U.S. Customs and Border Protection (“CBP”) is the nation’s largest federal law enforcement agency. CBP’s responsibilities include enforcing criminal laws, engaging in anti-terrorism activities, intercepting illegal weapons and drugs, and managing the flow of visitors and migrants.

On top of these responsibilities, CBP also manages 328 ports of entry through which trillions of dollars of cargo enter the United States every year. Screening these goods presents an enormous burden: on a single average day in fiscal year 2022, CBP processed 91,605 containers carrying $9.2 billionworth of imported products.

Many of these products are subject to customs duties, which are intended to protect the United States economy by ensuring that American manufacturers can compete on a fair basis with foreign manufacturers. For instance, a company importing pencils from abroad might be required to pay a duty rate of $0.01 per pencil, and a company importing tea might be required to pay a duty rate of 5% of the value of the tea. In recent years, the United States has implemented punitive trade measures in the form of anti-dumping and countervailing duties (“AD/CVD”), whose rates can actually exceed 100% of the value of the product.

With so many goods entering the country every day, it is impossible for CBP to open and inspect each package to determine which duty rates should apply and how much the importer owes. Therefore, when an importer brings goods into the United States, the importer is required to file paperwork with CBP—called an “entry summary,” or Form 7501—describing the goods, their country of origin, and their applicable duty rates. In fiscal year 2022, CBP processed 39.1 million entry summaries.

CBP’s responsibilities are even more daunting than those statistics suggest. Entry summaries frequently are dozens of pages long and can cover hundreds of packages of merchandise. With CBP’s competing responsibilities related to international trade, criminal activity, and migration, the agency does not have the resources to closely scrutinize every entry summary. Therefore, CBP largely relies on an honor system, trusting importers to fill out their entry summaries truthfully.

Most importers abide by the honor system. However, fraudsters sometimes take advantage of CBP’s limited resources, lying about the nature of their goods to avoid paying what they owe. For example, in August 2021, CBP reported that importers owed $3.54 billion in unpaid antidumping and countervailing duties on goods from China. Fortunately, whistleblowers can help fill the gap by revealing the fraudulent schemes these importers use to avoid paying their fair share. Later this month, we will explore how whistleblowers can assist in enforcing customs laws by filing a False Claims Act lawsuit or participating in CBP’s e-Allegations program.

Noah M. Rich is an Attorney at Law at Baron & Budd.