September 11th, for all of its unspeakable horror, has provided all of us with the opportunity - in fact, I would say an obligation - to think anew about the missions and operations of our customs organizations. On that morning, the United States Customs Service went to a Level One Alert - the highest state of security short of shutting down our border and our ports of entry.

During the initial days of this increased security, extraordinarily long delays ensued at our borders - wait times of 10-12 hours at some of the land ports of entry. These delays at our ports of entry threatened an economic crisis, not only in the United States, but also in Canada, Mexico, and, indeed, throughout the world.

Canada - Mexico

Dealing with these ramifications forced us to rethink our approach to the movement of goods across our borders, and to develop new ways to improve security, but to do so without choking off trade into my country.

We have worked and are working together with Canada, our neighbor to the North, and with Mexico, our neighbor to the South, to tackle this challenge at our mutual land borders. And we are working with other nations to address this issue - increased security, without significantly slowing down imports to the U.S.

Our cooperative efforts with our neighbors are paying off. With Canada, we have engaged in a number of extraordinarily important initiatives to improve border security needed in the post 9/11 world, while, at the same time, facilitating trade and the movement of people between our two nations. This includes the signing of a Smart Border Accord last December. Commissioner Wright has joined me here today to talk about these initiatives. One of them is the Free and Secure Trade program or F.A.S.T. program. He will also discuss our mutual container security program - the model for the Container Security Initiative - a program that involves targeting and examining sea containers in each country before they are shipped to the other. After Commissioner Wright, I'll talk more about the Container Security Initiative, its future, and the future of container security in general.

With Mexico, the United States has also signed a Smart Border Accord. Through this, Mexican Customs Administrator General Jose Guzman and I are implementing initiatives for increasing security as well as harmonizing the operations of both U.S. and Mexican ports of entry in order to ease traffic congestion. We have agreed to share and are sharing unprecedented amounts of information and technology - from advance passenger information, to x-ray and gamma-ray machines and their images, to commercial data - all to enhance both U.S. and Mexican law enforcement efforts and to improve security for our two nations. An important side benefit has been the detection of trade fraud. In other words, protecting for security also achieves protection of revenues. Just ask my friend, Pepe Guzman.

U.S. Seaports

In addition to our efforts with our neighbors and other nations, U.S. Customs has taken many steps to bolster security at the seaports of the United States since September 11th. First, we are making it mandatory for carriers to file electronic manifest information in advance, before they arrive at U.S. ports. This information must be accurate and complete, and it must be timely.

Second, we have revamped our risk targeting criteria, with input from intelligence agencies, so that it takes into account all available information that can help us address the increased terrorist threat. We have been applying this revamped risk targeting criteria to all incoming containers through our Automated Targeting System, which identifies "high-risk" containers. "High-risk" containers include all containers that may potentially contain terrorist weapons, or even terrorists. We also target for other contraband, like narcotics. All cargo identified as "high risk" for security is being and will continue to be subject to a "security inspection" upon arrival at U.S. seaports, unless this security inspection is done before the cargo container is shipped to the United States.

A "security inspection," at a minimum, includes an inspection of a container using large scale x-ray or gamma ray inspection systems and radiation detectors. United States Customs already has 80 of these large x-ray and gamma ray systems right now at our seaports and land border ports of entry. As many of you know, these machines can see through steel containers and produce x-ray-type images. This is a stationary x-ray-type machine.

We are purchasing 36 more mobile, large scale x-ray and gamma ray Inspection Systems, to augment the 80 systems we already have. Next year, we plan to purchase several dozen more, so that we will have one at every significant container terminal at every container seaport in the United States, and one at every significant commercial truck and rail crossing into the U.S.

These x-ray and gamma ray machines are not just for discovering illegal drugs - they are equally good for discovering even lead-shielded nuclear and radiological weapons, or even people illegally concealed in containers.

Using these machines, customs inspectors can screen a full 40-foot cargo container in about 90 seconds. If an anomaly shows up - by that I mean anything inconsistent with what is supposed to be inside the container - a full physical examination is conducted. When radiation is indicated by our sensitive radiation detectors, we use isotope identifiers to determine the source of the radiation, to quickly determine whether the source is an innocent one, or whether it is radiological material being smuggled on behalf of terrorists.

I encourage you to stop by the U.S. Customs booth outside the meeting room to take a look at some of the technology we're using.

I have outlined for you some of the steps the United States has taken since 9/11 to bolster security at our seaports. We believe these steps are a start toward securing global maritime trade, but we must do more. All of us must do more if we are going to secure the global trading system against the terrorist threat.

WCO member nations are responsible for processing more than 95% of all international trade. So, the WCO and its members - all of you - have an important role to play in efforts to protect global maritime trade. It is a role that builds on many existing WCO efforts and policies.

I am pleased now to introduce my friend and colleague from Canada, Rob Wright, the Commissioner of the Canadian Customs & Revenue Agency, who will discuss some of the key initiatives being implemented between the United States and Canada. Over the last nine months, I have met with Commissioner Wright many times. We have engaged in what is, I believe, unprecedented cooperation between our countries on border security issues. Commissioner Wright and I have a close working relationship, and I can tell you that he is a true visionary when it comes to employing sound risk management principles, and developing programs to improve security while simultaneously making the movement of international trade more efficient. Commissioner Wright.

(Commissioner Bonner resumes his remarks.)

The joint in-transit container targeting program, described by Commissioner Wright, is the cornerstone of the Container Security Initiative, or "CSI", that the United States proposed last January and began to implement earlier this year. Because there have been many questions and some misconceptions about CSI, I would like to take some time to describe the specifics of that initiative to you today.

Container Security Initiative (CSI)
The best place to start is to discuss why the Container Security Initiative, or CSI, is needed.

Why is CSI needed?

The Container Security Initiative is a plan to secure an indispensable, but vulnerable link in the chain of global trade, i.e., containerized shipping. CSI is designed to achieve an objective that you will appreciate, because it is akin to the objectives of many WCO programs and policies. That objective is: providing greater security for containerized shipping, but doing this efficiently, without significantly slowing the movement of containerized cargo.

Importance of Sea Containers

As you know, ocean-going sea containers represent a vital artery of global commerce. Just as the WCO was established 50 years ago, it was about 50 years ago that a man named Malcolm McLean conceived of a standardized cargo container. Now, 50 years later, approximately 90% of cargo moves by container, much of it stacked dozens of stories high on huge transport ships. 200 million cargo containers are transported between the world's seaports each year, constituting the most critical component of global trade. In the United States, nearly half of all incoming trade by value - about 46% -- arrives by ship, and most of that is in sea containers.

As significant as sea container traffic is to the U.S., other countries are even more dependent on it - many other nations, nations such as the United Kingdom, Japan, and South Korea, for example, have greater than 90% of their trade volume arriving or leaving by sea - most of it via cargo containers.

The sheer volume of sea container traffic - and the opportunities it presents for terrorists - are alarming. The effects of a catastrophic event involving sea containers would be far-reaching. You may recall that after the attacks of September 11th, all airline traffic in the United States stopped for almost a week, costing the international commercial airline industry billions of dollars.

If a sea container is used to smuggle a weapon of mass destruction into a port, the impact on global trade and the global economy could be even more devastating. Even a three-week shutdown of global sea container traffic would be consequential to the economies of all trading nations. All nations would be affected. Governments would struggle to put in place a secure system, one that prevents and deters its use by terrorist groups. Meanwhile, much of world trade would be adversely impacted.

Countries whose economies are dependent on sea container traffic - which includes an ever-growing number of the countries represented in this room - those countries' economies would also be adversely impacted. Even countries that are less dependent on sea container traffic would inevitably suffer economic consequences. We are interlinked, and our economies are interdependent.

Unfortunately, as a number of scholars and experts have pointed out, the possibility that international terrorists may attempt to use a sea container to conceal or smuggle a crude nuclear device or a radiological weapon in a sea container is a real one.

Some of you may recall that last October, Italian authorities found an individual, an Egyptian national, concealed inside a shipping container bound for Halifax, Canada.

There have also been reports in the press concerning a cache of mortars and explosives found at the port of Felixstowe in the U.K. just last April.

So, the system is vulnerable, and the stakes are high. We cannot afford to wait to address this risk. All of us have an obligation - as protectors and facilitators of legitimate trade - to do something now to prevent terrorists from exploiting the system of containerized shipping. The Container Security Initiative, CSI, is a key start to this effort.

What is CSI?

CSI has four core elements:

• First, identify "high-risk" containers. As I mentioned earlier, these include any containers that may contain terrorist weapons or even terrorists. This entails establishing criteria for identifying "high-risk" containers, and using those criteria to target containers based on advance information or data transmitted electronically. Given the volume of containers that pass through ports, electronic transmission of information in advance is an essential component of a successful risk management strategy. It is essential to this kind of targeting.
• Second, pre-screen containers before they are shipped. Currently, many customs administrations around the world inspect containers after they arrive at their ports. United States Customs does this. All of us do. Unfortunately, if a cargo container has been used to smuggle a weapon of mass destruction, the current system would fail to protect human lives, it would fail to protect the global trading system, and it would fail to protect the global economy. That system must be changed - be made more secure. The U.S. and Canada developed the idea for pre-screening sea containers in foreign seaports, in part, from scholarly writings that pointed out that the system of global trade is vulnerable to terrorist use.
• Third, use technology to pre-screen high-risk containers, so that it can be done rapidly without materially slowing down the movement of trade. Such technology - large scale x-ray and gamma ray machines and radiation detection devices - permits rapid detection of risk, much more quickly than laborious physical inspections. This technology already exists and is currently being used by U.S. Customs and quite a few other customs administrations around the world to screen inbound cargo containers. To protect the global trading system, we need to do something that is somewhat revolutionary for customs administrations. We need to focus on outbound shipments as well.
• Fourth, use smarter, more secure containers. With these, customs officials will be able to tell if a container has been tampered with. This is especially important. The technology for the smart box - or should I say, a smarter box, already exists. For a few dollars per container shipment, a tamper proof seal and tamper proof tape can be placed on a pre-screened container. We have already begun a pilot program with Canada to test tamper-resistant electronic seals. We are testing more secure cargo containers, and will be using them as part of CSI.

  Use of smarter containers will also speed the flow of legitimate commerce, because the containers that have received security pre-screening at the port of origin or the port of transshipment will not need to be pre-screened again at the port of arrival. In other words, if they are pre-screened at the Port of Rotterdam, they will not be screened again for security at the U.S. port. It will not be necessary to do so. The security screening only needs to be done once.

The four elements of CSI build on concepts that are already being promoted through the WCO:

• For example, the WCO Customs Data Model and the WCO's revised Kyoto Convention promote standardization of - and advance transmission of - electronic customs documentation worldwide. This standardization and advance transmission will significantly benefit CSI or any similar container security programs. It will also make the sharing of advance information for targeting purposes easier.

• And the WCO's revised Kyoto Convention also promotes, as CSI does, use of technology and risk management principles to balance security and trade facilitation.

Under the CSI program, our inspectors work side-by-side with inspectors from our partner CSI ports to fulfill a joint mission of protecting maritime commerce. The program is fully reciprocal - we welcome inspectors from a CSI-participating country being stationed at our ports, in the United States.

So, for example, as Commissioner Wright explained, U.S. Customs personnel are stationed at the three major ports in Canada - Halifax, Montreal, and Vancouver - and Canadian inspectors are stationed at ports in the United States - in particular, the ports of New York/Newark, Seattle, and Tacoma. These inspectors serve in the foreign ports with a dual mission: first, helping to target high-risk cargo, and second, observing inspections of that cargo. In other words, they cooperate with inspectors in the foreign port to detect potential threats to legitimate maritime commerce before it leaves outbound for the country of destination.

Having our inspectors work side-by-side has several advantages:

• First of all, the shipping world is not yet sufficiently automated that it can capture and transmit all the necessary information to consistently and reliably identify high-risk containers. Complete, accurate manifest information often cannot be transmitted, stored, and/or recalled in electronic format. So inspectors are still needed to review paper manifests.
• Second, no matter how universally automated we become, automation will never be able to capture some aspects of human targeting expertise. This expertise inevitably derives from being physically present in the ports where goods are transiting. One of our inspectors in the United States, who recently helped us seize five tons of pseudoephedrine, an ingredient for methamphetamine or "speed", referred to this concept as "inspector's intuition." She credited that "inspector intuition" and her training for the successful seizure.
• Relatedly, and perhaps most importantly, there are immeasurable benefits to the synergies gained from sharing our targeting expertise and information with each other in real time, as the containers come through our ports. Automation alone cannot replicate those synergies.
• And if pre-screening efforts expose illegal materials destined for another country, having the inspectors work side-by-side also enables customs personnel to carefully coordinate appropriate law enforcement efforts, such as controlled deliveries and the like.

The benefits of joining CSI

CSI offers several important benefits for those that join. It helps protect global trade and trade between the CSI port and ports of the United States. It facilitates the flow of legitimate commerce. If a container has been pre-screened and sealed under CSI, we will not, except in rare cases, need to inspect it again when it reaches the U.S. And, in the event of an attack using a cargo container, the CSI network of ports will be able to remain operational, because those ports already have a security system that will deter terrorists from using it. Joining CSI is therefore a form of insurance that will provide CSI ports with protection from shutdown if an attack occurs.

For those that do not join CSI, let me be very clear: Non-CSI ports will, of course, still be able to ship cargo containers to the United States. High-risk containers from those ports will continue to be subject to security inspections at the port of arrival in the United States.

You heard me mention earlier that we have taken steps to better identify "high-risk" containers upon arrival at U.S. ports. Every container not subject to security pre-screening before being shipped to the U.S. will go through the targeting and security screening procedure I described earlier: risk targeting through our automated targeting system, inspection through our x-ray or gamma-ray inspection systems and radiation detectors. If an anomaly is detected, a full physical inspection will take place.

I want to point out that in addition to making sense policy-wise, CSI makes good financial sense. Rather than adding unnecessary and costly steps to the inspection process, the container security initiative actually adds efficiencies to that process.

In the short-term, because of its pre-screening element, CSI offers increased predictability for the processing of containers arriving in the U.S. CSI is also a smart longer-term investment in container security that, should an attack with sea containers occur, will pay off in a huge way. And, as CSI moves forward, data collection efforts will become more thorough and accurate, and risk-targeting efforts more precise - so CSI will reduce the number of inspections needed.

To put this point another way, when we work together with our partner CSI ports, we are more likely to accurately identify the high-risk containers warranting further inspection. And, correspondingly, with reliable pre-screening, shipments that do not present identifiable risks can be processed more efficiently on arrival at their destination port.

CSI Status and Vision for the Future

So, what is the status of CSI now? So far, Canada, The Netherlands, Belgium, Singapore, and I expect very soon, France, are participating or have agreed to participate with the U.S. in CSI. We have U.S. Customs inspectors at Rotterdam working with Dutch Customs, and we expect to start CSI at the ports of Singapore, Antwerp, and Le Havre this summer. On a bilateral basis, we are also currently in discussions with several other key trading partners who have expressed interest in participating in CSI.

The top 20 ports exporting to the U.S. - just twenty ports - account for nearly 70%, over two-thirds, of all the containers entering the U.S. Beginning with the largest container-ports was simply a logical place for us to start our efforts to secure the global supply chain. Although our starting goal for the CSI program is to implement it at many of the top 20 container-ports, I want to emphasize that CSI is not limited to those 20 ports. We intend to go further. We want to make all maritime trade more secure.

As soon as we get CSI in place in many or most of the top 20 ports, we will turn our efforts toward securing the participation of other ports that ship cargo directly to the United States, and even some strategic ports that ship cargo indirectly to the U.S., i.e., transshipped through other ports.

We will seek to introduce CSI at those ports that have made a demonstrated commitment to such things as:

• enhancing export control efforts,
• improving automation,
• using risk management techniques to select containers for examination,
• improving detection technology, and
• ensuring the integrity of personnel.

We are also working through the G-8 to improve container security throughout the world. Indeed, the countries of the G-8 just showed their strong support for container security by issuing an action initiative, the Cooperative G-8 Action on Transport Security, that is very similar to the Resolution on Security and Facilitation being proposed here today. Through this initiative, the G-8 will strongly support container security and recommend implementation of pilot container security regimes between both ports within the G-8 nations and ports of non-G-8 nations as well.

We are committed to making CSI a success. To waiver in that commitment is to place the world's principal trading system - containerized shipping - at risk.

All of us have contributions we can make to improve container security, and there is also an important role for the WCO and its members to play:

• The WCO should forge ahead with its efforts to develop -- and secure adherence to -- guidelines for the advance transmission of standardized customs data.
• The WCO should continue to assist its Members in implementing cooperative arrangements with private industry that will increase supply chain security and facilitate the flow of international commerce; programs such as Canada's Partners in Protection and the U.S. Customs-Trade Partnership Against Terrorism (C-TPAT).
• The WCO should assist ports in enhancing their import and their export control efforts, improving automation, improving technology, using risk management and risk assessment techniques to select containers for examination, and ensuring the integrity of personnel. In other words, helping them take steps to put in place the foundation to become a full partner in a container security regime.

Ports and customs organizations that work with the WCO to take these steps will protect global commerce and their own economies against the very real terrorist threat we face.

I also note that - as an added bonus - ports and customs organizations taking steps toward container security, such as improving automation, investing in technology, and ensuring the integrity of personnel, will, in all likelihood, increase their overall revenue collection. Experience shows that such steps inevitably uncover more revenue evasion tactics.

Although we, as protectors and facilitators of legitimate trade, face great challenges in the post-9/11 world, I believe we can and will use those challenges as opportunities. And - working together - I believe we will help secure the ever increasing amount of maritime commerce.

* * *

In closing, I would like to encourage the Council to adopt the Resolution on Security and Facilitation, as unanimously recommended by the Policy Commission. This Resolution recognizes the importance of taking prompt and decisive steps to protect global maritime trade. This Resolution outlines a number of steps that the WCO and its members can take to improve supply chain security. We strongly support the Resolution, and we look forward to working with the WCO and its member nations in this important effort. Commissioner Wright joins me in thanking you for your attention.

* 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.