Reinventing border security
Bersin, with eye towards Canada and Mexico, presses U.S. Customs to synchronize security, trade-promotion missions.
By Eric Kulisch
The U.S. government should help make North American economies more competitive 'by driving down transactional costs' at land borders by 10 percent to 20 percent, Customs and Border Protection Commissioner Alan Bersin recently said.
Removing regulatory and security friction along the borders of Canada and Mexico would also make it easier to achieve President Obama's goal of doubling exports within five years and creating more manufacturing jobs, he added.
Bersin did not provide details for how to improve trade efficiency with Canada during a Dec. 9 speech at the U.S. Chamber of Commerce. But the concept dovetails with the larger strategy he has articulated since taking office last March of releasing cargo faster for low-risk, certified shippers that provide more advance shipping data, with the eventual goal of collaborating with foreign partners to separate suspicious traffic and do any necessary inspections far away from the border ' and before arrival.
Meanwhile, U.S. and Canadian government operatives and industry sources, as well as preliminary accounts in the Canadian press, indicate that the United States and Canada are close to striking a deal to better integrate their border management and security agencies with the goal of rationalizing processes for moving trade and travelers. In essence, they plan to create a perimeter approach to enforcement whereby both countries similarly treat people and products entering their sphere, with their common border acting more as a semi-permeable membrane for compliant commercial flows.
The two neighbors engage in $1.6 billion in two-way trade per day. Co-management of border policies has been discussed for years but has been stymied by political, legal and sovereignty challenges.
At the same time, U.S. Department of Homeland Security officials and their Mexican counterparts are pursuing similar initiatives to coordinate programs on the southern border.
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Bersin's message to the import-export industry during the past year, which he repeated at the Chamber's forum on global supply chain performance, is that stronger border security measures ' done right ' should be viewed as a way to expedite trade flows rather than a constraint on commerce. Trying to balance security and reducing regulatory complexity has often come at the expense of one policy goal or the other. But the former U.S. attorney argues that importers will willingly provide more details about their supply chains for pre-departure risk assessment if they are assured of quick cargo clearance and avoid the slow lane reserved for less compliant, high-risk or unknown shippers. Speeding legitimate commerce through ports of entry helps businesses and reduces the clutter that distracts border officers from focusing on more suspicious cargo.
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His vision is one in which the private sector and government collaborate on achieving effective enforcement instead of automatically assuming that more enforcement is bad for business and good for security or other safeguards, and vice versa, depending on where one sits.
'The key is risk targeting, assessments and traffic segmentation,' Bersin said. The maritime arena, where a one-year-old mandate exists for importers to transmit 10 data elements 24 hours prior to vessel loading, and carriers to supply two additional data streams shortly thereafter, should be the model for other transport modes as well, he suggested.
For a new system to work, CBP must have strong partnerships with DHS and other federal agencies, the private sector and foreign governments, and modernize its processes through digitization and other measures, Bersin said.
He noted the collaboration between CBP and the Transportation Security Administration has been 'unprecedented' since the Christmas Day 2009 underwear bomber incident in Detroit. Business sector relations, he believes, can improve by strengthening trusted trade and traveler programs, such as the Customs-Trade Partnership Against Terrorism, and consulting more closely with industry on ways to streamline trade compliance requirements. Innovation is needed to attract more companies into trusted shipper programs because freight transportation users and service providers know their cargo best and can best detect anomalies, Bersin said.
The commissioner acknowledged that the 'grand bargain' he espouses ' sharing proprietary information with the government in exchange for a commitment to protect its confidentiality and expedited movement through border crossings ' has been undercut by Wikileaks' indiscriminate publication of thousands of classified U.S. documents. He called Wikileaks' behavior a 'disgrace,' but expressed confidence the United States would eventually be able to prevent unauthorized data disclosures.
It is difficult to overcome the natural resistance to sharing information with the government even without the massive leaks, but Bersin said a new mindset is necessary in an interconnected world that relies on instant communication. The traditional notion that governments and organizations accrue power by hording information has been replaced by the new reality that 'it is by sharing information that we lever our influence and our reach,' he said.
Management By Account. One of the core trade facilitation initiatives undertaken by CBP in recent months is a review of how to replace the system of checking each customs entry filed by importers or their agents with account-based processing.
The concept, which has been discussed for more than 15 years and now is a top priority of many in the trade community, is to combine all of a filer's commercial, product safety and security interactions into a single view, and gauge a company's compliance by the effectiveness of its internal controls and ability to self-report requirements to government agencies.
Unclear is whether CBP will define management by account as simply gathering all the data it already collects from companies, plus some additional information, under one umbrella, or as requiring frequent shippers to only supply information that is unique to a particular shipment and link back to their accounts for the rest of the information. The latter is the preferred approach among many traders so they don't have to repeatedly file the same information.
The agency is struggling to figure out a wholesale change to the existing trade management model, but in November launched two demonstration programs to advance pieces of the new concept and try to facilitate low-risk trade more effectively. CBP created:
' An account executive to work with some volunteer firms in the electronics industry on an account basis.
' A Center of Excellence and Expertise to provide answers and smooth the importation process for the pharmaceutical industry. CEE is designed to help educate ports of entry to be more consistent in their implementation of policies and procedures, as well as provide technical guidance to importers of pharmaceutical products.
CBP officials have come to realize that trade facilitation is much more important to shippers than trying to reduce inspection rates further, said Brenda Brockman Smith, executive director for international policy, in separate remarks at the Chamber of Commerce.
A major importer, for example, recently reported that its average time to get cargo released is negative 3.4 days, which is made possible by importers being able to file customs entries five days prior to the estimated vessel arrival.
'So really trying to impact the number of inspections most importers see may not be where we can have the greatest impact,' she said.
Instead, the focus has turned to bringing down the cost of moving goods across the border, with Bersin setting a target of lowering transactions costs by 10 percent to 20 percent, Brockman Smith said.
CBP needs help from the private sector because reforming how CBP does business and engages with the trade community presents a big challenge, she said.
'We need feedback to better understand supply chains and those points of leverage where you can reduce your costs and we can better use the tools we already have available to us or tools that you might make available to us, whether it's advance data, intelligence, or more experts within CBP that know your industry and know when to ask questions and when not to ask questions,' Brockman Smith said.
Customs hopes to learn from the two pilots on how to simplify trade and effectively enforce the law, and then spread those lessons to other industries.
Simplifying the customs entry and financial processes has proven more complicated, but Brockman Smith said her office is aggressively working on a plan to do so.
Importers, carriers and freight intermediaries provide lots of data to CBP for enforcement targeting in the form of manifests, pre-departure security filings about shipments, entries and other documents, many of which include redundant information. CBP wants to respond to the trade community's request to rationalize and better use the data it receives to reduce filing costs, she added.
Companies that have a proven low-risk profile deserve less scrutiny and the agency is testing ways to make the data it collects for specific purposes available across the enterprise to help build holistic account profiles.
'If I know who your manufacturer is, your carrier, your broker, warehouse, etc., and I see that pattern and I'm comfortable with that pattern of moving goods, I shouldn't be looking at you,' Brockman Smith said. 'If I see a manufacturer that I know is not one of your licensees and you're producing a protected product, I should be looking at that.'
International traders point out that CBP can make cargo release and other functions more efficient, but the progress won't matter if other agencies with regulatory authority over imports also don't modernize their practices.
In October, Bersin pulled together senior leaders from 10 agencies responsible for import safety and got general acceptance to follow the same risk management principles and rely more on CBP's data and industry relationships to coordinate enforcement decisions ( 'U.S. agencies team up on import safety,' December American Shipper, page 6, or online at www.AmericanShipper.com/links).
Border Alignment. One group that is ready and willing to offer advice on reducing border irritations is Businesses for a Better Border. The B3 Coalition, organized by Canadian Manufacturers & Exporters (CME), is a collection of 10 large corporations with cross-border operations, including the top three U.S. automakers.
It wants to take the lead on recommending 'bottom line' returns for collaborating with border agencies and new incentives for trusted shipper programs.
The B3 is unique because it comprises validated members of C-TPAT and Canada's Partners in Protection program (PIP), and able to advise both CBP and the Canada Border Services Agency.
'It's one thing to have a vision. It's another thing to actually put in programs that make the border work,' CME President Jayson Myers said in an interview during a visit to Washington to discuss North American competitiveness with the National Association of Manufacturers and other U.S. business leaders.
Issues of concern to shippers on both sides of the border include new or rising fees and inspections, unpredictable border wait times that force companies to carry more inventory, layers of rules and regulations from different agencies, infrastructure constraints, and ever stricter compliance requirements.
'Our thinking was to bring those companies together and set priorities because no one knows better how to expedite shipments across the border than shippers themselves,' he said.
Companies like General Motors, Ford and Chrysler have closely integrated plants and suppliers that ship components back and forth across the border on a daily basis. One-third of U.S-Canada bilateral trade involves intra-corporate shipments, and another 25 percent to 30 percent is from closely held supply chain relationships.
A 2009 U.S. Chamber of Commerce report on the shared border noted that the effects of costly and duplicative border procedures are magnified in U.S.-Canada trade, putting companies at a competitive disadvantage compared with foreign firms that cross the border once to enter the North American market. Foreign manufactured cars entering North America, for example, require a single customs clearance for one shipload of 4,000 cars. The same number of cars made in Canada and the United States ' which cross the border seven times in various stages during the production process ' need about 28,000 customs and security clearances.
Myers and other supporters of streamlined border management, say low-risk, repetitive, high-volume shippers should not receive the same enforcement treatment as companies with irregular shipments or less stringent supply chain security procedures.
A CME representative met with Bersin in early December to brief him on the coalition's ideas for improving border processing.
Myers said the B3 would like to see more of a perimeter approach to customs functions in which regulatory compliance checks are moved away from the border.
According to sources and Canadian press accounts, one of the elements of the upcoming U.S.-Canada border management agreement is cargo preclearance for C-TPAT and PIP companies. Pre-clearance models vary, but include allowing securely sealed, bonded shipments from trusted companies to cross the border without stopping at customs checkpoints. Trade compliance, product safety and security assessments could be made at their inland manufacturing or warehousing facilities, or at inland customs facilities, thereby reducing congestion at capacity-constrained checkpoints. Last year, the U.S. and Canadian governments agreed to renew negotiations to set up land preclearance facilities for trucks at the Buffalo, N.Y., and Fort Erie, Ontario, border crossing.
The bilateral agreement would also lead to common approaches for pre-departure screening of overseas cargo and an integrated entry/exit system for people.
Details are expected to be announced early this year.
A joint approach to import safety, for example, in which products from outside the United States and Canada are similarly regulated, could provide savings by allowing goods cleared into, or produced within, one country to cross seamlessly into the other, Myers added.
Regulations won't drop away with a perimeter security approach, 'but we can ensure that programs we've put in place, that companies have invested in, can operate as they're designed to operate,' said Mark Nantais, president of the Canadian Vehicle Manufacturers' Association.
Bersin tipped his hand about a 21st century border concept last September in a video shot during a visit to a Mexican agricultural cooperative that was posted on Our Border, a DHS-managed social network used to interact with border residents, business, law enforcement, elected officials and DHS personnel.
In the clip, he talked about CBP and other federal agencies conducting joint product safety and security inspections alongside Arizona Department of Agriculture inspectors who check produce for disease or pests at the Mexican distribution facility. Pre-inspections would allow for 'one-stop interaction with the government' and expedite the movement of shipments across the border through so-called secure transit zones, he said.
Container security devices designed to indicate if a load was tampered with en route to the border could also be a component of these secure commercial corridors, he told a reporter following his December address.
Chamber of Commerce recommendations for border improvements include:
' Waive Agriculture Department inspections for imported fruits and vegetables for low-risk shipments (they are applied uniformly on all border shipments and air travelers to cover inspection costs) and instead pay for the inspections through appropriations of tax dollars because border security is a national responsibility.
' Designate funds to extend Free And Secure Trade lanes for security-certified trucking companies several miles from the port of entry and create more FAST lanes at each checkpoint. Highway carriers often can't get to the FAST lanes without first waiting in long backups leading up to the crossing.
' Ensure that rail and truck cargo inspected, cleared and secured at a Canadian air or ocean port are not subject to further inspections at the U.S. border.
' Initiate a joint pilot program to expedite processing products regulated by other government agencies, such as for qualified low-risk food importers from Canada and the United States.
' Launch a private-sector-driven short sea shipping pilot project in the Great Lakes region under the same entry and clearance requirements as truck and rail modes, rather than vessels requiring manifests 24-hours before cargo is loaded on the vessel. Trucks and trains have to submit manifests one and two hours before arrival at the border, respectively.
' Hire part-time and seasonal workers, such as recently retired officers or local law enforcement, at major ports of entry. Others could handle administrative tasks to free up officers for front-line duties.
The theme of reinventing the traditional security regime resonates with the trade community, which has tried to convince CBP for years that facilitating trade can be done without compromising security. But most observers are cautiously waiting to see whether Bersin and Homeland Security Secretary Janet Napolitano can coax the giant DHS bureaucracy to change how it views its mission, and whether Congress will go along with the plan.
Customs reauthorization bills stalled in the House and Senate last session, but called for CBP to reprioritize its trade facilitation and enforcement missions.
At the Chamber, Rep. Kevin Brady, R-Texas, endorsed Bersin's recent efforts. The tax-writing House Ways and Means Committee is also studying whether account management is a viable solution, he said.
'Given the limited resources to handle large volumes of trade we have to look at more risk-based tools to regulate the import process. Account management may well be a strong tool,' the incoming chairman of the trade subcommittee said.
Speaker-designate John Boehner also appointed Brady to be vice chairman of the Joint Economic Committee.
'The reality is that cargo security and trade facilitation goals are not mutually exclusive. We can, and should, find ways to better target high-risk trade and move low-risk trade. Similarly, companies that partner with CBP to increase their cargo security, safety and trade compliance should receive trade facilitation and other benefits providing incentives for even stronger cooperation,' Brady said.