EU offers harsh indictment of box scan law

EU offers harsh indictment of box scan law

Related Stories •   Taiwan lawmaker questions container security expenditures

The European Union has informed U.S. officials it will not help them meet a cargo security legislative mandate by X-ray scanning all outbound ocean containers, because member states believe the practice is ineffective, sucks resources from existing security programs and would severely disrupt the flow of commerce.
   EU officials have openly criticized the requirement in last summer’s 9/11 Implementation Act that within five years 100 percent of containers must pass through imaging equipment at foreign ports to check for terrorist-related materials.

Verrue

   Now preliminary results from a demonstration program at a handful of ports support the EU’s argument that the scan-all concept is flawed and too expensive to work, said Robert Verrue, the EU’s director general for taxation and customs, in an April 4 letter to U.S. Customs and Border Protection Commissioner Ralph Basham. The U.S. law was rushed out without proper consideration of the facts, he said.
   It was also the second time in recent days that there has been pushback from foreign government officials over the unilateral nature of U.S. cargo security initiatives and sovereignty issues. The lack of U.S. jurisdiction over foreign ports raises questions about how such a mandate would be enforced, leaving many to conclude that private sector terminals and ocean carriers will pick up the tab and pass the cost along to cargo customers who want access to the U.S. market.
   “From a European perspective, it would be difficult for customs administrations to set sovereignty aside in order to implement the U.S. legislation, to invest massively in a measure designed to protect the U.S., and to divert resources away from measures designed to strengthen security in the EU as well as that of international trade.
   “It would also be difficult to imagine a situation where the 100-percent scanning requirement would be applied in one direction, to U.S.-bound containers only. Finally, 100-percent scanning would imply systematic transfer of sensitive information, which could only take place in the context of a new international agreement between the USA and the EU,” Verrue wrote.
   Last week a Taiwanese legislator questioned the cost and benefit of participating in the U.S. Container Security Initiative at the Port of Kaohsiung. CSI has more widespread support because it is only designed to inspect suspicious cargoes — a tiny fraction of the overall volume — prior to vessel loading. U.S. teams of Customs officers are stationed in 58 ports under bilateral agreements to analyze shipping documents and request that their foreign counterparts examine boxes flagged as high risk. But the host government must provide the scanning equipment and few have demanded reciprocal rights to coordinate on-site checks of U.S. exports to their country.
   Verrue said lessons learned from the Secure Freight Initiative have confirmed the EU’s fears about a technology-based comprehensive inspection regime. Congress passed the law without waiting for the results a feasibility study it previously ordered the Department of Homeland Security to conduct.
   Homeland Security’s CBP has small-scale pilot projects underway at a half-dozen ports to test the technology, protocols, security benefit, operational impact and cost of scanning every container in a limited section of participating marine terminals. One of those ports is Southampton in the United Kingdom, where U.S. Customs deployed three radiation portal monitors, one advanced radiation detection machine still undergoing field tests and one large-scale imaging device.
   A major problem is cost. The small trial in Southampton alone cost $18 million to scan 5,500 U.S. bound containers over a period of six months, Verrue said.
   Some high-volume terminals around the world handle that many containers in a single day.
   CBP is spending about $500,000 per month at another port on communications charges simply to transmit the large data files containing the electronic readouts back to analysts in the United States, said Christopher Koch, president of the World Shipping Council, in testimony before the House Appropriations homeland security subcommittee earlier this month.
   Expanding the automated inspection process to all containers from all 700 ports around the world that trade with the United States would impose an incredible cost on industry and governments, opponents of the concept say.
   Verrue said the initial investment and personnel required, especially at small ports, would create significant expenses, noting that the per-box cost in Southampton is estimated at $500.
   Costs would likely be higher at multimodal terminals handling rail and vessel transshipment compared to Southampton that is primarily set up for truck traffic, he said. Feeder vessel and rail transfers are particularly complicated because they deliver large batches of containers at once, which would require huge resources to perform the scans immediately or extra handling to temporarily stack the boxes in a storage area. Southampton also needed limited infrastructure modifications, which would not be the case at other large-volume terminals in Europe where expensive expansion or reconfiguration of terminals would be required to funnel traffic through the inspection equipment and secure scanned containers until vessel loading.
   Verrue said preliminary feedback from large EU ports indicates that it would cost an additional $300 per box to move stacked containers to scanning checkpoints, and unit costs and delays would increase at terminals with greater physical constraints. Roughly 47 percent of the U.S.-bound container traffic in Rotterdam, for example, arrives on ships or barges from feeder ports for transfer to larger vessels. The difficulties associated with inspecting transshipment cargo would force more intra-European shipments to truck, which runs counter to EU policies designed to reduce congestion and pollution through use of the barge system, according to the director general.
   Verrue said no estimates of the indirect costs to the shipping industry — which could run into the billions of dollars — have been made, beyond the equipment and IT investments.
   EU ports shipped 2.6 million TEUs to the United States out of a worldwide total of 36.5 million TEUs originating in the EU in 2006, according to EU statistics. Only 23 of the EU’s 64 ports shipped more than 10,000 TEUs to the United States.
   The 9/11 legislation did not authorize funding for the 100 percent scanning requirement, meaning that the costs would have to be shouldered by the ports and the private sector, he noted.
   The requirement, the EU official said, has the potential to change shipping patterns by funneling cargo through major hubs that can afford the equipment rather than putting it in every port.
   “The tendency to reallocate EU exports to the U.S. to a limited number of larger ports or newly developing hubs would be to the detriment of smaller ports and their hinterland. The consequence could be a competitive disadvantage for certain regions and further road and port congestion with negative environmental and regional development consequences within the EU,” the letter stated.
   The competitive balance between terminals at the same port could also be impacted based on who could meet the U.S. goal. The security measure essentially amounts to a non-tariff trade barrier, Verrue said, that could give non-European suppliers to the United States an advantage.
   “Scaling up Southampton’s pilot action to 100 percent of European ports shipping containers to the U.S. and to 100 percent of container shipments within these ports would be a huge challenge, which cannot be met at current levels of resources or with limited increases thereof,” Verrue said.
   “It might be argued that cost should not be a decisive issue when it comes to improving security. Such a line of thinking would assume that 100 percent scanning was superior to alternative measures for improving security. No such demonstration exists,” he added, noting that the detection scheme ignores chemical and biological weapons, as well as bulk, ro/ro, ferry and other vessel modes.
   Comprehensive scanning, Verrue said, would force customs administrations to divert staff from other functions, such as fraud, smuggling and counterfeit enforcement, and would undermine other security programs already in place.
   “Having highly skilled officials trying to make a meaningful interpretation of the millions of images of innocent cargo does not seem to be an effective use of taxpayer’s money,” he added.
   The EU is concerned that a focus on 100-percent scans will undermine the development of international supply chain security standards and the risk-based approach that underpins U.S.-EU cooperation on trade security, the letter said.
   Those efforts include audits of ports, vessels and cargo under the International Ship and Port Facility Security code, participation in CSI, the development of international security standards at the World Customs Organization, and harmonization of U.S. and EU trusted trader programs that provide incentives for companies to implement controls on shipping operations.
   Several EU ports participate in the CSI and most have scanning equipment to check inbound cargo as well, but those programs are based on selective targeting of container inspections. Larger ports, on average, scan about 0.1 percent of ocean boxes while smaller ports check about 3 percent of the traffic.
   Verrue said beefing up data requirements from shippers and carriers to enhance the risk-based analysis and selective inspection of containers, as well as sharing common standards for pre-certifying companies seeking trusted shipper status, is preferable to scanning every box. ' Eric Kulisch