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GAO-15-491R 1 (2015-05-07)

handle is hein.gao/gaobaaiwm0001 and id is 1 raw text is: GAO U.S. GOVERNMENT ACCOUNTABILITY OFFICE 441 G St. N.W. Washington, DC 20548 May 7, 2015 The Honorable Orrin G. Hatch Chairman The Honorable Ron Wyden Ranking Member Committee on Finance United States Senate Electronic Cigarettes: Imports, Tariffs, and Data Collection Electronic cigarettes, known as e-cigarettes, are becoming more popular and widely used. Although information about the e-cigarette market is incomplete, most e-cigarettes sold in the United States are thought to be imported. U.S. Customs and Border Protection (CBP), an agency of the Department of Homeland Security, enforces U.S. customs laws and collects tariffs for goods imported into the United States.1 You asked us to examine a number of issues related to the U.S. e-cigarette market and imports. This report-the first of two planned reports responding to your request-provides information on what is known about the volume of and tariff revenue from e-cigarette imports, and how the federal government tracks imports.2 In conducting our work, we analyzed CBP's classification rulings related to e-cigarette imports and fiscal year 2014 tariff revenue data. We assessed the reliability of the data by performing data checks for inconsistency errors and by interviewing cognizant officials. We determined that CBP's tariff revenue data were sufficiently reliable for the purposes of this report. We also reviewed relevant laws and documents. In addition, we interviewed officials from CBP, the U.S. International Trade Commission (USITC), and the U.S. Census Bureau (Census) of the Department of Commerce, as well as industry experts, such as financial analysts and researchers. We conducted this performance audit from September 2014 to May 2015 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. Results in Brief E-cigarette import volume and tariff revenue are unknown, because the Harmonized Tariff Schedule of the United States (HTS)-which is used to classify U.S. imports and exports for tariff and other purposes-does not contain statistical reporting numbers specific to e-cigarettes. E-cigarettes, e-cigarette parts, and e-cigarette liquid are imported under HTS statistical 1Tariffs are customs duties on merchandise imports that can be levied on an ad valorem basis (percentage of value) or a specific basis (e.g., $7 per 100 kilograms) or on a combined ad valorem and specific basis to create a compound duty rate. 2Tariff revenue, as defined in this report, refers to customs duties paid by importers and does not include applicable federal taxes or import fees. GAO-1 5-491 R Electronic Cigarettes Page 1

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