U.S. TRAVEL AND TOURISM ADVISORY BOARD

Room 4830

DOC Building

14th & Constitution Avenue. N.W.

Washington, DC

Wednesday,

September 5, 2007

The meeting was convened, pursuant to notice,

at 10:35 a.m., MS. CARLSON NELSON, Chairman, presiding.

APPEARANCES:

[MEMBERS OF THE BOARD]{.underline}

MS. MARILYN CARLSON NELSON

Chairman and Chief Executive Officer

Carlson Companies

MR. JEREMY JACOBS, JR.

Executive Vice President

Delaware North Companies, Inc.

MR. REX JOHNSON

President and Chief Executive Officer

Hawaii Tourism Authority

MR. GLENN TILTON

Chairman

President and Chief Executive Officer

UAL Corporation and United Airlines, Inc.

MR. MANNY STAMATAKIS

Chairman and Chief Executive Officer

> Greater Philadelphia Tourism Marketing Corporation

[U.S. GOVERNMENT]{.underline}

THE HONORABLE CARLOS GUTIERREZ

Secretary of Commerce

THE HONORABLE MICHAEL P. JACKSON

Deputy Secretary of Homeland Security

THE HONORABLE HENRIETTA FORE

Under Secretary of State for Management

THE HONORABLE STEWART BAKER

Assistant Secretary for Policy

Department of Homeland Security

THE HONORABLE WILLIAM G. SUTTON

Assistant Secretary of Commerce for

Manufacturing and Services

MS. ANA GUEVARA

Deputy Assistant Secretary of Commerce

for Services

MR. TONY EDSON

Deputy Assistant Secretary of State

for Visa Services

I N D E X

[PAGE]{.underline}

MEETING CALLED TO ORDER

AND WELCOMING REMARKS

Ms. Marilyn Carlson Nelson,

Acting Chairman 4

SECRETARY\'S REMARKS

The Honorable Carlos M. Gutierrez,

Secretary of Commerce 8

REMARKS

The Honorable William G. Sutton,

Assistant Secretary for Manufacturing and

Services 18

INTERACTIVE DISCUSSION ON EASE OF TRAVEL

ISSUES

The Honorable Michael P. Jackson,

Deputy Secretary of Homeland Security

The Honorable Stewart Baker,

Assistant Secretary for Policy,

Department of Homeland Security 10

The Honorable Henrietta Fore,

Under Secretary of State for Management

The Honorable Tony Edson,

Deputy Assistant Secretary for Visa Services,

U.S. Department of State 55

GULF COAST RECOVERY STRATEGY

The Honorable Michael P. Jackson,

Deputy Secretary of Homeland Security

The Honorable Stewart Baker,

Assistant Secretary for Policy,

Department of Homeland Security 65

THE BOARD\'S FINAL LETTER TO THE SECRETARY

Ms. Marilyn Carlson Nelson,

Acting Chairman 67

MEETING ADJOURNED 69

[P]{.underline} [R]{.underline} [O]{.underline} [C]{.underline}
[E]{.underline} [E]{.underline} [D]{.underline} [I]{.underline}
[N]{.underline} [G]{.underline} [S]{.underline}

**[MEETING CALLED TO ORDER AND WELCOMING REMARKS]{.underline}**

CHAIRMAN CARLSON NELSON: It took a minute to get everybody\'s attention.
I was tapping on this fine crystal and it didn\'t seem to do the trick.

Well, good morning, everyone. I want to welcome you to the U.S. Travel
and Tourism Advisory Board\'s final meeting of this particular board as
it was constituted, and to express my appreciation to all those who have
been able to come. We were expecting Noel, so perhaps she\'ll be here
any time. I think that she had indicated that she would be here.

Now, I actually am excited to be here and to chair this meeting as the
deputy chair. Before the meeting is over, we do want to especially
express our appreciation to Jay Rasulo for leading the Advisory Council
and for all that\'s been accomplished.

I\'m going to indulge myself, as someone who\'s been around in this
business for quite a long time, with the sense that it\'s not the final
blow that breaks the rock, it\'s all those that went before. And
finally, after many, many years of coming together, and in many cases
not failing to come together, to speak with one voice about what travel
and tourism means to the country, not only in terms of its economic
contribution, but the diplomatic contribution that it makes.

Travel and tourism, indeed, are facilitators of so many other industries
that, in a sense, we come not in our own interest, but very much come
here to the Department of Commerce and in service and in collaboration
with the Secretary and others to facilitate the economic vitality of the
country as a facilitator. I think that that\'s becoming more and more
clear, and we appreciate the progress that\'s been made.

I do view this final meeting of this Advisory Board as a kind of
beginning. I don\'t remember who it was that said, \"This is not the
beginning of the end, but the end of the beginning.\" Let\'s hope that
the momentum continues and that the next group that is gathered here
will continue to collaborate on these important issues.

I think it\'s also important to recognize that we\'ve agreed, I think
we\'ve found an old truth, that it\'s sometimes easier to agree on the
goals than it is on the solutions. That\'s been true here, though in
much of what we\'ve advised we\'ve had pretty much a unanimous response,
a consensus of how to proceed.

But there are a couple of places where we\'ve had different voices that
reflected different interests, and we\'ve respected those voices. We
believe that, over time, these differences will work out and that we
will continue to make progress against our goals of making the United
States, once again, competitive among other industrialized nations as a
destination.

So I should remind us, and reiterate for the record, that we\'re the
largest service export for the United States\' economy. We consider
ourselves one of America\'s most important industries. We\'re
responsible for nearly 8 million jobs and \$1.3 trillion in economic
revenue.

We have two issues that we\'ve been working on, the National Tourism
Advisory Strategy and the Gulf Coast Recovery Strategy. They\'re still
of great interest to this board, Mr. Secretary. And I know that you have
worked very hard against these initiatives and that your Department has,
and it\'s an honor to have you here. We appreciate very much that
you\'ve convened this group and that you have indicated your desire to
have a similar group continue into the future.

I\'m also pleased, before we return to the Secretary, to indicate that
Deputy Secretary Michael Jackson and Assistant Secretary Stewart Baker
from the Department of Homeland Security, as well as Under Secretary
Henrietta Fore, and Deputy Assistant Secretary Tony Edson from State,
have joined us and they\'re going to discuss the important issues that
we\'ve all identified about the ease of travel.

And then finally later in the meeting the board has drafted a letter
outlining the goals and accomplishments of this group, as well as a
recommendation for the next iteration of the board, and we\'re going to
be able to share that letter with you, Mr. Secretary, and get any last
thoughts from the committee. I believe, after circulating it several
times, that we should be able to arrive at a consensus and offer it
officially to the Secretary.

That said, once again, welcome. Thank you. Let me turn it over to you,
Secretary Gutierrez.

**[SECRETARY\'S REMARKS]{.underline}**

By Hon. Carlos M. Gutierrez,

Secretary of Commerce

SECRETARY GUTIERREZ: Thank you. Welcome to all. This may be the smallest
meeting we\'ve had, and I\'d like to explain that we did schedule this
with very short notice. So, I appreciate everyone making the effort to
be here. I especially want to thank our acting Madam Chairman, Marilyn
Carlson Nelson, for being acting chairperson of this meeting, and for
your leadership. I very much appreciate it.

Also, I\'d mention that I, too, want to just recognize the effort and
the commitment and the passion with which Jay Rasulo approached his
work, and I know we\'re all going to miss him. We\'re going to miss him,
his contribution, and his professional zeal. He made an important
contribution and he leaves a legacy, and that\'s the important thing.

Let me get just to some areas I\'d like to go over, some statistics,
some facts. We\'re going to issue a press release today on tourism. Then
I\'ll close out with some administrative steps that we\'ll be taking to
renew the board charter.

But first of all, let me introduce Rear-Admiral William Sutton, who\'s
with us today. He\'s our new Assistant Secretary of Manufacturing and
Services. It\'s William \"Woody\" Sutton. I asked, \"What\'s his first
name?\" Somebody said, \"Woody\". I said, \"No.\" (Laughter) So,
extensive government and trade association experience, private sector
experience. I know that he\'s going to bring a lot of value to this. So,
welcome. We appreciate your service and we look forward to working with
you, especially on this important issue.

ASSISTANT SECRETARY SUTTON: Thank you, Mr. Secretary.

SECRETARY GUTIERREZ: Let me just go over some numbers. We are going to
issue this press release today, and I thought I\'d just read some of the
facts on the press release.

The headline is: \"International Visitors Pumped Over \$10 Billion Into
the U.S. Economy, June \'07.\" So we\'ve got some good news on the state
and the momentum in the travel and tourism industry.

New travel data shows international visitors spent more than \$10
billion in the United States in June of \'07. That\'s an all-time high
for the month of June, so that bodes well for the year. International
visitors increased by 12 percent over June of \'06, reaching 3.8
million. I think the important part is that it\'s not only in dollars,
but also in number of visitors. The expansion obviously is important for
the economy, being that tourism is such a big part and has such an
important multiplying effect throughout the economy.

International visitors spent \$10 billion in June. That\'s a 14 percent
increase over \'06. Through June, international visitors have spent over
\$58 billion. That\'s compared to \$53 billion during the same period of
\'06. So, that\'s really growth over that same period of last year. The
3.8 million international visitors is a 12 percent increase over \'06.
It\'s a 12 percent increase in volume. I think that\'s a very
significant increase.

Total visitation, 21.5 million. That\'s an 8 percent increase over the
first six months of \'06, so year-to-date, in volume terms of number of
people visiting the U.S., 8 percent growth, which I think is very
healthy. Thirteen of the top 20 arrival markets have posted double-digit
increases in the first six months of \'07.

Visitors from Canada grew 9 percent over June of \'06, with air arrivals
up 5 percent and land arrivals up 10. Arrivals from Mexico, up 25
percent, June \'07. This aggregate, including air arrival, which is up
11 percent, land arrivals, 31 percent. So overseas arrivals, excluding
Mexico and Canada, up 12 percent, 8 percent for the first six months.

So a lot of numbers, but they\'re all positive and they all show that
tourism has recovered. I believe we\'re in record territory now in terms
of the number of visitors. Last year was a record in terms of dollars.
This year should be a record in dollars and number of visitors.

So I just want to congratulate the board, because I know that this is
ultimately what counts. I would like to think that\'s the way we will be
measured, is the results that we can deliver. I think you should all
feel very good about that.

In terms of the Commerce Department, we had mentioned that we were going
to be a lot more involved in the inter-agency process, given the
board\'s interest in visas and the facility with which tourists can get
visas, and how tourists are treated in the U.S., and just that whole
process that we in the public sector manage, and therefore it\'s
probably where we can bring the most value, is that whole visa
facilitation and visa process for key countries around the world.

So, at the Department of Commerce we are now serving on the
Rice-Chertoff Advisory Committee. Member agencies of the Tourism Policy
Council have done a review of the National Tourism Strategy, and those
materials are in the book.

The Department of Commerce is also actively participating in the Model
Airport Pilot Program Subcommittee. We have served as facilitator in
both information needs and communications coordination of the Western
Hemisphere Travel Initiative, and we will continue to do so throughout
the next phase of implementation. We have continued to provide financial
assistance in the recovery of the Gulf Coast region.

Finally, to better demonstrate the value of tourism, we have updated and
improved some of the data that come out of the travel and tourism
satellite account. That\'s the Bureau of Economic Analysis. So, I hope
you\'ll see better, sharper, more precise data coming out on tourism in
the upcoming months.

Also, per your feedback in January, we\'re actively negotiating a
bilateral agreement with China, and the goal here is to enhance
opportunities for Chinese tourism to the U.S. We have both our SED and
our JCCT in December in Beijing, and this topic will be very much on the
agenda. We hoe this is one of those topics that we can break through and
show some results.

I\'m pleased to welcome from Homeland Security, Deputy Secretary Michael
Jackson, Assistant Secretary for Policy Stewart Baker, and from the
Department of State, Under Secretary of Management, Henrietta Fore, and
Deputy Assistant Secretary Tony Edson. The idea here is that, as opposed
to thinking about this as a one-off conversation, that we develop a
rhythm to these talks.

And we have defined, based on your recommendation, a series of priority
countries. What we would like to do, is let\'s keep talking about those
priority countries and give you an update of those priority countries
every time we meet as opposed to having a one-off conversation on
something and then going to another topic. Let\'s stick to some key
priorities. We believe, over time, we will be able to show results if we
focus and continue to stick with the priorities.

So in that spirit, we\'ve asked the Assistant Secretaries to be here to
update us on progress, and we\'ll be focused on the four key countries
that were identified in the Tourism Strategy. I hope that, over time, we
will see real, tangible results in those four countries because of this
sharpened focus.

From an administrative standpoint, Marilyn mentioned the board. We will
renew our board charter in September. As always, it\'s a wonderful
opportunity to step back and say, well, what should we be doing? How can
we take this to the next level? I will be working on priorities to
present to you in terms of, over the next year, what should we be
focused on so that we can look back and say, you know, did we move the
dial or not? I have that pending for the next board meeting.

But this is an opportunity to step back and provide your thoughts, your
recommendations. I would also like to have your thoughts on the
chairmanship. We\'re fortunate to have Marilyn as acting chairperson.
I\'d love to hear thoughts of people who could be part of the board who
may not be part of the board today. But again, this is a unique
opportunity to grab a clean sheet of paper and think about how we can be
more effective, even more effective than we have been.

So I want to thank you for your service, for your commitment, for being
here. My commitment to you is, as we go into our renewed charter and the
board, that this will be a key priority. Again, we are committed to
results. We are committed to moving the dial, moving the numbers,
ensuring that whatever we do adds dollars to our economy, adds visitors
to our economy, that we can see on a bar chart the impact of our
actions.

That\'s what drives us to this, and that\'s what we\'re committed to.
Please know you have our full commitment to ensure that we continue to
make the travel and tourism industry a fuel\--a very important fuel if
not [the]{.underline} fuel\--for our economy. You have my full
commitment. So, thank you.

CHAIRMAN CARLSON NELSON: Thank you, Mr. Secretary. I think, on behalf of
all of us, we will participate as we go forward in the meeting and try
to give you some feedback as we proceed in terms of areas that we might
focus on going forward.

I think I could speak for all of us, and for those who aren\'t here,
that the enthusiasm with which we greeted the creation of this Advisory
Board and the sense that Commerce was a place that could, indeed,
convene a range of agencies around this problem, to deal with the pieces
of the problem that the public sector can address.

We appreciate your fact-based approach, that we continue to get good
facts that we can work with, and then the metrics that we can put in
place so that people have the satisfaction of making progress against
these initiatives. I think it\'s much more rewarding for everyone.

SECRETARY GUTIERREZ: If I may, on the feedback, if you could just take a
moment and drop me a note, and that way we can give you time to think
about it. We\'ve got until September. Just drop me a note with your
thoughts and any recommendations as we head into the September renewal.

CHAIRMAN CARLSON NELSON: Great. Thank you.

SECRETARY GUTIERREZ: Thank you.

CHAIRMAN CARLSON NELSON: I hope everyone here, and those of you who are
representing members who aren\'t here, will make note of that and make
sure that we accept that responsibility to really give a lot of thought
to who might have the energy, the time, and the vision to come together
and continue the momentum that we\'ve achieved so far.

Now, I should also say thank you, and welcome, if we may call you Woody,
Assistant Secretary Sutton. We\'re delighted that you\'ve accepted this
role, and we\'ll look forward to working with you.

So now we\'ll get to one of our top priorities, which is ease of travel.
We\'re going to have actually two panels. The first, is Deputy Secretary
for Department of Homeland Security, Michael Jackson, and Assistant
Secretary for Policy at DHS, Stewart Baker. They\'re going to bring us
up to date, as the Secretary mentioned, on the ease of travel issues.
Then that\'s going to be followed by Under Secretary Henrietta Fore, and
Deputy Assistant Secretary Tony Edson from State, who will actually
provide the second panel for us.

So let\'s begin with Deputy Secretary Jackson.

MS. GUEVARA: Madam Chairman, if I may interrupt, I think that Assistant
Secretary Sutton had some comments that he wanted to make.

CHAIRMAN CARLSON NELSON: Oh. Please.

ASSISTANT SECRETARY SUTTON: I do, yes. Thank you.

CHAIRMAN CARLSON NELSON: Wonderful. Well, welcome. We\'d love to hear
from you.

**[REMARKS]{.underline}**

By Hon. William G. Sutton,

Assistant Secretary for Manufacturing and Services

ASSISTANT SECRETARY SUTTON: Madam Chairman and Mr. Secretary, thank you
very much for a most warm welcome. It is, indeed, an honor to be back in
government service again. I really look forward to working with this
board as we continue the mojo and keep the momentum going, as you\'ve
talked about.

I was asked to give a short report on the status of the special \$3.9
million appropriations that we received in 2006 and 2007. And as most of
you are aware, the first one in 2006 was worked out with the Travel
Industry Association to develop a web site, a \"Discover America\" web
site. That process is ongoing and it\'s being vetted now with the
various constituents of the industry, primarily with the destinations
involved and the Visit USA committees abroad. We\'re hoping for a
roll-out in late or early spring.

The 2007 \$3.9 million is going to be used to continue a third wave:
You\'ve Seen the Film, Now Visit the Set program, which was a very
successful first roll-out in the U.K. and in Japan. We want to focus in
the U.K. from mid-December to early January. Also, in this case a unique
aspect of it will be that we will highlight the Gulf Coast region, those
spots.

So that was the report I was asked to give, and that concludes my
report, Madam Chair.

CHAIRMAN CARLSON NELSON: Very, very good. Thank you.

Are there any questions or comments for the Assistant Secretary?

(No response)

CHAIRMAN CARLSON NELSON: Okay.

Then why don\'t we begin with our panel? Thank you.

**[INTERACTIVE DISCUSSION ON EASE OF TRAVEL ISSUES]{.underline}**

By Hon. Michael P. Jackson,

Deputy Secretary, Homeland Security

Hon. Stewart Baker,

Assistant Secretary for Policy,

Department of Homeland Security

DEPUTY SECRETARY JACKSON: Thank you for having me. Mr. Secretary, thank
you for inviting me back. I believe this is my third visit with this
group. I\'ve enjoyed it. I have to say that the Secretary of Commerce
plays an important role for DHS, and I think I speak for Henrietta in
the same vein here, of trying to help us bring his considerable business
experience and his Department\'s important focus on these areas. We very
much welcome having a chance to sit at this table with him, and with
you, to talk about these types of issues. It\'s very valuable to us so
we can set priorities, sort of, what\'s broken and what needs attention.

Secretary Gutierrez and my boss, Mike Chertoff, became virtual twins in
their efforts to try to bring some sensible, comprehensive immigration
reform to the country. And while we have not yet succeeded in that
effort, what it has done is made, I think, a very powerful bridge
between our two departments.

So this has been a very powerful bridge, a personal and professional
bridge, between our two departments that has benefitted us. We thank you
for your allowing us here to help us.

I thought what I would do is just give really quick, staccato updates on
a couple of topics that have been of interest here to members, and we
can deepen that up into each one that interests you in more detail. Some
of these, Henrietta has, so please, Henrietta, feel free to jump in as
part of this. My colleague, Stewart, will do the same thing.

I thought we\'d say a word about WHTI, Western Hemisphere Travel
Initiative, the Visa Waiver Program, U.S. Visit, typically our U.S.
Visit exit issue, Model Airport Program, our redress program for taking
issues and complaints, and problems particularly from arriving
passengers overseas, and just a little word about some of our efforts to
take our CPPs training program, for them to be welcoming and
professional in the work that they do at the front line of our borders.
So, those are the topics I\'ll run through a little bit.

The Western Hemisphere Travel Initiative, WHTI, is a very important
priority of the President and one that we\'ve been working on very
aggressively. I\'m just going to say it this way. The documents that
we\'re using right now at the border are so materially weak, are so rife
with fraud, so numerous in their versions that we present for passage
into the country from Canada to the U.S., less so a problem with
Mexicans coming into the U.S., but a significant problem of U.S.
citizens that go to Mexico and come back. We\'ve got Caribbean national
issues that are coming as well.

This is a fundamental vulnerability for us that the Congress has
required us to address and that the President is very keen on us fixing.
By the same token, we have a strong commitment not to crash the border
and to create, I think, an unreasonable impediment to commerce and the
movement of people and goods across our borders. So trying to do it, get
the job done but do it in some coherent way that implements it without
problem, is the challenge here.

We had initially implemented the air portion of WHTI requirement this
year. The State Department experienced this unparalleled demand on
passport productions, as did our Canadian colleagues experience a
similar crisis. In consultation inside the administration, we agreed to
hit the \"pause\" button and to be a little bit more flexible for the
summer travel season in how we gave some flexibility for people who were
coming into the country, using not a passport exclusively, but also to
be able to show proof that they\'d applied for a passport.

What I\'m going to ask Henrietta to report later on, is that basically
the backlog has been steadily eliminated and they\'re making excellent
progress. We provided notification to the airline industry this week
that we would continue the previously announced policy of returning to
100 percent passport requirements for air travel.

We are at the point where, a couple of weeks ago when I checked this, we
had single-digit number of Canadians who had come to try to travel and
hadn\'t had a passport. The number of American citizens traveling
outbound is really de minimis. We're at the 99.9 something percentile in
the use of passports for air travel, and I believe that September\'s
transition back to the intended policy should work well with us and not
be a problem.

Henrietta, do you want to add anything on that score?

UNDER SECRETARY FORE: Just that we have, indeed, worked on the passport
backlog. We\'ve had a 60 percent reduction, so we are back at historic
levels of 6 to 8 weeks, which is very good. We're looking at everything
and we\'re hoping it\'s on track now.

DEPUTY SECRETARY JACKSON: The next big, and more challenging,
requirement was to implement WHTI land border rules. We published our
WHTI rule that lays out the process for managing this process. It
piggy-backs upon technology that\'s broadly used at the borders right
now from an RFIB perspective. The State Department is in the middle of
their procurement to produce passcards, passport cards.

We have had intensive conversations with State governments around the
Nation, but particularly at the borders, to allow them and encourage
them to issue driver\'s licenses which had a WHTI-compliant
certification for citizenship and to be able to incorporate, at the
decision of the driver\'s license holder, a chip, which is the same chip
that we\'d use in the passcard, to facilitate faster flow of traffic.
Washington State has announced their intention to do this, Vermont has
announced their intention to do this, Arizona has announced their
intention to do this.

We\'re in serious conversations with New York State, with Michigan, with
Texas, with a variety of the large border States. We have targeted the
highest volume of tourist traffic states. The Canadian ambassador asked
us to focus on Pennsylvania because of the volume of people who come to
Pennsylvania, and we\'re working with them to try to make that pitch.

What we hope is that we\'ll have a series of tools, passports,
passcards, Nexus, Century, Fastcards, and driver\'s licenses, all of
which can help address the problem. The Department is poised in a very
short period of time to publish final rules on the so-called Real ID Act
implementation, which is modernization of the driver\'s license itself.

These two efforts are jointly aligned so that we think we\'ll be able to
use these driver\'s licenses over time in a very efficient way for
people to move. We\'ve taken minors, in large measure, off the table of
requiring individual certification. I think you\'ll see, in our Real ID
Act, some flexibility about how we look at in a way that will make it
doable and less costly for the states. So, I think that all is good
progress.

The trick will be, the President has made it very clear to DHS that he
expects this program to be accomplished on his watch, so we\'re trying
to implement it before the end of the administration. We\'re committed,
however, not to do it in a foolish fashion, to crash commerce.

What we\'re going to have to do is take some soundings over the period
of time between now and early summer and figure out what the saturation
level is, work very aggressively to get these cards out to businesses
and to other communities that can help us improve the saturation, and
take soundings with the Canadian government and ours to see how we
implement it in an appropriate way.

My sense is, sort of, stayed tuned to early summer as we refine the
timetables and deadlines associated with the specific requirements with
this. We\'re in very close contact with the Canadians on this. I\'ve had
probably a dozen meetings on this topic in the last two years and we
are, I think, at the point where the Canadians are very aggressively
exploring, and I hope about to settle on, the idea of using driver\'s
licenses to be a cheap, low-cost, and rapidly distributed method for
meeting the WHTI-compliant movement for our land border as well. So, all
of that is sort of on the plate and, I think, moving well. We\'re trying
to balance our security and mobility objectives here.

SECRETARY GUTIERREZ: Should I take questions on that?

DEPUTY SECRETARY JACKSON: What we\'ve said, is that we expect
implementation by summer. Mike has refined this to say by late summer,
which means September. We\'re privately sort of trying to understand
exactly how we can make this happen and get it on the right course when
we see better how much the card is treated.

CHAIRMAN CARLSON NELSON: Would you be willing to take some questions at
this time?

DEPUTY SECRETARY JACKSON: Sure. Sure.

CHAIRMAN CARLSON NELSON: Does anyone have any questions?

MR. JACOBS: The driver\'s license impregnation with the chip, that would
be strictly for land-based transfer?

DEPUTY SECRETARY JACKSON: Yes. I think it\'s land-based. I think we
anticipate that the passport would be the standard means of access for
air travel. And what we\'re finding is, the saturation of passports is
growing in both countries. The number of people who are applying for
passports is up. For air travelers right now in the western hemisphere,
it\'s very, very, very, very high.

A sort of very interesting statistic that Henrietta has, is that
there\'s a large percentage of people who apply for passports these days
who do not have any planned travel. It used to be in the old days, in
the form that the State Department would get, it would say, yes, I\'m
going to Rome on July 9th, and you\'d see a specific travel plan. Now
there\'s a very substantial portion\--I don\'t know the number,
Henrietta, but it\'s a meaningful number\--that just says, I want one.

UNDER SECRETARY FORE: It is. It\'s the majority of those applying for a
passport as a means of identification, not for travel, in the United
States.

DEPUTY SECRETARY JACKSON: So we both, I think, expect to see continued
investment on passport issuance here, and then Canada is telling us the
same thing.

CHAIRMAN CARLSON NELSON: Any other questions or comments?

MR. STAMATAKIS: We are asking \-- cooperation \--

DEPUTY SECRETARY JACKSON: We are asking at the governor\'s level and at
the DMV to consider this as an option. It aligns pretty much with this
so-called Real ID modernization of the card itself to make it a more
secure work. There\'s a statutory requirement to make that first round
happen by May of next year. We do not anticipate that a majority of the
states are going to meet that deadline, and the Secretary has authority
to provide waivers to allow that process to continue.

But we\'re already engaged in this modernization conversation about
driver\'s licenses with all the DMVs. I was just recently out at their
trade association annual meeting of DMVs for Canada and the U.S. talking
to this, so they\'re all working very closely. What we\'re really trying
to do is encourage the governors to get on board. In Pennsylvania, for
example, we\'re at the beginning point of that conversation but we would
love to have that be on the governor\'s radar screen as well. That would
be great. That would be a real help.

ASSISTANT SECRETARY BAKER: We would welcome help. I think, states that
are looking hard at this now, but haven\'t yet signed up, would include:
New York, Michigan, Texas, California.

CHAIRMAN CARLSON NELSON: How about Minnesota?

ASSISTANT SECRETARY BAKER: Minnesota is looking at it. Yes.

CHAIRMAN CARLSON NELSON: Is the expectation that people would actually
go and exchange a driver\'s license or that it would be, as the licenses
need renewing, that they would be replaced by the next generation?

ASSISTANT SECRETARY BAKER: Either way. As they renew, they\'ll have the
option. Typically they\'ll pay a surcharge. That\'s our expectation. But
if they wanted to come in early, we\'re encouraging the states to allow
that as well.

DEPUTY SECRETARY JACKSON: We\'ve sort of estimated it\'s some kind on
the order of about \$20 to put the chip and do the extra work associated
with this, so it\'s a relatively nominal thing for what\'s typically a
five-year credential in the states. It\'s easy. You can just walk across
the border with it in your purse or pocket and it\'s a lot more
expedited and can be dealt with at the border that way.

CHAIRMAN CARLSON NELSON: One other question that I have, Henrietta. That
is, you mentioned the six to eight weeks. What is our target?

UNDER SECRETARY FORE: Sixteen weeks is our normal, so that\'s what we
have had year in and year out. This year, we just have far more volume
of requests and applications for passports, many of them as an ID, some
for travel. So we\'re now back to our historic levels. We\'re going to
try to shoot for six weeks and if we can, we\'re going to keep going
down. So we think the better \-- increasing tourism.

CHAIRMAN CARLSON NELSON: Well, I watched you at one point put that kind
of, sort of, six signal approach in process engineering in another role,
and I\'m hoping that that will continue here because I think
facilitating that, the perception, it\'s that it\'s a very long way and
it may actually be driving people.

I don\'t need to have them for ID, but to have them in case because they
don\'t. So most of us in the travel business are aware that travel
decisions are being made later and later. There\'s a lot of, with the
Internet there\'s last-minute purchases, and I think people want to be
able to facilitate their own flexibility in that regard. So I appreciate
the fact that you\'ll be putting that kind of process engineering into
place.

Let\'s hear from Secretary Baker, if there are no more questions.

DEPUTY SECRETARY JACKSON: If I could just run quickly through the rest
of my list, and then if there are areas that you want to \--

CHAIRMAN CARLSON NELSON: Oh, fine. Excellent.

DEPUTY SECRETARY JACKSON: \-- focus on.

CHAIRMAN CARLSON NELSON: Thank you.

DEPUTY SECRETARY JACKSON: The Visa Waiver Program. I\'d just give a
quick status. Basically the administration requested, and Congress
recently approved, a provision which allowed us to weigh the historic 3
percent visa refusal rate, which was a gate that prevented, or you can
say enabled, countries to come into the Visa Waiver Program. This is
intended to allow some of the ascension countries from the European
Union, and other countries like Korea and others around the world who
have expressed an interest to participate in the Visa Waiver Program.

Honestly, the Visa Waiver Program was, I think initially, grounded upon
sort of economic concerns, that people would move here and stay here
illegally. That drove the mechanics of how we got permission for
participation in this program. After 9/11, we\'re trying to balance that
still-meaningful consideration with security concerns.

If you look at the attacks in London, if you just think about two
take-downs which have occurred in Europe in the last two days, what it
shows is, in visa waiver countries in Europe and around the globe, we
will see, I think, a considerable problem about people who have access
to visa waiver flexibility to move in and I\'m going to say a
considerable problem on internally radicalized or imbedded cells in
these countries. So we\'re trying to balance mobility and security in
this zone. I would say that the security issues are really not trivial
concerns.

The President proposed a series of criteria that we could use to be able
to provide a waiver to the 3 percent limit for visa refusal rate.
Greece, for example, I think is a point where our State Department has
just now, in the last few days, formally asked us to do the reviews that
would allow them to be considered for approval.

They look like they may have made the 3 percent visa refusal rate, but
there are several countries\--South Korea is one of them\--that\'s
floating on the margin of that 3 percent. The new rule would allow us to
be able to bring them in, and some who are not going to get the 3
percent in the near term but would be below a 10 percent threshold that
Congress has established.

In order to be able to do that, what we\'ve taken is a series of
security measures that would be put in place and negotiated with each of
these ascension countries. I think the key one to mention is ETA.
Stewart, what does that stand for?

ASSISTANT SECRETARY BAKER: Electronic Travel Authorization.

DEPUTY SECRETARY JACKSON: There you go. This is a longstanding mechanism
that Australia has used whereby you apply in advance and travel. It\'s
very easy to do online, and you get an authorization to come to stay in
Australia for an extended period of time. A very, very small number of
people who pop up as persons of concern are sent to a consular affairs
office to perfect that application. Even, I think, some of the airlines,
if somebody wants to travel at the last minute and has forgotten to do
this, have facilitated the applications of the ETA at the airport.

So we\'re proposing to do the same thing, to bring this online over
time, starting with the people who want to enter the country\'s VWP
program as new participants, and then a series of other, I think, very
prudent and not particularly burdensome security measures which we\'re
asking the airline industry for facilitating air marshals and other
things that will help us feel more comfortable about this, especially
the aviation security issues.

Hopefully we will implement this ETA, begin to engage in negotiations
with countries and the security evaluations that didn\'t meet the 3
percent, but would fall into this threshold. Congress set up a number of
things that we have to do before we can turn it on, the most important
one being the implementation of U.S. Visit exit requirements at the air
and sea points of exit for ships and for airlines.

So we have a plan to do that. We\'ll be publishing rules very shortly
about how that will work. We\'re in disagreement with the airline
industry at this juncture about some of the details of that. Glenn and I
talked about that a little before the meeting. I\'ve met with some of
the airline folks in the last couple of weeks on this.

We\'re trying to find a balance again of getting this done, but doing it
in a way that is compatible with the business model that the airlines
have about trying to allow flexibility for people to get their boarding
passes without having to go up to the check-in counter.

Details of this all to be sorted out in the next few weeks, and it
integrates to a series of other data reporting requirements on passenger
manifests and the language the Department has put in place in TSA and
CEP in the last few months, the last few weeks, on a couple of the major
regulations. All of this, I think, is coming together. The
implementation of the U.S. Visit exit is an enabler for the VWP. The VWP
should be a real enabler for increased tourism from these new countries.
It will change the way Henrietta does business overseas considerably.

UNDER SECRETARY FORE: It will.

DEPUTY SECRETARY JACKSON: But it will, I think, open doors much more
readily for unplanned travel, for tourism, and for more ease of travel
around the globe. So I think this is big progress. Maybe I\'ll just hit
the \"pause\" button here and see if there\'s any questions about that.

SECRETARY GUTIERREZ: I have two questions \-- waiver \--

DEPUTY SECRETARY JACKSON: I don\'t know the answer. Do you, Stewart?

ASSISTANT SECRETARY BAKER: Yes, although no one has come in since
September 11, so it\'s been a long time. But there is an increase in
travel from South Korea, in particular. It\'s already in the top 10,
maybe the top 5, in terms of sending people to the U.S. We expect a big
increase there.

SECRETARY GUTIERREZ: I didn\'t realize \--

ASSISTANT SECRETARY BAKER: They are right on the \-- proper security
agreement.

SECRETARY GUTIERREZ: In terms of these four priority countries, Brazil,
China, India, and Korea, are we working on these \-- which is \--

ASSISTANT SECRETARY BAKER: Only South Korea is, at this point, eligible,
even with the new legislation. The others probably don\'t make that \--
economic migrants in those countries.

CHAIRMAN CARLSON NELSON: Chuck, do you have any statistics on that?

ASSISTANT SECRETARY BAKER: \-- to new \--

SECRETARY GUTIERREZ: It would initially be that, although over time we
would apply it to all countries. So if you just look at the London
transit bombings or the \-- the two aviation-related incidents, over
time we have to try to beef up that security. But what we\'re saying
right now is, we would take this first wave and then, beginning in about
two years as we do the renewal cycle for the reviews that have to occur
to keep current the VWP waivers.

MR. MERIN: Every couple of years I think we do an assessment. We start
to begin to move those in in some way.

CHAIRMAN CARLSON NELSON: We can come back to some public statements, but
I thought that there might be an issue on this particular visa waiver
question specifically.

MR. MERIN: My only point was that \--

DEPUTY SECRETARY JACKSON: Yes. We\'ve had conversations. The question,
for the record, was whether the ETA security process would apply
equally, and at the same time to both existing and new entrants into the
Visa Waiver Program.

The answer is, our initial thoughts are that we would implement this
with new applicants over the next year to two years that would require
some work to get the thing running, test it to make sure that it\'s
stable, customer friendly, and works effectively. We would then
implement, in turn, for existing VWP countries as we do their renewals.

So we\'ll have to work with Congress on how they craft any legislation
that would impose it. We want to make sure that we\'re doing this in a
measured way so that we don\'t disrupt travel, but we can get everybody
enough notice to implement it effectively.

CHAIRMAN CARLSON NELSON: And I\'m sure that you\'re aware, in just about
all the studies that this group has done, that the focus has been on
having enough staffing to be able to actually facilitate these things
and anticipating the numbers that are going to be received so that we
don\'t stay kind of behind the 8-ball.

The perceptions that we have in the market are just so important as we
introduce these programs, that I think over and over we talk about
setting some very clear sort of time frames and goals and trying to
facilitate staffing to that level. Then I think for all of us, we get
used to the fact that we have to kind of over-staff at the beginning and
then pull back, because we don\'t really know where and how the pattern
is going to emerge.

DEPUTY SECRETARY JACKSON: Right. And Marilyn, I think that\'s a good
point. One of the reasons why, on precisely this question about the
implementation, for new countries, ETA won\'t seem so burdensome because
we\'re conveying a much-sought-after benefit. It gives people a chance
to understand how the ETA will work and how the security measures would
be implemented.

I think it would establish a sort of global baseline of understanding,
as people who have traveled in and out of Australia know now, that this
is not a big deal. But understanding the threat profile and the evolving
threat profile of internal radicalization in western countries,
including our own, as several arrests in this country demonstrate, gives
us a chance to help people get a baseline of comfort with it before we
impose it unilaterally in one fell swoop. Our hope is that this will
evolve at a prudent pace and be acceptable as a commonplace.

Then just very quick, to say that one of the questions that you reported
to the Secretary on recommendations on how to improve tourism focused on
a whole set of questions about, I\'m going to say, customer satisfaction
and the issues associated with making the experience of arriving and
departing from the United States more customer friendly.

We have tried multiple things to embrace that concept and this core
recommendation. I think the model airport program has been a success.
We\'ve had enough time to do this. This is the Rice-Chertoff initiative.
We have gotten a mandate, and hopefully Congress will come along with
funds, to help us expand it to another 20 airports, I believe. If we
took the right 20 airports, we\'ll get the vast bulk of all the inbound
traffic. So, this is something that I think both State and DHS both
welcome very much. We think we\'ve sort of practiced a little bit and
had good input about that.

I don\'t know how you all feel, if you have any suggestions about the
Houston and Dulles efforts in this regard. It\'s sort of an
airport-by-airport campaign to try to take the airport leadership\--the
airlines have been helpful in this\--to try to figure out, at each
airport, what works and how to do signage, and greeting, and other sort
of simple, but I think effective, tools to help. If you have any
additional comments on that, we\'re happy to hear them. I think the
punchline is that we would like to expand on this pilot and grow that
effort.

SECRETARY GUTIERREZ: If I may, it makes a lot of sense to go airport by
airport. You talk about improving \-- it\'s hard to measure that. By
taking a couple of airports and ensuring that we\'re making a
difference, I think we can continue to roll that out. We\'d love to have
comments, though. We\'d love to have anything you\'re hearing, if it\'s
working, if it\'s not working, because that\'s part of the approach, is
picking out priority airports, getting them done, and perhaps moving on
to others, a little bit like the priority countries.

MR. TILTON: Let me offer a comment to the Deputy Secretary. I think,
back to Henrietta\'s point, all of this really is connected in the
context of process improvements. Even the airlines\' process improvement
with respect to the kiosks are treated in the experience. It\'s one of
the reasons that we have a little bit of a dilemma with respect to
making those significant improvements jibe with the discussion we\'re
having on security applications for the kiosk itself.

They\'re not independent of one another. You have different groups of
people working hard to improve the overall process, but sometimes with a
slightly different perspective on what success looks like across the
entire arrival process. That having been said, you take two airports
that are different, as Dulles and Houston are, the common denominator is
the willingness of the airport authority, the executive authority, to
want to participate in the improvement process.

I know Dulles is very important to our company. That\'s really the key.
The Greater Metropolitan Washington Airport Authority is key to work
together \-- ourselves to make this happen, because they\'re not blessed
with a great physical plant. There has been significant improvement
there.

Newer airports, such as Houston and Denver have an easier time of it,
but I think the coherent conversation emanates from these \-- and we all
understand what the balance of equities is, what success looks like.
It\'s really going to be the driver of positive change.

CHAIRMAN CARLSON NELSON: Other comments?

SECRETARY GUTIERREZ: How do we measure change, though? Are there any
surveys that people do or is it just \-- how will we know if we\'re
making progress in these airports?

MR. TILTON: Well, we certainly do. All of our metrics are driven by the
logistics of people moving through the Hughes Airport, from point of
arrival to point of, in essence, navigation through the airport itself.
The same for departure.

I\'ll give you what I think is really a good example. The executives at
the various airports, if it\'s a hub of ours, we have a very significant
role to play with the airport. Think O\'Hare. The relationship that we
have been able to develop over time with the TSA executive, the TSA
management, the TSA authorities is measurable \-- and that\'s simply a
function of speaking the same language and actually driving the same
metrics through the process of moving people.

Maybe I\'d offer this observation to the Secretary. A well-run
logistical experience at an airport is a security one. If you think of
the antithesis of security, it\'s created by confusion and consternation
by everybody. So our ability to move people through the airport
efficiently together, from point of check-in, baggage check, to then the
security queue, is really a cooperative exercise. It\'s a perfect
cooperative exercise. TSA is a customer-centric experience \-- but it
has gotten significantly better because we\'re working together to
actually pursue the same purposes.

SECRETARY GUTIERREZ: Common metrics makes a lot of sense.

MR. TILTON: And it\'s a very easy metric to pursue.

DEPUTY SECRETARY JACKSON: We have set up, with the industry and with the
airport folks, a series of consulting mechanisms. I was out at Denver
for an unexpected period of time not long ago. Your folks were really
great. We used the time to talk about how they think TSA is performing.
Then we went into the airport people and the bags and check-in procedure
for all of our guys to spend some time talking through. It was valuable
to me.

But what I saw was that, as a guy who helped stand up TSA to begin
with\--I don\'t know \-- I don\'t know\--but the customers inside the
airport are all working together \-- the owners of the airport, the
airlines, the people who are responsible for the airport and TSA, and
the CBP.

We\'ve had good success in getting all the law enforcement, border
patrol, the FBI, the local police, a council with the airport people and
the airlines. Virtually all of our airports do have this customer
council here where everybody\'s sort of talking and managing it and
reporting metrics back and forth. Our model ports group has a metrics
that takes on those type of things. So, not perfect, but I think really
has shown some very substantial evolution. I give Kip Holly a lot of
credit for this. He\'s a business guy and a terrific force there.

MR. TILTON: And in the case of Denver, the mayor takes a \--

DEPUTY SECRETARY JACKSON: He gets a lot of dough out of it, so he needs
to.

CHAIRMAN CARLSON NELSON: Mr. Secretary, when we speak of the metrics, is
there what we\'ve sort of come to refer to as a balanced scorecard that
can be applied across the board and so that the progress can be compared
between airports and a collaborative set of metrics? It would be
interesting to have such a thing. The more I read in the travel industry
about some of the blogs that are being created where actually travelers
are telling each other which security line is the shortest, where the
customer actually is a collaborator in some of this \--

MR. TILTON: Marilyn is exactly right. I think what we do, to answer your
question, is we have a balanced scorecard for each airport and we bring
our partners in the airport into staff meetings when we do our balanced
scorecard with the security advisors \-- so it\'s not one that we impose
on TSA, but we certainly \-- so we can compare performance across
airlines.

DEPUTY SECRETARY JACKSON: We actually put on our web the wait times for
TSA in airports. If you want to go on and click and see how long it
takes to wait in Denver, Chicago, or Washington Dulles, you can see
that. It\'s a good question about, there\'s the experiences, both an
objective and a subjective issue. I think to be able to understand it
that way, we have to measure different ways, which is probably some
polling that is not purely numerical in its nature about the experience
of coming through Customs.

But these are people who have been on airplanes for a long time.
They\'re tired when they come in anyway, and it\'s sort of hard to
endure having all of this time. I think we understand that when you get
there, you finally just want to get your bags and get the heck out of
there. So we\'re trying to be respectful of that, while also managing
the security issues that we\'re trying to balance. The tools that we\'re
using now for U.S. Visit are really helping us to expedite the CBP
process at that point of arrival.

I think I\'ve taken up too much of your time, so I\'ll just mention in
passing two last things that you guys asked us to work on. If I can make
a poor pun that doesn\'t sound too goofy, we\'ve been using Disney to
help us go through some of our facilities to look at the business
processes that we\'ve used.

We\'ve got an internal group inside of CBP that\'s looking at exactly
these sort of soft metrics of how we do our job and how we manage line
management and customer reaction to that. I think that\'s valuable.
We\'ve consolidated our one-stop redress program, the so-called TRIP
program, that gives everybody one place to complain and for people to
figure out what we\'ll make of all that.

And we\'ve done some things in the background at CBP whereby people who
are having persistent problems are flagged in our database in such a way
as to allow the people at the primary point of inspection to be able to
expedite them through faster.

I would say a multiplicity of identity management, technology, business
process issues have all been focused on this area. They\'re not done and
complete and off the agenda by any stretch of the imagination, but I
think there\'s some meaningful progress there to report. And if you \--
part of our operating companies, CBP and TSA in particular, to continue
that.

CHAIRMAN CARLSON NELSON: Do we have, to the Secretary\'s question, a
list of how we\'re going to roll this out and over what time frame? What
determines \-- I have a plaque at home that says, \"God, Give Me
Patience, Quick!\" So I just want to know how we expect to roll this out
in terms of what we have on the docket.

DEPUTY SECRETARY JACKSON: I think that we\'re going to use additional
funds out of the FY \'08 \-- I think it\'s starting in October to do
that. We will prioritize it by volume and we\'ll try within that.
Category X airports are the biggest line, but not always the ones that
have the most international departures and arrivals.

We'll take all those factors into account and we\'ll sort of prioritize
that. If we start at a place where the airport ownership doesn\'t have
an interest and is not very engaged, we\'ll probably pass on and just
move to the ones that are so that we can try to record success fast.

VOICE: If I may \-- call on us to \--

DEPUTY SECRETARY JACKSON: Yes, we will.

SECRETARY GUTIERREZ: At some point you have \-- plan of how you \-- what
airports would come next. Is that what \--

DEPUTY SECRETARY JACKSON: Yes. That\'s what she\'s asking for.

CHAIRMAN CARLSON NELSON: That\'s exactly what I was thinking, that if we
communicated \--

DEPUTY SECRETARY JACKSON: We\'re happy to share that.

CHAIRMAN CARLSON NELSON: Because I think it will allow all of us then,
from an industry point of view, to actually push, or urge, or pull our
own airports to get on the bandwagon. It gives us a voice. People are
wanting to get their own airport moved up a little higher on the
priority list.

Any other questions or comments?

(No response)

CHAIRMAN CARLSON NELSON: I think that we really appreciate the fact that
we\'ve moved a long way from just saying, we can\'t have both security
and these \-- these kind of insights, that perhaps having both, that
they would enhance the optimization if we\'re collectively working on
both pieces of it. I think chalking it down and taking each one of these
metrics and deciding which are public sector issues and which the
private sector can deal with, is very helpful and accounts for a lot of
the progress to date.

Secretary Baker?

ASSISTANT SECRETARY BAKER: I will get us closer to the schedule. I\'ll
just touch on two topics where I think the members of the committee will
engage a little more.

The first is something that the Deputy Secretary mentioned, which is
exit, land exit. This is an area where it\'s often the case that we\'re
urging security restrictions on travel, and it\'s your job to point out
the cost of those restrictions. In the case of land exit, which is the
recording of everyone who leaves the United States by land, we\'ve
actually been rather cautious ourselves, pointing out that we have never
traditionally done this. We\'ve not identified everybody who\'s leaving.

Our infrastructure is not set up to do it. We have 53 lanes, I think,
coming into San Diego crossing the Mexico border, and 3 leaving. If we
were to stop everyone for as long on their way out as we stop them on
the way in, we\'d have backups to Los Angeles. So, we\'ve been quite
cautious about this.

But Congress has been very, very aggressive. They\'ve decided that this
is a measure of our seriousness about determining who has over-stayed
their visas. In an effort to demonstrate their toughness on immigration
issues and their commitment to strong security, Congress has been
pushing us very hard to get serious about land exit measurements, to
come up with a plan to do it, to launch pilot programs which we\'re
obliged to do under the BWP law.

I\'m not convinced that they\'ve been hearing from industry about what
the potential costs will be of doing that. We have heard that some, but
even we have not heard as much as I expected to. It\'s nothing like what
we hear in the context of the Western Hemisphere Travel Initiative and
whether we\'re going to require passports at the border with Canada.

Believe me, requiring passports is nothing compared to what would happen
on the border if we started doing land exit. I think it would be useful
if industry joined that debate now rather than waiting for an even
greater head of steam on the part of the people who think we should be
doing land exit. We\'re prepared to do it if Congress tells us to do it,
but it is going to be very expensive and I think it would cost \--

SECRETARY GUTIERREZ: Give me your estimate.

ASSISTANT SECRETARY BAKER: Thirty billion dollars.

SECRETARY GUTIERREZ: And the time, too. The disruption.

ASSISTANT SECRETARY BAKER: And the disruption. The auto industry is just
toast at that point. They\'ve totally integrated across the border, and
I don\'t know how they get their trucks back and forth. There are some
real costs that ought to be looked at.

The second topic I would just alert you to, and to the extent that
you\'re dealing with the Chinese and the Indian governments and hoping
to build a better travel relationship with them, I actually think
there\'s a significant cloud on the horizon there. Both of those
countries, in contrast to almost all of the countries we deal with,
whether they\'re developed or not, have a policy\--I can only describe
it as that\--of basically not taking back their illegal immigrants.

They take them back very slowly, a handful a month, or a year. We\'ve
got thousands\--in some cases tens of thousands\--of illegal migrants
from China and India. If we\'re going to keep them in detention, which
is the only way to know that we\'ll have them when the time comes to
deport them, we\'re spending on them the equivalent of a Harvard
education every year.

The delays that these countries impose on us cost us tens of thousands
of dollars for each year they delay, for each person, in the thousands
or tens of thousands. It\'s a staggering expense for us and something
that I think is going to become much more salient as people begin to
focus on, for example, the fact that there are thousands of criminals
who are deportable from those countries, where the countries simply
don\'t take them back.

That\'s going to make it harder for people to travel from those
countries as we begin to tighten up in an effort to get them to focus on
this. To the extent that you can get them to come into the community of
nations\' ordinary practice, which is to say, yes, he\'s carrying my
passport, he\'s my citizen, I\'ll take him back, it\'s going to very
much ease our relationship with them, which otherwise I think is likely
to take a down-turn in terms of visa processing. Thank you.

CHAIRMAN CARLSON NELSON: Okay.

SECRETARY GUTIERREZ: We have that problem with China today.

ASSISTANT SECRETARY BAKER: And India is not far behind.

CHAIRMAN CARLSON NELSON: Let\'s move on and hear Under Secretary
Henrietta Fore and Deputy Assistant Secretary Edson.

**[INTERACTIVE DISCUSSION ON EASE OF TRAVEL ISSUES]{.underline}**

By Hon. Henrietta Fore, Under Secretary of State

for Management

Hon. Tony Edson, Deputy Assistant Secretary for

Visa Services, U.S. Department of State

UNDER SECRETARY FORE: Thank you very much, Madam Chairwoman. Thank you
very much for chairing. Thank you, Mr. Secretary, for hosting us.

What Michael and Stewart are talking about with Rice-Chertoff, I think,
has made a big difference for what we are doing at the Department of
State. Let me just focus on three quick areas:

1\) Communications with foreign visitors

2\) How we are doing on the border being

welcoming, as well as being secure and

the balance with an open visa policy

3\) How we are doing on passports

On the communication with foreign visitors, we would love to hear from
you if you feel we are doing a better job. We think we are. We have
really focused on being welcoming. We are getting lots and lots of
communication out. Ambassadors, all traveling Secretaries, individuals
from every embassy are out and they are talking about visiting the
United States and what the process is for getting visas. But we would
like to hear back from you, as an industry-based group, if you feel we
need to pay more attention in a certain area or in a certain country.

This aggressive public outreach program, I think, has been part of the
good figures that you have for this year with the number of visitors who
are coming to the United States, because if America looks welcoming and
they understand what the system is, I think that improves.

We are encouraging travelers and we are also keeping as our number one
security on the borders. It must remain our number-one issue. From the
figures that we had from last year from Commerce, \$107.4 billion is
brought in by economic activity due to tourism. Students, we believe,
are comprising about \$13.5 billion. Our number of visas going to
students is up once again. We think that that is good for the future of
tourism in America. It\'s also good for the future of relations with the
United States.

We\'ve been consulting closely in the joint committee that we have under
Rice-Chertoff for open borders, yet secure borders. Our advisory
committee is delighted that Commerce has joined on that committee. It is
composed of many of the members who are here who are in the private
sector. But we think there\'s been good progress there. We want to be
sure that we are sending out the message that America wants you, and
America welcomes you. Please tell us, give us feedback, if we are not
completing that message in any country or in any post overseas.

Passports. Let me just quickly update you. We had said that, by Labor
Day, we wanted to get all of our numbers back to the levels that we are
historically at, and we have done it, which is good news. So where we
are now, is that passports are being issued in six to eight weeks.

If you have any clients or customers who need passports, this is a good
time because traditionally for us the fall is a time when there is lower
demand. So, it\'s a good time to come in. Our workload will begin
picking up again in January.

We have completed a record number of passports this year. We are
currently at 16 million passports. We anticipate we will issue another 2
million passports in the month of September, which would bring us to 18
million passports. We are at about 30 percent of Americans carrying
passports.

Our work in passports, we believe, has fundamentally changed. What we
are looking at for the future is 23 million passports in 2008, 26
million passports in 2009, and 30 million passports in 2010. We are
moving forward with plans to increase our capacity for 2009 and beyond.
We are increasing the number of personnel. We have to have a number of
people to be able to complete this work. New facilities and expansion of
existing facilities, and a second passport book production facility.
This is for the Government Printing Office.

We also are establishing a reserve workforce. These are our employees
who have worked on passports. So once you\'ve worked on passports, you
can do it again. Once you\'ve worked on visas, you can do it again. We
now have a number of retirees that we will call \"reserve workforce\"
which we consider our surge workforce for application in specific
countries or on specific issues.

We are constantly reviewing the business processes. We are leveraging
new technology. Remote renewals of passports is now in effect and we are
following best practices. So I have directed consular affairs to open at
least 13 new facilities over the next 3 fiscal years. Our plan calls for
four facilities in 2008, four in 2009, and four in 2010. So, I believe
that we have made significant progress.

I know that you have a particular interest in the numbers for our visas
for India, China, Brazil, and Korea, so if I may turn to Tony Edson, he
has some numbers for us.

Tony Edson?

DEPUTY ASSISTANT SECRETARY EDSON: If you really are interested in some
short metrics, I would go to the podium. In this forum, I think we\'ve
spoken quite a bit in the past about working on reducing appointment
wait times. In general, we\'ve been successful\--in some cases
dramatically, sometimes less so, as in Brazil\--in reducing the
appointment wait times.

But what happened as we were doing that, was workloads in all three of
those countries shot up amazingly. China actually had the least dramatic
increase. China has had double-digit non-immigrant visa workload
increases since 9/11. That was the one large market that never really
dipped post-9/11.

We\'re looking at wait times between three and four weeks now. It went
up in the summer. It\'s seasonal work, just as much of your business is
seasonal. It did go up. Our posts in China scheduled additional
interviews to keep up with it as best they could, and it managed to hold
the line. Beijing is 30 days now for a routine tourist visa appointment.
They were slightly higher than that earlier in the summer and managed to
get that down.

Growth in China. One of the interesting trends we\'re seeing is growth
in Chindu and Shinyang, which are fairly small posts that you never
heard me talk about before because they were just too small to care
about. Chindu is having 17 percent growth this fiscal year on last.
Everybody is double digits again: Beijing, 11, Shanghai, 14. Those are
smaller numbers than we\'ve had for the past couple of years, but
that\'s still pretty significant.

India. With the leadership of Ambassador Mulford and support from the
Department and Under Secretary Fore, we devoted a lot of resources over
the past, not quite 12 months, probably about 10 months, additional
resources to India, trying to see \-- one of our concerns in India was
the demand was already so huge. The signs were that the unmet demand was
so huge, we weren\'t sure what genuine visa demand was.

I stand before you to tell you, we\'re still not sure. Having worked to
reduce the backlogs fairly dramatically, we had increases there. For
example, Bombay was up 80 percent this fiscal year on last. So we\'re
not actually sure that the end is in sight.

Since 9/11, we\'ve increased consular officer staffing by over 25
percent there. We do have the new facility in Hydrobad, the new
consulate in Hydrobad. It\'s still on schedule to open, with limited
staffing, in \'08, and then fuller staffing in 2011, I think. We\'re
hopeful that that will help take care of that huge, particularly
business rather than tourist, demand in the southern part of the
country. But we\'re looking across the country at a 61 percent increase
in workload on the last fiscal year.

Brazil went up 100 percent between 2004 and 2006. That\'s when you
started seeing those appointment wait times really increase. It\'s
continued to grow, although the appointment wait times have gone down
slightly. They\'re still ugly. Rio is still a 110-day wait for a tourist
visa appointment.

All of these places, I should have said\--I\'m remiss for not saying it
earlier\--do have programs in place for American business cases. That\'s
not going to help the vast bulk of the tourist travelers who will have
to plan in advance for these kind of wait times. We know that, and we
know that\'s not ideal, so we\'ll continue working on them.

Fiscal year. I mentioned 100 percent in fiscal year \'06 over \'04. This
past fiscal year, Brazil is up over 20 everywhere. Sao Paulo is 32
percent growth. The country-wide average was 28, almost 29 percent
growth in Brazil. I guess it\'s a good news/bad news thing. We will have
reduced those appointment wait times even more, except that the travel
environment has improved to the extent that we\'ve got a lot more
clients.

Korea. I didn\'t actually come with metrics. We\'ve spoken before about
the process there. It is the most efficient visa operation we have in
the world in terms of labor inputs into each individual visa case. It\'s
the most efficient location we have, and solely remains the single
largest non-immigrant visa operation that we have now in the world. I
suspect we\'ll continue that way unless and until Korea qualifies for
the Visa Waiver Program.

SECRETARY GUTIERREZ: Just a question similar to the metrics on airports.
Is there a way that we can develop metrics that we can compare progress
on these countries, something you look at to see if \--

DEPUTY ASSISTANT SECRETARY EDSON: Yes. The Rice-Chertoff Advisory Board
actually has a Metrics Working Group that has been looking at this as
well. We have some standard metrics, volume, workload, appointment wait
time. We\'d like to have everybody consistently down below 30 days. But
for some of the similar reasons we were discussing before about the
airports, there are qualitative differences in some places.

When we have huge refusal rates due to fraud, the United States is not
advantaged by us issuing more visas. So it\'s a little hard in some
cases, but we would like to be able to look at appointment wait times in
particular as a measure of how well we\'re doing in mediating the
business demand.

UNDER SECRETARY FORE: We carry lots and lots of metrics. They key for us
is settling on metrics that drive performance changes, so that\'s what
we have now across the world. Because we\'re posting the wait times, we
think that makes it helpful for the traveler so that if we are at 20
days, or at 30 days, or at 100 days, that at least they are aware of it.

SECRETARY GUTIERREZ: Right.

UNDER SECRETARY FORE: It\'s on the web sites.

MR. JACOBS: What is the status of student visas?

DEPUTY ASSISTANT SECRETARY EDSON: Student visas. We continue the policy
we put in place back in 2003. I think it was the summer of 2003 when we
started expediting student visa appointments. All those places I
mentioned, students can get in within two to three days for an
appointment so that we can get them here before their classes start. I
think we\'re hearing from the educational community that we\'ve been
meeting that goal pretty well. There\'s the occasional story, but \--

CHAIRMAN CARLSON NELSON: If there aren\'t any other burning questions,
let\'s go on. Thank you both. I think certainly some of the suggestions
\-- we appreciate the fact that there\'s been such a drive against these
initiatives that have been a real concern to the whole industry in terms
of facility and travelers. Also, I think when the numbers increase at
that rate, 60 percent or 61 percent, it does, I\'m sure, drive the
Rice-Chertoff group to look at sort of new and innovative ways to solve
these problems because it\'s just not going to be possible to do them in
the same labor-intensive manner that we\'ve done them historically.

Let\'s go on. I think we\'ll try to move very quickly. If you could just
give us a couple of words, Secretary Jackson, about the Gulf Coast
recovery effort.

**[GULF COAST RECOVERY STRATEGY]{.underline}**

By Hon. Michael P. Jackson, Deputy Secretary

of Homeland Security

DEPUTY SECRETARY JACKSON: I\'ll do this very quickly. You\'ve read in
the newspapers and understand sort of where we are. There were about 1.5
million people, for example, in New Orleans before the storm. There\'s
about 1.3 million now. Jobs in the metropolitan area in New Orleans are
about 83 percent of pre-storm levels.

The largest employer in New Orleans, and the second largest in the
state, is the tourism industry. That is still not back to where it was.
Currently there are 140 metro area hotels and motels. There were 265
before that. Flights into the airport, which are a good barometer of
traffic, are at about 119 now, and they were 162 before landfall.

The State of Louisiana, I think, was the slowest, obviously, to come
back and focus in New Orleans, is the biggest set of challenges. We
started out with over 1.5 million households that we were somehow
housing. That number is down to somewhere in the range of about 80,000
in trailers across the Gulf Coast area and less than 30,000 in longer
term housing. That\'s moving down. We\'re taking in something on the
order of about 500 or 600 trailers a week, so people are finally moving
back into their homes and they\'re getting stabilized.

But there\'s just a lot to do in the Gulf, particularly in Louisiana.
I\'d be happy to answer any questions about it, but the facts show that
they\'re a part of the long march back. The President was down there and
continues to press financial aid and other assistance as possible into
the region. It\'s just going to take us a longer term commitment to make
sure that we keep working these issues.

I\'d be happy to answer any questions.

CHAIRMAN CARLSON NELSON: Any other questions or comments?

(No response)

**[THE BOARD\'S FINAL LETTER TO THE SECRETARY]{.underline}**

CHAIRMAN CARLSON NELSON: Ben, I think we should turn to our letter. We
have circulated the letter. I think each of you have it in your book.
I\'d welcome any comments. I know that we have Glenn Tilton here, who
was in charge of one of the committees. Actually, both the Western
Hemisphere Travel Initiative and Facility Travel came under that
particular \-- thank you so much for being here, Mr. Secretary.

And then Andrew Taylor was the chair of the Subcommittee on Promotions,
and Rich Johnson was here, the Subcommittee on Return on Investment.

Just, if anyone has anything further to mention, I think that this has
been quite well vetted back and forth among a very active staff group
and we appreciate all that work.

Any comments?

MR. TILTON: Marilyn, I would just echo what\'s emerged as the theme, I
think, of the discussion, and that is the commonality of interest
between the various departments and agencies of the U.S. Government and
the private sector, and where we work well together, and we pursue
metrics that are mutually reinforcing, we do our best work. We do our
best work on behalf of our customers.

CHAIRMAN CARLSON NELSON: Other comments?

(No response)

CHAIRMAN CARLSON NELSON: I think, personally, that listening to the
progress that\'s actually been made as each of the departments not only
helped to educate us about the problems, but also our progress in
directionally solving them or facilitating both security and the travel,
is clearly an objective.

I\'m thrilled to hear the numbers. I\'m hoping that that will be an
indication that it will demonstrate that we\'re actually gaining
momentum and regaining our rightful share of travel and tourism. I think
we\'ll all continue our efforts to support these initiatives through
both the Senate and the House, and to support the initiatives at the
various agencies that we heard about today.

Well, hearing no additions or corrections, I\'d like to suggest that we
submit the letter to the Secretary. Again, I\'d like to reiterate our
appreciation for the creation of the council, but more importantly, for
what\'s been really unprecedented collaboration. I just think we
expressed a great deal of appreciation to you for your leadership.

I also wanted to express my appreciation, and I have the list but in
consideration of the time I won\'t read it, but we have many staff
people who have spent hours and hours to make this work, to bring these
collaborations about and to help us work out the details and understand
each other better, and we appreciate that communication very much. I
will make sure that, for the record, we give you this list so that these
people can be acknowledged.

Once again, I think we all wish that you were here, but we will
individually express our appreciation to Jay Rasulo for beginning with
the intensity and the passion that he brought to this, and continues to
bring.

So is there any comment from those of you in the public who are here, or
the staff or agency folks?

(No response)

CHAIRMAN CARLSON NELSON: If not, I would adjourn this meeting, this
final meeting of this particular council, and again express my
appreciation to all those who have participated in this outcome.

So, thank you, Mr. Secretary.

(Whereupon, at 12:05 the meeting was adjourned.)

C E R T I F I C A T E

This is to certify that the foregoing proceedings of a meeting of the
U.S. Travel and Tourism Advisory Board, held on September 5, 2007, were
transcribed as herein appears, and this is the original transcript
thereof.

LISA DENNIS

Certified Verbatim Reporter

Diane White

Rebecca Rueseler

Tammy Dahjaoui

Wendy Watkins

Bill Bissett

Frank Haas

Kay Fujimoto

Tom Polski

Leslie Kupchella

Melissa Froelich

Deborah Fell

Meryl Levitz

Deborah Diamond

Kellie Vargo

Karen McDonald

Wendy Rice

Lana Bilvous

Monica Durrwachter

Ray Wagner

Brian Rothery

Mary Barnicle

Julie Oettinger

Jeff Stewart

Chuck Merin

Vicki Alfonzetti

Tara Riordan

June Kunsman