Before I begin my remarks, I also want to introduce the new Customs and Border Protection Director of the Office of Trade Relations, Keith Thomson.

Keith brings a wealth of private sector experience to Customs and Border Protection, and he will be my right arm as we work together with you and with the international trade community to strengthen our partnership, make trade flow more efficiently, and protect America. I'm grateful for Keith's willingness to serve, and if you haven't already done so, I invite all of you to introduce yourselves and get to know Keith.

Not long ago, a Customs broker with years of experience summed up our present situation: He said, "It used to be we had to worry about what went into these containers. Now we have to worry about what comes out of them as well."

This simple bit of wisdom sums up the challenge we face in the post 9/11 era. Debate continues about the probability of more terrorist attacks, risk assessments, the cost of security, and the most effective - and cost-effective - security solutions.

But at the center of this discussion, there is one thing we know for sure: that somewhere in the world today, at this very moment, there are people working on another plan to kill large numbers of innocent American citizens; to destroy the U.S. economy; and, indeed, to destroy the system of global trade on which billions of people, many in the world's poorest nations, depend.

This is the Al Qaeda MO, to never give up, to remain faithful to a long-term vision of terrorism...to a murderous campaign that began years ago, in a number of places, before it materialized with such devastating consequences on American soil on 9-11.

Unfortunately, these terrorists benefit from the lapse of time. It allows us to forget and to indulge in a benevolent and natural form of self-deceit, the idea that something as terrible, or even more terrible, than September 11 cannot happen again.

But we can't afford to forget. We cannot afford to become complacent. We cannot indulge in self-deceits. The cost in lives, as well as livelihoods, is too high.

Let us not forget that eight years elapsed between the first and the second attack on the World Trade Center. And this enemy is determined to strike back against America, even harder than on 9-11.

A year ago, in October 2002, 85 industry and government leaders, including officials from the Office of Homeland Security - there was no Department of Homeland Security - participated in a two-day Port Security War Game. Some of you are no doubt familiar with it.

The war game played out one of our worst nightmares - a terrorist attack with "dirty bombs" delivered in one or two of the millions of cargo containers that arrive at U.S. ports every year.

I won't review the whole scenario, but just say it begins at the Port of LA-Long Beach, when a "dirty bomb" concealed in a container is carried into our Nation's largest seaport.

And it involved another bomb, shipped through Halifax, Nova Scotia in a container, in transit to the U.S. by rail. That bomb explodes in Chicago.

We've done a lot of things to detect and prevent these things from happening, but the consequences of this scenario were dramatic and far-reaching:

• The closing of every U.S. seaport (for over a week),
• A backlog of container traffic that required 92 days to clear,
• A 500 point drop in the DOW,
• A cost to the U.S. economy of $58 billion,
• Chronic economic repercussions for U.S. trading partners.

And these are the costs to business, to our economy and the trading system. Try to imagine the loss of human life, which is incalculable.

If anything, this scenario underestimated the economic damage.

My purpose in citing this study is not to tell you what you already know, but to remind you of what could well occur - two years after 9-11, or four years, or 8 years - or even further down the road.

We must not lose the sense of urgency that's driven our efforts so far and so fast.

We can't relax, we can't disengage, and most importantly, we must not allow ourselves to believe that two years without another large-scale attack means we can return to "business as usual."

Rather, we must continue to build upon what we have already accomplished to make America and the global trading system safer against terrorism. I stand before you here today almost 2 years since we all worked together to launch our partnership against terrorism - the Customs-Trade Partnership Against Terrorism.

And I can report to you that our partnership is strong, and is wider than I ever would have imagined. Yet we have much to do.

Your supply chains are more secure, but there is more that needs to be done to reduce the vulnerability of your supply chains.

But I don't mean to give you a message that is just gloom and doom.

Let's think about how far we’ve come. Since C-TPAT was proposed in November 2001 at the Customs Trade Symposium, and since we launched it in January 2002, with just seven (7) companies, seven (7) major importers, today more than 4,500 companies have signed on to the Customs-Trade partnership.

These 4,500 companies represent the diversity of and are critical players in, the global supply chain - major U.S. importers, Customs brokers, terminal operators, carriers, and now we are adding major foreign manufacturers.

In joining C-TPAT, all of our partners have signed agreements to work with CBP to identify security gaps, to implement specific security measures and best practices, in order to protect your supply chains, from the foreign loading docks of your vendors literally to U.S. seaports, or airports or to our land borders with Canada and Mexico.

You are protecting your supply chains, and your businesses, from concealment of terrorist weapons, and even terrorists. This is a partnership. In exchange, Customs, now Customs and Border Protection, has agreed to give benefits, in terms of reduced examinations at the port of arrival and reduced audits and expedited processing at the border.

C-TPAT is, beyond question, the largest and most successful government-private sector partnership to emerge from the ashes of 9-11.

I am proud of what we have accomplished together, and I might add C-TPAT reflects my approach and my philosophy, which is to work with the trade community, to work with the private sector, to achieve our shared goals of protecting America and our economy by increasing security, but do it by working with and listening to the private sector.

My approach has been to provide the antiterrorism security we must have without choking off or impeding the flow of trade, so important to our Nation's economic well being.

Let me say, though, that C-TPAT should not be viewed in isolation. C-TPAT is only one piece of Customs and Border Protection's extended border strategy to protect America against the terrorist threat and, indeed, to protect the global supply chain.

Our partnerships with foreign governments, or more precisely our agreements with foreign governments to implement the Container Security Initiative, CSI, are another big piece. As are the steps we've taken to dramatically improve our ability to identify high-risk shipments for inspection at both CSI ports and U.S. ports of entry, through the collection and analysis of advance information and the better use and acquisition of intelligence, and automated targeting systems. We are far better able to identify cargo shipments that pose a potential risk for the terrorist threat now than we were on 9-11, thanks to advance information and the 24 Hour Rule, better use of intelligence and our Automated Targeting System operated out of CBP's National Targeting Center in Virginia.

Another piece in Customs and Border Protection's multi-layered antiterrorism strategy is our rapid deployment of non-intrusive inspection (NII) and radiation detection technology at ports of entry throughout the United States to screen all potentially risky containers arriving at U.S. seaports.

Few realize that since 9-11, we've deployed whole container x-ray type machines to all our significant seaports and all commercial Northern Border crossings, where there were none on 9-11. We have 135 of these machines, or 3 times as many as we had on 9-11. This allows us to target and screen faster; to add security without unduly delaying the movement of goods.

We've implemented many other "Smart Border" initiatives, including the Free and Secure Trade, or FAST, program with Canada on the Northern Border. And we are expanding FAST to our Southern Border with Mexico.

So, CBP's strategy for protecting America and securing the global supply chain is operating on many fronts, and C-TPAT represents one piece of that strategy.

But C-TPAT is a hugely important piece, and it works because it recognizes - I recognize - that you are the owners of the supply chain. Government can only do so much. Your efforts to secure your own supply chains against terrorism are absolutely essential to protecting America, and the global economy, from terrorism.

But it is time to take C-TPAT to the next level, not only in terms of protecting America and the global supply chain, but also in terms of making the movement of commerce across our borders more efficient, even more efficient than it was before 9/11.

I envision a true "green lane" that speeds low risk shipments across our borders and through our ports of entry. C-TPAT, and the other CBP initiatives I've discussed, are how we're going to get there. But we're not there yet.

I want to discuss with you today three (3) new pieces of our supply chain security strategy that we are unfolding through C-TPAT over the next several months.

1. C-TPAT Validation Program
The first piece is the ramp up of our C-TPAT "validation" program. As a great former president once said: "Trust, but verify." As members of C-TPAT, all of you have submitted information telling CBP of the measures you are taking, or have taken, to secure your supply chains. For example, the steps C-TPAT importers, through contract, have required your vendors to take.

We are now sending Customs and Border Protection teams of C-TPAT Supply Chain Specialists all over the globe to visit with you, your vendors, and their plants to verify that these steps have been taken to identify security gaps and to discuss "best practices." These validations have been useful to both CBP and to C-TPAT partners, as we are learning from each other how better to secure supply chains. Some of you have already met with our C-TPAT Supply Chain Specialists. In the coming year, many more of you will meet them as well, as we have received funding for more Supply Chain Security Specialists to staff our validation teams.

I should also say parenthetically that, separate and apart from the validation project, I have directed that we "red team" ourselves to see how good we really are at preventing, securing, targeting, deterring, and detecting suspicious shipments potentially containing terrorist weapons, including weapons of mass destruction.

ABC News and the General Accounting Office will not, and should not, be the only check on Customs and Border Protection's effectiveness to perform its priority homeland security mission: preventing terrorists and terrorist weapons from entering our country. We must also do it. And, of course, part of our red team exercises will be to assess whether C-TPAT does what it is supposed to do - actually better secures supply chains and protects America and global trade.

2. Foreign-Based Manufacturers
The second new piece in our supply chain security strategy is the rollout of C-TPAT to foreign-based manufacturers. We've already started this with manufacturers based in Mexico as part of our expansion of the "FAST" program to the U.S.-Mexico border.

This past Monday, we began piloting FAST at the Bridge of the Americas (BOTA), which connects Juarez, Mexico and El Paso, Texas. In deference to the vast amount of illegal drugs coming across our border transiting through Mexico, the Southern Border version of FAST is different and much tighter than the FAST many of you have seen on the U.S.-Canada border. In order to participate, you must be a C-TPAT importer, utilizing a C-TPAT carrier with a vetted driver, and importing from either your own manufacturing plant, or a C-TPAT-participating Mexican manufacturer. If all those pieces line up, then you get the fast lane across the BOTA bridge, and expedited clearance. As I said, we are piloting Southern Border FAST in El Paso now, and depending on how the pilot works, we will expand it to other locations in 2004.

C-TPAT "Foreign Manufacturer" enrollment is the next logical step in C-TPAT to embrace the entire supply chain, and it is not stopping with Mexico. We are also, as an initial phase, looking to expand C-TPAT to include major manufacturers based in other parts of the world, primarily Asia and Europe.

This is a major step toward the creation of the true "Green Lane" with C-TPAT shippers sending their goods through CSI ports, via C-TPAT carriers, to C-TPAT importers in the United States. If all of those pieces line up, those shipments should and will get the "green lane" through the border and into American commerce. If all those pieces line up, we know that those shipments are low risk, and our officers ordinarily won't need to waste their time inspecting them.

3. Smart, Secure Container
But I am getting ahead of myself because we cannot fully construct the "Green Lane" of the future without the third new piece of our supply chain security strategy that I am rolling out to you today. That is: implementing the Smart, Secure C-TPAT Container.

When I proposed the Container Security Initiative in January 2002, I said that there were four "core elements" to container security. The first three were (1) identifying high-risk containers at foreign ports; (2) pre-screening those containers at the foreign seaports, before they are shipped to the United States; and (3) inspecting or pre-screening these high-risk containers using sophisticated "non-intrusive" inspection and radiation detection technology.

These first three elements are CSI. And these three elements are operational and protecting America in 16 foreign ports around the world right now -- in the ports of Yokohama, Pusan, Singapore, and Hong Kong in Asia, in the ports of Rotterdam, Bremerhaven, Hamburg, Antwerp, Le Havre, Felixstowe, La Spezia, Genoa, and Gothenberg in Europe, and the ports of Halifax, Vancouver, and Montreal in Canada.

In each of these ports, CBP officers are on the ground, working with their foreign counterparts to identify and then inspect, with sophisticated x-ray inspection technology, high-risk cargo containers before they head to the United States. And CSI will be operational soon in 7 or 8 additional ports around the world, ports covering nearly 80% of all 7 million containers shipped to the U.S.

But I have also often spoken of a fourth "core element" of Container Security, the use of so-called "smart" containers that: one, are better secured against intrusion and two, are capable of telling us (CBP) and, equally important, you whether they have been tampered with en route to the United States.

This fourth element has lagged behind the other three in development. But it is an essential element to truly improved supply chain security.

The best factory and loading dock security at the point of stuffing of a container, the best CBP targeting, and the best CSI inspections are part of the solution, but after all that has been done, a terrorist must not be able to open a container en route and stuff a bomb in it, or weapon of mass destruction (WMD). We should know if there has been unauthorized entry along the supply chain. And so should you.

We need a smarter container.

I want to tell you a bit today about our strategy for getting where we want to be regarding a smarter, more secure container.

The first step involves no new technology at all, and is well known to most of you as the state-of-the-art method of locking and sealing a container. As many of you know, the members of the Container Working Group -- which includes Customs and Border Protection, the Department of Transportation, and the Transportation Security Administration, as well as key members of the private sector -- devised a new, more secure mechanical bolt seal for use on containers, and indeed had it blessed by the ISO as a high-security bolt with a unique identifying number. It's cheap, readily available, and is now clearly a "best practice" for container security. We have made its use one of the "prices of admission" into the Southern Border FAST program. And, in the near future, I expect its use will be the "price of admission" for all C-TPAT shipments into the United States.

If the containers entering our ports are not suitably sealed with at least an ISO certified high-security mechanical seal, we simply cannot view them as "low risk."

Of course, putting a high-security bolt on a container door is not enough to avoid unauthorized entry without cutting the ISO hard bolt seal. One of our best inspectors, Ray Pardo, devised a different type of hole for sealing a container that prevents access without cutting the seal. Appropriately enough, this is called the "Pardo Hole." We have made use of the "Pardo Hole" another mandatory "price of admission" for the Southern Border FAST program. And, in the near future, I envision CBP making the Pardo Hole, or its equivalent, a requirement for all C-TPAT containerized shipments into the United States.

A stronger seal, more strategically placed or secured, helps, but it does not make a container "smart" and cannot tell us whether a container has been entered or opened, that is, tampered with. And this is where C-TPAT must go next. Through the C-TPAT Partnership, we will work together to specify, and make economically feasible, the "smart" container. And let me tell you, the future is now.

Through the Container Working Group, we are testing sensor equipment that can be installed in containers - sensor equipment that, among other things, can detect intrusions. More importantly, these sensors can communicate to CBP officers and your logistics personnel that particular containers have been tampered with or opened. The point is, this equipment already exists. The technology is there.

We will soon set the minimum requirements, or C-TPAT "best practices" for the smart box. Besides the ISO mechanical seal appropriately secure by the "Pardo hole" or its equivalent, the C-TPAT smart container will meet these three minimum requirements:

(1) A sensor inside the container,
(2) That CBP can read, and
(3) That says whether it's been opened.

This is the C-TPAT smart box. Will we mandate its use on every container bound for the United States? Probably not. But I will tell you this - the use of such a smart container will be seen by CBP as the "best practice" in the industry. Those companies that use the smart container will be seen by CBP as companies that go the extra mile to secure their supply chains, and go the extra mile to, in fact, be "low risk." It will be those companies that receive the full benefits of being C-TPAT members.

And it will be those companies around which we at CBP will build the true "green lane" of commerce into the United States. Regarding timing, I'd like to discuss this and put it in place for Green Lane C-TPAT partners by the end of November, by the time of our Trade Symposium next month. In other words, we are looking for a number of C-TPAT companies to step up to the plate and adopt the C-TPAT smart container.

In the not-too-distant future, I see two types of shipments entering the United States - those that are low risk, and that will speed through the "green lane" into the U.S. economy, and everybody else.

And what will give a shipment "green lane" treatment? On the land border, it will be simple - participation in the FAST program. But for oceangoing shipments, it will be all the links of a secure supply chain. A shipment will receive "green lane" treatment if it comes from a:

1. foreign vendor that meets C-TPAT security standards at the point of loading or stuffing, or a C-TPAT importer that has assured its foreign vendors meet C-TPAT security standards at point of stuffing, and
2. uses a C-TPAT smart container,
3. is shipped through a CSI port, and
4. carried on board a C-TPAT carrier's vessel,
5. for delivery to a C-TPAT importer.

Just a note: the important first step, security at the point of stuffing, can be achieved by the C-TPAT importer requiring their vendors to do this and validated by CBP, or by a C-TPAT foreign manufacturer enrolled and validated into C-TPAT.

The shipment will be sent via a secure, smart, tamper-evident container. That is the key to the "green lane" of the future. And the future is coming very soon, so I would advise all of you to get ready, and move your shipments, and your containers, into the 21st Century.

I know some of you will think it's too expensive, and it's not worth it to use a smart container. To this, I have three responses.

First, it's not that expensive to retrofit a container, especially given the number of times a container is used a year, and as the technology becomes more widespread, the prices will come down.

Second, while it may add costs in the immediate sense, in the post 9/11 world, it is never smart to be "pennywise and pound foolish." If one of your shipments is used to deliver a weapon of mass destruction into the United States, and you did not spend the extra money to secure that shipment, the damage to your business and your good name will be incalculable. Every CEO needs to know that. Indeed, the reduction in insurance premiums for pilferage losses may cover all or part of the cost.

Finally, being in the "green lane" will have true economic meaning because inspections at CSI ports, U.S. seaports, and all U.S. ports of entry have increased, and they will continue to increase, based on risk management principles and targeting based on risk assessment. Since 9/11, the rate of cargo inspections at U.S. seaports has more than doubled. And the rate of cargo inspections at all U.S. ports of entry has roughly tripled, to over 10% of all containers entering the United States. As we deploy more NII equipment, and can better deploy our personnel, I expect that those numbers will continue to increase. They will go even higher as the threat level is raised.

What will that mean for shipments not in the "green lane"? More inspections, more delays, and more expenses at the ports. This will cost non-C-TPAT compliant companies serious money - I suspect more money over time than the cost of investing in the smart containers. So, again, I would urge: Don't be "pennywise and pound foolish." Be part of the supply chain security solution, and get into the green lane.

I want to close by referencing again the war gaming exercise I mentioned at the beginning of my remarks. When I was discussing the exercise with you earlier, I didn't mention a key conclusion the players drew from the game: security must be "embedded" into the supply chain, not just bolted on. No one system or technology or regulation can guarantee the kind of security we need. Only the hands and eyes that create and package and load the goods, transport them, load them onto a vessel, guard them in transit, and deliver them to our borders, aided by technology, can do that.

This is the ultimate meaning of C-TPAT. All of you understand this simple wisdom, and are acting upon it everyday to better secure your businesses, the global economy, and the American people.

Thank you for everything you are doing.

* 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.