Supply Chain Security: CBP Works with International Entities to Promote Global Customs Security Standards and Initiatives, but Challenges Remain
Published: 2008-08-15T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Oceangoing cargo containers play a vital role in global trade but can also pose a risk of terrorist exploitation. U.S. Customs and Border Protection (CBP), part of the Department of Homeland Security (DHS), oversees security of the supply chain--the flow of goods from manufacturer to retailer. CBP anticipates that adoption of uniform, international customs security standards could eventually lead to a system of mutual recognition whereby the customs security-related practices and programs taken by one customs administration are recognized and accepted by another administration. In response to congressional requesters, GAO determined (1) actions CBP has taken to develop and implement international supply chain security standards, (2) actions CBP has taken with international partners to achieve mutual recognition of customs security practices, and (3) issues CBP and foreign customs administrations anticipate in implementing 100 percent scanning of U.S.-bound container cargo. To conduct its work, GAO analyzed CBP documents on supply chain security programs and international cooperation initiatives and met with CBP officials and foreign customs officials from various trading partner nations. Also, GAO drew upon its related reports and testimony on supply chain security issued earlier this year-- GAO-08-187 (Jan. 25), GAO-08-240 (Apr. 25), and GAO-08-533T (June 12). DHS provided technical comments on a draft of this report, which GAO incorporated where appropriate.
section_title: What GAO Found
paragraphs: To develop and implement international supply chain security standards, CBP has taken a lead role in working with foreign customs administrations and the World Customs Organization (WCO). Through the Container Security Initiative (CSI), CBP places staff at foreign seaports to work with host nation customs officials to identify high-risk container cargo bound for the United States, and through the Customs-Trade Partnership Against Terrorism (C-TPAT), CBP forms voluntary partnerships to enhance security measures with international businesses involved in oceangoing trade with the United States. In collaboration with 11 other members of the WCO, CBP developed the Framework of Standards to Secure and Facilitate Global Trade (SAFE Framework), which is based in part on the core concepts of the CSI and C-TPAT programs and provides standards for collaboration among customs administrations and entities participating in the supply chain. The SAFE Framework was adopted by the 173 WCO member customs administrations in June 2005; and as of July 2008 154 had signed letters of intent to implement the standards. CBP has actively engaged with international partners to define and achieve mutual recognition of customs security practices. Broadly, for example, CBP contributed to development of the SAFE Framework, which calls for a system of mutual recognition. More specifically, in June 2007, CBP signed a mutual recognition arrangement with New Zealand--the first such arrangement in the world--to recognize each other's customs-to-business partnership programs. Furthermore, in June of this year, CBP signed mutual recognition agreements with Jordan and Canada. By early 2009, CBP anticipates obtaining a mutual recognition agreement with the European Commission, which represents the 27 member nations of the European Union. CBP actively engages in the implementation of international customs security standards, however recent law, such as The Implementing Recommendations of the 9/11 Commission Act of 2007 (9/11 Act) requiring that 100 percent of U.S.-bound container cargo be scanned at foreign seaports--using a nonintrusive inspection process involving equipment such as X-rays and radiation detection equipment--may affect worldwide adoption of international supply chain security standards. CBP and some foreign partners have stated that unless additional resources are made available, 100 percent scanning could not be met. Given limited resources, CBP and European custom administration officials said that 100 percent scanning may provide a lower level of security if customs officers are diverted from focusing on high-risk container cargo. Under the current risk-management system, for example, the scanned images of high-risk containers are to be reviewed in a very detailed manner. However, according to WCO and industry officials, if all containers are to be scanned, the reviews may not be as thorough. Further, a European customs administration reported that 100 percent scanning could have a negative impact on the flow of commerce and also would affect trade with developing countries disproportionately.

section_title: Letter
paragraphs: Concerns about the ability of both the federal government and U.S.  companies participating in international maritime commerce to identify  and prevent weapons of mass destruction (WMD) from being smuggled  inside cargo containers bound for the United States have heightened since  the terrorist attacks of 2001. Oceangoing cargo containers play a vital role  in the movement of cargo between global trading partners, and more than  700 foreign seaports ship cargo to the United States. In fact, 11 million  oceangoing cargo containers arrived at U.S. seaports in fiscal year 2007— meaning roughly 30,000 oceangoing containers arrived each day that year.  Balancing security concerns with the need to facilitate the free flow of  commerce remains an ongoing challenge for the public and private sectors  alike.
In the federal government, U.S. Customs and Border Protection (CBP),  part of the Department of Homeland Security (DHS), is responsible for  overseeing oceangoing container security and reducing the vulnerabilities  associated with the supply chain—the flow of goods from manufacturers  to retailers. As CBP performs this mission, it maintains two overarching  and sometimes conflicting goals—increasing security while facilitating  legitimate trade and travel. To address these goals, CBP has developed a  layered risk-management approach to cargo security. This approach  includes analyzing trade data received in advance of cargo being shipped  to facilitate risk-based decisions for the identification of high-risk cargo.  Also, as part of this risk-management approach, CBP operates two  voluntary security programs. The first is the Container Security Initiative  (CSI), a customs-to-customs program that places CBP officers in foreign  seaports to use intelligence and risk assessment information to determine  whether U.S.-bound shipments are at risk of containing WMD or other  terrorist contraband—a process referred to as targeting. The second is the  Customs-Trade Partnership Against Terrorism (C-TPAT), a customs-to- business partnership program that provides benefits to supply chain  companies that comply with pre-determined security measures. In  addition, to better protect international trade against the threat of  terrorism, CBP promotes a set of international customs security standards  similar to the CSI and C-TPAT programs, which as of June 2008, 154  countries have pledged to adopt. To develop and promote the  implementation of these international standards for supply chain security,  CBP works through the World Customs Organization (WCO)—an  intergovernmental organization representing the customs administrations  of 173 countries, which aims to enhance the effectiveness and efficiency of  customs administrations. CBP and the WCO anticipate that widespread  adoption of uniform, international customs security standards eventually  could lead to the development of a system of mutual recognition whereby  the security-related practices and programs taken by the customs  administration of one country are recognized and accepted by the  administration of another. According to CBP, a system of mutual  recognition could lead to greater efficiency in providing security by, for  example, reducing redundant examinations of container cargo and  avoiding the unnecessary burden of addressing different sets of  requirements as a shipment moves through the supply chain in different  countries, thereby facilitating international trade.
To further address container security concerns, Congress passed, and the  President signed, the Security and Accountability for Every (SAFE) Port  Act in 2006, which includes provisions that codified the CSI and C-TPAT  programs, both of which had been CBP initiatives but not previously  required by law. The act also included requirements for CBP to consider  factors such as cargo volume when designating seaports as CSI  participants and required CBP to test the feasibility of scanning 100  percent of U.S.-bound container cargo in foreign seaports. To fulfill these  and other requirements of the act, CBP developed the Secure Freight  Initiative (SFI) and the SFI pilot program. In August 2007, the  Implementing Recommendations of the 9/11 Commission Act of 2007 (9/11  Act) was enacted, requiring, among other things, that foreign seaports  scan 100 percent of U.S.-bound container cargo by 2012, with possible  exemptions for individual seaports, replacing the similar provision in the  SAFE Port Act that did not have a deadline for full implementation of the  scanning requirement.
In response to your request, we assessed CBP’s efforts related to  international customs security standards. Specifically, this report  addresses the following questions:    What actions has CBP taken to develop and implement international  supply chain security standards?
What actions has CBP taken with international partners to achieve  mutual recognition of customs security practices?
What issues do CBP and foreign customs administrations working to  internationalize customs security standards anticipate in implementing  100 percent scanning of U.S.-bound container cargo?
To address these objectives, we reviewed available CBP documentation,  such as reports pertaining to the CSI, C-TPAT, and SFI programs, and  international agreements related to CBP’s work in the international trade  community. In addition, we met with CBP officials in Washington, D.C.,  who have program responsibilities for international affairs and trade. Also,  to discuss multilateral and bilateral efforts to promote supply chain  security, we met with representatives from the European Commission and  the WCO, as well as with customs officials from the Americas, Asia, and  Europe at the 2007 WCO World Customs Forum and CBP’s 2007 CSI  Global Targeters Conference. We also spoke with representatives of  industry groups, including CBP’s Departmental Advisory Committee on  Commercial Operations and the Federation of European Private Port  Operators. We spoke with officials of foreign customs administrations  during our visits to 6 of the 58 seaports that participate in the CSI  program. We selected the six CSI seaports—located in the countries of  Belgium, Canada, France, Honduras, South Korea, and United Arab  Emirates—based on geographic and strategic significance, container  volume shipped to the United States from the seaports, and when the  seaports began conducting CSI operations. The results from our visits to  seaports provided examples of CBP and host government operations but  cannot be generalized beyond the seaports visited because we did not use  statistical sampling techniques in selecting the seaports. Similarly, while  the perspectives of foreign officials we spoke to cannot be generalized  across the wider population of countries, they provided us examples of  how CBP interacts with foreign customs administration officials at  overseas seaports. Additionally, we reviewed CBP and WCO documents on  international initiatives for enhancing supply chain security. We conducted  this performance audit in conjunction with concurrent reviews of the CSI  and C-TPAT programs from May 2006 through July 2008 in accordance  with generally accepted government auditing standards. Those standards  require that we plan and perform the audit to obtain sufficient, appropriate  evidence to provide a reasonable basis for our findings and conclusions  based on our audit objectives. We believe that the evidence obtained  provides a reasonable basis for our findings and conclusions based on our  audit objectives. A detailed discussion of our scope and methodology is  contained in appendix I.
subsections: section_title: Background
subsections: section_title: Vulnerabilities of Containers in the International Supply Chain
paragraphs: Seaports are critical gateways for the movement of commerce through the  international supply chain. The facilities, vessels, and infrastructure within  seaports, and the cargo passing through them, all have vulnerabilities that  terrorists could exploit. The containers carrying goods that are shipped in  oceangoing vessels are of particular concern because they can be filled  overseas at many different locations and are transported through complex  logistics networks before reaching U.S. seaports.
In addition, transporting a shipping container from its international point  of origin to its final destination involves many different participants and  many points of transfer. The material in a container can be affected not  only by the manufacturer or supplier of the material being shipped but  also by carriers who are responsible for getting the material to a seaport  and by personnel who load containers onto the ships. Others who interact  with the cargo or have access to the records of the goods being shipped  include exporters who make arrangements for shipping and loading,  freight consolidators who package disparate cargo into containers, and  forwarders who manage and process the information about what is being  loaded onto the ship. Figure 1 illustrates many of the key participants and  points of transfer involved from the time that a container is loaded for  shipping to its arrival at the destination seaport and ultimately the  importer.
Several studies of maritime security conducted by federal, academic,  nonprofit, and business organizations have concluded that the movement  of oceangoing cargo in containers is vulnerable to some form of terrorist  action. Every time responsibility for cargo in containers changes hands  along the supply chain there is the potential for a security breach; thus,  vulnerabilities exist that terrorists could take advantage of by, for  example, placing a WMD into a container for shipment to the United States  or elsewhere. While there have been no known incidents of containers  being used to transport WMDs, criminals have exploited containers for  other illegal purposes, such as smuggling weapons, people, and illicit  substances. Finally, while CBP has noted that the likelihood of terrorists  smuggling WMDs into the United States in cargo containers is low, the  nation’s vulnerability to this activity and the consequences of such an  attack are potentially high. For example, in 2002, Booz Allen Hamilton  sponsored a simulated scenario in which the detonation of weapons  smuggled in cargo containers shut down all U.S. seaports for 12 days. The  results of the simulation estimated that the seaport closures could result in  a loss of $58 billion in revenue to the U.S. economy along with significant  disruptions to the movement of trade.
section_title: The U.S. Government Is Engaged in Efforts to Secure Containers in the International Supply Chain
paragraphs: The federal government has taken many steps to secure the supply chain,  including the cargo in oceangoing containers destined for the United  States. While CBP officials at domestic seaports continue efforts to  identify and examine high-risk imports arriving in containers, CBP’s post- 9/11 strategy also involves focusing security efforts beyond U.S. borders to  target and examine high-risk cargo before it enters U.S. seaports. As  discussed earlier in this report, CBP’s strategy is based on a layered  approach of related initiatives that attempt to focus resources on  potentially risky cargo shipped in containers while allowing other  containers carrying cargo to proceed without unduly disrupting commerce  into the United States. While the Department of Energy (DOE) has led U.S.  efforts to detect radiation in cargo containers originating at foreign  seaports, CBP has initiated five initiatives addressing container security. A  brief description of each is shown in table 1.
One of CBP’s major efforts to address container security is CSI—a 6-year- old program that aims to identify and examine U.S.-bound cargo that is  considered to pose a high risk of concealing WMDs or other terrorist  contraband by reviewing advanced cargo information sent by ocean cargo  carriers. As part of the program, CBP officers, usually stationed at foreign  seaports throughout Europe, Asia, the Middle East, the Americas, or  elsewhere, seek to identify high-risk U.S.-bound container cargo. CBP and  host government officials share the role of assessing the risk of U.S.-bound  container cargo leaving the seaports of the countries participating in CSI.  Among other tasks, CBP officers at the 58 CSI seaports are responsible for  identifying high-risk cargo shipped in containers, whereas host  government customs officials examine the high-risk cargo—when  requested by CBP—by scanning containers that hold the cargo using  various types of nonintrusive inspection equipment, such as large-scale    X-ray machines, or by physically searching the containers’ contents before  departure to the United States. Figure 2 describes the activities carried out  by CBP officers and host government customs officials to target and  examine high-risk container cargo at CSI seaports.
Another of CBP’s major efforts to address container security is through  the C-TPAT program. Initiated in November 2001, C-TPAT aims to secure  the flow of goods bound for the United States by developing a voluntary  antiterrorism partnership with stakeholders of the international trade  community, which is comprised of importers; customs brokers;  forwarders; air, sea, and land carriers; and contract logistic providers.       C-TPAT members commit to improving the security of the supply chain,  which may include, for example, the use of employee identification  systems for access control purposes. The members also agree to provide  CBP with information on their specific security measures and allow CBP  to validate or verify, among other things, that their security measures meet  or exceed the agency’s minimum security requirements. The purpose of  this latter step, referred to as validation, is to help CBP ensure that the  security measures outlined in a member’s security profile are actually in  place and are effective. In return, C-TPAT members are entitled to various  benefits—chief among them, a reduced likelihood of having their cargo  inspected.
As part of its mission and strategic plan, CBP also seeks to promote the  security of oceangoing containers by having its officers work closely with  other stakeholders, including international customs trade organizations  and host governments (where seaports participating in the CSI program  are located). CBP’s former Commissioner has stated that a key goal of this  outreach effort is to promote an international framework of customs  security standards that multiple countries can agree upon. Such a  framework is intended by the United States and other parties to help  institute consistent, reliable customs security standards and practices.  Figure 3 shows a timeline for the various U.S. security initiatives  addressing container cargo security.
section_title: CBP and Foreign Customs Administrations Have Jointly Developed Global Customs Security Standards and Initiatives and Work Cooperatively to Implement These Standards Worldwide
paragraphs: Working through the WCO and in cooperation with the international  customs community, CBP has taken a lead role in the development of  international standards in customs security practices and in customs-to- business partnership programs. This effort led to the adoption of the WCO  SAFE Framework, which establishes standards for collaboration between  the customs administrations of different countries as well as between  customs administrations and businesses. CBP has also assisted in the  implementation of the SAFE Framework to promote international customs  security standards, such as through capacity-building efforts that provide  technical assistance and training to developing countries wanting to  implement the SAFE Framework.
section_title: CBP Is Working with Foreign Customs Administrations to Develop International Standards for Customs-to-Customs Relationships and for Customs-to-Business Partnership Programs
paragraphs: CBP has taken a lead role in working with foreign customs administrations  on approaches to standardizing supply chain security worldwide. In 2004,  CBP, along with 11 other member customs administrations of the WCO,  formed the High Level Strategic Group to develop international standards  for customs security practices. The group developed the WCO  Framework of Standards to Secure and Facilitate Global Trade (commonly  referred to as the SAFE Framework), the core concepts of which are  based on components in CBP’s CSI and C-TPAT programs. Further, CBP’s  CSI and C-TPAT programs have provided a model for developing global  customs security standards, as countries adopt a framework that  embodies the core principles of these programs.
The CSI and C-TPAT strategic plans call for promoting an international  framework of customs security standards using the core elements of the  U.S. cargo security strategy. As CBP has recognized in security matters  the United States is not self-contained, either in its problems or its  solutions. The growing interdependence of countries requires policy  makers to recognize the need to work in partnerships across international  boundaries to achieve vital national goals. Further, the WCO has  acknowledged that customs security enforcement, particularly with the  threat of terrorism, cannot be done in isolation and requires international  cooperation. To that end, CBP has taken a lead role in working with  foreign customs administrations, through the WCO, to establish the  framework of international standards designed to enhance the security of  the global supply chain while facilitating international trade. In June 2005,  the 173 member customs administrations of the WCO adopted the SAFE  Framework. Further, as of June 2008, 154 WCO member countries,  including the United States, had signed letters of intent for implementing  the SAFE Framework (see fig. 4).
The SAFE Framework establishes the standards for collaboration between  the customs administrations of different countries (known as the customs- to-customs pillar) as well as between customs administrations and the  businesses participating in commercial trade activities through various  supply chains (known as the customs-to-business pillar). These standards  provide guidance on what WCO member customs administrations must do  at a minimum to both secure the international supply chain and facilitate  trade. As seen in figure 5, the twin pillars of the customs-to-customs  standards and the customs-to-business standards are based upon four core  principles and underpin the SAFE Framework.
The standards and principles of the SAFE Framework are similar to those  of the CSI and C-TPAT programs. For example, just as in the CSI program,  the standards in the customs-to-customs pillar state that members should  use a risk-management system to target and identify potentially high-risk  cargo. Under these standards, members should also require advanced  electronic information on container shipments to determine the risk posed  by cargo. Further, member customs administrations should provide for  joint targeting and screening, the use of standardized sets of targeting  criteria, and compatible communication and information-exchange  mechanisms. The customs-to-business pillar of the SAFE Framework  incorporates the concept of the Authorized Economic Operator (AEO) and  provides technical guidance for customs administrations to develop an  AEO program that offers incentives to supply chain companies that  comply with predetermined minimum security standards. In the United  States, C-TPAT is the designated AEO program (and businesses  participating in the program are Authorized Economic Operators). Just as  in the C-TPAT program, the WCO customs-to-business pillar provides that  the customs administration should, with representatives from the trade  community, design a validation process for the respective AEO program  that offers incentives to participating businesses. Further, the technical  guidance for AEO programs states that participating businesses should  develop mechanisms for the education and training of personnel regarding  security practices. In essence, the SAFE Framework internationalizes the  core principles of the CSI and C-TPAT programs.
According to the WCO, SAFE Framework stakeholders receive benefits  from incorporating the core principles of the framework and implementing  the standards. CBP officials stated that widespread implementation of the  SAFE Framework benefits global container cargo security by shifting the  focus of international customs administrations from primarily revenue  collection to include enhanced security. Further, the SAFE Framework  strengthens cooperation between customs administrations to improve  their capability to detect high-risk cargo. Additionally, widespread  implementation of the SAFE Framework could potentially help prevent  port shopping by terrorists or smugglers who look for seaports with more  lax or nonexistent security standards. According to CBP and WCO  officials, implementation of the SAFE Framework could benefit WCO  member countries by enhancing security, speeding up operations,  increasing revenue collection, and improving integrity programs for  ensuring that customs administrations are free of corruption. The officials  also noted that the SAFE Framework could lead to implementation of CSI- like customs security practices at non-CSI foreign seaports and enhance  customs administration reform and modernization, which could improve  the ability to detect high-risk cargo for antiterrorist security purposes.  According to the WCO, the broad implementation of the standards also  could allow companies to avoid the unnecessary burden of addressing  different sets of requirements as a shipment moves through the supply  chain logistics in different countries. Moreover, as we have previously  reported, creating common standards facilitates collaboration between  entities.
subsections: section_title: Multiple Initiatives Are Under Way to Implement Elements of the SAFE Framework and to Promote Global Customs Security Standards
paragraphs: Working with the WCO and other international partners, CBP has taken  several steps to support implementation of the SAFE Framework and to  promote a customs environment that focuses on security. To help  implement the SAFE Framework, CBP, along with the customs  administrations of other countries, participates in a capacity-building  program, known as the Columbus Program, which is coordinated through  the WCO and fosters customs administration modernization in developing  countries. Capacity-building activities consist of technical assistance and  training, which lead to the establishment of infrastructure and procedures  that are consistent with the objectives of the SAFE Framework standards.  Capacity building consists of three phases: needs assessment,  implementation, and monitoring. The first phase (needs assessment)  provides an evaluation of a developing country’s current capacity and  existing gaps that would prevent it from implementing the SAFE  Framework. The second phase (implementation) involves support from  the assisting country to put into action recommendations derived from the  needs assessment. Finally, the third phase involves monitoring the  modernization practices put in place in phase two. According to the WCO,  as of April 2008, 111 countries were participating in the capacity-building  program. As of July 2008, 104 of these countries had completed the first  phase, 65 had moved into the second phase, and one was in the third  phase. To carry out capacity-building activities, the WCO relies on  contributions from individual donor countries like the United States. As a  participating customs administration, CBP has provided training and  assistance to 10 countries in the capacity-building program by developing  customs regimes in these countries that incorporate the core elements of  U.S. supply chain security programs, and thus the SAFE Framework. CBP  has provided border enforcement training, integrity awareness training,  and an advisory program. Additionally, CBP works with Asia-Pacific  Economic Cooperation (APEC) member countries to help implement the  WCO SAFE Framework through APEC’s Framework for Secure Trade,  which, according to CBP, is substantially identical to the WCO SAFE  Framework. The APEC Framework enables member countries to  advocate the implementation of the WCO SAFE Framework in non-WCO  customs administrations, such as Taiwan.
In addition to working collaboratively with the international community to  develop and implement the SAFE Framework, CBP has influenced the  development of customs security practices in other countries through its  own cargo security strategy. According to European customs  administration officials we spoke to, the CSI program is beneficial because  it provides a model for how to incorporate elements of the SAFE  Framework, including targeting and the use of advance information, into  their own customs practices. For example, the European Union recently  amended its customs code to incorporate programs similar to CSI and      C-TPAT. To further promote international supply chain security, since  2004, CBP has held an annual CSI global conference to share information  on challenges met and best practices for customs operations. For example,  in the August 2007 conference, two sessions specifically focused on  challenges encountered with capacity building and on best practices for  CSI seaport operations. Additionally, the conference provided a forum for  senior-level customs officials from all CSI countries to establish working  relationships with one another and discuss future policy actions.
Just as the CSI program has influenced the ability of foreign customs  administrations to target and examine high-risk containers in other  countries, the C-TPAT program has helped influence the development of  AEO programs. According to CBP officials as well as customs officials  from Europe, Asia and Africa, operation of the C-TPAT program has  provided a guide on how these programs should be operated. According to  data from the WCO, about 70 countries have begun developing their own  national AEO programs, which is essential to implementation of the SAFE  Framework. Canada, Japan, Jordan, New Zealand, and Singapore have  operational AEO programs in place. Other countries, such as Australia and  some European Union nations will soon have operational systems in place.  Further, through the WCO capacity-building program, several countries in  the developing world have begun work on AEO pilots. For example, the  East African Community—a regional intergovernmental organization  made up of Burundi, Kenya, Rwanda, Tanzania, and Uganda—has started a  program based on the SAFE Framework, which used the C-TPAT program  as a model. Similarly, the Southern African Customs Union—made up of  Botswana, Lesotho, Namibia, South Africa, and Swaziland—has also  begun work on developing a pilot AEO program. Panama and Paraguay are  considering AEO pilots as well.
section_title: CBP and International Partners Are Working to Achieve Mutual Recognition of Customs Security Practices
paragraphs: The SAFE Framework calls for a system of mutual recognition, and CBP  has developed action plans and pilot programs to help develop mutual  recognition relationships with other countries. There are two types of  mutual recognition—first, the arrangement whereby the actions or  decisions taken by one customs administration are recognized and  accepted another administration and, second, an arrangement whereby  the two nations’ AEO programs are mutually recognized by the respective  customs administrations. CBP and other international customs officials  see mutual recognition as providing an exit strategy for the CSI program  (which includes reassigning or repatriating CBP officers stationed abroad)  in some countries, as well as being a driver for further implementation of  AEO programs. Finally, CBP engages in activities to assist in the  development of a system of mutual recognition, such as pilot programs,  and in June 2007, CBP signed a mutual recognition arrangement with New  Zealand—the first ever such arrangement in the world—to recognize each  other’s customs-to-business partnership programs.
subsections: section_title: CBP and International Organizations Have Defined Different Types of Mutual Recognition
paragraphs: CBP has worked with the international customs community to develop  and implement the SAFE Framework, a set of international customs  standards that calls for a system of mutual recognition, which the CBP and  the WCO define as the arrangement whereby the actions or decisions  taken by the customs administration of one country are recognized and  accepted by the administration of another. Further, according to the WCO,  for a system of mutual recognition to work, there must be an agreed-upon  common set of standards that are applied in a uniform manner so that a  level of confidence is possible between different customs administrations.  The WCO distinguishes between mutual recognition of customs controls  and mutual recognition of AEO programs, as described below and  illustrated in figure 6.
Mutual recognition of customs controls is achieved when, for example,  the customs administrations of two countries have confidence in each  other’s procedures for targeting and inspecting cargo shipped in  containers. According to the WCO, such mutual recognition could be  achieved through joint targeting and screening, the use of standardized  sets of criteria for identifying high-risk cargo for inspection, and  compatible communication and information-exchange mechanisms.
Mutual recognition of AEO programs occurs when customs  administrations agree to recognize one another’s AEO programs and  security features and to provide comparable benefits to members of the  respective programs.
The SAFE Framework states that members should work with each other  to develop mechanisms for mutual recognition of customs controls and of  AEO programs.
While CBP officials stated that the agency accepts the WCO definition of  mutual recognition, CBP focuses its efforts and offers a process for  achieving mutual recognition of AEO programs. CBP does not offer  specific guidance on how to achieve mutual recognition of customs  controls because officials believe that mutual recognition of AEO  programs, such as the United States’ C-TPAT program and New Zealand’s  AEO program, called the Secure Export Scheme, implies mutual  recognition of customs controls. This is because, when obtaining  information on a foreign country’s AEO program, CBP officials also review  the targeting and customs practices of that country. Therefore, according  to CBP, there is no need for additional guidance or efforts with regard to  mutual recognition of customs controls. However, an official from the  WCO Private Sector Consultative Group (consisting of trade community  partners from diverse industry and transport sectors) stated that there  needs to be more clarity between the two types of mutual recognition and  the benefits associated with each. CBP and WCO officials have stated that  achieving mutual recognition of customs controls presents a challenge to  customs administrations and may not be easily or quickly attained.  According to those officials, this is because full recognition and adoption  of the SAFE Framework does not by itself provide countries with  confidence in each other’s customs security practices and thus mutual  recognition.
section_title: CBP and International Officials See Mutual Recognition as an Exit Strategy for the CSI Program in Some Countries and a Catalyst for Implementation of AEO Programs
paragraphs: CBP and European customs officials we spoke with see the benefit of  mutual recognition as providing an exit strategy for the CSI program in  some countries and being a catalyst for further implementation of AEO  programs. CBP officials have stated that it was never the intention of the  agency to keep CBP officers in foreign seaports under the CSI program  indefinitely, but that a certain level of trust about the security practices of  the customs administration of a foreign country and a common set of  standards (i.e., mutual recognition) would be needed before CBP  personnel at CSI seaports could be shifted to areas of greater need.
While the CSI program constitutes an effort to implement the SAFE  Framework, it differs from the SAFE Framework in that it is a reciprocal  program. The SAFE Framework calls for a system of mutual recognition  between the customs administrations of two countries, whereas CSI  requires CBP officers to be placed in foreign ports, and in return for  accepting the CSI program in a foreign country, the United States offers  host countries the opportunity to place their customs officers in U.S.  seaports to target oceangoing, containerized cargo being exported to their  countries. However, when partner countries do not place their customs  officers in a U.S. seaport, the CSI program focuses on identifying high-risk  U.S.-bound containers at the CSI seaports (i.e., U.S. imports) and not on  those containers outbound from the United States to foreign countries  (i.e., U.S. exports). Alternatively, under a system of mutual recognition, in  which comparable risk management principles are used, joint activities  such as identifying cargo for inspection and cooperation between customs  administrations would not require the placement of customs officials in  foreign seaports. Further, the SAFE Framework requires that all countries  inspect outbound high-risk containers at the request of the importing  country if such a request is deemed to be reasonable. While the CSI  program offers participating countries the ability to station their customs  officials in U.S. seaports, 2 of the 33 countries participating in CSI— Canada and Japan—had decided to do so as of July 2008. Thus, the  program primarily benefits U.S. security. European customs  administration officials we spoke to stated that if all countries practiced  reciprocity, as envisioned in the CSI program, each seaport would have  numerous customs officials present from different countries, which is an  inefficient use of resources. Alternatively, they said that implementation of  a system of mutual recognition whereby customs officials in the United  States have confidence that the customs controls and AEO programs of  another country provided an acceptable level of security would be a more  efficient use of limited resources.
CBP and customs officials we spoke to from Asia, Europe, and the South  Pacific support mutual recognition of AEO programs. The WCO and  industry representatives have stated that mutual recognition is an  important benefit of AEO programs and will be the driving force behind  further implementation of such programs internationally. Further, these  officials stated that, in the absence of mutual recognition, there is little  incentive for private companies to join AEO programs and, therefore,  countries may not adopt this risk-management approach. Conversely,  mutual-recognition systems provide some assurance that joining an AEO  program could provide benefits across countries. According to CBP and  the WCO, mutual recognition of AEO programs could reduce the need for  multiple assessments of private sector supply chain firms by the customs  administrations of different countries and could generate benefits for both  industry and government—benefits that include faster clearances, reduced  examinations, and rapid business resumption in the aftermath of a  terrorist event.
section_title: CBP Has Engaged in Activities to Achieve Mutual Recognition with International Partners
paragraphs: CBP has been working to promote the SAFE Framework and engaging in  pilot programs with foreign governments to harmonize customs efforts  and to facilitate progress towards mutual recognition. For example, CBP is  working with the European Commission—the executive arm of the EU— to standardize customs practices across countries to be consistent with  the SAFE Framework. CBP and the European Commission’s Taxation and  Customs Union Directorate, working through the Joint Customs  Cooperation Committee, developed a 10-point action plan to further  harmonize the customs efforts of the United States and the European  Union. This action plan includes the establishment of common data  elements to be used for risk determination and a mechanism for the  exchange of information, both of which are suggested by the SAFE  Framework to assist in the development of mutual recognition of customs  controls. The action plan also calls for a pilot to compare the United  States’ C-TPAT program with the European Union’s AEO program for the  purpose of achieving mutual recognition between the respective  programs. Based on the 10-point action plan, CBP and the European  Commission are also conducting a CSI pilot involving low-volume  European seaports, known as the feeder port pilot program. Under the  pilot, local customs officials at the feeder ports work with CBP officers  located at CSI seaports to assess the risk and jointly determine whether  the U.S.-bound container cargo originating in these feeder ports should  receive further scrutiny. Local customs officials at the feeder seaports  then inspect those U.S.-bound containers determined to be high risk  before they are loaded on vessels at the feeder port. According to EU  officials, the aim of coordinating on the efforts included in the 10-point  action plan is to reduce the number of requirements that differ between  European countries and the United States. Once these efforts are finalized,  the EU intends to expand the projects to include other international  partners. Table 2 describes elements of the 10-point action plan.
European Commission officials we spoke with stated that activities  undertaken with CBP under the action plan are for the purpose of  harmonizing customs efforts and facilitating progress toward achieving  mutual recognition of customs controls. For example, the feeder port  project is seen as a step toward mutual recognition as containers are  examined at the feeder port with no CBP officers present. According to  officials from the European Commission and other European customs  officials, with the establishment of these common security practices, a  state of mutual recognition of customs controls between the European  Union and the United States would exist, and there would no longer be a  need to have CBP personnel stationed at European seaports as part of the  CSI program. However, both European Commission and CBP officials  stated that several hurdles exist before personnel could be removed from  these seaports, such as verification of inspection and targeting programs  and activities.
In addition to the European Union, CBP has been pursuing mutual  recognition of AEO programs with those countries that have developed  programs. For example, in June 2007, CBP entered into its first mutual  recognition arrangement—that is, CBP and the New Zealand Customs  Service mutually recognized each other’s respective customs-to-business  partnership program. Under the arrangement, CBP recognizes members of  New Zealand’s AEO program (the Secure Export Scheme) and provides  benefits to New Zealand companies validated by the Secure Export  Scheme similar to those of C-TPAT members and vice versa. According to  a senior New Zealand customs official, requirements for membership and  validation in the nation’s Secure Export Scheme program have been  adapted from the United States’ C-TPAT program. CBP later signed mutual  recognition arrangements with Jordan and Canada in June 2008. Further,  CBP and the European Commission have agreed to establish mutual  recognition of customs-to-business partnership programs by early 2009.  The specific details of how the participating countries’ customs  administrations plan to implement the mutual recognition arrangement— such as what benefits, if any, should be allotted to members of other  countries’ AEO programs—are in the process of being worked out. Finally,  CBP is also negotiating with Japan and Singapore to establish mutual  recognition arrangements with the industry partnership programs of those  countries.
To that end, CBP has developed an approach to achieving mutual  recognition of AEO programs with international partners. Prior to  pursuing mutual recognition, these partners must have (1) submitted a  letter of intent to the WCO to implement the SAFE Framework,                 (2) developed their own AEO program to enhance security, and (3) shown  a willingness to commit to a four-phase mutual recognition process. The  four phases are    phase 1: an evaluation process that includes a comparison of both  nations’ programs to determine the similarities, differences, gaps, and  challenges;   phase 2: an operational planning and testing phase to determine the  specific approach to how mutual recognition will be achieved,  including the development of a pilot program;   phase 3: conducting the pilot that was developed in phase two; and    phase 4: declaration of mutual recognition.
Appendix III provides an overview of CBP’s collaborative efforts to  enhance container security.
section_title: While Working to Internationalize Customs Security Standards, CBP and International Partners Report Challenges in Balancing These Efforts with Other Legal Requirements
paragraphs: CBP has been actively engaged in the development and implementation of  international customs security standards; however, recent laws requiring  100 percent scanning of U.S.-bound container cargo at foreign seaports  may affect worldwide adoption of these standards. As required by the  SAFE Port Act, CBP is currently testing the feasibility of 100 percent  scanning in a pilot program; and, while CBP has not yet completed the  pilot program, the 9/11 Act requires 100 percent scanning of all U.S.-bound  container cargo by 2012, with possible extensions for individual seaports  where specified conditions could hinder implementation. CBP and  international partners also report facing challenges in implementing a 100  percent scanning requirement while also maintaining their risk- management security approach.
subsections: section_title: Recent Law to Improve Maritime Security Imposes New Requirements to Scan 100 Percent of U.S.-Bound Container Cargo
paragraphs: The SAFE Port Act of 2006 requires DHS to test the feasibility of 100  percent scanning of U.S.-bound containers. To fulfill this requirement, in  December 2006, CBP and DOE jointly announced the formation of the  Secure Freight Initiative. This initiative included the SFI pilot program,  which became operational in October 2007. For more details on SFI, see  appendix IV. While the SFI pilot project is still under way, the 9/11 Act was  enacted. The act requires by 2012 100 percent scanning of all U.S.-bound  container cargo using nonintrusive inspection equipment, including  imaging equipment, which may use X-rays or gamma rays to create images  of the containers’ contents and radiation detection equipment at foreign  seaports. The act also (1) specifies conditions for potential extensions  beyond 2012 if a seaport cannot meet that deadline, (2) requires DHS to  develop technological and operational standards for scanning systems  used to conduct 100 percent scanning at foreign seaports, and (3) requires  DHS to ensure that actions taken under these provisions of the act do not  violate international trade obligations and are consistent with the WCO  SAFE framework or other international obligations of the United States.  These provisions of the 9/11 Act replace requirements of the SAFE Port  Act that called for 100 percent scanning of container cargo before its  arrival in the United States. While the SAFE Port Act stated that this  should be done as soon as possible, the 9/11 Act specifies a deadline of  2012. According to senior CBP officials, requiring 100 percent scanning  before having the results of the SFI pilot compromises the credibility of  the agency with its international partners because those countries that  agreed to partner with CBP on the SFI pilot did so with the understanding  that the findings would drive further discussions regarding a logical path  forward.
While we have not yet fully reviewed the implementation of the 100  percent scanning requirement, we have a number of preliminary  observations based on visits to foreign seaports and on discussions with  officials from CBP, foreign customs administrations, and trade  organizations regarding potential challenges CBP and others may face in  implementing this requirement. We also testified in June 2008 on  challenges associated with implementing the 100 percent scanning  requirement.
section_title: CBP and International Partners Report Facing Challenges in Balancing the 100 Percent Scanning Requirement with Current International Risk- Management Security Practices, and Concerns Remain regarding the Impact on Resources, Trade, and Security
paragraphs: CBP may have difficulty implementing a 100 percent scanning requirement  while also maintaining a risk-management security approach that it has  developed with many international partners. Currently, under the CSI  program, CBP uses automated targeting tools to identify containers that  pose a risk for terrorism for further examination before being placed on  vessels bound for the United States. As we have previously reported, risk  management reduces of the risk of possible terrorist attack to the nation  by allocating resources to those areas of greatest risk and is an approach  accepted throughout the federal government. Further, international  partners have expressed to DHS and Congress that 100 percent scanning  runs counter to the SAFE Framework, which is based on risk-management  principles. WCO officials are concerned that 100 percent scanning could  have an adverse impact on several of the organization’s core instruments,  which include not only the SAFE Framework but also the Revised Kyoto  Convention—an international customs agreement to which the European  Commission, the United States, and 52 other nations, have acceded.  Moreover, CBP and WCO officials stated that some countries are reluctant  to implement AEO programs since they believe such programs would not  be necessary with 100 percent scanning. Industry officials also stated that  some companies are reluctant to join AEO programs since one of the main  benefits of membership, a reduced likelihood of examination, would no  longer apply with 100 percent scanning.
CBP’s international partners have raised concerns about the impact on  resources, security, and the flow of commerce should the 100 percent  scanning requirement take effect. As we testified in June 2008, additional  resources—including increased staff, equipment, and infrastructure— would be necessary for implementing 100 percent scanning of U.S.-bound  container cargo at foreign seaports, and it is unclear who would be  responsible for the costs. Given this situation, officials from the European  Commission and CBP stated that unless additional resources are made  available, 100 percent scanning could not be accomplished. According to  officials from CBP, WCO, and the European Commission, 100 percent  scanning may actually provide a lower level of security than the current  method of targeting and examination using risk-management methods.  Officials from CBP and the European Commission stated that the risk- management approach directs resources to where they are most needed,  whereas scanning 100 percent of containers is inefficient because it directs  too many resources to one activity—scanning—and diminishes the focus  on those container shipments that pose the highest risk. According to a  senior WCO official, under the current risk-management system, customs  officers review the scanned images of high-risk containers in a very  thorough and detailed manner. However, if the officers must review  scanned images of all containers, the reviews may not be as thorough  because the officers could lose focus due to the sheer volume of work. If  more officers are not assigned, scanned images may not be properly or  thoroughly analyzed, leading to a degradation of security. Further, a  European customs administration official reported that 100 percent  scanning could have a negative impact on the flow of international  commerce, which under the 9/11 Act may be grounds for granting a 2-year,  renewable extension to the 100 percent scanning requirement at individual  seaports. The official also added that the 100 percent scanning  requirement would disproportionately affect trade with developing  countries.
section_title: Concluding Observations
paragraphs: In large part because of the collaborative international efforts in which  CBP has taken a lead role, the global customs environment for ensuring  supply chain security is significantly transforming. CBP is working in the  international community actively and conscientiously to promote the  adoption and implementation of global security standards for customs  controls and for the adoption of AEO programs. Further, CBP has  promoted a vision of mutual recognition whereby countries can have  confidence in their respective customs security practices. To date, CBP  has made substantial progress in working with foreign governments to  develop and implement security practices based on components of CBP’s  CSI and C-TPAT programs. These efforts potentially point to an exit  strategy for the CSI program in some countries and the generally more  efficient use of all countries’ resources through cooperative international  relationships from the public and private sectors.
The transformation of customs security strategies from inward-looking  programs to outward-looking and internationally cooperative relationships  is in its early stages. While CBP has made progress developing global  security initiatives, the agency faces challenges that may make it difficult  to promote widespread adoption of a system of internationally accepted  customs security standards and mutual recognition. In particular,  significant challenges are posed by prospective implementation of the  statutory provision that calls for 100 percent scanning of U.S.-bound  container cargo at foreign seaports. Because of cost and logistical  concerns, this provision may dissuade foreign governments and  businesses from participating in risk-management security initiatives such  as the CSI or C-TPAT programs as well as discourage other nations from  developing their own AEO programs.
section_title: Agency Comments
paragraphs: We provided a draft of this report to the Department of Homeland Security  and the Department of State for review and comment. The Department of  Homeland Security provided technical comments, which we incorporated  in this report where appropriate. The Department of State did not provide  comments.
We are sending copies of this report to appropriate congressional  committees, the Secretary of Homeland Security, and the Secretary of  State. This report will also be available at no charge on the GAO Web site  at http://www.gao.gov.
If you or your staff have any questions about this report, please contact me  at (202) 512-9610 or caldwells@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. Key contributors to this report are listed in appendix V.
section_title: Appendix I: Objectives, Scope, and Methodology
subsections: section_title: Objectives
paragraphs: In response to a request from the Chairman and Vice Chairman, Senate  Committee on Commerce, Science, and Transportation; the Chairman and  Ranking Member, Senate Committee on Homeland Security and  Governmental Affairs; the Chairman and Ranking Member, Permanent  Subcommittee on Investigations of the Senate Committee on Homeland  Security and Governmental Affairs; and the Chairman, House Committee  on Energy and Commerce, we reviewed U.S. Customs and Border  Protection’s (CBP) programs—the Container Security Initiative (CSI)  program and the Customs-Trade Partnership Against Terrorism (C-TPAT)  program—and CBP’s efforts to promote international supply chain  security standards. For this report, our review focused on the following  questions regarding CBP’s efforts to promote and implement an  international framework of standards for supply chain security:    What actions has CBP taken to develop and implement international  supply chain security standards?
What actions has CBP taken with international partners to achieve  mutual recognition of customs security practices?
What issues do CBP and foreign customs administrations working to  internationalize customs security standards anticipate in implementing  100 percent scanning of U.S.-bound container cargo?
section_title: Scope and Methodology
paragraphs: In reviewing CBP’s CSI program, C-TPAT program, and international  initiatives in supply chain security, we are releasing three reports—one on  the CSI program issued in January 2008, one on the C-TPAT program  issued in April 2008, and this report on CBP’s international supply chain  security initiatives.  We conducted this performance audit in conjunction  with concurrent reviews of the CSI and C-TPAT programs from May 2006  to July 2008. To determine what actions CBP has taken and its role in  developing and implementing international supply chain security  standards, we met with officials at CBP’s Office of International Affairs  and Trade Relations and the Office of Field Operations to discuss the  issues within the scope of this review. We reviewed the strategic plans of  the CSI and C-TPAT programs. We also reviewed CBP documents related  to its participation in capacity-building efforts. Further, we attended CBP’s  2007 CSI Global Targeters Conference that took place in Arlington,  Virginia, from August 28 to 30, 2007. The conference brought together,  among others, foreign customs officials from participating CSI countries  and CBP officials stationed at CSI seaports and from headquarters and  provided a forum for sharing challenges met and best practices for CSI  country participants. At the conference, we gathered information and  spoke with officials involved in many aspects of the international customs  arena. To determine CBP’s role in the development of the World Customs  Organization’s (WCO) SAFE Framework of Standards to Secure and  Facilitate Global Trade (more commonly referred to as the SAFE  Framework), we reviewed the meeting minutes and reports from the  WCO’s High Level Strategic Group, the group tasked with developing the  principles and standards of the SAFE Framework. These meeting notes  helped us determine CBP’s participation in the development of these  standards. We also reviewed the SAFE Framework itself. Additionally, we  spoke with WCO officials in Brussels. We reviewed WCO documents  related to capacity-building efforts and progress towards implementation  of the SAFE Framework.
We also visited 6 of the 58 CSI seaports. CSI seaports operate in 33  countries, and we selected these six CSI seaports based on geographic and  strategic significance, container volume to the United States from the  seaports, when the seaports began conducting CSI operations, and  whether the seaport was involved in CBP’s Secure Freight Initiative. The  results from our visits to seaports provided examples of CBP and host  government operations but cannot be generalized beyond the seaports  visited because we did not use statistical sampling techniques in selecting  the seaports.
We also spoke with the European and Asian customs officials in foreign  embassies in Washington, D.C. Further, we spoke with foreign customs  officers stationed at the Port of Long Beach, California, as part of the  reciprocal agreement of the CSI program. While the perspectives of  foreign officials we spoke to cannot be generalized across the wider  population of countries, they provided us an overall understanding of how  CBP interacts with foreign customs officials at overseas seaports. To  determine CBP’s role in implementing the SAFE Framework in the Asian- Pacific region, we reviewed meeting reports from the Asia-Pacific  Economic Cooperation’s Subcommittee on Customs Procedures.
Regarding the second and third questions—that is, CBP’s efforts in  achieving mutual recognition of customs practices and business  partnership programs and the challenges CBP faces as it moves forward  with its international supply chain security initiatives—we spoke with the  European Union’s European Commission officials in the United States and  with the European Commission’s Taxation and Customs Union  Directorate and the Transportation and Energy Directorate, both located  in Brussels, Belgium. We reviewed meeting notes and reports from the  U.S.-EU Joint Customs Cooperation Committee and official agreements  between the United States and the EU. We also spoke with officials from  the customs administration of New Zealand, the first country with which  the United States has a mutual recognition arrangement, and reviewed the  official arrangement between the two countries. We further reviewed  official documents from CBP and the WCO regarding mutual recognition.  We attended the WCO World Customs Forum 2007, an international  conference on the SAFE Framework that took place at WCO headquarters  in Brussels, Belgium, on December 11 and 12, 2007. The forum provided a  critical implementation review of the SAFE Framework, including the  development of customs-to-business partnership programs, mutual  recognition efforts, and obstacles preventing widespread implementation  of international standards and programs. It also brought together  recognized experts in global trade, supply chain security, international  trade law, and customs procedures. We also spoke with members of  industry organizations including CBP’s Departmental Advisory Committee  on Commercial Operations and the Federation of European Private Port  Operators. Additionally, we spoke with the private terminal operators at  the six CSI seaports we visited as well as with officials from the port  authorities. At the CSI seaports, we interviewed host government officials  and observed conditions at the seaports regarding the scanning of  containers. Finally, we reviewed recent U.S. legislation dealing with  maritime security, in particular the Security and Accountability for Every  Port Act of 2006 and the Implementing Recommendations of the 9/11  Commission Act of 2007.
We conducted this performance audit from May 2006 through July 2008 in  accordance with generally accepted government auditing standards. Those  standards require that we plan and perform the audit to obtain sufficient,  appropriate evidence to provide a reasonable basis for our findings and  conclusions based on our audit objectives. We believe that the evidence  obtained provides a reasonable basis for our findings and conclusions  based on our audit objectives.
section_title: Appendix II: World Customs Organization SAFE Framework of Standards
paragraphs: The World Customs Organization Framework of Standards to Secure and  Facilitate Global Trade (SAFE Framework) is built on the twin pillars of  the customs-to-customs network arrangements and the customs-to- business partnerships. Table 3 describes the 11 standards that govern the  interaction between the customs administrations of different countries in  the customs-to-customs pillar, and table 4 describes the 6 standards that  govern the interactions between a customs administration and the  businesses participating in commercial trade activities through various  supply chains in the customs-to-business pillar.
section_title: Appendix III: CBP’s Collaborative Efforts to Enhance Container Security
paragraphs: CBP has collaborated with several partners or working groups to enhance  international container security. Some of these partners or groups include  the World Customs Organization (WCO), the Asia-Pacific Economic  Cooperation (APEC), member countries and the customs administrations  of the European Union, the New Zealand Customs Service, and the Canada  Border Services Agency. Table 5 describes some of the collaborative work  done by CBP.
section_title: Appendix IV: The Secure Freight Initiative
paragraphs: To improve maritime container security, the SAFE Port Act was enacted in  October 2006 and requires, among other things, that CBP conduct a pilot  program to determine the feasibility of scanning 100 percent of U.S.-bound  containers. It also specifies that the pilot should test integrated scanning  systems that combine the use of radiation portal monitors and  nonintrusive inspection equipment, building upon CSI and the Megaports  Initiative. To fulfill this and other requirements of the SAFE Port Act, CBP  and DOE jointly announced the formation of the Secure Freight Initiative  (SFI) in December 2006.
The goal of SFI is to build upon existing port security measures by  enhancing the U.S. government’s ability to scan containers for nuclear and  radiological materials overseas and better assess the risk of U.S.-bound  containers. According to CBP officials, SFI is to be rolled out in three  phases. The initial phase is the International Container Security project— commonly known as the SFI pilot program. The SFI pilot program tests  the feasibility of 100 percent scanning of U.S.-bound container cargo at six  overseas seaports meant to represent a diverse array of trade processing  capacities with varying container traffic contents and flows. The SFI pilot  program involves the deployment of advanced cargo scanning capabilities  and an integrated examination system to participating overseas ports. The  advanced cargo scanning equipment—NII and radiation detection  equipment—produce data to indicate the presence of illicit nuclear and  radiological material in containers. The integrated examination system  then uses software to make this information available to CBP for analysis.  According to CBP, it will review the scan data at the foreign seaport or at  CBP’s National Targeting Center–Cargo (NTC-C) in the United States. If  the scanning equipment indicates a potential concern, both CSI and host  government customs officials are to simultaneously receive an alert and  the specific container is to be further inspected before it continues on to  the United States.
Table 6 lists the seaports participating in the SFI pilot program. As shown  in the table, three SFI seaports are to scan 100 percent of U.S.-bound  container cargo that passes through those seaports, while the other three  seaports are to deploy scanning equipment in a more limited capacity.
Phase two of SFI is the implementation of a requirement that importers  and cargo carriers provide certain additional information about the cargo  they are transporting to the United States prior to loading at the foreign  port. The additional information will allow CBP to better target high-risk  cargo. In general, this security filing—also called “10+2”—requires  importers to provide data elements that further identify the entities  involved in the supply chain and their locations as well as a more precise  identification of the items shipped to the United States. CBP worked with  its Departmental Advisory Committee on Commercial Operations and the  trade community to identify the specific data elements to be required,  which resulted in the 10+2 additional data elements required. CBP  published a notice for proposed rulemaking in the Federal Register on the  10+2 security filing in January 2008, and the regulations underwent a  public comment period until March 2008. This phase is currently in the  development stage.
As required by the SAFE Port Act, CBP issued a report in June 2008 on the  lessons learned from the SFI pilot program and the need and feasibility of  expanding the 100 percent scanning system to other CSI seaports, among  other things. Every 6 months after the issuance of this report, CBP is to  report on the status of full-scale deployment of the integrated scanning  systems at foreign seaports to scan 100 percent of U.S.-bound cargo.
section_title: Appendix V: GAO Contact and Staff Acknowledgments
subsections: section_title: Acknowledgments
paragraphs: In addition to the contact named above, Christine A. Fossett and Danny R.  Burton, Assistant Directors, and Robert Rivas, Analyst-in-Charge, managed  this assignment.
Stephanie Fain, Valerie Kasindi, Matthew Lee, and Leslie Sarapu made  significant contributions to the work.
Stanley Kostyla assisted with design and methodology.
Frances Cook provided legal support.
Sally Williamson provided assistance in report preparation.
Pille Anvelt and Avy Ashery developed the report’s graphics.
section_title: Related GAO Products
paragraphs: Supply Chain Security: Challenges to Scanning 100 Percent of U.S.- Bound Cargo Containers. GAO-08-533T. Washington, D.C.: June 12, 2008.
Supply Chain Security: Examinations of High-Risk Cargo at Foreign  Seaports Have Increased, but Improved Data Collection and Performance  Measures Are Needed. GAO-08-187. Washington, D.C.: January 25, 2008.
Maritime Security: The SAFE Port Act: Status and Implementation One  Year Later. GAO-08-126T. Washington, D.C.: October 30, 2007.
Maritime Security: One Year Later: A Progress Report on the SAFE Port  Act. GAO-08-171T. Washington, D.C.: October 16, 2007.
Maritime Security: The SAFE Port Act and Efforts to Secure Our  Nation’s Seaports. GAO-08-86T. Washington, D.C.: October 4, 2007.
Combating Nuclear Smuggling: Additional Actions Needed to Ensure  Adequate Testing of Next Generation Radiation Detection Equipment.  GAO-07-1247T. Washington, D.C.: September 18, 2007.
Maritime Security: Observations on Selected Aspects of the SAFE Port  Act. GAO-07-754T. April 26, 2007.
Customs Revenue: Customs and Border Protection Needs to Improve  Workforce Planning and Accountability. GAO-07-529. Washington, D.C.:  April 12, 2007.
Cargo Container Inspections: Preliminary Observations on the Status of  Efforts to Improve the Automated Targeting System. GAO-06-591T.  Washington, D.C.: March 30, 2006.
Combating Nuclear Smuggling: Efforts to Deploy Radiation Detection  Equipment in the United States and in Other Countries. GAO-05-840T.  Washington, D.C.: June 21, 2005.
Container Security: A Flexible Staffing Model and Minimum Equipment  Requirements Would Improve Overseas Targeting and Inspection  Efforts. GAO-05-557. Washington, D.C.: April 26, 2005.
Homeland Security: Key Cargo Security Programs Can Be Improved.  GAO-05-466T. Washington, D.C.: May 26, 2005.
Maritime Security: Enhancements Made, but Implementation and  Sustainability Remain Key Challenges. GAO-05-448T. Washington, D.C.:  May 17, 2005.
Cargo Security: Partnership Program Grants Importers Reduced  Scrutiny with Limited Assurance of Improved Security. GAO-05-404.  Washington, D.C.: March 11, 2005.
Preventing Nuclear Smuggling: DOE Has Made Limited Progress in  Installing Radiation Detection Equipment at Highest Priority Foreign  Seaports. GAO-05-375. Washington, D.C.: March 31, 2005.
Homeland Security: Process for Reporting Lessons Learned from Seaport  Exercises Needs Further Attention. GAO-05-170. Washington, D.C.:  January 14, 2005.
Port Security: Better Planning Needed to Develop and Operate Maritime  Worker Identification Card Program. GAO-05-106. Washington, D.C.:  December 10, 2004.
Maritime Security: Substantial Work Remains to Translate New  Planning Requirements into Effective Port Security. GAO-04-838.  Washington, D.C.: June 30, 2004.
Homeland Security: Summary of Challenges Faced in Targeting  Oceangoing Cargo Containers for Inspection. GAO-04-557T. Washington,  D.C.: March 31, 2004.
Container Security: Expansion of Key Customs Programs Will Require  Greater Attention to Critical Success Factors. GAO-03-770. Washington,  D.C.: July 25, 2003.