Good morning, Madame Chairman and members of the Committee. Thank you for this opportunity to testify.

I am pleased to be here on behalf of the Border and Transportation Security Directorate (BTS) to discuss some of the initiatives we have implemented to improve security in the aftermath of the September 11th attacks – and to do so while still protecting the flow of legitimate trade so important to our national economy. On March 1, 2003, the initiatives I will discuss today became Department of Homeland Security initiatives as the U.S. Customs merged with the Border Patrol and the immigration and agriculture inspection programs to form the Bureau of Customs and Border Protection, or BCBP. As you know, BCBP is within the Department of Homeland Security’s BTS Directorate.

As Secretary Ridge has oft stated, our primary objective here at the Department is to prevent terrorism. At BTS, and specifically within the Bureau of Customs and Border Protection, our priority mission is preventing terrorists and terrorist weapons from entering the United States. That extraordinarily important mission means improving security at our physical borders and ports of entry, but it also means extending our zone of security beyond our physical borders. Indeed, the initiatives I am going to discuss today are designed to push our zone of security outward so that American borders are the last line of defense, not the first line of defense against the international terrorist threat. These initiatives – like all BTS Smart Border initiatives – are designed to improve security without stifling the flow of legitimate trade. In fact, many of these initiatives promote the more efficient movement of trade. Securing trade and facilitating trade are two of the main goals of the BTS Directorate. My statement today focuses on those specific initiatives the Committee asked that I discuss.

Container Security Initiative (CSI)

Ocean-going sea containers represent the most important artery of global commerce – some 48 million full sea cargo containers move between the world’s major seaports each year, and nearly 50 percent of all U.S. imports (by value) arrive via sea containers. That means nearly 6 million cargo containers arrive at U.S. seaports annually.

Because of the sheer volume of sea container traffic and the opportunities it presents for terrorists, containerized shipping is uniquely vulnerable to terrorist attack. Most experts believe that a terrorist attack using a container as a weapon or as a means to smuggle a terrorist weapon, possibly a weapon of mass destruction, is likely. If terrorists used a sea container to conceal a weapon of mass destruction and detonated it on arrival at a port, the impact on global trade and the global economy could be immediate and devastating – all nations would be affected.

The purpose of the Container Security Initiative, CSI, is to prevent and deter terrorists from using cargo containers to conceal terrorist weapons, including potentially nuclear weapons or radiological materials. Under CSI, which is the first program of its kind, we are identifying high-risk cargo containers and partnering with other governments to pre-screen those containers at foreign ports, before they are shipped to our ports.

The four core elements of CSI are:

• First, identifying "high-risk" containers. These are any containers that pose a potential risk for terrorism; i.e., that may contain – based on intelligence and risk-targeting principles – terrorist weapons, or even terrorists. We are using a structure called the Automated Targeting System (ATS), a sophisticated rules-based system, capable of sorting and processing vast quantities of information very rapidly to identify the “high-risk” containers.
  
• Second, pre-screening the “high risk” containers at the foreign CSI port before they are shipped to the U.S.
  
• Third, using technology to pre-screen the high-risk containers, so that it can be done rapidly without materially slowing down the movement of trade. This includes both radiation detectors and large-scale x-ray-type machines in order to detect potential terrorist weapons.
  
• Fourth, using smarter, “tamper-evident” containers – containers that indicate to BCBP officers at the port of arrival whether they have been tampered with after a security screening.

Under CSI, we have deployed and continue to deploy small teams of BCBP personnel to the foreign ports, of nations that are partners in the CSI initiative. These U.S. personnel target containers using computers that are connected to our Automated Targeting System (ATS) system here in the United States. Our host nation customs partners add information useful to the targeting process, using their own systems. Pooling our information and data results in better targeting decisions.

The next step is that the host nation’s customs officers inspect the containers identified as posing a risk, using non-intrusive inspection (NII) and radiation detection equipment. The NII equipment generates x-ray and gamma ray images, which U.S. and host nation officers study for anomalies that could indicate the presence of terrorist weapons, including nuclear or radiological materials. In the event that an anomaly is detected through the NII or radiation detection equipment, the host nation’s customs officers conduct a physical inspection of the contents of the container. U.S. Customs and Border Protection officers observe this entire process to make sure security protocols are followed.

CSI adds substantial security to containerized shipping without slowing down the flow of legitimate trade. Containers that have been pre-screened and sealed under CSI will not ordinarily need to be inspected again by U.S. Customs and Border Protection when they arrive at United States seaports. Currently, every container identified as high risk is being screened on arrival to the United States. With CSI, it will usually be unnecessary to do this screening here, if it has been done – “there” – at a CSI port.

The Customs Service developed the CSI initiative in the last two months of 2001, and Commissioner Bonner announced CSI in January, 2002. Since then, CSI has generated exceptional participation and support.

The goal for the first phase of CSI was to implement the program at as many of the top 20 foreign container ports – in terms of volume of cargo containers shipped to United States seaports – as possible, and as soon as possible. Those ports were the logical place to start CSI, because the top 20 alone account for nearly 70 percent, over two-thirds, of all cargo containers arriving at U.S. seaports. The top twenty ports include: Hong Kong, Shanghai, Singapore, Kaohsiung, Rotterdam, Pusan, Bremerhaven, Tokyo, Genoa, Yantian, Antwerp, Nagoya, Le Havre, Hamburg, La Spezia, Felixstowe, Algeciras, Kobe, Yokohama, and Laem Chabang.

Within one year of the announcement of CSI, 18 of the top 20 ports agreed to participate in CSI. CSI has been implemented and is operational in Le Havre, France; Rotterdam, the Netherlands; Antwerp, Belgium; Bremerhaven and Hamburg, Germany; and in Singapore, the largest container transshipment port in the world. It will be operational at other CSI ports very soon.

BCBP is in the process of formulating the second phase of CSI. Under CSI Phase 2, the CSI program will be implemented at other foreign ports that ship a significant volume of cargo to the United States, and that have the infrastructure and technology in place to support the program. Sweden and Malaysia have already signed CSI agreements for this phase. To date, a total of 14 countries have agreed to implement CSI.

24-Hour Rule

Because CSI involves getting and using information about containers before those containers leave foreign ports, the advance transmission of complete and accurate vessel cargo manifest information to BCBP is essential to its success. Advance transmission of that information is also essential to overall successful targeting of high-risk cargo containers from any port, regardless of whether that port is part of CSI, because the better the information and the sooner we have it, the more effective and efficient U.S. Customs and Border Protection can be in identifying high-risk cargo and screening that cargo for terrorist weapons, including nuclear and radiological material.

A final advance manifest regulation relating to oceangoing cargo was issued on October 31, 2002, requiring the presentation of accurate, complete manifest information 24 hours prior to loading of a container on board a vessel at the foreign port. Under that regulation, vague descriptions of cargo, such as “FAK” (Freight All Kinds) are no longer acceptable. On February 2, 2003, a strategy was begun to ensure compliance with the so-called “24-hour rule,” following a 60-day grace period to permit the trade to adjust its business practices. BCBP is continuing that strategy. The compliance strategy has involved issuing “no load” orders and denying permits to discharge containers in the event of non-compliance.

In the first month of enforcement, BCBP issued approximately 150 “no load” orders, but the trade is working very hard to comply and we are seeing significant compliance with many aspects of the rule.

Additional Protocols For High-Risk Containers

If high-risk containers are identified after they have set sail for the United States, BCBP makes a determination on their level and source of risk. Depending on that assessment, BCBP has protocols in place for working with a variety of agencies, such as the Coast Guard to take appropriate next steps. For example, when a determination is made that cargo should not reach U.S. shores, BCBP works with the Coast Guard to ensure that the cargo is screened and examined, including the possibility of conducting examinations at sea.

Customs-Trade Partnership Against Terrorism

The Customs-Trade Partnership Against Terrorism, C-TPAT – developed and started by the Customs Service in January 2002 – is an initiative designed to further reduce the risk that terrorist weapons could be concealed in cargo shipped to the United States. It does this by substantially improving security along the entire supply chain, not just at foreign seaports. By partnering with the trade community – U.S. importers, customs brokers, carriers, shippers, and others – we can better protect the entire supply chain against potential exploitation by terrorists or terrorist weapons.

Under C-TPAT, companies sign an agreement with BCBP to conduct a comprehensive self-assessment of their supply chain security and to improve that security – from foreign loading docks to the U.S. border and seaports – using C-TPAT security guidelines. These guidelines were developed with a large amount of input from the trade community, and include such items as procedural security, physical security, personnel security, education and training, access control, manifest procedures, and conveyance security.

Those companies that meet C-TPAT security standards receive expedited processing through our land border crossings, through our seaports, and through our international airports. This partnership enables us to spend less time on lower-risk cargo, so that we can focus our resources where they are needed most – on higher-risk cargo. It is a program through which businesses win, government wins, and, most importantly, the American people win.

To date, over 2,000 companies – 2,060 as of March 13, 2003 – are participating in C-TPAT and have signed agreements with BCBP to improve the security of their supply chains. Members of C-TPAT include 60 of the top 100 importers and 32 of the 50 largest ocean carriers. Collectively, C-TPAT companies represent 90 percent of the containerized sea cargo entering the United States, and about 40 percent of all imports by value.

Currently, importers, carriers, brokers, freight forwarders, and non-vessel operating common carriers are eligible to apply for participation in C-TPAT. In January 2003, we also began accepting applications from domestic marine port authorities and terminal operators, who are already encouraged to participate in the U.S. Coast Guard Navigation and Vessel Inspection Circular (NVIC) program for waterfront facilities. We have plans to expand C-TPAT to foreign manufacturers and shippers as well.

Finally, to ensure the consistency of guidelines provided to operators of marine ports and terminals, BCBP and the Coast Guard have worked closely to ensure that the Coast Guard’s (NVIC) programs for waterfront facilities are consistent with C-TPAT guidelines for Ports and Terminal environments.

Operation Safe Commerce

Operation Safe Commerce (OSC) is a public/private partnership being implemented by the TSA, dedicated to finding methods and technologies to protect commercial shipments from threats of terrorist attack, illegal immigration, and other contraband, while minimizing the economic impact upon the vital transportation system.

OSC involves developing and testing technology and systems to improve container security, consistent with the principles and security practices of ongoing security programs, such as CSI and C-TPAT. Specific supply chains along particular trade routes are identified; then every aspect of the supply chain, from packaging to delivery, is analyzed for vulnerabilities. Based on this analysis, plans will be developed to improve security throughout the entire supply chain, and potential solutions will be tested in an actual operating environment.

Specifically, OSC is addressing three key components to secure supply chain management. They are: (1) demonstrating what is needed to ensure that parties associated with commercial shipping exert reasonable care and due diligence in properly packing, securing, and manifesting the contents of a shipment of goods in a container; (2) demonstrating various methods to ensure that information and documentation associated with these shipments is complete, accurate, and secure from unauthorized access – this may entail transmitting information in a secure electronic format; and (3) testing supply chain security procedures and practices in order to determine the impact of these procedures when combined with the implementation of enhanced manifest data elements and container sealing procedures (including effective intrusion detection), to determine the most effective method to reduce the susceptibility of a shipment in transit in an international or domestic supply chain to illicit interference.

OSC is to be carried out using the three major U.S. container load centers: Seattle/Tacoma, New York/New Jersey, and Los Angeles/Long Beach. Seventy percent of U.S. container movement originates or terminates at these centers. We are now, accepting proposals from these identified ports. This acceptance period closes on March 20, 2003.

OSC’s Executive Steering Committee, which is co-chaired by the Deputy Commissioner of BCBP and the Associate Deputy Secretary of the Department of Transportation, is responsible for managing OSC. The Transportation Security Administration, the Coast Guard, the State Department, the Commerce Department, the Justice Department, and the Homeland Security Council also have individual representatives on the Steering Committee.

Conclusion

CSI and the 24 Hour Rule provides a mechanism for the U.S. Government to appropriately scrutinize the international movement of marine containers coming to the USA. The cooperative efforts of the federal government and the regulated parties in C-TPAT and OSC allow realistic, practical, business-oriented enhancements to that scrutiny. This provides more assurance of a secure international trade network, allowing BTS to deliver on securing and facilitating trade.

Thank you again Chairman Collins, and the members of the Committee, for this opportunity to testify. I am happy to answer any questions you may have.