I’m delighted by the great participation of the private sector in this C-TPAT workshop. I want to welcome especially the Customs officials from 22 countries around the world that are here with us for this C-TPAT working conference. This is the first time Customs officials from other countries have attended one of our C-TPAT workshops.

I’m delighted you are here. I can’t think of anything more important as you—and the U.S. Customs and Border Protection and the World Customs Organization—move forward with a Framework to secure and facilitate the movement of global trade.

We have done a good job of better securing trade moving toward—and into—the United States, through programs like the U.S. Customs-Trade Partnership Against Terrorism—and the Container Security Initiative, the 24-Hour Rule, and automated risk targeting.

But, global terrorism is truly a global problem in need of a global solution.

And that solution involves working with our international partners—other sister Customs agencies and the trade community—to secure, not only the trade coming to the U.S., but trade moving anywhere in the world.

Let me thank all of you from the private sector for your participation in this conference, for your commitment to securing the supply chain, and for your willingness to share with us the security methods and best practices from your own companies.

We can all learn valuable lessons from each other.

Complacency: Our Enemy, Too

Today, I want to talk about C-TPAT—about our partnership. To take stock of what we’ve accomplished so far—and what I envision we can accomplish, together, in the future.

From the very beginning, C-TPAT was intended to be a dynamic program, not a static one. By that I mean that our partnership is—and was always intended to be—an evolutionary program, one designed to evolve to a higher level of supply chain security, and in exchange, increase benefits for companies that invest and adopt C-TPAT security criteria—criteria developed jointly, as partners, with the private sector.

We frequently hear the statement that the terrorist attacks on 9/11 changed the world. And, it’s true.

Indeed, for international trade, the change has been revolutionary. Customs—CBP—had to rethink the way we do business, and so did the trade. International trade is no longer just about moving goods quickly and cheaply. In this age of global terrorism, there is a third element: it’s about moving goods quickly, efficiently, and securely.

Together, we’ve made enormous strides toward our Twin Goals—to better secure trade without unduly impeding the flow of goods. Indeed, to actually facilitate the movement of goods. To add needed security where there was little or none, but to improve the overall speed and efficiency of that movement. Those are the Twin Goals.

I am convinced we can achieve both. I know we can.

C-TPAT is one of the vehicles for doing so—perhaps the most important one. C-TPAT members have been on the leading edge of this change—and they will lead the changes needed to accomplish the Twin Goals—to make them a reality.

And wouldn’t that be the ultimate irony for Bin Laden.

He intended—and intends—to disrupt and destroy global trade—and damage the global economy. But we have—and are—making global trade more secure and more efficient than ever!

C-TPAT is a layer. It is a part of a much larger strategy, part of CBP’s philosophy of a smart and extended border security strategy designed to protect the global supply chain, our country, our economy—and ultimately, others countries and the global economy.

Most of you are familiar with the four core initiatives upon which our strategy is built. They are:

1. Requiring advance electronic information on all cargo shipments coming to the United States, moving by land air, and sea, so that we know what is coming to our shores long before it arrives. That’s the 24-Hour and Trade Act rules.
2. Analyzing that information—that is, evaluating every container for terrorist risk before it is loaded on board vessels for U.S. seaports. We do that through automated risk management, through our Automated Targeting System housed in CBP’s National Targeting Center. And every container deemed a potential risk—100 percent—are given a security inspection at the port of arrival in the United States—or before arrival through the Container Security Initiative—or CSI.
3. Under CSI, we work with our host nation partners to inspect containers identified as high risk before they are loaded on ships and bound for the U.S.; and
4. We have partnered with the private sector to better secure the global supply chain, in exchange for faster processing of goods at U.S. ports of arrival. That, of course, is C-TPAT.

C-TPAT is the largest, and I believe, the most successful government-private sector partnership to arise out of 9/11.

But at this point in our partnership—at the 3-year juncture, we face a new challenge—and that is complacency.

Together, we’ve accomplished a great deal. That’s true.

But a certain danger lies in that success, in thinking that we’ve run the race and crossed the finish line. That we’re done. Thinking: my company is already in the fast lane. What else do we need to do?

Well, let me tell you:

We must continue to work to close the gaps that global terrorists might seek to exploit.

We must not permit them to use the primary systems of global trade as a weapon against us.

We must continue to raise the bar toward better security practices that reduce the vulnerabilities of our global trading and transportation systems.

Because, ladies and gentlemen, the reasons that led to C-TPAT,

and CSI, and risk targeting, and 24-Hour Rule HAVE NOT GONE AWAY.

We must not forget why C-TPAT was created in the first place. It was created as a result of 9/11, but it was created because there was—and still is—a continuing, real threat of terrorist attack.

That threat still exists. Al Qaeda has vowed to strike us again—even harder than 9/11.

Our enemy is patient.

And, we know they are single-mindedly focused on hurting America and the West, on damaging not only the American economy, but the global economy.

That’s the reality.

C-TPAT: The Philosophy

Now, let me talk for a moment about what C-TPAT does to keep al Qaeda from reaching its goals.

Under C-TPAT, the private sector and the government have struck a bargain. C-TPAT partners have made the commitment, and taken actions, and made the investments needed to protect their supply chains from concealment of terrorist weapons, including weapons of mass destruction—or even terrorists.

In exchange, CBP provides benefits to our C-TPAT partners in the form of fewer inspections at the ports of arrival, in the form of faster processing at the border.

That’s the bargain.

Just last week, C-TPAT reached another milestone.

The number of private sector companies that have joined C-TPAT, that have pledged to meet C-TPAT security criteria went over 9,000 last week. 9,083 to be exact.

That’s over 5,000 importers—and 2,200 carriers—1,400 brokers, and nearly 400 foreign manufacturers. In other words, C-TPAT has grown from 7 partners in November 2001, when it started, to over 9,000 today. That’s an average of 2,000 to 3,000 new members applying each year.

Why?

Well, in part, it is because many C-TPAT companies were—and are—highly motivated to make a contribution to the security of our nation. Private sector companies want to contribute—and you have—through C-TPAT!

I heard you—and officers and CEOs from many companies—in the days after 9/11. That’s why I proposed C-TPAT—this unique government-private sector partnership.

But there is another reason for C-TPAT’s explosive growth and success. It is because, like all true partnerships, C-TPAT provides mutual benefits.

Companies benefit through expedited customs clearance, and better control of their supply chains.

And, CBP benefits through a better ability to focus our resources and inspection on higher risk shipments.

And, the country benefits by more secure cargo shipments that reduce the threat of terrorism.

And, all of this helps protect international trade from attack and helps prevent disruption of the global economy. Not bad.

C-TPAT: A Voluntary Program

Some in Washington have asked why C-TPAT is a voluntary program. The answer to that is simple: quite frankly, the government doesn't always do such a great job when it regulates.

Regulation and laws are blunt instruments.

We should use them when they are necessary, but I believe a dynamic and robust government-private sector partnership, like C-TPAT, is a better approach.

C-TPAT is a voluntary partnership for a very practical reason, as well—because U.S. Customs and Border Protection—the U.S. Government—does not have the regulatory reach into the supply chain beyond our borders.

Even if we wanted to, the U.S. Government does not have the ability to effectively regulate, or to enforce regulations, deep into the supply chain, to ensure point of origin security all the way back to a foreign manufacturers' loading docks.

But, C-TPAT companies use their leverage with their foreign vendors to increase security at the overseas point of origin—the foreign vendors—through transport to outbound ports—in other words, to all points in the supply chain from foreign vendors loading docks to port of entry into the United States.

One of the points that stuck with me from my briefings before I became Commissioner of U.S. Customs is that the top 1,000 U.S. importers account for 62 percent of all goods imported into the U.S., by value.

Think about what improved security practices by the foreign vendors of those 1,000 importers means to improving security of the movement of goods to the U.S. Already, C-TPAT covers about 40 percent of containerized imported goods into the U.S., by value. So, we have already greatly added to the security of goods exported to the U.S., and the vessels, trucks, rail cars, and aircraft that carry them here, as well.

But it is not just C-TPAT importers. Customs brokers, who are C-TPAT members, have made great contributions to supply chain security, as have C-TPAT carriers, and port operators.

Security Criteria Better Defined

We promised to take the C-TPAT partnership to an even higher level—that we would better define the security criteria for the private sector companies.

Before making significant decisions about C-TPAT, we engaged in a dialogue with the trade, and especially with importers, to more clearly define minimum security criteria for C-TPAT membership.

As you have discussed here, we implemented the C-TPAT security criteria on March 25—and we are phasing it in.

While always a C-TPAT best practice, C-TPAT importers are now expected to use their contractual leverage over their foreign vendors to meet minimal security criteria at the point of stuffing, to see that they incorporate C-TPAT security standards into their RFP and purchase orders, much like they do with Quality Assurance standards, and that they monitor compliance by their vendors.

If a company is to receive C-TPAT benefits, it must meet C-TPAT supply chain security criteria.

Now, the other part of that bargain is what happens if companies aren’t meeting their commitments to improve the security of their supply chain?

To put it bluntly, we don’t want companies in C-TPAT who aren’t meeting their commitments, that aren’t holding up their end of the bargain, nor do you.

We are tightening up.

During the application process for certified status, 20 percent of the security profiles submitted for C-TPAT membership—well over 1,000—have been rejected, because of failure to meet minimally acceptable C-TPAT security levels.

We have decertified and suspended almost 100 companies because of negative validations, for failure to meet their commitments, or because their supply chain security was compromised.

And, we will be increasing our validations to further assure that security commitments by our C-TPAT partners are being met. Like a good partner, we expect C-TPAT members to meet their end of the bargain.

C-TPAT Benefits

CBP is also delivering on the promise to better define our part of the bargain—our benefits to you, our C-TPAT partners.

Let me talk about those benefits for a moment.

The benefits of C-TPAT membership include reduced ATS scoring. This benefit, provided to certified C-TPAT importers, results in fewer security inspections, and fewer compliance inspections also.

As for other benefits, only C-TPAT members, C-TPAT certified importers and carriers, have access to FAST lanes on the land borders.

Only C-TPAT members are eligible for the Importer Self-Assessment Program (ISA), for training classes, and assistance with security issues.

Members will soon have access to a C-TPAT web page that will allow us to communicate securely with C-TPAT members. It will contain a list of C-TPAT members, unless a member prefers not to be listed. And, the web site will notify C-TPAT partners of elevations of the threat level, threat assessments, and non-classified information pertinent to supply chain security.

Tiered Benefits

Based on the belief that CBP should recognize the efforts of those companies that do more toward securing their supply chains, who go above and beyond minimal requirements, I believe there should be a tiered system of C-TPAT benefits, based on the level of security, validation results, and use of C-TPAT best practices.

As I envision it, this tiered structure would look something like this:

Tier One would consist of certified companies who receive the benefits I have just mentioned—reduced ATS scoring, and the other benefits of a certified C-TPAT member.

Certified companies are those that have submitted their security plans; have committed to meet C-TPAT minimal security criteria, and had those plans evaluated and approved by CBP supply chain security specialists; and based upon vetting, have had no history of significant compliance or law enforcement problems.

The Second Tier would consist of validated C-TPAT companies. They would get even further ATS reduction in their scoring, and even fewer inspections.

Already, CBP has validated the supply chains of 10 percent of all certified partners, and another 20 percent are in the process. This year, we are increasing dramatically the number of people we have conducting validations.

Tier Three will consist of those certified and validated C-TPAT partners, who exceed the minimum standards, who have adopted C-TPAT best practices.

The third tier is my vision for highest level for C-TPAT—one we can—and should aspire to—and that is, the “Green Lane.”

C-TPAT partners who meet the “gold standard” of best practices—that is, for example, certified, validated C-TPAT importers using C-TPAT best security practices will get the Green Lane: no inspections for security. They will be subjected to only relatively infrequent random inspections.

Among the added benefits for validated C-TPAT partners will be moving the shipments of C-TPAT members to the front of the inspection line when a shipment does need to go to secondary, either for a random inspection or due to other agency requirements.

Investments made to meet and maintain best practices should be recognized and rewarded.

C-TPAT membership will also be factored into our planning for contingency response in the event of a terrorist attack that impacts our ports, transportation and cargo facilities.

In re-establishing normal operations, C-TPAT members will receive priority in moving their freight into the country, depending, of course, on an analysis of existing intelligence regarding continuing threats.

As a general philosophy, CBP will demonstrate more concretely that we view C-TPAT members as trusted partners in the war against global terrorism.

C-TPAT: Next Steps

We’ve made a good start, but we have much more to do.

We should implement the Smart Box—a more secure, smarter container.

We should continue to expand CSI to ports in strategic locations.

And, I believe we should internationalize the core elements of our cargo security strategy for two important reasons:

1. We have better secured the movement of cargo to the U.S. in ways that have improved the efficiency of trade.
   
   But these same principles can—and should—be applied wherever in the world that trade moves, whether it is from Pakistan to the U.K.—or North Africa to the ports of Italy.
2. And, private sector companies should have one set of standards to comply with, not multiple and differing standards.

Internationalizing the Cargo Security Strategy can, I believe, improve the overall efficiency of global trade.

We are seeking to do this through the World Customs Organization-sponsored Framework to Secure and Facilitate Global Trade that will be presented to the Council of the WCO—all 164 countries—in June of this year.

Conclusion

From your discussions over the past several days, I think you can see that C-TPAT is a serious program with serious benefits.

It’s not just a one-year program, or a two-year program, or a four-year program.

It is the way of doing business in the 21st Century.

Many companies have stepped forward, made investments, and institutionalized C-TPAT security requirements. I applaud you and your companies for doing so.

In the final analysis, should there be a terrorist attack involving the supply chain—and every national security expert I’ve spoken to thinks there will be one—it will be those companies who have joined C-TPAT, who have done the work, who will be able to continue operating.

C-TPAT is, after all, the best insurance policy against terrorist disruption your company can buy.

But, you know that. That’s why you are here.

Thank you for being here. And thank you for making C-TPAT a success.