Customs and Border Protection: Improved Planning Needed to Strengthen Trade Enforcement
Released: 2017-06-12T00:00:00

Letter

Background

History of CBP and Key Legislation Related to Trade

Historically, the U.S. Customs Service under the Department of the Treasury was responsible for collecting revenue from trade in the form of customs duties, taxes, and fees. However, these functions were transferred to DHS under the Homeland Security Act when the U.S. Customs Service was merged with parts of the Immigration and Naturalization Service and the Department of Agriculture’s Animal and Plant Health Inspection Service to form CBP in March 2003. At that time, CBP’s priority mission was homeland security, but the agency was also responsible for facilitating the movement of legitimate trade and people.

Congress required in Section 412(b) of the Homeland Security Act that the Secretary of DHS, at a minimum, maintain the level of staff and associated support staff in certain customs revenue functions, which was in part defined as those functions performed by staff in nine positions that were present in the U.S. Customs Service when it became part of DHS in 2003. These customs revenue functions involve trade functions, including trade enforcement. For the purposes of our report, we refer to these as the nine mandated trade positions.

Since the creation of CBP, Congress has passed additional legislation that relates to CBP’s trade functions. For example, the Security and Accountability for Every Port Act of 2006 (SAFE Port Act) requires CBP to prepare a resource model to determine the optimal staffing levels that are required to carry out commercial operations, including inspection and release of cargo and the revenue functions described in Section 412(b) of the Homeland Security Act. Accordingly, CBP developed the Resource Optimization Model for trade positions. In its model, CBP identified the staffing levels for 15 positions, of which 9 were the mandated trade positions from the Homeland Security Act, and 6 were nonmandated trade positions that also perform trade functions. According to CBP, the Resource Optimization Model generated a staff level range that projects the optimal staffing levels necessary for each of the 15 positions to conduct trade processing and enforcement across the seven Priority Trade Issue areas for a given fiscal year. CBP’s Resource Optimization Model is based on projected workloads, staffing needs, and attrition levels for trade positions, according to officials from CBP’s Office of Trade.

The Trade Facilitation and Trade Enforcement Act of 2015 acknowledged many existing CBP trade practices and enforcement processes, such as Priority Trade Issues and partnerships with the trade industry, and also placed additional requirements on CBP, such as enforcing revised U.S. laws concerning imported goods made using forced labor. The Act covers trade facilitation and trade enforcement issues such as import safety, protection of intellectual property, and prevention of evasion of duties. The Act also requires the development and implementation of Centers of Excellence and Expertise (Centers) that CBP had already been piloting and, among other things, centralizes CBP’s trade enforcement and trade facilitation efforts. According to CBP officials, the Act complements and bolsters CBP’s existing initiatives to enhance trade enforcement and facilitation.

CBP’s Strategic Framework for Trade

According to CBP officials, two strategic documents inform the agency’s approach to trade enforcement. CBP Trade Strategy, Fiscal Years 2009-2013 is the most recent CBP trade-specific strategy, according to CBP officials. The strategy lays out four trade goals: (1) facilitate legitimate trade and ensure compliance, (2) enforce U.S. trade laws and collect accurate revenue, (3) advance national and economic security, and (4) intensify modernization of CBP’s trade processes. According to officials in the Office of Trade, CBP’s current trade priorities are reflected in CBP’s Vision and Strategy 2020 document. The document lays out four overarching strategic goals with objectives for CBP and addresses the agency’s dual security and trade mission. Two of these four goals address trade enforcement.

CBP’s Priority Trade Issues

CBP’s Priority Trade Issues are high-risk issue areas in which violations can cause significant revenue loss, harm the U.S. economy, or threaten the health and safety of the American people, according to CBP. Priority Trade Issues focus CBP’s actions and resources to better direct an effective trade facilitation and enforcement approach, according to CBP. Table 1 provides information on CBP’s Priority Trade Issues and examples of violations and enforcement actions that can occur. The Act required CBP to establish seven Priority Trade Issues, of which five already existed prior to being mentioned in the Act, according to CBP.

CBP’s Organization

CBP is led by a Commissioner who oversees CBP’s dual mission of protecting national security objectives while promoting economic prosperity and security, according to CBP documents. This mission was being carried out by more than 60,000 employees as of March 2017, with less than 20 percent working on trade-related issues, according to CBP officials. Two of CBP’s six offices are involved in carrying out trade enforcement: the Office of Trade and the Office of Field Operations (see fig. 1). Two other CBP offices, Enterprise Services and Operations Support, provide the Office of Trade and the Office of Field Operations with technical and administrative support for trade enforcement.

Flow of Goods into the United States and CBP’s Role

The flow of imports, or goods, into U.S. commerce is a regulated, multifaceted process that CBP is responsible for facilitating and enforcing. Imported goods enter at over 300 ports by air, land, or sea. The flow of goods can be characterized by three stages: pre-entry, entry, and post- entry (see fig. 2).

At pre-entry, before goods leave their country of origin and prior to goods arriving at a U.S. port of entry, importers and carriers file paperwork and provide required advance electronic information for CBP to review.

At entry, importers or brokers file entry documents when goods reach a U.S. port of entry where CBP scans and possibly examines them for import security and trade enforcement purposes before they enter into U.S. commerce. In some cases, CBP may target cargo for examination based on a risk assessment. Cargo that is scanned or inspected may be deemed as nonadmissible because of trade law violations, among other things. If CBP finds such violations, it may seize the cargo and issue penalties and/or fines. If the goods pose a risk of nonpayment of duties, and the shipment meets certain requirements, CBP may require additional bond coverage. Admissible goods are released from the port and enter into U.S. commerce.

At post-entry, importers or brokers file an additional set of entry summary documents that CBP reviews to ensure trade compliance, after entry of the goods has been authorized. CBP verifies the importer’s cargo classifications and calculation of customs duties, taxes, and fees owed, taking action when needed. For example, CBP may determine that an importer misclassified cargo in an attempt to pay lower duty rates, such that the agency issues the importer a bill for a greater amount based on the proper classification and possibly applies a penalty. CBP also continues to review and process trade information provided by the importer. For example, CBP may conduct audits and reviews and validate information provided by the importer to check for importer compliance.

Two of CBP’s Six Offices Conduct Trade Enforcement, with New Centers Changing the Way CBP Carries out Trade Operations Nationally

CBP’s trade policy, processing, and enforcement are primarily carried out by two offices—the Office of Trade and the Office of Field Operations. The Office of Trade develops policies to guide trade enforcement efforts, while the Office of Field Operations conducts a range of trade processing and enforcement activities at ports. CBP staff in a variety of positions, including import specialists and CBP officers, conduct a range of trade processing and enforcement activities. CBP’s previously port-centric approach to trade enforcement has shifted to a national-level, industry- focused approach with the establishment of the Office of Field Operations’ 10 Centers of Excellence and Expertise. These Centers represent a shift in trade operations, centralizing the processing of imported goods on a national scale through a single industry-related Center rather than individual ports of entry.

The Office of Trade Develops Trade Policies and Guides the Office of Field Operations’ Trade Enforcement Efforts

Within CBP, the Office of Trade is the lead entity for trade policy and operational guidance. The Office of Trade is responsible for developing policy and practices to ensure that importers comply with U.S. trade laws and regulations, directing enforcement when compliance does not occur, and facilitating processes with industry partners. The Office of Trade guides the Office of Field Operations’ trade enforcement efforts at the ports through policy documents and directives, according to CBP officials. The Office of Trade is composed of six directorates: five are focused on trade issues, and one provides human capital and financial support to the office (see table 2 for a description of the directorates and app. III for an organizational chart of the Office of Trade).

The Trade Policy and Programs directorate oversees CBP’s seven Priority Trade Issues, according to CBP officials. Each branch within this directorate is headed by a director who oversees components covering policy, enforcement, targeting, and operations as they relate to enforcement of the Priority Trade Issues at the field office and port level. See figure 3 for an organizational chart of the Trade Policy and Programs directorate and its branches.

The Office of Field Operations Conducts Trade Operations and Enforcement at Ports throughout the United States

While the Office of Trade focuses solely on trade, the Office of Field Operations is responsible for both border security and the facilitation of lawful trade and travel at U.S. ports of entry. The Office of Field Operations operates 20 field offices located throughout the United States. The field offices, which are organized by regions, manage over 300 ports where cargo enters.

The Office of Field Operations is composed of seven directorates, six with responsibility for trade enforcement and border security, and one that provides human capital and financial support. According to CBP, four of the seven directorates and relevant divisions are involved in carrying out CBP’s trade enforcement. Table 3 describes the four directorates that carry out trade enforcement as well as one directorate that carries out human capital and financial support. (See app. III for the organizational chart of the Office of Field Operations.)

Trade Enforcement Activities Are Carried Out by CBP Staff in Various Positions in the Office of Trade and the Office of Field Operations

Within the Office of Trade and the Office of Field Operations, trade operations and enforcement are carried out by CBP staff in various positions at ports located throughout the United States and CBP headquarters. In the Resource Optimization Model, CBP’s Office of Trade identified 15 positions that carry out trade functions, including the 9 mandated trade positions and 6 nonmandated trade positions that may perform security functions in addition to trade functions. In this report, we refer to these 15 positions as trade positions. Thirteen of the 15 trade positions are located within the Office of Trade or the Office of Field Operations, one is in Enterprise Services, and one is in Operations Support (see table 4).

Centers of Excellence and Expertise Change the Way CBP Conducts Trade Operations by Enhancing Industry Focus at a National Level

CBP’s 10 Centers of Excellence and Expertise have changed the way in which CBP conducts trade operations, centralizing the processing of imported goods on a national scale through a single industry-related Center rather than through individual ports of entry. Within the Office of Field Operations, the Centers of Excellence and Expertise are organized by industry, with staff located in ports across the United States (see fig. 4).

Each Center is responsible for performing trade functions related to its industry sector, such as the processing of entry summary and post-entry summary documentation and account management, regardless of the cargo’s port of entry. Each Center is located within a CBP field office and has a Center director. Each Center is organized into three divisions – Validation and Compliance, Enforcement, and Partnership Programs – each covered by an assistant Center director. Center staff are located at ports across the United States.

The Centers have made it easier for CBP to gain a national perspective on the movement of trade, compliance issues, and enforcement patterns; they also have enhanced commodity expertise and industry-based knowledge for import specialists, according to CBP officials. Before CBP established the Centers, documents associated with the imported goods were processed by import specialists at the ports where the goods physically entered, so importers had to communicate with multiple import specialists at ports across the United States to process goods if they imported goods into more than one port (see fig. 5). As a result, it was harder for CBP to uniformly process entries and detect import patterns across the nation. For example, a potential trade violation caught by an import specialist at one port might not have been caught by an import specialist at another port. Now, after the establishment of the Centers, goods are processed by import specialists assigned to specific Centers, and importers work with one Center. In addition, the Centers have centralized CBP’s support for the trade community; now the trade community can reach out to one Center instead of multiple ports with questions about the import process, according to CBP officials.

With the 10 Centers fully operationalized, Center staff are adjusting to a new work environment that involves remote teams. Prior to the creation of the Centers, import specialists were reporting to and managed by a supervisor and port director located at their port, while national account managers reported to the Office of Trade. Now, import specialists and national account managers are reporting to and managed by the Center they are assigned to, even though they may not be physically co-located with their supervisors or Center director. According to CBP officials, entry specialists are currently reporting to their local port supervisors and managers, but will be reporting to and managed by 1 of the 10 Centers later in fiscal year 2017. Figure 6 illustrates an example of the remote management environment of the Electronics Center.

According to CBP officials, Centers and their staff face challenges that stem mainly from the transition to working in a remote environment and are making efforts to address these challenges:

Virtual communication. Management and staff are increasing their usage of technology, teleconferences, and webcams and undergoing training to facilitate building remote teams. In addition, division directors and supervisory import specialists may teleconference once a month to discuss challenges in remote management.

New policies and procedures. Managers are learning different administrative policies such as leave policies as well as union rules that vary by port and operating across different time zones. In general, managers cover one geographic region, so they do not need to learn every port’s policies.

Funding and support structure. While the Centers do not have a separate budget to support activities such as travel and do not have mission support staff, the field offices have generally been supportive, according to CBP officials. The CBP field offices that house each of the Center directors have discretion on budget matters and mission support for the Centers. The Centers also find alternatives to activities that may require funds, such as attending webinars instead of in- person training.

CBP Enforces Its Priority Trade Issues through a Layered, Risk-Based Approach but Generally Does Not Have Performance Targets for Its Activities

CBP uses a layered, risk-based approach to guide its trade enforcement activities across its Priority Trade Issues but generally does not set performance targets to assess the effectiveness of its activities. CBP’s trade enforcement activities leverage many different units within CBP and at other government agencies, according to CBP officials. See figure 7 for examples of these activities by stage of entry of goods into the United States. CBP has created plans to set goals and objectives for its Priority Trade Issues; these plans contain some performance measures but generally lack targets to measure achievements and effectiveness.

CBP’s Trade Enforcement Activities Focus on High- Risk Imports and Reducing Risk of Noncompliance

Partnering with Industry to Reduce Risk of Noncompliance

CBP focuses on creating partnerships with industry to support its goal of increasing compliance among importers, according to CBP, and thereby reducing the risk of allowing noncompliant goods to enter the United States. According to CBP, partnership with industry helps expedite the flow of legitimate trade shipments and reduces the examination rate of low-risk importers, allowing CBP to focus its trade enforcement efforts on higher-risk importers. Examples of CBP’s partnership programs include the following:

The Customs-Trade Partnership Against Terrorism (C-TPAT) program. Through this public–private partnership program, 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. According to CBP, over 50 percent of the imports into the United States by value in 2016 are C-TPAT imports.

The Importer Self-Assessment (ISA). Current members of C-TPAT can apply to be ISA-certified, which means that importers have developed and implemented internal controls and assessed risk based on self-testing. The benefits of ISA to industry, according to CBP, include importers’ exemption from comprehensive CBP audits, fewer cargo exams, and faster clearance of cargo at the ports of entry.

The Trusted Trader Program (currently in a pilot phase). The Trusted Trader Program’s goal is to unify the current C-TPAT and ISA processes in order to integrate supply chain security and trade compliance and further increase the low-risk importer population, which allows CBP to focus on the high-risk importers. The development of Trusted Trader is a coordinated effort with members of the trade community, CBP, and partner government agencies. The program is carried out by the Partnership Divisions of the Centers of Excellence and Expertise, which is composed of national account managers, import specialists, and entry specialists who work with the Trusted Trader accounts. According to CBP, this arrangement enables CBP and partner government agencies to provide additional incentives to participating entities and enhance efficiencies by managing supply chain security and trade compliance within one partnership program.

In addition to partnership programs, according to CBP officials, staff at the Centers work closely with company representatives through meetings and seminars to enrich their knowledge of products and better understand the nuances of a particular industry to enhance their ability to identify high- risk importers. According to CBP, such partnerships with the private sector include participation in the Commercial Customs Operations Advisory Committee (COAC) to U.S. Customs and Border Protection working groups, roundtable meetings with industry representatives, and educational seminars. Another partnership is through E-allegations, CBP’s online referral process for alleging trade violation(s) by importers, which provides a means for industry and the public to report to CBP any suspected violations of trade laws or regulations related to the importation of goods into the United States.

Targeting High-Risk Shipments

CBP’s targeting efforts are carried out by different targeting groups at the national and port levels, and can support or help identify enforcement actions that are carried out on high-risk shipments. Targeting involves obtaining information about the shipment entering U.S. ports and those parties involved in moving the cargo and goods, such as the importer. Targeting groups develop user-defined rules (targeting rules) based on advance data, research, and other information that might show trends or emerging trade issues. The targeting rules are generally entered into CBP’s Automated Targeting System and flag certain cargo and goods for CBP officials responsible for trade enforcement to inspect or review documentation for potential trade violations. The targeting rules are ranked as mandatory, or high-, medium-, or low-risk, providing CBP officials some discretion on the need to take action.

At the national level, CBP’s targeting efforts are carried out by different units, according to CBP. Within the Office of Trade, the National Targeting and Analysis Groups (NTAG) and Commercial Targeting and Analysis Center (CTAC) target for further review high-risk imports that are related to the Priority Trade Issues. Currently there are five NTAGs, located in various locations across the country and staffed mainly by international trade specialists who specialize in targeting mainly at post- entry for their respective Priority Trade Issue. The CTAC facilitates information sharing among partner government agencies on targeting and enforcement at all stages of the import process – pre-entry, entry, and post-entry – focusing on a variety of issues, including import safety and environmental crime, natural resources, wildlife trafficking, and cultural property, according to CBP. These targeting groups also collect information to develop targeting rules from import specialists who are assigned to 1 of the 10 Centers that cover their respective industry.

Also at the national level, the Office of Field Operations’ National Targeting Center provides advance targeting, research, and coordination for CBP field units, the intelligence community, foreign counterparts, and investigative and law enforcement agencies in support of CBP’s antiterrorism mission and includes a cargo component focused on trade called the Tactical Trade Targeting Unit. This unit provides a national targeting perspective and is focused on developing user-defined rules that have a high probability of leading to investigations, according to National Targeting Center officials. The National Targeting Center established an integrated operational network, known as the Integrated Trade Targeting Network (the network), between all of CBP’s national level trade targeting assets in the Office of Trade and the Office of Field Operations. According to CBP officials, the purpose of the network is to improve communication, coordinate actions, and standardize procedures for more effective trade targeting. The network provides training to enhance the knowledge of relevant CBP field and headquarters personnel in the areas of automated targeting and reporting systems and targeting techniques.

At the port level, CBP’s targeting efforts are also carried out by CBP officers who utilize user-defined rules to identify high-risk cargo coming through the port for examination, according to CBP officials. CBP officers located at ports must examine all shipments that have a mandatory rule in the Automated Targeting System, but are given discretion to examine or not examine cargo for all other nonmandatory rules, according to CBP. For example, the targeting rules may trigger a requirement that CBP hold up the movement of a specific shipment at a port (called “holds”) until CBP officers can examine the shipment or import specialists can review documentation to determine whether there are possible trade violations. CBP may also conduct targeting based on advance information it receives on shipments coming into ports (see fig. 8 for an example of goods seized as a result of targeting).

CBP’s targeting efforts can support enforcement operations that are carried out by numerous CBP entities such as import specialists, agriculture specialists, and CBP officers as well as U.S. Immigration and Customs Enforcement’s (ICE) Department of Homeland Security Investigations (HSI), a partnering component agency of CBP under the Department of Homeland Security, and other partner government agencies. For example, CBP reported in December 2016 that it conducted several operations in the last quarter of fiscal year 2016 focused on targeting counterfeit goods—such as apparel, footwear, auto parts, and handbags—coming through express consignment and international mail facilities. CBP reported that these operations resulted in seizures of 948 shipments of counterfeit goods with an estimated manufacturer’s suggested retail price of over $20 million for the goods.

Conducting Audits and Validating Trade Compliance

CBP conducts post-entry audits and validation activities to assess trade compliance and identify possible trade violations across the Priority Trade Issue areas. Customs auditors in the Regulatory Audit directorate within CBP’s Office of Trade reported that they use a risk-based approach to select candidates for assessment. According to officials from Regulatory Audit, their audit plans tend to focus on examining importers with high dollar value shipments and potential risk to revenue—generally large and midrange importers. Regulatory Audit conducts various types of audits and reviews, including the following:

Focused assessment–comprehensive audits of major importers.

These audits assess internal control over import activities to determine whether the importers pose acceptable risk for complying with CBP laws and regulations. Such assessments can look at value, classification, free trade agreements, intellectual property rights, free trade zones, prior disclosures, and antidumping and countervailing duties.

Quick response audits–targeted compliance audit with narrowly defined objectives. These audits focus on a single issue or specific concern referred to Regulatory Audit by CBP’s NTAG or ICE, and cover Priority Trade Issues and other areas. Such audits can cover antidumping, intellectual property, import safety, textiles and wearing apparel, drawback, and foreign trade zone issues.

Surveys of importers. These surveys are performed as a result of an assertion or allegation, such as an e-allegation, with an objective to obtain an understanding of a company’s importing practices to determine if there are concerns that merit future CBP consideration.

Regulatory Audit officials we met with in Los Angeles and New York told us that the majority of their assignments are made up of quick response audits and surveys. According to CBP officials, the audits and reviews can result in the collection of additional revenue. For example, Regulatory Audit in headquarters reported that for fiscal year 2015, it identified, through its audit recommendations, over $109 million of revenue owed by importers and was able to collect almost $60 million that year. The audits and reviews also provide informed and enforced compliance to the trade community and act as a deterrent by discouraging potential violators.

In addition to activities carried out by Regulatory Audit, the Centers also conduct validation and compliance checks by reviewing post-entry importer records. All Centers have a division that conducts validation and compliance checks to ensure importer compliance. The checks are mainly carried out by teams of import specialists that specialize in different commodity types within their industry section. For example, by reviewing an importer’s post-entry summary records, the Center may validate that the entry complied with all conditions to be treated as a specific commodity under free trade agreements in which the United States is a party. When prompted by mandatory targeting rules, import specialists at the Centers are also responsible for reviewing the importers’ post-entry documentation and recording in the Automated Targeting System whether any potential violations were found. Some officials from targeting groups that we met with told us that import specialists are inconsistent about recording the results of the reviews they conduct, which impedes the targeting groups’ ability to assess the effectiveness of their targeting rules. According to Center procedures, import specialists are responsible for working with importers to ensure future compliance if violations have occurred and goods are seized or penalties are issued.

Seizing Unlawful Goods and Issuing Penalties

CBP can take actions against noncompliant importers when applicable. For example, CBP can seize imported goods if it believes there is a violation of a trade law. The types of seized shipments range across the different Priority Trade Issue areas such as intellectual property rights, textiles, wearing apparel, and import safety (see fig. 9). For instance, according to CBP, 28,865 shipments were seized based on intellectual property rights violations in fiscal year 2015. The top five categories for intellectual property rights seizures include consumer electronics and pharmaceuticals, each of which often involve shipments that pose threats to consumer safety. According to CBP, as part of the seizure process, the Office of Field Operation’s Fines, Penalties and Forfeitures office will send the importer or another relevant party a notice of seizure. Any interested party may file a petition for relief from seizure within 30 days, according to CBP. CBP stores the seized goods until a final decision is made; if it does not return the goods to the importer, it generally destroys or sells the goods, as appropriate.

CBP also has the authority to issue penalties and/or fines against importers, brokers, and other entities bringing goods into the United States that violate the law. Penalties may result, for example, if products are not properly marked with the country of origin, trademarks are violated with counterfeit goods, or illegal goods such as controlled substances are found. Penalties are monetary and are established by statute, according to CBP. In fiscal year 2015, CBP assessed over $237 million in penalties for violations related to its Priority Trade Issues and collected $3.5 million, according to CBP.

Conducting Investigations Stemming from Trade Violations

CBP officials collaborate with officials from the HSI directorate within ICE on civil and criminal cases involving trade fraud, according to CBP and HSI officials. CBP and HSI coordinate at the field office level through regularly scheduled meetings, according to HSI officials. At these meetings, according to HSI and CBP officials, HSI special agents meet with CBP officials, such as import specialists, customs auditors, and international trade specialists, to discuss potential and active cases and upcoming operations. While HSI officials have traditionally worked with local import specialists, they have had to adjust to working with import specialists located in other cities because of the virtual nature of the import specialists at the new Centers of Excellence and Expertise. For example, HSI officials in one city may be working on a case that involves a commodity assigned to a particular Center, but CBP no longer has a local import specialist that works for that Center—so the HSI officials must work with the import specialist located in another city who works for that Center, according to HSI officials. This has caused a decrease in cooperation and communication between CBP and HSI resulting in fewer investigations, according to HSI.

CBP officials will share information on suspected activities or importers that are noteworthy based on their own trade enforcement efforts, which may lead to an HSI investigation. For example, while processing shipments entering the United States, import specialists at the Centers may identify unusual trade patterns or documentation discrepancies for shipments of significance, such as large volume or value, with the shipments having health and safety or national security concerns, according to CBP officials. In addition, according to CBP officials, customs auditors from Regulatory Audit may send referrals to HSI if they find potential fraud or other significant issues during their audits of importers. Officials from CBP’s Fines, Penalties and Forfeitures office might also work with HSI on cases that may include seizures of goods. According to Fines, Penalties and Forfeitures officials at one of the ports we visited, more than 50 percent of their time is spent working with HSI on cases involving seized property. According to CBP and HSI officials, other U.S. partner government agencies may also be involved in investigations involving trade violations.

CBP also conducts investigations stemming from allegations brought forth by industry and pertaining to the Enforce and Protect Act of 2015. According to the Office of Trade, such investigations draw upon the expertise of resources that include the Centers, targeting groups, and Regulatory Audit to look into the allegations and share the outcomes of investigations with industry.

CBP Articulates Some Performance Measures but Generally Lacks Targets for Trade Enforcement Activities, Which May Impede Its Ability to Assess Effectiveness

CBP has created strategic or annual plans that contain strategic goals for its Priority Trade Issues and some performance measures but generally lack targets to measure achievements and effectiveness. Leading practices for managing for results note, among other things, that a plan should identify goals and measures covering each of its program activities and contain targets to assess progress toward performance goals. Numerical targets or other measurable values facilitate further assessments of whether overall goals and objectives were achieved because comparisons can be easily made between projected performance and actual results. The Act mandates CBP to develop by February 24, 2017, a joint strategic plan with ICE that incorporates enforcement activities and performance measures. However, the Act does not require that the strategic plan include targets. Currently this plan is in draft form, according to CBP and, because the plan is still changing, CBP declined to share a copy and declined to discuss the extent to which the plan would identify performance measures and targets that would enable CBP to gauge the effectiveness of its activities by Priority Trade Issue.

We asked CBP to provide us with strategic or annual plans for its seven Priority Trade Issues to determine how the agency measures its effectiveness in carrying out its trade enforcement efforts for each Priority Trade Issue area. CBP provided us with various plans for its Priority Trade Issues. While one of these Priority Trade Issues had plans that were current, the other Priority Trade Issues either did not have a plan or were using plans that had not been updated in several years. According to officials from the Office of Trade, CBP is in the process of finalizing plans for those Priority Trade Issues with outdated plans or no plans (see app. IV for the status of strategic or annual plans by Priority Trade Issue, as of February 2017).

Our analysis of all the Priority Trade Issue plans provided to us shows that they generally lacked performance targets that would enable CBP to assess the effectiveness of its enforcement activities. While we found that most plans identified strategic goals, some plans had performance measures but generally did not contain performance targets that would allow CBP to assess its actual performance against planned performance or compare to past performance. For example, the AD/CVD annual plan for fiscal year 2017 has a number of performance measures that pertain to enforcement and these include reporting the number of AD/CVD- related audits, nonaudit services, surveys conducted, and importers removed from a targeting rule. However, CBP did not set a target level for performance for these measures in the plan, such as the target number of AD/CVD-related audits and surveys to be conducted. Without targets, CBP may not be able to determine the effectiveness of its trade enforcement activities, particularly to see if its projected performance for an activity met its actual results.

CBP also reports on some trade enforcement performance measures related to its Priority Trade Issues in various documents, including reports mandated by Congress and annual reports prepared by various CBP entities. For example, a textiles report to Congress describes the types and number of enforcement actions taken, such as the number and value of seizures and penalties and the number of cargo examinations conducted by fiscal year. Also, in its first annual report covering its operations and programs for fiscal year 2015, CTAC—which covers CBP’s import safety Priority Trade Issue—reported on the number of seizures by operations that were conducted with U.S. partner government agencies, ineligible products that were prevented from entering the United States, and the number of enforcement operations conducted, among other things. However, while these metrics allow yearly changes to be identified and tracked, none of the two reports we reviewed included targets that would help officials with oversight responsibilities assess performance and the effectiveness of the CBP’s enforcement activities.

CBP Has Not Met Its Staffing Targets for Some of Its Trade Positions, Which Can Impact CBP’s Trade Enforcement Efforts

Over the past 5 fiscal years, CBP generally has not met the minimum staffing levels set by Congress for four of nine positions that perform customs revenue functions, and it generally has not met the optimal staffing level targets set by the agency for these positions. The Homeland Security Act set mandatory minimum staffing levels for nine mandated trade positions. CBP’s Resource Optimization Model projected optimal staffing levels for the 15 identified trade positions, 9 mandated and 6 nonmandated, for the period of fiscal years 2015 through 2022. Staffing shortfalls can lead to decreased effectiveness of trade enforcement. CBP faces several challenges to hiring and filling staffing gaps, according to CBP officials. We found that CBP has not articulated how it plans to address challenges to filling staffing gaps for trade positions.

CBP Has Not Met Its Staffing Targets for Some of Its Trade Positions

Our analysis of CBP data from fiscal years 2012 through 2016 shows that the numbers of staff in four of the nine mandated trade positions – import specialist, customs auditor, national import specialist, and drawback specialist – were generally below the minimum mandated staffing and optimal staffing levels. In addition, staffing levels for these positions generally declined during this period. Staffing levels for import specialists provide an example. The Homeland Security Act set the minimum mandated staffing level for import specialists at 984, and CBP’s Resource Optimization Model calculated an optimal staffing level range from 984 to 1,748 import specialists for fiscal years 2015 through 2022. However, the actual staffing levels were below the mandated levels for 4 of the 5 years, consistently declining in the last 3 years from 954 import specialists at the end of fiscal year 2014 to 917 import specialists at the end of fiscal year 2016.

The actual staffing levels for customs auditor, national import specialist, and drawback specialist were also generally below the minimum mandated staffing levels from fiscal years 2012 through 2016 and below the optimal staffing level targets in fiscal years 2015 and 2016. In addition, the staff levels for the financial system specialist position were below the mandated levels for 2 out of the 5 fiscal years and below optimal staffing levels for both fiscal years 2015 and 2016. For the four other mandated trade positions, CBP met or exceeded the mandated staffing levels. See table 5 for a list of mandated trade positions and their mandated and optimal staffing levels compared to actual staffing levels as of the end of fiscal years 2012 through 2016.

For the six nonmandated trade positions identified in CBP’s Resource Optimization Model, CBP reported that actual staffing levels for five of the positions, as of October 2014, were below the optimal staffing range.

For example, the actual level of staff for the CBP officer position, as of October 4, 2014, was significantly below the optimal staffing range, with an actual staff level of 6,889, representing about 1,800-2,800 fewer CBP officers on board than the model’s optimal staffing level. See table 6 for the optimal and actual staffing levels for nonmandated trade positions as reported by CBP, but not mandated by the Homeland Security Act.

The optimal and actual staffing levels for the nonmandated trade positions, according to CBP officials, are based on an estimated percentage of time that staff spend on trade functions. For example, while there were 22,000 CBP officers overall in fiscal year 2014, CBP reported that the full-time equivalent of 6,889 staff spent time on trade activities.

All of the nonmandated trade positions, except the Chemist position, assigned to Operations Support, are assigned to the Office of Field Operations.

Trade Position Staffing Shortfalls Can Impact CBP’s Trade Enforcement Efforts

Staffing shortfalls in certain key trade positions can also impact CBP’s ability to identify and address risk in trade operations. For example, according to officials from Regulatory Audit in headquarters, if CBP met the mandatory staffing levels for customs auditor, Regulatory Audit would be able to more effectively address risk in the multitude of trade areas. Specifically, they told us that Regulatory Audit would be able to increase the number of importers it audits and expand the scope of their work. In addition, according to Office of Field Operations officials, if CBP met the mandatory staffing levels for import specialists, Centers could conduct more enforcement operations and focus on specific trade issues.

Staffing shortfalls in trade positions can impact CBP’s trade processing and enforcement efforts, including CBP’s ability to enforce trade effectively. For example, staffing shortfalls can lead to decreased cargo inspections, according to several CBP officers at three ports we visited. According to these CBP officers, CBP officers at ports respond to rules from targeting groups to inspect cargo for trade violations, particularly when the instructions are mandatory. CBP officers have discretion to inspect cargo that is characterized as nonmandatory, which may be helpful in gaining new information about potential trade violations according to CBP officers. However, according to CBP, with staffing shortages of CBP officers, some CBP officers told us that they focus their efforts on addressing the mandatory inspections and may not be able to conduct any additional inspections, contributing to missed opportunities for assessing risk.

Shortfalls in CBP officers may also lead to reassigning CBP officers during high periods of traffic volume, as we found in a 2013 report. In 2013, at three of the six land borders visited, CBP field and port officials reported to us that CBP had insufficient staff to process cargo arriving by commercial vehicles. As a result, CBP had to reduce the number of CBP officers assigned to secondary inspection to open up additional primary inspection lanes for commercial traffic. We reported that staffing shortages were caused in part by budget constraints and time needed to train and assign new CBP officers. In addition, during our port visits, some CBP officers told us that they were pulled from trade functions, such as examining air consignment cargo, to temporarily fill shortages of CBP officers needed to screen air passenger traffic, particularly during the holidays and summer.

CBP Faces Challenges to Hiring for Trade Positions

CBP faces a number of challenges to hiring staff for trade-related positions, such as other hiring priorities and limited numbers of staff focused on hiring for trade positions, according to CBP officials we met with. Some of the hiring challenges identified by CBP officials we met with include the following:

Hiring priorities focused on security positions. CBP has focused on hiring staff for security positions, such as border patrol agents and CBP officers, and hiring for trade positions is not an agency-wide priority. Furthermore, trade positions with mandated staffing levels, such as import specialists, have not been hiring priorities.

Limited numbers of staff focused on hiring trade positions. CBP’s hiring centers have limited numbers of staff dedicated to hiring for trade positions. As a result, they have a backlog in hiring for trade positions.

Lengthy hiring process. Filling trade positions within the Office of Trade and the Office of Field Operations is a lengthy process. Potential candidates tend to drop out because of the time it takes to process an applicant. All positions require lengthy background investigations, and some positions, such as CBP officers, require a polygraph and additional clearances, which can take a long time.

Location-based issues. Some positions, such as customs auditor, are harder to fill because other government agencies or the private sector are competing for the same pool of applicants with specialized knowledge, or because the positions are in locations that are less desirable for applicants. CBP does not offer incentives to recruit potential candidates for mandated trade positions, according to CBP officials.

CBP Has Not Articulated a Long-Term Plan for Addressing Staffing Shortfalls in Hiring for Trade Positions

CBP has not articulated how it plans to address gaps in staffing for most of its trade positions. While CBP has established targets, it has not articulated a plan to attain those numbers or how budgetary constraints, if any, impact its ability to meet staffing levels. Leading practices in human capital management indicate that agencies, through strategic workforce planning, should address developing long-term strategies for acquiring, developing, and retaining staff to achieve programmatic goals. Specifically, leading practices suggest that agencies have a plan to identify strategies for recruiting staff that includes customized strategies to recruit highly specialized and hard-to-fill positions. Such a plan would help CBP to ensure that it meets its staffing targets for trade positions, particularly those positions where it has not met its mandated staffing levels for a number of years. However, we found that CBP has not developed such a plan and, during the course of our audit, we found that it generally conducts hiring for trade positions on an ad hoc basis. For example, officials from the Office of Field Operations told us that CBP hired for import specialist positions, as well as most other trade positions, on an as-needed basis based on requests coming from specific port locations.

Officials from the Office of Field Operations told us that they are planning to take some actions to meet its staffing targets for trade positions. In December 2016, these officials said that CBP would post general import specialist job announcements starting in December 2016 and renew the announcements as necessary throughout fiscal year 2017. CBP officials indicated in March 2017 that several announcements were posted in late December and that there were over 4,000 applicants for the external announcement pertaining to general import specialist. These officials also stated that CBP plans to track and facilitate the Office of Field Operations’ progress toward selecting a sufficient number of applicants by June 2017 to fill all import specialist vacancies, but made no mention of recruiting or retention strategies in general or in hard-to-fill locations. In addition, in February 2017, officials from the Office of Trade told us that they are planning to create a hiring plan for customs auditors and are seeking incentives, but did not provide any time frames.

Conclusions

As an agency tasked with collecting revenue and identifying harmful and noncompliant imports, such as counterfeit products and goods that are misclassified to evade duties, CBP needs to ensure that it effectively enforces U.S. customs and trade laws while at the same time facilitating legitimate trade. In 2015, CBP officials processed more than $2.4 trillion in imports through more than 300 ports of entry and collected around $46 billion in revenue, making CBP the second-largest revenue collection agency in the United States. In 2016, Congress passed the Trade Facilitation and Trade Enforcement Act, which codified the establishment of CBP and highlighted the numerous units within CBP’s Office of Trade and Office of Field Operations that play a critical role in CBP’s trade enforcement process. CBP’s strategic and annual plans for its Priority Trade Issues are intended to help focus the agency’s actions and resources on high-risk issues and direct its trade facilitation and enforcement approach. These plans identify goals and contain some performance measures. However, these plans generally lack performance targets, contrary to leading management practices. Without performance targets, CBP cannot assess its actual performance against planned performance or the effectiveness of its trade enforcement activities.

Congress passed the Homeland Security Act of 2002, directing CBP to maintain, among other things, a minimum level of staff and associated support staff in certain customs revenue functions. In 2006, Congress directed CBP in the SAFE Port Act to prepare a resource model to determine the optimal staffing levels that are required to carry out commercial operations, including inspection and release of cargo and the revenue collection and trade functions described in section 412(b) of the Homeland Security Act. In its model, CBP outlined optimal staffing levels for 15 positions needed to perform trade functions and adequately staff Priority Trade Issues; 9 of the 15 are congressionally mandated trade positions. Our analysis of CBP staffing data over the past 5 fiscal years shows that CBP has generally not reached the optimal and mandated staffing levels for some of the 15 trade positions that carry out trade enforcement and protect revenue, such as import specialists, CBP officers, and customs auditors. CBP officials cited several challenges to filling staffing gaps, including that hiring for trade positions is not an agency-wide priority. Contrary to leading practices in human capital management, CBP has not articulated how it plans to reach its staffing targets for trade positions over the long term. Without adequate numbers of staff to carry out its numerous trade enforcement activities, CBP faces challenges to effectively carrying out its mandated mission to enforce U.S. trade laws.

Recommendations for Executive Action

To strengthen CBP’s trade enforcement efforts, we recommend that the Commissioner of CBP direct relevant CBP units to take the following two actions:

The Office of Trade should include performance targets, when applicable, in addition to performance measures in its Priority Trade Issue strategic and annual plans.

The Office of Trade and the Office of Field Operations should develop a long-term hiring plan that articulates how CBP will reach its staffing targets for trade positions set in the Homeland Security Act and the agency’s resource optimization model.

Agency Comments and Our Evaluation

We provided a draft of this report for review and comment to CBP and ICE. CBP provided technical comments for the sensitive but unclassified version of the report, which we also incorporated in this report, as appropriate. ICE also provided technical comments on this report, which we incorporated, as appropriate. CBP provided formal agency comments, which are reproduced in appendix V. In its comments, CBP concurred with both of our recommendations and identified actions it intends to take in response to the recommendations. In response to our first recommendation, CBP indicated that it will work to identify applicable performance measures with performance targets to include in the fiscal year 2018 annual and strategic plans for its Priority Trade Issues. In response to our second recommendation, CBP indicated that the Office of Trade and the Office of Field Operations will partner with the Office of Human Resources Management to identify stakeholders and define challenges that have resulted in hiring gaps in trade-related positions and to develop a long-term hiring and resource plan.

We are sending copies of this report to the appropriate congressional committees, the Acting Commissioner of CBP, and the Acting Director of ICE. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact me at (202) 512-8612 or GianopoulosK@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix VI.

Appendix I: Past Audit Findings and Recommendations Related to U.S. Customs and Border Protection Trade Enforcement, Fiscal Years 2011-2016

We identified a total of 24 reports issued between fiscal years 2011 and 2016 that are related to trade enforcement and contain recommendations to the Department of Homeland Security (DHS) or U.S. Customs and Border Protection (CBP). Nine of these reports were audits conducted by GAO, while 13 were audits and 2 were inspections conducted by the DHS Office of Inspector General (OIG). This appendix provides an overview of key findings and relevant recommendations from these reports, as well as the status of actions taken to implement the recommendations.

Key Findings and Recommendations from GAO Audits Issued between Fiscal Years 2011 and 2016

We identified nine GAO audits, issued between fiscal years 2011 and 2016 and related to trade enforcement, that have recommendations to DHS or CBP. Of the nine audits, two reviewed antidumping and countervailing (AD/CV) duties; three reviewed targeting; two reviewed other topics; and two reviewed the agricultural quarantine inspection (AQI) program, a program that guards against harmful agricultural pests and diseases by inspecting imported agricultural goods, products, passenger baggage, and vehicles at ports of entry. Table 7 lists the nine GAO audits.

These nine GAO audits contain a total of 46 recommendations, 33 of which concern trade enforcement and are addressed to DHS or CBP. Topics of these 33 recommendations fall into four general categories: AD/CV duties, agriculture (specifically the AQI program), targeting and cargo examination, and other (see fig. 10 for a breakdown of recommendations by topic).

Some of these 33 GAO recommendations address weaknesses concerning adequate data reliability, guidance, or performance measures as they relate to the four topics.

Recommendations for addressing data reliability include, among other things: improving the reliability of AQI data on arrivals, inspections, and interceptions across ports; developing a better national estimate of compliance with maritime cargo targeting policies by calculating compliance rate differently; and developing an enhanced methodology for selecting samples to check compliance with policies on examining high-risk shipments.

Recommendations for addressing guidance include, among other things: revising guidance to include how targeters are to correctly enter data in targeting systems; updating guidance on how ports are to conduct work studies to determine the correct allocation of staff time; and updating guidance with requirements to establish time frames for issuing trade alerts for exclusion orders, which are notices that the International Trade Commission (ITC) issues to not allow certain imports that infringe upon certain intellectual property rights or other unfair import practices into the United States.

Recommendations for addressing performance measures include, among other things: reviewing performance against established time frames; and identifying performance measures for monitoring effectiveness in targeting, AD/CV duty collection, and protecting U.S. agriculture from introduction of foreign pests and disease.

In the nine reports issued between fiscal years 2011 and 2016, GAO made 33 recommendations to DHS or CBP, of which 24 have been closed as implemented, and 9 remain open (see table 8 for the status of GAO’s open recommendations, as of October 2016). Most of the open recommendations come from two GAO reports. Three of the nine open recommendations are found in GAO’s July 2016 report on $2.3 billion in unpaid AD/CV duty bills. In addition, another three open recommendations are found in GAO’s July 2013 report on U.S.-Mexico border wait times. This report on U.S.-Mexico border wait times stated that CBP’s Office of Field Operations (OFO) could help CBP better ensure that scarce staff resources are effectively allocated to fulfill mission needs across ports by improving transparency, that is, documenting the methodology and process OFO uses to allocate staff to land ports of entry on the southwest border.

Key Findings and Recommendations from DHS OIG Reports Issued between Fiscal Years 2011 and 2016

We identified 15 reports, which include 13 audits and two inspections issued between fiscal years 2011 and 2016 by DHS OIG related to trade enforcement that have recommendations to DHS or CBP. Six of the DHS OIG audits were independent auditors’ reports on CBP’s financial statements. Of the remaining nine reports, three reviewed targeting and cargo examinations, and the other six each reviewed different topics: the bonding process; the Office of Regulatory Audit; the penalty process; the workload staffing model; bonded facilities; and the Automated Commercial Environment, the central trade data collection system used for, among other things, receiving users’ standard data and other relevant documentation required for the release of imported cargo. See table 9 for a list of these DHS OIG reports.

The 15 DHS OIG audits and inspections contain a total of 142 recommendations, 103 of which pertain to trade enforcement and are addressed to DHS or CBP. Eighty-five of these 103 recommendations originate from the six independent auditors’ reports on CBP’s financial statements and cover recurring topics. Topics of the recommendations fall into 11 general categories. For a breakdown of DHS OIG recommendations by topic, see figure 11.

Some of these 103 DHS OIG recommendations addressed weaknesses concerning guidance or strategy or procedures, as they relate to the 11 topics.

Recommendations addressing guidance include, among other things, providing guidance to ports and field offices to ensure that employees resolve reports during the in-bond process, review bonded warehouses and foreign trade zones facilities, and use the correct targeting criteria for rail shipments.

Recommendations addressing strategy and procedures, among other things, include establishing written procedures or conducting assessment for developing, changing, and using the Workload Staffing Model, an Excel spreadsheet-based model that CBP uses to identify staffing needs for CBP officers at ports of entry; and determining whether resources are appropriately allocated to ensure effective penalty case management at Fines, Penalties and Forfeitures field offices.

Of the 103 DHS OIG recommendations pertaining to trade enforcement and addressed to DHS or CBP, 85 have been closed and 18 remain open (see table 10 for a list of DHS OIG reports with open recommendations and their status as of October 24, 2016). DHS OIG officials report that the agency concurred with these open and closed recommendations. The 18 open recommendations originate from five reports. In one particular report, the independent public accounting firm KPMG LLP (KMPG) recommended that CBP implement additional training at ports and/or additional oversight controls to ensure that risk assessments for bonded warehouses and foreign trade zones (FTZ) are consistently performed in accordance with required guidelines. KMPG had found that CBP was unable to provide evidence of completing compliance reviews to support the assessed risk level for certain bonded warehouses and FTZ reviews, and improperly recorded the risk level of an FTZ based on the compliance review that was conducted. KMPG found that the problem was that CBP personnel did not consistently adhere to bonded warehouses’ and FTZs’ policies and procedures for completing compliance reviews. These conditions increased the risk that imported goods awaiting entry into commerce may not be secure, which could result in a loss of revenue.

KMPG also recommended that CBP implement additional training at port locations on tracking in-bond entries for compliance. An in-bond entry allows for the movement of cargo through the United States without payment of duty or appraisement prior to entry into either domestic commerce or exportation to a foreign country, and CBP oversees in-bond compliance using the In-Bond Compliance Module. However, KMPG found that port personnel did not have a clear understanding of how to operate the compliance module, which, according to OIG-15-76, may result in missed opportunities for CBP to assess fines and penalties and collect the associated revenues.

Appendix II: Objectives, Scope, and Methodology

This report examines (1) U.S. Customs and Border Protection’s (CBP) structure for carrying out trade enforcement, (2) how CBP conducts trade enforcement across its high-risk issue areas and ensures that its enforcement activities are effective, and (3) the extent to which CBP meets its staffing needs for trade enforcement. We also provide information on audits related to CBP’s trade enforcement and the implementation status of any recommendations made in such audits.

To examine CBP’s structure for carrying out trade enforcement, we reviewed organizational documents for CBP, specifically for the Office of Trade and the Office of Field Operations. We also spoke with CBP officials in headquarters representing directorates and branches that have a trade enforcement component within CBP to better understand their role and organizational structure. We interviewed CBP officials in the field who carry out trade enforcement to learn about their roles and responsibilities. The trade enforcement staff we spoke to in the field include the following positions: Customs and Border Protection officer; entry specialist; import specialist; national account manager; drawback specialist; customs auditor; international trade specialist; agriculture specialist; paralegal specialist; Fines, Penalties and Forfeitures specialist; and seized property specialist. We also interviewed officials at all 10 Centers of Excellence and Expertise (Centers) and asked most Centers questions pertaining to the Center’s organizational structure and resources, the benefits of having Centers, and any challenges that they have faced since the Centers became operational.

To examine how CBP conducts trade enforcement across its high-risk issue areas and ensures that its enforcement activities are effective, we reviewed CBP documents pertaining to trade enforcement and Priority Trade Issues, as well as planning documents. We interviewed CBP officials who set policy and conduct enforcement activities for Priority Trade Issues in headquarters as well as CBP officials in the field who carry out trade enforcement activities. Specifically, we met with officials representing units within the Office of Trade and the Office of Field Operations: National Targeting Center; Regulatory Audit; Fines, Penalties and Forfeitures Office; and Trade Operations Division. We also spoke with CBP officials representing every National Targeting and Analysis Group and the Commercial Targeting and Analysis Center to learn about their role in trade enforcement by Priority Trade Issue and to understand their coordination with other units within CBP. We visited CBP ports and field offices in Baltimore, Maryland; Los Angeles/Long Beach, California; and New York, New York to observe trade enforcement activities and interviewed CBP officials located at the sea and air ports. We visited an international mail facility at John F. Kennedy airport to learn about trade enforcement in the mail environment and observed cargo being inspected at a DHL facility at the Los Angeles airport. We selected the CBP ports and field offices to visit based on a number of factors, including the volume of imports coming through the ports, the number of relevant trade enforcement-related units at the port, the port environment (locations with cargo arriving by air, sea, and through international mail), and the proximity of the port to our location. We interviewed officials at all 10 Centers of Excellence and Expertise and asked questions pertaining to the Centers’ coordination within and outside of CBP, strategy, and data collection. We did not visit and observe any land ports of entry because of limited time frames. However, during our interviews, CBP officials discussed trade enforcement processing and other activities that occur at the land borders. We spoke with Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) officials in Washington, D.C., and in New York to learn about ICE and HSI’s role in trade enforcement as well as to understand how HSI coordinates with various CBP components. We requested copies of CBP’s strategic or annual plans for each of the seven Priority Trade Issues. We initially received three plans, one of which was current and two that were outdated but still being used by CBP. In addition, in February 2017 we received seven Priority Trade Issue plans, of which one was final and six were still in draft form. We reviewed and compared all plans we received against leading practices for managing results, specifically those focused on performance planning. These leading practices noted that a plan should identify goals and measures covering each of its program activities and contain targets to assess progress toward performance goals.

To examine the extent to which CBP meets its staffing needs for trade enforcement, we reviewed CBP documents and reports related to trade enforcement positions and staff levels, such as CBP’s Resource Optimization Model. We obtained information on trade enforcement staffing, budgeting, hiring process, and any challenges to hiring trade staff by interviewing officials from the Office of Trade’s Resource Management Division, the Office of Field Operations’ Human Capital and Budget offices, the Enterprise Services’ Finance division, and the Minneapolis Hiring Center. We also spoke to CBP officials in the field about the impact of staffing shortfalls and challenges to meeting optimal staffing levels. We requested copies of CBP staffing plans or strategies related to trade enforcement positions and discussed with CBP officials whether they had any hiring plans for trade positions. We reviewed leading practices in human capital management, which indicated that agencies, through strategic workforce planning, should address developing long-term strategies for acquiring, developing, and retaining staff to achieve programmatic goals.

We requested staffing data covering fiscal years 2012-2016 for the trade positions that carry out trade functions identified in CBP’s Resource Optimization Model. Nine of the 15 trade positions were mandated in the Homeland Security Act. To identify positions with staffing shortfalls, we compared actual staffing data for the nine mandated trade positions against the minimum staffing levels set in the Homeland Security Act. In addition, we compared actual staffing data for fiscal years 2015 and 2016 to the optimal staffing levels identified in CBP’s Resource Optimization Model. Although the Homeland Security Act also required CBP to maintain minimum staffing levels for the associated support staff for the nine mandated trade positions, we did not assess CBP’s ability to meet these staffing targets because CBP officials could not provide any information on these positions or the staffing levels in response to our request for data. To identify staffing shortfalls for the model’s six nonmandated trade positions, we compared the actual staffing data CBP reported for these positions in October 2014 against optimal staffing levels identified in the Resource Optimization Model. While we asked for the percentage of time spent on trade functions performed by staff in the six nonmandated trade positions for fiscal years 2012-2016, CBP was able to report data only for the end of fiscal year 2014 because it does not track the actual staffing levels for these positions on an annual basis. We did not independently assess and validate the optimal staffing models’ ranges. To assess the reliability of the actual staffing levels reported by CBP, as of October 2014, for the six nonmandated trade positions we compared and corroborated staffing information provided in CBP reporting and spoke to CBP officials regarding the methodology used to determine the actual staffing levels for these positions. On the basis of the checks we performed, we determined these data to be sufficiently reliable for the purposes of indicating the staffing levels for the nonmandated positions. To assess the reliability of the staffing data for fiscal years 2012-2016 for the nine mandated trade positions, we compared and corroborated information provided by CBP with staffing information in the Congressional Budget Justifications for that time period and spoke to CBP officials regarding the processes they used to collect and verify the staffing data. On the basis of the checks we performed, we determined these data to be sufficiently reliable for the purposes of comparing actual to mandated staffing levels.

To provide information on audits related to CBP’s trade enforcement and the implementation status of any recommendations made in such audits, we identified audits that (1) were published between fiscal years 2011 and 2016, (2) followed a professional auditing standard such as the generally accepted government auditing standards (GAGAS), (3) contained recommendations made to the Department of Homeland Security (DHS) or CBP, and (4) were related to trade enforcement. To identify these audits, we searched databases such as ProQuest, Lexis Market and Industry News, and the National Technical Information Service to include sources representing think tanks, academics, trade industry, and government. We also searched the Department of Homeland Security’s Office of Inspector General (DHS OIG)’s external website and GAO’s internal database, the Engagement Results Phase. By systematically narrowing down the search results from the DHS OIG external website and GAO’s Engagement Results Phase, we identified nine GAO audits and 15 DHS OIG reports that met our criteria. We corroborated our DHS report searches with the DHS Office of Inspector General. Based on our searches, we did not find that any other private or nonprofit entities or government agencies had published trade enforcement audits between fiscal years 2011 and 2016 that pertained to trade enforcement, adhered to a professional auditing or inspection standard, and contained recommendations addressed to CBP or DHS.

We obtained the status of GAO audit recommendations from GAO’s external website and GAO’s Engagement Results Phase database, and the status of DHS OIG audit recommendations from DHS OIG officials. For both GAO and OIG reports, we only included trade-relevant recommendations made out to CBP or DHS—136 recommendations out of a total of 188 (33 out of 46 recommendations for GAO reports, 103 out of 142 recommendations for OIG reports). The sources of these audits and inspections varied; the sources for GAO and DHS OIG may have been work initiated under agency authority, congressional mandates, or congressional requests. Other sources of DHS OIG audits included annually conducted independent auditors’ reports on CBP’s consolidated financial statements or part of a series of audit, inspection, and special reports prepared as part of DHS OIG’s oversight responsibilities to promote economy, efficiency, and effectiveness within the department.

To analyze the content of the recommendations, we coded each recommendation made in GAO and OIG audits by a topic that reflected our reporting objectives, information in the Trade Facilitation and Trade Enforcement Act of 2015 (the Act) related to GAO’s mandate, and/or recurring themes and pre-existing topics identified in the audit reports. We identified 13 topics in the recommendations made by the GAO and OIG audits. Recommendation topics covering both the GAO and OIG audits included: agriculture as well as targeting and cargo examination. Recommendation topics unique to GAO audits included: antidumping and countervailing duties and an “other” category that includes U.S.-Mexico border wait times. Recommendation topics unique to OIG audits included: bonds, bonded warehouses and foreign trade zones, drawback, entry reports, in-bond program, obligations, staffing, and trade compliance measurement. To ensure the consistency and accuracy of coding the recommendations according to these topics, an independent verifier coded some topics independently, and a supervisor reviewed coding for other selected recommendations.

We conducted the performance audit on which this report is based from May 2016 to April 2017 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. We subsequently worked with CBP in May 2017 to prepare this public version of the original sensitive but unclassified report for public release. This public version was also prepared in accordance with these standards.

Appendix III: Organizational Structure of U.S. Customs and Border Protection’s Office of Trade and Office of Field Operations

The Office of Trade is composed of six directorates (see fig. 12).

The Office of Field Operations is composed of seven directorates, each with a number of divisions (see fig. 13).

Appendix IV: Status of U.S. Customs and Border Protection’s Seven Priority Trade Issue Plans

Table 11 provides a status of U.S. Customs and Border Protection’s (CBP) strategic or annual plans by Priority Trade Issue, as of February 2017.

Appendix V: Comments from the Department of Homeland Security

Appendix VI: GAO Contacts and Staff Acknowledgments

GAO Contact

Staff Acknowledgments

In addition to the contact named above, Christine Broderick (Assistant Director), Andrea Riba Miller (Analyst-in-Charge), Debbie Chung, Martin De Alteriis, Neil Doherty, Joyce Kang, Grace Lui, and Edith Yuh made significant contributions to this report.