Congress to include in the recent CBP Trade 
Facilitation and Enforcement Act (Pub. L. 114-125) a provision that 
requires CBP to submit, by the end of February 2017, a plan to create 
an agricultural specialist career track that includes a ``description 
of education, training, experience, and assignments necessary for 
career progression as an agricultural specialist; recruitment and 
retention goals for agricultural specialists, including a timeline for 
fulfilling staffing deficits identified in agricultural resource 
allocation models; and, an assessment of equipment and other resources 
needed to support agricultural specialists.''

    CBP's FY16 AgRAM, shows a need for an additional 631 frontline CBP 
Agriculture Specialists and supervisors to address current workloads 
through FY 2017, however, even with the 2016 increase in AQI user fees, 
CBP will fund a total of 2,414 CBP Agriculture Specialist positions in 
FY 2017, not the 3,045 called for by the AgRAM.

    NTEU urges the Committee to authorize the hiring of these 631 CBP 
Agriculture Specialists to address this critical staffing shortage that 
threatens the U.S. agriculture sector.

CBP Trade Operations Staffing

    CBP has a dual mission of safeguarding our nation's borders and 
ports as well as regulating and facilitating international trade. In FY 
2015, CBP processed more than $2.4 trillion worth of trade goods and 
collected $46 billion in revenue. Since CBP was established in March 
2003, however, there has been no increase in CBP trade enforcement and 
compliance personnel even though inbound trade volume grew by more than 
24 percent between FY 2010 and FY 2014.

    In 2011, CBP established the Centers of Excellence and Expertise 
(CEEs)--10 
industry-specific Centers--requiring significant changes in CBP trade 
operations employees' workload and work practices.

    In 2014, four of the CEEs began operating at an accelerated level 
of processing and became fully operational. On March 24, 2016, the 
remaining six CEEs came on board. Critical for supporting the CEE's 
virtually-managed and geographically dispersed workforce is the 
completion of the Automated Commercial Environment (ACE). Now 3 years 
behind schedule and more than $1 billion over budget, CBP began rollout 
of the ACE ``single window'' for industry filing electronic trade 
entries on March 30, 2016. According to industry users, the ACE rollout 
has been challenging. Users have experienced network error and system-
wide crashes.

    The rollout of CEEs has raised many issues affecting trade 
operations staff at the ports including insufficient frontline staffing 
and insufficient training for both frontline employees and supervisors. 
NTEU urges Congress to authorize the hiring of additional trade 
enforcement and compliance personnel, including Import Specialists, to 
enhance trade revenue collection.

Additional CBP Personnel Funding Issues

    NTEU commends the Department for increasing the journeyman pay for 
CBP Officers and Agriculture Specialists. Many deserving CBP trade and 
security positions, however, were left out of this pay increase, which 
has significantly damaged morale. NTEU strongly supports extending this 
same career ladder increase to additional CBP positions, including CBP 
trade operations specialists and CBP Seized Property Specialists. The 
journeyman pay level for the CBP Technicians who perform important 
commercial trade and administration duties should also be increased 
from 
GS-7 to GS-9.

    NTEU also supports extending enhanced retirement that was granted 
to CBP Officers in 2008 to the approximately 120 CBP Seized Property 
Specialists, the only armed, uniformed officers at CBP that do not 
receive Law Enforcement Officer retirement.

RECOMMENDATIONS

    Funding for additional CBP staff must be increased to ensure 
security and mitigate prolonged wait times for both trade and travel at 
our nation's ports of entry. The use of RSAs as an alternate source of 
funding is merely a band-aid approach and cannot replace the need for 
Congress to authorize an increase in customs and immigration user fees 
or to provide sufficient appropriations to hire 2,107 new CBP Officers 
to adequately address CBP staffing needs.

    Therefore, NTEU urges the Committee to:

          Authorize increases in trade, travel and agriculture 
        inspection and enforcement staffing to the level called for in 
        CBP's most recent WSM that shows a need for 2,107 additional 
        CBP Officers and an additional 631 CBP Agriculture Specialists 
        through FY 2017;
          Authorize an increase in journeyman pay to additional 
        CBP personnel, including CBP Technicians, Import and other 
        Commercial Operations Specialists, and enhanced retirement to 
        armed, uniformed CBP Seized Property Specialists; and
          Engage in robust oversight of RSAs to ensure that 
        this program does not replace primary funding sources or result 
        in inequitable distribution of CBP Officer resources.

    Lastly, NTEU asks Congress to support legislation to allow CBP to 
increase user fees to help recover costs associated with fee services 
and provide funding to hire additional CBP Officers. If Congress is 
serious about job creation, then Congress should either authorize 
funding or raise immigration and custom user fees to hire the 
additional 2,107 CBP Officers as identified by CBP's own Workload 
Staffing Model.

    The more than 25,000 CBP employees represented by NTEU are proud of 
their part in keeping our country free from terrorism, our 
neighborhoods safe from drugs and our economy safe from illegal trade, 
while ensuring that legal trade and travelers move expeditiously 
through our air, sea and land ports. These men and women are deserving 
of more resources to perform their jobs better and more efficiently.

    Thank you for the opportunity to testify before the Committee on 
their behalf.

                                 ______
                                 
              Prepared Statement of Hon. Orrin G. Hatch, 
                        a U.S. Senator From Utah
WASHINGTON--Senate Finance Committee Chairman Orrin Hatch (R-Utah) 
today delivered the following opening statement at a hearing to examine 
the U.S. Customs and Border Protection's (CBP) efforts to enhance trade 
facilitation and enforce U.S. trade laws, including the implementation 
of the Trade Facilitation and Trade Enforcement Act of 2015.

    I would like to welcome everyone to our hearing this morning.

    And welcome to the Honorable R. Gil Kerlikowske, Commissioner of 
U.S. Customs and Border Protection. The Commissioner last appeared 
before this committee during his confirmation hearing in January 2014. 
A lot has happened since then. So, we are happy to have the 
Commissioner here again today.

    The Finance Committee--and, in fact, the entire Congress--has been 
extremely active on trade over the past year and a half.

    Just last night, the Senate, by unanimous consent, passed the 
American Manufacturing Competitiveness Act, a bipartisan, bicameral 
bill that will provide tariff relief to American job creators by 
establishing a reformed process for the consideration and passage of 
Miscellaneous Tariff Bills, or MTBs.

    Once it's signed into law, this legislation will allow American 
manufacturers to lower their production costs on parts that can't be 
found in the United States. This is absolutely essential if we want 
American companies to be able to compete effectively in the 21st-
century global marketplace.

    Passage of the MTB bill is long overdue and I'm very pleased that 
we've finally gotten it through Congress and over to the President for 
his signature. Many members of the committee--on both sides of the 
aisle--worked to get this bill over the finish line. I want to commend 
all of them--especially Senators Portman, Burr, and Toomey--for their 
efforts.

    This MTB bill closely resembles legislation we reported out of the 
Finance Committee last year. In fact, it was just about a year ago that 
we began floor debate on several of our committee's trade bills that 
all eventually became law. One of those bills, the Trade Facilitation 
and Trade Enforcement Act of 2015, commonly referred to as the Customs 
bill, was signed into law on February 24th of this year.

    The passage and signing of the Customs bill marked the end of a 
legislative process that began almost 10 years ago and underwent many 
iterations. With the law now in place, CBP and other agencies have the 
tools necessary to ensure that America is able to compete in the world 
economy while also ensuring that our trading partners play by the 
rules.

    As we all know, CBP has the dual responsibility of facilitating 
legitimate trade and travel while also protecting the United States 
from illicit goods and inadmissible people, such as terrorists. This 
dual mission is vitally important to ensuring the strength of our 
economy and the security of our borders. The overarching goal of our 
Customs bill was to facilitate the efficient movement of low-risk and 
compliant goods to the marketplace while also allowing CBP to focus its 
resources on goods that could do harm to the economic or physical 
security of the United States.

    To that end, I'd like to take a few minutes to discuss some 
specific ways that the recently-passed law enhances and modernizes the 
way CBP operates.

    The new statute includes a number of elements that were designed to 
help facilitate trade.

    For example, the law requires CBP to consult with private-sector 
entities to identify commercially significant and measurable trade 
benefits for participants in 
public/private-sector partnership programs. It also raises the de 
minimis level from $200 to $800 and modernizes the duty drawback 
process.

    In addition, the new law provides a number of new enforcement 
tools.

    These tools include a new process at CBP, with strict deadlines and 
judicial review, for dealing with evasion of our antidumping and 
countervailing duties laws and a significant expansion of CBP's 
authorities to protect intellectual property rights at the border. 
Given the importance of intellectual property to our economy, these new 
authorities are long overdue and they were among my top priorities in 
crafting and passing the Customs bill.

    On top of that, the law includes a codification of the Centers of 
Excellence and Expertise, which, among other things, ensures that the 
post-release process for goods coming into the United States will be 
aligned by industry rather than the port of entry where a shipment 
arrives. These Centers provide tailored support to unique trading 
environments and eliminate the need for importers to work with 
individuals at multiple ports of entry that may slow down legitimate 
trade with needless and duplicative inquiries. The Centers also allow 
CBP to enforce our trade and customs laws uniformly on a nationwide 
basis and to prevent nefarious trade practices, including what some 
have called ``port shopping.''

    The new statute also provides the necessary authorization and 
funding to fully implement the Automated Commercial Environment, or 
ACE, and requires the completion of the International Trade Data 
System, or ITDS, by the end of this year. The completion of ACE and 
ITDS will allow for the electronic submission of all import 
requirements through a single window and process. Once fully 
implemented, this will simplify and streamline the submission of import 
documents, reducing the paperwork burden on the private sector and 
ensuring that CBP has the data it needs to identify high-risk imports 
and importers.

    Much has changed since 2003 when CBP was first established. The new 
law is the first comprehensive authorization of the agency since that 
time, and many of the improvements that CBP has made internally over 
the years have been codified in the statute, including increased 
coordination between the two offices primarily responsible for trade 
facilitation and trade enforcement--the Office of Trade and the Office 
of Field Operations. We included this codification to address concerns 
that many had expressed about CBP over the years, namely, that its 
security mission could overshadow its trade mission.

    There are many other significant provisions in this bill, several 
of which were championed by members of the committee. I hope we will 
have an opportunity to touch on some of those in more detail today.

    While most of us are pleased with these new changes to our customs 
laws, simply providing new tools and putting new mandates in place will 
not, in and of itself, improve conditions on the ground. As with the 
passage of any new law dealing with any important government agency, 
congressional oversight is going to be key to ensuring that the statute 
is implemented in a manner that reflects our intent.

    That is why I've requested Commissioner Kerlikowske to appear 
before the committee today.

    With passage of the Customs bill, the Commissioner has many new 
authorities to implement. I am looking forward to hearing about how the 
Commissioner intends to use these authorities as well as a robust 
discussion of CBP's ongoing efforts to facilitate trade and enforce our 
laws.

    With that, I'll turn to Senator Wyden for his opening remarks.

                                 ______
                                 
     Prepared Statement of Hon. R. Gil Kerlikowske, Commissioner, 
     Customs and Border Protection, Department of Homeland Security
    Chairman Hatch, Ranking Member Wyden, and members of the committee, 
it is an honor to appear before you today to discuss U.S. Customs and 
Border Protection's (CBP) role in facilitating international trade and 
enforcing our Nation's trade laws.

    As America's unified border agency, CBP protects the United States 
against terrorist threats and prevents the illegal entry of 
inadmissible persons and contraband, while facilitating lawful travel 
and trade. CBP is the second-largest revenue-
collecting source in the Federal Government and our operations have a 
significant impact on the security and facilitation of legitimate 
international commerce and America's economic competitiveness.

    CBP's trade enforcement and facilitation mission is highly complex. 
We enforce nearly 500 U.S. trade laws and regulations on behalf of 47 
Federal agencies, facilitate compliant trade, collect revenue, and 
protect the U.S. economy and consumers from harmful imports and unfair 
trade practices. Fraudulent trade activities, including the import of 
counterfeit and pirated goods, threaten America's innovation, economy, 
the competitiveness of our businesses, the livelihoods of U.S. workers, 
and, in some cases, national security and the health and safety of 
consumers.

    Annually, CBP manages over 300,000 active unique importer-of-record 
numbers, accounting for 30.4 million commercial transactions, which 
represents approximately $2.4 trillion in imports and generates over 
$40 billion in duties, fees and taxes. In addition to applying the 
multitude of tariffs and the processing of mass amounts of commercial 
shipments, CBP must also consider the complexities of enforcing U.S. 
Free Trade Agreement (FTA) commitments. The United States has existing 
FTAs with 20 countries and completed negotiations for the Trans-Pacific 
Partnership Agreement with 11 Pacific region countries, and is 
currently negotiating the Transatlantic Trade and Investment 
Partnership (T-TIP) with the European Union (EU). These are important 
agreements for the United States that will promote U.S. international 
competitiveness, jobs, and growth. In fiscal year (FY) 2015, FTAs 
accounted for over $636 billion in imports.

    The enactment of the Trade Facilitation and Trade Enforcement Act 
of 2015 (TFTEA), Pub. L. No. 114-125, or ``the Act'' in February 2016 
demonstrates that economic competiveness and enforcement of our trade 
laws are among our Nation's highest priorities. This law is a major 
milestone for CBP, as it is the agency's first authorization since its 
creation within the Department of Homeland Security (DHS) in 2003. It 
supports CBP's efforts to ensure a fair and competitive trade 
environment, sending a strong message that CBP will effectively enforce 
U.S. trade laws, including safeguarding Intellectual Property Rights 
(IPR), combating Anti-dumping/Countervailing Duty (AD/CVD) evasion, and 
prohibiting the importation of forced labor-derived goods.

    My testimony will discuss CBP's progress in some of our key trade 
facilitation and trade enforcement efforts, including implementation of 
the Act, and our path forward in securing and enabling international 
commerce and promoting the growth of the U.S. economy.
                       cbp's trade transformation

    CBP recognizes its vital role in the economy and has embarked on a 
``Trade Transformation,'' a series of initiatives that create 
efficiencies for U.S. businesses, the government, and the consumer.

    In addition to enhancing the import process, CBP is working to 
modernize its export process in support of the President's National 
Export Initiative to streamline the export process and foster growth 
for U.S. companies, and the Export Control Reform Initiative to bolster 
competitiveness of key U.S. manufacturing and technology sectors. Even 
as trade volumes continue to rise, these initiatives strengthen CBP's 
capabilities and the Nation's economic competitiveness by lowering the 
cost of doing business, strengthening enforcement efforts, and leveling 
the playing field for U.S. businesses.

    CBP's Trade Transformation initiatives not only seek to create 
efficiencies within the agency's business processes, but also seek to 
develop a consistent ``One U.S. Government'' approach at the border. 
CBP, in collaboration with 47 Partner Government Agencies that have 
equities in the trade process, is working toward standardizing 
government procedures, streamlining processes, driving efficiencies 
through automation, and aligning and harmonizing with industry business 
processes.

    The need for consistency and harmonization has been a driving force 
behind our transformation efforts. Currently, there are hundreds of 
paper forms being used to import and export goods. In February 2014, 
President Obama issued an Executive Order (E.O. 13659), Streamlining 
the Export/Import Process for America's Businesses, which, among other 
things, directs Federal agencies with a role in trade to design, 
develop, and integrate their requirements into an electronic ``Single 
Window,'' known as the International Trade Data System, by December 
2016. CBP's cargo processing system, the Automated Commercial 
Environment (ACE), will ultimately serve as the ``Single Window'' and 
enable businesses to electronically transmit the data required by the 
U.S. Government to import or export cargo. Through ACE, manual 
processes will be streamlined and automated, paper will be virtually 
eliminated, and the international trade community will be able to more 
easily and efficiently comply with U.S. laws and regulations. ACE is 
being developed and deployed in increments, and CBP is on track to 
deliver all core trade processing capabilities in ACE by December 31, 
2016.

    Close collaboration with the trade community, and developing 
public-private partnership programs, is an essential component of CBP's 
Trade Transformation efforts. The Customs-Trade Partnership Against 
Terrorism (C-TPAT) program is a public-private partnership program 
wherein members of the trade community volunteer to adopt tighter 
security measures throughout their international supply chains in 
exchange for enhanced trade facilitation, such as expedited processing. 
The C-TPAT program now has more than 11,000 members, with C-TPAT 
imports accounting for 54 percent (by value) of all imports to the 
United States. Additionally, in collaboration with the U.S. Consumer 
Product Safety Commission and the U.S. Food and Drug Administration, 
CBP is working to complete another important pilot, our Trusted Trader 
program, which unifies C-TPAT and the Importer Self-Assessment 
processes.\1\
---------------------------------------------------------------------------
    \1\ Federal Register Notice, June 16, 2014. Announcement of Trusted 
Trade Program Test, https://www.federalregister.gov/articles/2014/06/
16/2014-13992/announcement-of-trusted-trader-program-test.

    The C-TPAT program continues to expand and evolve as CBP works with 
our foreign partners to establish bilateral mutual recognition of 
respective C-TPAT-like programs. Mutual Recognition as a concept is 
reflected in the World Customs Organization's Framework of Standards to 
Secure and Facilitate Global Trade, a strategy designed with the 
support of the United States, which enables Customs Administrations to 
work together to improve their capability to detect high-risk 
consignments and expedite the movement of legitimate cargo. These 
arrangements create a unified and sustainable security posture that can 
assist in securing and facilitating global cargo trade while promoting 
end-to-end supply chain security. CBP currently has signed Mutual 
Recognition Arrangements with New Zealand, the EU, South Korea, Japan, 
Jordan, Canada, Taiwan, Israel, Mexico, and Singapore and is continuing 
to work towards similar recognition with China, Brazil, the Dominican 
Republic, India and other countries.\2\
---------------------------------------------------------------------------
    \2\ CBP also has multiple Customs Mutual Assistance Agreements, 
which allow for the exchange of information, intelligence, and 
documents that will ultimately assist countries in the prevention and 
investigation of customs offenses. The agreements are particularly 
helpful for U.S. Attache offices, as each agreement is tailored to the 
capacities and national policy of an individual country's customs 
administration. See http://www.cbp.gov/border-security/international-
initiatives/international-agreements/cmaa.

    Another public-private partnership program that focuses on cargo 
entering the United States via air is CBP's Air Cargo Advance Screening 
(ACAS) program. This pilot, which currently has 51 participants, will 
run through July 2016, after which we look forward to identifying a 
path forward for permanent status. Additionally, CBP is implementing a 
multifaceted approach to e-commerce, particularly as it impacts sales 
and imports through the mail and express environments. We are educating 
consumers and working with major e-commerce businesses to identify and 
prevent the sale and import of counterfeit or dangerous products, and 
look forward to continued partnerships with the trade community to help 
---------------------------------------------------------------------------
us evolve with the growth in e-commerce.

    A hallmark of our transformation efforts is the implementation of 
the Centers of Excellence and Expertise \3\ (Centers), established in 
2011 to increase uniformity at the POEs, facilitate the timely 
resolution of trade compliance issues nationwide, and further 
strengthen our knowledge about industry practices. In 2014, 4 of the 10 
Centers became fully operational, and, I'm proud to announce that, last 
month, the remaining 6 became fully operational. These virtually-
managed Centers align CBP with modern business practices, focusing on 
industry-specific issues, and provide tailored support to unique 
trading environments.
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    \3\ The 10 Centers are: Pharmaceuticals, Health and Chemicals--New 
York, NY; Agriculture and Prepared Products--Miami, FL; Automotive and 
Aerospace--Detroit, MI; Apparel, Footwear and Textiles--San Francisco, 
CA; Base Metals--Chicago, IL; Petroleum, Natural Gas and Minerals--
Houston, TX; Electronics--Los Angeles, CA; Consumer Products and Mass 
Merchandising--Atlanta, GA; Industrial and Manufacturing Materials--
Buffalo, NY; and Machinery--Laredo, TX.

    Through the implementation of CBP's Trade Transformation 
initiatives we are working to increase the Nation's economic 
competitiveness by lowering the cost of doing business, removing 
barriers to facilitation, and leveling the playing field for U.S. 
businesses. Additionally, these transformative efforts help CBP 
strengthen trade enforcement efforts and address ongoing challenges 
such as AD/CVD collection, by improving and modernizing our trade 
processes.
                 cbp's trade intelligence and targeting
    As the Nation's unified border agency, CBP is responsible for 
detecting and interdicting goods imported to, exported from, and 
transiting through the United States by means of fraudulent trade 
activities intended to avoid the payment of duties, taxes and fees, or 
activities meant to evade U.S. legal requirements for international 
trade. Central to all of CBP's multi-layered trade enforcement 
activities are the continuous enhancements to our targeting programs, 
the expansion of our trade intelligence, and our ability to identify 
and understand trade risks that may affect national security, U.S. 
business competitiveness, or the collection of revenue.

    Enforcement of trade laws and interdiction of illegal cargo are 
based on trade intelligence and advanced risk-based targeting. 
Partnerships with other Federal agencies and the trade community are 
essential to expanding CBP's trade intelligence. CBP works closely with 
U.S. Immigration and Customs Enforcement's Homeland Security 
Investigations (ICE/HSI), the Department of Justice's Drug Enforcement 
Administration, the Financial Crimes Enforcement Network, and the 
Departments of Commerce and Health and Human Services to promote 
information sharing and the exchange of trade intelligence.

    Through collaboration with industry, CBP deepens its understanding 
of the way businesses and industries operate in the ever-changing 
global marketplace and leverages that information for risk analysis and 
targeting. A key element in CBP's trade intelligence and targeting 
efforts are the 10 Centers. The Centers redefine how CBP works 
collaboratively with industry members to understand trade risks and 
support CBP's efforts to target the evasion of U.S. trade laws, protect 
the revenue of the U.S. Government, and ensure a level playing field 
for U.S. industry.

    Depending on the specific pathway, CBP performs targeting 
activities throughout the import process--prior to departure from 
origin, before cargo arrives at a POE, at the time of entry, and after 
the cargo is conditionally released. In accordance with the Trade Act 
of 2002, Pub. L. No. 107-210, and the SAFE Port Act of 2006, Pub. L. 
No. 109-347, carriers are required to submit manifest data containing 
an inventory of all goods, supplies, cargo, and persons on board a 
conveyance or container in advance of arriving at a POE for vetting 
through CBP's Automated Targeting System (ATS). ATS is a critical 
decision support tool that CBP uses to assess the risk of goods 
entering the United States. Incorporating information from CBP and 
other law enforcement databases, ATS provides a uniform screening of 
all its cargo transactions and identifies anomalies based on numerous 
risk factors.

    Shipments matching ATS targeting factors are presented to CBP 
officers assigned overseas with the Container Security Initiative 
(CSI), officers at our numerous Advance Targeting Units (ATUs) located 
at our domestic POEs, as well as our seasoned experts at the National 
Targeting Center for Cargo Operations (NTC-C). Upon arrival of cargo at 
a POE, using targeting results to prioritize inspection of high risk 
cargo, CBP has the authority to perform an exam of the goods; detain, 
and where appropriate, seize, or request re-export of the goods; or 
release the goods. In the post-entry environment, CBP assesses duties, 
determines statutory and regulatory compliance, and collects import 
statistics. Effective targeting not only enables CBP to detect and 
address potential risks before a shipment arrives at a POE, but it also 
enables CBP to separate low-risk and legitimate shipments from those 
that require additional scrutiny.

    When it comes to targeting shipments for potential threats to 
consumer safety, the Commercial Targeting and Analysis Center (CTAC) is 
a CBP facility designed to streamline and enhance Federal efforts to 
address import safety issues. Created in 2009, the CTAC facilitates 
information sharing amongst 11 participating government agencies,\4\ 
while simultaneously developing, implementing, and streamlining 
cohesive import-safety enforcement procedures that drive further 
interdiction of harmful and inadmissible goods. Supporting CBP's 
unified trade targeting mission, the NTC-C has an embedded presence at 
the CTAC facility to heighten the connectivity between the 
participating government agencies' admissibility mission and the NTC-
C's 24/7 operational capabilities.
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    \4\ The 11 Federal agencies that participate in the CTAC include: 
CBP; U.S. Consumer Product Safety Commission; U.S. Department of 
Agriculture Animal Plant Health Inspection Service; Food Safety and 
Inspection Service; U.S. Immigration and Customs Enforcement Homeland 
Security Investigations (ICE/HSI); U.S. Environmental Protection Agency 
(EPA); Pipeline and Hazardous Materials Safety Administration (PHMSA); 
National Highway Traffic Safety Administration (NHTSA); Food and Drug 
Administration (FDA); U.S. Fish and Wildlife Service (FWS); and the 
National Marine Fisheries Services (NMFS).

    The National Targeting and Analysis Groups (NTAGs) are the primary 
national trade targeting assets for CBP. Providing in-depth risk 
analysis for high priorities, the NTAGs work in concert with the 
Centers, and the NTC-C Tactical Trade Targeting Unit (T3U), to enhance 
trade targeting expertise. These entities work with the entire life-
cycle of trade fraud enforcement--from information intake, analysis, 
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targeting, investigative case support, and operational assessments.

    Each of these entities brings a particular targeting skill set to 
the table. For example, by virtue of the Centers' industry-based 
knowledge, CBP can apply critical trade intelligence toward our 
enforcement efforts. Additionally, because of the NTAGs' expertise, CBP 
can better understand the overlapping risk areas within each industry 
sector. Integrating these knowledge areas is an enforcement priority 
for the agency. By creating a common operating picture that identifies 
risk within the trade arena, CBP can quickly act on fraudulent trade 
schemes. Moreover, by leveraging expertise within each targeting unit, 
CBP deepens its trade enforcement posture, resulting in more effective 
outcomes. For example, in FY 2015, referrals from the T3U resulted in 
341 seizures with a Manufacturer's Suggested Retail Price (MSRP) value 
of over $92.1 million.

    Integration of these national targeting groups is crucial, as each 
provides support for our law enforcement partners, such as ICE/HSI 
Agents assigned to the newly formed National Targeting Center for 
Investigations (NTC-I). Partnerships between T3U and NTC-I personnel 
are leveraged as a force multiplier which has resulted in more 
effective sharing of information and increased outcome-based 
enforcement actions. For example, in FY 2015, the T3U supported ICE/HSI 
case work concerning goods worth an estimated $179 million total MSRP, 
including 132 criminal arrests, 81 indictments, 65 convictions, 179 
search warrants and 3 administrative arrests.
                    cbp trade enforcement operations
    In the performance of its trade enforcement operations, CBP has 
identified several high-risk areas, designated as Priority Trade Issues 
\5\ (PTI) that could cause significant revenue loss, harm the economy, 
or threaten the health and safety of the American people. PTIs drive 
risk-informed investment of CBP resources and enforcement and 
facilitation efforts, including the selection of audit candidates, 
special enforcement operations, outreach, and regulatory initiatives.
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    \5\ The five current PTIs are Intellectual Property Rights; 
Textiles and Apparel; Import Safety; Trade Agreements; and Antidumping 
and Countervailing Duties. The Trade Enforcement and Facilitation Act 
of 2015 added Agriculture programs and Revenue to the list of PTIs.
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Antidumping and Countervailing Duties
    AD/CVD \6\ has been identified by CBP as a PTI because collection 
of these duties is critical to the U.S. economy and the competitiveness 
of U.S. businesses. While the vast majority of manufacturers, 
importers, customs brokers, and other parties involved in shipments of 
goods subject to AD/CVD orders accurately provide shipment information 
and pay appropriate duties, CBP has a core statutory responsibility to 
detect and deter the circumvention of AD/CVD laws and collect all 
revenue owed to the U.S. Government that arises from the importation of 
goods. CBP is constantly enhancing our AD/CVD detection and enforcement 
protocols, including advancing our targeting and analysis, streamlining 
our administrative processes, and utilizing all available authorities 
to meet the challenges posed by the increasing complexity of AD/CVD 
evasion schemes.
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    \6\ Under the Tariff Act of 1930, U.S. industries may petition the 
government for relief from imports that are sold in the United States 
at less than fair value (``dumped'') or which benefit from subsidies 
provided through foreign government programs. Under the law, the U.S. 
Department of Commerce determines whether the dumping or subsidizing 
exists and, if so, the margin of dumping or amount of the subsidy. The 
United States International Trade Commission determines whether there 
is material injury or threat of material injury to the domestic 
industry by reason of the dumped or subsidized imports.

    CBP's AD/CVD targeting and enforcement activities are applied at 
every stage in the import process. CBP personnel at POEs are 
continuously reviewing import information to detect AD/CVD evasion and 
noncompliance, deter future evasion, and bring importers into 
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compliance with AD/CVD requirement.

    For instance, in FY 2015, entry summary reviews and cargo exams of 
solar panels resulted in the identification of $56 million in potential 
loss of revenue of AD/CVD duties and the recovery of almost $8 million 
in AD/CVD duties on shipments of solar cells and panels from China and 
Taiwan. Also, an audit of an importer of tapered roller bearings from 
China discovered a loss of revenue of $36 million, most of which was 
antidumping duties. In another example, Import Specialists detected AD/
CVD evasion on tires from China, with over $7 million in AD/CVD duties 
identified, penalties imposed, and collection efforts ongoing.

    Since 2013, CBP has broadened the use of single transaction bonds 
to ensure additional protection when CBP has reasonable evidence that a 
risk of revenue loss exists. These measures have been very effective in 
protecting the revenue and facilitating compliance with AD/CVD. 
Furthermore, in 2014, as part of our strategy to resolve AD/CVD debts, 
CBP created a team within the Office of Administration dedicated to AD/
CVD collection. The creation of the AD/CVD Collections team will 
enhance CBP's technical expertise to deal with the unique complexities 
of the 
AD/CVD process; enable CBP to identify importers unwilling or unable to 
pay outstanding duties earlier; and provide deeper integration of the 
full AD/CVD processes to anticipate AD/CVD debts, rather than simply 
react to those debts after they are formally established.

    CBP, in collaboration with ICE/HSI and the Department of Commerce, 
has had increasing success in identifying, penalizing, and disrupting 
distribution channels of imported goods that seek to evade AD/CVD. CBP 
personnel refer many cases of 
AD/CVD evasion to ICE/HSI for criminal investigation and work closely 
with 
ICE/HSI to establish the evidence of criminal violations. A few 
examples demonstrating the success of this collaborative relationship 
include:

          Operation Honeygate--ICE/HSI, in collaboration with CBP, 
        exposed a criminal network responsible for evading $180 million 
        in antidumping duties on imported Chinese honey. Several 
        individuals were imprisoned for their criminal activities and 
        two of the Nation's largest honey suppliers paid millions of 
        dollars of fines.
          Lined Paper--An ICE/HSI investigation, with substantial CBP 
        support, culminated in the criminal indictments of Chinese, 
        Taiwanese, and U.S. companies and officials for illegally 
        transshipping lined paper from China in order to evade over $25 
        million in antidumping duties.
          Aluminum Extrusions--ICE/HSI agents, working jointly with 
        CBP officers, arrested five individuals and indicted three 
        companies who allegedly participated in a conspiracy to 
        illegally import aluminum extrusions from China transshipped 
        through Malaysia to avoid over $25 million in AD/CVD duties.

    Another recent example of this effort is our enforcement of AD/CVD 
orders on steel products. In FY 2015, CBP, in coordination with ICE/
HSI, was able to successfully seize over $900,000 worth of steel 
products that violated AD/CVD laws and assess $45.5 million in 
penalties for AD/CVD violations on importers of steel products. In FY 
2015, CBP also conducted over 7,200 entry summary reviews of steel 
imports for AD/CVD issues, and identified violations with a value of 
over $970,000. Additionally, in January 2016, an examination by CBP 
port personnel resulted in CBP identifying nearly $200,000 in AD/CVD 
violations. CBP industry experts at the Base Metals Center of 
Excellence and Expertise are actively enforcing 149 AD/CVD orders on 
steel products. CBP works closely with our steel industry partners and 
the Department of Commerce to educate both CBP personnel and steel 
industry members through seminars that explain how AD/CVD enforcement 
can best be implemented in the current trade environment.\7\
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    \7\ In FY 2015, CBP, in partnership with the U.S. steel industry, 
conducted five AD/CVD seminars, which took place at key trade locations 
in California, Georgia, Illinois, New York, and Texas, for CBP 
personnel and customs brokers. In FY 2016, CBP will conduct additional 
Steel Seminars in Laredo, Texas; New Orleans; Philadelphia; Long Beach, 
California; and Detroit.
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Intellectual Property Rights
    CBP enforces IPR, another PTI, by seizing products that infringe on 
U.S. trademarks, copyrights, and by enforcing exclusion, seizure, or 
forfeiture orders of the International Trade Commission with respect to 
products found to infringe U.S. patents. The theft of intellectual 
property and trade in fake goods threaten America's economic vitality 
and national security, and the American people's health and safety. 
CBP, in close collaboration with ICE/HSI, protects businesses and 
consumers every day through an aggressive IPR enforcement program.

    CBP uses technology to increase interdiction of fake goods, 
facilitates partnerships with industry, and enhances enforcement 
efforts through the sharing of information and intelligence. In 
addition to seizing goods at U.S. borders, CBP conducts post-import 
audits of companies that have been caught bringing fake goods into the 
United States, issues civil fines and, when appropriate, refers cases 
to other law enforcement agencies for criminal investigation.

    Strong partnerships with our Federal enforcement counterparts, 
effective targeting of high-risk shipments, and frontline interceptions 
of cargo at U.S. POEs produced more than 28,000 seizures of fake 
products in FY 2015, with an estimated MSRP of $1.35 billion that could 
have cheated or threatened the health of American consumers. CBP also 
enforced 152 exclusion orders enforcement action in FY 2015. CBP's 
collaboration with the HSI-led National Intellectual Property Rights 
Coordination Center \8\ (IPR Center) resulted in 538 arrests, with 339 
indictments and 357 convictions. IPR seizures increased nearly 25 
percent in 2015 from 2014, representing DHS' busiest year on record for 
IPR related seizures.
---------------------------------------------------------------------------
    \8\ The IPR Center is one of the U.S. Government's key weapons in 
the fight against criminal counterfeiting and piracy. Working in close 
coordination with the Department of Justice Task Force on Intellectual 
Property, the IPR Center harnesses the tactical expertise of its 23 
member agencies to share information, develop initiatives, coordinate 
enforcement actions and conduct investigations related to intellectual 
property theft.

    For example, in recent months, CBP officers nationwide have seized 
record numbers of counterfeit self-balancing scooters, commonly 
referred to as ``hoverboards.'' \9\ As of February 19, 2016, there have 
been 245 hoverboard seizures, totaling more than 63,000 pieces, with a 
MSRP of $24.7 million. Hoverboard seizures have been recorded in 42 
different ports of entry. The hoverboards contain batteries that are 
deemed unauthorized, and therefore counterfeit, as well as fake 
trademark logos. Major safety concerns have also surfaced following 
reports of fires possibly caused by substandard and counterfeit lithium 
ion batteries that power some hoverboards.
---------------------------------------------------------------------------
    \9\ CBP officers have seized hoverboards at ports in Chicago, 
Houston, Buffalo, International Falls, Miami, Charleston, Puerto Rico, 
Savannah, Sterling, Norfolk, and at John F. Kennedy airport.

    Invaluable to the enforcement of all trade laws, CBP's Laboratories 
and Scientific Services Directorate (LSSD) has been part of U.S. trade 
enforcement since 1841. LSSD plays a key part in the enforcement of 
trade priorities, including AD/CVD, IPR, classification, value, and 
transshipment. In FY 2015, this division handled 1,035 samples relating 
to 294 entries of importations of suspect AD/CVD violations \10\ and 
700 samples relating to 125 importations of suspect IPR violations.\11\ 
LSSD analyzes a wide range of commodities, including honey, garlic, 
plastic carrier bags, steel, bearings, wax candles, paper, pasta, 
hardwood and decorative plywood, and mushrooms.
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    \10\ The commodities analyzed involving the Nation's various AD/CVD 
orders included: honey, garlic, monosodium glutamate, glycine, 
melamine, plastic carrier bags, polyethylene terephthalate film, 
manganese dioxide, potassium phosphate salts, stilbenic optical 
brightening agents, chlorinated isocyanurates, steel, steel pipe, line 
pipe, steel nails, steel wire hangers, steel threaded rods, stainless 
steel wire rod, petroleum wax candles, aluminum extrusions, aluminum 
tubing, electrolytic multilayered wood flooring, artist canvases, 
thermal paper, tissue paper, coated paper, paper clips, pencils, solar 
cells and panels, narrow woven ribbons, woven electric blankets, 
refined brown aluminum oxide, and magnesia carbon bricks.
    \11\ The commodities analyzed involving potential IPR violations 
included: integrated circuits, network routers, electronic memory media 
(compact flash, SD, USB drives, etc.), movie DVDs, wearing apparel, 
pharmaceuticals, smartphones, perfume, video game consoles, and food.

    Partnerships with the trade community are critical to rooting out 
unfair trading practices and illegal trading activity. U.S. industry, 
trade associations, and importers provide critical insight to CBP on 
enforcement issues related to developments in AD/CVD, IPR, and other 
trade sensitive imports. CBP meets regularly with U.S. industry 
representatives to discuss circumvention schemes, and U.S. industry 
representatives share valuable market and product intelligence with us. 
CBP's online referral process, e-Allegations, facilitates the process 
for the trade community to provide CBP with critical information. Since 
e-Allegations' inception in June 2008, CBP has received more than 
10,500 commercial allegations. While the majority of e-allegations are 
IPR-related, nearly 10 percent are AD/CVD-related.\12\ Every allegation 
submitted through e-Allegations is reviewed and researched to determine 
the validity of the trade law violation(s) being alleged. Some are 
reviewed and resolved internally within CBP, and some are referred to 
ICE/HSI for further investigation. Intellectual Property Rights holders 
can also use our web-based tool, e-Recordation, to record their 
trademarks and copyrights with CBP. Recordation makes information on 
protected rights available to CBP offices throughout the United States.
---------------------------------------------------------------------------
    \12\ As of April 5, 2016.
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        the trade facilitation and trade enforcement act of 2015
    The Act strengthens CBP's trade enforcement capabilities and 
provides the agency with new tools to better enforce AD/CVD and IPR 
laws. It enhances our targeting capabilities and collaboration efforts 
with our international counterparts and with IP rights holders. The Act 
also strengthens our enforcement of other illicit trade activities, 
such as honey transshipment, and provides revenue-protecting provisions 
such as increased bonding for high-risk imports.

    Effective March 10, 2016, the Act eliminates the ``consumptive 
demand'' exemption, meaning that goods made with indentured, child, or 
other forced labor are no longer allowed into the country just to meet 
U.S. demand. With this change, CBP will no longer be legally required 
to weigh consumptive demand considerations to process information 
concerning forced labor. Since March 10, 2016, CBP has executed several 
withhold/release orders related to suspicions of goods made by convict 
or forced labor. Specifically, on March 29, 2016, I directed CBP 
frontline personnel to detain certain chemical, fiber, and potassium 
products believed to be manufactured in Chinese prisons. CBP will be 
updating its regulations to clarify this new provision, along with the 
process through which we are notified of potential violations of forced 
labor laws. In addition, effective March 10, 2016, CBP implemented an 
increase to the de minimis value for an imported shipment from $200 to 
$800. CBP has made the needed changes in ACE and we are training field 
personnel. This change will save businesses money, exempting low-value 
shipments from certain duties and taxes.

    The Act also authorizes several critical CBP programs and lays a 
strong foundation for many of our most vital initiatives. The law 
authorizes continued funding for operations and maintenance of ACE--the 
backbone of the U.S. Government's ``Single Window.'' As we continue to 
drive toward the President's year-end 2016 goal for delivery of all 
core trade processing capabilities in ACE, continued funding will 
ensure that ACE and the Single Window are fully supported over the long 
term.

    Supporting CBP's efforts in modernizing the way we work with the 
trade and do business, the Act formally recognizes the Centers and 
their importance to modernizing and streamlining operations by industry 
sector, generating expertise that also improves CBP's enforcement 
capabilities. The Act also simplifies and modernizes the drawback 
process for duty refunds, making drawback more workable for CBP while 
increasing efficiencies for trade stakeholders. Furthermore, 
recognizing the value of our industry advisory committee in improving 
CBP's trade operations and policies, the Act enhances the role of the 
Customs Operations Advisory Committee within DHS, and increases 
involvement from our ICE/HSI partners.

    In the travel environment, the Act improves funding mechanisms and 
supports CBP's Preclearance efforts, better positioning us to push our 
security efforts outward and increase locations around the globe to 
meet our goal of processing 33 percent of U.S.-bound air travelers 
through Preclearance by 2024. In addition, in accordance with the IPR 
outreach provisions in the Act, CBP revised Form 6059B, Customs 
Declaration Form, to include a warning to travelers of the penalties 
associated with transporting IPR-infringing goods.

    The Act has a significant impact on CBP, both organizationally and 
operationally, and we are working aggressively to shift resources and 
develop processes to ensure swift and effective implementation of the 
Act. We are establishing within the Office of Trade a Trade Remedy Law 
Enforcement Division, led by a director and a dedicated NTAG for 
evasion. We are also drafting numerous regulations, covering a broad 
span of trade enforcement areas, including IPR information sharing with 
rights holders; procedures for investigating claims of evasion of AD/
CVD orders and timelines; allowing donations of certain equipment, 
training, and other support services from the private sector for 
enforcing IPR; and setting minimum standards for brokers and importers 
regarding importer identity verification.

    As we move forward, CBP will work closely with this committee and 
with our trade partners to implement the provisions of the new law. For 
example, we will be collaborating with the private sector to ensure 
that participants of CBP's voluntary partnership programs, such as C-
TPAT, are receiving significant and measurable trade benefits in 
exchange for their participation. We also look forward to working with 
our industry partners to educate the trade community about how to file 
allegations with CBP. Since the Act was executed, CBP has hosted 
webinars, industry phone calls and participated in events on a range of 
topics related to implementation of the numerous provisions in the Act. 
We look forward to continuing our strong dialogue and partnership with 
private industry and with this committee as we work to implement the 
Act's trade enforcement and trade facilitation provisions.
                               conclusion
    CBP recognizes and is committed to our vital role in supporting the 
U.S. trade agenda. We will continue to enhance our Trade Transformation 
initiatives, which strengthen our enforcement capabilities and 
streamline trade for low-risk legitimate shipments. We will also 
continue to advance our risk-based targeting to enforce trade laws and 
interdict illegal cargo to ensure compliance with statutory and 
regulatory authorities and to minimize loss of revenue.

    CBP is committed to working with our Federal, international, and 
private sector partners to enhance our trade intelligence, detect and 
resolve unfair or unlawful trade practices, and develop solutions to 
facilitate legitimate trade and protect the U.S. economy.

    Chairman Hatch, Ranking Member Wyden, and members of the committee, 
thank you for the opportunity to testify today. I am happy to answer 
any questions you may have.

                                 ______
                                 
     Questions Submitted for the Record to Hon. R. Gil Kerlikowske
               Questions Submitted by Hon. Orrin G. Hatch
                      syrian and iraqi antiquities
    Question. A number of press reports claim that antiquities from 
Syria and Iraq are being sold in the United States, and those reports 
have linked such trade to terrorism financing. What law enforcement 
actions has CBP taken to determine the extent to which such antiquities 
are being trafficked in the United States and to implement existing 
import restrictions on trafficked antiquities? And, to what extent, if 
at all, has CBP assessed the risk of terrorist financing from such 
activities?

    Answer. U.S. Immigration and Customs Enforcement (ICE) Homeland 
Security Investigations (HSI) and its U.S. Customs and Border 
Protection partners monitor the importation of antiquities and cultural 
property from conflict areas, which include Iraq and Syria. Cultural 
property from those countries has been sold in the United States both 
legally and illegally for some time. It often takes 5 to 10 years from 
the time an artifact is looted, to the time it comes up for sale.

    While there are no confirmed cases linking the funding of terrorism 
from cultural property imported into the United States, HSI Special 
Agents are serving as liaisons to the Federal Bureau of Investigation's 
(FBI) Counterterrorism Division and the Terrorism Financing Operations 
Section. These Special Agents will support all ICE investigative 
efforts involving the theft and exploitation of cultural property, art, 
and antiquities for the purposes of providing illicit financial 
resources to further terrorism. ICE is committed to using all of its 
authorities to disrupt and prevent acts of terrorism and the material 
support of terrorism, to include the profiting by smuggling or 
trafficking of cultural property by any individual or organization 
associated with terrorism.

    CBP is actively enforcing existing import restrictions on 
trafficked antiquities, effecting seizures of trafficked cultural 
property, pursuing civil administrative penalties against violative 
parties involved, and supporting Department of State repatriation of 
those antiquities to the rightful countries of origin.

    Specifically, through the National Targeting Center-Cargo (NTC-C), 
CBP has conducted tactical trade targeting to identify (for CBP 
examination and/or investigative referral) suspected shipments of 
antiquities from Syria and Iraq, which may be trafficked in the United 
States and to implement existing import restrictions on trafficked 
antiquities in general.

    CBP has neither obtained nor developed any evidence that 
conclusively supports a link between the trafficking of Syrian and 
Iraqi cultural artifacts and the financing of terrorist operations. CBP 
has also not assessed the risk of any terrorist financing obtained from 
the trafficking of antiquities from Syria and Iraq for sale in the 
United States and is unaware of the scope and extent of any such 
activity.

    However, CBP actively collaborates with HSI to investigate the 
trafficking of antiquities for sale in the United States, e.g., by 
conducting data analysis, targeting and examinations in support and 
referring interdictions of cultural property to HSI for investigative 
consideration. The purpose of this close CBP coordination is to assist 
HSI efforts to identify, arrest, and convict criminal associates of 
organizations responsible for the smuggling of trafficked antiquities.

    CBP's National Targeting Center (NTC) has collaborated with the 
FBI, HSI, and Department of State (DOS) for targeting antiquities 
smuggling out of the territories in Syria and Iraq to United States. 
NTC will participate in FBI-led meetings in Switzerland to assess the 
movement of antiquities through the free trade zone. These meetings are 
not yet scheduled at the time of our response to this question. NTC 
also participated in an FBI-led conference on countering antiquities 
smuggling, held in Denver, Colorado this past July. NTC is working with 
various agencies to support law enforcement efforts related to 
importations of antiquities.
                        advance electronic data
    Question. Virtually every other week a company comes into my office 
describing the challenges that they face battling counterfeit products. 
Many of these counterfeit products are being advertised and sold on-
line. The products are then shipped in small packages, often through 
the U.S. Postal Service. This appears to be a very serious problem that 
harms both job-creators and consumers. Todd Owen, the Executive 
Assistant Commissioner of CBP's Office of Operations, has spoken 
publically about the need to collect electronic data in advance 
specifically because there is no way to identify and stop counterfeit 
products through manual inspection alone.

    Does CBP currently have authority to require advance electronic 
data from all small package shippers, including the U.S. Postal 
Service? If not, what additional authority would CBP need to require 
such data?

    Answer. For all modes of transportation, CBP has the authority to 
collect advance electronic data. With respect to shipments by the 
United States Postal Service, however, DHS must exercise its authority 
in consultation with the Postmaster General and determine the extent to 
which the advance electronic data requirements may be applied to USPS 
shipments. CBP continues to work with USPS in obtaining advance 
electronic data from multiple countries, as they receive it from other 
countries through a Memorandum of Understanding. Currently, CBP 
receives limited advance electronic data on international mail packages 
from the following countries: Australia, Canada, China, France, Hong 
Kong, South Korea, Singapore, Spain, and the United Kingdom.

    CBP has played an integral part in working with the Universal 
Postal Union (UPU) to amend Article 9 of its convention to adopt a 
security strategy that ``. . . includes the principle of complying with 
requirements for providing electronic advance data on postal items. . . 
.''

    CBP has also been actively involved in developing the implementing 
provisions of this Article in cooperation with UPU subsidiary bodies 
and other international organizations. Along with these efforts, USPS 
and DHS have contributed significantly to efforts to: establish 
international electronic messaging and data sharing standards agreed to 
by the UPU and World Customs Organization (WCO); develop a global 
postal electronic data model; and establish minimum security standards 
for physical screening and security of all facilities world-wide that 
process international mail.
                additional mutual recognition agreements
    Question. Mutual recognition arrangements, or MRAs, can be very 
effective tools to enhance trade facilitation and trade enforcement. As 
you know, the United States currently has a number of MRAs in place.

    Can you please tell us what additional countries are being 
considered for MRAs? Is CBP prioritizing MRAs for countries that are 
signatories to existing free trade agreements with the United States?

    Answer. CBP has established procedures prior to engaging countries 
and their supply chain security programs in joint work plans and Mutual 
Recognition Arrangement (MRA) discussions. There must be an established 
Authorized Economic Operator (AEO) program of an operational nature for 
CBP to engage within these efforts. While it is not a pre-requisite, 
CBP does consider trade volume and free trade agreements that we are 
signatories with when prioritizing countries and AEO programs to engage 
with.

    Since 2007, CBP has signed a total of 11 MRAs with the following 
countries/
programs: New Zealand, Canada, Mexico, Jordan, Japan, South Korea, 
Taiwan, Singapore, the European Union, Israel and the Dominican 
Republic. Out of those 11, 7 are with countries that the U.S. has a 
free trade agreement in force with.

    CBP/Customs-Trade Partnership Against Terrorism (C-TPAT) has signed 
joint work plans towards an MRA with the following countries: China, 
India, Brazil, Peru and Uruguay. Such joint work plans detail the 
process by which C-TPAT and the AEO program will engage in a systematic 
and multi-step analysis of each other's program to determine 
compatibility and to verify if an MRA is feasible.
                        customs bill section 303
    Question. Section 303 of the customs bill closes a statutory 
loophole regarding the seizure and disclosure of information related to 
circumvention devices. Can you please provide us with CBP's timeline 
for implementation of this new provision?

    Answer. CBP is currently drafting regulations to implement section 
303 of the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA) 
and and is seeking input from rights owners in this regard. CBP 
anticipates that it will have completed work on this initiative within 
the 1 year period provided for in TFTEA.
             new rules implementing drawback simplification
    Question. The recently enacted customs bill includes new rules 
simplifying the administration of the duty drawback system that will go 
into effect 2 years after the date of enactment the bill. As you know, 
this is an arcane area of the law that we have been working to simplify 
for at least 10 years. Can you share with us the status of your efforts 
to write new rules implementing drawback simplification? And how do you 
intend to engage stakeholders for their input?

    Answer. The drawback community and CBP have a history of working 
together. CBP has been engaging the trade community on this effort ever 
since passage of the Trade Facilitation and Trade Enforcement Act of 
2015 to include the Trade Support Network (TSN) and the Commercial 
Customs Operations Advisory Committee (COAC). CBP meets and 
communicates regularly with a smaller working group that is part of the 
TSN drawback committee to review system requirements and policy. 
Furthermore, CBP recently attended the American Association of 
Exporters and Importers Drawback Committee meeting on June 8, 2016, to 
share progress and seek stakeholder input. CBP continues to meet with 
the drawback community. There have been several drawback working group 
meetings where CBP and the drawback community discussed the upcoming 
implementation. We also have intermittent conference calls with working 
group members to discuss specific drawback issues that need to be 
addressed.

    While the associated regulatory changes are not required until 
February 24, 2018, CBP has begun laying the groundwork for promulgating 
new regulations to ensure that the deadline is met. CBP Office of 
Trade/Policy and Office of Trade/Regulations and Rulings have been 
involved since the passage of the Act addressing what regulations would 
need to be updated. CBP is coordinating a regulation working group 
which will be made up of Trade and CBP personnel to address all 
concerns. Initial discussions are planned with this new workgroup and a 
timeframe for new regulations are being addressed. This new working 
group will address the additional regulations.
                          information sharing
    Question. The new customs law requires CBP to share information and 
photos of suspect counterfeit merchandise with rightsholders when CBP 
determines that doing so would help determine whether the merchandise 
is counterfeit.

    How is CBP complying with section 302 of the Trade Facilitation and 
Trade Enforcement Act of 2015 (TFTEA)?

    Answer. As a general matter, section 302(a) of TFTEA provides that 
if CBP suspects that violative Intellectual Property Rights (IPR) 
merchandise is being imported, and determines that examination or 
testing by the right owner would assist the agency in determining the 
existence of a violation, it shall disclose certain information 
appearing on the imported merchandise or its retail packaging. 
Accordingly, CBP is in the process of drafting regulations that would 
implement section 302(a).

    In drafting the regulations to implement section 302, however, we 
are also taking into account section 499 of the Tariff Act of 1930, as 
amended by the Customs Modernization Act, which provides that when 
merchandise is detained CBP shall advise the importer of the nature of 
any information which, if supplied, might accelerate the disposition of 
the merchandise. To this end, we anticipate following the same approach 
as was adopted in the recently published final rule on trademark 
disclosure (80 Fed. Reg. 56370 (September 18, 2015); see also 19 CFR 
Sec. 133.21). These regulations require that the importer be notified 
of a detention and given 7 business days in which to present 
information that would establish to CBP's satisfaction that the 
detained merchandise does not bear a counterfeit mark.

    Question. In the previous 2 fiscal years, how many times has CBP 
requested assistance from rightsholders to determine the legitimacy of 
an import(s)?

    Answer. CBP does not systematically track the frequency with which 
it requests assistance from right owners at detention. In order to do 
so, CBP would need to implement certain system changes to capture the 
data. As a general matter, however, CBP often reaches out to rights 
holders when additional information would be helpful in determining if 
an imported article bears a counterfeit mark or piratical work.
                            tftea compliance
    Question. With the signing of the TFTEA, CBP's authority for 
sharing of information with rightsholders from the National Defense 
Authorization Act of 2012 was terminated. However, stakeholders have 
informed me that CBP continues to cite the terminated authority when 
requesting assistance from rightsholders. When does CBP intend to 
comply with the new law?

    Answer. CBP is aware that subsection 818(g) of the National Defense 
Authorization Act (NDAA) of 2012 no longer has force or effect. The 
NDAA was one of a number of authorities pursuant to which CBP's 
trademark disclosure regulations were promulgated. In order to comply 
with section 302 of the TFTEA, CBP will be issuing implementing 
regulations as noted above. CBP's recently-promulgated trademark 
disclosure regulations, at 19 CFR Sec. 133.21 remain in effect, 
however.
                           importer response
    Question. Under current regulations, CBP provides an importer with 
up to 7 days to provide information substantiating the legitimacy of 
their import(s) before requesting assistance from a rightsholder. In 
the previous 2 fiscal years, what is the average time it takes for an 
importer to respond to CBP?

    Answer. As noted above, CBP does not systematically track rights 
holder assistance, nor the average time it takes for an importer to 
respond to a request for assistance. As a general matter, however, 
anecdotal evidence suggests that most right owners respond to requests 
for assistance within a matter of days.

    Question. In the previous 2 fiscal years, how many importers have 
provided CBP with information that has substantiated the legitimacy of 
their import(s) and negated the need to request assistance from a 
rightsholder?

    In the previous 2 fiscal years, how many importers have provided 
CBP insufficient information to CBP to substantiate the legitimacy of 
their import(s)?

    Answer. As noted above, there is limited tracking of detention 
information, and the tracking process varies between ports. However, 
many ports maintain detention packets with information on why detained 
merchandise was released. If merchandise detained for a possible IPR 
violation is released, the log notes may or may not indicate why the 
goods were released. Factors leading to release may include, importer-
provided information, IPR owner information, or even a lack of 
cooperation on the part of the IPR owner (e.g., they do not timely 
respond and we do not have enough information to move from a reasonable 
suspicion to probable cause).
                  voluntary abandonment pilot program
    Question. As an alternative to the normal seizure process, CBP has 
been piloting a voluntary abandonment program in the express 
consignment environment. Under what statutory authority does the 
voluntary abandonment pilot program operate?

    When a seizure is made in the traditional seizure process, CBP 
provides the rights holder with eight data elements. During the 
voluntary abandonment pilot, however, CBP has stated that it would be a 
violation of the Trade Secrets Act (18 U.S.C. 1905) to provide all 
eight elements, and thus CBP only provides five of the eight data 
elements to rights holders. Please provide a detailed explanation 
regarding why it is permissible to provide all eight data elements to 
rights holders under the traditional seizure program but impermissible 
when goods are ``stopped'' using the voluntary abandonment pilot.

    Answer. CBP developed the Voluntary Abandonment Program as a pilot 
program to prevent illicit goods from entering commerce in response to 
a significant increase in IPR infringing merchandise being imported 
through purchases made on the Internet.

    The Voluntary Abandonment Program is based on a different legal 
authority than the detention and seizure process. The ability of 
importers to abandon their merchandise is governed by 19 U.S.C. 1506, 
which requires CBP to make an allowance in duty liability for 
merchandise abandoned to the United States, and 19 U.S.C. 1609, which 
provides CBP with the authority to forfeit property to which no claim 
of ownership is given. CBP regulations on abandonment include 19 CFR 
Sec. Sec. 127.12, 127.13, and 158.42. Under the Voluntary Abandonment 
Program, both the importer of record and ultimate consignee of the 
merchandise must agree to voluntarily relinquish their proprietary 
interest in the merchandise.

    In contrast to voluntary abandonment, CBP must make an affirmative 
determination of infringement during the detention and seizure process. 
When CBP detains suspected counterfeit merchandise, the agency 
initially only shares information that is not protected by the Trade 
Secrets Act with rights holders (the 5 elements listed in 19 CFR 
Sec. 133.21(b)(4)). In addition, when CBP needs the assistance of 
rights holders to determine whether detained merchandise bears a 
counterfeit mark, the agency has special statutory authority to share 
additional information that is protected by the Trade Secrets Act with 
rights holders (19 CFR Sec. 133.21(c)). Only after CBP has determined 
that detained merchandise is counterfeit and seizes merchandise does 
the agency provide rights holders with 3 additional data elements 
protected by the Trade Secrets Act pursuant to 19 CFR Sec. 133.21(e).
                      intellectual property rights
    Question. It is widely documented that Canada refuses to enforce 
intellectual property rights (IPR) for in-transit cargo destined for 
the United States.

    What is CBP doing to target these shipments and prevent them from 
entering the United States?

    Answer. CBP has implemented a three-pronged approach to IPR 
enforcement incorporating: (1) direct engagement with rights holders 
through several roundtable events; (2) increased international 
cooperation with foreign governments through bi-lateral agreements 
(e.g., China and Singapore) and multilateral partnerships like Asia-
Pacific Economic Cooperation that facilitate joint or simultaneous 
enforcement operations; and (3) increased focus on express consignment 
shipments which accounted for 52 percent of all IPR seizures in fiscal 
year 2015. High risk shipments are identified through CBP's targeting 
systems, and interdiction and seizure data provide valuable 
intelligence for use in targeting subsequent shipments and tracking 
trends. In addition to CBP engagement with Canada Customs counterparts 
on IPR-related issues, targeting of high risk in-transit cargo entering 
the U.S. via Canada occurs at both the national and the port levels and 
through local IPR enforcement operations.

    Question. CBP recently released its fiscal year 2015 statistics on 
seizures of IPR infringing imports. How many of these seizures are from 
cargo transiting through Canada?

    Answer. During fiscal year (FY) 2015, CBP's enforcement efforts 
resulted in 28,865 IPR seizures which represented a 25 percent increase 
over FY 2014. CBP was able to identify 109 seizures or 0.38 percent 
that were sourced from Canada (i.e., exported from (including 
transitioning through) or made in Canada).
                      exclusion order proceedings
    Question. Given the critical role that intellectual property plays 
in our economy and the emphasis that the Congress has placed on 
supporting CBP's role to stop infringing products at the border, I am 
interested in examining CBP's efforts to increase the transparency, 
efficiency, and effectiveness of the enforcement of section 337 
exclusion orders.

    Many stakeholders have proposed that CBP, when investigating the 
applicability or inapplicability of an ITC exclusion order to a 
particular product, institute inter partes proceedings rather than ex 
parte proceedings in which rightsholders may not participate. I would 
support such inter partes proceedings. I understand that CBP is in the 
process of developing such a proposal. Please provide a detailed 
explanation of the proposal, including its development progress and 
CBP's plans for finalization.

    Answer. CBP is drafting a Notice of Proposed Rulemaking (NPRM) to 
amend part 177, CBP Regulations (19 CFR part 177) by creating a new 
subpart C to implement an inter-partes proceeding in respect of ruling 
requests submitted to the agency in connection with the administration 
of exclusion orders issued by the U.S. International Trade Commission 
(ITC).
                              jurisdiction
    Question. As you know, the ITC issues an exclusion order based on 
an extensive legal and factual record developed with the benefit of an 
adversarial process, expert testimony, outside counsel, the expertise 
of an Administrative Law Judge, and review by the Commission. Some have 
argued, therefore, that complex legal and factual issues regarding 
allegedly redesigned products are more appropriately directed to the 
ITC rather than CBP. What are your views?

    Answer. The ITC has advised that section 337 expressly places the 
responsibility for the enforcement of exclusion orders expressly with 
the Secretary of the Treasury, and as delegated, to the Commissioner of 
CBP. Accordingly, CBP is of the view that questions concerning the 
enforcement of exclusion orders, including redesigns, are appropriately 
directed to CBP. In order to enforce exclusion orders, the Regulations 
and Rulings Directorate, Office of Trade, has attorneys who are members 
of the patent bar and familiar with 337 practice, and are able to 
adjudicate the admissibility of articles potentially subject to ITC 
exclusion orders. CBP understands that questions about redesigned 
articles can also be addressed to the ITC but notes that CBP's NPRM 
proposal would complement those procedures.
                     current regulatory environment
    Question. Under the current regulatory environment, how do CBP and 
the ITC work together to administer exclusion orders?

    Answer. CBP meets regularly with the ITC to review specific 
exclusion orders as well as to discuss general matters relating to the 
enforcement and administration of exclusion orders. Following the 
issuance of an exclusion order, the ITC provides CBP with electronic 
copies of the administrative record. When making infringement 
determinations, CBP reviews the administrative record at the ITC, 
including the Administrative Law Judge's Initial Determination and the 
Commission Opinion. In situations where the record is unclear CBP 
requests assistance from the ITC regarding the record; however, if 
there are no questions concerning specific findings in the ITC record, 
CBP does not contact the ITC inasmuch as the ITC has made it clear that 
CBP, not the ITC, is responsible for infringement determinations at the 
border.

    Question. What are the benefits and the limitations of the current 
regulatory environment, in which both CBP and the ITC have certain 
authorities and obligations?

    Answer. The current system functions well given that CBP, as a 
border agency, is best placed to make admissibility determinations. The 
disadvantage of the current system, however, is that CBP determinations 
can be challenged in a forum where neither the ITC nor the complainant 
are represented. Accordingly, as a matter of public policy the current 
system could be improved as noted below in the response to the 
following question.

    Question. What can be done to improve the effectiveness and to 
increase the efficiency of the administration of exclusion orders?

    Answer. From CBP's perspective, one way to improve the 
effectiveness and to increase the efficiency of the administration of 
ITC exclusion orders is to establish an inter-partes procedure at CBP 
to adjudicate rulings requests submitted to the agency in the post-
issuance phase. The ITC Trial Lawyers Association, among others, has 
supported the concept. As noted above, CBP is working on a notice of 
proposed rulemaking to address this concern.

                                 ______
                                 
                 Questions Submitted by Hon. Ron Wyden
                trade enforcement act enforce provisions
    Question. One of my top priorities in the Trade Enforcement Act is 
the Enforce procedures to combat evasion of anti-dumping and 
countervailing duty orders. The Enforce provisions represent years of 
work by this committee, starting with a sting operation I undertook as 
chairman of the Trade Subcommittee to reveal the brazen evasion of U.S. 
trade laws by foreign, often Chinese, exporters. Although CBP has put 
in place new initiatives to address evasion, it hasn't been enough, as 
was evident from a recent filing of U.S. Steel describing the ease with 
which importers can find foreign exporters willing to evade U.S. laws. 
If trade cheats evade our laws, domestic businesses are harmed, making 
our trade remedy laws all but useless in protecting American jobs. The 
Enforce provisions, if robustly implemented, can go a long way to 
preventing this result. It is important both to get it done now, and to 
get it done right.

    Can you describe how CBP plans to implement the Enforce provisions 
within the 180-day deadline, and what steps it has taken to engage 
stakeholders, including the domestic industries directly impacted by 
evasion?

    Answer. CBP has drafted regulations implementing section 421 of 
title IV of the TFTEA (Enforce and Protect Act, EAPA). The interim 
final rule implementing those regulations was published within the 
statutory deadline, on August 22, 2016, and parties have 60 days within 
which to provide comments to CBP. CBP has engaged, and will continue to 
engage impacted stakeholders throughout the implementation process.

    CBP's West Coast Trade Symposium addressed TFTEA during the General 
Session on opening day and discussed title IV in detail during panel 
discussions on day 2. CBP has also participated in multiple meetings 
and discussions with various trade groups including the American 
Institute for International Steel and the Retail Industry Leaders 
Association. Furthermore, within CBP's Trade Remedy Law Enforcement 
Directorate, a Trade Enforcement Task Force has been stood up that will 
initially administer the new EAPA provisions and coordinate across CBP 
resources to ensure timely and transparent management.

    Question. In particular, the Enforce process should be transparent 
and allow all interested parties an opportunity to meaningfully 
participate. Can you assure me that CBP shares this priority and 
describe how the Enforce procedures will reflect this?

    Answer. CBP agrees that the EAPA allegation process should be 
transparent and encourage participation. During the investigation 
phase, CBP will be reaching out to all interested parties with 
questionnaires and other forms of inquiries in order to gather 
pertinent information related to the investigation. Also, all parties 
to the investigation will be informed of CBP's decision to investigate 
and will be provided ample opportunity to contribute evidence on the 
record.
                        ``e-allegations'' system
    Question. Up to now, CBP has used the ``e-allegations'' system to 
accept allegations of evasion. Can you describe to me how that system 
differs from the ENFORCE process, as you see it? For example, what 
opportunities will interested parties have to participate in the 
investigations once they are initiated?

    Answer. CBP will create a separate track in the existing e-
allegations system in order to accommodate the open and transparent 
processing of EAPA allegations. The previous system allowed for 
anonymous submissions; however, under the new EAPA allegation 
processing guidelines, parties to the investigation will be notified by 
CBP and will be given the opportunity to provide documentary evidence 
to be placed on the record.
                           revenue collection
    Question. A fundamental task of CBP is to collect revenue. CBP's 
collection of tariffs on imports is the second largest source of 
revenue for the Federal Government. In CBP's own estimation it 
collected 98.61% of import revenue owed in 2015. Over 98% sounds pretty 
good, until you realize that means over $400 million in duties went 
uncollected in a single year. Just think what that means over 2 years, 
or 10. In addition, CBP's revenue collection protects U.S. businesses 
and workers. Much of the uncollected revenue comes from foreign goods 
subject to anti-dumping and countervailing duty orders put in place to 
protect U.S. manufacturers from unfair trade practices.

    Congress said in the Trade Enforcement Bill that revenue collection 
is a priority trade issue. What is CBP doing to make revenue collection 
a priority, particularly when that revenue is also collected to protect 
American workers and business?

    Answer. Revenue protection is one of the oldest missions of CBP, 
dating back to 1789 when the U.S. Customs Service was established. For 
many years, revenue was considered a Priority Trade Issue (PTI), and 
the Trade Facilitation and Trade Enforcement Act of 2015 once again 
elevates revenue to PTI status. As such, the Drawback and Revenue 
National Targeting and Analysis Group (NTAG) located in Chicago, IL, 
focuses its efforts on applying risk management principles to target 
misclassification, undervaluation, and other material revenue risks, 
while also addressing drawback policy and enforcement issues to prevent 
the over-refunding of duties. In fact, the NTAG uses Trade Compliance 
Measurement statistics as one means to identify areas in which duties 
are owed, and implements corrective action aimed at collecting unpaid 
duties. CBP has also established a Trade Enforcement Task Force to 
focus on issues involving anti-dumping and countervailing duty (AD/CVD) 
evasion, which includes a renewed focus on ensuring AD/CVD duties are 
collected.
         centers for excellence and expertise (cees) authority
    Question. The Trade Enforcement Act reflects the priorities of 
Congress, and is the result of a great deal of deliberation on how we 
can best protect U.S. revenue and ensure that American businesses and 
workers aren't harmed by unfair and illegal trade practices. In some 
cases, this means significant reorganization that is also meant to 
change the way that CBP approaches trade enforcement. It is critical 
that CBP does not think it can merely change titles and call it a day 
for implementing these changes. For example, the Centers for Excellence 
and Expertise (``the CEEs'') are sector-based centers of trade 
enforcement and facilitation. The CEEs reflect our highly sophisticated 
economy--we shouldn't have folks sitting at ports looking at shipments 
of steel, for example, not knowing what other shipments may be coming 
in at other ports of the same product.

    We need experts in the product, with knowledge of what is going on 
across our ports of entry. Leaders of the CEEs need to have complete 
authority over those reporting to them, and the tools to be effective. 
How are you ensuring that this is happening?

    Answer. The Centers of Excellence and Expertise (Centers) represent 
one of CBP's modernization efforts to better align the trade component 
with the current business models of the importing community. As such, 
the Centers are organized on an industry basis, applying account-based 
principles, in which the agency works with the account as a whole 
rather than the traditional focus on individual transactions. 
Additionally, the Centers have national authority to make trade 
decisions and determinations, and the trade staff for a Center is 
located at various ports of entry (POE) in order to ensure transparency 
and visibility into shipments and products being imported at all 
locations. This means that all of an importer's trade transactions are 
being processed by one Center, which provides uniformity and 
predictability to the importer while also positioning CBP to better 
understand the global activities of companies and the industry. CBP can 
then use this enhanced knowledge obtained through the Centers to 
strengthen enforcement methods on a national basis, rather than on a 
port basis. CBP is fully dedicated to ensuring that this transformation 
effort serves as the premier model for trade enforcement and 
facilitation; that the Centers are fully and permanently staffed with 
trade personnel; and that our automated systems provide the flexibility 
and capability for national processing. From an organizational 
perspective, the Centers are national POE for trade processing with the 
permanent staff under their chain of command located across many POE 
across the Nation.
                         de minimis thresholds
    Question. The Trade Enforcement bill didn't only include 
enforcement provisions, it also included a provision to help small 
businesses that has long been a priority of mine. It raises the de 
minimis threshold for small shipments to be exempt from customs duties 
and other filing requirements--from $200 to $800. There is a vibrant 
economy of small businesses thanks to the spread of the Internet and 
platforms like eBay, Etsy and others, and the best way for us to 
support them is to cut out the red tape. Not everyone can hire a 
customs broker to help them import raw materials, or export to their 
customers abroad. I hope that the U.S. example will encourage other 
countries to raise their de minimis thresholds. To achieve these goals, 
the U.S. threshold increase must be meaningful.

    Will CBP or any other agency place any requirement on imports under 
the new threshold that did not apply when it was at $200?

    Answer. CBP has been engaged with the trade community and our 
Partner Government Agencies (PGA) concerning the TFTEA section 901, de 
minimis provision. CBP has implemented only the value increase from 
$200 to $800 at this time. No other requirements were changed. CBP has 
been gathering comments from our PGA community and providing 
information and education about the de minimis provisions for each PGA. 
CBP will not place any additional requirements for the new value 
threshold. At this time, we are not aware of any new requirements from 
another PGA.
                        forced labor prohibition
    Question. In the Trade Enforcement Act, thanks to the leadership of 
Senator Brown, we closed an egregious loophole that could have allowed 
products like these into the United States. Now we can say that the 
product of forced labor is never permitted here. The Trade Enforcement 
Act has brought some welcome attention to the prohibition, and I am 
pleased to see CBP's actions on two orders related to products made in 
China with forced convict labor, including soda ash. However, the 
renewed interest in the provision has raised questions from 
nongovernmental organizations and U.S. importers on how the forced 
labor prohibition will be implemented going forward.

    What outreach is CBP undertaking to provide guidance to these 
stakeholders and partner with them on how the prohibition will be 
enforced going forward?

    Answer. CBP is actively engaging with Non-Governmental 
Organizations (NGOs), industry stakeholders, foreign producers, Federal 
partners, and others, urging them to come forward with information 
regarding suspected use of forced labor with respect to goods imported 
into the United States.

    Because many NGOs are uniquely positioned to gather information in 
places where CBP do not have the authority to operate, by the end of FY 
2016, the CBP Office of Trade (OT) will send a forced labor Fact Sheet 
to 93 NGOs who are actively engaged in forced labor and forced child 
labor issues and leverage the CBP Centers of Excellence and Expertise 
to meet with other interested stakeholders.

    As part of our outreach to industry stakeholders, CBP provided 
three breakout sessions on forced labor enforcement during the recent 
CBP West Coast Trade Symposium, in May 2016. The breakout sessions were 
attended by domestic industries, importers, customs brokers, customs 
attorneys, and members of the press. Furthermore, OT has met with, or 
provided information to, the following groups: Center for American 
Progress; Central American Sugar Association; Chicken of the Sea; 
Deloitte; Environmental Defense Fund; Federal Human Capitol; Food 
Marketing Institute; Global Forum on Responsible Business Conduct, 
OECD; Honduran Embassy; Institute for Business and Human Rights of 
Georgetown Law; IO Sustainability; Laogai Research Foundation; LCDR; 
National Retail Federation; Nestle Corporate Affairs; Pelagic Data; 
Resources for the Future; Royal Thai Embassy; Sodexo; Stove Boat; 
Stimson; Target; U.S. Council for International Business; U.S. Fashion 
Industry Association; Wal-Mart; Wasserman DC; White House Council on 
Environmental Quality; Worker Rights Consortium; and World Wildlife 
Fund.

    CBP is also engaged with foreign producers, interested importers, 
and trade groups to explain the impact of the repeal of consumptive 
demand and the process of any subsequent CBP enforcement action or 
detention.

    In addition, CBP is collaborating with the Department of State, 
Department of Labor, and ICE/HSI to present an informational webinar on 
forced labor to embassy Economic and Labor Officers.
                          gao's recommendation
    Question. Near the end of the George W. Bush administration, the 
Government Accountability Office conducted an investigation into CBP's 
approach to revenue collection and found some troubling information. 
First, the GAO found that Homeland Security auditors had not conducted 
any assessments of high-risk areas within customs revenue functions and 
did not perform any audits focused on improving these functions. 
Second, CBP had not determined how many staff and what skills it needs 
in customs revenue positions since the agency was moved from the 
Department of Treasury into the Department of Homeland Security, when 
Congress created the department in 2003.

    How has CBP responded to this criticism by the GAO and implemented 
the GAO's recommendations in these two areas?

    Answer. The Government Accountability Office (GAO) report 07-529 
(job code 320470), entitled Customs and Border Protection Needs to 
Improve Workforce Planning and Accountability, included two 
recommendations for CBP, both of which were closed as implemented, and 
one recommendation directed to the Department of Homeland Security 
(DHS) Office of Inspector General (OIG).

    In recommendation 1, GAO provided that the Commissioner of CBP 
should develop a strategic workforce plan that aligns its human capital 
efforts with its objectives related to performing customs revenue 
functions. In response, U.S. Customs and Border Protection (CBP) 
adopted several documents that together contain the elements of a 
strategic workforce plan. In 2009, CBP issued a Resource Optimization 
Model that assists management in determining the optimal level of staff 
to meet the performance outcomes and goals of CBP's trade mission. In 
addition, CBP issued a Human Capital Strategy for Revenue Positions 
Fiscal Years (FY) 2010-2011, and CBP Trade Strategy FY 2009-2013, both 
of which address the principles outlined in GAO's recommendation for a 
strategic workforce plan. Finally, CBP officials discuss quarterly 
updates on the status of customs revenue staffing to evaluate progress 
toward human capital goals.

    In recommendation 2, GAO suggested that the Commissioner of CBP 
establish specific customs revenue performance measures and targets as 
well as evaluate, track, and report performance measures in annual 
agency Performance and Accountability Reports for congressional and 
public oversight of customs revenue functions. In response, in FY 2009, 
CBP developed two new measures for the Department of Homeland 
Security's FY 2010-2011 Annual Performance Plan: (1) the percentage of 
estimated revenue losses due to non-compliance with trade laws, 
regulations, and agreements, and (2) estimated revenue losses due to 
non-compliance with trade laws, regulations, and agreements (in 
millions). The two measures are tracked and monitored in the DHS Future 
Years Homeland Security Program database system and were submitted for 
inclusion in the FY 2011 Congressional Budget Justification.

    Recommendation 3, in GAO-07-529, was directed to the DHS OIG and 
there was no action required of CBP.
                     single transaction bond errors
    Question. In response to concerns about the rampant evasion of 
anti-dumping and countervailing duties employed by foreign suppliers, 
CBP told this committee that increasingly requires importers to post a 
``Single Transaction Bond'' in order to improve the likelihood that CBP 
can collect any duties that are determined to be owed. In June of 2011, 
the Office of the Inspector General determined that CBP did not have 
adequate controls over its Single Transaction Bond process. 
Specifically, CBP could not identify the number of these bonds it 
required in a given year. Many of the bonds were inaccurate or 
incomplete, and there was no consistent policy as to when the bonds 
should be required. Furthermore, the Inspector General determined that 
more than half of the single transaction bonds it reviewed had errors 
that impact CBP's ability to collect on the bond.

    Can you describe to the committee how CBP responded to the 
Inspector General's criticism and recommendations?

    Answer. In response to the Office of Inspector General's 
recommendations, CBP developed E-Bond, which centralizes CBP's 
management of Single Transaction Bonds (STBs), and helps to facilitate 
the collection of funds secured by STBs. E-bond is a web-based bond 
application which serves as the platform through which sureties provide 
STBs when both an entry and entry summary are filed in CBP's Automated 
Commercial Environment (ACE). E-bond became operational in January 
2015, and since then, the number of inaccurate/incomplete STBs (among 
the bonds filed electronically) has decreased.

    In addition, in May 2012, CBP issued guidance to CBP personnel on 
the use of STBs to protect against potential losses of revenue with AD/
CVD. This guidance discusses when the bonds should be required and how 
to determine the amount of the STBs to protect the revenue.

    Question. The Inspector General said that of the $12 billion in 
Single Transaction Bonds CBP accepted in 2009, two thirds--$8 billion--
of them contained errors that could result in non-collection. What do 
you think those numbers are today--how many Single Transaction Bonds 
were accepted in 2015 and how many of them are likely to contain the 
types of errors the Inspector General identified?

    Answer. On January 3, 2015, CBP deployed e-Bond processing in the 
Automated Commercial Environment (ACE). E-Bond enables sureties or 
their designated agent to electronically transmit a Continuous or 
Single Transaction Bond (STB) to CBP and receive a positive response 
from ACE within 10 or 15 seconds, while providing a centralized view of 
the number of bonds filed via e-Bond. E-Bond provides a number of 
validations around the bond information submitted to ACE that ensures 
the validity and integrity of the bond prior to ACE allowing cargo to 
be released. These validations help to greatly reduce or eliminate many 
of the items the Inspector General identified that could result in non-
collection. In 2015, 107,030 STBs totaling $1,246,605,154, were filed 
through ACE's e-Bond program. Following July 23, 2016, when ACE cargo 
release becomes mandatory, all STBs will be required to be filed via e-
Bond, meaning that the full universe of all STBs filed after July 23, 
2016 will be available in e-Bond. CBP anticipates that the mandatory 
use of e-Bond will continue to lead to a significant improvement in the 
quality of STBs.
                           ``port shopping''
    Question. Additionally, what measures have you taken to ensure that 
use of these bonds is consistent across ports--so that unscrupulous 
foreign suppliers can't ``port shop''--and that these bonds cover the 
full amount of the potential liability and can actually be collected?

    Answer. CBP employs targeting systems to alert all ports when one 
port requests an STB to address revenue threats involving AD/CVD, so 
that STBs will be required uniformly at each port for the particular 
merchandise at issue. CBP has issued internal guidance on the amount of 
the STBs to ensure that these bonds cover the full amount of the 
potential liability.
                             unpaid duties
    Question. Can you provide recent statistics on the overall amount 
of unpaid duties actually covered by bonds and the collection rate?

    Answer. $642.7 million in open duty bills is currently associated 
with bonds which have not been exhausted (i.e., collections from the 
surety still likely/possible). $2.5B in open duty bills is currently 
associated with bonds where the bond has already been exhausted (i.e., 
surety has paid).

    Collections rate for FY 1986-FY 2015 is 99.5%. Calculated as 
(current open debt + amounts written off)/total collections.

    Question. The Inspector General said that of the $12 billion in 
Single Transaction Bonds CBP accepted in 2009, two thirds--$8 billion--
of them contained errors that could result in non-collection. What do 
you think those numbers are today--how many Single Transaction Bonds 
were accepted in 2015 and how many of them are likely to contain the 
types of errors the Inspector General identified?

    Answer. On January 3, 2015, CBP deployed e-Bond processing in the 
Automated Commercial Environment (ACE). E-Bond enables sureties or 
their designated agent to electronically transmit a Continuous or 
Single Transaction Bond (STB) to CBP and receive a positive response 
from ACE within 10 or 15 seconds, while providing a centralized view of 
the number of bonds filed via e-Bond. E-Bond provides a number of 
validations around the bond information submitted to ACE that ensures 
the validity and integrity of the bond prior to ACE allowing cargo to 
be released. These validations help to greatly reduce or eliminate many 
of the items the Inspector General identified that could result in non-
collection. In 2015, 107,030 STBs totaling $1,246,605,154, were filed 
through ACE's e-Bond program. Since July 23, 2016, when ACE cargo 
release became mandatory, all STBs are required to be filed via e-Bond. 
CBP anticipates that the mandatory use of e-Bond will continue to lead 
to a significant improvement in the quality of STBs.
              information sharing on counterfeit products
    Question. The import of counterfeit products is a growing threat to 
U.S. consumers and businesses--but trade cheats have become so 
sophisticated that it can also be a challenge for CBP to accurately 
identify fake drugs, computer chips, and even sneakers. In the Trade 
Enforcement Act, we gave CBP authority to share information about 
suspected counterfeit products with those who are best equipped to 
identify them--the U.S. companies who make the real thing.

    Can you provide an overview of how CBP has used this authority 
already? And, can you provide examples of how you expect it to further 
CBP's detection of counterfeits in the future?

    Answer. Section 302(a) authorizes CBP to disclose information 
appearing on merchandise or its retail packaging. Pursuant to earlier 
authority provided by subsection 818(g) of the National Defense 
Authorization Act (NDAA) of 2012, now repealed, CBP has been disclosing 
such information at the time of detention, either by means of digital 
images or by making available a sample of the article concerned, since 
the interim final rule on trademark disclosure was published in 2012 
(See 77 Fed. Reg. 24375). Prior to supplying the information to the 
trademark owner, the importer is notified and given 7 days in which to 
respond with information that would establish that the detained 
merchandise does not bear a counterfeit mark, though rarely is the 
importer successful in establishing this to CBP's satisfaction. CBP 
considers that the ability to disclose ``information appearing on,'' 
has been of significant help in establishing the probable cause 
required to seize merchandise.

    As discussed in the response to previous questions, CBP is drafting 
regulations to implement section 302 of the customs bill and to require 
the disclosure of ``information appearing on'' in connection with 
suspect copyright and Digital Millennium Copyright Act violations 
(DMCA), subject, in the case of suspect copyright violations, to 
notifying and affording the importer an opportunity to provide 
information in accordance with statutory authority that would 
accelerate the disposition of the detention.

    CBP anticipates that the ability to disclose information to 
copyright owners will greatly assist the agency in making copyright 
seizures, just as it has with trademarks. In contrast, CBP considers 
that it is unlikely that the disclosure authority will result in an 
appreciable increase in DMCA seizures, given that in the case of mod 
chips and other circumvention devices the article itself constitutes 
the probable cause needed to seize.
                            illegal logging
    Question. Illegal logging doesn't just hurt the environment, it 
hurts sawmill workers in Oregon and around the country who have to 
compete with an influx of cheap stolen wood. I have fought for years to 
stop trade in illegally harvested timber. As you know, the enforcement 
legislation Congress passed this year requires Customs agents to be 
trained in detection and seizure of illegally traded fish, wildlife, 
and plants.

    Will you commit to work with experts such as the World Wildlife 
Fund and the Environmental Investigation Agency within the next 30 days 
to develop an effective training module on illegal logging and begin 
trainings, so that America's port officers are fully equipped to deal 
with illegal trade in wood products?

    Answer. U.S. Fish and Wildlife Service (FWS) and Animal and Plant 
Health Inspection Service (APHIS) are the agencies with both the legal 
authority and expertise specific to wood and wood products under the 
Lacey Act. Because of this, CBP defers to FWS and APHIS to inspect and 
make determinations on the admissibility and origin of imported wood 
that may have been sourced from illegal logging. For these reasons, 
non-governmental organizations must work through FWS and APHIS to 
develop any training module on illegal logging. In turn, CBP will work 
with FWS and APHIS on training to ensure operational awareness of 
illegal logging at ports of entry for CBP personnel.
                        unpaid duties from china
    Question. In your testimony, you highlight recent successful 
criminal investigations of AD/CVD evasion, which included the illegal 
evasion of $180 million in duties on Chinese honey, $25 million in 
duties on paper from China, and $25 million on aluminum extrusions from 
China.

    How much of these unpaid duties has CBP collected to date?

    Answer. CBP supported these three ICE HSI criminal investigations 
of AD/CVD evasion which disrupted illegal distribution channels of 
imported goods, and resulted in criminal indictments, convictions, and 
monetary fines. Operation Honeygate resulted in the imprisonment of 
four individuals, the conviction of two companies, the seizure of 828 
drums of honey, and monetary fines of over $7 million. The lined paper 
investigation resulted in the indictment of four individuals and $1.75 
million in fines (the criminal prosecution and related civil actions 
are still ongoing). The aluminum extrusions investigation resulted in 
the conviction of four individuals and one company, the seizure of 14 
containers of aluminum extrusions and $493,400 in bank accounts, and $4 
million in fines.

    To the extent that liability for AD/CVD duty payments by the 
importers of record was not covered by the convictions, CBP seeks to 
collect any duty payments from the importer of record and surety when 
possible. However, due to the criminal nature of these importations, 
which were set up with shell companies with no assets and other schemes 
specifically to avoid duty payments, it can be challenging for CBP to 
collect duties from importers beyond any amounts covered by the 
importation bonds.
                        e-cigarette importation
    Question. As you know, starting January 1, 2016, the United States 
began to collect customs data on e-cigarettes, and the liquids used in 
e-cigarettes, for the first time. This follows my request to Chairman 
Broadbent of the U.S. International Trade Commission (USITC) asking 
that the U.S. Government begin tracking the imports of e-cigarettes and 
related products, such as the nicotine liquids used in 
e-cigarette devices. On October 20, 2015, the interagency committee 
responsible for establishing these tracking codes agreed to this 
request and approved the establishment of five new codes that track 
these imports.

    After 3 months, the data thus far raises some important questions. 
First, China accounts for roughly 85% of all imports, but e-cigarette 
devices and liquids come into the U.S. from two dozen other countries. 
Second, the value of all e-cigarette-related imports being reported is 
running in the neighborhood of $20 million a month. For a U.S. retail 
e-cigarette market that is estimated to be in the range of $3.5 billion 
a year, the value of imports being reported doesn't appear to be 
capturing everything that's coming into the United States.

    What steps does CBP take to ensure that shippers and importers 
properly report these imports from all of these countries, that they 
declare the correct customs value, and that the right duties are paid?

    Answer. CBP has worked with the International Trade Commission 484f 
Committee to implement the additional Harmonized Tariff Schedule (HTS) 
commodity classification codes within our systems. Commercial imports 
are largely processed by customs brokers with responsibilities for 
declaring goods for proper classification and valuation. CBP can react 
to specific, actionable intelligence for non-compliance and conducts 
post-entry random sampling across all commodities to ensure broad 
compliance.
                           e-cigarette codes
    Question. When new statistical reporting numbers are put in place--
in this case, there are five new e-cigarette-related codes--what steps 
does CBP take to ensure that its own customs officers are aware of and 
implementing the new codes?

    Answer. New HTS commodity codes are implemented directly in our 
import processing systems. Regulatory requirements for additional 
Partner Government Agency reporting can be flagged in our system 
against specific HTS codes, thereby informing both CBP officers and 
filers of the additional reporting requirements. Specific enforcement 
and compliance issues are handled through our targeting systems.
                             chinese honey
    Question. I was pleased to hear that ICE/CBP recently seized 
132,000 pounds of Chinese honey that had been fraudulently imported 
into the United States as Vietnamese honey. CBP labs later confirmed 
that there was a 99 percent chance this honey had actually originated 
in China. I've also heard, though, that a study commissioned by 
domestic beekeepers estimates that 90 million pounds of Chinese honey 
was fraudulently imported last year as being honey from Vietnam, India, 
Thailand, and Taiwan, and thereby avoided about $87 million in dumping 
duties. Ninety million pounds is roughly one-fourth of all U.S. honey 
imports last year.

    This seems exactly like the duty evasion schemes Congress intended 
CBP to stop through the Enforce provisions in the Trade Enforcement 
Act. Is CBP planning on investigating this allegation?

    Answer. CBP, in coordination with U.S. Immigration and Customs 
Enforcement (ICE), Homeland Security Investigations (HSI), is 
continuing to actively target illegally transshipped shipments of honey 
subject to the antidumping duty order on honey from China. Over the 
past several years, CBP has detected a substantial amount of illegal 
transshipment of Chinese honey through third countries and the 
misclassification of honey as syrup and other sweeteners. CBP has used 
a variety of enforcement techniques to enforce this antidumping duty 
order, including nationwide and port-specific special operations, 
seizures, single transaction bonds, and lab testing, as well as 
supporting HSI's criminal investigations. CBP's enforcement efforts on 
honey from China have contributed to several successful HSI criminal 
investigations, including Operation Honeygate.

    CBP recently held three extensive meetings with domestic 
beekeepers, honey importers, honey packers, scientists, and other 
interested parties to obtain in-depth trade intelligence on honey 
imports, new evasion schemes (including the scheme referenced in the 
question), and the world honey market. Representatives from ICE HSI, 
the Food and Drug Administration, and the U.S. Department of Justice 
also participated in these meetings. CBP is using the intelligence from 
these meetings to further improve and expand its targeting of high-risk 
honey shipments.
                        testing of honey imports
    Question. Couldn't CBP reduce the widespread country-of-origin 
fraud reported in the domestic beekeepers' study by significantly 
increasing its testing of honey imports from these four countries?

    Answer. CBP regularly tests honey imports to determine whether they 
are subject to the antidumping duty order on honey from China. CBP will 
continue to test honey imports as part of its active targeting of 
illegal transshipment of honey from China. These efforts are an 
integral part of CBP's strategy to detect high-risk activity, deter 
non-compliance, and disrupt fraudulent behavior on imports subject to 
AD/CVD. CBP has increased targeting and testing of high risk honey 
imports to determine whether they are subject to the antidumping duty 
order on honey from China.

    Question. Does CBP now have the technology and other resources it 
needs to undertake a comprehensive testing regime for imported honey?

    Answer. For over 15 years, the CBP Laboratories have been using the 
trace metal profiles in honey determined by Inductively Coupled Plasma 
Mass Spectroscopy (ICP-MS) for country of origin verifications. Using 
multivariate discriminant and canonical statistics, the trace metal 
profiles obtained by ICP-MS are compared to our honey database which 
consists of honey reference samples obtained from multiple countries of 
interest, including Vietnam, India, Thailand, and Taiwan. However, 
additional database samples are always needed from these countries, and 
from other countries of interest, in order to provide maximum support 
to honey transshipment investigations.

    In addition to ICP-MS, CBP Laboratories also use Isotopic Ratio 
Mass Spectrometry (IRMS), High Performance Liquid Chromatography 
(HPLC), microscopy, moisture content and color analyses for enforcement 
of both honey AD/CVD and honey Harmonized Tariff Schedule 
classification. The honey industry has recently suggested that Nuclear 
Magnetic Resonance (NMR) technology could be used to assist in the 
determination of both country of origin and potential adulteration of 
honey. CBP has NMR instruments that could be used to investigate and 
validate industry's claims that it can be used for determining 
adulteration. However, country of origin determinations using NMR also 
require a honey reference database, and CBP's current honey reference 
database is not suitable for NMR testing. A completely new collection 
of honey reference samples would need to be obtained in order to add 
the honey industry's suggested approach to CBP's testing protocols.
                             chinese bonds
    Question. For the past 4 years, Members of Congress--myself and 
Senator Thune included--have been trying to get an accurate accounting 
of the approximately $628 million worth of bonds that secure 
antidumping and countervailing duties owed on Chinese imports of honey, 
garlic, crawfish, and canned mushrooms. We've written numerous letters, 
legislated reporting requirements through appropriations measures, and 
secured a commitment from you to develop a strategy to identify and 
collect on these bonds. Yet, we do not have any clearer picture of 
these bonds now than we did in 2012.

    Please tell me when CBP will provide an accounting of these bonds, 
specifically in accordance with the mandate from the Consolidated 
Appropriations Act of 2016, which requires CBP to make available to 
Congress and the public:

        ``. . . a reasonably detailed inventory, including disposition, 
        of single-entry customs bonds received by CBP as security on 
        entries subject to any antidumping duty orders on imports of 
        honey, fresh garlic, crawfish tail meat, and certain preserved 
        mushrooms from October 1, 1998 through September 20, 2007. The 
        inventory shall include details on each bond for which summary 
        materials were previously provided to Congress, including the 
        date of the bond, the orders against which the bonds were 
        posted, and whether it is in litigation, pending collection or 
        not collectible.''

    Answer. Assembling a detailed accounting of this type would be 
extremely resource intensive. CBP would have to provide individualized 
information concerning every STB it has received on imports of honey, 
fresh garlic, crawfish tail meat, and certain preserved mushrooms for 
entries from October 1, 1998, through September 30, 2007. Bonds are not 
sorted by commodity, so this would essentially require CBP to locate, 
examine, research, and analyze each individual STB it has received from 
October 1, 1998, through September 30, 2007, whether there was a bill 
associated with that entry or not. This would require a manual review 
of tens of thousands of entry files created between October 1, 1998, 
and September 30, 2007, some of which are located in Indianapolis under 
the Office of Finance and many of which are scattered at approximately 
50 ports, offices, and/or Federal Records Centers. Some of these files 
are up to 18 years old and many have been destroyed pursuant to 
established records retention policies. Identifying the universe of 
entry files would be extremely time consuming. Then, locating the bonds 
would be even more time consuming (both for the Office of Finance and 
Office of Field Operations). After that, CBP would have to physically 
examine each bond to verify its applicability, and then perform a 
manual accounting of the events that transpired with each individual 
bond. Finally, entry and bond information would need to be manually 
entered into a new database correlating bond and debt information. As a 
CBP official testified, ``accurately responding to such a request would 
be practically impossible and any attempt to do so would require 
personnel resources far beyond our present capabilities and CBP's 
ongoing mission priorities would be severely compromised,'' including 
the enforcement and collection of AD/CVD on many other commodities.

    Moreover, a manual review of this scope is highly unlikely to 
result in greater collections by CBP. CBP has provided a detailed 
accounting of unpaid AD/CVD debts and the resources CBP has committed 
to collecting as much of these debts as possible to the House and 
Senate Appropriations Committees each year since Fiscal Year 2012. As 
CBP reported last year, collection from the surety bond(s) has been 
completed for a significant majority of the debts, while CBP continues 
to work with the Justice Department to aggressively pursue payment from 
the surety for other debts.
        comprehensive plan on trade enforcement and facilitation
    Question. Section 105 of the Trade Enforcement Act requires CBP to 
develop a comprehensive multiyear plan on joint strategic plan on trade 
enforcement and trade facilitation measures every 2 years, with the 
first plan due 1 year after the date of enactment.

    In light of this requirement, and with respect to trade 
facilitation, can you please describe the activities that your office 
is currently developing in order to keep pace with technological 
innovation?

    Answer. The Automated Commercial Environment (ACE) is CBP's 
signature effort to incorporate modern technological capabilities to 
improve the flow of cargo into and out of the United States. By the end 
of 2016, ACE will become the Single Window--the primary system through 
which the trade community will report imports and exports and the 
government will determine admissibility. Through ACE, processes will be 
streamlined for industry and government and paper will be greatly 
reduced; following the implementation of ACE, all forms can be 
submitted electronically. Interactions between CBP, members of the 
trade community, and Partner Government Agencies will be automated to 
enable near real-time decision making, reducing costs for business and 
government. Federal agencies will now have earlier, automated 
visibility to shipment data, expediting their import or export 
assessments at the border and speeding the flow of legitimate trade 
while also improving security, health, and safety of cargo. ACE also 
promotes improved data quality which further supports risk management 
and contributes to streamlined processing.

    Within CBP, we are constantly scanning the trade and business 
environment, leveraging numerous information sources, and engaging the 
technology and trade communities to stay abreast of developments and 
innovations that could potentially enhance the fulfillment of CBP's 
trade mission. Recently, CBP engaged with innovators in Silicon Valley 
to flag priority areas where we see potential the technology enablers 
to have a positive impact for not only for CBP but also for other 
customs agencies and the trade community.
                    u.s. harmonized tariff schedule
    Question. Through the inter-agency consultation process in 
developing the joint strategic plan, please describe any activities CBP 
will conduct with the United States International Trade Commission 
(USITC) in order to ensure the U.S. Harmonized Tariff Schedule keeps 
pace with technological innovation and avoid import/customs delays for 
new technology products?

    Answer. CBP currently works closely with the United States 
International Trade Commission (ITC) on amendments to the Harmonized 
System (HS), as part of one delegation to the World Customs 
Organization Harmonized System Committee Review Subcommittee (RSC). CBP 
will continue to solicit from the trade community, as well as from 
subject matter experts within CBP, areas of the HS that require 
updating, and work with ITC to propose necessary amendments to the HS. 
CBP has proposed to increase the frequency of its meetings between the 
offices within CBP and ITC that are responsible for updates to the HS 
and the U.S. Harmonized Tariff Schedule (HTSUS), in order to be more 
proactive in this area. ITC has published a notice of investigation, 
``WCO Sixth Review Cycle: Request for Proposals to Amend the 
International Harmonized System for Implementation in 2022,'' on 
November 9, 2015, soliciting comments from the trade for amendments to 
the 2022 HS 80 Fed. Reg. 69248. On June 18, 2015, CBP published a 
general notice, ``Notice of Opportunity and Procedures To Request 
Assistance on Tariff Classification and Customs Valuation Treatment by 
Other Customs Administrations Affecting United States Exports,'' 80 
Fed. Reg. 34924. CBP will post both notices on the public website as a 
reminder to the trade of these opportunities to request assistance. CBP 
is planning a joint ITC and CBP presentation to the trade on the 2017 
HTSUS amendments that are expected to take effect on January 1, 2017.
           consultation and coordination with private sector
    Question. What plans does CBP have to engage the private sector to 
improve consultation and coordination, as called for in section 
105(b)(10)?

    Answer. CBP will fully engage with our Commercial Customs 
Operational Advisory Council (COAC) groups and Trade Support Network 
working groups to improve consultation and coordination. We will engage 
with each sub-working group as needed to ensure that all levels of the 
private sector are aware and coordination is taking place at all 
levels. Other working groups that are created will be notified and 
engaged.
                      single window participation
    Question. Through the International Trade Data System (ITDS) and 
the Automated Commercial Environment (ACE) the U.S. Government is 
creating a ``Single Window'' to ensure the admissibility of goods into 
the United States. Through ACE, CBP has announced that manual processes 
will be streamlined and automated, paper will be eliminated, and 
importers will be able to more easily and efficiently comply with U.S. 
laws and regulations.

    What agencies will be participating in the single window?

    Answer. CBP and 47 other federal agencies are working together to 
implement the Single Window through ACE:

------------------------------------------------------------------------
 
------------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE            DEPARTMENT OF JUSTICE
AMS | Agricultural Marketing         ATF | Bureau of Alcohol, Tobacco,
 Service                              Firearms and  Explosives
APHIS | Animal and Plant Health      DEA | Drug Enforcement
 Inspection Service                   Administration
FAS | Foreign Agricultural Service
FSIS | Food Safety and Inspection
 Service
GIPSA | Grain Inspection, Packers
 and Stockyards  Administration
------------------------------------------------------------------------
DEPARTMENT OF DEFENSE                DEPARTMENT OF LABOR
USACE | Army Corps of Engineers      BLS | Bureau of Labor Statistics
DCMA | Defense Contracts Management
 Agency
------------------------------------------------------------------------
DEPARTMENT OF COMMERCE               DEPARTMENT OF STATE
BIS | Bureau of Industry and         A/LM | Bureau of Administration,
 Security                             Office of Logistics Management
U.S. Census Bureau                   DDTC | Directorate of Defense Trade
FTZB | Foreign Trade Zones Board      Controls
E&C | Enforcement and Compliance     OES | Bureau of Oceans and
OTEXA | Office of Textiles and        International Environmental and
 Apparel                              Scientific Affairs
NMFS | National Marine Fisheries     OFM | Office of Foreign Missions
 Service
------------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION         DEPARTMENT OF ENERGY
BTS | Bureau of Transportation       OFE | Office of Fossil Energy
 Statistics                          EIA | Energy Information
FAA | Federal Aviation                Administration
 Administration                      OGC | Office of General Counsel
FHA | Federal Highway
 Administration
FMCSA | Federal Motor Carrier
 Safety Administration
MARAD | Maritime Administration
NHTSA | National Highway Traffic
 Safety Administration
PHMSA | Pipeline Hazardous
 Materials Safety Administration
------------------------------------------------------------------------
DEPARTMENT OF TREASURY               DEPARTMENT OF HEALTH AND HUMAN
IRS | Internal Revenue Service        SERVICES
OFAC | Office of Federal Assets      CDC | Centers for Disease Control
 Control                              and Prevention
TTB | Alcohol and Tobacco Tax and    FDA | Food and Drug Administration
 Trade Bureau
FinCEN | Financial Crimes
 Enforcement Network
------------------------------------------------------------------------
DEPARTMENT OF HOMELAND SECURITY      INDEPENDENT AGENCIES
USCG | United States Coast Guard     CPSC | Consumer Product Safety
CBP | U.S. Customs and Border         Commission
 Protection                          EPA | Environmental Protection
TSA | Transportation Security         Agency
 Administration                      FCC | Federal Communications
                                      Commission
                                     FMC | Federal Maritime Commission
                                     ITC | International Trade
                                      Commission
                                     NRC | Nuclear Regulatory Commission
                                     USAID | U.S. Agency for
                                      International Development
                                     USTR | Office of the United States
                                      Trade Representative
------------------------------------------------------------------------
DEPARTMENT OF THE INTERIOR
FWS | Fish and Wildlife Service
------------------------------------------------------------------------

             automated commericial environment (ace) misuse
    Question. Can you describe how CBP will ensure that the agencies 
participating in ACE will not utilize ACE as a tool to inject 
additional regulatory and informational requirements, which may be 
decreasing efficiencies in the import and customs processes and 
increase burdens on importers?

    Answer. ACE will only provide each Partner Government Agency (PGA) 
the data that it is legally authorized to access, according to its MOU 
with CBP. The Border Interagency Executive Council (BIEC) Change 
Control Board (CCB) will be responsible for approving and prioritizing 
any PGA requests for enhancements or new requirements once core ACE 
development is complete. All changes to information collections in 
ACE--including additional requirements--continue to be subject to 
approval by the Office of Management and Budget under the Paperwork 
Reduction Act and will be subject to public notice and comment 
procedures before implementation.

    Additionally, by collecting all information required by nearly 50 
government agencies in one system--ACE, CBP and its partner government 
agencies will reduce duplicative information collections from the 
public by making sure that information given for a data field for one 
agency will automatically populate data fields for other agencies that 
are asking for the exact same information. This is not something that 
was previously possible when information collections for entry and 
export were spread across numerous systems and will save the reporting 
public time.

                                 ______
                                 
               Questions Submitted by Hon. Chuck Grassley
                   swift and efficient implementation
    Question. The Trade Facilitation and Trade Enforcement Act provides 
important tools to promote effective enforcement of intellectual 
property rights at our borders, including information sharing between 
law enforcement and right holders. Importantly, this law affirms the 
authority of U.S. Customs and Border Protection (CBP) to seek 
assistance from intellectual property owners in carrying out its 
intellectual property enforcement mission. Historically, right holders 
have provided invaluable assistance to CBP in determining whether the 
goods before them were genuine or counterfeit. However, in recent 
years, the U.S. Treasury Department and CBP have taken a more 
restrictive view of what information can be shared with right holders. 
I understand that in the past, this restrictive view has hampered right 
holders' ability to provide the needed expertise to identify whether a 
good is genuine or counterfeit, and has made it difficult for right 
holders' own intellectual property enforcement efforts.

    The Trade Facilitation and Trade Enforcement Act now specifically 
requires that where a right holder can assist CBP in determining 
whether a suspected good is counterfeit, CBP must ``provide to the 
person information that appears on the merchandise and its packaging 
and labels, including unredacted images of the merchandise and its 
packaging and labels.''

    What is CBP doing to ensure that the new customs law provisions--
especially the information sharing provisions--are being implemented 
swiftly and effectively and in a manner that will facilitate the timely 
sharing of vital information such as unredacted photos and samples with 
right holders?

    Answer. The initiative to disclose information appearing on 
merchandise or its retail packaging was originally proposed by CBP and 
the administration in 2010 when it submitted the 19 U.S.C. Sec. 1628a 
legislative proposal to Congress. Thus, rather than taking a 
restrictive view of disclosure, CBP has long sought statutory authority 
to disclose confidential information to rights' holders that is 
otherwise protected by the 18 U.S.C. Sec. 1905. See 77 Fed. Reg. 24375, 
24376 (April 24, 2012) (``The protection afforded by the Trade Secrets 
Act, however, must be balanced against the important and legitimate 
interests of government.''). As noted above, pursuant to earlier, more 
limited, authority in the 2012 National Defense Authorization Act, CBP 
has been disclosing information appearing on imported merchandise, or 
its retail packaging, suspected of bearing counterfeit marks, since 
2012. CBP is drafting a notice of proposed rulemaking to implement the 
provisions within section 302 of TFTEA.
                     abandoned and destroyed goods
    Question. There is no doubt that we are seeing a massive shift in 
how counterfeit goods are coming to our country. While large container 
shipments are still a problem, small shipments by post--fueled by the 
ease of online websites selling counterfeit goods--are rapidly 
increasing. In fact, a report released recently by the OECD on 
counterfeits strikingly found that postal shipments are the top method 
of shipping fake goods, accounting for 62% of seizures over 2011-2013. 
To address this problem, in early 2015, CBP began operating a pilot 
program with express delivery carriers to streamline the process of 
abandoning and destroying imported goods detained by CBP that violate 
intellectual property rights. U.S. 2015 seizure statistics indicate 
that there have been more than 2,800 voluntary abandonments since this 
program's inception. While the goal of this program is a good one, I 
understand that under the pilot program, the importer of the goods, not 
the right holder whose intellectual property rights were violated, is 
given notice that the goods have been abandoned and destroyed. A 
failure to provide right holders with this information can make it 
harder for them to protect their brands.

    How can this program ensure better information sharing between 
right holders and law enforcement?

    Answer. During the abandonment process both the importer of record 
and ultimate consignee of the merchandise must voluntarily relinquish 
their proprietary interest in the merchandise. Unlike the detention and 
seizure process, where CBP has exercised authority to share information 
with rights holders to assist the agency in determining whether 
merchandise bears a counterfeit mark, in the abandonment process CBP 
does not mandate any action on the part of the importer or consignee, 
take physical possession of the merchandise or make a final 
determination on infringement. The merchandise is never detained or 
seized by CBP, but abandoned by the consignee and importer and 
destroyed by the express carrier. CBP has a robust outreach strategy 
that incorporates regional stakeholder roundtables and participation in 
domestic and international trade association conferences that promote 
effective communication and information sharing. Throughout the course 
of the pilot program, CBP has shared information with stakeholders at 
these events and other meetings about trends identified with respect to 
abandoned merchandise and best practices identified with regard to 
processing small packages.
                             asylum seekers
    Question. In recent years we've heard a lot about the dramatic 
increase in the number of people arriving at Ports of Entry along the 
southern border who announce that they are seeking asylum. According to 
a media report in 2012: [T]housands of asylum-seekers--reportedly 200 
in a single day at the Otay Mesa Port of Entry in California--are 
forcing the U.S. Customs and Border Protection agents to pay for hotels 
rooms for hundreds of immigrants while they wait for an immigration 
judge to decide whether they can stay in the country.

    http://www.dailymail.co.uk/news/article-2390442/Surge-immigrants-
seeking-asylum-Mexican-border-crossings-forced-authorities-pay-hotels-
hundreds-release-thousands-U-S.html#ixzz48TR0oFMJ. 

    It is my understanding that the flow of asylum seekers arriving at 
the southern border has not diminished since 2012 and has likely only 
increased.

    Please give the number of aliens arriving at Ports of Entry (POEs) 
along the southern border, in FY14, FY15, and FY16 to date, who have 
sought asylum, with a breakdown by the aliens' countries of origin.

    Answer. Please see the below credible fear statistics showing the 
number of credible fear claims by country of nationality by individuals 
who presented themselves at U.S. Ports of Entry. USCIS asylum reports 
do not differentiate between the northern and southern borders, nor 
between the types of ports of entry (i.e., land v. airport). USCIS 
asylum reports do not include individuals who ask for asylum at Ports 
of Entry and who are not placed in expedited removal with credible fear 
but instead are placed in removal proceedings with the Executive Office 
for Immigration Review.

                 Credible Fear POE by Nationality Report
------------------------------------------------------------------------
                                                           FY16 through
       Nationality         FY14 Receipts   FY15 Receipts   Q2  Receipts
------------------------------------------------------------------------
AFGHANISTAN                            9              16               6
------------------------------------------------------------------------
ALBANIA                                1              13              13
------------------------------------------------------------------------
ALGERIA                                0               0               2
------------------------------------------------------------------------
ANGOLA                                 4               7               2
------------------------------------------------------------------------
ARGENTINA                              2               9               5
------------------------------------------------------------------------
ARMENIA                               33              87              98
------------------------------------------------------------------------
AUSTRALIA                              2               3               1
------------------------------------------------------------------------
AUSTRIA                                0               1               0
------------------------------------------------------------------------
AZERBAIJAN                             5               1               1
------------------------------------------------------------------------
BAHAMAS                                1               4               1
------------------------------------------------------------------------
BAHRAIN                                0               1               0
------------------------------------------------------------------------
BANGLADESH                           231             532              64
------------------------------------------------------------------------
BELARUS                                4               7               1
------------------------------------------------------------------------
BELIZE                                 8              15              14
------------------------------------------------------------------------
BENIN                                  4               7               2
------------------------------------------------------------------------
BOLIVIA                                8               4               4
------------------------------------------------------------------------
BOSNIA-HERZEGOVINA                     0               1               0
------------------------------------------------------------------------
BRAZIL                                31              57             167
------------------------------------------------------------------------
BULGARIA                               0               4               1
------------------------------------------------------------------------
BURKINA FASO                           3              25              28
------------------------------------------------------------------------
BURMA                                  6              10               6
------------------------------------------------------------------------
BURUNDI                                1               5               6
------------------------------------------------------------------------
CAMBODIA                               1               1               0
------------------------------------------------------------------------
CAMEROON                             239             165             183
------------------------------------------------------------------------
CANADA                                 7              11               5
------------------------------------------------------------------------
CENTRAL AFRICA                         0               2               1
------------------------------------------------------------------------
CHAD                                   3               1               3
------------------------------------------------------------------------
CHILE                                  4               2               1
------------------------------------------------------------------------
CHINA, PEOPLES REPUBLIC              147             131             162
------------------------------------------------------------------------
COLOMBIA                              61             127              83
------------------------------------------------------------------------
CONGO                                  8              12              14
------------------------------------------------------------------------
COSTA RICA                             5               1               6
------------------------------------------------------------------------
COTE D'IVOIRE                          4               8              16
------------------------------------------------------------------------
CUBA                                   1               3               0
------------------------------------------------------------------------
DEMOCRATIC REPUBLIC of                 7               3               2
 CONGO
------------------------------------------------------------------------
DENMARK                                0               1               0
------------------------------------------------------------------------
DJIBOUTI                               0               0               2
------------------------------------------------------------------------
DOMINICA                              12               6               6
------------------------------------------------------------------------
DOMINICAN REPUBLIC                    23              35              15
------------------------------------------------------------------------
ECUADOR                              129              65              66
------------------------------------------------------------------------
EGYPT                                 45              37              19
------------------------------------------------------------------------
EL SALVADOR                        1,221             841           1,501
------------------------------------------------------------------------
EQUATORIAL GUINEA                      0               0               1
------------------------------------------------------------------------
ERITREA                              135             175             151
------------------------------------------------------------------------
ETHIOPIA                             125             156              54
------------------------------------------------------------------------
GABON                                  0               1               0
------------------------------------------------------------------------
GEORGIA                                1              12               9
------------------------------------------------------------------------
GERMANY                                0               0               3
------------------------------------------------------------------------
GHANA                                151             473             329
------------------------------------------------------------------------
GUATEMALA                            796           1,002           1,252
------------------------------------------------------------------------
GUINEA                                17              54              75
------------------------------------------------------------------------
GUINEA-BISSAU                          1               3               1
------------------------------------------------------------------------
GUYANA                                 5               2               1
------------------------------------------------------------------------
HAITI                                180             162             109
------------------------------------------------------------------------
HONDURAS                           1,017             882           1,319
------------------------------------------------------------------------
HONG KONG                              0               0               1
------------------------------------------------------------------------
INDIA                                108             132             128
------------------------------------------------------------------------
INDONESIA                              2               2               1
------------------------------------------------------------------------
IRAN                                  15              19              10
------------------------------------------------------------------------
IRAQ                                  35              61              10
------------------------------------------------------------------------
IRELAND                                0               0               2
------------------------------------------------------------------------
ISRAEL                                 1               1               3
------------------------------------------------------------------------
ITALY                                  1               0               2
------------------------------------------------------------------------
JAMAICA                               14              31              28
------------------------------------------------------------------------
JORDAN                                 5               5              15
------------------------------------------------------------------------
KAZAKHSTAN                             1               1               0
------------------------------------------------------------------------
KENYA                                  4               4               5
------------------------------------------------------------------------
KOSOVO                                 0               1               0
------------------------------------------------------------------------
KUWAIT                                 0               4               1
------------------------------------------------------------------------
KYRGYSTAN                              0               1               0
------------------------------------------------------------------------
LAOS                                   0               1               0
------------------------------------------------------------------------
LEBANON                                9              11               3
------------------------------------------------------------------------
LIBERIA                                3               3               2
------------------------------------------------------------------------
LIBYA                                  4               0               0
------------------------------------------------------------------------
LITHUANIA                              1               0               0
------------------------------------------------------------------------
MACEDONIA                              0               1               0
------------------------------------------------------------------------
MALAWI                                 0               0               1
------------------------------------------------------------------------
MALAYSIA                               1               1               1
------------------------------------------------------------------------
MALI                                   2               3              14
------------------------------------------------------------------------
MAURITANIA                             0               1               2
------------------------------------------------------------------------
MAURITIUS                              0               0               1
------------------------------------------------------------------------
MEXICO                             4,251           6,467           2,843
------------------------------------------------------------------------
MOLDOVA                                4               4               2
------------------------------------------------------------------------
MONGOLIA                               4               2               1
------------------------------------------------------------------------
MOROCCO                                5               2               2
------------------------------------------------------------------------
NEPAL                                 12              98              97
------------------------------------------------------------------------
NETHERLANDS                            1               2               0
------------------------------------------------------------------------
NICARAGUA                             40              39              23
------------------------------------------------------------------------
NIGER                                132             138             103
------------------------------------------------------------------------
NIGERIA                               76              73              21
------------------------------------------------------------------------
NORTH KOREA                            1               0               0
------------------------------------------------------------------------
NORWAY                                 0               1               0
------------------------------------------------------------------------
OMAN                                   1               0               0
------------------------------------------------------------------------
PAKISTAN                              28             157              45
------------------------------------------------------------------------
PANAMA                                 0               2               0
------------------------------------------------------------------------
PARAGUAY                               1               0               2
------------------------------------------------------------------------
PERU                                  54              53              40
------------------------------------------------------------------------
PHILIPPINES                            7               4               1
------------------------------------------------------------------------
POLAND                                 2               1               2
------------------------------------------------------------------------
ROMANIA                               79              55              28
------------------------------------------------------------------------
RUSSIA                                23              44              36
------------------------------------------------------------------------
RWANDA                                17               6               1
------------------------------------------------------------------------
SAMOA                                  1               0               0
------------------------------------------------------------------------
SAUDI ARABIA                           4               3               1
------------------------------------------------------------------------
SENEGAL                                3              30              30
------------------------------------------------------------------------
SIERRA LEONE                           3               7              10
------------------------------------------------------------------------
SERBIA and MONTENEGRO                  0               0               1
------------------------------------------------------------------------
SINGAPORE                              1               0               1
------------------------------------------------------------------------
SOMALIA                              254             728             252
------------------------------------------------------------------------
SOUTH AFRICA                           3               2               2
------------------------------------------------------------------------
SOUTH KOREA                            3               1               2
------------------------------------------------------------------------
SPAIN                                  0               1               0
------------------------------------------------------------------------
SRI LANKA                             22              36              15
------------------------------------------------------------------------
ST. LUCIA                              0               3               4
------------------------------------------------------------------------
STATELESS                              4               5               4
------------------------------------------------------------------------
SUDAN                                  9               8               1
------------------------------------------------------------------------
SWAZILAND                              1               2              60
------------------------------------------------------------------------
SYRIA                                 70              77              10
------------------------------------------------------------------------
TAIWAN                                 1               1               0
------------------------------------------------------------------------
TAJIKISTAN                             0               3               3
------------------------------------------------------------------------
THAILAND                               1               0               0
------------------------------------------------------------------------
THE GAMBIA                             2              13              16
------------------------------------------------------------------------
TOGO                                   5              19              16
------------------------------------------------------------------------
TRINIDAD AND TOBAGO                    0               3               0
------------------------------------------------------------------------
TUNISIA                                5               1               2
------------------------------------------------------------------------
TURKEY                                 3              10               6
------------------------------------------------------------------------
UGANDA                                 4               3               2
------------------------------------------------------------------------
UKRAINE                               15              69              39
------------------------------------------------------------------------
UNITED KINGDOM                         2               0               1
------------------------------------------------------------------------
UNKNOWN                               20              12              58
------------------------------------------------------------------------
URUGUAY                                2               0               0
------------------------------------------------------------------------
USSR                                   1               0               1
------------------------------------------------------------------------
UZBEKISTAN                             1               1               2
------------------------------------------------------------------------
VENEZUELA                             61              82             108
------------------------------------------------------------------------
VIETNAM                                3               2               4
------------------------------------------------------------------------
YEMEN                                  1               4               3
------------------------------------------------------------------------
ZAMBIA                                 1               0               0
------------------------------------------------------------------------
ZIMBABWE                               3               4               6
------------------------------------------------------------------------
    Total                         10,151          13,744           9,939
------------------------------------------------------------------------

                     hotel rooms for asylum seekers
    Question. Does CBP pay for hotel rooms for asylum seekers while 
they await their date in immigration court? If so, how much has CBP 
spent on such accommodations for asylum seekers in FY14, FY15, and FY16 
to date?

    Answer. CBP does not pay for hotel rooms for asylum seekers and has 
not expended any funding on accommodations outside of those provided. 
CBP generally processes aliens either administratively or criminally 
and maintains short-term custody of individuals, pending transfer of 
custody to another agency (generally ICE ERO) or final case 
disposition. CBP temporarily holds individuals for the length of time 
necessary for CBP to complete the required casework, which may entail 
an interview, the collection of biographic and biometric data, records 
checks, determination of disposition, and release of the individual or 
transfer of him/her to another agency's custody. CBP has many 
facilities throughout the United States to support mission-critical 
operations, most of which include short-term hold rooms.
                         infrastructure changes
    Question. What infrastructure changes has CBP had to make at the 
POEs to accommodate this flow? I understand, for example, that at some 
POEs there is a dedicated line for asylum seekers in the pedestrian 
entryway.

    Answer. CBP works within our existing infrastructure to manage the 
flow. However, when necessary, CBP has made infrastructure changes to 
POEs to accommodate increased flow of asylum seekers. When there is a 
high volume of asylum seekers, CBP will coordinate a dedicated line or 
waiting area to ensure the orderly flow of regular pedestrians through 
the facility.
                   financing the smuggling of minors
    Question. I have read about the various Department of Homeland 
Security informational and media campaigns to discourage family units 
and Unaccompanied Alien Children from making the dangerous journey to 
the United States border. Clearly, none of that is working, given the 
high numbers of minors and family unit members who crossed the border 
during the first 6 months of this fiscal year. Statistics from your 
agency show that apprehensions of unaccompanied minors are 78% higher 
than the same period last year, and on par with apprehensions for the 
same period in Fiscal Year 2014, which was the year that brought us the 
record-breaking surge. Family unit apprehensions are up 131% over the 
same period last year and 62% over the same period in FY 2014.

    According to data obtained from the Department by the Associated 
Press, about 80 percent of the 71,000 mostly Central American minors 
who crossed the U.S. border in 2014 were placed by the government with 
adults or sponsors who were in the country illegally. Clearly, someone 
is paying the smugglers to bring the unaccompanied alien children to 
the border. Participating in alien smuggling is a felony under section 
274(a)(1) of the Immigration and Nationality Act. Some would say that 
in many cases these smugglers are being paid by the minors' parents and 
family members, currently residing in the United States.

    Is your agency, or anyone else in the Department of Homeland 
Security, ``following the money'' and then prosecuting or removing the 
persons determined to have financed the smuggling of the minors?

    Answer. As the largest investigative agency in the U.S. Department 
of Homeland Security (DHS), U.S. Immigration and Customs Enforcement 
(ICE) is charged with protecting national security and public safety by 
enforcing the Nation's immigration and customs laws. Combating human 
smuggling is a core mission priority of ICE Homeland Security 
Investigations (HSI) and U.S. Customs and Border Protection (CBP). The 
Department has, and will continue to, target transnational criminal 
organizations to hold them accountable for their actions and help 
prevent illegal and dangerous migration.

    One of ICE's tools in combatting transnational criminal 
organizations is to focus on financial facilitation. Seizing the funds 
that motivate and fuel criminal activity is a high priority for ICE. 
ICE HSI has identified a multitude of methods through which human 
smuggling organizations hide, move, and store proceeds associated with 
illegal activity. Human smuggling organizations have unique money 
laundering footprints or patterns that must be addressed specifically. 
These patterns include the utilization of money services businesses 
(MSBs) and funnel accounts to facilitate and conceal illicit payments.

    Interstate funnel accounts provide efficient and hard-to-detect 
means for human smugglers to transfer their illicit proceeds rapidly 
from the interior of the United States to the U.S. States bordering 
Mexico. Funnel accounts are simple bank accounts that are opened in 
financial institutions located in southern U.S. border regions. These 
accounts receive regular cash deposits from remote branches that are 
usually located in interior States. The deposits tend to be anonymous 
counter deposits that are of relatively low value so they do not exceed 
Bank Secrecy Act reporting thresholds. Once enough deposits are made 
into the account and the funds are recognized by the host financial 
institution, a nominee for the account will withdraw the funds in 
relatively small increments, similarly evading Federal reporting 
thresholds. The withdrawn funds are then smuggled south across the 
border into Mexico.

    MSBs are financial institutions that enable the swift and efficient 
movement of funds from one geographic location to another. Unlike bank 
customers, MSB users are not required to maintain committed, long-term 
financial relationships with the MSB. Because of this, MSB users often 
perceive that they have greater levels of financial privacy. These 
characteristics combine to make MSBs particularly attractive means by 
which human smugglers move their illicit proceeds.

    Operation Coyote was ICE HSI's response to the surge in 
unaccompanied children and other migrants from Central America in 2014. 
The operation was created and designed to combat the financial aspect 
of human smuggling, and is focused on targeting and identifying 
criminal organizations that utilize funnel bank accounts to move 
illicit proceeds. Information and evidence collected during the course 
of Operation Coyote has led to the conclusion that nearly all human 
smugglers move unaccompanied children.

    ICE and its DHS partners pursue the removal of aliens in all cases 
deemed appropriate and according to policy.

    Question. How many, if any, such cases has CBP investigated?

    Answer. Since 2012, ICE HSI has investigated 30 human smuggling or 
trafficking cases that involved the use of interstate funnel accounts 
as a means of financial facilitation. Since 2005, ICE HSI has 
investigated 49 human smuggling or trafficking cases that involved MSBs 
as a means of financial facilitation.
                       entry/exit overstay report
    Question. In January 2016, CBP published the long-awaited ``Entry/
Exit Overstay Report'' for fiscal year 2015. The report lists, country 
by country, the percentage of visitors who overstay their visas. The 
Department of Homeland Security had dragged its feet on publishing the 
report for many years. What finally made the Department publish it was 
a provision in the Consolidated Appropriations Act of 2016 prohibiting 
the release of $13,000,000 for the Office of the Secretary of Homeland 
Security until both the overstay report and the comprehensive plan for 
implementation of the biometric entry and exit data system are 
submitted to Congress. Significantly, the appropriations act requires 
that the overstay report include statistics on overstays from all 
nonimmigrant visa categories.

    When will CBP publish a complete overstay report, with overstay 
statistics for all visa categories, not just for the tourist and 
business visitor categories?

    Answer. The Department released the fiscal year (FY) 2015 Entry/
Exit Overstay Report after addressing concerns it had about the quality 
and completeness of the data that had been collected. In the FY 2016 
report, CBP plans to address additional nonimmigrant classes, 
including:

          Addition of the foreign student exchange visitor population 
        to the report (F, M, and J nonimmigrant admission classes);
          Addition of other nonimmigrant admission classes (such as H, 
        O, P, and Q nonimmigrant admission classes); and
          Addition of land related overstay populations.

    This summer, CBP, ICE, and USCIS have successfully implemented data 
system changes that will allow reporting of these additional visa 
categories. CBP is now working to add historic FY 2016 data from the 
systems in ICE and USCIS into the Entry/Exit reporting capability. CBP 
anticipates being able to develop a full set of FY 2016 data on these 
additional visa categories.

    Question. Since the overstay report does not include data on 
overstays in all visa categories, do you agree with me that the report 
fails to satisfy the requirements set forth in the FY16 omnibus 
appropriations act and that, therefore, the Office of Management and 
Budget should not release the $13 million in funding for the 
Secretary's office?

    Answer. CBP believes this report is responsive to the requirements 
in the FY 2016 omnibus appropriations act, as the FY 2015 Entry/Exit 
Overstay Report provided country-specific overstay statistics on all 
visa categories that CBP data systems were technically able to report 
on at that time. This report covers approximately 85 percent of all 
nonimmigrant travelers arriving via air or sea.
                       biometric entry/exit plan
    Question. On April 20, 2016, U.S. Customs and Border Protection 
published its ``Comprehensive Biometric Entry/Exit Plan.'' The report 
describes the agency's strategy for implementation of a biometric exit 
system that would apply to all travelers departing the United States. 
The strategy takes into account the $1 billion in funding for biometric 
exit that was made available in the fiscal year 2016 Omnibus 
Appropriations Act.

    As I understand the report, CBP will be in a position to begin 
implementing a biometric exit system in 2018, but only at the highest 
volume airports, and focusing initially on only high-risk flight 
departures. So when 2018 rolls around, at best we might have 
implemented biometric exit at a few airports, and even then, for only a 
few high-risk flights at that limited number of airports. Is my 
understanding correct?

    Answer. CBP will begin deployment of biometric exit in FY 2018, 
starting with the largest gateway airports. CBP does not plan to limit 
biometric exit to only ``high-risk'' flights, but will deploy biometric 
exit in a manner that covers all departing international flights from 
airports that support biometric exit.

    Question. Do I further understand the report correctly that the $1 
billion provided by the FY 2016 Omnibus Appropriations Act is not 
sufficient to reach that 2018 implementation goal and that additional, 
up-front funding is required? If so, can you please provide me with 
details of the cost assessment upon which you are basing this need for 
additional funding?

    Answer. The $1 billion provided by the FY 2016 Omnibus 
Appropriations Act will significantly advance CBP's deployment of 
biometric exit. However, not all of the $1 billion is available right 
away or provided to CBP in a single allotment. The $1 billion is 
derived from the fees paid by petitioners for H-2B and L-1A visas, and 
will accrue over 10 fiscal years. CBP expects the fund to provide about 
$86 million at the start of FY 2017, and provide an estimated $115 
million at the start of FY 2018.

    Fee funding for FY 2017 and FY 2018 is sufficient for CBP to begin 
deploying biometric exit in FY 2018. No additional ``up-front funding'' 
is required to begin work.

                                 ______
                                 
                Questions Submitted by Hon. John Cornyn
                          duty drawback rules
    Question. Section 906: Drawback. As you know, Congress recently 
passed trade legislation which included simplification of the duty 
drawback rules. This culminated a long, 10-year process where industry 
worked closely with Customs to simplify rules that will save both the 
public and private sectors money by improving administration of this 
export promoting law. I have constituents that utilize the duty 
drawback program and in order to prepare for filing claims two years 
after the date of enactment, by 2018, they must have time to reprogram 
their systems. In order to do so in a timely manner, they need 
assurances that Customs will work with the industry to develop 
regulations within 12-18 months, and meet regularly with the industry 
to discuss your agency's view on the new law and the development of 
regulations.

    I have heard concerns from my constituents about section 906 with 
respect to the new calculation of claim language. Can you provide 
assurance that a meeting with the industry will occur in the near 
future and that the new regulations can and will be completed in the 
next 12-18 months?

    Answer. CBP has formed a working group with both government and 
trade representatives to address all of the new provisions laid out in 
section 906. Besides recent outreach efforts with the trade through 
teleconferences, the Automated Commercial Environment (ACE) Trade 
Support Network, and a recent meeting of the American Association of 
Exporters and Importers, the new working group is scheduled to meet 
this Fall specifically to address new regulations to implement section 
906 of the law. CBP is still digesting all of the provisions contained 
in section 906 of the law, not the least of which is the requirement 
for CBP to develop a method to properly calculate the amount of 
Drawback. The trade community has indicated to CBP that this is a 
concern, and CBP will continue to engage industry through the new 
working group. CBP must significantly revise the current regulations on 
drawback to implement section 906 of the law. The drafting process is 
ongoing and involves collaboration among our legal, policy, operational 
and ACE programming experts. New regulations will be issued as quickly 
as possible.
                 cbp resource planning and forecasting
    Question. As an agency engaged in critical border security and 
trade facilitation functions, it is vitally important that CBP allocate 
resources and personnel based on both current and anticipated needs.

    To what extent is CBP's Workload Staffing Model, Land Port of Entry 
(LPOE) Construction Plan, or other agency planning or forecasting tools 
based on anticipated business or trade activity?

    Answer. OFO's Workload Staffing Model (WSM) incorporates the WSM 
baseline analysis, staffing requirements related to planned facility 
expansions or enhancements, staffing efficiencies or requirements 
related to planned technology deployments, and requirements for 
conservatively projected growth in travel and trade volumes. For FY 
2017, this projection for trade and travel volumes was 3 percent.

    A key element of CBP enforcement strategy is a network of 110 land 
ports of entry (LPOE) encompassing 167 separate crossings along both 
borders. CBP utilizes a robust methodology known as a Strategic 
Resource Assessment (SRA) to determine those LPOE facilities most in 
need of capital improvements. Generally, the SRA process gathers 
internal and external stakeholder feedback regarding operations, volume 
and facility conditions at each LPOE through questionnaires, interviews 
and other avenues. The feedback and data collected are then put into a 
prioritization scoring methodology to achieve an objective ranking of 
the LPOEs that is then used to determine the level of investment needed 
to bring a location up to current mission standards. CBP completed the 
most recent SRA effort in FY 2015.

    More specifically, the current SRA scoring methodology employs 
weighted scaling across four distinct criteria as shown in Table 1:

                Table 1: SRA Scoring Criteria and Weights
------------------------------------------------------------------------
                           Criterion                             Weight
------------------------------------------------------------------------
Mission and Operations                                              35%
------------------------------------------------------------------------
Security and Life Safety                                            25%
------------------------------------------------------------------------
Space and Site Deficiencies                                         25%
------------------------------------------------------------------------
Personnel and Workload Growth                                       15%
------------------------------------------------------------------------

    The Mission and Operations criterion measures the facility's 
compatibility with specific inspection responsibilities; Security and 
Life measures the facility's ability to protect occupants and visitors 
while allowing law enforcement functions to occur; Space and Site 
Deficiencies references the space available and site of the LPOE 
related to the functional work environment; and Personnel and Workload 
Growth measures current personnel levels along with current and 
projected workload categories that will require additional personnel 
and space.

    It is this last criterion, Personnel and Workload Growth, which 
addresses anticipated increases in traffic by evaluating changes in 
traffic volumes and patterns over the previous 3 years, and assessing 
regional and national patterns of growth, including regional economic 
assessments and traffic forecasting and trends, such as asylum seekers. 
This evaluation, in conjunction with inputs from the Workload Staffing 
Model (WSM), is used to forecast anticipated growth for a future 10-
year period. This forecast is then fed back into the SRA model to 
determine overall LPOE infrastructure investment needs.

    Question. How does CBP anticipate trends driven by private-sector 
decision-
making?

    Answer. Emerging trade and global supply chain trends are garnered 
from CBP's regular engagement with the Commercial Customs Operational 
Advisory (COAC) Committee, Trade Support Network (TSN), and key trade 
and travel associations.
           information sharing with trade community partners
    Question. If CBP could receive business forecasts from private 
industry, would the agency have a strategy for utilizing this data to 
better inform resource allocation decisions and future traffic flows?

    Answer. One component of CBP's strategy for its Workload Staffing 
Model (WSM) is to improve its methodology for predicting and 
forecasting workload and volume. Receiving business forecasts from 
private industry could possibly be incorporated into the agency's 
approach for informing resource allocation decisions. CBP has had 
discussions with industry groups about this concept, and is currently 
awaiting a draft project outline from one industry group. CBP would 
need to thoroughly and carefully review any forecast data received from 
private industry prior to using it for resource allocation or resource 
request purposes. CBP currently must defend the validity of its own 
data against Department and Congressional auditors. Therefore, CBP 
would proceed very carefully before basing resource-related 
recommendations and requests on third-party data.

    Question. How would CBP work with private-sector, nonprofit 
institutions, and international equivalent agencies, to establish and 
implement such an information sharing regime with trade community 
partners that better informs agency resource management?

    Answer. CBP's Office of Trade Relations is in continuous 
communication with industry sectors impacted by its mission. A primary 
part of our outreach and communication plan includes webinars and 
roundtables used as methods of bi-directional education with the 
domestic and international trade community as well as partner and 
international government agencies. CBP has implemented Centers of 
Excellence and Expertise (CEE) to integrate management-by-account 
principles and allows CBP trade personnel to specialize in a key 
industry, by building advanced knowledge in the intricacies of 
particular products and processes. Communication and outreach efforts 
have enabled CBP to better understand the trends and needs from 
industry.
               protect confidential business information
    Question. What methods might CBP use aggregate data and protect 
confidential business information?

    Answer. Any confidential business information submitted by the 
trade community to CBP is protected by the Trade Secrets Act and the 
Privacy Act and adheres to DHS privacy policies. There are strict 
guidelines and procedures put into place to guard this information from 
release/misuse.
Fair Information Practice Principles (FIPPs)
    In 2008, DHS issued a policy declaring the eight Fair Information 
Practice Principles (FIPPs) as the foundation and guiding principles of 
the Department's privacy program. The FIPPs were formed from the 
foundations of the Privacy Act of 1974, and memorialized in the 
National Strategy for Trusted Identities in Cyberspace.

    On February 12, 2013, the President signed an Executive Order on 
Improving Critical Infrastructure Cybersecurity (Executive Order) 
(learn more about the White House's ongoing cybersecurity policies). 
Section 5 of the Executive Order directs the DHS Chief Privacy Officer 
and the Officer for Civil Rights and Civil Liberties to issue an annual 
report using the FIPPs to assess the Department's cyber operations 
under the Executive Order. As Deputy Attorney General James M. Cole 
explained during the public presentation of the Executive Order, the 
FIPPs are ``time-tested and universally recognized principles that form 
the basis of the Privacy Act of 1974 and dozens of other Federal 
privacy and information protection statutes.''

    The Executive Order also directs the senior agency privacy and 
civil liberties officials of other agencies engaged in activities under 
the order to conduct their own assessments for inclusion in the DHS 
public report. In 2010, DHS issued a White Paper on Computer Network 
Security and Privacy Protection to provide an overview of the 
Department's cybersecurity responsibilities, the role of the EINSTEIN 
system in implementing those responsibilities, and the integrated 
privacy protections.

    For further information, see this link: https://www.dhs.gov/sites/
default/files/publications/privacy_cyber_0.pdf.
           anzalduas international bridge commercial traffic
    Question. Since January 2015, the Anzalduas International Bridge 
has been fully permitted to facilitate international commercial traffic 
between the U.S. and Mexico. However, delays and inaction by U.S. 
Federal agencies, as well as counterparts in Mexico, have forced local 
governments to take unprecedented steps to initiate the first phases of 
commercial traffic (expected to focus on unladen or ``empty'' 
commercial vehicles headed southbound toward Mexico), including funding 
infrastructure improvements in Mexico and signing a historic agreement 
to share bridge revenue among public entities in both countries. 
Despite the concerted efforts of local leaders, the Anzalduas 
International Bridge has still, to date, been unable to conduct even 
limited commercial traffic.

    Is your agency aware of the requirements that Mexico and its 
governmental agencies have imposed on the Anzalduas Bridge Board and 
the local governments that the Board represents?

    Answer. Yes, CBP was made aware of the requirements that Mexico and 
its governmental agencies have imposed on the Anzalduas Bridge Board 
and the local governments that the Board represents.

    Question. What specific and credible steps is CBP taking to assist 
the efforts of the Anzalduas International Bridge to initiate the first 
phases of commercial traffic?

    Answer. CBP met with the Anzalduas Bridge Board and representatives 
from the U.S. Department of State, U.S. Department of Transportation, 
U.S. General Services Administration and the Government of Mexico on 
June 13, 2016, to discuss commercial expansion plans at the Anzalduas 
International Bridge. CBP will be working with the Anzalduas Bridge 
Board, as well as U.S. and Mexico partners to develop a roadmap of 
forward looking milestones, activities, and timelines to help 
facilitate and organize future commercial expansion efforts. Once that 
roadmap is developed CBP will have a clearer understanding of what 
specific and credible steps it can take in order to assist the 
Anzalduas Bridge Board.

    The Anzalduas International Bridge is now open to southbound empty 
commercial vehicles. The first vehicles crossed on August 22, 2016. The 
Binational Bridges and Border Crossing Group and the U.S.-Mexico Joint 
Working Committee on Transportation Issues continues to progress toward 
commercial facilities at Anzalduas. (http://www.krgv.com/story/
32817469/cities-expected-to-benefit-from-anzalduas-bridge-expansion)
           bridge board donating infrastructure improvements
    Question. I understand the Bridge Board has communicated their 
interest in donating to the Federal Government certain infrastructure 
improvements to the Land Port of Entry (LPOE) to accommodate inbound 
commercial vehicles, with initial project phases focused on 
infrastructure and technology improvements necessary to process unladen 
or ``empty'' northbound commercial vehicles. In light of the 
substantial commitments local sponsors have already agreed to with CBP 
and the Government of Mexico, how would your agency work to expedite 
such a proposal, to ensure an opportunity to improve binational trade 
and commerce is not hamstrung by administrative red tape?

    Answer. CBP understands that the Anzalduas Bridge Board plans to 
submit a formal donation proposal for consideration during the next 
proposal submission period which is scheduled to open in October 2016. 
CBP traveled to McAllen, TX on June 22, 2016 to discuss the Anzalduas 
Bridge Board's proposal plans and will continue to work with them to 
develop and submit a successful and viable proposal. Moreover, CBP is 
already exploring its operational, infrastructure and technology 
requirements for northbound empty improvements to help facilitate 
planning and development activities should the Anzalduas Bridge Board's 
proposal be approved.
                      laredo pre-inspection pilot
    Question. Last year, CBP, in cooperation with counterparts in 
Mexico, launched a pilot program at the Laredo International Airport to 
pre-inspect certain Mexico bound automotive, electronics, and aerospace 
component parts. This is the only operation of its kind outside of the 
Mexico City International Airport.

    What levels of pilot program participation has your agency observed 
at Laredo, and how has that compared to other pre-inspection pilot 
sites in the United States and Mexico?

    Answer. Mexico Customs is the lead government agency for the Laredo 
pre-
inspection pilot, as this pilot involves cargo destined to Mexico. The 
level of company participation has been modest; eight companies that 
were able to pass all of Mexico Customs vetting requirements for 
participation. A few additional companies are going through the vetting 
process, but CBP is not aware of the status of those companies.

    CBP and Mexico Customs are working very well together inspecting 
multiple shipments destined for Mexico in Laredo.

    As you are aware, the only other cargo pre-inspection pilot CBP is 
currently conducting with Mexico Customs is at their Mesa de Otay, 
Mexico customs facility. Since the two locations were limited to 
specific vetted participants, we did not see a large increase in the 
number of participants. We believe there are no more than 10 
participants for the Mesa de Otay pilot.

    CBP and Mexico Customs are working very well together inspecting 
multiple shipments destined for the United States in Mesa de Otay.

    Question. What benefits, in terms of reduced processing or wait 
times, has CBP found during the first 6-months of the Pre-Inspection 
Program? How is your agency working with stakeholders in both countries 
to ensure that the Laredo pilot is a success?

    Answer. For shipments that originate from the United States 
destined to Mexico, CBP understands from Mexico Customs that a reduced 
processing time is observed once cargo arrives in Mexico. Since the 
cargo is inspected in the U.S., there is normally no need to conduct 
another inspection once it arrives in Mexico. Again, this pilot in 
Laredo involves Mexico Customs inspecting goods destined for Mexico.

    CBP and Mexico Customs have conducted multiple stakeholder events 
and we understand that Mexico Customs plans to adjust their strict 
vetting requirements that would allow additional companies to 
participate.
                     expand pre-inspection program
    Question. Is CBP considering steps to make the pre-inspection 
program permanent or expand it to add additional pilot sites? If so, 
what criteria will the agency use to determine the best ports of entry 
to develop and deploy an expanded pre-inspection regime?

    Answer. CBP is working with Mexico Customs to evaluate the three 
locations that were agreed upon under the pilot. Once the pilots are 
concluded and the results are validated, CBP leadership will evaluate 
next steps.

    If the decision is to expand and make the pilot permanent, CBP will 
develop a list of criteria to determine locations. Cost to place 
employees on foreign soil will definitely be one of the criteria used.

    Mexico Customs will decide if this pilot works for them and then 
decide on the next steps. Air cargo seems to be the best approach for 
them.
                     west rail international bridge
    Question. Recall that last year, the United States and Mexico 
inaugurated the West Rail International Bridge between Brownsville and 
Matamoros, the first international rail bridge between the United 
States and Mexico in over a century. One of the key challenges to 
reaching this historic achievement was resolving the deployment of 
vehicle security screening and inspection.

    How has CBP worked to build on the innovative image and information 
sharing partnership, entered into with Mexican Aduanas as part of the 
initiation of international traffic at the West Rail Bridge, to improve 
communication and collaboration between customs agencies in both 
countries?

    Answer. CBP and Mexico Customs have had multiple discussions on 
possible future locations for image data sharing. At a rail crossing in 
California/Baja California, Mexico Customs does not have a rail x-ray 
imaging system. The idea would be to install the necessary equipment 
for Mexico Customs to remotely view the images. Since this is something 
that Mexico Customs wants, we have asked for them to fund this project. 
CBP is standing by to see if they can fund such technology. Future 
acquisitions for CBP rail inspection technology will include 
requirements to allow data sharing and remotely view imaging 
information.

    Question. To what extent are current technologies at the West Rail 
facility and other international rail crossings fulfilling the security 
and trade facilitation needs of CBP?

    Answer. Current rail imaging technology provides CBP with the 
capability to non-intrusively inspect inbound trains while transiting 
at all Southwest Border crossings. At the West Rail facility, CBP also 
has the capability to share Non-Intrusive Inspection (NII) data with 
our Mexican counterparts and leverage their data to examine trains 
prior to entry.
                        rail bridge maintenance
    Question. What steps are you taking to ensure equipment at rail 
bridge POEs like this one is not only maintained to full functional 
standards, but replaced when it reaches the end of its maximum useful 
life?

    Answer. Current rail imaging technology provides CBP with the 
capability to non-intrusively inspect inbound trains while transiting 
at all Southwest Border crossings; however, the technology has been in 
place for an average of over 10 years. A key component of the Non-
Intrusive Inspection (NII) technology recapitalization is to replace 
rail imaging systems with more capable technology via a new open, full 
procurement. The goal is to deploy an integrated solution that enables 
data sharing, increases the effectiveness of scanning, leverages 
advancements in technology and facilitates improved efficiency for both 
the rail industry and CBP operations.
               presido-ojinaga international rail bridge
    Question. State and local officials have worked to develop and 
implement a project to restore service to the arson-damaged Presido-
Ojinaga International Rail Bridge. How has your agency coordinated with 
Texas leaders to proactively address the inspection technology and 
equipment requirements of a reconstructed Presidio bridge?

    Answer. CBP Office of Field Operations have held initial 
discussions with the State of Texas regarding the Presido-Ojinaga 
International Rail Bridge. The State of Texas is aware of the general 
requirements for inspection technology and the associated facilities 
and for a rail inspection facility. CBP's existing Rail LPOE standard 
has been provided to the State of Texas with the caveat that the 
standard will be updated once the procurement for new rail imaging 
technology is completed.

    Question. What best practices or lessons learned from the West Rail 
International Bridge experience might CBP apply to efforts to process 
traffic at the reinstated Presidio rail POE?

    Answer. The West Rail International Bridge project spanned several 
years with the original design being completed many years prior to the 
start of construction. During the intervening years, CBPs facility 
design requirements were upgraded (per CBP's 3-year cyclical process). 
As a result, by the time construction was funded, the designs required 
upgrading to be in compliance with the most current standards. This 
increased the cost of the project.

    In addition, the project experienced a delay due to uncertainty 
regarding the responsibility to fund the relocation of the rail x-ray 
system. Had this issue been resolved at the beginning of the project, 
the project might have been completed earlier. Going forward, funding 
responsibilities are to be clarified during the programming phase, 
prior to the start of design.

    Since the construction project was a County-funded project rather 
than a CBP-funded project, CBP's involvement in the early stages of the 
project was minimal. Going forward, CBP will work with local 
stakeholders starting at project inception through construction to 
ensure stakeholder plans are in compliance with CBP's requirements so 
as to prevent delays and equally important, adverse impact to the LPOE 
operations.
                   cross border trade enhancement act
    Question. As you may know, I authored a bill to provide innovative 
partnerships between border communities and businesses to boost 
staffing and improve infrastructure at our land ports of entry. The 
bill, S. 461, the Cross Border Trade Enhancement Act, has been amended 
to reflect the input of various members and stakeholders and was 
recently passed by HSGAC prior to the Memorial Day recess.

    Texas communities have shown that they can't wait to meet the 
resource needs at our ports of entry, and have been leading efforts to 
partner with CBP to improve staffing and modernize infrastructure at 
our ports of entry using their own resources. What steps is your agency 
taking to improve administration of existing partnership programs to 
achieve even better results, and will you support my legislation to 
standup a more permanent framework that better meets the needs of your 
agency as well as my constituents?

    Answer. CBP continues to expand and mature its capacity to explore 
infrastructure and staffing partnership opportunities through its 
Donations Acceptance and Reimbursable Programs. In June, the Donations 
Acceptance Program announced that three new proposals had been approved 
for further planning and development and has recently implemented a new 
process by which to accept and evaluate small scale proposals valued at 
$3 million or less on a year-round basis. The Reimbursable Services 
Program has also made significant strides towards expanding its 
capacity and announced 29 new selections for reimbursable services 
agreements on June 23rd, a number of which are located in Texas. CBP 
has and continues to collaborate with its stakeholders to explore new 
opportunities to improve the implementation and administration of its 
Donations Acceptance and Reimbursable Services Programs.

    CBP is supportive of legislation that establishes a more permanent 
legislative framework, and commits to working with your office and 
other Members of Congress to support authorities that provide the 
Federal Government with full flexibility to explore, foster, and 
facilitate partnerships for infrastructure and staffing improvements.
                           border wait times
    Question. Along with then-Senator Hutchison, I requested a GAO 
Report on CBP border wait time collection practices, responding to 
concerns from border communities and businesses that current agency 
processes were antiquated and failing to keep pace with increasing 
trade volumes. The final 2013 report outlined serious flaws in agency 
practices, including: poor wait time collection methods; a lack of 
progress toward automated data collection; and an overall absence of 
trade facilitation-related metrics for guiding agency resource 
allocation decisions. Since the report was issued in July 2013, CBP has 
struggled to fully implement the GAO's recommendation to improve and 
modernize data collection practices. One option for improving data on 
Texas border wait times that CBP has evaluated is leveraging an 
existing automated wait time collection system (Border Crossing 
Information System, operated by the Texas A&M Transportation Institute) 
toward the existing Border Wait Times online platform. CBP has 
discussed a maintenance and funding strategy with the Federal Highway 
Administration as well as TxDOT, but has thus far not committed 
resources.

    As you may know, wait times at the Texas-Mexico border are a 
concern for Texas border communities, as well as binational trade and 
commerce. How is your agency working to improve the methods it uses to 
collect wait times along the Southwest Border and move toward 
automated, technology-based solutions, like those we have piloted in 
Texas?

    Answer. CBP and the Federal Highway Administration (FHWA) have 
assessed the feasibility of replacing current manual methodologies for 
calculating commercial vehicle wait times with automated methods. CBP 
and FHWA recommended enhancements to leverage the existing automated 
wait time collection system--the Border Crossing Information System, 
operated by the Texas A&M Transportation Institute. The enhancements 
were completed in 2016.

    In July 2016, CBP committed additional resources via an Interagency 
Agreement with FHWA to continue the operations and maintenance of the 
seven automated RFID wait time collection system in Texas through FY 
2017 in order for CBP to perform final ground truth data verification 
on the accuracy of the data being collected.

    The automated commercial vehicle wait time measurement solution is 
currently deployed at eight southern border crossings: seven in Texas 
and one in Nogales, Arizona. The RFID solution captures wait times 
every 10 minutes using benchmarks identified by CBP (e.g., exit from 
toll booths or Aduana Mexico):

          Veterans Memorial Bridge (Brownsville, TX),
          World Trade Bridge (Laredo, TX),
          Pharr-Reynosa International Bridge (Pharr, TX),
          Colombia Solidarity Bridge (Laredo, TX),
          Bridge of the Americas (El Paso, TX),
          Yselta/Zaragosa Bridge (El Paso, TX),
          Camino Real International Bridge (Eagle Pass, TX), and
          Mariposa Port of Entry (Nogales, AZ).

    The system will begin measuring automated wait times at the 
Mariposa Port of Entry in Nogales, AZ in the 4th Quarter of FY 2016. 
Mariposa is the first crossing location in the State of Arizona to 
collect automated wait times. The FHWA has also funded a new border 
wait time study for the New Mexico-Chihuahua, Mexico border which is 
expected to begin by the end of October 2016. With this recent study, 
FHWA has funded border wait time studies for all four southern U.S. 
border States. It is anticipated that the automated commercial vehicle 
Radio Frequency Identification (RFID) wait time measurement solution 
will provide CBP with accurate and reliable commercial vehicle wait 
time data, eliminating the need for the port to manually calculate wait 
times. The eight crossings outfitted with RFID wait time technology 
will enable CBP to capture wait times for nearly 70 percent of 
commercial traffic on the Southwestern Border. (The TTI website may be 
accessed at http://bcis.tamu.edu/index.aspx).

    Beginning on October 24, 2016, the DHS Science and Technology (S&T) 
directorate will be performing an independent verification on the 
accuracy and reliability of the RFID solution. Pending verification, 
CBP will coordinate efforts to develop communication protocols to 
automatically update the commercial wait time data on the CBP Mobile 
Border Wait Time website and Border Wait Time app.

    CBP is also moving forward with developing a data-driven wait time 
measurement solution (i.e., no hardware deployment required) for 
measuring privately owned vehicle wait times. The data-driven solution 
takes advantage of travel data (i.e., Floating Car Data) derived from 
the public sector and CBP's vehicle throughput data.

    The data-driven solution will enable CBP to provide wait time and 
mapping data to the traveling public in near real-time, allowing the 
traveler to make an informed decision on when and where to cross the 
border. The solution is currently collecting test data at nine 
crossings along the northern and southern border.

    Due to the complexity of the commercial vehicle environment, the 
data-driven solution pilot will only focus on private vehicles at this 
time.

    CBP is committed to implementing an automated wait time solution 
for both commercial and privately-owned vehicles along high-volume 
northern and southern border crossings and will continue to work 
collaboratively with our border partners to identify innovative 
solutions to reach this goal.

                                 ______
                                 
             Questions Submitted by Hon. Patrick J. Toomey
                           drug interdiction
    Question. You testified in September 2015 at a Senate Homeland 
Security Committee field hearing that seizures of illicit fentanyl had 
risen substantially in the last 3 years. Despite the increased 
enforcement actions, there has been a dramatic and disturbing increase 
in overdose deaths attributable to illicit fentanyl and other synthetic 
drugs. The Drug Enforcement Administration (DEA) suggests much of the 
illicit fentanyl and other drugs are arriving from China, either 
directly or through Canada and Mexico.

    Why in your view has it been so hard to detect and seize these 
drugs before they do harm to U.S. citizens?

    Answer. CBP employs a multilayered approach to border security, 
utilizing advanced data, trend analysis, tactical intelligence and 
automated targeting systems to identify high-risk cargo, conveyances, 
and passengers for secondary examination.

    The primary challenges to intercepting synthetic narcotics, such as 
illicit fentanyl, include the identification of synthetic narcotic 
compositions, the lack of advanced targeting or analysis in 
international mail and the ability of laboratories to change the 
chemical compositions of substances once deemed to be illegal. Standard 
field test kits do not accurately detect fentanyl. Many fentanyl 
shipments are smuggled into the United States as mixtures that are 
difficult to identify using field equipment with personnel without the 
requisite scientific training. Regarding pure fentanyl, the field 
equipment currently in use have librairies that may identify a pure 
laboratory form of fentanyl but has trouble identifying street grade 
forms of fentanyl. It must also be emphasized that fentanyl analogues 
are extremely potent and must be handled very carefully, making field 
examination more difficult than other scheduled narcotics.

    CBP has improved its effectiveness with detecting and seizing other 
narcotics. CBP is deploying a new field detection technology at the 
port of Otay Mesa, the express consignment hubs, and the International 
Mail Facilities (IMF). This new technology allows CBP's labs to 
remotely and rapidly analyze sampled narcotics to more accurately 
determine the substance. Within the International Mail environment, 
service providers are not required to provide CBP with any advanced 
manifest information. This lack of advanced data significantly impacts 
CBP's ability to identify and target high-risk packages prior to 
arrival. Without the pre arrival risk assessment, intercepting illicit 
contraband is left to Officers manually sorting for identification and 
manifest information.

    Due to the wide range of chemical compositions, law enforcement 
generally has difficulty identifying synthetic narcotics. Once the 
chemical composition is deemed ``illegal'' it is placed on the 
scheduling list.

    Question. How do you determine whether CBP is effective at 
interdicting illicit fentanyl and other synthetic drugs?

    Answer. CBP has had successes interdicting illicit fentanyl and 
other illicit synthetic drugs. During fiscal year (FY) 2016 until the 
end of August, CBP seized 173.78 kilograms of fentanyl. This is a 
152.77 percent increase in the amount seized (68.75 kilograms) during 
the same time frame in FY 2015. As technology improves allowing CBP to 
more accurately assess the contents of packages and shipments into the 
United States, our interdiction rates will improve. Robust cooperation 
from our law enforcement partners in Mexico and the Peoples Republic of 
China will also greatly enhance our ability to interdict illicit 
fentanyl and other illicit synthetic drugs.
                      trade and goods relationship
    Question. Is there any relationship between the volume of licit 
trade flows through U.S. ports of entry and the volume of illicit 
contraband goods flowing through those same ports of entry?

    Answer. In general, the more trade and travel any given POE 
processes, the more likely that POE is to seize illicit contraband; 
however, beyond this generalization, CBP is not aware of any direct 
relationship between individuals and organizations involved in licit 
trade and the volume of illicit contraband seized.
                              chinese help
    Question. On October 1, 2015, the Chinese Ministry of Public 
Security (MPS) Narcotics Control Bureau announced the sale and 
distribution of 116 chemical compounds used in the production of 
synthetic drugs will be regulated in China, including acetyl-fentanyl. 
Part of the challenge to stopping the flow of controlled substances is 
the ability of chemists and drug gangs to slightly manipulate the 
molecular structure of a chemical to circumvent the law. Despite recent 
efforts by the Chinese government to stop the export of fentanyl, what 
else do you believe the Chinese could do to help stop the large 
quantities of acetyl-fentanyl and other dangerous, illegal substances 
that are continuing to flow into our country?

    Answer. Most direct shipments of acetyl-fentanyl to the United 
States from China arrive as air cargo or in postal shipments. Advanced 
information is voluntarily provided by carriers participating in the 
Air Cargo Advance Screening (ACAS) pilot, but only for conventional air 
cargo and express consignment shipments. Pre-loading advance data for 
postal shipments is not yet available. Because of the unique nature of 
the postal data supply chain, postal shipments were not included as 
part of the ACAS pilot. If China could provide export data on acetyl-
fentanyl shipments destined to the United States by air, or information 
on suspected shipments, this information may be helpful to CBP air 
cargo targeting efforts. As most chemical manufacturers of acetyl-
fentanyl in China are state-owned enterprises, it may also be possible 
for these companies to provide to CBP the export data for shipments of 
this chemical, and its various related formulations, to U.S., Central 
American and Mexican addresses. China's General Administration of 
Customs, could also provide more complete information about the results 
of its Container Security Initiative-requested container inspections, 
to improve CBP's targeting efforts.
                               drug flow
    Question. While you were Director of the Office of National Drug 
Control Policy between 2009 and 2014, was the flow of illicit fentanyl 
and other synthetic drugs, including new psychoactive substances, a 
concern?

    Answer. Yes, synthetic drugs such as illicit fentayl and new 
psychoactive substances, were a significant concern. In fact, two 
primary objectives of the interagency visit to China I led in September 
2012 were to encourage China to address methamphetamine precursor 
chemicals and synthetic drugs to include new psychoactive substances. 
To follow up our constructive conversations in Beijing and to ensure 
that they fully understand our message I sent a follow up letter to 
China's Ministry for Public Security dated December 12, 2012. This 
letter specifically noted that a ``. . . priority issue for the White 
House is the control of new psychoactive substances.''

    Question. What policies did you try to put in place as drug czar to 
limit the import of illicit fentanyl?

    Answer. When I served as ONDCP Director, I worked with my 
interagency colleagues, in multiple forums, to encourage producing 
countries--primarily China--to ban production and transshipment of 
synthetic drugs and precursors, as well as illicit fentanyl. In 2013, 
ONDCP began to receive discrete reports from High Intensity Drug 
Trafficking Areas detailing heroin and fentanyl related overdoses. Data 
was inconclusive, therefore ONDCP asked DEA to coordinate data sets 
with the HIDTAs to better assess fentanyl use.

    My staff and I also worked, in collaboration with the Department of 
State and the Drug Enforcement Administration, to improve the exchanges 
of information about effective approaches to controlling synthetic 
drugs with key partners, including the European Union, the United 
Kingdom, Sweden, Australia, and New Zealand. Many of these 
conversations occurred on the margins of the annual Commission on 
Narcotics Drugs meetings in Vienna where synthetic drugs including new 
psychoactive substances had become a high priority concern of many 
nations.
                         tariff evasion report
    Question. Since 2008, the Department of Commerce (DOC) and the 
International Trade Commission (ITC) have enacted or extended 130 anti-
dumping/countervailing duty (AD/CVD) orders on imports of illegally 
subsidized Chinese products. These orders are important to some of my 
constituents who compete directly with Chinese manufacturers. 
Unfortunately, many constituents--particularly producers of steel and 
paper products--inform me that importers often evade AD/CVD orders by 
falsifying country-of-origin labels and other import documentation. Tax 
fraud is always problematic, but it is especially harmful in this 
instance because it negates the legal remedies my constituents have 
obtained from the ITC.

    In the past, CBP has provided Congress and other stakeholders with 
data on CBP's actions to combat tariff evasion. I ask that you provide 
my office with an updated report on the actions CBP is now taking to 
reduce tariff evasion, specifically for Chinese products covered by: 
ITC Investigation Nos. 701-TA-451 and 731-TA-1126-1127; and existing 
AD/CVD orders for product groups ISM, ISO, and ISP.

    Answer. The enforcement of AD/CVD orders is a priority for CBP. CBP 
takes an agency-wide approach to enforcing AD/CVD orders, utilizing 
nationwide assets from across the agency to enforce AD/CVD. CBP employs 
multiple methods such as document reviews, cargo exams, audits, 
targeting and analysis, and scientific testing at the port, Centers of 
Excellence and Expertise, and national level to target AD/CVD evasion 
on imports subject to AD/CVD, including document reviews, cargo exams, 
audits, targeting and analysis, and scientific testing. CBP works in 
partnership with the trade community and other government agencies, 
including the U.S. Department of Commerce and U.S. Immigration and 
Customs Enforcement/Homeland Security Investigations.

    The referenced ITC investigations refer to the AD/CVD orders on 
thermal paper from China. CBP is working in partnership with Commerce, 
ICE HSI and the U.S. thermal paper industry to enforce the AD/CVD 
orders on thermal paper from China. CBP has been requesting single 
transaction bonds from importers of thermal paper, due to suspected 
transshipment of thermal paper from China; conducting entry summary 
reviews and cargo exams of thermal paper imports; auditing thermal 
paper importers; and working with foreign customs authorities to obtain 
information about shipments that have potentially been transshipped to 
evade AD/CVD liability. In November 2015, CBP personnel visited the 
facility of U.S. thermal paper producer Appvion in Dayton, Ohio, and 
has been regularly meeting with Appvion staff to obtain additional 
commodity expertise and market intelligence to enforce these AD/CVD 
orders on thermal paper from China.

    CBP is currently taking enhanced steel enforcement measures by 
targeting steel imports (in product groups (Mill Products (ISM)), Other 
Products and Castings (ISO), and Pipe Products (ISP) to counter AD/CVD 
duty evasion. The enhanced steel enforcement measures include enhanced 
reviews of Chinese steel imports which will provide a statistically 
valid measure of risk of duty evasion, and provide targets for further 
enforcement. CBP is also requiring ``live entry'' for certain high risk 
steel shipments, which means that the importer must provide all entry 
documents and duties are required to be provided before cargo is 
released by CBP into U.S. commerce. The live entry requirements have 
already been implemented on certain shipments of steel plate from 
China, and CBP is examining other high-risk steel imports to determine 
if live entry is necessary. CBP is also increasing other operational 
measures on steel imports, including audits of steel importers.

    CBP is also working with its North American partners to increase 
steel enforcement throughout North America. CBP, the Canada Border 
Services Agency (CBSA) and Mexico Servicio de Administracion Tributaria 
are initiating a trilateral customs dialogue at the North American 
Steel Trade Committee to discuss these efforts and additional 
collaboration in order to strengthen the North American position in the 
global economy. Additionally, CBP and CBSA recently developed an AD/CVD 
collaborative work plan on AD/CVD information sharing and cooperation, 
and CBP and the CBSA are collaborating on a joint steel operation. CBP 
is also exploring 
AD/CVD information sharing and potential joint trade enforcement 
operations with Mexico's Servicio de Administracion Tributaria to 
address threats to our respective economies.

                                 ______
                                 

                   EXECUTIVE OFFICE OF THE PRESIDENT

                 OFFICE OF NATIONAL DRUG CONTROL POLICY

                          Washington, DC 20503

                           December 12, 2012

State Councilor Meng Jianzhu
Ministry of Public Security
No. 14 East Chang'an Street
Beijing 100741 China

Dear State Councilor Meng Jianzhu:

    It was a great pleasure for me, as a White House official and 
Director of National Drug Control Policy, to lead an interagency 
delegation to the People's Republic of China September 10-14, 2012. We 
were very pleased with the constructive and substantive nature of our 
bilateral discussions and the warm hospitality with which we were 
received.

    The United States intends to maintain regular, high-level 
cooperation with China on drug issues as a vital and permanent part of 
our bilateral relationship. In that context, the White House Office of 
National Drug Control Policy (ONDCP) looks forward to continuing our 
counternarcotics cooperation in accordance with the Memorandum of 
Intent we signed on September 12, 2012. To ensure that the important 
progress from our meetings in Beijing is maintained, I have shared our 
agreements and discussions on the topics below with the U.S. co-chairs 
of the U.S.-China Joint Liaison Group (JLG), who, as you know, have 
already built a good record of success on counternarcotics efforts.

       Precursor Chemical Control
            During our meeting both sides highlighted the very 
productive efforts by China and the United States to combat 
pseudoephedrine/ephedrine-based methamphetamine production. However, 
the United States noted with concern that methamphetamine manufacturers 
have adapted and now the vast majority of methamphetamine consumed in 
the United States is manufactured through the phenyl-2-propanone (P2P) 
method using phenylacetic acid (PAA). The United States requested that 
China take steps to enhance scrutiny of shipments of PAA and related 
chemicals to Central American nations, and other states with no 
apparent legitimate need that might be used as conduits for illicit 
methamphetamine manufacturing producers.

            The United States, China and other nations should 
accelerate the exchange of specific information about this new threat. 
The United States' Drug Enforcement Administration (DEA) office in 
China would be pleased to facilitate information exchange between 
China's Ministry of Public Security (MPS) and Western Hemisphere 
nations, as appropriate.

        New Psychoactive Substances
            Another priority issue for the White House is the 
control of new psychoactive substances. This issue has previously been 
a discussion topic at the JLG counternarcotics working group, but 
requires added emphasis.

            Synthetic drugs--primarily synthetic cannabinoids and 
synthetic cathinones--are widely used and have caused significant harm 
to U.S. citizens. Many of these substances are illegal controlled 
substances in the United States, but manufacturers continue to 
circumvent the legislation by producing new variants that are not yet 
subject to controls.

            The United States would be interested in additional 
law enforcement operational exchanges on cases related to new 
psychoactive substances via our DEA office in Beijing. In addition, 
ONDCP, per our September 2012 Memorandum of Intent, would be pleased to 
exchange information concerning use of these substances.

        Trade-Based Money Laundering
            During our discussions in Beijing, the U.S. side 
proposed, and China accepted in principle, that we increase cooperation 
on money laundering investigations.

            We should build on the positive steps taken earlier 
this year when MPS and DEA completed a training exchange with officers 
from the Narcotics Control Board (NCB) regarding money laundering 
investigations.

            The U.S. Internal Revenue Service (IRS) delegation 
member proposed, and the MPS accepted in principle, an increase in 
bilateral law enforcement cooperation on the investigation of the 
transactions involving laundering of narcotic proceeds occurring in the 
United States and China. The IRS, assisted by Joint Interagency Task 
Force West (JIATF-West), hopes to share its enforcement experience with 
our Chinese partners in money laundering trends and methods to detect 
and investigate those offenses.

    I thank you again for your outstanding efforts, and those of your 
entire team from the Ministry of Public Security, to ensure a 
productive and enjoyable visit by our delegation. If there are key 
points from our discussions that have not been included above, please 
let me know. I have directed my staff member, Richard Baum, who 
accompanied me on the trip and who works closely with your Ministry of 
Public Security representatives in Washington, to follow up on the 
issues raised on our visit. He can be reached at [email protected] or 
by phone at 202-395-7221. Please feel free to contact me directly, or 
your staff may work through Mr. Baum, if ONDCP can be of assistance in 
any way.

    I look forward to future engagements between our organizations.

            Sincerely,

            R. Gil Kerlikowske
            Director

                                 ______
                                 
                  Question Submitted by Hon. Tim Scott
                        targeting methodologies
    Question. Effective and efficient trade enforcement is vital to 
upholding our free trade agreements and improving revenue collection. 
As you know, Customs' targeting methodology has not been disclosed with 
Congress in any meaningful way. To that end, I offered an amendment to 
the Trade Facilitation and Trade Enforcement Act of 2015 that required 
CBP to include in their strategic plan a description of the actual 
targeting methodologies used in enforcement activities.

    Has Customs started to implement this provision? If not, what are 
your plans for implementation and how far along are you in that 
process?

    Answer. CBP and U.S. Immigration and Customs Enforcement are 
currently in the process of drafting the Joint Strategic Plan and 
intend to submit this plan in accordance with the requirements outlined 
in the Trade Facilitation and Trade Enforcement Act of 2015.

                                 ______
                                 
               Questions Submitted by Hon. Maria Cantwell
                      trade enforcement trust fund
    Question. Commissioner Kerlikowske, H.R. 644, the Trade 
Facilitation and Trade Enforcement Act of 2015, included a provision I 
authored to authorize a $15 million Trade Enforcement Trust Fund 
specifically for the purposes of enforcement and capacity building with 
our FTA and World Trade Organization partners. I strongly believe that 
if we are going to have economically meaningful trade deals and high 
standard commitments from our partners, then we must make sure those 
partners actually live up to those commitments.

    The Customs and Border Protection is on the front lines in the 
enforcement of our trade laws, specifically anti-dumping and 
countervailing duty orders, when we find that countries we are doing 
business with are trying to bend the rules. In addition to those laws, 
would you please explain the role that Customs and Border Patrol plays 
in enforcing the free trade agreements and WTO commitments that the 
United States is a party too?

    Answer. U.S. Customs and Border Protection (CBP) plays an integral 
role in the implementation and enforcement of trade agreements and 
trade preference programs, which provide duty-free or reduced duty 
access to the U.S. market for qualifying merchandise. CBP works to 
ensure that the benefits afforded by the free trade agreements (FTAs) 
accrue only to eligible importations.

    CBP utilizes a layered, multi-faceted approach to detect non-
compliant shipments and deter violators. This layered approach includes 
data analysis and targeting, verification, and enforcement. CBP 
conducts extensive verifications of trade agreement preference claims 
(for both textile and non-textile imports) to ensure that the goods 
qualify under the agreement. CBP also utilizes collaborative 
partnerships with other Federal agencies, foreign governments and the 
trade community to more effectively enforce trade agreements.

    Question. Do you have the resources you need to enforce these laws?

    Answer. CBP utilizes its existing resources to best enforce free 
trade agreements and trade preference programs.

    Question. What enforcement actions could CBP improve if given 
access to more funding?

    Answer. CBP continues to explore new and innovative ways and 
methods to enhance and strengthen its trade agreement enforcement 
efforts and seeks to expand the use of existing tools with the 
available resources.
                 ustr funding in coordination with cbp
    Question. Would the funding made available to the USTR through the 
trust fund, in coordination with agencies like CBP, help you better 
enforce our trade agreements and improve economic outcomes here at 
home?

    Answer. Any funding made available to CBP through the Trust Fund 
could only enhance CBP's capabilities to detect non-compliance and 
enforce trade agreements to ensure a fair and competitive trade 
environment. The Trust Fund is managed by USTR per section 611 of TFTEA 
that directs that USTR ``. . . shall, on the basis of the advice of the 
Trade Policy Committee and relevant subordinate bodies of the TPC, use 
or transfer for the use by Federal agencies represented on the TPC 
amounts in the Trust Fund. . . .''

                                 ______
                                 
            Questions Submitted by Hon. Robert P. Casey, Jr.
                    illicit antiquities interdicted
    Question. We must take a whole of government approach to curb the 
means and mechanisms by which terrorist groups raise revenue to conduct 
operations, procure weapons, and pay salaries to fighters. The 
President recently signed into law the ``Protect and Preserve 
International Cultural Property Act.'' This bill, which I sponsored in 
the Senate, authorizes the President to restrict the import of cultural 
artifacts illicitly smuggled out of Syria since the beginning of the 
conflict. This will help cut off a meaningful component of the way ISIS 
finances its operations and send an important signal to our partners in 
the region that we expect them to do the same. CBP will be instrumental 
in successful implementation of this legislation. I request responses 
to the following questions:

    What is the annual volume of illicit antiquities that CBP has 
interdicted coming into the United States from 2011 to 2015?

    Answer.

Fiscal Year                         Seizures
2011                                27
2012                                15
2013                                18
2014                                13
2015                                20
                  antiquities identification training
    Question. Do CBP officers have sufficient training in 
identification of antiquities and their provenance documents? If not, 
what additional training is required to improve CBP officers' ability 
to effectively interdict smuggled antiquities?

    Answer. CBP officers do not receive training specific to the 
identification of antiquities; however, the CBP Office of International 
Trade (OT) Cultural Property Integrated Project Team is working with 
CBP's Office of Field Operations (OFO) and the Office of Chief Counsel 
(OCC) to develop a training program. With regard to provenance 
documents, OT has always recommended that the documents be sent to U.S. 
Immigration and Customs Enforcement (ICE) for authentication depending 
on the circumstances. OCC and OT are working on a directive and other 
implementing documents to provide agency guidance/policy on how to 
establish an antiquity's provenance.

    U.S. Customs and Border Protection (CBP), Office of Field 
Operations, ensures that CBP Officers are trained on detecting 
prohibited goods entering the United States as part of their basic 
training. New hire CBP Officers receive training on Anti-Terrorism, 
Other Agencies, and Introduction to Travel Documents as part of their 
pre-academy preparation.

    During the 19-week CBP Officer Basic Training, CBP Officers also 
receive training to address cultural property:

          Prohibited and Restricted Merchandise; and
          Seizure Processing.

    CBP Officers also receive training during basic to address the 
anti-terrorism mission of CBP, as well as risk based targeting:

          Anti-Terrorism Overview;
          Anti-Terrorism, Risk Targeting, and Passenger; and
          Anti-Terrorism, Risk Targeting and Trade.

    Finally, CBP Officers receive document fraud detection training 
through the following courses during basic:

          Analyzing Documents;
          Document Analysis and Questioning Lab;
          Primary Document Examination/Primary Document Examination 
        Practical Exercise;
          Secondary Passenger Processing; and
          Secondary Document Examination.

    Upon their return from basic academy, CBP Officers are then 
required to complete a post-academy curriculum over the remainder of 
their one-probationary period. The following modules revisit what was 
taught at basic and certifies the CBP Officer to work in the area:

          Primary Inspections;
          Secondary Inspections; and
          Processing Seizures.

    The Forensic Document Analysis Unit (FDAU) distribute mandatory 
training to the field (e.g., Border Security Coordinators, Tactical 
Analysis Units) each year with the latest trends in fraudulent 
documents and impostor detection in addition to alert bulletins.

    CBP Officers have the authority to detain any item suspected of 
being cultural property and collaborate with CBP Import Specialists, 
Immigration and Customs Enforcement, Homeland Security Special Agents, 
and INTERPOL to confirm legitimacy, valuation, and ownership of the 
item before release or seizure.

    Finally, the Office of Field Operations distributes musters and 
policy memoranda to be disseminated during shift musters to ensure CBP 
Officers have the latest information on trends and threats to our 
Nation.
     training and technical assistance to foreign partner countries
    Question. What training and technical assistance does CBP offer to 
foreign partner countries on border control and identification of 
illicit goods, like IED precursor chemicals, drugs, weapons, and 
antiquities?

    Answer. CBP's Office of International Affairs offers training and 
technical assistance to foreign partner countries, including the 
International Passenger Interdiction Training and International Border 
Interdiction Training and the Targeting and Risk Management (Land) 
Training. These training efforts are geared towards assisting our 
foreign partners increase their capability to manage border security 
operations and identify illicit materials and goods, including IED 
precursor chemicals, drugs, weapons, and antiquities.

    Question. Are there any legislative or funding barriers to CBP 
offering this type of training?

    Answer. Because CBP does not have title 10 or title 22 authority, 
and title 19 does not provide funding for foreign assistance, CBP 
collaborates with the Department of State to develop and implement all 
foreign training programs.

    Question. What training and technical assistance does CBP and the 
Trade Transparency Unit offer to foreign partner countries on 
identification and interdiction of trade based money laundering?

    Answer. U.S. Immigration and Customs Enforcement (ICE) Homeland 
Security Investigations Trade Transparency Unit (TTU) provides law 
enforcement and customs agencies around the world information, 
assistance, and training on Trade Based Money Laundering (TBML). The 
training provided by the TTU ranges from the basic introduction to the 
concepts of TBML to development of complex TBML investigations. Most 
foreign countries are unable to conduct TBML investigations because 
they lack access to both sides of trade transactions and are unable to 
analyze big data. The sharing of data and access to the ICE analytical 
system are two of the benefits provided in TTU partnerships. Bulk data 
analysis may be one of the key factors in identifying the illicit 
movement of antiquities and cultural artifacts. ICE has had initial 
discussions with the U.S. Department of State's Cultural Heritage 
Center on TBML, suspected illicit goods, and utilizing big data as a 
means to disrupt ISIS finances.
                      trade-based money laundering
    Question. What is the annual number of investigations CBP initiated 
concerning trade-based money laundering from 2011 to 2015?

    Answer. U.S. Customs and Border Protection (CBP) and U.S. 
Immigration Customs Enforcement (ICE) Homeland Security Investigations 
(HSI) coordinate extensively on investigations involving cultural 
antiquities, trade-based money laundering. Specifically, between 2011 
and 2015, ICE HSI initiated 1,029 trade-based money laundering cases.

          ICE HSI Trade-Based Money Laundering Cases Initiated
------------------------------------------------------------------------
                                           Fiscal Year
                       -------------------------------------------------
                          2011      2012      2013      2014      2015
------------------------------------------------------------------------
Number of cases             209       213       277       195       135
 initiated
------------------------------------------------------------------------

    Question. What is the value of goods interdicted as a result of 
those investigations?

    Answer. Illicitly trafficked artifacts and antiquities seized as 
part of these investigations are usually considered priceless, 
especially by the country that is the lawful owner. Often, antiquity 
experts are extremely hesitant to assign a monetary value to cultural 
property. As such we cannot give an estimated total value for illicitly 
trafficked cultural property seized during investigations.

                                 ______
                                 
              Questions Submitted by Hon. Robert Menendez
                 refunding erroneously collected duties
    Question. As I mentioned at the hearing, several of my constituents 
have been accidentally charged higher rates of duty for imported 
products due to CBP error. Although they worked to rectify the problem 
with CBP, and CBP has admitted to them, in writing, that they were 
charged a higher rate of duty than they should have been, CBP has 
stated that they are statutorily unable to refund the excess charges. 
In the past, these ``reliquidation'' cases were addressed through the 
MTB process, but the new process Congress is currently debating would 
not provide these companies relief.

    Commissioner Kerlikowske, can you please explain to the members of 
the committee why CBP is statutorily barred from refunding erroneously 
collected duties from these companies, and if the MTB process is no 
longer the proper avenue to correct these mistakes, what should 
Congress do in order to make sure that these companies receive the 
money rightfully owed to them?

    Answer. Generally, if an importer does not file a timely protest as 
is required by statute (see 19 U.S.C. 1514) and more than 90 days have 
elapsed since the original liquidation of an entry by CBP, the agency 
is barred by statute from carrying out reliquidations that may result 
in a refund of collected duties.

    Liquidation is defined as the final computation or ascertainment of 
duties accruing on an entry of merchandise. See 19 CFR Sec. 159.1. Once 
liquidation occurs, the import transaction is completed and the 
decision made by CBP becomes final and conclusive on all parties, 
including the United States. See 19 U.S.C. Sec. 1514(a). There are two 
exceptions to this rule. First, an importer may file a protest 
challenging a CBP decision within 180 days from the date of 
liquidation. Filing a protest commences the administrative review 
process. If not satisfied with the result of the administrative 
process, the importer may seek judicial review of the decision made by 
CBP. If a protest is not filed, however, the liquidation remains final 
and is no longer subject to administrative or judicial review. See 
Chemsol, LLC v. United States, 755 F.3d 1345, 1349-50 (Fed. Cir. 2014).

    Even if a protest is not filed, CBP may on its own reliquidate an 
entry, in any respect, within 90 days from the date of liquidation. See 
19 U.S.C. Sec. 1501, amended by the Trade Facilitation and Trade 
Enforcement Act of 2015 Sec. 911, Pub. L. No. 114-125, 130 Stat. 240 
(changing the start of the 90-day voluntary reliquidation period from 
the date of posting of notice original liquidation to the date of 
original liquidation). Once this 90-day voluntary reliquidation period 
expires, CBP no longer has the legal authority to reliquidate an entry 
unless a protest is filed. Thus, if an importer does not file a protest 
and the entry is beyond the 90-day voluntary reliquidation period, the 
liquidation of an entry becomes final and CBP is statutorily barred 
from changing the liquidation. In order for companies with entries that 
are statutorily barred to receive refunds, Congress must provide CBP 
with express statutory authority to make the refunds.

    Before 19 U.S.C. Sec. 1520(c) was repealed by Sec. 2105 of the 
Miscellaneous Trade and Technical Corrections Act of 2004, Pub. L. No. 
108-429, CBP could reliquidate an entry or reconciliation to correct 
``a clerical error, mistake of fact, or other inadvertence . . . not 
amounting to an error in the construction of a law, adverse to the 
importer and manifest from the record or established by documentary 
evidence, in any entry, liquidation, or other customs transaction, when 
the error, mistake, or inadvertence is brought to the attention of 
[CBP] within one year after the date of liquidation.''
                      goods made with forced labor
    Question. I and many other members of this committee were proud to 
close the consumptive demand loophole in the Customs bill we passed 
last year and to pass my amendment to TPA to withhold ``fast track'' 
for countries on Tier 3 of the State Department's Trafficking in 
Persons Report. As you know, many victims of forced labor have been and 
continue to be victims of human trafficking. I was therefore surprised 
to see that CBP states on the forced labor section of its website that, 
``[t]he agency does not generally target entire product lines or 
industries in problematic countries or regions.'' Furthermore, since 
2001, CBP has only issued two withhold release orders for products made 
with forced labor. Both of these orders were made about 6 weeks ago and 
target Chinese companies in the chemicals industry. But we all know 
that forced labor is a global problem--much more widespread than just 
one country or one product.

    Given Congress's clear direction on this issue, does CBP leverage 
the work of the State Department's Trafficking in Persons Report and 
the Department of Labor's List of Goods Produced by Forced and Child 
Labor to identify countries and products with a higher likelihood of 
being made with forced labor?

    Answer. Yes, CBP employs a risk-based approach to all enforcement 
issues, including forced labor, to identify countries and products with 
the highest likelihood of being made with forced labor. While CBP 
leverages the source information provided to support the Department of 
Labor lists and State Department reports and values the strong 
relationships we have with the Department of Labor and the Department 
of State to work together to combat forced labor, CBP has a different 
evidentiary burden to meet in making a determination under 19 U.S.C. 
Sec. 1307. CBP has issued four withhold release orders in FY 2016 and 
continues to enforce the entire list of active withhold release orders 
and findings posted on its website.

    Question. Does CBP have the proper resources--both at home and 
abroad--to identify and interdict products made with forced labor?

    Answer. Since the passage of the Act, CBP has reallocated or 
detailed existing staff to create a team within the Trade Enforcement 
Task Force that includes one program manager, two additional personnel, 
and contract support, to work full time on this issue. Additionally, 
auditors from Regulatory Audit and attorneys from Regulations and 
Rulings have been assigned to forced labor allegation cases to review 
and, where appropriate, prepare withhold release orders. To the extent 
possible, CBP leverages its overseas offices and partners with the U.S. 
Immigration and Customs Enforcement (ICE) Homeland Security 
Investigations (HSI) to support forced labor enforcement; however, U.S. 
authority is limited outside the United States and forced labor and 
forced child labor often occurs in countries where cooperation with 
U.S. authorities is limited. CBP's trade enforcement resources address 
a myriad of critical trade topics as directed by the Act, and CBP 
acknowledges that additional resources to support its trade enforcement 
missions would facilitate improved identification and interdiction of 
forced labor products.
                    body-worn and dashboard cameras
    Question. Would you please update the committee on what progress 
has been made, and when the public can expect widespread CBP deployment 
of body-worn and dashboard cameras?

    Answer. U.S. Customs and Border Protection (CBP) has been actively 
seeking to expand our camera technology to enhance officer and agent 
safety, transparency and accountability through the use of both body-
worn cameras and vehicle-mounted cameras. Earlier this year, in April 
2016, CBP issued a Request for Information (RFI) on body-worn camera 
and vehicle-mounted camera systems, which yielded responses from 29 
vendors. Based on the results of this market research, CBP issued a 
Request for Quote (RFQ) on September 13. We solicited quotes for 108 
body-worn cameras and 12 vehicle-mounted cameras, and CBP awarded 4 
delivery orders. These cameras will be used at select air, sea and land 
ports, checkpoint locations, and CBP training academies.

    Multiple awards will enable CBP to evaluate several commercially 
available camera systems in varied operational environments and, 
ultimately, determine the right mix of camera systems. The purchase 
will also help to define reasonable cost estimates for processing and 
storing audio and video files.

    To further this initiative, on October 11, 2016, CBP hosted a Body-
Worn Camera and Vehicle Mounted Cameras Industry Expo at CBP's Advanced 
Training Center, which included 45 leading camera and software 
providers. CBP law enforcement, policy, information technology, 
training, and procurement personnel interacted with a room full of 
vendors to learn about innovative camera technologies as well as video 
processing and storage options. Vendors demonstrated camera systems and 
answered questions about their products.

    All cameras, not just body-worn, are as important to officer and 
agent safety as they are to the safety of the public we serve. CBP 
operates in a diverse border environment. Agents patrol the border in 
desert heat, on the water, and in below freezing temperatures. These 
drastically different environments present a challenge in finding the 
right camera solutions. CBP was the first Federal agency to conduct a 
feasibility study on body-worn cameras. From the study, we learned that 
there isn't a ``one-size-fits-all'' solution. Nonetheless, we have many 
different factors to consider during this next phase. Because cameras 
are already used in much of CBP's day-to-day operations, a full-scale 
deployment of body-worn cameras on every CBP officer and agent is 
neither necessary nor cost effective. For example, a body-worn camera 
may not be needed at a port of entry where there is already an 
abundance of cameras in place. As with any large-scale modernization 
project, we must deploy the technology carefully and in a fiscally 
responsible way.

    Question. Your statement also included a January deadline for 
``[a]n assessment of existing fixed camera capabilities with 
recommendations for enhancements, to include funding estimates.'' Is 
that assessment complete and can you share it?

    Answer. CBP is expanding the overall use of cameras to include 
body-worn and vehicle-mounted cameras. The working group designated by 
CBP operationally reviewed where cameras do and do not exist to 
determine where to deploy additional cameras purchased. A formal report 
was not produced although these workgroup reviews may guide future 
camera deployments.
                      cbp integrity advisory panel
    Question. I appreciate the work performed by dedicated external 
law-enforcement professionals on the CBP Integrity Advisory Panel, co-
chaired by NYPD Commissioner Bratton and former DEA Administrator 
Tandy. You are rightly committed to instituting best law enforcement 
practices of oversight and accountability at CBP.

    The panel's recommendations in its two reports are extensive: can 
you comment on CBP's approach to implementing them and provide the 
committee with periodic reports on DHS's and CBP's progress?

    Answer. CBP welcomed and worked very closely with the Integrity 
Advisory Panel. CBP realizes how important integrity is within our 
workforce and to our stakeholders and the general public. The IAP's 
recommendations often were confirmatory of work that was begun by CBP 
and also directed new efforts. CBP established a mechanism to track and 
review goals through a multi-component process.

    Many of the recommendations in the IAP reports are completed or are 
well underway. Several recommendations need outside Agency assistance 
or require further consideration. CBP is willing to provide briefings 
to the committee on CBP's IAP implementation progress and will reach 
out to your staff to coordinate.

    Question. One Panel finding I was particularly struck by is that 
``[t]he CBP discipline system is broken.'' What reforms are you putting 
in place to remedy that situation and to reform CBP's complaints 
system?

    Answer. In 2015, CBP created a Complaints and Disciplinary Steering 
Committee to improve the way the agency responds to complaints and 
communicates with the public. It has also addressed this matter through 
the Integrity Advisory Panel and the Pivotal Report. These concerted 
efforts have conducted inventories of all formal and informal case 
handling systems, as well as existing systems and processes, to 
identify leading practices. Other significant comprehensive initiatives 
completed or underway include:

          Staffing complaint intake centers with Spanish-speaking 
        personnel;
          Instituting a centralized electronic complaint management 
        system;
          Creating an online complaint form with DHS/Office of the 
        Inspector General points for receipt of complaints;
          Formalizing a 24-hour complaint intake program with Spanish 
        language capability;
          Establishing specific timeframes and processes for 
        furnishing confirmation of complaint receipt and providing 
        appropriate status updates;
          Preparing a performance dashboard that will support 
        complaint reporting capabilities at the Sector Chief and Port 
        Director levels;
          Developing guidance that will allow the CBP Office of 
        Professional Responsibility (OPR) to serve in a consultative 
        role to mission support and other organizational components;
          Providing regular reports on complaint case resolution 
        similar to the Federal Bureau of Investigation, Office of 
        Professional Responsibility reports;
          Maintaining complainants informed of the complaint status 
        through a closure letter;
          Delegating to supervisors the effective resolution of 
        complaints with less serious offenses;
          Regular reporting on the resolution of complaint cases; and
          An assessment of the effects on the workload and staffing 
        (mission) of the response requirements in cases of use of force 
        incidents.

    Question. When can we expect tangible changes and how will you 
measure their effectiveness?

    Answer. Since 2015, the CDSC has met frequently to improve the 
complaints management and disciplinary process within CBP. The CDSC is 
actively working to complete over two dozen recommended actions for 
improvement or implementation (some are listed under 9a above). One 
significant milestone that has already been completed is the 
implementation of a centralized complaint management system to be used 
by all CBP components. This centralization of complaints information 
through a single electronic management information system will be 
critical to ensure appropriate oversight at the CBP organizational 
level. The CDSC is also working on instituting quantitative metrics for 
determining workload-based hiring factors.

    Question. Is Secretary Johnson also actively considering actions in 
response to the reports?

    Answer. As Secretary Johnson was instrumental in establishing the 
Integrity Advisory Panel (IAP) under the rubric of the Homeland 
Security Advisory Council, he has been kept informed on the Panel's 
recommendations and CBP's response to said recommendations. The 
Secretary was briefed both after the IAP's Interim report release in 
June 2015 and the Panel's final report released in March 2016. The 
Secretary concurs and supports CBP's response and implementation of the 
IAP's recommendations.

                                 ______
                                 
                 Prepared Statement of Hon. Ron Wyden, 
                       a U.S. Senator From Oregon
    Across the world, trade cheats are looking for any way they can to 
break our trade laws and rip off American jobs. Customs and Border 
Protection is often our number-one defense against them. It is tasked 
with spotting the illegally dumped steel and solar technology, the 
counterfeit chainsaws and computer chips, before jobs are lost or 
economic damage is done.

    Earlier this year, the Finance Committee spearheaded the first big 
package of customs legislation in decades as part of the Trade 
Enforcement Act. Back when the last overhaul was passed, our customs 
agency was fighting a very different foe. It was much more difficult 
for foreign companies to evade duties by concealing their identities. 
Now the Internet makes it easier to move quickly and stay hidden in the 
shadows. Blocking counterfeit products from creeping into our market 
used to mean stopping the right shipping container. Now counterfeit 
products are often tougher to trace; they can be spread out in 
individual boxes shipped straight to the doorsteps of American homes. 
Since the last customs overhaul, China shifted its unfair trade 
practices into overdrive. And in many cases, the old schemes to get 
past our trade laws and rip off American jobs have taken on a new spin.

    So in the wake of the Trade Enforcement Act becoming law, this 
committee has an important role to play in ensuring that CBP is meeting 
the mark on its trade mission. That mission remains as critical as 
ever, even with CBP now under the Department of Homeland Security. It's 
all about focusing like a laser on enforcing our trade laws, protecting 
American workers, and defending our economy.

    The early signals are, this focus is producing real results. For 
example, our new legislation closed an egregious, old loophole in U.S. 
trade laws that allowed for certain products made by slave or child 
labor to be imported to this country. What the loophole said--that 
economics trumped human rights--is wrong and un-American. I was very 
glad to see that CBP has already taken action to stop the imports of 
soda ash and several other industrial products from two Chinese 
companies alleged to be using forced labor.

    CBP has a lot of other tools to fight against the trade cheats, and 
our new customs legislation added even more to the kit. I'll be 
especially interested today in hearing about CBPs plans to implement 
the ENFORCE Act, which gives CBP 6 months to put in place procedures to 
ensure that American workers and firms aren't injured by foreign 
products that are evading our laws.

    Another of CBP's most important roles is fighting unfair 
competition and job loss by cracking down on duty evasion and bringing 
in revenue for taxpayers. CBP is also responsible for keeping illegally 
harvested timber out of our market and for protecting consumers from 
unsafe products. It is absolutely vital in the fight against trade 
cheats that all of those enforcement tools are fully implemented, 
including those that were created and strengthened in the Trade 
Enforcement Act. I look forward to discussing today how CBP will do its 
part to implement those policies as quickly and as effectively as 
possible.

    Thank you again, Mr. Chairman, for convening this hearing. And 
thank you, Commissioner Kerlikowske, for being here today.

                                 ______
                                 

                             Communications

                              ----------                              

                American Council of Life Insurers (ACLI)

         101 Constitution Avenue, NW, Washington, DC 20001-2133

                              www.acli.com

           Hearing Statement of the Honorable Dirk Kempthorne

                 President and Chief Executive Officer

The American Council of Life Insurers (ACLI) is pleased to submit this 
statement for the record for today's hearing titled ``Debt versus 
Equity: Corporate Integration Considerations.'' We thank Chairman Orrin 
Hatch and Ranking Member Ron Wyden for holding this hearing. ACLI would 
like to take this opportunity to respectfully comment on life insurer 
investments.

ACLI is a Washington, DC-based trade association with approximately 300 
member companies operating in the United States and abroad. ACLI 
advocates in federal, state, and international forums for public policy 
that supports the industry marketplace and the 75 million American 
families that rely on life insurers' products for financial and 
retirement security. ACLI members offer life insurance, annuities, 
retirement plans, long-term care and disability income insurance, and 
reinsurance, representing more than 90 percent of industry assets and 
premiums.

On behalf of the U.S. life insurance industry, we share the goal of 
encouraging economic growth through a competitive tax system. The 
nature of the life insurance business is very different from that of a 
manufacturer or retailer in that it involves the satisfaction of long 
duration promises. Life insurers receive premiums in exchange for a 
contractual promise to pay insurance or annuity benefits. These 
premiums are invested in assets that match our expected liability 
obligations and duration and that are subject to the state financial 
regulatory frameworks that influence and can constrain life insurers' 
investment options. Life insurers utilize those premiums as well as 
investment returns on the premiums to pay policyholder benefits as they 
arise, often many decades in the future. The protections and guarantees 
our products provide for consumers are not available from any other 
financial services companies.

The life insurance industry has priced its products and made guarantees 
to its policyholders based on receiving 100 percent of its investment 
income. The industry utilizes these resource as they are earned by its 
investment portfolios in order to fulfill the future obligations and 
promises under its insurance and annuity contracts. A 35 percent, 
nonrefundable withholding tax on gross investment income would amount 
to a de facto gross income tax with a substantial retroactive effect on 
existing business. Specifically, earnings from current investments 
would fall far short of providing sufficient income each year to pay 
contractual obligations on in-force business. Therefore, a withholding 
tax on investment income would have a crippling effect on the life 
insurance industry and ultimately on consumers' ability to purchase 
valuable coverage.

The ACLI appreciates the opportunity to comment and point out the 
unique features of our products that make them so critical to the 
financial security of all Americans. ACLI and its member companies look 
forward to working with Senate Finance Committee Chairman Hatch and his 
staff to address the industry's concerns on these very important 
issues.

                                 ______
                                 
                  Express Association of America (EAA)

                      1390 Chain Bridge Road #748

                            McLean, VA 22101

                              703-759-0369

                   [email protected]

           Submitted by Michael C. Mullen, Executive Director

Express Association of America (EAA) members are DHL, Federal Express, 
TNT and UPS, the four largest express delivery service providers in the 
world, providing fast and reliable service to the U.S. and more than 
200 other countries and territories. These four EAA member companies 
have estimated annual revenues in excess of $200 billion, employ more 
than 1.1million people, utilize more than 1,700 aircraft, and deliver 
more than 30 million packages each day.

The Express Association of America (EAA) strongly supported the passage 
of the Trade Facilitation and Trade Enforcement Act (TFTEA) of 2015 and 
applauded the bipartisan Congressional effort to enact this important 
legislation. This statement will address measures EAA believes are 
necessary to achieve effective implementation of TFTEA and ensure both 
the private sector and the Government realize the full benefits of the 
bill. EAA encourages Congress to ensure these recommendations are part 
of the oversight process going forward, as the bill is implemented.

Raising the de minimis level, under which most shipments are not 
subject to collection of tariffs, taxes or formal customs procedures, 
to $800 (TFTEA Section 901) will have major benefits for the U.S. 
economy, particularly for small and medium-size companies that handle 
proportionately greater numbers of low value shipments. U.S. Customs 
and Border Protection (CBP) should be commended for implementing this 
provision by the mandated deadline of March 10th this year. To realize 
the full benefits of this measure Congress should ensure that:

      All U.S. Government agencies with jurisdiction over goods 
crossing the border--especially those with hold authority--take steps 
to facilitate the movement of goods and target efforts on the highest 
risk by minimizing the number of low value shipment ``exceptions'' 
which would not receive de minimis treatment among the products they 
regulate.
      The U.S. Trade Representative actively adheres to the Section 
901 language encouraging other countries to adopt commercially 
meaningful de minimis levels as part of our trade negotiations with 
them. The ongoing Trans-Atlantic Trade and Investment Partnership 
negotiations represent the first opportunity to take this step.

The TFTEA measures aimed at improving Partnership Programs (Section 
101) will significantly upgrade the benefits of the Customs-Trade 
Partnership Against Terrorism (C-TPAT), if implemented in a robust way. 
In providing oversight of this section of the bill, Congress should 
ensure that:

      CBP consults closely with the private sector to ensure the 
trusted partnership program is providing commercially significant and 
measurable benefits to the trade, including:
         Pre-clearance of goods;
         A lower rate of shipment detentions for program members;
         Tier 3 C-TPAT membership for non-importers; and
         Reduced bond requirements.

      The CBP Commissioner is consulting actively, as the bill 
prescribes, with other federal agencies to establish a single, U.S. 
Government-wide trusted partnership program that provides immediate 
release of goods that do not pose a security or compliance risk.

In providing the authorized funding for the construction of the 
Automated Commercial Environment (ACE) system (Section 106), TFTEA 
ensures the United States will have the modern, effective tool we need 
to keep our businesses competitive globally and to stimulate exports. 
By the end of 2016, ACE will be the single system on which the entire 
trade of the United States, inbound and outbound, depends for timely 
clearance actions at the border. Even the slightest disruption in 
normal ACE operations will cause backups, storage charges, and 
logistics and transportation costs that will quickly run into billions 
of dollars. It is therefore mandatory that Congressional oversight 
ensure ACE maintenance is fully funded and that Congress consider 
providing a fully redundant second system that can be brought on line 
immediately to guarantee uninterrupted ACE availability. As an interim 
measure, the current Automated Commercial System (ACS) provides an 
effective backup capability for ACE and retaining this system after it 
is replaced by ACE is advisable.

TFTEA confirms in law (Section 107) the goal established by the 
President's Executive Order on the International Trade Data System 
(ITDS), that all U.S. Government agencies will use ACE and the ITDS 
functionality for processing data on cross-border trade shipments. In 
implementing this measure, Congress should ensure that:

      All agencies use a common approach to risk management that 
relies on weighted algorithms and automated targeting as the basis for 
a unified decision on a government-wide release of goods. This common 
approach should incorporate the government-wide trusted trader program 
mentioned above.
      All agencies are available to conduct border clearance 
operations at the same time, including weekends and holidays. Global 
commerce is now a 24/7 operation, and to ensure the competitiveness of 
U.S. businesses, the U.S. border clearance operation must adopt a 
similar approach.

TFTEA (Section 108) requires CBP to consult with Congress before 
entering into negotiations on, and before finalizing, any agreements on 
mutual recognition of trusted partner programs with other nations, and 
also requires the partnership programs of the other nation be 
compatible with U.S. programs. Reports required by Congress on this 
subject should include:

      A detailed description of how the benefits of mutual recognition 
agreements are aligned between the U.S. and partnering nations and how 
they are commercially meaningful;
      Ensuring that the application and validation processes to become 
a member of each nation's trusted partner program are fully aligned and 
mutually recognized.

TFTEA codifies in law (Section 110) the very successful procedures and 
policies that have been developed for the Centers of Excellence and 
Expertise (CEE). In providing oversight in this area, Congress should 
ensure that CBP:

      Provides uniform implementation at each port of entry of the 
United States of policies and regulations relating to imports and 
exports;
      Formalizes an account-based approach to the importation of 
merchandise into the United States;
      Ensures CEE account managers coordinate with other government 
agencies on all related border issues for their account, to support the 
single U.S. Government-wide release process under the ITDS.

TFTEA ensures (Section 904) that goods being returned to the United 
States after being exported are not subject to payment of duties twice 
based on the original location of the goods' manufacture. This 
provision has removed an obstacle that was preventing many small U.S. 
eCommerce businesses from developing export markets for their 
innovative products. In implementing this provision, Congress should 
ensure a simple, automated process exists by which a company can verify 
the goods were exported from the United States without needing to 
provide cumbersome paperwork.

TFTEA includes several provisions for improving the ability to identify 
and track entities importing goods into the United States, including:

      Section 114, establishing an importer of record (IOR) program, 
an IOR database and a streamlined process of assigning IOR numbers to 
importers;
      Section 115, establishing an importer risk assessment program 
that would adjust bond amounts for new importers based on risk; and
      Section 116, on Customs broker identification of importers, 
which will establish standards for customs brokers to collect 
information on the identity of importers. Changes are under 
consideration to Customs Form 5106 that will assist in meeting this 
requirement for brokers to collect more information on the identity of 
importers.

In implementing each of these sections, EAA recommends that Congress 
ensure that CBP consults closely with the trade community to ensure:

      Any new procedures produce clear improvements in trade 
facilitation and do not impose unreasonable requirements for 
information on parties that do not possess it;
      The provisions of these sections apply only to larger commercial 
importers, and a de minimis level is established to ensure individual 
consumers are not subject to the definition of a new importer as 
envisioned by these measures, which would have a debilitating impact on 
e-Commerce.

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