I'm especially pleased to be able to speak at this conference on Transnational Threats, especially the transnational terrorist threat and how we can better defend against that threat.

MERGER

As Arnaud mentioned, we are in the midst of a merger at U.S. Customs and Border Protection, or "CBP." In fact, the creation of CBP is the largest, honest-to-goodness, actual merger of people and functions taking place within the Department of Homeland Security. It is a merger of 42,000 employees; about one-fourth of all of the employees of the Department of Homeland Security are CBP employees. That should not come as a surprise, given the importance of the security of our border to the security of our homeland.

As Secretary Ridge has observed: the best way to prevent further significant terrorists attacks in the United States is to prevent the terrorists from entering the U.S. in the first instance.

On March 1 of last year, we began the merger of most of U.S. Customs, about 20,000 people, including 10,000 Customs inspectors; over one-half of the former INS, including all of the approximately 7,000 Immigration inspectors and the entire 12,000-strong U.S. Border Patrol; and, for good measure, about 2,000 Agriculture border inspectors.

I can report the merger is going very well. The merger to create what Secretary Ridge has called "One Face at the Border" is all about creating one agency to manage, secure, and control our borders, all ports of entry, and points in between.

Since March 1 of last year, we have designated one Port Director for each of the 317 ports of entry; whereas before there were 2 or 3. We established a clear, short chain of command from the Port Directors to CBP Headquarters and, importantly, we established, for the first time, a chain of command for the Border Patrol, from the Sector Chiefs, who were largely autonomous and not centrally directly under the INS, into CBP Headquarters.

We have said that all inspectors at the ports of entry should have one CBP officer uniform and that's happening. It will be completed by this summer, and we are hiring and training for one CBP officer - no more hiring of "Immigration" or "Customs" inspectors.

The creation of one border agency is one of the most important achievements of the President's decision to create a new Department of Homeland Security.

The priority mission of his unified border agency is: Homeland Security. And that means CBP's priority mission is:

- Preventing terrorists and terrorist weapons from entering the U.S.

- But doing so without shutting off the flow of legitimate trade, travel and our economy.

Daunting, yes. But, believe me, we're better organized and more effective against the terrorist threat by unifying all border responsibilities into one agency - better off than we were before 3-1-03, before the Department of Homeland Security - when border responsibilities were fragmented between 4 agencies in 3 departments of government.

CSI/C-TPAT

I said I was glad to be back here, because I have a soft spot for CSIS. It was the birthplace of the Container Security Initiative, CSI. As some of you may recall, in January 2002, a few months after the terrorist attacks of September 11, 2001, I proposed CSI here. At the time, some thought I was proposing something simply beyond the pale. "Oh sure, Bonner, thirteen countries, representing the top 20 foreign seaports in the world, are really going to agree to let you put your inspectors on their territory, to target and screen containers headed to the United States." The cynics said, "That's not going to happen."

Well, it did happen. It has happened. Countries representing 19 out of the top 20 ports have signed on to CSI, as have a number other countries. And our officers are on the ground, as we speak, in 17 foreign ports around the world, in Europe, Asia, Africa, and Canada. And we will be operational at Port Kelang in Malaysia next month and soon we hope to be operational at the port of Shanghai and elsewhere.

We still have a ways to go, and we want to expand beyond the top 20, but CSI is a reality, and it is protecting America and the global trading system right now.

And CSIS played a key role. John Hamre, Arnaud, and other CSIS scholars were helpful to me and my staff as we developed and implemented CSI, and thought about how we might persuade foreign governments to join. For that, I am extremely grateful, as are the American people.

Of course, CSI is only one piece of our broader supply chain security strategy. As I look out upon this audience of security executives from some of the world's major companies, an equally important and complementary piece of our strategy is our partnership with you, the private sector, through Customs-Trade Partnership Against Terrorism, or C-TPAT.

We now have over 5,500 companies in C-TPAT, up from just 7 in December 2001 when we started C-TPAT - companies representing all aspects of the global supply chain - major U.S. importers, carriers, brokers, forwarders, foreign manufacturers, and terminal operators. Over 3,000 U.S. importers have joined CSI, representing approximately 40% of all goods imported in the U.S. by value. All of our C-TPAT partners have entered into agreements to work with CBP to implement specific security measures and best practices, in order to protect their supply chains, from the factory loading docks of their foreign vendors to arrival in the United States.

C-TPAT is not a paper program. Working with CBP, C-TPAT partners are making America safer, and the global trading system more secure. Importers are requiring their vendors to toughen their security practices. Companies are spending money to own and improve supply chain security. Some are spending money on "smarter" containers that will warn CBP officers if there has been tampering. And CBP is sending validation teams all over the world to verify that C-TPAT partners are doing what they have committed to do, in exchange for expedited processing through the U.S. ports of entry.

So, C-TPAT is working, and C-TPAT is making America safer. And I might add: C-TPAT is the largest government-private sector partnership to emerge from the ashes of 9/11.

Both CSI and C-TPAT reflect my philosophy of "smart borders." More importantly, they reflect Secretary Ridge's approach to smarter borders - borders that make America far more secure than before 9/11, push the zone of security out beyond our borders, and make the movement of legitimate trade more efficient, faster and more predictable.

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IMMIGRATION SECURITY INITIATIVE (ISI)

We cannot rest our laurels, however. We must continue to strengthen our ability to prevent terrorist attack. We must strive to be as agile as our enemy.

CSI and C-TPAT are aimed at extending our border and protecting the global trade; to help us prevent terrorist weapons from entering the U.S., to prevent the use of cargo shipments - containers, food products and the like - from being used as terrorist weapons.

But now that the frontline Immigration inspectors and Immigration authorities are part of CBP, how do we extend our borders further? How do we do a better job preventing terrorists from entering the U.S.; the other big part of CBP's priority mission?

I want to turn now to a new concept - how we push our zone of security out to prevent terrorists from entering our country by air, add an additional layer of defense, and in the process, better secure passenger aircraft and the commercial aviation industry.

This, of course, is not a new duty for us, on either the legacy Customs or legacy Immigration sides of U.S. Customs and Border Protection. But the creation of CBP, and the unification of Customs and Immigration border authorities, gives us an unparalleled opportunity to be more effective in carrying out that task.

I need only make reference to the recent testimony of CBP officer, and legacy Immigration Inspector Jose Melendez-Perez to the 9/11 Commission concerning his denial of entry into the United States of a Saudi national, named Mohamed al-Qahtani, who attempted entry on August 4, 2001 at the Orlando Airport. Al-Qahtani was traveling on a genuine Saudi passport and had a valid U.S. B-2 visa. He was travelling from Dubai via London. He did not appear on any watchlist. And yet, after questioning Al-Qahtani and hearing his evasive and inconsistent answers to questions about the purpose of his visit, Inspector Melendez-Perez believed Al-Qahtani's story did not add up, and after consulting

with his supervisor, he used the authority under the Immigration and Nationality Act to deny Al-Qahtani entry into the United States. Al-Qahtani was escorted by two armed inspectors to board a flight back to Dubai.

As it turned out, something was wrong. Four months later, this same Saudi, Al-Qahtani, was captured in Afghanistan by the U.S. military. Al-Qahtani was fighting alongside the Taliban. Subsequent FBI investigation indicates that Al-Qahtani is very probably an Al Qaeda member. Whether or not he was a conspirator in the attacks of September 11, 2001, as speculated in the media, he was very clearly an Al Qaeda-trained terrorist. And it was Immigration inspector - now, a CBP inspector - who kept him out of our country. And he did it by doing what he was trained to do - asking probing questions, reading behavior, and making a judgment call. If the purpose appears to be terrorism, deny entry. That is what all CBP inspectors are trained, directed and expected to do, and are doing almost every day.

And this expertise is not limited to the Immigration inspections side of the house. As you all know, it was a legacy Customs inspector, now, a CBP inspector, Diana Dean who, along with her colleagues arrested an Al Qaeda terrorist named Ahmad Ressam, who was trying to enter the U.S. from Canada. It was questioning by Inspector Dean and observing behavior that led to Ressam's arrest.

This is CBP's most fundamental job - keeping terrorists and terrorist weapons out of the United States. That is our priority mission. And the bringing together of both legacy Customs and Immigration Inspectors into one, unified workforce brings together all of the personnel performing that mission, and all the broad legal authorities to back it up, within a single antiterrorism border agency - CBP. CBP's legal powers - to detain, question, search and deny entry - are broader than any other U.S. law enforcement agency.

We are now working together as one agency to target high-risk passengers, with a unified CBP running the National Targeting Center and our "Passenger Analytical Units" at our international airports. And we are working together in consolidated anti-terrorism "secondary" examination teams - with both legacy Customs and Immigration inspectors working side-by-side to scrutinize individuals presenting any potential terrorist risk. And if there is a concern about a person's intent, they are denied admission into the U.S.

But if a person is going to be denied admission, why wait till they have boarded an aircraft and arrived at our port of entry, whether it is JFK, LAX or some other U.S. airport. Why not have an extended border, defense-in-depth strategy.

As I have said many times, the border should not be the first line of defense against terrorists. Within the Department of Homeland Security's Border and Transportation Security Directorate, under the leadership of Under Secretary

Asa Hutchinson, we are now considering, how to take these concepts - and our

well-trained officers - to foreign hub airports, so we can better prevent terrorists from boarding planes bound for America in the first place. A "CSI for People," if you will.

I want you to remember for a moment what happened during the Christmas holidays. During that period, we received information indicating that a number of flights headed for the United States from France, the United Kingdom, and Mexico had been potentially targeted by Al Qaeda for terrorist activity of some form. As the media has reported, we worked together with our foreign counterparts and the airlines to review relevant intelligence, run passenger manifests through the sophisticated databases of CBP's National Targeting Center, among other things, to determine whether any individuals potentially boarding these planes presented a risk.

As it turned out, some of the flights in question ended up being cancelled, at considerable cost to the airlines, I might add. Why? In part, because we could not be assured that Al Qaeda operatives had not targeted these planes for terrorist attack and had no effective way of screening a small number of passengers that were of concern.

What tools did the United States have at its disposal to deal with this situation? We had reservation data through the Advance Passenger Information System maintained at the National Targeting Center, and all of the databases and expertise of the intelligence agencies of the United States government. We had our relationships with foreign intelligence agencies and sources, as well as our relationships with the relevant air carriers. And we had some advance information on the flights - not all we needed, but some.

What I am positing today is that we need another "tool in our toolbox" - an Immigration Security Initiative - to deal with the threat that terrorists might board commercial planes abroad and attempt to enter the United States. We in DHS are considering whether we should station small teams primarily of CBP officers to work with foreign law enforcement and the airlines at key foreign "hub" airports, perhaps starting with the top 5 or 10 in terms of passenger volume and strategic locations. The Immigration Security Initiative might include airports, such as Heathrow in London, Schipol in Amsterdam, Charles de Gaulle in Paris, Benito Juarez Airport in Mexico City, or Narita or Frankfurt. As you can see from the Chart, the top seven hub or mega airports account for 40 per cent of all passengers flying to the U.S. from abroad.

Under the Immigration Security Initiative, or "ISI," these teams of CBP officers would work with the National Targeting Center, the foreign authorities, the air carriers, and other U.S. law enforcement and intelligence agencies to do three things - what I have called the "core elements" of ISI:

First, the ISI teams would utilize advance manifest information to identify potentially high-risk passengers. Currently, CBP does this on all passengers before their arrival in the United States. ISI would push this process out to before boarding, so we could identify the high-risk passengers before they get on the planes.

Second, the ISI teams would work with the airlines and the host-nation authorities to question the high-risk passengers and examine their travel documents. Currently, CBP does this upon arrival, with, for example, a CBP officer trained in document fraud reviewing the high-risk passenger's travel documents. ISI would push this process out to the foreign airports, so we can do this before the high-risk passengers get on the airplanes.

Third, the ISI teams would make a determination whether the high-risk passengers are admissible into the United States. And they would do this prior to boarding, rather than on arrival, so the high-risk passenger would not get on the plane.

The CBP officers would not have legal authority in the host country. But given that CBP - through authority under the Immigration and Nationality Act - has exclusive authority to determine admissibility into the United States, and air carriers pay a penalty for transiting an alien found inadmissible, the air carriers will likely listen to the CBP officer's advice and deny boarding to the individual, because it is, in effect, a decision to deny admission to the U.S. It is just being made prior to departure rather than after arrival.

In essence, ISI would institute in these foreign airports something akin to what the Israeli airline, El Al, does with all individuals: running information against databases and, importantly, questioning potentially suspect individuals before they board the aircraft.

It was the process of questioning that led Inspector Melendez-Perez to suspect that something was amiss with Al-Qahtani.

Conceivably, we could do this now on a "threat-response" basis - sending jump teams to foreign airports, based on specific intelligence. But in my view, a more effective way of doing this would be to permanently station teams of CBP officers, about 6 or 7, at major foreign "hub" airports, so these teams can develop close working relationships with their foreign counterparts and the airline officials. Because the team would be made up of legacy Immigration inspectors primarily, ISI teams would be expert in spotting fraudulent and counterfeit entry documents. They would also be expert at questioning high-risk individuals and making determinations based on behavior and other factors.

I would propose that we pilot ISI at 5 to 10 hub airports, evaluate it, and then expand - as we are doing with the Container Security Initiative.

I see ISI as part of the DHS continuum of "layered" defense aimed at preventing terrorists from entering the United States - from the DHS Visa Security teams being deployed to consular offices under Section 428 of the Homeland Security Act, to the ISI teams at the hub airports, to the CBP antiterrorism inspectors and US-VISIT technology deployed at the ports of entry. ISI would add that middle layer of defense between the consular office and the U.S. port of entry, and would be particularly valuable for visa waiver passengers, who are exempted from the visa issuance process; people such as Richard Reid who held a U.K. passport and who was flying to the U.S. via Charles de Gaulle.

ISI is not an entirely new concept. It builds upon and revitalizes the old Immigration Control Officer program of the former INS, although ISI would give the program a sharper, homeland security focus. Our counterparts in Australia, Canada, the Netherlands, and the United Kingdom all have some form of ISI program, that is, immigration officers stationed abroad to screen outbound passengers to their respective nations for admissibility and valid, genuine entry documents. Thus, Immigration Control Officers, as they are called, are currently deployed in various locations around the world, with their chief mission to interdict inadmissible aliens, often with fraudulent documentation, before they board planes. In some locations, there are actually multi-national teams. For example, in Bangkok, the Immigration Control Officer team is made up of individuals from five countries, and the team has worked closely with the Thai government to great effect.

Aside from its obvious antiterrorism benefits, the Immigration Security Initiative I am proposing will be cost effective. The U.S. Government and the airlines will save substantial sums of money when it is implemented. Unlike most government programs, this one literally pays for itself.

How do we know that ISI will save the government money? In Fiscal Year 2003, the INS launched a five-month pilot or temporary "surge" ICO initiative in various locations around the world, called Operation Global Shield. In its five months of operation, Global Shield resulted in 2,791 interceptions of inadmissible aliens bound for the United States.

Because these interceptions were done on foreign soil, the individuals were not boarded and did not arrive in the U.S. Accordingly, the U.S. Government did not have to detain these individuals on arrival, or process them, or send them back from whence they came. Nor did the airlines have to transport these aliens back or pay the penalties associated with transporting inadmissible aliens. The INS estimated that, because of Operation Global Shield, the U.S. Government avoided having to pay out over $45 million in detention and processing costs. And the airlines avoided over $9 million in penalties and costs. How much did Operation Global Shield's five-month deployment cost the U.S. government? Only $2.4 million. So, according to the INS analysis, for a $2.4 million investment, the U.S. Government received $45 million in avoided costs.

The U.K., Australian, and Canadian ICO programs have resulted in similar and substantial savings to the airlines and to these governments; savings that significantly exceed the costs of the programs.

ISI will pay for itself and then some.

There is an additional, humane benefit to ISI. Currently, foreign nationals traveling under the Visa Waiver Program - those have overstayed their time in the United States previously - are not admitted into the U.S., and are detained, sometimes overnight, before they can be put back on a plane. Unfortunately, CBP - like the INS before it - has no legal authority to waive prior overstay violations, except in very rare emergency cases.

With ISI, we should be able to identify these individuals before they board, thereby avoiding the humiliation and inconvenience of being denied admission at a U.S. airport, detained, sometimes overnight, and then put on a plane back to the country of origin.

But that's not the sole or driving reason to launch ISI. We need it to add to our layered, extended border defense against the terrorist threat. We need it to better protect passenger aircraft and the civil aviation. And it will give the U.S. Government, in a circumstance like the Holiday Threat, an option other than canceling flights.

We need another, less blunt, tool in our toolbox to identify potential terrorists, and make determinations on whether these particular individuals should be allowed to fly. ISI will give us that tool.

Thank you for your attention, and I look forward to hearing your thoughts on this idea.