GAO Testifies to Congress on CBP Efforts to Address Textile Transshipment
In the report, the GAO summarized its key findings from prior reports on (1) U.S. government efforts to enforce laws related to imports of textiles and other goods, including transshipment, and (2) the revenue implications of these efforts, as well as discuss the recommendations GAO has made to improve those efforts. In its prior reports on the matter, the GAO identified three key challenges confronting CBP relating to: (1) the timeliness of finalizing reports and follow up by CBP’s Textile Production Verification Team; (2) improvements needed to support information from overseas Customs Attache offices and enforcement personnel; and (3) improvements needed to the in-bond program that allows importers to circumvent trade rules, including those applying to textile imports. The GAO found that CBP responded and made improvements to the first two challenges, but:
Despite prior audit recommendations, important management weaknesses persisted in CBP's tracking of in-bond cargo, with the result that CBP still does not know whether in-bond cargo shipments of greatest security or revenue interest are in fact entered into U.S. commerce or exported as required. In particular, CBP continued to have high numbers of open in-bond transactions with uncertain disposition. In addition to needed improvements on specific programs, we also found that CBP had to find a way to better balance security and important trade functions such as revenue collection. Although CBP's priority mission relates to homeland security, it collected more than $34 billion in fiscal year 2008, making it the second largest revenue generator for the federal government. Because of the high concentration of duties collected on textiles and apparel--four percent of U.S. imports generate approximately 40 percent of U.S. duties collected--any efforts to focus on revenue functions would likely generate improved oversight of textile and apparel imports.
GAO Issues Report Critical of U.S. Export Controls
In a report entitled, “Export Controls: Fundamental Reexamination of System Is Needed to Help Protect Critical Technologies,” Anne-Marie Lasowski, the Director Acquisition and Sourcing Management, explained the work GAO has conducted on export controls in past years and stated that over the years, the GAO has identified interagency coordination challenges, inefficiencies in the export control system, and a lack of systematic assessments conducted by State and Commerce Departments. In conclusion, the GAO calls for the executive and legislative branches to conduct a fundamental reexamination of the current export control programs and processes.
In a report entitled, “Military and Dual-Use Technology: Covert Testing Shows Continuing Vulnerabilities of Domestic Sales for Illegal Export,” Gregory D. Kutz, the GAO’s Managing Director Forensic Audits and Special Investigations, testified regarding undercover tests conducted by the GAO to attempt to (1) purchase sensitive dual-use and military items from manufacturers and distributors in the United States and illegally export such items from the U.S. In its covert testing, the GAO purchased items such as gyro chips, night vision monoculars, accelerometers, electrical components used in IEDs, and secure military-grade radios used by U.S. Special Operations personnel. The covert testing was conducted between May 2008 and June 2009 and in at least two instances, the GAO was able to illegally export two items without detection.
In this report, the GAO concluded:
A comprehensive network of controls and enforcement is necessary to ensure sensitive technology does not make it into the hands of unauthorized individuals. However, the lack of legal restrictions over domestic sales of these items, combined with the difficulties associated with inspecting packages and individuals leaving the United States, results in a weak control environment that does not effectively prevent terrorists and agents of foreign governments from obtaining these sensitive items. The key to preventing the illegal export of these sensitive items used in nuclear, IED, and military applications is to stop the attempts to obtain the items at the source, because once sensitive items make it into the hands of terrorists or foreign government agents, the shipment and transport out of the United States is unlikely to be detected.
GAO Issues Report Critical of State and Commerce's Export Control Functions
In the report, the GAO found export licensing inefficiencies, poor interagency cooperation, and limits in the Departments of State's and Commerce's ability to provide a sound basis for changes to the system. In November 2007, the GAO reported that procedural and automation weaknesses, along with workforce challenges, created inefficiencies in State's arms export licensing process. The GAO noted that in less than 4 years, median processing times for license applications nearly doubled (from 14 days in 2003 to 26 days in 2006), with State's backlog of open cases peaking at 10,000.
Specifically, the GAO found procedural weaknesses in that the State Department lacked screening procedures to promptly identify those cases needing interagency review. The GAO also found that State also lacked procedures to expedite certain cases such as exports to the UK and Australia and those to support Operations Iraqi Freedom and Enduring Freedom, as required by law. The GAO also found electronic processing problems with State's D-Trade system and that State has faced challenges in establishing and retaining a sufficient workforce with the experience and skills needed to efficiently and effectively process arms export applications.
In response to these findings, State has informed the GAO that it (1) has implemented procedures to more quickly determine whether referrals to other agencies are needed and instituted senior level reviews of cases that are over 60 days old, (2) is planning future D-Trade upgrades that are expected to facilitate case reviews by licensing officers and allow managers to better oversee the processes, and (3) has restructured its licensing divisions to ensure a more equitable distribution in the workload and skill level of licensing officers based on the GAO's analysis.
From 1998 through 2005, the GAO found that Commerce's overall median processing times have remained stable at around 40 days and are consistent with time frames established by a 1995 executive order. However, the GAO found that Commerce lacks efficiency-related measures and analyses that would allow it to identify opportunities for improvement. For example, Commerce only measures its performance in terms of how long it takes to refer an application to another agency for review but does not have efficiency-related measures for other steps in its review process, such as how quickly a license should be issued once other agencies provide their input, or for the entire process.
The GAO also found vulnerabilities in the export control system due to poor interagency coordination. The GAO noted issues relating to jurisdiction determinations between State and Commerce and license exemption determinations between State and Defense. In addition, the GAO found that State and Commerce do not receive information on criminal export control prosecution outcomes on a timely basis.
Finally, the GAO found that the absence of systematic assessments by State and Commerce limits their ability to identify problems and make improvements to the system.
The GAO concluded its report by stating that, "While the implementation of our recommendations is an important first step for improving the efficiency and effectiveness of the export control system, a sustained commitment on the part of the departments to engage in a continuous process of evaluation, analysis, and coordination is needed."
GAO Issues Report on Supply Chain Security Calling for More and Better Data on CSI
U.S. Customs and Border Protection (CBP) has implemented the Container Security Initiative (CSI) to examine cargo it deems to be high risk U.S.-bound cargo at foreign seaports. GAO issued reports on CSI in 2003 and 2005 finding that CSI helped enhance homeland security and recommended actions to strengthen the program. This report updates the information and assesses how CBP has (1) contributed to strategic planning for supply chain security, (2) strengthened CSI operations, and (3) evaluated CSI operations.
GAO recommends that CBP enhance data collected on CSI team performance, host government examinations, and related performance measures. CBP concurred with the recommendation to enhance data team performance and partially concurred with the need to enhance data on host examinations, stating that it already conducts actions to improve such data. However, GAO states that these actions do not systematically collect data on people, processes, or technology used by host-governments to examine U.S.-bound containers. CBP partially concurred with the need to enhance performance measures, but stated it already captures core program functions. GAO still sees room for improvement.
GAO Report Criticizes Delays in State Department Export Licensing Process
For this report, GAO analyzed State arms export case data for fiscal year 2003 through April 30, 2007; reviewed relevant laws, regulations, and guidelines, Directorate of Defense Trade Controls (DDTC) funding and staffing information, and interviewed State and Department of Defense officials and selected arms exporters.
GAO found three key trends that indicate that DDTC's licensing process is under stress. First, the number of cases processed by DDTC increased 20% between fiscal years 2003 and 2006. Second, during the same period, median processing times almost doubled. Third, the number of open arms export cases increased 50% from about 5,000 in October 2002 to about 7,500 in April 2007, with a high of more than 10,000 cases in September 2006.
GAO is recommending that State conduct systematic analyses to help achieve efficiencies in the processing of arms export cases. State concurred with GAO's recommendations.