Like any other federal government agency, the U.S. Customs Service is affected by political and economic circumstances. Never has that been truer than it is today. Since the terrorist attacks of Sept. 11, Customs has had to shift some of its attention from trade facilitation, duty collections and law enforcement to fighting terrorism.

At the same time, information systems development has become a high priority as Customs moves full speed ahead with the desperately needed Automated Commercial Environment (ACE), which will replace today's outdated and overloaded information system.

The need to focus attention and resources on both of these issues has led customs authorities to not only re-examine the agency's priorities but also to redefine its role in government and its relationship to the international trade community.

Given its traditional law-enforcement role at the nation's borders, it's no surprise that Customs has become deeply involved in post-Sept. 11 security issues—or that it would be the cornerstone of the Department of Homeland Security proposed earlier this summer by President Bush. As currently envisioned, the new cabinet-level department would include all or part of every federal agency that has some responsibility for border security and operations. Customs would move from the Treasury Department, where it now resides, to Homeland Security.

Customs Commissioner Robert C. Bonner issued a statement saying that he "unequivocally" supported President Bush's "bold proposal" to create the department. Yet almost immediately, the administration found itself defending the move to importers, customs brokers and other members of the trade community who questioned whether homeland security would monopolize the agency's resources at the expense of trade processing.

Most members of the Washington-based American Association of Exporters and Importers (AAEI) worry that "the agency that has a thumb on our windpipe could disappear into an agency that has no concern except law enforcement," said John Simpson, AAEI's president and a former Treasury Department assistant secretary, at the annual conference of the Coalition of New England Companies for Trade (CONECT) in Newport, R.I.

In testimony before the House Ways and Means Committee in June and again before the Senate Committee on Finance in July, James B. Clawson, chief executive officer of the Joint Industry Group (JIG), expressed his organization's support for a Department of Homeland Security. Still, he said, JIG's members—more than 130 companies and organizations that are involved in international trade—were concerned about a potential diversion of customs resources away from commercial operations. To prevent that from happening, Clawson proposed that the new department include an Undersecretary for Commercial Operations, who would ensure that trade processing received equal priority with security. Clawson also expressed concern about a diversion of funding from commercial operations to security. "Fees imposed in the name of Customs' commercial operations," he said, "should be dedicated strictly to the programs they claim to support."

Although those concerns are legitimate, Carol Sheldon, vice president-imports, North America for Danzas AEI Intercontinental, says she isn't seeing any diversion of Customs' resources away from trade processing these days. "What we're seeing now is much more of a balance," she observes. "Customs hasn't allowed [itself] to become so focused on security as to exclude trade needs."

Moving Customs into the proposed Department of Homeland Security could have some benefits for the trade community, Sheldon suggests. "It's largely dependent on what Customs and all the other government agencies do with that change in structure," she says. "If they can take that structural change and use it to drive internal process improvements and take advantage of the core competencies of the other agencies ... then you're looking at an opportunity for the U.S. government to take advantage of those synergies [as] a business would, and then for trade to also take advantage of some of those synergies."

Sam Banks, a vice president with Sandler Travis Trade Advisory Services (STTAS) and a former deputy commissioner of U.S. Customs, agrees that moving Customs to the proposed department—provided trade processing and enforcement were not separated—could benefit international traders. "There would be greater efficiencies and greater sharing of information," he says. "There are a lot of turf wars between government agencies, but some of that's starting to [simmer] down now. There's much more emphasis on collaborating across department lines."

That pressing need for collaboration and information sharing across agencies, driven by security concerns, has made information system development another top priority for Customs.

Until last year, the trade community was waging an uphill battle to get Congress to approve funding for the Automated Commercial Environment, Customs' long-awaited new information system. Two factors—effective lobbying by a new and powerful coalition of international trade stakeholders and the need for better border security after September's terrorist attacks—broke the logjam on ACE funding. The project finally is under way and is slated to receive adequate funding. The Senate Appropriations Committee recently recommended $313 million for ACE for fiscal year 2003 and said it would favorably consider "more robust funding" in future budgets.

Another beneficiary of the focus on security is the International Trade Data System (ITDS). This project, which until recently languished in semi-obscurity, would create a single database and processing platform for trade-related data used by up to 104 federal agencies. ITDS originally was conceived as a means of reducing paperwork and streamlining international trade processes. Now it's getting attention because it would enable electronic sharing of information about international shipments among federal agencies. "After Sept. 11, ITDS became not just the right thing to do, but the needed thing to do," said Richard Biter, deputy director of the U.S. Department of Transportation's Office of Intermodalism, at AAEI's annual customs conference in New York.

Banks, who oversees his company's participation in the consortium that is creating the ACE system, says that ITDS is now fully integrated into the ACE project and that Customs has taken on responsibility for the program. All funding for both ACE and ITDS has been merged, he notes, and a single business plan will go to the General Accounting Office and the Office of Management and Budget.

Although the international trade community is pleased that both ACE and ITDS finally are moving forward, some are concerned that security considerations will force the trade facilitation components of the two systems onto the back burner. Banks asserts that the new system will accommodate both equally well. "The ITDS/ACE Web site is going to be the standard way to interact with Customs and conduct business. There will be much more effective communications with the trade community."

Customs is having to change its outlook in other respects. In the past, the agency's work largely took place at the U.S. border, but now that border is being pushed out to include overseas ports. As part of its Container Security Initiative (CSI), U.S. Customs is negotiating to place its own personnel at major foreign container ports so they can screen U.S.-bound cargoes for potential security threats. So far, the ports of Halifax, Montreal and Vancouver in Canada; Le Havre, France; Singapore; Antwerp, Belgium; and Rotterdam, the Netherlands are participating. The governments of Hong Kong and mainland China have said that they are considering participating but have expressed some reservations about sovereignty and potential shipment delays. Commissioner Bonner has said he wants to extend CSI to all ports around the world—a tall order and a situation that would require Customs for the first time to create a system of overseas postings much like that used by the State Department.

How Customs views importers in terms of risk assessment also is shifting. Before, qualifying as a "low risk" importer was based almost entirely on the importer's level of compliance with customs regulations regarding duties, commodity declarations and so forth. Now, importers must not only be highly compliant, but they also must show that the security of their supply chains meets certain criteria. For example, to participate in the Importer Self-Assessment program, which places more responsibility on importers and offers compliant importers expedited processing and the prospect of fewer inspections and audits, companies must also be part of the security-focused Customs-Trade Partnership Against Terrorism (C-TPAT). "Importers now have to worry about more than just getting merchandise from Point A to Point B," says Sheldon. "Now they have to concern themselves with how it got to Point A and where it is going after Point B."

Banks acknowledges that Customs' new definition of a "low risk" importer has added both administrative requirements and costs for importers and for customs authorities. But some aspects of these programs should be familiar, he says. He suggests that importers look at Customs' new focus on security as being similar to the agency's anti-drug smuggling initiatives in past years. They are not identical, he notes, but the agency is trying to leverage some of the models it uses in drug interdiction and other law enforcement activities as much as possible.

U.S. Customs, buffeted by the shifting political winds on Capitol Hill and the role it inevitably must play in fighting terrorism, may be facing the most critical time in its history.

As John Durant, the recently retired head of Customs' Commercial Rulings Division, put it in his presentation at the CONECT conference, "Trade is about politics ... the tragedy of 9/11 changed so many political givens" that have affected how Customs does business. The momentum for change since September can work to everyone's advantage, he said, as long as it's channeled in a realistic direction.