A DELICATE BALANCE

A DELICATE BALANCE

It's impossible at this early date to fully appreciate the impact the terrorist attacks will have on policies that affect international trade. But one thing is for certain: The impact will be substantial, and lasting. Issues that languished in Washington for years, such as port security and funding for a modern customs computer system, are rapidly ascending the anti-terrorism agenda. Trade policy has been stalled for a decade, but is now being looked upon much the way it was during the Cold War: as a necessary tool to spread Western values of democracy and free markets to unconverted regions and countries.

Like everything else in Washington, these issues will be dealt with in turn. First up in the aftermath of the attacks was aviation. Policy-makers quickly ensured that the industry was solvent and then enacted broad anti-hijacking legislation. The Federal Aviation Administration weighed in last week with new measures to pre-screen cargo moving on passenger flights. Ground transportation is coming onto the agenda, as was seen when conservative Rep. Duncan Hunter, R-Calif., introduced a bill to require inspection of all shipments entering the U.S.It appears that port security is next on the list. Congressional committees, the Department of Transportation and the newly created Office of Homeland Security are all studying the issue. This comes as no surprise, given the magnitude of what moves through the nation's port system. The value of cargo moving through U.S. seaports, plus the supporting logistics services, amount to about 160f U.S. gross domestic product, according to the Pacific Maritime Association. Maritime transportation is probably one of the least understood sectors of the U.S. economy, hence the rush by officials to get their arms around it.

The danger, of course, is that policies enacted will be too restrictive of trade, crimping the economic system that is the source of the nation's strength. At the same time, Washington is rightfully concerned that ports present serious security challenges that will have to be addressed at a number of levels.

The basic issues that will eventually be addressed by government policy seem fairly clear-cut, even though it is to early to predict how port security legislation, including the bill introduced by Sen. Fritz Hollings, D-S.C., will come out.

The first port-security issue is the security of marine terminals themselves, where longshore workers possess information about shipments and physically handle containers between the time they're unloaded and handed off to the trucker or railroad. The government is moving toward requiring background checks for dockworkers, over the objections of some unions. But truckers also enter terminals and could present a security risk as well. This needs to be studied.

Ships themselves also present a concern, because crewmembers with terrorist intentions could enter the country by disembarking, or as some pilot groups have suggested, could hijack a loaded vessel as it's entering the harbor and ram it into a bridge or petroleum facility. The Coast Guard is aware of this threat.

Perhaps the biggest risk comes from the origin of the cargo itself. About 10.8 million TEUs were imported last year, according to the Port Import/Export Reporting Service of the Journal of Commerce Group. Thousands of those shipments originated with people unknown to carriers through no fault of their own, and also often unknown to the government until the cargo has arrived in the U.S. The master bills of lading presented to carriers by non-vessel-operating common carriers normally do not contain information about the actual shipper. No 'known-shipper' rules such as those imposed on air freight forwarders are imposed on ocean carriers or NVOCCs. In addition, a minority of NVOCCs file manifests through Customs' Automated Manifest System. That means Customs is unable to pre-screen those shipments, which account for a growing percentage of total imports.

Further, many overseas NVOCCs are fly-by-night outfits that are hard for even government agencies to track. Finally, falsifying ocean shipping documentation is not a complicated task, and only about 1% to 20f containers entering the country are currently inspected by U.S. Customs. It would not be unreasonable, therefore, to assume that terrorist networks would use the container shipping system to import tools of their trade into the country

That is why the pre-screening procedures developed

by Customs over the last decade in order to most efficiently deploy their limited numbers of inspectors

seems the best building block on which to erect a serious counter-terrorism infrastructure. And that is why so much attention is being focused on finally getting the Customs' Automated Commercial Environment funded and built.

Peter Tirschwell is editor of JoC Week. He can be reached at (973) 848-7158, or via e-mail at ptirschwell

oc.com.