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1 Andrew Grainger 2nd PICARD Conference at the World Customs Organisation, Brussels, Supply Chain Security: adding to an already complex operational and institutional environment Page 1
2 Supply Chain Security the US-led CTPAT and CSI programmes the European Union s Security Amendment to the Customs Code (648/2005/EC) the Swedish Stairsec programme the Canadian Partnership in Protection programme the New Zealand Secure Export programme the Australian Frontline programme the ISO/PAS standard for supply chain security systems the IMO s security amendment to the SOLAS convention and the newly drafted ISPS code various IATA initiatives including the known shipper concept the WCO s framework of standards to secure and facilitate global trade (WCO 2005) Page 2
3 Regulatory Security Objectives Identify security risks before goods move. Make efficient use of finite enforcement resources To enhance controls at the border Ensure that wealth-generating trade continues Extending controls up and down the supply chain Page 3
4 Government: a new thread running across the supply chain? Suppliers Border Border Procurement Manufacturing Border Border Factory Distribution Customers Government Actors Border Border Endusers Page 4
5 $ The Cross-border Operational System Shipment Global Freight Forwarding Company / Transport Integrator Packaging Company Local Freight Forward Shipping Line Port Stevadore Local Freight Forward Local Haulage Company / Trucker Inland Port or Warehouse Local Freight Forward Airline Line Local Haulage Company / Trucker Rail Road / Train Operator Buyer s own Truck $ $ Seller Local Haulage Company / Trucker Customs Broker Shipping Agent Shipping Line Local Freight Forward Warehouse Buyer Country A Seller s own Truck Global Freight Forwarding Company / Transport Integrator Free Zone or Customs Warehouse Shipping Line Bank Country B Local Haulage Company / Trucker Local Freight Forward Consolidator Customs Broker Port Operator Shipping Line Third Party Logistics Service Provider Local Haulage Company / Trucker Bank Customs Broker Airline Line Transit Shed Local Freight Forwarder (A) Bank Customs Broker Local Freight Forward (B) Page 5 Source: own practitioner observations; interviews
6 Many Trade Procedures Regulatory Category Revenue Collections Safety and Security Environment and Health Consumer Protection Trade Policy Examples of related activity Collection of Customs duties, excise duties and other indirect taxes; payment of duties and fees; management of bonds and other financial securities Security and anti smuggling controls; dangerous goods; vehicle checks; immigration and visa formalities; export licences Phytosanitary, veterinary and hygiene controls; health and safety measures; CITES controls; ships waste Product testing; labelling; conformity checks with marketing standards (e.g. fruit and vegetables) Administration of Quota restrictions; CAP refunds Page 6
7 Concerns and Perceptions Technology Performance of government Capabilities Trade procedures Cooperation between actors The performance of business Uncertainty Page 7
8 SCS: Adding to the Equation Many institutions are involved: Goods Transport and vehicles People Page 8
9 Internationally -set Security Regimes US-set Security Regimes WCO IMO IATA ISO US Customs and Border Protection US Food and Drug Administration WCO Supply Chain Security Framework IMO ISPS Code IATA Known Shipper ISO US Container Security Initiative ( CSI ) DG TAXUD EU Customs Code Security Amendment DG Tren EU-set Security Regimes US Customs and Trade Partnership Against Terrorism ( CTPAT) US Bioterrorism Act HMRC Department for Transport TRANSEC Project Cyclamen Home Office Security measures applicable or proposed: - EU Customs Code Security Amendment ( mandatory 2009) - ISO ( optional) - CTPAT ( Optional) - Bioterrorism Act Registration ( USA trade only) - IATA Known Shipper ( optional) Security measures applicable or proposed : - EU Customs Code Security Amendment (mandatory 2009) - ISO ( optional) - CTPAT ( USA only) - Bioterrorism Act Registration ( USA trade only) - IATA Known Shipper ( optional) - DfT Operator Licence ( mandatory) - Trade declarations under Home Office legislation ( mandatory) UK Traders and their representatives Transport Operators Ports Security Regimes in the UK Legend: Immigration and Nationality Act Terrorism Act Security measures applicable or proposed: - EU Customs Code Security Amendment ( mandatory 2009) - ISO ( optional) - CTPAT ( USA only) - Bioterrorism Act Registration ( USA trade only) - HMRC authorisation ( mandatory) - Trade declarations under Home Office legislation ( mandatory) - ISPS Code - CSI ( USA trade only ) - Operation of detection equipment under Cyclamen Security legislation or programme Institution or government body Demarcation of policy level Page 9
10 International Level - Share concerns ( e.g. as NGO) - Participate in consultation Other International Institutions International Associations and Interest Groups Escalate issues where they cannot be resolved in the EU European Associations and Interest Groups - Share concerns ( e. g. as NGOs ) - Participate in consultation EU Level (Regional) - Share concerns ( e.g. through TCG ) - Participate in consultations Seek to influence through agency of members Develop int. instruments European Commission DG TAXUD Negotiate preferred position WCO Negotiate UK position Co- operation agreements Develop int. instruments Develop int. instruments Third Country Level (U SA) Develop int. instruments Develop int. instruments Other International Institutions Other International Institutions US Customs and Border Protection Cooperation agreements... Develop int. instruments Escalate issues where they cannot be resolved in the UK Customs in other EU Member States Develop int. instruments UK Trade Associations and Interest Groups UK Level (National) - Share concerns - Participate in Consultation Coordinate UK position with other EU members HMRC ( National Level) Escalate issues where they cannot be resolved locally UK Level (Local) Escalate issues where it cannot be resolved locally Operate CTPAT Regime HMRC ( Local Level) Operate CSI Regime Share concerns Apply UK/EU procedures Advise on concerns Local Trade Associations and Groupings Local Port Local Port Advise on concerns Advise on concerns Local Port... Send goods Individual Businesses Legend: Public Sector Private Sector Demarcation of policy levels Abbreviations: Int. International Page 10
11 WCO Private Sector Council Group Nationally Sponsored International Trade Organisations American Assoc. of Exporters and Importers ( AAEI) SITPRO UK Trade Facilitation Agency World Shipping Council [shipping lines ] Business Umbrella Organisations Moscow International Business Association Japan Machinery Centre for Trade and Investment International Chamber of Shipping ( ICS) [ship owners and operators ] International Association of Ports and Harbors [ ports] Global Express Association ( GEA) [ parcels] DG TAXUD Trade Contact Group Association of European Airlines ( AEA) [airlines] Federation of European Private Port Operators ( FEPORT) [ports ] Organisation of EC Ship - suppliers ( OCEAN) [ shipping agency services] International Federation of Customs Brokers ( IFCBA) International Air Transport Association ( IATA) [airlines] International Road Union ( IRU) [ road transport] European Assoc. for Forwarding, Transport, Logistics & Customs Service ( CLECAT) European Community Shipowners Association ( ECSA) [shipping] Freight Forwarding International [large EU freight forwarding companies] International Alliance for Secure Commerce ( BASC) [security] International Chamber of Commerce ( ICC ) [business ] Port and Transport Services Port and Transport Services European Express Association (EEA) [ parcels ] European Shippers Council ( ESC ) [traders and freight users] EUROCOMMERCE [EU retailers] European Small Business Alliance ( ESBA) [SMEs] Named Firms - Barloworld - IBM - Boing Company - Limited Brands - BP - Maersk Sealand - Carrefour - Microsoft - COSCO - Nissan - FedEx - Philips - General Motors - Proctor & Gamble - Hutchinson Ports - Siemens - Thales Business Sector Interrests Federation of European Trade Facilitation Committees ( EUROPRO ) Federation of European Business Associations ( UNICE) [EU business] European Electronic Components Industry ( EECI) [ manufacturing] Assoc. European Semiconductor Industry Association ( ESIA) [ manufacturing] European Business Umbrella Organisations Assoc. of European Chambers of Commerce & Industry ( EURO - CHAMBERS) American Chambers of Commerce to the EU ( AMCHAM EU) [US businesses in EU] HMRC JCCC Members Chamber of Shipping [ shipping] Customs Air Transport Consultative Group ( CATICG ) [ airlines] Institute of Chartered Shipbrokers ( ICSB) [ shipping agency services ] Transport Services Airline Operators Committee Cargo ( AOCC) [ cargo handlers] UK Major Ports Group ( UKMPG) [ port industry ] British International Freight Association ( BIFA) [freight forwarders ] Port Operations and Stevadoring Freight Transport Association [ in- house transport operators] UK Warehousing Association ( UKWA) [ warehousing services] Association of International Courier and Express Services ( AICES) [parcels ] Road Haulage Association ( RHA) [road haulage] Invited Representatives: UK Port Community System Providers [IT] British Ports Association ( BPA) [ port industry] One Invited Representative from the Rail Industry Association of Freight Software Suppliers ( AFSS ) [ software developers ] Business Sector Interrests SITPRO UK Trade Facilitation Agency Confederation of British Industry ( CBI) [UK Industry ] UK Business Umbrella Organisations Automated Customs and International Trade Association ( ACITA ) [ large manufacturers] UK Commercial Aviation Industry Customs Group ( UKCAICG) [aircraft manufacturing] British Chambers of Commerce [ UK businesses ] Int. Chamber of Commerce UK ( ICC UK) [trade & commercial services] Customs Practitioners Group ( CPG) [specialists, advisers and lawyers ] Food and Drink Federation ( FDF ) [food industry] Wine & Spirits Association [UK drink industry ] Page 11
12 Implementation of improved trade procedures Operational Frustrations in Crossborder Operations Gives rise to the demand for improvements in governing trade procedures Customs and Trade Procedures Trade Procedures Reform Cycle Governing Regulatory Institutions Negotiated outcome sets scope for improvements in governing trade procedures Page 12
13 This cycle is slow Appears out of step with the fickle nature of day to day supply chain operations Page 13
14 Institutional Challenges Government Security Objectives make efficient use of finite enforcement resources enhance controls at the border extend controls up and down the supply chain ensure that trade continues Business Supply Chain Objectives reducing costs increasing value Page 14
15 Challenges (cont.) Environmental complexity and institutional overlap Government controls and their institutions appear out of step with the SCM practices Meaningful incentives by regulators to offset additional burden appear to be thin Challenge of realigning a complex arrangement of regulatory institutions to fit the needs of their stakeholders Includes the full cross-section of traders and their intermediaries Page 15
16 Challenges (cont.) Commercial arrangements in international trade operations can be complex, too Power amongst stakeholders in the crossborder environment is not equally distributed Business interests are not always aligned Quite often they are conflicting or opposing especially where it gives rise to market positioning strategies Page 16
17 Challenges (cont.) Some types of business interests may be under-represented or not represented at all As regulatory institutions are overhauled, changed or amended (like through supply chain security regimes) the economics and actors change, too Trade facilitation principles can help align government and business interests Page 17
18 Points for Consideration Unexplored research areas include the operational interface between business and government the institutional and regulatory overlap in the control of goods the development of a regulatory framework that is aligned to modern day supply chain management practices the negotiation process between public and private sector actors in defining trade procedures the interests of actors and the implementation of trade facilitation concepts the human and organisational capabilities necessary to enable closer cooperation between business and government actors in supply chain security. Page 18
19 Discussion? Page 19
2 nd PICARD Conference at the World Customs Organisation, Brussels, March Andrew Grainger
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