I recognize many friends from COAC, from the Treasury Department, and from other government agencies here today. I also see many of the leaders in the Customs-Trade Partnership Against Terrorism, as well as representatives from many of the countries partnering with us on the Container Security Initiative.

I also want to welcome the representatives from the Canadian Customs and Revenue Agency ("CCRA"), who are with us at this summit. U.S. Customs has developed a very strong, close working relationship with CCRA, especially this past year, and that's enabled us to improve our mutual security. This interaction between CCRA and U.S. Customs benefits the trade in many ways - in streamlining, evolving, and unifying our practices, creating a smarter border for everyone.

Before I begin my remarks today, I just want to say a quick word about the historic action that took place on Tuesday. As I'm sure all of you know, the Senate and the House have now both passed legislation for the new Department of Homeland Security, and the President will be signing it into law next week, so a new Department of Homeland Security will soon be a reality. Under this legislation, the entire Customs Service will be transferred to the new Department.

We at Customs are very proud of the 213-year history we have had with the Treasury Department. But the President's creation of a Department of Homeland Security is bold and it is absolutely essential. The U.S. Customs Service looks forward to its role in the new Department, and I look forward to working with the new Secretary.

It has been a busy year for all of us. As I think all of you know, the U.S. Customs Service has been working very hard over the past year to increase the security of our country and our people, to increase what is being called "homeland" security these days. And very simply put, that means we've been working hard to address the terrorist threat our country faces.

And, as is plainly evident from the recent increase in Al Qaeda activity, we cannot afford to let down our guard. In recent weeks, terrorists murdered our marines in Kuwait and in the Philippines, and an American diplomat in Jordan; they murdered nearly 200 innocent civilians in Bali, Indonesia; and they attacked a French oil tanker off the coast of Yemen.

And, just last week, we heard an audio recording apparently from Osama Bin Laden, taking credit for recent terrorist attacks and threatening continued attacks on U.S. economic targets.

It should be very clear to everyone in this room that the terrorist threat is as real today as it was on September 11th of last year.

So, just as we have done in the 14 months since 9/11, the U.S. Customs Service must and will continue to do everything we can to prevent terrorists and terrorist weapons from getting into our country - to protect our nation and our people from further terrorist attacks. This is our responsibility and, make no mistake, we take it very seriously.

But I want to make sure that all of you know that at Customs, we also take seriously our responsibility to assure the flow of legitimate trade. We know that besides our security mission, we have an important role to play in making sure that legitimate goods move through our borders as efficiently as possible. We must protect the American economy as well as the American people.

The U.S. Customs Service has twin goals: (1) increasing security and (2) facilitating trade. These goals do not have to be mutually exclusive. By developing and implementing smart initiatives, we can do both.

Many of the initiatives we developed and began implementing this past year, in the wake of the attacks of 9/11, are specifically designed to meet those twin goals - initiatives like C-TPAT, FAST, and CSI.

I'll talk more about where I see us headed with those initiatives in a moment, but before I do so, I think it's important to mention that we have also, in the past year, worked closely with the trade on a number of other issues, some of which you'll hear about today.

• We got our Importer Self Assessment program up and running, which allows importers to manage their own compliance without Customs oversight. We already have our first 3 acceptances to the ISA program. And I can tell you we are very impressed with what we've seen so far. We know that many companies are ready to take charge of their own compliance.
• We have eliminated the backlog in commercial rulings and dramatically shortened the time it takes to get a ruling. This was no small achievement - when I became Commissioner, the time it took to get a ruling averaged nearly two years, and now all rulings are being issued within 90 days.
• We implemented processing of refunds under the Byrd Amendment, and we are making sure these refunds are provided in a timely and efficient manner.
• Through Remote Location Filing, we have made it easier for Customs and the trade to do business with each other - making it possible for brokers to serve locations without the costs of maintaining a physical presence there.
• And those are just a few of many examples from the past year.

Department of Homeland Security
Many of you in the room may be thinking to yourselves, "Yes - Customs has worked closely with the trade, and we have made progress on a number of issues, but what is going to happen now that Customs is moving from the Department of the Treasury to the Department of Homeland Security?"

Well, let me tell you what's going to happen.

• Customs is going to keep pursuing its twin goals of trade security and trade facilitation. That's important to me, and it's important to the President, who has communicated this message many times.
• Customs is going to keep strengthening its partnership with the trade.
• Customs and the trade are going to keep making progress on the challenging issues we are facing in the post 9/11 world
• The trade's voice will continue to be heard - loud and clear - at Customs and in the new Department.

All of Customs, all of its functions - trade, revenue, enforcement, and security - all of its people - will become part of the Department of Homeland Security.

The move of all of Customs to the new Department is a good thing - it is good for our country, it is good for the security of America, and, I would submit, it is good for the trade community.

The new Department will unquestionably make us more effective and more efficient, and it will establish clear responsibility and accountability over what is now a fragmented effort, particularly at our borders, to protect our homeland and the American people. Because all of Customs is moving to the new Department, Customs will continue to promote both border security and trade facilitation.

"Partnering for Smart Borders and Secure Trade"
So, now that I've cleared up all of the mystery of what is going to happen when Customs moves to the new Department of Homeland Security - well, at least I hope I've cleared up some of the mystery! - let me tell you a little more about what I think lies ahead in the coming year.

A good place for me to start might be by talking about the theme for this symposium: "Partnering for Smart Borders and Secure Trade." That theme conveys the broad vision for what I see ahead in the coming year.

What do I mean by "smart" borders? I mean having a supply chain that adds security earlier, without adding unnecessary, time consuming, and costly hurdles at the actual physical border itself.

I mean using sound, objective risk management principles and strategic intelligence to identify the high-risk shipments, vehicles, and people. We are doing this with Advance Manifest information, with Advance Passenger Information, and with the National Targeting Center at Customs headquarters.

I mean separating out the high risk from the low risk, and using our people, our broad legal authorities, and our detection technology against shipments that pose a risk. That requires obtaining and using information gathered electronically so that we can identify the shipments that pose a risk, and subject only those shipments to greater scrutiny and security inspections at our borders, while letting the low risk or no risk shipments move right through.

I mean developing ACE and moving to account-based processing. Smart borders means more manifest and entry information electronically submitted to Customs prior to arrival at our border ports of entry. The days of presenting paper entry documents at the physical ports of entry are numbered.

"Smart" borders also means pushing our zone of security outward - taking the pressure off of the physical border by partnering with businesses and foreign governments in programs like C-TPAT, FAST, and CSI - programs that increase the volume of shipments that can be judged to be no risk for security issues. That's what C-TPAT and FAST do. It means programs that can identify high-risk cargo earlier in the process, before they are shipped to the United States, so they don't have to be screened again upon arrival at U.S. ports. That's what CSI does.

In a nutshell, when I say "smart" borders, I mean making our physical border ports of entry (land, sea, and air) even more efficient while also making sure we make no compromises on the necessary security increases required by the threat of international terrorism.

Before I move on, I want to make sure I don't overlook the first word in the theme for this symposium - "partnering." Over the past year, U.S. Customs and the trade community have worked hard to build a true partnership relationship. That partnership is more important than ever.

We simply must work together to address the enormous issues we face in the post 9/11 world. Because it is only by working together that we can and will find the most effective solutions to those issues and to the great challenges of our day.

Now, I'd like to spend a few moments talking about some of the specifics of how we hope to achieve that smarter border - what the next, necessary steps are.

Implementing and Perfecting C-TPAT
Let me start by talking about the Customs-Trade Partnership Against Terrorism, an initiative born out of ideas raised at last year's symposium. C-TPAT is an initiative that exemplifies the kind of partnership we seek with the trade.

We've made enormous progress with C-TPAT. Over 1,000 companies have signed up to participate. That's an extraordinary response. It tells me that companies are eager to embrace their responsibility to take part in security efforts against international terrorism.

But I should tell you that I would prefer to have just 1,000 C-TPAT participants who take the program's security standards seriously, than 10,000 who are not truly serious about securing their supply chains. We want to make sure there is real substance to C-TPAT and that the program does not get diluted with uncommitted participants.

Many C-TPAT participants have already made significant improvements to the security of their supply chains. For example, one company is now taking ownership of its goods earlier in the supply chain. That company almost doubled the number of security visits overseas to check on suppliers. I also know many other companies are moving toward implementing background checks, and requiring increased security by their vendors so that it is more difficult to conceal a terrorist weapon inside one of their shipping containers.

C-TPAT members, with Customs' Applied Technology Division, are making great strides to develop smarter, more tamper-proof containers. We're already implementing smarter seals and tamper-proof tape. There are also sensors that can be used inside the box to alert us - and you - if the box is opened before it reaches our borders or your plant.

We are looking for a few, good C-TPAT partners to model the smart box in their supply chain. Any takers? See me at the break.

I want you to know that at Customs, I take our commitment to C-TPAT very seriously. I am making sure the program has the necessary resources for it to be effective.

And I also want to make sure that C-TPAT members receive meaningful benefits. That's important to me - companies that partner with us and truly improve security in their supply chains should get tangible benefits. As some of you know, the vetted members of C-TPAT are already receiving benefits, including reduced inspections and reductions in the National Targeting Center scoring that identifies high risk cargo shipments.

I expect C-TPAT participants to take their commitment to the program just as seriously as we do. So in the coming weeks and months, we will begin working with individual participants to validate their supply chain security - to make sure that the program does, in fact, result in a meaningful increase in supply chain security.

Let me be clear on what this means. When I talk about "validating" what participants are doing, I'm not talking about audits.

But what I am talking about is U.S. Customs personnel - personnel familiar with supply chain security - evaluating, with company security and logistics personnel and management, the measures being taken under C-TPAT agreements.

This will not be disruptive to the companies involved. It will, however, be mutually beneficial to determine whether there are security gaps in the supply chain and whether reasonable, cost-effective measures can be taken to improve security against terrorist access. These same measures usually will result in less pilferage. Our goals are the same when it comes to increasing security and increasing the commitment at the senior management levels to achieve it.

These efforts are necessary to ensure the success of the program - for both of us. They also reflect the partnership that C-TPAT is - we both have commitments to uphold. If you think we're not holding up the commitments on our end, I want to hear about it, and vice versa.

So in 2003, look for U.S. Customs to continue to hone our skill sets and processes to be able to meaningfully and consistently maintain and improve this program.

Implementing and Expanding FAST
Many of you may know that participation in C-TPAT is a requirement for participating in another important initiative that we developed with Canada and began implementing in the past year - the Free and Secure Trade program, or FAST.

With C-TPAT, we will expedite processing at all border ports of entry. FAST is designed to expedite processing specifically at our land border with Canada, for companies that provide enhanced security in their supply chains. This winter, we will be implementing FAST at all six major Northern Border crossings.

The intent and goal of FAST is to make it possible to get three green lights on the Customs Inspector's computer screen - green for the importer, green for the trucking company, and green for the driver. With that, there would be no stopping at the border.

Of course, the truck will need to slow down enough to avoid hitting the Customs booths dedicated to FAST!

This will be the quickest border release mechanism in the world - this side of the Schengen Agreement.

To get a fast start with the FAST program, we will be offering two release mechanisms as part of FAST. The first is a modified version of the National Customs Automation Program, or NCAP. It is modified in that it makes use of fewer data elements than the original NCAP program.

And the second release mechanism for FAST will be a modified version of the Pre-Arrival Processing System. We are adding this as a release mechanism for FAST because we want to make sure that through FAST, we are offering the trade a truly meaningful benefit in the form of expedited release, with minimum investment on their part. All this will require is a bar code and a fax machine.

I want to encourage all of you to take advantage of C-TPAT and FAST. Importers, carriers, and foreign shippers should talk to each other to be aware of who is participating in C-TPAT and who is therefore eligible for FAST. The greater the involvement, the closer we will be to our shared vision of a smarter border.

Implementing and Expanding CSI
Another very important thing that Customs will be doing in the coming months is moving forward rapidly with our implementation of the Container Security Initiative. CSI is an absolutely critical part of our strategy for smart borders and secure trade.

It is designed to detect and deter terrorists who would exploit our primary system of global trade - containerized shipping - to commit an attack. Through CSI, as many of you know, we target and screen cargo containers before the cargo is shipped to U.S. ports.

CSI helps us push our zone of security outward. And, because the screening does not need to be done twice, ordinarily, CSI-screened cargo will speed right through on arrival at the U.S. ports, getting the fast lane into U.S. commerce.

Like C-TPAT, CSI has had great success so far. Early last Spring, we began modeling CSI with Canada. The initial goal then was to start CSI at the top 20 foreign ports in terms of volume of sea cargo containers shipped to the U.S. These are the largest container ports outside the U.S.

That was 8 months ago. Since then, the Netherlands, Belgium, France, Germany, Italy, Singapore, Hong Kong, Japan, and China have all agreed to, and are, implementing CSI. That means we are or soon will be implementing CSI at 15 of the top 20 ports. Fifteen out of 20. Those 15 ports alone account for over 50% of the volume of cargo containers shipped to the United States. And I expect additional countries to join CSI soon.

So what are our next steps with CSI? We are in the process of getting CSI implemented in those ports that have signed on. We have deployed and will continue to deploy teams to the participating ports as quickly as possible.

And we are looking to expand CSI beyond the top 20 ports, as rapidly as we can. Once we have implemented CSI at most of the top 20 ports, we will quickly expand CSI to all ports that ship substantial amounts of cargo to the United States, and that have the infrastructure and technology in place to participate in the program - ports like Marseilles in France; Livorno and Gioia Tauro in Italy; and Gothenburg in Sweden.

Implementation of 24-Hour Rule
Critical to CSI's success - and to our efforts to create the smarter border - is the new rule requiring transmission of manifest information to Customs 24 hours in advance of lading, the so-called "24-Hour Rule."

I look forward to a productive session on the new rule tomorrow morning. I added a special panel on this issue so that Customs and the trade could come together to discuss the operational and implementation issues that may arise as the rule is phased in.

I also look forward to continuing to work with the trade on this issue. As many of you know, I asked Treasury to invite COAC to form a special subcommittee to advise us on operational issues arising from implementation. I recommended we do this, because I know that working in cooperation on the rule will help make it more effective and will help achieve compliance without unnecessary disruption.

How the Initiatives Tie Together
Let me paint a picture of how these initiatives all tie together.

Imagine a C-TPAT importer, one that is using a supplier that has been checked by, for example, the company's security team. The container has been properly loaded at the supplier's warehouse, moved out on a truck to a CSI seaport, and is secure throughout the process by a tamper-proof container.

The manifest information for the container has been provided 24 hours in advance of lading. The container is scored by our automated targeting system with the appropriate reductions for being a C-TPAT importer, and one that is using a C-TPAT carrier.

Customs personnel have determined that this container does not present a high risk, and so it requires no further inspection at the outbound port. It goes right on to the vessel. The C-TPAT carrier exercises tight security control over the container while it is on the vessel.

To further expedite the container and ensure its security, a C-TPAT broker may be involved in the process.

When this container is offloaded at the U.S. seaport or arrives at our border, no further inspection or screening of the container is necessary. The container can immediately be released and move out of the port and on to its ultimate destination - to the C-TPAT importer's plant or distribution facility.

That container is in the fast lane.

This border, this picture I have described, is one that is actually more efficient, more predictable, and faster, than the one that existed on September 10, 2001. That's my goal.

Conclusion
Make no mistake, we have a big job ahead of us. In the coming year we will:

• expand and perfect C-TPAT;
• expand and implement CSI;
• expand and implement FAST;
• we will implement the "24 Hour Rule"; and
• we will move the U.S. Customs Service into a new Department of Homeland Security.

A tall order? Absolutely.

In fact, if we tried to do it alone, it would be impossible.

But doing it in partnership - in partnership with you - the members of the international trade community - we can achieve the seemingly impossible - we can make smart borders and we can secure trade.

Thank you.