Gov. John deJongh Jr. wrote U.S. Customs and Border Protection this week, calling to renegotiate its 1994 agreement with the territory to let the territorial government keep more customs duties collected by CBP and limit reimbursement to CBP from those funds, according to Government House.

Under federal law that goes back to the time the U.S. purchased the U.S. Virgin Islands, the U.S. government collects the V.I. customs duties and other fees on behalf of the territory and then remits them after deducting the costs of collection, Government House said in a statement. In 1994, the territorial government entered into a memorandum of agreement with the U.S. Customs Service that allowed the Customs Service to reimburse itself for its costs of providing other customs services in the Virgin Islands along with the costs of collecting V.I. duties.

CBP’s costs have increased dramatically in recent years, Government House said, noting that sometimes the cost even exceed the total amount of V.I. customs duties collected, leaving the government with no net revenue.

DeJongh said in his letter, the "purpose of the USVI’s customs duties is to provide revenues to the government, but increasingly the customs duties only provide revenue to the CBP.” He said the
the 1994 Memorandum of Agreement with CBP “no longer functions as intended.”

According to deJongh, his administration has been engaged with CBP over the last two and a half years in sensitive discussions to resolve differences over the levels of services provided and the reimbursement of CBP’s costs.

DeJongh said that these discussions have led to the V.I. Port Authority collecting its own port user fees for the first time and retaining all of the funds collected, without any disruption or reduction in the level of CBP services provided.

While progress has been made in some areas, including agreement on the part of CBP to provide a more detailed and transparent accounting of its costs, deJongh said that “we have still not yet reached agreement on the scope of services for which CBP is entitled to seek reimbursement.”

In the past, CBP has raised the prospect of reducing or eliminating customs preclearance services for air and cruise passengers returning to the United States if CBP reimbursements were cut.

DeJongh has responded by noting that many of the customs services for which CBP currently reimburses itself out of V.I. customs duties are services required by law, the cost of which should be borne out of other CBP user accounts or general CBP appropriations, according to Government House.

In his letter, deJongh asked that the government and CBP “meet again promptly” in order to continue to work together “to find a mutually satisfactory solution.”