Global trade standards on the way

Electronic systems will help identify high-risk containers

World Customs Organization

The World Customs Organization recently adopted international standards that will help spur government and industry to improve the security of global commerce and better deal with emerging threats, experts say.

According to the framework, customs administrations should use interoperable systems to share information that identifies high-risk containers or cargo. The document also calls for the use of nonintrusive inspection equipment, an automated risk assessment system and development of performance measures, among other principles.

The WCO, an independent intergovernmental body with 166 member governments representing 98 percent of global trade, adopted a framework of international standards for securing trade three weeks ago. About one-third of the members plan to implement them.

Robert Bonner, the U.S. Customs and Border Protection agency's commissioner (below), said the framework provides a security envelope "beyond anything that's ever existed in the movement of global trade." Essentially, nations will try to secure their supply chain management to improve accountability and transparency and reduce fraud, waste and theft.

"While a lot of this kind of stuff has been talked about from a 'let's improve the customs process' standpoint, there's not been a lot of traction or action on it," said Kim Marsho, IBM's business executive for supply chain security and government programs. "But we have an opportunity now with this new security dimension adding some urgency to the situation."

Otherwise, Marsho said, countries might have continued to establish programs similar to the United States' Customs-Trade Partnership Against Terrorism, in which private companies agree to improve their security plans in return for a reduced number of inspections. But each agreement could have different standards. Companies would still have to comply with each country's requirements, increasing the cost and inefficiency of doing business, she said.

With new minimal global standards, IBM and other companies could improve trade and reduce costs even more, Marsho said.

James Rice Jr., director of the Massachusetts Institute of Technology's Integrated Supply Chain Management Program, said getting 166 countries to agree to some standards is a significant achievement, although some could find it difficult to justify security investments. When a security initiative is successful, nothing happens, he said. So it's important to identify collateral benefits as a reason for participating.

For example, the new standards are likely to improve efficiency and transparency of cargo's contents along the supply chain. They also would reduce losses from overages, shortages and damages, he said. Implementing the security framework will also serve as a platform for collaboration within industry to drive improvements in quality and safety.

"If you have to come up with a unique set of data that you have to share with all the different countries, that takes a lot of time and coordination and invariably it breeds the possibility of errors," Rice said.

CBP was training customs officials worldwide how to improve security initiatives before the Sept. 11, 2001, terrorist attacks, said Patrick Jones, a CBP spokesman. The new international standards could hasten that training and bolster security in parts of the world with weak policies.

Around the world

The World Customs Organization's Framework of Standards to Secure and Facilitate Global Trade consists of four core elements.

  • It harmonizes advance electronic cargo information requirements on inbound, outbound and transit shipments.
  • Participating countries must use a consistent approach to address security threats.
  • Countries will inspect inbound and outbound high-risk containers and cargo preferably using nonintrusive detection equipment such as large-scale X-ray machines and radiation detectors.
  • Each country's customs agency will define benefits for businesses that meet minimal supply chain security standards and best practices.

— Dibya Sarkar

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