Findings also Reveal Uncollected Duties on Packages into the U.S. are costing the Government More than $1 Billion in Revenue

WASHINGTON–The Coalition of Services Industries (CSI), a leading trade association representing the American services economy, today released a study that revealed a security gap in U.S. infrastructure related to packages that are inbound to the United States and that packages sent via Posts did not have any of the required customs entries. Copenhagen Economics found that international postal operators, from the 10 countries surveyed, did not submit any advance electronic security data on packages flowing into the United States. In contrast, private express carriers submitted advance security information and did so for all packages shipped from those same countries to the U.S

“In 2014, at least 170 million flats and small packages were shipped through postal operators worldwide into the U.S. and then to their final destination through the U.S. Postal Service,” said Bruno Basalisco, Ph.D. and Senior Economist at Copenhagen Economics. “Items worth over $200 are by U.S. law, subject to duty, and the number of package shipments will continue growing as the rise of e-commerce endures; yet our study found that none of the international postal shipments surveyed submitted any electronic data detailing the items being sent. The lack of intelligence about postal packages crossing over America’s borders seems to represent a real security and public income protection risk.”

“This lack of scrutiny is an open invitation to bad actors to send illegal goods into the U.S.”, said Peter Allgeier, President of CSI.

Copenhagen Economics – a leading European consultancy in the fields of competition, regulation, international trade and impact assessment – was engaged by CSI to assess how international posts and private express carriers are complying with customs and advance electronic security data submissions for packages and large envelopes inbound to the U.S. The study was completed in the first half of 2015 and involved more than 200 shipments into the U.S. from 10 representative countries, which are key trading partners with the United States. Half of the sample was shipped via international postal operators (e.g. China Post, Canada Post, LaPoste) and half by express carriers (e.g. FedEx, UPS).

The study also looked at the customs and duties collected on packages shipped into the U.S. from both postal operators and private express carriers. Express carriers are required to collect information from the sender detailing the items being transported. In the study, the express carriers were found to have made customs declarations 98 percent of the time. International postal operators could not verify whether any customs declarations were submitted and $0 duties were collected.

“All shipments over $200 require a customs entry: while the private express carriers are complying, serious doubts emerge when looking into the international postal shipments,” added Basalisco. “According to our estimates, the annual loss of public sector income due to not collecting customs fees is more than $1 billion.”

Allgeier also added, “When customs duties are not paid on merchandise, it puts domestic competitors at a disadvantage, as well as the commercial carriers whose customers are paying duties on their goods.”

The 10 countries included in the test were Argentina, Canada, China, France, Germany, India, Japan, Korea, Mexico and the UK. Each package included general consumer goods (e.g. jewelry, shoes, sunglasses) liable to duties and were sent by an independent merchant offering goods on an international basis.

About CSI

The Coalition of Services Industries (CSI) represents the dynamic American service economy, which employs over 75% of the workforce and generates 3/4 of national economic output. Since 1982, CSI has created greater public awareness of the major role services play in the U.S. economy, and it has shaped domestic and international economic policies on behalf of the services sector. The broad range and diversity of the U.S. service economy is reflected in CSI’s membership, which includes major international companies from the banking, insurance, telecommunications, information technology, logistics and express delivery, audiovisual, retail, and other service industries. CSI members conduct business in all 50 states and in more than 100 countries.

About Copenhagen Economics

Copenhagen Economics is a specialized economics consultancy. Its economists provide advice and analyses in the fields of competition, regulation, international trade and impact assessment – focusing on solving complex problems for clients in the areas of:

• Auctions
• Competition
• Digital Economy
• Dispute Support
• Energy & Climate
• Greenland
• Health Care & Welfare
• IP Valuation
• Postal & Delivery
• Public Finance & Financial Markets
• Trade
• Transport

 

Copenhagen Economics provides hard facts and clear stories, enabling its clients and their stakeholders to make superior decisions based on sound analysis. It advises companies, authorities and policy makers when market meets regulation and conflicts arise. The firm helps private sector clients handle conflict cases and guides them on how to prosper through regulatory management. Equally, the firm helps public sector clients evaluate and devise new regulation.

Copenhagen Economics A/S was founded in 2000 in Denmark. Today, the firm employs more than 50 expert economists – making it one of the largest groups of professional economists on continental Europe. Copenhagen Economics has for the past nine years been listed on Global Competition Review’s Top 20 of the world’s best economics consultancies (GCR).

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