U.S. exports as a share of U.S. gross domestic product have grown significantly, increasing from less than 6 percent in 1970 to a peak of more than 11 percent in 1997, as shown in figure 1. The rise in U.S. imports was even greater, increasing from about 5 percent in 1970 to nearly 15 percent of GDP in 2000, according to Commerce Department statistics. Although the share of U.S. exports and imports has declined from those peak levels, they still represent a substantial part of our GDP—at 9.3 percent, and 13.3 percent, respectively, in 2002. The U.S.’s principal trading partners include Canada, Mexico, Japan, and China. At least 17 federal agencies, led by USTR, are involved in developing and implementing U.S. trade policy. USTR’s role includes developing and coordinating U.S. international trade policy and leading or directing negotiations with other countries on trade matters. It also has primary statutory responsibility for monitoring and enforcing U.S. trade agreements. The Department of Commerce has a relatively broad role with respect to trade agreement activities, with three units in the International Trade Administration performing the key trade functions: The Import Administration helps enforce U.S. trade laws; Market Access and Compliance is responsible for ensuring that other nations live up to their trade agreements; and Trade Development focuses on advocacy for U.S. companies, export promotion services, support for trade negotiations, and market analysis. Trade functions at the CBP are primarily directed toward enforcing U.S. import and export laws and facilitating legitimate trade as well as collecting duties, fees, and other assessments (more than $23 billion in fiscal year 2002). Other agencies also play important roles, such as the departments of Agriculture and State, which have relatively broad roles with respect to trade agreement activities. The departments of the Treasury and Labor have more specialized roles, such as advising on financial services or labor and workers’ rights issues. Federal trade policy development and monitoring and enforcement efforts are coordinated through an interagency mechanism comprising several management- and staff-level committees and subcommittees. The number of authorized full-time staff at USTR, Commerce’s Import Administration, and Commerce’s Market Access and Compliance division has increased in recent years (see fig. 2). However, actual staff levels are still in the process of catching up with authorized levels in Commerce and USTR offices. USTR has requested additional staff resources for 2004. As of January 23, 2003, the CBP had 3,269 positions dedicated to performing trade-specific functions: 2,263 specialists, auditors, and attorneys and 1,006 associated positions carry out trade activities such as auditing trade compliance; processing entry documents; collecting duties, taxes, and fees; assessing and collecting fines and penalites for noncompliance; and advising on tariff classification issues. CBP is expected to maintain these staff levels, as the Homeland Security Act of 2002 stipulates that the Secretary of Homeland Security may not reduce the staffing levels attributable to such functions on or after the effective date of the act. In addition, more than 18,000 CBP inspectors perform trade and nontrade functions depending on the nature of their assignment. For example, inspectors may screen and inspect cargo for illegal transshipment of textiles, counterfeit cigarettes, illegal drugs, and other contraband; and enforce compliance with U.S. trade and immigration laws. After September 11, 2001, combating terrorism became the priority mission for the U.S. Customs Service and remained so when the Customs Service was transferred to the Department of Homeland Security and incorporated into CBP. While it is too soon to tell how the increased importance of security will affect the implementation of CBP’s trade- related activities in the long run, some short-term shifts in human capital from trade to nontrade functions have occurred. As part of its focus on terrorism, CBP has implemented new programs to screen high-risk containers for weapons of mass destruction at overseas ports and to improve security in the private sector’s global supply chain. CBP has made progress in getting these programs up and running but has not devised systematic human capital plans to meet long-term staffing needs for both programs. The increased importance of security requires human capital strategies that link with the goals of combating terrorism and facilitating trade to establish accountability and ensure effective performance. The historical mission of the U.S. Customs Service has been to collect customs revenues and ensure compliance with trade laws, but this mission has shifted over time. For example, in the 1970s Customs expanded its functions to include the interdiction of narcotics entering the United States. Since September 11, 2001, combating terrorism has become Customs’ priority mission, culminating in the creation of CBP on March 1, 2003. On that date, the U.S. Customs Service was transferred from the Department of the Treasury to the Department of Homeland Security as part of the Homeland Security Act of 2002. Figure 3 illustrates the range of trade and nontrade activities that CBP performs. While two of the nine key mission-related offices within CBP are primarily dedicated to trade, most offices and most of CBP’s more than 40,000 employees perform a range of activities that support both trade and nontrade goals. Moreover, about a fifth of the 3,269 CBP positions dedicated to performing trade activities are located in the trade-specific offices, but most are located in offices that support both goals. Within this kind of organization, activities performed by persons in the offices that support both goals could shift from trade to nontrade activities when security threat levels are higher without actually seeing a reduction in the number of staff dedicated to trade. Moreover, the activities of the 18,000 plus CBP inspectors who perform trade and nontrade functions could shift to focus on combating terrorism when security concerns are heightened. Several examples illustrate the types of shifts from trade to security activities that have occurred. After September 11, 2001, CBP temporarily detailed approximately 380 inspectors to international airports around the country to strengthen security measures—reducing the number of inspectors available to work on trade activities. During the first 2 quarters of fiscal year 2002, CBP audits on export compliance were not conducted so that 150 inspectors could be temporarily redeployed to land ports along the northern border to strengthen security measures. During fiscal year 2002, the Compliance Measurement program, which determines compliance with U.S. trade laws, regulations, and agreements, was temporarily discontinued for 11 months because import specialists and inspectors were redirected to border security activities. Due to the limited compliance sampling, CBP was unable to calculate an overall trade compliance rate for fiscal year 2002. Moreover, compliance measurement helps ensure the quality of trade data, and unreliable trade data increase the risk that critical threats will not be identified. In fiscal year 2003, 3 of 14 scheduled textile production verifications were canceled when the national security alert level increased, so that the verification teams could remain at their ports and field offices to focus on security-related activities. The textile production verification teams, comprised of CBP import specialists and special agents, examine the production facilities in nations where there is potential for illegal transshipment of textiles. While the Homeland Security Act stipulates that the Secretary of the Department of Homeland Security may not reduce the staffing levels attributable to specific trade-related activities, our examination found that measuring inputs such as the number of staff assigned to trade-related positions does not adequately capture possible shifts away from trade activities—as the number of people assigned to trade-related positions may remain the same, but the focus of their work may shift to nontrade duties. In addition, those positions that were not included in the legislation, such as inspectors, but conduct trade and nontrade activities, may increasingly shift their focus away from trade and concentrate on homeland security activities. Measuring changes in CBP’s outputs and outcomes will be important in assessing how the increased emphasis on combating terrorism and Customs’ transfer to the Department of Homeland Security have affected trade activities and whether human capital strategies need to be readjusted accordingly. Responding to heightened concern about national security since 9/11, CBP assumed the lead role in improving ocean container security and reducing the vulnerabilities associated with the overseas supply chain. In November 2001, CBP initiated the Customs-Trade Partnership Against Terrorism program, where companies agree to voluntarily improve the security of their supply chains in return for reducing the likelihood that their containers will be inspected for weapons of mass destruction. In January 2002, CBP also initiated the Container Security Initiative whereby CBP officials are placed at strategic foreign seaports to screen cargo manifest data for ocean containers to identify those that may hold weapons of mass destruction. We reported in July 2003 that CBP had not taken adequate steps to incorporate human capital planning, develop performance measures, or plan strategically- - factors crucial to the programs’ long-term success and accountability. Initially, 10 officials were assigned to roll out the Customs-Trade Partnership Against Terrorism. Under the program, companies enter into partnership agreements with CBP and agree to self-assess their supply chain security practices and document it in a security profile. These 10 officials provide guidance to companies on how to prepare their security profiles as well as review the completed security profiles and prepare feedback letters. As of May 2003, more than 3,300 agreements had been signed, 1,837 security profiles reviewed, and 1,105 feedback letters prepared. However, early on CBP realized that it did not have a cadre of staff with the skills necessary to conduct site visits to observe supply chain practices and make substantive recommendations for improving security. In October 2002, CBP began the process of developing a new position, called “supply chain specialists,” to review company security profiles, visit companies to validate information contained in the security profiles, and develop action plans that identify supply chain vulnerabilities and the corrective steps companies need to take.