European Affairs

Spring 2004

 

Homeland Security
Tighter Security Must Not Slow Down World Trade
By Robert Verrue

 

The massive flow of containers around the world makes global maritime transport an essential part of the world economy, and renders it almost impossible to picture the disastrous consequences that a terrorist attack could have on global freight supply systems. Borders could be closed, ships might not be allowed to enter ports, and the global supply chain could be disrupted, with enormous consequences for the world economy.

After some initial differences of view, the European Union and the United States are now actively cooperating to tackle this problem, particularly with a view to improving the safety of container shipments, on which the two parties signed an agreement in April. The aim is to expand Transatlantic customs cooperation by introducing efficient and effective control measures to improve the security of maritime container transport. These measures are to be extended beyond the biggest European ports to include other ports in both old and new EU member states. A partnership of this type, between the world's two most important trading blocs, will certainly increase the security of the global supply chain.

Working with the United States to achieve these objectives is an excellent thing, but we have an even bigger responsibility to protect the European Union and its citizens from terrorism and other threats. Our customs services also have a pivotal role in protecting the European Union's external frontiers against the increasing traffic in goods that are dangerous to health and safety. To this end, the Commission has proposed a package of measures to improve security and yet maintain the trade facilitation advantages that a modern customs system must offer. The measures include a greater role for customs in managing security at the European Union's external border, and, because of the need for quick action, changes in the Community Customs Code.

It is of the greatest importance to strike the right balance between greater security and the legitimate concerns of traders that unnecessary obstacles may be placed in the way of legal trade. There is no point in having the greatest security controls in the world if they kill off trade. It is for this reason that the Commission is also proposing an action plan for making customs procedures more effective by simplifying customs legislation and making better use of information technology.

The Commission is currently working to provide the public with greater protection at the EU border against illegal and unsafe goods, while allowing legitimate trade to flow smoothly. New security controls have to go side-by-side with measures to increase supply chain efficiency. Introducing security measures in customs controls, and, where necessary, increasing the number of controls and the use of scanning equipment at the borders, may improve security in the supply chain, but we must be careful that such actions do not reduce logistical efficiency.

Facilitation of legitimate trade has to be considered in every step we take to improve supply chain security. It has been a longstanding EU policy to simplify customs procedures for legitimate traders, and we should not abandon these measures as we introduce new security controls.

One specific change we are proposing in the Community Customs Code introduces the concept of authorized economic operators, who would benefit from easier, simplified procedures in return for meeting predetermined security criteria. The status of authorized operator could be granted not only to importers and exporters, but to all participants in the supply chain, including freight forwarders and customs brokers.

Cooperation among U.S. and EU customs experts under the recent EUU. S. agreement will be important in achieving equal levels of controls at all borders. The work of these expert groups will give significant added value to the measures the European Union is currently developing. EU customs experts will work with their American colleagues to develop common measures, such as risk indicators for selecting cargo for inspection and minimum control standards. In this way we shall be able to prepare all EU ports for participation in the U.S. Container Security Initiative, instead of only major ports. It is also in the interests of international trade, and certainly of U.S. exporters, that we apply common procedures and equal levels of controls at all points of entry into the European Union.

This is relevant to another important strategic objective, set by EU leaders in Lisbon in March 2000, which calls for the European Union to become “the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion.” This strategic goal can only be achieved by a well-functioning internal market, which requires the free movement of goods and the avoidance of any risk of distortions.

This is why we have to ensure that controls at the EU external frontier are carried out in a harmonized way. Following the European Union's enlargement to 25 members in May, we need to improve cooperation with our neighbors beyond our new border. We aim to develop with them more integrated border management systems, leading to common standards of control, and common understanding of risk management and of each other's procedures.

Introducing different measures or different levels of control creates discrimination between ports and airports and runs counter to EU trade and transport policies, which are based on equal treatment across the Union. The Commission is asking the member states to rationalize their procedures by concentrating anti-terrorist and safety checks at the EU border and moving fiscal and commercial controls inland, closer to the importer's premises. For the first time, customs controls throughout the European Union will be based on common risk criteria. At the same time, controls will be made more efficient and less intrusive by increased use of modern equipment, such as container scanners and nuclear radiation detection instruments.

To support efficient security controls, it will be essential to harmonize pre-arrival information. Among other changes to the Community Customs Code, the Commission is proposing that cargo information should be provided to customs authorities before goods arrive in the European Union. This is different from the U.S. measures, which require advance cargo information 24 hours before loading in the country of export.

Together with the pre-arrival information, the proposed legislation will also require information before loading for export from the European Union. Although this will mean changes for EU exporters, the legislation provides for exceptions for certain types of goods and for authorized economic operators. The advance collection of this information is necessary to facilitate security controls by customs administrations in countries outside the European Union. Reciprocity will be a fundamental part of our security efforts and we will use customs cooperation agreements to reinforce this approach.

Before the terrorist attacks of September 11, 2001, efforts to improve security focused on the movement of illicit goods, such as drugs and weapons, as well as trafficking in persons. One consequence of the attacks was the realization that the supply chain is vulnerable to terrorist action, as it is quite fragmented and many different actors are involved. All these actors ˇ customs, carriers, customs brokers, freight forwarders and so on ˇ have to take their responsibilities in developing and implementing measures to ensure the secure transport of goods throughout the world. Such measures have to be agreed in close consultation among all the participants, all of whose needs must be respected. Unilateral initiatives would place unnecessary obstacles in the way of the transportation of goods, slow down the logistical process and raise costs.

Robert Verrue is Director General for Taxation  Customs Union at the European Commission. He was previously Director General for Information Society, from 1996 to 2002, and Deputy Director General for External Relations with the Central European countries and CIS Republics, from 1993 to 1995. Before that, he was Director for Industrial Affairs and the Internal Market.