Customs fiscal year 2002 budget request totals $2.39 billion dollars. This budget will support Customs' ongoing mission to facilitate the flow of international travel and trade while protecting America from drug smuggling, terrorism, money laundering, cybercrime, copyright fraud, and other threats.

The rapid growth of our world economy poses key challenges for the Customs Service. A spiraling volume of people and goods crossing our borders has put immense pressure on our resources. At the same time, we must accommodate a steady increase in new trade agreements and requests for services from the public.

Fortunately, Customs is supported by some of the most able and dedicated employees in federal government. The men and women of Customs continue to process passengers and trade in record numbers. Last year, the Customs Service processed over twenty-three and a half million trade entries, a 150% increase since 1990. That volume is expected to nearly double by 2006. In addition, we processed nearly half a billion travelers at airports, seaports, and land border crossings.

Thanks to the Congress, Customs has been able to acquire the resources to help meet the growing demand for our services. In addition to support for Customs' annual budget requests, the Congress established the collection of traveler and conveyance processing fees, otherwise known as COBRA fees, to pay for enhanced inspection services. Currently, COBRA fees pay for approximately 1100 inspector positions, as well as overtime and premium pay for all inspectors.

The fees are also used to cover pre-clearance inspection and other essential operating costs. Regrettably, the rapid growth in Customs resource needs has outpaced COBRA revenues. We look forward to working with the Congress to address this funding shortfall to ensure that Customs maintains its current level of service.

Staffing, in general, will continue to be a critical issue for our agency. With the help of a leading consultant, we built a resource allocation model to help us project future staffing needs at all our Customs locations. The model was designed as a planning tool for management. It can be programmed to take into account changing scenarios that impact our mission, such as an expanded volume of trade or a shift in threat.

Customs will rely increasingly on technology to supplement the skills of our people. We have obtained a range of non-intrusive inspection technology for our busy southern tier. The use of these tools has cut down our processing times significantly, and enabled us to seize more illegal drugs.

Of the many tools under development at Customs to help facilitate border flows, none will benefit the American public in more ways than our new automated system for trade. Customs' ability to contend with a heavy workload hinges largely on the development of the Automated Commercial Environment, or ACE.

Last year, we received the first appropriations for ACE in our 2001 budget. With part of that funding we were able to select an ACE prime contractor this past April, after an intensive bidding process. The e-customs partnership, led by IBM Corporation, was chosen to join with Customs to modernize our automated systems.

Improved outreach to the trade community goes hand-in-hand with our ACE efforts. We are working closely with the trade community on a proposal to streamline the entry process. We are implementing risk management strategies throughout the agency that will lessen the focus on compliant importers, and concentrate our enforcement efforts where they're needed most. We have assigned individual Account Managers to the largest importers, refined our audit processes, and begun to deliver on a range of benefits to low-risk companies.

With the continued assistance of the Congress, we look forward to building upon these successes and enhancing our level of service to the American public. In that regard, I want to thank the members of the Subcommittee for your support in the recent mark-up of the 2002 Treasury budget. The additional funding recommended, particularly in the area of new automation, would enable Customs to stay on schedule with our ACE planning and deliver faster, safer, more efficient trade processing in as short a time frame as possible.

I want to thank the Subcommittee once again for this opportunity to testify. I would be happy to answer any of your questions.