Our

and generally cripple the in-bond trade of the United States. past experience clearly indicates that users fees do not improve government services to the import and export communities, and generally result in dramatically increased costs to importers and exporters for enforcement and policing activities which accrue to the benefit of the general public, or more specifically, to the protected domestic industries of the United States.

For the past three years, Customs has supervised bonded warehouses through an audit inspection program.

Under this

program, Customs imposes an annual users fee on bonded warehouses, calculated by adding the total cost of the audit inspection program and then dividing those costs by the total number of bonded warehouses in the country.

The annual fee in 1984 for operation of a bonded warehouse was $650. With no prior explanation or justification, Customs more than doubled the annual fee in 1985 to $1400. Stunned by the fee increase, and provided absolutely no explanation by Customs, the National Bonded Warehouse Association filed a Freedom of Information Act Request to uncover the basic statistics used in the calculation of the annual fee. The initial request for information was flatly denied by Customs. On administrative appeal, Customs reversed itself and provided cost information used to calculate the annual fee. Information contained in the documents released by Customs indicates that Customs has included entire salaries of personnel not directly related to the audit

inspection program into the calculations of the annual fee. This is but one of many apparent abuses revealed by the disclosed statistics.

We cannot determine all the problems because of the vague manner in which Customs disclosed its costs: the New York Region attributed $136,650 in costs to spot checks of bonded warehouses: $44,301 in expenses to audits; and an incredible $576,678 to miscellaneous costs, unsubstantiated in detail and charged directly to bonded warehouse proprietors under the users fee system.

Is this the type of accounting we can expect from Customs under a users fee system? Will we find the same obvious problems and vague cost figures when we explore the other users fees charged by Customs on warehouses which rose twelvefold in two years--from $80 to $1,021? This is the fee charged under the Users Fee Statute for establishing or altering bonded warehouse

facilities.

Although our research is only in its preliminary stages, it appears likely that under the guise of reimbursing the government for its expenses, bonded warehouse proprietors pay the full salary of some Customs officers, while being charged again under specific users fee statutes for estimated time spent by the same officers in performing a number of different tasks related to warehouses. Bonded warehouse proprietors are charged administrative overhead charges under the Users Fee Statute as well as charges for

overtime incurred by Customs officers whose salaries have already

been accounted for in other charges.

Because there is no

accountability and no direct focus for funds under a broad users fee system, users fees inevitably end up compensating for overall fiscal measures, completely in violation of the General Agreements on Tariff and Trade. As a result of this system of fees, bonded warehouses and other in-bond traders are systematically being taxed our of existence for enforcement efforts which provide no service whatsoever to the bonded community and serve only to police bonded warehouses for the benefit of the general public. Although the annual bonded warehouse fee is calculated by dividing the number of bonded warehouses in the country into the total costs, our Freedom of Information Act Requests have uncovered that Customs has no accurate list of all the bonded warehouses in the United States. The NBWA filed Freedom of Information Act Requests on a district-by-district basis in order to obtain the Customs' lists used to calculate the number of bonded warehouses in the United States. After receiving those lists from Customs, the NBWA painstakingly crosschecked those lists with other sources of information and found that many lists were so old that they neither accounted for bonded warehouses which had gone out of business, nor accounted for warehouses which had come into existence within the past year. We must again note, that the only way this annual fee information came to public light, was through costly research and legal efforts by the National Bonded Warehouse Association.

Our main point in detailing these few examples of inaccuracy and abuse under the current system of reimbursing the government for expenses, is two-fold. First, past experience has shown us that absent strict Congressional scrutiny, Customs cannot impose these fees accurately or fairly. Second, when authorizing users fees, Congress is taking the taxing power out of its direct purview, and essentially giving carte blanche to Customs to tax as it sees fit. The enactment of a broad range of users fees, would create a nightmare of undisclosed and unaccounted for costs to the import and export community, and ultimately to the consumers of the United States.

Aside from our Association's fear of abuse, imposing fees on a broad range of Customs transactions is economically unrealistic. Just one small group of border stores in Texas processes in excess of 33,000 entries and withdrawals in one year. This does not even include in-bond transit, drawback filings, or many of the other specific transactions for which users fees have been suggested. Users fees would destroy border store profitability on our southwestern and northern borders. Alcoholic beverage importers and wholesalers, likewise, would be severely damaged by these charges. A users fee would, in effect, tax these operators for simply complying with the enforcement procedures required by Customs and other federal taxing authorities.

Duty-free shops, which process literally thousands of

in-bond transactions on a daily basis, would be virtually taxed out of existence by users fees. Despite the fact that most duty-free Customs transactions are routine in nature, requiring only a few minutes of a Customs officer's time, a uniformly set users fee would impose a significant cost on each transaction, regardless of its complexity. This would cost many duty-free operators millions of dollars per year in users fee charges, and force them out of the duty-free business. The loss of these valuable vehicles of international commerce, would have wide-ranging impact on revenues generated by airport related industries.

Foreign trade zones, which in some circumstances provide an alternative for certain types of export transactions, would be rendered unprofitable by a users fee on each transaction. Users fees would be a death knell to the small export, and import, businesses of the United States.

Users fees will inevitably overburden international traders by duplicating users fees which are already collected through other means. Already, administrative overhead charges, bonded warehouse fees, application and relocation fees, and overtime charges overlap. A broad scope of additional users fees would inevitably overlap with these fees, and other vessel and aircraft clearance fees, already in place.

Perhaps the most disturbing aspect of users fees, which we have alluded to previously, is the contention that Customs' users