U.S. CROSS BORDER FEES FROM THE CANADIAN PERSPECTIVE` - PowerPoint PPT Presentation

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U.S. CROSS BORDER FEES FROM THE CANADIAN PERSPECTIVE`

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  1. U.S. CROSS BORDER FEES FROM THE CANADIAN PERSPECTIVE` April 19, 2008 Canadian – United States Law Institute Case Western Reserve School of Law Cleveland, Ohio Presented by David Hamill, Arent Fox LLP

  2. TOPICS • Types of U.S. Cross Border Fees • U.S. fees from the Canadian perspective • Deficiencies in border fee data and analysis • Example of estimated data from existing sources • Gaps in U.S. legal requirements for border fee data collection and analysis • 2008 GAO Study and other recommendations

  3. BORDER FEES • COBRA Fee • Funds inspection services • Paid by carrier (air, rail, vessel, truck) per crossing • Merchandise Processing Fee (“MPF”) • Funds non-inspection commercial customs services rotation mode • Paid by importer per entry • Harbor Maintenance Fee (“HMF”) • Funds harbor dredging • Paid by importer for merchandise transported and entered by vessel • APHIS Fee • Funds agricultural inspections at border • Paid by carrier (air, rail, vessel, truck) per crossing • Special Agriculture Fees

  4. Historically Special Status of Canada • NAFTA • Special trading relationship • NAFTA – no increases to “customs user fees” • Canada shipments exempt from MPF • Canada historically was exempt from APHIS fees BUT…..

  5. CANADA LOSING ITS SPECIAL STATUS • Must claim NAFTA in order to be exempt from MPF (even if duty rate is “zero”) • NAFTA is not claimed on approximately 45 percent of shipments from Canada • APHIS exemption for Canada removed in 2007 • Canada pays disproportionate amount of COBRA and HMF fees

  6. BORDER FEE DATA AND STUDIES LACKING • U.S. law does not require Customs and Census to maintain data on user fees by specific country • Customs is not required to maintain information regarding the number of border crossings by transportation mode (vessel, truck, rail, air) • Census maintains import values for Canadian into the U.S. for air and vessel conveyances only • Neither Customs nor Census maintains import values by rail or truck

  7. HMF • $3.3 BILLION surplus • Canada: • FY 2006 - $223,202,547 • FY 2005 - $203,285,162 • FY 2004 - $169,591,309 • China • FY 2006 - $142,367,030 • FY 2005 - $116,312,644 • FY 2004 - $100,885,086

  8. HMF CHART

  9. PERCENTAGE OF ENTRY VALUE OF SHIPMENTS BY VESSEL • FY 2006 • Canada – 5.3 percent • China – 73.5 percent • Germany – 58.7 percent • Japan – 77.7 percent • United Kingdom – 50.2 percent These countries, other than Canada, do not pay user fees for rail and truck conveyances, including COBRA and APHIS

  10. COBRA FEES • COBRA fees raised 10 percent in 2007 • Canada: • FY 2006 - $62,171,089 • FY 2005 - $62,985,068 • FY 2004 - $61,316,089 • China • FY 2006 - $39,655,073 • FY 2005 - $36,037,848 • FY 2004 - $36,475,212

  11. COBRA FEE CHART

  12. APHIS Fees • APHIS may raise fees to cover the cost of agricultural inspections • APHIS is unable to determine whether inspections of international airline passengers and commercial aircraft, vessels, truck and rail cars are being funded from the revenue of the user fee • Customs is unable to separate costs related to agricultural activities • However, U.S. Government is removing Canadian exemption for APHIS fees, because it claims agricultural costs for inspecting Canadian shipments are increasing

  13. OTHER FINDINGS • U.S. law does not require Customs and Census to maintain data on user fees by specific country • Customs is not required to maintain information regarding the number of border crossings by transportation mode (vessel, truck, rail, air) • Census maintains import values for Canadian into the U.S. for air and vessel conveyances only • Neither Customs nor Census maintains import values by rail or truck

  14. OTHER FINDINGS (Con’t) • While no hard data is available, Canada pays more in COBRA and HMF fees than China and Mexico • Customs cannot demonstrate that the proceeds from border user fees proportionately benefit the payers of these fees • While proceeds are deposited in special accounts, U.S. Congressional approval is required to spend the proceeds

  15. FEBRUARY 2008 GAO STUDY ON CUSTOMS FEES • Covered only air and sea customs fees; still no comprehensive study on land border crossing fees • Confirmed that U.S. Customs cannot fully account for the fees collected and that they are used for the purpose for which they are assessed • User Fee Advisory Committee recommended • Conclusion: Without regular, substantive fee, reviews, agencies, payers, and Congress lack complete information about changing program costs and whether authorized, reimbursable activities align with program activities