International Trade: Persistent Weaknesses in the In-Bond Cargo System Impede Customs and Border Protection's Ability to Address Revenue, Trade, and Security Concerns, Report to the Committee on Finance, U.S. Senate [open pdf - 2MB]
"The in-bond system is designed to facilitate the flow of trade; however, CBP does not know the extent of the in-bond system's use as a result of lax oversight. The system allows cargo to be transported from the arrival port, without appraisal or payment of duties, to another U.S. port for official entry into U.S. commerce or for exportation. Although the in-bond system is estimated to be widely used, CBP cannot assess the extent of program use because it collects little information on in-bond shipments and performs limited analysis of data that it does collect. Despite numerous program reviews and audits that identified problems in CBP's management of the in-bond system, weaknesses persist and continue to impede CBP's ability to ensure proper collection of trade revenue and management of trade risks. The major weakness is that CBP does not adequately monitor and track in-bond goods. In particular, it does not consistently reconcile in-bond documents issued at the arrival port with documents at the destination port to ensure that the cargo is either officially entered with appropriate duties or quotas applied, or is in fact exported. CBP records show that many in-bond cargo shipments remained unreconciled, or 'open,' with one port reporting that 77 percent of its in-bond transactions were open. Also, in-bond regulations provide unusual flexibility for the trade community, but create challenges for CBP in tracking movements. Finally, some CBP ports do not consistently perform in-bond compliance reviews which could identify weaknesses and possible solutions. The limited information available on in-bond cargo also impedes CBP efforts to manage security risks and ensure proper targeting of inspections. In-bond goods transit the United States with a security score based on manifest information and do not use more accurate and detailed entry type information to re-score until and unless the cargo enters U.S. commerce. As a result, some higher risk cargo may not be identified for inspection, and scarce inspection resources may be used for some lower risk cargo."
Government Accountability Office (GAO): http://www.gao.gov/