Facilitating Trade in the
New Security Environment
Mr Tom Butterly
United Nations Economic Commission for Europe
May 2004
Trade Security
• Recent Developments in International Trade
Security
• Potential Economic Impact
• Some Possible Approaches
United Nations Economic Commission for Europe
Trade Security
• Security - major issue in international trade, with
significant potential costs and economic impact
• Response needs to be considered rather than
reactionary,
• Need to ensure that trade security does not become a
new non-tariff barrier
• The challenge is to facilitate the secure movement of
the vast majority of legitimate international cargo
• Need to grasp this opportunity to implement existing
trade facilitation standards and tools
Response to 9/11
• Major shift in focus – to the threat FROM trade
– Push Back the Boarders – CSI
– Risk Profiling – Advance information
• US undertook emergency analysis of
vulnerability and identified sea-borne
containers as main threat
United Nations Economic Commission for Europe
Why containers?
•200 million containers move annually amongst
the worlds top sea ports
•90% of world cargo moves by container.
•almost half of incoming trade (by value) in the
US arrives by container
•In the United Kingdom, Japan and South
Korea, over 90% of trade volume arrives or
leaves by sea.
United Nations Economic Commission for Europe
US Container Security Initiative
(CSI)
• Shift in Customs emphasis – checking goods at
export as opposed to import – pushing back the
borders – the border is too late!
• Container Security Initiative (CSI) 20 Mega Port
Initiative
• US officers in Ports – Risk analysis
• Huge expense
• Reciprocal
• US moving to second stage of CSI - other ports
United Nations Economic Commission for Europe
Source: Philippe Christ: OECD
Source: Philippe Christ: OECD
CSI Ports in Europe
United Antwerp, Belgium Göteborg, Sweden
Kingdom Rotterdam, Netherlands
Hamburg
Bremerhaven
Felixstowe
Germany
Le Havre
France
Genoa
Spain
La Spezia
Italy
Algeciras
(Click anywhere to continue or press <Esc> to exit this presentation)
Currently Operating
Coming Soon
Advance Cargo Information
US 24 Hour Rule
•
•
•
•
•
Trade Act 2002 Introduced by US
24 Hours Rule - before lading - risk analysis
Major shock (and cost) to shipping industry
Could deny entry otherwise
Moving to implement rules for air and land
United Nations Economic Commission for Europe
European Community 24 Hour Rule
• Currently under discussion
• Possible 24 hours before the goods are brought
into the customs territory of the Community
• Less time (4 hours) for short sea voyage
• Air, road and rail: 4 hours (or 2 hours if data
supplied electronically)
• Possible flexibility for authorised trade schemes
• Special rules for movements covered by the New
Computerised Transit System (NCTS)
United Nations Economic Commission for Europe
WCO ACI Guidelines
• Advance information concept for risk analysis
• Defines core set of data for security ( 27 data
elements)
• Broad set of guidelines for the exchange of
information, customs – customs and trade –
customs.
• Should be approved by WCO Task Force in
April
United Nations Economic Commission for Europe
International Ship and Port
Security Code (ISPS)
•
•
•
•
Developed by IMO
Comes into effect on July 1 2004
Mandatory
Big push to get in place by 1 July
United Nations Economic Commission for Europe
ISPS
• 56,000 ships will have to be certified
• 20, 000 ports worldwide
• 75,000ship security officers need to be
trained and certified
United Nations Economic Commission for Europe
Source: Philippe Christ: OECD
Integrated and Secure Supply
Chain
• Authorised Trader Concept
• Authorised Supply Chain - Authorised
Trader, Port, Shipper, Agent, ….
United Nations Economic Commission for Europe
US Customs-Trade Partnership
Against Terrorism (C-TPAT)
•
•
•
•
Authorised Trader Concept
Partnership approach
Benefits to the “good guys”
Voluntary
United Nations Economic Commission for Europe
Swedish Customs/business
partnership
• Swedish StairSec Programme provides
examples where compliance costs for
accredited operators decreased by 76%
while Swedish Customs has seen increases
in some hit rates from 5 to 45%
• StairSec was developed in close cooperation between Customs and trade
United Nations Economic Commission for Europe
Source: Philippe Christ: OECD
So, the security system is in
place. Can trade still
function??
United Nations Economic Commission for Europe
Possible dangers
•
•
•
•
Added costs - who pays?
Rolling back the gains of trade facilitation??
Any benefits for trade?
Danger of Security becoming new non-tariff
barrier to trade
• Possible relocation of production to “safe”
locations (especially SC related)
United Nations Economic Commission for Europe
Costs – ISPS
Example of the US
• Vessel Security: $188 million in Year 1; annual
cost appaox. 144 million.
• Facility Security: $963 million Year 1; annual cost
$535 million
• Port Security: $120 million in Yr 1; $46 million
per year thereafter.
• Paperwork 1.7 million hours in first year ;
approx 1 million hours per year thereafter.
Source: US Coast Guard
United Nations Economic Commission for Europe
Costs
• The NZ Government is to raise
$20million a year to pay for new
border security measures
– tax of $450 on an airfrieght shipment
Source: Export New Zeland
Concerns for developing countries
•
•
•
•
Exclusion
High level of technology required: available?
Necessary expertise ?
Managerial capacity to implement the required
measures and keep updated with the future
requirements of this area still in evolution ?
• Ability to understand the new security
environment as a whole?
United Nations Economic Commission for Europe
Cost on Inaction
• Relatively modest nuclear device detonated
in a major US Port:
–
–
–
–
0.5 to 1 million fatalities
$500 billion worth of property destroyed
Trade disruption costs of $100-200 billion
Further indirect costs of $1.2 trillion
Source: US Centre for Trade Policy Studies (April 2004)
United Nations Economic Commission for Europe
Some Potential Benefits
• More rapid implementation of existing trade
facilitation measures, risk management and
advance information,
• Better systems facilitate the movement of
the legitimate international cargo
• Greater links between customs and business
(StairSec)
• Reduced theft, smuggling, contraband and
increased detection rates
United Nations Economic Commission for Europe
Possible Strategies
• Establish TF and security as key elements
of trade development strategy (as in APEC)
at the regional and national level
• Focus on implementation of new and
existing TF standards and tools
• Ensure that implementation of TF and
security initiatives results in real gains for
traders – quality control approach
• Establish a strong government – trade
partnership
United Nations Economic Commission for Europe
Possible Strategies
• Look at possibilities for implementing
advance information systems and procedures
• Standardised and harmonised documentation
• Mutual recognition of authorized traders –
based on guidelines / recommendation
• Focus on multilateral approach, international
standards and conventions
United Nations Economic Commission for Europe
What is UNECE doing?
• Two conferences on trade facilitation and security in
2003 (also major topic in Forum)
• Implementation of existing UNECE standards,
recommendations and tools (UN/EDIFACT,
UNTDED, UN Layout Key, Codes for trade, etc, etc)
• Development of UNeDocs – last mile connection
• Single Window Recommendation and Guidelines
• Security Management Standard and Modelling
• Work of UNECE Transport Division
• Working closely with other agencies (WCO, IMO,
UNCTAD, etc)
Conclusion
• Trade Security has huge potential cost
implications
• Need to take focussed and considered approach to
security implementation
• Need for multilateral approach
• Need to ensure security does not become a new
NTB to Trade
• Need to grasp the opportunity to implement
existing standards and recommendations
United Nations Economic Commission for Europe
UNECE Resources

All UNECE UN/CEFACT Recommendations,
codes, standards and publications are
available for free on our website at:
www.unece.org
www.unece.org/cefact

For other inquiries, please contact:
[email protected]
United Nations Economic Commission for Europe
THANK YOU FOR
YOUR ATTENTION
United Nations Economic Commission for Europe