Chairman Thomas, members of the Committee, thank you for this opportunity to testify. Let me at the outset say that we want to work closely with you, Congressman Rangel, and the Members of the Committee to address your questions and concerns as we move through the legislative process on this important issue. We appreciate the Committee’s historical role on trade and tariff matters which, along with Customs itself, dates back to 1789. We also recognize the highly compressed schedule you are operating under, and we will make every effort to be responsive to you and do so in a timely manner.

I am proud to be here on behalf of the Administration to discuss President Bush’s proposal to create a Homeland Security Department. As you know, President Bush’s proposal includes moving the entire U.S. Customs Service into the new Department, which is the subject of today’s hearing. Secretary O’Neill, Customs Commissioner Bonner and I fully support the President’s proposal and strongly believe that the new Department of Homeland Security will play a key role in safeguarding the American people.

In his June 6^th address to the Nation, President Bush called for the creation of "a single, permanent department with an overriding and urgent mission: securing the homeland of America, and protecting the American people." The President also stated, "The reason to create this department is not to [increase] the size of government, but to increase its focus and effectiveness."

After the President’s announcement on June 6th, Treasury Secretary O’Neill applauded President Bush for his bold plan to concentrate our homeland security resources in a single Cabinet department. The Secretary said, "The President has demonstrated real leadership, recognizing the new challenges we face and redesigning our system to rise to those challenges. I fully support for this plan to integrate our resources into one collaborative, efficient and nimble structure to focus solely on protecting the American people."

Two days ago, President Bush toured Port Elizabeth, New Jersey, and commended employees of the Customs Service, Coast Guard, and the New York/New Jersey Port Authority for their vital work in keeping dangerous cargo from entering our country. The President told the employees that his proposed Homeland Security Department would make their jobs easier. President Bush said, "It’ll make our Federal government more responsive. It will allow us to communicate better" to more effectively secure the homeland.

For over 200 years, the U.S. Customs Service has defended our country’s borders and facilitated legitimate international trade and travel. Since September 11^th, at the direction of the President, the top priority of Customs has been responding to the continuing terrorist threat at our land borders, seaports, and airports. The Customs Service is working diligently to protect homeland security by keeping terrorists and terrorist weapons from entering the United States, while enhancing our economic security by moving goods and people efficiently across the borders.

The Customs Service has implemented several key programs since September 11^th that respond to the new threat our country faces. "Operation Green Quest," a Customs-led multi-agency initiative that targets terrorist financing, has already initiated hundreds of investigations, aggressively moved against terrorist funding sources, and led to the seizure of suspected terrorist assets. With the Container Security Initiative (CSI), Customs is entering into partnerships with foreign seaports to conduct pre-screening and more effective risk targeting of sea containers, before they are shipped to our ports. Under "Project Shield America," Customs agents monitor exports of strategic weapons and materials from the U.S. to prevent international terrorist groups from obtaining sensitive U.S. technology, weapons, and equipment that could be used in a terrorist attack on our nation.

On April 16^th of this year, Secretary O’Neill, Governor Ridge and Commissioner Bonner launched the Customs-Trade Partnership Against Terrorism (C-TPAT) in Detroit. C-TPAT is a unique partnership with U.S. importers, carriers, brokers, and others to improve security along the entire supply chain, while expediting the flow of legitimate commerce into the United States.

The success of programs like CSI and C-TPAT demonstrates how Customs seeks to balance its important dual missions of security enforcement and trade facilitation, dual missions that are inextricably linked. With C-TPAT, for example, Customs has been successful in recruiting companies to join the program and make additional investments in supply chain security solely because Customs is able to offer those companies the benefit of expedited clearance at the borders. The same is largely true for CSI, which offers expedited processing at U.S. ports for pre-screened cargo from its partner ports. These programs underscore how Customs is capable of effectively increasing security at the borders while facilitating the critical flow of trade into and out of the United States. These programs also reflect how Customs has effectively established partnerships with private industry to work together to protect our borders.

Another example of how Customs’ trade and enforcement functions are intertwined can be seen in the way Customs inspectors, import specialists, and special agents currently work closely with each other to enforce trade and anti-smuggling laws. When Customs inspectors make a substantial bulk cash seizure at the border using resources such as canine enforcement teams and non-intrusive inspection equipment, they hand the case over to Customs special agents. These agents then conduct a follow-up investigation, such as an investigation into the source of the funds or the destination of the funds. This cooperative effort between inspectors and special agents is a seamless one precisely because of Customs’ dual missions. The same is true with other border-related enforcement matters, such as intellectual property piracy. What begins as an infringement identification is often directly turned into an investigative effort.

There are three additional points that may be self-evident, but cannot be overlooked in describing the link between Customs’ dual missions. First, many trade enforcement functions are carried out by the same Customs personnel who ensure border security. Second, Customs uses the information it receives from trade compliance examinations and manifests also to assess security risks for shipments. This information is the cornerstone of many of Customs’ anti-terrorism efforts. Third, Customs relies on the expertise of its trade enforcement personnel to recognize anomalies in their review and processing of commercial transactions information associated with the admissibility and entry of imported goods that assist law enforcement in developing targeting criteria as well as targeting suspect shipments and initiating investigations.

Recognizing these links, the President has proposed that the Customs Service as a whole be transferred intact into the new Department of Homeland Security. Under the President’s plan, Customs will continue to administer and enforce our Customs laws, protect our borders from terrorists, and facilitate the flow of legitimate commerce. The President’s plan strikes the appropriate balance between enforcement and trade facilitation that is so critical to our nation’s economy and security.

Mr. Chairman, the Department of the Treasury is proud of the vital role the men and women of the Customs Service have played, and will continue to play under the President’s plan, in defending our homeland. Thank you again, Mr. Chairman and the members of the Committee, for this opportunity to testify. I would be happy to answer any questions you may have.