It's great to be here in San Francisco, and I'm particularly delighted to have the opportunity to address the Customs Law Committee and other committees of the American Bar Association.

Introduction
It goes without saying that we are in the midst of one of the most challenging times in our nation's history. We are facing a threat unlike any other we have ever faced -- the threat of international terrorism.

To combat that threat, we are building a new department of government -- under the leadership of Secretary Tom Ridge -- one that brings together the federal government's prevention, preparedness, and response capabilities. By putting those capabilities in one Department, our nation will be -- and already is -- better able to deal with the terrorist threat.

Our agency, U.S. Customs and Border Protection, is part of the new Department, and it's been up and running for five months.

For 162 days, to be precise, but who's counting?

What CBP Is
Customs and Border Protection, CBP, is the largest and most profound actual merger of personnel and functions taking place within the Department of Homeland Security. Some agencies in the new Department were transferred intact, such as the Coast Guard, TSA and the Secret Service. Other parts of the Department are start-ups, such as Science & Technology and "IAIP." That's Information Analysis and Infrastructure Protection for those of you who didn't bring your Washington acronym dictionaries. But Customs and Border Protection -- is an actual, honest-to-goodness merger.

Because to create CBP, we have taken almost all of U.S. Customs and merged with it the entire Border Patrol and all of the immigration inspectors from the former INS, and the agriculture border inspectors from the Department of Agriculture. The total number of employees in the Customs and Border Protection agency is 42,000. To put it another way, CBP has about one-fourth of all the personnel that make up the Department of Homeland Security. The size of CBP is not too surprising when you consider how important the security of our borders is to the security of our homeland.

But it's not just the size of the merger that makes the creation of CBP of profound importance. This merger is historic, because for the first time in our country's history, all agencies of the United States Government with significant border responsibilities have been unified into one agency of our government; one agency to manage and secure our borders.

Earlier this year, one person described the challenge of the CBP merger to me this way. He said "You're bringing all these different agencies together. People from agencies that hate each other . . . And many of these people are armed!!!"

That early assessment of the challenge was, fortunately, somewhat exaggerated!

Bringing all the border agencies together into a single agency is a good government reform advocated by seven independent studies since the Nixon Administration. I was discussing this with someone not long after 9-11, and he said to me, "Well, if there were seven studies saying it should be done and it wasn't done, it must not have been a good idea." And I said to him, "How long have you been in Washington?"

I can assure you -- it was and is a good idea. One of the best ideas of the President's reorganization of government. But unfortunately the reorganization of our border agencies into one agency was not possible without 9-11, the worst terrorist attack anywhere in the history of the world. And it was not possible without creating a new department of government.

Before 9-11, the debate was: would the border agency be in the Justice Department or in the Treasury Department? Which congressional committees would lose power and jurisdiction?

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Before March 1 of this year, before the reorganization, our border agencies were fragmented into 4 different agencies in 3 different departments of government. This fragmentation was not just terribly inefficient; it made America more vulnerable to the threat of international terrorism.

Now, we are one agency, within one department. And, as U.S. Customs and Border Protection, we are creating, as Secretary Ridge has called it, "One Face at the Border," by establishing one agency for our nation's borders.

CBP's Priority Mission
The priority mission of this new agency is homeland security. And for the border agency, that means our priority mission is preventing terrorists and terrorist weapons from entering our country.

It's been nearly two years since the terrorist attacks of September 11, but -- and I receive regular intelligence briefings -- the terrorist threat is still with us.

The terrorist bombing earlier this week outside a Marriott hotel in Jakarta is a reminder that the terrorist threat continues. That attack appears to have been carried out by Jemaah Islamiyah (JI), a group closely associated with Al Qaeda. The terrorist threat unfortunately will be with us for many years to come.

CBP's Traditional Missions
Although our priority antiterrorism mission is paramount, Customs and Border Protection must also carry out the traditional missions of its predecessor agencies, such as:

• regulating and facilitating international trade;
• interdicting illegal drugs and contraband;
• apprehending those attempting to enter the United States illegally;
• protecting American agriculture from harmful pests and diseases;
• protecting American businesses from theft of their intellectual property;
• collecting import duties ($23 billion last year); and
• enforcing all U.S. laws, including our trade and immigration laws, at our borders and at our ports of entry.

These missions remain important, and we are continuing to perform them. And we must continue to perform them well.

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Let me give you a brief update on where we are with some of the traditional missions that impact the international trade law work that many of you do.

Eliminating Rulings Backlog and Delays
First, as some of you know, before I became Commissioner, the time it took to get a ruling from Customs averaged nearly two years. This was completely unacceptable to me. I challenged Customs' Office of Regulations and Rulings (OR&R) to issue rulings within 90 days -- because I understand how important it is for the trade community to get those rulings in a timely manner.

OR&R rose to the challenge. Our rulings backlog has been eliminated and so have the inordinate delays. Currently, we are averaging 70 days for rulings, and there is no backlog.

E-Rulings
Another development on the rulings front, has been our progress on "e-rulings." At our annual trade symposium last year, I mentioned that we were committed to working with the trade to create electronic rulings requests. I'm pleased to report that just a couple weeks ago, Customs and Border Protection issued its first electronic response to an electronic binding ruling request. The electronic request came in to CBP on July 21, and we issued an electronic ruling just two days later on July 23. This is an important milestone -- a sign of ever greater efficiencies in the way we do business with you and your clients.

Penalties
Another area of Customs that needs to be reformed is the 592 penalty process. The lengthy delays in final assessment and resolution of penalties are unacceptable! I am looking at ways to streamline the 592 penalty process. I want to see a system that is faster and more predictable, and that deters violative conduct and facilitates compliance. The current system fails to do this.

Stay tuned.

Importer Self Assessment Program
Another effort of ours that many of you may be familiar with is our Importer Self Assessment, or "ISA" program, which allows importers to manage their own trade compliance.

ISA operates as a partnership between us and importers -- a partnership that recognizes many importers are willing to assume responsibilities for self-assessment in exchange for less Customs oversight. An approved account in the ISA program gets several benefits, including removal from the audit pool for comprehensive audits.

So far, we have received over 50 applications for the ISA program and we have 10 approved companies in the program.

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Twin Goals
As Customs and Border Protection works to carry out its priority antiterrorism mission, and traditional missions, we must devise ways to do so without choking off the flow of legitimate trade and travel, so important to our nation's economy and our openness as a nation.

I learned this most graphically on September 12 and 13, 2001. On 9-11, Customs went to its highest level of security alert -- short of shutting down our borders. On September 12th and 13th, wait times at our land borders skyrocketed from 10 to 20 minutes, to 12 hours at many of our major land border entry points. The border virtually shut down.

I learned this most graphically on September 12 and 13, 2001. On 9-11, Customs went to its highest level of security alert – short of shutting down our borders. On September 12th and 13th, wait times at our land borders skyrocketed from 10 to 20 minutes, to 12 hours at many of our major land border entry points. The border virtually shut down.

And the consequences to our "just in time" economy were quickly apparent. Some auto plants began to shut down by September 14th.

We must protect American lives, but we must also protect American livelihoods -- our economy. That's why we have twin goals: (1) increasing security and (2) facilitating legitimate trade and travel.

These goals don't have to be mutually exclusive. We've developed ways to make our borders more secure that also ensure the more efficient flow of legitimate trade and travel.

This relates to the theme of this session: "How will the economic costs of security affect the facilitation of legitimate trade?"

That brings me to some of the important things Customs and Border Protection is doing to improve security and simultaneously facilitate trade -- make it move more efficiently, faster, and more predictably, without inordinately adding to the overall cost of trade.

How are we doing this?

CSI
For one, we're pushing our borders outward, extending our zone of security beyond our physical borders -- so that American borders are the last line of defense, not the first line of defense. We're doing this in part through the Container Security Initiative, or CSI.

As many of you know, CSI is U.S. Customs and Border Protection's program for detecting and deterring terrorists from exploiting the vulnerabilities of containerized shipping -- the primary and indispensable system of global trade.

About 90% of all world cargo moves in cargo containers. If a terrorist weapon were to be concealed inside a container, or if a container were used as a weapon, it could wreak havoc on global trade and the world economy.

With CSI, we are partnering with other countries to address that threat and secure this vital system of trade.

Under CSI, our CBP inspectors work side-by-side with officials from our partner customs agencies at foreign seaports -- at "CSI ports." There, they target and screen high-risk containers before the containers leave foreign ports for the United States.

In the first phase of CSI, we've focused on implementing CSI at the top 20 foreign ports, in terms of volume of containers shipped to the U.S. We started with the top 20 because they account for nearly 70% of all cargo containers arriving at U.S. seaports.

Just last week, I was in Beijing to sign a CSI Declaration of Principles with the Chinese government. With that signing, the nations that represent 19 of the top 20 ports have now agreed to join CSI.

And we are not just talking about implementing CSI. We're implementing it.

CSI is already "operational" at 16 ports worldwide. Our personnel are deployed in Europe at the ports of Rotterdam, Antwerp, Le Havre, Bremerhaven, Hamburg, Felixstowe -- the largest container port in the U.K., and Gothenburg, Sweden. In Asia, CSI is operational at Yokohama; Singapore; Hong Kong; and Pusan, in Korea. CSI is also operational at all three principal ports in Canada: Halifax, Montreal, and Vancouver.

While I was in Asia last week, I visited the Port of Hong Kong and our CSI team there. I can tell you, CSI is going very well there. We're targeting high-risk containers headed for the U.S., and Hong Kong Customs has done a security inspection on every container we’ve identified using their large-scale x-ray and radiation detection equipment.

24-Hour Rule
A key to CSI's success is advance information. In order to identify high-risk containers before they leave foreign ports, we need the manifest information before the cargo goes on board those ships.

Last fall, I issued a rule, the so-called "24-hour rule" that required transmission of complete manifest information for sea cargo to Customs 24 hours in advance of lading.

In crafting that rule, we worked hard to achieve a rule that would provide the necessary -- and I do mean necessary -- security improvements, but also a rule that was manageable for those in the industry. One that, yes, required some changes in business practices, but that would not cripple the industry that the rule was, at least in part, designed to protect.

I've heard nightmarish tales about how the 24-hour rule would paralyze world trade.

None of the doomsday predictions have come to pass. Rather, compliance with the new rule is high, and trade has not been disrupted. Importantly, CBP is getting information that allows us to identify containers we need to take a closer look at -- ones that raise security concerns -- and with this advance information, we can let the no-risk shipments move through more quickly.

The rule is helping us to fulfill our twin goals of increasing security while simultaneously facilitating legitimate trade.

Trade Act Proposed Regs
Over the past several months, Customs and Border Protection has worked closely with the trade community to develop regulations that will require advance electronic information for the other modes of transportation -- commercial trucks, rail, and air cargo.

Our proposed regulations were published about two weeks ago, and, similar to the 24-hour rule, these regulations will permit more effective risk management for the terrorist threat, before cargo shipments reach the U.S. border ports of entry.

C-TPAT
One other program that helps us achieve our twin goals is the Customs-Trade Partnership Against Terrorism, or C-TPAT. The idea behind C-TPAT is that with CBP and the trade community working together, as partners, we can do a lot to improve the security of the entire supply chain, while expediting the flow of legitimate commerce into the United States.

Companies that take steps to adopt "best practices" to improve the security of their shipments are and will be given the "fast lane" through our land border crossings, and through our seaports.

Again, C-TPAT enables Customs and Border Protection -- working with the trade -- to risk manage, i.e., to separate the low-risk traffic from the high-risk traffic.

So far, over 3,800 companies have signed up and are participating in C-TPAT.

Conclusion
Let me wrap this up by bringing my discussion of CBP's efforts back around to the question set out as the theme for this session.

I firmly believe that increased security measures, can and should -- and are -- actually helping secure and enhance facilitation of legitimate trade. The security measures I've described are making our borders and trade more efficient.

Are there some economic costs to implementing new security measures? Yes, there are. But a much more important question to ask is what is the economic cost of not implementing any new security measures? Of doing nothing to protect our supply chains against the terrorist threat?

That cost is far too high to calculate. That cost is the potential collapse of not just a local economy, but the collapse of our national economy.

The world has changed, and so something must be done -- we must make some investments in security to ensure the long-term strength of global trade. But I believe we can -- and I know for a fact that Customs and Border Protection is -- making these investments without stifling the flow of legitimate trade.

I promise you this: as CBP moves forward with the programs I've mentioned today, and with similar programs, we will become even more effective and efficient at the borders; we will increase security and facilitate legitimate trade; we will better protect both the American people and the American economy.

Thank you.

*Commissioner Bonner reserves the right to edit his written remarks during his oral presentation and to speak extemporaneously. Thus, his actual remarks, as given, may vary slightly from the written text.