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XXIX COMALEP meeting, speech on the implementation of the SAFE Framework

18 November 2008

(Directors General of Customs from Latin America, Spain and Portugal)

San Jose (Costa Rica), 12 November 2008

Speech by Kunio Mikuriya, WCO Secretary General elect, on the implementation of the SAFE Framework of Standards

Dear Directors General,

I would like to begin by thanking the Director General of Customs in Costa Rica and the COMALEP for inviting me to the XXIX meeting in this beautiful environment. Last month I talked at the General Assembly of ASAPRA held in Panama. This is therefore my second visit to Latin America since the WCO Council met in June. It is important for me to increase my exposure to this part of the world in my efforts to embrace this region more closely. This time I am accompanied by Ernani Checcucci who is from this region and speaks both Spanish and Portuguese.

Now, let me talk about the implementation of the SAFE Framework of Standards in which the WCO has invested so much in order to modernise customs. Why is the SAFE so important? It is essential because it has shifted the attention of customs from traditional imports to the entire trade supply chain, thus extending customs control to export. It has also raised the profile of customs in ensuring the security and facilitation of global trade. In this way customs is expected to act as global network which assesses the security risk based on advance electronic information as early as possible in the supply chain. This scheme requires a standardised dataset using the WCO Data Model and consistent risk management to facilitate customs cooperation and mutual recognition of control. As a result, customs will inspect high-risk cargo including outbound, transit and inbound containers while allowing the smooth flow of legitimate trade. We recommend the use of non-intrusive inspection technology to strengthen security control while avoiding disruption of international trade. A partnership with business is therefore indispensable in realising this system.

The SAFE Framework of Standards was adopted in 2005, based on a US proposal following the September 11th terrorist attacks in 2001. However, the US Congress keeps on putting pressure on the customs community to take additional measures that are deemed to strengthen security. This is the origin of the legislation on the mandatory 100% scanning requirement, enacted in 2007 with an implementation period of 5 years. Although the US Department of Homeland Security and The US Customs and Border Protection (US CBP) were cautious in expressing their view at the outset, they have become increasingly vocal in expressing their opposition to mandatory 100% scanning at export. I think they carefully avoided potential politicization of this issue during the US Presidential campaign. They have carried out pilot projects in three ports of relatively small size in Honduras, Pakistan and the United Kingdom to test the feasibility of this legislation. Consequently, the US CBP reported to their Congress that scanning US-bound maritime containers is technologically and operationally possible on a limited basis, but that each port has differing infrastructural, technological, environmental and political challenges. The resource commitment to overcome these challenges must be commensurate with the additional security gain. In addition, they felt that there were two challenges: to determine who would bear the costs; and to work out staffing for both the foreign customs service and the terminal operator. More crucially, when they started to extend the pilot project to ports with high-volume and transshipment cargo, they found that technical and operational solutions are not yet available to capture transshipped cargo efficiently. The US CBP stresses that no one should be misled to believe that 100% scanning equals 100% security, which I believe we all agree. They believe that prioritising their scanning deployments on high-risk trade corridors will maximize the security benefit.

Under these circumstances what has been the WCO action? Last December the WCO Policy Commission adopted a joint resolution with the Private Sector Consultative Group to express concern over 100% scanning at export and to ask the US Congress to review the legislation. Since the WCO Council endorsed this resolution in June, I co-signed several letters with the outgoing Secretary General Michel Danet and the Council Chair addressed to US Congressional leaders explaining the WCO position that stresses risk management and not mandatory 100% scanning. I have pursued a policy of constructive engagement with the US Congress in explaining the position of the global customs community. Now I am carefully watching the new orientation of the US President elect and the new Congress to find how best to reach out to them. As an alternative, the WCO supports the US CBP initiative to focus on a risk management based approach and is therefore ready to discuss the US request to review the necessary data elements, such as 10+2 advance information, for inclusion in the SAFE Framework. Furthermore, the development of AEO programmes and their network of mutual recognition are vital in providing more security and facilitation to the trade supply chain.

The SAFE Working Group continues to maintain and develop the SAFE Framework of Standards. Last month it discussed the US 10+2 proposal as part of the SAFE amendment procedures as I have just mentioned. Another proposal at the working group includes Customs-to-other border agencies cooperation as the 3rd pillar of the SAFE. This proposal consists of the single window concept and the coordinated border management concept; both of them are expected to develop into standards in the future. In fact, coordinated border management is one of the 10 building blocks identified in the “Customs in the 21st Century” WCO policy document and requires attention in our future work. A new agenda item is trade recovery to ensure expeditious resumption of trade in the event of a disruption to the global supply chain caused by acts of terrorism. The WCO took up this agenda from the APEC (Asia Pacific Economic Cooperation) programme. The WCO always tries to ensure that regional standard setting is compatible with global standards, but it is also ready to adopt regional initiatives as basis for global standard setting. Incidentally trade recovery entails cooperation with other border agencies, another topic that I have just mentioned. Moreover, the WCO Secretariat is finalising the guidelines for procurement and deployment of scanners and intends to organize regional seminars to share experience among customs, which I understand will be taken up later by Mexico and Spain. The working group also touched upon the issue of small and medium-sized enterprises, which I understand will be taken up later by BASC (Business Alliance for Secure Commerce).

One of the pillars of the SAFE Framework of Standards is the customs-to-business partnership, embodied as the Authorized Economic Operator concept. There are already many emerging AEO programmes with slight differences in focus, reflecting the priority of each country. However, these programmes should remain compatible and consistent with SAFE Standards. Otherwise, they will have difficulties in the area of mutual recognition. Therefore I have started to develop a compendium of existing AEO programmes to provide a reference for those WCO Members wishing to develop their own programmes and to prepare for mutual recognition. I need input and information on the emerging programmes in this region from you. Likewise, I asked my team to prepare guidance on how to implement the AEO concept - practical step-by-step guidance with nine phases, the first cut of which was presented to the WCO SAFE Working Group last month. This Guidance is of course being translated into Spanish.

Now, I want to move on to the Columbus Programme that provides capacity building assistance for implementing the SAFE Framework of Standards. In the past two and a half years, over one hundred customs administrations have been visited and a snapshot taken of each administration in order to analyze the gap and formulate recommendations, because accurate diagnosis is the basis of capacity building activities. The WCO will continue this work with strengthened quality assurance of diagnostics based on past experience and review the WCO Diagnostic Framework in preparation for reform monitoring and evaluation missions. Currently we are moving on to the implementation assistance phase with strategic planning assistance and donor interaction; and technical assistance and advice on SAFE Framework topics such as AEO, risk management, non intrusive inspection technology and integrity. We identified that one of the key issues for sustainable delivery of capacity building is the promotion of ownership and leadership where the WCO provides the necessary tools, support and research. Another key issue for sustainable delivery is partnership with other international organizations, lending institutions, donors and the private sector. These partnerships will provide us with political, financial and knowledge support. In this connection, we will support the Regional Office for Capacity Building in Buenos Aires and the Regional Training Centres in Brazil and the Dominican Republic as they are most suited for capacity building delivery and coordination with local donors such as the Inter-American Development Bank and other stakeholders.

Last month I organized the International Donor Conference in London to enhance dialogue and partnership, inviting customs administrations, major donors and the private sector from all WCO regions, including Latin America, to participate. Donors confirmed that money is available but they need better explanations on the feasibility of the project, on ownership and on the issue of political support. On the other hand, customs representatives pointed out that access to donors is a complicated process. This is where the WCO is willing to help its Members through its Columbus Programme, with its improved diagnostic and strategic planning process resulting in higher quality and better advocacy and collaboration with donors. The conference in London also pointed out that management and leadership is important both at the top level and at the lower level. Change management and human resource management are areas that require more work in accumulating and sharing success stories and lessons learned and in applying the theory in practice in the customs field. In this connection, many donors stressed that safeguarding integrity is the cornerstone of any capacity building activities. As a matter of fact, the WCO recently organized the integrity workshop at the International Anti-Corruption Conference in Athens where many Directors General and senior officials participated from this region. We will carry on the work at the WCO Integrity Sub-Committee later this month, taking up a new agenda item; facilitation payment.

To conclude, once again I would like to thank the COMALEP who invited me to deepen its regional cooperation to help advance the global customs agenda. The WCO will continue to assist this important regional forum for our shared goal.

Thank you for your attention.

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Click here to read Mr. Mikuriya’s speech on the Revised Kyoto Convention