Border Security and Congress
(Published in the Journal of Commerce, 12/26/01)

Right now the watchwords on Capitol Hill are "border security." Every container is a possible weapon, the mantra goes, every ship a possible delivery vehicle and every port a possible target!

Customs is physically able to inspect some 2% of all the containers arriving in the United States. Therefore, Members of Congress and Senators have become understandably focused on the question of border security, by land, sea and air.

The legislative proposals have ranged to the untenable. Some Members introduced a bill (H.R. 2960) requiring 100% examination of all cargo! That approach is obviously not the answer both from the point of view of what it would do to cargo release and, equally importantly, for the unconscionable expense it would create for the American taxpayer, for staffing and equipment and, in the end, consumer goods.

Senator Hollings' port security bill (S.1214) is considered much more likely to pass now than before the events of Sept. 11. The objections of the labor unions to background checks has given way to the reality that everyone who has anything to do with cargo in any fashion should be someone who is trustworthy, and trustworthy in this context means someone whose background has been thoroughly checked and approved.

The Hollings bill is focused on the nation's 50 largest ports. The first question obviously becomes, should all ports be included? The bill allows each port to design its own program, which raises the next question of whether a better approach might not be to first identify best practices and then encourage implementation of those best practices.

As mentioned, one of the provisions in the bill requires background checks for individuals who have access to "secure areas within a port or maritime facility." This phrase, too, raises questions. What part of a maritime terminal is not a secure area? What part of a port should not be considered a secure area? The other obvious question to anyone who favors civil liberties is how long is long enough? One principal of the American way of life is that each person should be given a chance at rehabilitation. If someone is convicted of a felony, serves his time and turns his life around, how long must he be out of jail to pass his background check?

Because the Hollings bill leaves the question of the specifics of the program to each seaport, it further begs the question of how to reconcile conflicting requirements if not all seaports enact compatible programs?

What does a terminal company with operations in several ports do if each port has different requirements? Should the federal government set the standards or should it set only minimum standards with each location able to enact requirements to suit its unique needs?

What none of the current proposals do is deal with the real weak link in the process - the information provided by the foreign seller. Hoping to address this aspect in the supply chain, the U.S. Customs Service is evaluating security criteria it will likely encourage the private sector to implement. Unfortunately, those efforts seem currently focused solely on large companies rather than recommending security measures which can realistically be implemented by companies of all sizes.

There seems to be little dispute, wither within the government or between the government and the private sector, that the best way to address security concerns and still allow expedited release of legitimate freight and people is through the pre-filing of manifest information. Pre-filing is accomplished by the carrier filing its manifest information with U.S. Customs electronically, but not all modes of transportation are linked to the Customs computer; plus the existing program needs refinement so it is able to handle all levels of consolidation manifest information.

Even so, pre-filing still does not insure the reliability of the information because the carrier is simply reiterating what it received from the foreign shipper. Unless there is some means to evaluate the reliability of the foreign shipper's information, the loophole is not closed, and the only way to do so is in concert with our trading partners.

Customs is understandably concerned about "Order of Shipper" bills of lading because the name of the actual consignee is generally not stated on the bill of lading, an important element for pre-screening.

Similarly, goods which move on an FAK (freight all kinds) freight rate lack a specific product description, another important factor in making a decision as to whether to release cargo. While both accepted and long-standing methods of shipping goods, they may have to give way to security concerns. The need for the order bill of lading is obvious to anyone who has ever sold goods relying on a letter of credit.

Similarly, the FAK freight rate exists because the U.S. still requires the use of steamship tariffs. FAK applies when no other published tariff provision adequately describes the goods being shipped. If shippers need to use these options for legitimate commercial reasons, why not provide a means for carriers to provide the consignee name or a "better" product description right on the manifest?

One reason many companies give for not wanting to state the actual consignee's name is they don't want it published when manifest information is publicly released. As to FAK rates (and product descriptions generally), a major consideration for companies to avoid detailed product descriptions is cargo theft. An equally important consideration is industrial espionage. Therefore, solutions to these problems may lie in the government changing the way it does business, e.g., one possibility is making the sharing of information by an importer with Customs easier, perhaps by allowing customs brokers the ability to input clarifying information into certain data elements in the Automated Manifest System.

The same concerns exist for exports. One fact we obviously have learned is that terrorists can exist unnoticed on any country's soil for lengthy periods of time. The type of uproar they seek to cause can be committed much more easily by exporting a shipment than importing it, if for no other reason than the time of transport is much shorter, thereby allowing less time for things to go wrong.

The one major component missing from the current debate is international efforts. If we are to be satisfied the cargo system is secure, we must work internationally with our trading partners to agree upon the required elements for security. The same concern for international cooperation exists in the immigration context. A bill (S.1618) is currently making its way through Congress which mandates that biometric information be stored on visas. However, which standard(s) is to be used, e.g., fingerprint, retinal scan, etc., is unclear. Whether dealing with Customs, immigration or a host of other concerns, the bottom line is that if we are to have a reliable system, we must reach consensus with our trading partners as to what is expected and then enforce those rules. If there ever was an example where unilateral action will only gum up the works, cargo security is it!

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