This is our second article on the international initiatives and measures to secure the supply chain as a result of the September 11, 2001 attack on the World Trade Center (WTC) in New York. The succeeding discussion will focus on these security measures being implemented by various governments and international agencies, and its likely impact on the trading and transport industries.
Securing the Supply Chain.
In the last two years, there had been various initiatives to promote security and facilitation in international trade and transport at the international, regional and national level. In addition to the security measures being implemented by the United States, there have been initiatives by international agencies such as the International Maritime Organization (IMO), International Civil Aviation Organization (ICAO), World Customs Organization (WCO), UN Conference on Trade and Development (UNCTAD), Asia-Pacific Economic Conference (APEC), International Chamber of Commerce (ICC) and International Air Transport Association (IATA). Among these initiatives are security measures on ship and port security, export control, cargo control, data model and legal infrastructure for information sharing.
US Security Measures.
As a result of the 9/11 attack, one of the major measures initiated by the US was the creation of the Department of Homeland Security, which now includes the US Customs and Border Protection. The US also passed the Maritime Security Act of 2002. Together with these initiatives were various Immigration and Naturalization Service (INS) measures to regulate the movement of people across the border.
In the field of international maritime transport, the US had the following security measures:
- 24-hours Advance Vessel Manifest Rule;
- 96-hours Advance Notification of Vessel Arrival;
- Customs-Trade Partnership Against Terrorism (C-TPAT); and
- Container Security Initiative (CSI).
To promote security in international trade, APEC formulated its own security initiative known as “Secure Trade in the APEC Region (STAR)”. Together with other international agencies such as IMO, WCO and ICAO, the program seeks to promote, among others, the following:
- common standards for electronic customs reporting (risk assessment and trade facilitation);
- container security system (advance electronic information to customs, port and shipping);
- private sector supply chain security guidelines;
- ship and port security plan by July 2004; and
- enhanced airline crew and passenger security /air cargo security.
International Maritime Organization (IMO).
By June 2004, part of the agreement under the IMO is the implementation of measures under the International Ship and Port Facility Security Code (ISPS Code) and the Convention on Safety of Life at Sea (SOLAS). These measures will greatly affect both the public and the private sectors. Specifically, the measures will be applied on governments, ships and maritime carrier companies; and ports facilities and operators.
Under the ISPS Code, ships will be required to have the following: (a) security plans; (b) security officers; and (c) onboard security equipment. On the other hand, port facilities will have their own (a) security plan, (b) security officers and (c) security equipment.
WCO Task Force on Security and Facilitation of International Trade.
Upon the request of developed countries and the IMO, the WCO created a task force to promote security and trade facilitation in the supply chain. The challenge to the task force is how to harmonize the various security initiatives without affecting the international movement of goods. By June of 2003, the WCO has developed various initiatives such as:
- export controls (e.g. Unique Consignment Reference and WCO Data Model); and
- guidelines for cooperation between business and governments (e.g. Legal and Procedural Infrastructure for Data Collection and Transmission / Advance Cargo Information).
Impact on International Trade and Transport.
As in the case of the 9/11 attack, the indirect cost of a terrorist attack far outweighs the direct costs. In fact, the indirect costs can be exponential. As these security measures continue to be implemented, it is expected that these will put a strain on trade facilitation. Specifically, we will see more customs controls not only at the country of destination but more so at the port of origin. The burden of security costs for these measures will have direct impact on customs administrations, port operators, shipping companies and freight forwarders.
Although the security measures are going to be very costly for both the trading and transport industries, these measures are however necessary to mitigate, if not prevent, the threat of terrorism. There is no doubt these initiatives will become permanent and that even more security measures will be implemented. In addition to the costs, another major concern is how these measures will affect trade facilitation.
On a bright note, the impact of these measures has the potential to change long-established industry practices. Hopefully, these changes will, in the long term, be for the better of both the transport and trading community.
The author is an international trade, indirect tax (customs) and supply chain expert. He is the Editorial Board Chairman of Asia Customs & Trade, an online portal on customs and trade developments affecting global trade and customs compliance in Asia. He was also Bureau of Customs Deputy Commissioner for Assessment and Operations Coordinating Group (2013-2016). For questions, please email at email@example.com and firstname.lastname@example.org