WCO asks U.S. for dialogue on box scan implementation

The recent congressional mandate to scan all U.S. bound containers at overseas ports within five years has the potential to exacerbate the global economic slowdown, hinder trade, create financial burdens for international shippers and undermine global supply chain security efforts, according to the head of the World Customs Organization.
   The U.S. government ignored world opinion when it unilaterally adopted the measure as part of legislation to plug post-9/11 homeland security gaps, but now should implement the law in cooperation with effected nations to achieve a harmonized global scanning standard, and consider a 'Marshall Plan' to cover the technology and start-up costs for the rest of the world, said WCO Secretary-General Michel Danet in a letter to Customs and Border Protection Commissioner Ralph Basham.
   Aside from the acquisition and operational costs for expensive imaging equipment, shipping industry officials universally say that technical and infrastructure shortcomings mean that efforts to line up and scan more than 11 million U.S.-bound containers per year will lead to huge backlogs at ports and force shippers to spend more on inventory.
   'I am extremely concerned about the difficulties and financial, economic and social costs with which trade facilitation will be faced. The all-out approach to security proposed ' will have even more devastating effects around the world,' he wrote.
   The timing of the law could have unforeseen ripple effects by placing an indirect brake on trade at a time when the world economy is beginning to cool and the International Monetary Fund has reduced its growth forecast to 4.8 percent from 5.2 percent, Danet said. And if the United States refused a reciprocal request from another country to inspect export cargo it could lead to a formal World Trade Organization investigation and have a chilling effect on trade.
   In the letter, obtained by Shippers NewsWire the secretary-general offered the international organization's help in collecting data on the impact of 100 percent scanning and to begin discussions on developing international technology standards for automated, large-scale X-ray imaging at the Policy Commission's December meeting in Almaty, Kazakhstan. Danet also has commissioned an economic impact analysis that he plans to share with CBP.
   Other areas of concern include:
   ' Whether machines capable of meeting the U.S. requirement can be developed in time to handle huge volumes.
   ' Whether terminal operators can affordably transmit the large data files to customs agencies under a privately managed process.
   ' How transshipments and freight remaining on board a vessel at a port of call are handled.
   The WCO chief said U.S. lawmakers gave little consideration to the cost other countries or businesses must incur to purchase the detection machines, upgrade infrastructure to accommodate the flow of truck traffic or staging of containers, and hiring of personnel to conduct the automated inspections.
   'I have no idea how many officers will be needed to implement such a project,' Danet said, 'but I do not think that governments today are willing or able to make such significant increases in the number of civil service personnel. It will therefore be necessary to resort to private companies and staff who, it seems to me, currently lack the necessary skills, which means an extensive training program.
   'I understand that the security of the homeland, the American people and U.S. trade is a priority for the U.S. legislature. However, providing this security for U.S. interests comes at a high price. Only the voting of a new 'Marshall Plan' could make it possible to meet this new challenge.'
   Danet said the international community should have a say in further trial projects because the limited scanning currently underway gives those seven selected ports 'an undeniable commercial and technical advantage over their competitors.'
   Port Qasim in Pakistan has become a preferred port for exporters, for example, because the demonstration program there to test the feasibility of running all U.S.-bound containers through imaging and radiation detection equipment, reduces the likelihood that their goods will be stopped for inspection in the United States, and Pakistani customs officials say that ocean carriers are beginning to adjust their schedules accordingly at the expense of other ports.
   The lessons learned from those Secure Freight Initiative pilot projects may or may not apply to other ports with different operating or geographical characteristics, according to U.S. and other customs officials. One of the reasons Port Qasim was selected, aside from the fact that it is in a high-risk area for terrorist activity, is that it handles fewer than 3,000 containers per year destined to the United States.
   Therefore 'it will be necessary to establish global standards for such a system to have a modest chance of functioning properly,' Danet said.
   A byproduct of the law is that governments and the private sector are confused about what is the true U.S. strategy for maritime cargo security, and could pull back from investing in the very security regime the U.S. has promoted and sought to internationalize. The Container Security Initiative, Customs-Trade Partnership Against Terrorism and global customs simplification and automation efforts gained broader acceptance the past three years through the WCO in the form of a common approach toward using analysis of advance shipment data for selective inspections and partnering with industry to drive self-policing of security standards among business partners. Those achievements came through extensive outreach, persuasion and cooperation, Danet noted.
   Instead, the U.S. government has lost credibility in terms of trying to convince other countries that adopting security measures to stop terrorists from using containerized trade as a conduit for a bomb attack on a port or city is designed to protect them as much as the United States. The unilateral imposition of the new law 'has dented the enthusiasm of the international community' to further participate in the new collaborative approach to security, he said.
   The 9/11 Commission Recommendation Act 'is a sword of Damocles suspended over governments, businesses and investors. Uncertainty is what those engaged in international trade fear the most.
   'Why should public and private operators commit themselves to a provisional implementation (of advance data filing for shipment screening and trusted shipper certification programs) requiring substantial changes when, in four years time, everything will be called into question. Why invest today in Authorized Economic Operator status that will be obsolete in four years from now?' Danet said.
   The AEO system is the WCO's equivalent term for C-TPAT under which companies voluntarily demonstrate they have implemented plans to tighten internal controls for which they are certified and eligible for reduced inspection levels and possible other trade facilitation benefits.
   Danet said it appears likely the 100 percent scanning requirement will be implemented, especially if there is a terrorist attack on the trading system.
   Border and trade security expert Stephen Flynn concurred with Danet's opinion, despite talk that many members of Congress now understand the challenges, regret their vote and could craft new legislation to correct problems with the law.
   'We're doing a disservice to industry to think that we'll get Congress to change' its mind, Flynn said at the Maritime Security Expo in New York on Tuesday. <a href=mailto:ekulisch@shippers.com><b> ' Eric Kulisch</b></a>