Trade Symposium 2005 FINAL

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SUMMARY
CUSTOMS & BORDER PROTECTION TRADE SYMPOSIUM 2005
“GLOBALIZING TRADE SECURITY AND FACILITATION”
NOVEMBER 2-4, 2005 WASHINGTON, D.C.

FROM: Can/Am BTA P.O. Box 929, Lewiston, New York 14092
Jim Phillips, President & CEO 716-754-8824
www.canambta.org, canambta@aol.com

CBP Deputy Commissioner Spero’s Introduction OF Commissioner Bonner:

CBP Commissioner Rob Bonner mobilized and brought us together. His vision is to extend
a Zone of Security by (pushing our Borders out to points of origin) to achieve the critical
intertwined “Twin Goals of Security and Facilitation.” A top priority he achieved was truly
making the “Trade Community” a full working partner with CBP. Rob Bonner has insight,
wisdom and a profound understanding of the realities needing to be faced. He instills a
sense of urgency. He is a leader, visionary and a true patriot. Deputy Commissioner Spero
also led the very insightful and informative Open Forum with CBP Senior Managers

Commissioner Bonner’s Overview:

 Summarized events and focus post 9/11 knowing we must not hurt the economy so
the only option is to continue to both “improve security” while achieving more
“efficient movement” of low-risk goods and people.
 Reviewed and described the 5 Interlocking Principles guiding CBP:
1) ADVANCE INFORMATION (all cargo);
2) AUTOMATED RISK TARGETING (assess terrorist threat on a national
basis using algorithms and anomalies by evaluating 100% of activity and
inspecting 100% of that activity designated “high-risk” from the targeting);
3) USE OF BEST DETECTION TECHNOLOGY (Non Intrusive Inspection
NII having currently installed 600+ Radiation Portal Monitors and 160
Gamma Machines that read through lead shields);
4) CONTAINER SECURITY INITIATIVE (currently operating at 40 major
Foreign Port increasing to 50 in 2006 evaluating over 80% of all containers
arriving in U.S.) and
5) CUSTOMS-TRADE PARTNERSHIP AGAINST TERRORISM (now has
5300 certified comprising 42% of the total value of trade).
 An Acting Commissioner will be named as he is leaving office late November.
 NEXT STEPS:
-Need more data, deeper into the supply chain/are developing how to get it/
involves help from TSN and COAC.
-We now must implement WCO Framework. 115 Countries have declared intent
and adopted protection of Global Supply Chains with one set of rules, one policy
and one set of standards. Capacity building to assist developing Countries in
complying now underway.
-GREEN LANE for OCEAN and AIR will be completed this year for C-TPAT
validated organizations using CSI and a container security device (the final step
“a work in progress” is a lynch pin to the Green Lane). The Green Lane will
normally have no inspection.
CBP TRADE SYMPOSIUM 2005 page 2

-ACE is a reality, is being funded and will be completed including being
“one window” to the Government for all Trade Data input (ITDS).
-C-TPAT has rigor built in to move cargo in time of crisis. NEXUS/FAST as well.

In closing quoted Teddy Roosevelt
“IT IS REWARDING TO WORK HARD AT WORK WORTH DOING.”

Dialogue on Compliance with CBP Trade Team Panel:

 Trade does “not” have a backseat to security as they are inexorably linked.
 Discussed Bioterrorism Act, Wood Packing (as of 1/05 (76% were non-
compliant), as of 2/06 enforced compliance occurs and as of 7/5/06 full
enforcement including Dunn age with only remedy immediate exportation).
Avian Flu (smuggling of birds into U.S. is high and must be stopped).
 Textiles make up 43% of all duties collected. Reviewed China Safeguards (in
place to 12/31/08). On $90 Billion of Trade 24% claimed preference, of those 50%
were not compliant.
 Reviewed entry modernization including Periodic Monthly Statements, Post
Summary Correction, ACE Reconciliation and Drawback Simplification.
Seizures, Fines and Penalties were discussed including Mitigation Guidelines and
fact patterns of aggravated violators including their record, attitude and evidence
to evade. Cargo control and verification is directly related to pre-arrival
information including Timing, Data Quality and Content. Electronic truck
manifest will be operational nationwide in 2006 and then become mandatory.
 Regulatory Audits were described (risk-based and post-entry). Types of Audits
detailed: i.e. Revenue; Intellectual Property; Textile Transshipments;
Antidumping/Countervailing Duty, User Fees and Emerging New Issues.
 Customs Modernization results in building ACE. Must freeze ACS and stop
relying on it. Policy must drive electronic systems development. Ultimately ACE
with one click should reflect “all information” on an Account.
 Legal Rulings, Official Regulations development and Rulings Processes were
reviewed. Described a particular case of how a non-prudent importer allowed
outright fraud by a third party. They were prosecuted.

Dog Team capabilities were demonstrated. “Jacko”, 7 years in service currently trained
to find concealed humans, (in his first pass of the room holding 700 people to which he
paid no mind as they were in plain site), found an individual hidden behind a panel in the
wall. In his career Jacko has found 38,000 pounds of Marijuana, 9,000 pounds of cocaine
and uncovered 221 concealed persons at the Border in every place imaginable. The second
Team demonstrated with “Dwarf” trained to find money. He very quickly found the money
secreted on one person of a group of people. He signaled so by “immediately sitting” by
the person.

WCO – Framework Implementation and Capacity Building Panel:

 Framework implementation underway. Global Private Sector Consultative Group
to be named to provide high level input, address known vulnerabilities and
identify key issues.
CBP TRADE SYMPOSIUM 2005 page 3

 Consistency is key. Corruption of people in the process is a serious problem and
must be eradicated. Framework is very important for the protection of “Brands”
and reputations. IBM does business in 160 countries daily moving $70 million
globally with 2500 entries.

Cargo Security Strategy Panel:

 CBP National targeting Center now has 38 FDA Analysts assigned resulting in
much improved coordination and correlation.
 C-TPAT in January 2005 had 36 Supply Chain Specialists, now increased to 87
and being staffed up to 157. Validations of 1106 participants have been completed
with 2000 additional underway.
 90% of trucks and 80% of cars are currently passing through Radiation Portal
Monitor detection upon arrival at the Border.
 A straw man outlining “minimum security” for Air and Highway will soon be
published.
 J C Penney, with 1015 stores, is the largest “multi-channel” retailer in the U.S.
Described their Importer Criteria Policy, check list for non-C-TPAT suppliers and
factories including their overseas on-site-visit process. Described their internal
“How To” Manual including Seal Integrity and Seal Tracking System.
 Advised CBP has agreed to reseal any containers they open with a CBP distinctive
seal so company knows who replaced their seal.
 World Shipping Council advised advance notice “before loading” is key.
Reminded all that Maritime commingles many different supply chain containers
on a single asset (ship). Quality information in the targeting process can mitigate
“at sea boarding” resulting in containers proceeding to dock instead.

Keynote – DHS Deputy Secretary Michael P. Jackson

-Mobility, efficiency and agility of Trade is crucial.
WE MUST NOT MESS IT UP!
-Bad guys are real and out there, bad guys will be back since bad guys have
malignant intent.
-It is imperative that we recover from attacks and sustain normalcy.
-Must have a secure system for freight and secure the Global Supply Chains.
-Discussed Global Business Platform architecture.

Trade Partnership Benefits Panel:

 CBP needs more data to make Risk Management more robust.
TSN and COAC assisting in what data and how best to get it. Who owns it, where
does it now reside and current format are all factors. Additionally define how
Private Sector will benefit and the No Regular Inspection Green Lane
implemented. Purpose is to develop a Government Risk Assessment Platform “end
to end from factory to end-user” initially for ocean containers with Air next
followed by Ocean Bulk shipments. “THIS” is critical to determine “true point of
origin” and step by step who everyone is that- handles or has possession of an
Ocean container in route.
CBP TRADE SYMPOSIUM 2005 page 4

 Green Lane concept discussed in detail requiring ACE, C-TPAT, FAST, record of
high level of compliance trusted account (C-TPAT Level III). Benefits are being
finalized i.e. Reduced Inspection, Priority Recovery, Remote Filing of All Entries,
perhaps Penalty Mitigation and Zero Inspections Except Random.
 C-TPAT for FDA may be coming.

International Trade Challenges Panel:

 System must address volume of Trade needing to be serviced efficiently while
containing an effective Compliance Measurement Program. Currently Importers
Self Assessment (ISA) accounts are 97.4% compliant. C-TPAT Level III is 97%
with the Top 3000 Importers averaging 96%. Trade Compliance Issues to be
handled Post Entry.
 The “Other Government Agency” initiative is intended to cooperatively
operationalize and feasibly perform Requirements, Forms, Processes, and Visual
Inspections collectively in a much more effective manner. Special situations
includes Ag Food, Health and Safety, Duties, BTA, Quotas and Revenue. Some
Agencies assume 100% of shipments under their jurisdiction are “at risk” and need
to be educated and convinced that Risk Management techniques are as effective
while substantially facilitating shipments scored as low-risk.
 The impacts of Counterfeiting, Piracy and Intellectual Property “realities” were
detailed. Intellectual Property is valued at $5 to $5.5 trillion with ($250 billion
fake, stolen etc.) occurring in U.S. bound Trade. This is equal to one half the
World Total. China is the source of 66% of this illegal activity. 750,000 U.S. jobs
have been lost due solely to Piracy. Education, stronger Legislation, Supply Chain
Security and Intelligence are all part of the “STOP Program” now being led by the
U.S. Chamber of Commerce in a major new program. The objective is to secure a
North American “No Trade in Fakes” Zone!

Open Forum with Customs and Border Protection Senior Managers

Deputy Commissioner Spero advised that CBP’s senior Management is a stable group that
has developed Strategies and Move Forward Agendas.

Specified what is “the Focus” in the year (2006) Outlined the 9 Top Priorities:
1) Gain Operational Control at Land Border Between Our Ports
2) Prevent entry of Terrorists.
3) Strengthen Supply Chains to better DETER, DETECT and PREVENT.
4) Strengthen Risk Based Operational decision making.
5) Implement WCO Framework.
6) Increase mechanisms to facilitate Trade and Travel.
7) Expand use of Technology.
8) Strengthen employee integrity.
9) Unification of real “One Face at the Border.”
CBP TRADE SYMPOSIUM 2005 page 5

Office of Field Operations Assistant Commissioner comments. Jay Ahern described the
makeup of Field Operations - 25,000 personnel of which “2,000 personnel are new since
DHS” was created. Cited the various initiatives to increase the level of professionalism.
Detailed the SIGNIFICANT STOPS made at the Border in the past year: 20,000 criminals,
643,000 inadmissible people refused entry and 6.700 individuals with serious Wants and
Warrants. Reviewed the 20 Field Offices and 317 Ports of Entry for which they are
responsible. Described the new Immigration Advisory Program where Officers are
assigned overseas to carry out Offshore Interdiction of inadmissible people at their
“originating point’ to prevent them from reaching U.S. soil.

Other initiatives discussed included: diversified layered approach to Trade; the coming
Consolidated Trusted Traveler Program and continuing objectives i.e. addressing
Congestion Issues.

Keynote- DHS Chief Financial Officer Andy Maner

-Budgets and Priorities set at DHS affect Trade. Encourages DHS and the Trade
Community to come together to educate one another. The Trade Community gets
things done and has really stepped up since 9/11. DHS is very complex and must
succeed. Have to be right to “prevent attacks.”
-Threats are evolving. DHS has a dual mission wrapped in Privacy. Includes Response
and Prevention. Preparedness rests mostly with State / Local Authorities. CBP,
TSA, Coast Guard and ICE are multiple touch points. Using a sophisticated Risk
Based approach as “100% inspection is not necessary.”
-DHS has addressed and catalogued Infrastructure Threats for the first time. It has
imposed background checks on all new citizens. It operates on the belief that the
NATIONAL and ECONOMIC SECURITY IS ONE.
-Money drives capability (for fiscal year 2006 DHS budget $41 billion,
70% Homeland plus a $60 Billion supplemental was passed). Intend to fund the
“MUST DO’S.” Have identified planned investment of $47 billion in 113 specifics.
-DESTROYERS OF OUR ECONOMIC ENGINE LEVEL include: 9/11;
SARS; Katrina; Rita; Wilma; Illegal Immigration; Bird Flu Preparedness.
-DHS Second Stage involves revamping Immigration, consolidating Intelligence,
initiating a Preparedness Directorate, an Operations Directorate and a Policy
Director.

Automated Commercial Environment(ACE) InternationalTradeDataSystem(ITDS):

ACE: a secure cargo facilitated Trade environment; the single window for providing
information to the Government; ITDS link, common set of data elements and risk based
rules. 26 Government Agencies are currently signed on including FDA, EPA, Census,
USDA and DOT. It will cost $3 billion. It is scheduled for completion in FY 2010.

 Release 4 Truck E-Manifest is operational at 28 Ports and will be at all Ports in
2006. When Release 4 is fully operational and functional TRUCK E-
MANIFESTS WILL BE MANDATORY. SEA and RAIL E-Manifest will be
operational December 2006 with AIR E-Manifest by September 2007. CBP Portal
process being improved. ACE is funded $305 million/year through year 2010.
CBP TRADE SYMPOSIUM 2005 page 6

Commissioner Bonner’s Closing Remarks:

-CBP Trade Symposium process has accomplished “key initiatives” and developed
new core approaches.

-ACE will work helping both CBP and the Trade Community.

-Everyone will be on ACE.

-Priority is to make the “Green Lane” a reality.

-The “5 Pillars” outlined and underway is the way forward with continual reassessment.

-The Trade Symposium frames issues.

-U.S. CBP is on a very sound footing with a solid proven Management.

-Key policies and procedures are in place.

-The partnership between CBP and the Trade Community is solid and will continue to
work together.

Commissioner Bonner stated
“It has been an honor to serve.
I am proud to have known you.
Thank You for your Support.”
APPENDIX: ACRONYMS DESCRIPTION

ACE AUTOMATED COMMERCIAL ENVIRONMENT (NEW)