Summary

GAO is required to report to Congress on the efficiency, effectiveness, and fairness of the U.S. Customs Service's user fees, which partially underwrite Customs' inspection services. This fact sheet discusses (1) the current structure of user fees, (2) uses of user fee revenues, (3) changes and possible fiscal impact of the North American Free Trade Agreement on the user fees, and (4) changes to Customs' overtime and premium pay system resulting from the Customs Officer Pay Reform provisions found in 1993 legislation.

GAO found that: (1) the Customs user fee program consists of conveyance- and passenger-related user fees and commerce-related merchandise processing fees (MPF) for processing barges and bulk carriers from Canada and Mexico; (2) in 1993, user fee revenues totalled $733.4 million; (3) Customs uses user fee revenues to fund various inspectional services, pay for inspectional overtime work and preclearance costs, and hire additional personnel and purchase equipment; (4) Customs has used user fee revenues in accordance with their intended purpose; (5) in 1993, MPF revenues offset the costs of Customs' commercial operations including duty, tax, and import merchandise fee collection; (6) NAFTA has increased some air and sea passenger user fees, and eliminated the passenger processing fee exemption for passengers traveling to the United States from Canada, Mexico, U.S. territories and possessions, and adjacent islands; (7) the elimination of the fee exemption will generate an additional $156 million in revenues annually; and (8) it could not determine how the changes to Customs' overtime and premium pay system will affect user fee revenues and appropriation accounts because Customs has not fully implemented the proposed changes.