The Alliance has consistently been among the most forward thinkers about U.S./Mexico and U.S./Canada relations. You are uniquely positioned to help find solutions to some of the most vexing issues facing the United States, Mexico and Canada.

Two forward thinkers I would single out are President George W. Bush and President Vicenté Fox. These Presidents have worked hard to improve relations between the United States and Mexico and to open our societies to the unimpeded cross-border trade that can bring prosperity to both nations.

Today I want to speak to you about the impact of U.S. homeland security efforts on cross-border trade. Dealing with this issue - as we have at U.S. Customs - has been a daunting challenge.

September 11, for all of its unspeakable horror, has provided all of us with the opportunity - in fact, I would say an obligation - to think anew. The terrorist attacks stand as a watershed event in history - a watershed event as profound as the Fall of the Berlin Wall or the attack on Pearl Harbor. What I'm suggesting is that, just as these events set the world on a different course, so too did the attacks on September 11th set the world upon a vastly different course. And in time, I believe, September 11th will stand as a clear dividing line between the past and the future.

Nowhere is this more true than at our borders. Immediately after the attacks on New York and Washington, the United States Customs Service went to Level One Alert - the highest state of security alert short of shutting down our border.

"Level One Alert" means that Customs inspectors are asking more questions, of more people, more often, and they are conducting more inspections of vehicles and commercial trucks seeking to cross the border.

What did this mean in the days after September 11? As most of you will recall, it meant long, long delays - wait times of 10-12 hours at some of the land ports of entry.

These delays at the border threatened an economic crisis, not only here in the United States, but also in Canada, Mexico and throughout the world.

As all of you know far more than I do, one of the great business innovations of the last 10 to 15 years has been what might be called the "global assembly line," or "mobile warehouse."

But the attacks on September 11th (and their aftermath) demonstrated that this powerful economic engine - this global supply chain - is vulnerable.

A critical component of this supply chain is a predictable and uninterrupted border.

This was why - even though I was not yet confirmed as Commissioner of Customs - I was deeply involved with the Customs Service to quickly remedy the extraordinary delays at the border right after September 11. Certainly we knew, and Secretary of Treasury Paul O'Neill knew, that the viability of the U.S. economy - indeed, the world's economy - was potentially at stake in those first few days after September 11. It was vital that the Customs Service promptly solve the border wait time problem posed by the increased security - without reducing the security required by Level One - required by the terrorist threat - a threat that continues.

By the following Monday, September 17th, we were able to get border wait times down to levels close to where they were before September 11th.

How did we do it? For one, we temporarily assigned additional inspectors to the land borders, and we asked all of our inspectors to work enormous amounts of overtime - 12 to 16 hour shifts. These extraordinary overtime levels continue to this day in order to keep as many lanes open, for as many hours as possible. And we asked for and received National Guard assistance, to augment our staffing and ability to inspect more trucks and cars.

Importantly, we also worked with business - U.S. importers - to bring greater order to the timing and routing of shipments across the border. It was this combination of U.S. Customs and industry efforts that brought the wait times under control. Most importantly, we did this while maintaining the tight Level One security that the ongoing terrorist threat required - and still requires.

This was a success. But it was a stopgap measure. For, in the long-term, we still have a lot of work to do.

I do not need to tell you that trade between the U.S. and Mexico has grown exponentially. In Laredo, for instance, imports have grown from 9.9 billion dollars in 1994 to 44.8 billion dollars last year. That's a 350 percent increase in trade - at just one port. Trade between the U.S and Canada has also grown tremendously. And while Canada remains the number one trading partner with the U.S., Mexico is rapidly closing the gap.

This growth is phenomenally important, but it puts an enormous strain on the people and the systems of the U.S. Customs Service. Overlay the terrorist threat from Al Qeada and other terrorist organizations bent on striking again at the United States, and you can begin to see the challenges we face at the U.S. Customs Service.

We are hiring hundreds of new inspectors to meet these challenges. But regardless of how many new Customs inspectors come on board, we can only inspect so much before the global, "just in time" assembly line - gets disrupted by border delays.

So, the U.S. Customs Service faces a huge dilemma: How do we maintain security, without choking off the flow of cross-border trade?

We do it by being smarter. We do it by working closely with other governments. And we do it by partnering with private industry.

It is time to think anew about how we view our borders. In my view, the only way to ensure that national security demands are met, and not disrupt the flow of global trade, - is to ease the pressure at the physical border itself.

The border should not be the Nation's first and only line of defense against international terrorists or drug smugglers. Quite the contrary, it should be the Nation's last line of defense - reserved for those high-risk persons, cargo, and vehicles we know we must inspect thoroughly to make sure that terrorist weapons and other contraband, including illegal drugs, do not enter the country. All others - the low risks - should move more freely across the border with far fewer inspections.

This is a smarter border - a border that allows legitimate and secure trade to flow unimpeded - a border that is the fast lane for the honest and the end of the road for the dishonest.

This, I submit to you, is the border of the future.

How do we achieve this?

It starts with business and industry. On April 16, together with Treasury Secretary O'Neill and Gov. Ridge, I announced the creation of the Customs Trade Partnership Against Terrorism, or C-TPAT. Under this initiative, U.S. companies have agreed to take concrete steps to tighten security along the entire supply chain. In exchange, the U.S. Customs Service has promised C-TPAT partners, among other things, expedited processing at the border and reduced Customs examinations.

In rolling out the Partnership Against Terrorism, we've started with U.S. Importers - who have jumped at the chance to help U.S. Customs improve homeland security. I am amazed and gratified at how U.S. Companies have stepped forward to be a part of the solution for homeland security. In the short period since we initiated the program, over 100 companies have signed up as C-TPAT partners.

We've also asked those importers to use their economic leverage to improve the security of their shipments and of their vendors - taking security back to the loading docks of their suppliers outside of the U.S. And our C-TPAT partners are doing just that.

We are not limiting the Customs Trade Partnership Against Terrorism to U.S. Importers We are expanding C-TPAT to include carriers - shipping lines and trucking companies, Customs brokers, forwarders, and even terminal operators and ports, thus securing a huge piece of the supply chain and the trade coming to, and ultimately across our borders.

When fully implemented, this will have two effects. First, as we give expedited processing to C-TPAT partners, this will mean fewer inspections at the border for low-risk cargo. Again, the goal is a secure and uninterrupted trade.

Second, by taking the low-risk C-TPAT partners out of the haystack of potential smugglers or terrorist threats, it allows Customs to focus on what Customs should be focusing on - high risk cargo.

Besides reaching out to businesses, we have also reached out to the governments of Canada and Mexico - again in an effort to lessen the pressure on the physical border, and yet ensure greater security and a smoother flow of cross-border trade.

We're doing this right now with Canada as part of the Container Security Initiative. U.S. Customs inspectors today are stationed at the seaports of Halifax, Montreal, and Vancouver, helping target and pre-screen containers in transit to the United States. That's partnership.

By the same token, Canadian Customs inspectors are in Newark and Seattle doing the same thing with regard to containers in transit to Canada.

This is no small thing. 500,000 containers a year are off-loaded at these three Canadian ports each year, destined for the U.S.

Through the Ridge-Manley Smart Border Accord, the U.S. And Canada are pursuing a variety of other strategies aimed at ensuring the security of the U.S.-Canada border.

We have also reached out to our partner, Mexico. On March 22, our two countries - our two presidents - President Fox and President Bush - signed a Smart Border Accord that aims to (and I quote):

"embrace technology and enhanced bilateral cooperation to ensure humane, efficient, and modernized management of the border that joins our peoples and our economies."

The U.S. Customs Service has taken a lead role in bringing this vision closer to reality. We are working closely with our Mexican counterparts, on a variety of initiatives. Some of these include harmonizing the operations of both U.S. And Mexican ports of entry to ease traffic congestion. We're talking to each other to make sure the port hours are the same. And we have agreed to share unprecedented amounts of information and technology - from advance passenger information, to container x-ray images, to commercial data - all to enhance both U.S. And Mexican law enforcement efforts.

The U.S. And Mexican Customs Services are working hand-in-hand both to improve security, and to facilitate cross-border trade.

We are also taking steps to encourage the expansion of industry partnership programs - such as the Business Anti-Smuggling Coalition, or BASC. By the end of June, we anticipate BASC chapters to open in not just in Mexico City and Monterrey, where they are now, but in Guadalajara and Juarez, as well. And, more significantly, we are working toward bringing the benefits of C-TPAT to Mexico and Mexican companies.

I can see a scenario in which BASC members, once they are vetted and certified as adopting rigorous supply chain security practices, would begin to take advantage of C-TPAT benefits, including expedited processing at the border and reduced inspections. If the promise of C-TPAT is realized, these benefits would bring greater predictability to companies seeking to export goods to the United States, increasing wealth on both sides of our mutual border, without compromising security.

But there is another reality that exists on the Southwest Border that I must consider as the Commissioner of Customs. There are still massive amounts of illegal drugs smuggled into the U.S. across the U.S./Mexico border.

Virtually every day, the U.S. Customs Service seizes large quantities of illegal drugs - cocaine, heroin, and marijuana in and among huge numbers of vehicles - both passenger vehicles and commercial trucks - that come across the border.

Indeed, it is estimated that 70% of all Colombian cocaine being smuggled into the United States is smuggled across - or under, in some cases - our mutual border with Mexico.

Two to three hundred metric tons of cocaine alone is smuggled illegally across the Southwest border each year. So, the continuing drug threat is a major problem that cannot be ignored as we envision the U.S.-Mexico border of the future.

The administration of President Fox understands this issue, and is taking serious steps to attack it.

You are, no doubt, aware of the Mexican government’s recent arrest of Benjamin Arellano Felix, the head of the Tijuana-based Arellano Felix drug trafficking organization. Also, the government of Mexico has arrested corrupt law enforcement officials in Baja California and elsewhere. It has moved out against all six (6) major drug trafficking organizations operating and headquartered in Mexico.

We recognize and applaud President Fox and his Administration for these forceful steps to break the power and grip of the drug kingpins and to destroy their organizations. But the efforts of the Fox Administration are just the beginning steps in what will be a long and difficult journey. The job is difficult. The obstacles are large, but there is no question: It is doable.

Drug trafficking - and the corruption of government that traditionally goes with it - is, perhaps, the major impediment to the growth of Mexico's economy, and to Mexico's fundamental ability to compete globally. Simply put, Mexico will never be able to reach, in my judgement, its full potential - nor will the United States be able to greatly reduce scrutiny at the border - until the drug trafficking organizations are significantly weakened - and strong, institutions of Mexican government grow and thrive in their place.

As the Fox Administration has recognized - the Mexican people deserve no less.

The United States has offered its assistance in this effort, and we can do more. Indeed, the greatest help the United States could provide, besides reducing the demand for drugs, would be to help de-link the Mexican drug trafficking organizations from their Colombian suppliers - to break the Colombian Connection.

To that end, we should step up our efforts to shut down the major supply route from Colombia to Mexico - The Eastern Pacific. This is the major transit route for Colombian cocaine into Mexico. The best estimates are that over 50% of all cocaine entering the United States is transited by boat from Colombia up the Pacific Ocean, and then transferred at sea to Mexican drug traffickers. These Mexican traffickers bring the large loads of cocaine into Mexico and then smuggle the cocaine in smaller quantities across the U.S.-Mexico land border.

Working together as true partners, we can go a long way to shutting down this route and to de-link the Mexican drug traffickers from a vast quantity of the Colombian cocaine that is the lifeblood of their criminal organizations.

We also should increase our joint efforts against the laundering of dirty, drug money. We can and should do far more to cut off the flow of illegal drug profits generated by drug trafficking. The seized drug proceeds can then be used by the Mexican government to attack the drug kingpins.

If we can cut off the flow of drugs like cocaine, and seize and disrupt these illegal drug profits, it would have a major impact on the economics of the drug trade, severely weakening the Mexican drug trafficking organizations, and greatly assisting the Fox Administration in its effort to crush these criminal organizations and their corrupting influences. It will permit Mexico to build strong police and judicial institutions for the 21st Century.

But the Mexican government, even with the assistance of the United States, cannot do it alone. As representatives of the U.S./Mexico border business community, you must also help.

For one, you must tighten your supply chains, along the BASC model - and you must by take strong action against people who taint the integrity of the supply chain. In doing this, you will be supporting and contributing to the efforts to release Mexico from violent and corrupting drug trafficking organizations.

So, let us together - the U.S. Customs Service and the Border Trade Alliance - work together to reaffirm our commitment to each other. I have instructed our offices of Field Operations and Trade Relations to make certain that we are doing everything that we can to listen to your ideas and concerns and continue to make our relationship a priority. Your group is full of very successful and entrepreneurial visionaries - we look forward to harnessing some of your energy and passion.

The long term success and competitiveness of your businesses are at stake. Make no mistake. Mexico holds great promise. It can be one of the great engines of world economic growth in the 21st Century. And I assure you, the United States wants nothing more than a strong, democratic, and economically sound Mexico. We want a far more open border.

But this vision will never be fully realized until the grip of the major drug trafficking organizations is broken. As the influence of the drug-trafficking organizations is weakened and the flow of drugs abates, you will then see the fast lane for commerce - you will see the border of the future.

President Fox and President Bush have built the framework for our efforts. It's up to us to take up the task. And it is a major task. But I am confident that, with enough courage, hard work, and the full participation of the U.S.-Mexico business community, the vision can be achieved. We can and we should build a smart and secure border between our two great nations.

Thank you.