Before the House Committee on Foreign Affairs
Subcommittee on Terrorism, Nonproliferation and Trade

Regarding Export Compliance: Ensuring Safety, Increasing Efficiency

Tuesday, May 20, 2008

Room 2200, Rayburn House Office Building

Chairman Sherman, Ranking Member Royce and Distinguished Subcommittee Members, my testimony this morning focuses on the role of the U.S. Department of Homeland Security (DHS) in enforcing U.S. export laws and regulations, inspecting and examining cargo and export documentation, conducting criminal investigations relating to illegal exports, detaining questionable shipments, seizing shipments in violation of export control laws, and interdicting unreported currency, stolen vehicles, and other illegal exports.

I am here to represent DHS; however, I am the Deputy Assistant Commissioner for the Office of Field Operations at US Customs and Border Protection (CBP). My testimony includes information on how CBP and Immigration and Customs Enforcement (ICE) work together to address export compliance. In saying this, my area of expertise is with CBP operations and I will not be able to address questions regarding ICE operations. I will be happy to take back any ICE questions and have them submit answers for the Congressional Record.

As America’s frontline border agency, CBP employs highly trained and professional personnel, resources, expertise and law enforcement authorities to meet our twin goals of improving security and facilitating the flow of legitimate trade and travel. CBP is responsible for preventing terrorists and terrorist weapons from entering the United States; apprehending individuals attempting to enter the United States illegally; stemming the flow of illegal drugs and other contraband; protecting our agricultural and economic interests from harmful pests and diseases; safeguarding American businesses from theft of their intellectual property; regulating and facilitating international trade; collecting import duties; and enforcing United States trade laws.

On a typical day, CBP processes more than 1.13 million passengers and pedestrians; 70,200 truck, rail, and sea containers; 251,000 incoming international air passengers; 74,100 passengers and crew arriving by ship; and 82,800 shipments of goods approved for entry. CBP also collects $88.3 million in fees, duties and tariffs and makes 70 arrests of criminals at our Nation’s ports of entry and 2,402 apprehensions between the ports of entry per day. Also, each day CBP and ICE seize an average of 7,388 pounds of narcotics, $652,603 worth of fraudulent commercial merchandise, 41 vehicles, 164 agriculture pests, and 4,296 prohibited meat or plant materials.

In support of DHS’s goal of keeping terrorists from acquiring weapons of mass destruction, weapons of mass effect, other weapons, and weapon components, CBP officers and ICE special agents work together to ensure that unauthorized exports are not allowed to leave the country. This includes the enforcement of the U.S. Munitions List, the Commerce Control List (i.e. items that can be used for both civilian and military purposes), controlled nuclear materials and technology, and sanctions or trade embargoes.

CBP is the last line of defense in the export control process, as CBP can execute its border search authority, has the authority to enforce export control regulations, is physically located at the borders at our Nation’s ports of entry, and has the ability to inspect, search, detain and seize goods being exported illegally or without the proper authorizations (licenses or license exemptions).

However, CBP is not alone in this endeavor. To combat the illegal export of U.S.-origin arms and other commodities, ICE also leverages multiple resources and their broad authorities in the areas of illegal export of munitions and sensitive dual-use technology, including sanction violations. Additionally, my colleagues at ICE inform me that in Fiscal Years 2006 and 2007, ICE’s Counter-Proliferation Investigations (CPI) agents initiated more than 2,700 investigations into the illegal export of U.S. munitions and sensitive technology. These investigations resulted in 326 arrests, 326 indictments, and 237 convictions, which is more than any other US federal law enforcement agency.

The key to effective export controls is the collection and screening of export transaction information prior to the departure of cargo from the U.S. The Automated Export System (AES), was first deployed by the U.S. Customs Service, with the assistance of the U.S. Census Bureau, in 1995 to collect export transaction information for statistical and enforcement purposes. AES continues to be a key tool for CBP. The departments of Commerce and Homeland Security have worked diligently to author a Final Rule, which would revise part 30 of title 30 of the Code of Federal Regulations, Foreign Trade Statistics Regulations (15 C.F.R. Part 30), to implement mandatory AES filing of shipper’s export declarations (SED). This Final Rule will assist CBP by strengthening our export enforcement capabilities. It is important that both the departments of Commerce and Homeland Security work together on an equal footing to enact future changes to these regulations to help meet our nation’s security objectives. This Final Rule should be published in the near future.

CBP’s ability to effectively screen exports using our risk management approach is dependent on receiving electronic information in advance of the departure of the cargo from the United States. The Trade Act of 2002 requires the Secretary of DHS to promulgate regulations mandating the electronic transmission of information pertaining to cargo to be exported from the United States prior to its export. The cargo information required to be transmitted is that information determined to be reasonably necessary to ensure cargo safety and security pursuant to the laws enforced and administered by CBP. The Act further indicates that the Secretary of DHS shall provide to appropriate Federal departments and agencies the cargo information it collects and, where practicable, implement regulations without imposing redundant requirements. CBP has published these regulations in addition to other export requirements, to include those pertaining to outbound manifests.

CBP’s long-term objective is to fully integrate U.S. exports into the International Trade Data Systems (ITDS) initiative. ITDS is an information technology initiative that aims to provide a single window for the international trading community to provide data to the Government for import and export transactions. CBP is the lead agency for the integration of participating government agencies under the ITDS umbrella, and the ultimate goal is full interoperability of all automated systems relative to exchanging and sharing transaction data.

Another aspect of CBP’s export control operations is the use of the outbound cargo targeting module of the Automated Targeting System (ATS-Outbound) to assist in identifying and targeting exports which pose a high risk of containing goods that may require export licenses, exports with potential aviation safety and security risks, such as hazardous materials, and shipments that are high-risk for export violations, such as smuggled currency, illegal narcotics, stolen property (including vehicles), U.S. munitions, sensitive U.S. technologies, or other contraband. ATS-Outbound extracts data from the SED that exporters file electronically through the AES. The data is sorted and compared to a set of rules and evaluated in a comprehensive fashion to assign a level of risk to the transaction.

If there is a question as to whether an export requires a license, CBP officers refer the shipment to the Exodus Command Center, which is managed by ICE. The Exodus Command Center is the principal administrative and operational technical center than coordinates with external export regulatory agencies to seek clarification or rulings in support of DHS export enforcement investigations. Specifically, the Exodus Command Center is the single point of contact for ICE special agents and CBP officers in the field to obtain operations support from national export licensing authorities, including Department of State, Directorate of Defense Trade Controls; Department of Commerce, Bureau of Industry and Security; Department of Treasury, Office of Foreign Asset Controls; Department of Energy, Nuclear Regulatory Commission; Department of Defense, and others. In Fiscal Year 2007, over 2,300 referrals were processed by the Exodus Command Center, including license determinations, license history queries, and other related requests. Based on the outcome of the Exodus Command Center queries, CBP may seize or release and ICE may initiate a concurrent criminal investigation.

CBP’s frontline officers and agents, working in coordination with ICE special agents, will continue to protect America from terrorist threats and executing our traditional enforcement missions in immigration, customs, and agriculture, while balancing the need to facilitate legitimate trade and travel. These initiatives discussed today are only a portion of DHS’s efforts to secure our homeland, and we will continue to provide our men and women on the frontlines with the necessary tools to assist them in protecting our Nation’s borders.

Regarding H.R. 5828, the Department of Homeland Security and other concerned agencies are currently reviewing this bill and will provide detailed observations to your Committee at a later date.

I would like to thank Chairman Sherman, Ranking Member Royce, and the members of the Committee, for the opportunity to present this testimony today. I will be happy to respond to any questions that you may have at this time.