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First results from the WCO Cancun AEO benefit survey

In today’s CBRA Blog we provide a sneak preview of the outcomes of the AEO Benefit survey carried out by CBRA research team at the 3rd Global WCO AEO Conference, in Cancun, Mexico, 11-13 May 2016.

We keep today’s Blog very simple. First, we would like to introduce a new test-categorization of Customs granted AEO benefits, with the following five groups:

  1. More streamlined / simplified Customs (and related) procedures
  2. Less frequent interventions by the Customs administration
  3. Increased priority over non-AEO companies (“getting to the front of the queue”)
  4. Increased (positive) attention by the Customs administration
  5. Increased number of other privileges granted by the customs administration

And second, we list the AEO benefits from our survey (only question 2 in the survey form, which focuses explicitly on Customs granted benefits to the supply chain companies, and not benefits for Customs themselves, or any kind of “side benefits” for the companies) under each of the five categories. The order of the benefits per category is based on the survey outcomes, i.e. the first bullet point benefit was the most common one in the survey, followed by the second bullet and so forth. Please note that there are no ranking indications between the five groups, neither when it comes to the groups per se, nor to the individual benefits – these will be included in our academic publications, bit later this year…

Group 1. More streamlined / simplified Customs (and related) procedures

  • Enjoying increased paperless processing of import/export shipments
  • Enjoying an access to / pre-qualification with various simplified customs procedures
  • Enjoying having a reduced number of data elements in the (final) declaration
  • Enjoying having entry/exit summary declarations with reduced data sets
  • Enjoying easier access to other governmental certification in the supply chain (e.g. in aviation security)

Group 2. Less frequent interventions by the Customs administration

  • Enjoying minimum number of cargo security inspections
  • Enjoying the option of audit-based / account-based controls (versus only transaction-based controls)
  • Enjoying access to self-audit or reduced audit programs

Group 3. Increased priority over non-AEO companies (“getting to the front of the queue”)

  • Enjoying priority use of non-intrusive inspection techniques when examination is required
  • Enjoying a priority status in Customs processing during a period of elevated threat conditions
  • Enjoying priority response to requests for ruling from Customs
  • Enjoying expedited processes to resolve post-entry or post-clearance inquiries
  • Enjoying priority treatment of consignments if selected for control
  • Enjoying preferential treatment at border crossings in post-disaster/post-attack situations
  • Enjoying a priority status in exporting to affected countries after a security incident

Group 4. Increased (positive) attention by the Customs administration

  • Privilege to deal with designated Customs contact points / assistance by Customs supply chain security experts
  • Privilege to receive training provided by Customs experts
  • Privilege to be notified of the intention to release goods prior to their arrival (“pre-clearance”)
  • Enjoying special treatment in some non-criminal legal cases
  • Privilege to exploit “extended Customs office opening hours”, during high peak / congestion times

Group 5. Increased number of other privileges granted by the Customs administration

  • Enjoying from tax privileges, such as speedier tax refunds and compensation
  • Enjoying the option to manage clearance formalities, inspections etc. at the business site
  • Enjoying from financial guarantee waivers, reductions or rebates
  • Privilege to self-manage the bonded warehouses
  • Enjoying tangible benefits due to mutual recognition agreements / arrangements (MRAs) with 3rd countries
  • Privilege to choose the place of controls (if selected for control)
  • Enjoying reductions on some Customs fees or charges
  • Privilege to conduct self-assessments when Customs automated systems are not functioning

And that’s about it! Please be reminded again that this CBRA Blog is just a first scratch on the surface to start publishing results from the WCO Cancun 2016 AEO conference… And by the way, we are also working to publish the results from the WCO Madrid 2014 AEO conference, as we have been waiting to publish the full results of the both conferences in a parallel manner / in a same paper. In the meanwhile, please email us any feedback, ideas and/or criticism regarding this Blog!

In Lausanne, 8 June 2016, CBRA Blog Dr. Juha Hintsa

Blog-080616-1

PS. Our earlier Blog with all the WCO Cancun 2016 AEO survey questions can be read at: http://www.cross-border.org/2016/05/08/aeo-benefits-or-no-benefits-thats-the/

PPS. Related literature by the Cross-border Research Association team and key partners:

Most of these papers are available for download at ResearchGate, https://www.researchgate.net/profile/Juha_Hintsa/publications . And all of them can be naturally requested by email ( cbra@cross-border.org )

Hintsa, J., Mohanty, S., Rudzitis, N., Fossen, C. and Heijmann, F. (2014), “The role and value of customs administrations in minimization of socio-economic negative impacts related to illicit import flows in freight logistics systems- three preliminary cases in Europe – FP7-CORE”, Proceedings of the 9th WCO PICARD Conference, September 17-19, 2014, Puebla.

Hintsa, J. (2013), AEO – MRA Study for RTC- Thailand Europe Cooperation TEC-II, PDSC: Implementation of international standards on Supply Chain Security leading to a secure Trade Environment and to increased Trade Facilitation (Activity Code : TRA 4), Final Report, Bangkok.

Urciuoli, L. and Ekwall, D. (2012), “Possible impacts of supply chain security certifications on efficiency - a survey study about the possible impacts of AEO security certifications on supply chain efficiency”, Proceedings of Nofoma Conference, June 6-8, 2012, Naantali.

Hintsa, J., Männistö, T., Hameri, A.P., Thibedeau, C., Sahlstedt, J., Tsikolenko, V., Finger, M. and Granqvist, M. (2011), Customs Risk Management (CRiM): A Survey of 24 WCO Member Administrations, Study for World Customs Organization (WCO), February 28, 2011, Lausanne

Hintsa, J., Hameri, A.P., Männistö, T., Lazarescu, M., Ahokas, J. and Holmström, J. (2010), ”Conceptual model for measuring benefits of security in global supply chains”, Proceedings of the the 3rd International Conference on Transportation and Logistics (T-LOG), September 6-8, 2010, Fukuoka City.

Hintsa, J., Ahokas, J., Männistö, T. and Sahlstedt, J. (2010), “CEN supply chain security (SCS) feasibility study”, CEN/TC 379 Supply Chain Security, Final report, January 15, 2010

Gutiérrez, X., Hintsa, J., Wieser, P. and Hameri, A.P. (2007), “Voluntary supply chain security program impacts: an empirical study with BASC member companies”, World Customs Journal, Vol. 1 No. 2, pp.31-48.

Gutierrez, X. and Hintsa, J. (2006), “Voluntary supply chain security programs: a systematic comparison”, Proceedings of the International Conference on Information Systems, Logistics and Supply Chain (ILS), May 15-17, 2006, Lyon.

EU logistics security – an interesting decade

I had a great pleasure to work intensively on the European surface transport security standardization efforts, some years ago – this CBRA Blog aims to summarize the main work done, and the key objectives achieved.

 

Couple of years after the US 9/11, 2001 terrorist attacks, the European Commission Directorate General of Transport and Energy, EC DG TREN, started to prepare a proposal for a regulation of the European Parliament and of the Council on enhancing cargo surface transport security. In the meanwhile, 9/11 was already triggering an avalanche of new customs, aviation and maritime supply chain security regulations, programs and standards, in the US, Europe and across the globe. But when it came specifically to surface transport security for road and rail cargo (and inland waterways, to that matter) in Europe, nothing was cooking before the DG TREN initiative “Secure Operator”, first announced in 2004. By 2006, the main goal of the EC proposal for a regulation on enhancing supply chain security (SCS) in the EU was shaped as to achieve greater protection of the European freight transport system against possible terrorist attacks. The specific objectives of the draft regulation were defined as: (i) to increase the level of security along the supply chain without impeding the free flow of trade; (ii) to establish a common framework for a systematic European approach without jeopardizing the common transport market and existing security measures; and (iii) to avoid unnecessary administrative procedures and burdens at European and national levels. In addition, the draft regulation related to the need to prevent a patchwork of various supply chain security standards and solutions across EU.

blog2105162However, it quickly became clear that there was no common sense of urgency in supply chain security regulations across EU Member States, particularly in the context of threat of terrorism to surface (cargo) transport. One was lacking a commitment towards an integrated approach, which would urge everybody to look at the holistic supply chain picture. The countries and especially stakeholder (or, lobby) organizations clearly focused on their specific interests on a part of the supply chain, thus appearing uncomfortable when trying to identify the “big picture”. Ultimately, the draft regulation was blocked in the European legislative process and finally officially withdrawn by the Commission, in 2010.

 

 

In the meanwhile, already in 2005, an expert group in supply chain security was formed under the umbrella of European Committee for Standardization (CEN) – and that’s when Cross-border Research Association started to play a role in the “EU land transport security regulations and standards play”, first as the rapporteur for the expert group, and later as the research party for the technical committee in supply chain security. The expert group was formed technically under the CEN working group "Protection and Security of the Citizen” (CEN/BT/WG161), and the (pre)standardization work was partly based on the Logistics Action Plan of the EC that indicated the need for standardization in the transport security domain for the whole logistic chain.

blog2105163Following the conclusions and recommendations by the expert group, the CEN Technical Committee in Supply Chain Security (CEN/TC 379) was established in 2008, producing ultimately three tangible outputs: Supply Chain Security Feasibility Study (in 2010); CEN Technical Report “Supply Chain Security — Good Practice Guide for Small and Medium Sized Operators” (in 2012, CEN/TR 16412:2012); and, a European Standard: Logistics - Specifications for reporting crime incidents (in 2013, EN 16352:2013-06). The first of the outcomes is available for free (ask by email:  cbra@cross-border.org ), and the latter two you can purchase e.g. from your national standardization institute web shop. All in all, great project experience behind us, couple of good publications, and many new contacts and even few friends for lifetime – thus, no regrets, and if asked, would become rapporteur and lead researcher on these important topics, again and again!

 

 

 

 

And finally, when it comes to the future of SCS regulation and standardization work in Europe – in particular in the land transport security sector (e.g. the LANDSEC expert group, Commission Decision 2012/286/EU): do not be shy in exploiting the tangible outcomes of a decade of our joint work, in particular the Euronorm EN 16352:2013-06, “Logistics: specifications for reporting crime incidents” – no reason to reinvent the wheel!

 

CBRA Blog by Dr. Juha Hintsa on 21.5.2016

 

Summarizing the main milestones of the surface transport security 2004-2014 regulatory and standardization process tracks:

A) Regulatory process -track was largely driven by the European Commission Directorate General for Transport and Energy (EC DG TREN), comprising of the following five sequential steps:
A1. Preparation of the Secure Operator legislation at EC DG TREN (2004-2006)
A2. Publication of the legislative proposal (EC, 2006a)
A3. Publication of an impact assessment study (EC, 2006b)
A4. Announcements and debates at European Parliament and Council (2006-2009)
A5. Withdrawal of the proposal by the Commission, (18.9.2010)

B) Standardization process -track - for which the European Committee for Standardization (CEN) was responsible – consisting of the following seven, chronologically ordered steps:
B1. Establishment of an Expert group in supply chain security, under CEN/BT/WG161, "Protection and Security of the Citizen” (2005)
B2. Publication of the final report of the Expert group, approved by CEN/BT/WG161 (14.11.2006)
B3. Establishment of the CEN Technical Committee in Supply Chain Security, CEN/TC 379 (2008)
B4. Publication of Supply Chain Security Feasibility Study (15.1.2010)
B5. Publication of the CEN Technical Report, CEN/TR 16412:2012 “Supply Chain Security — Good Practice Guide for Small and Medium Sized Operators” (2012)
B6. Publication of a European Standard: Logistics - Specifications for reporting crime incidents, EN 16352:2013-06 (2013)
B7. Closure of the CEN Technical Committee in Supply Chain Security, CEN/TC 379 (2014).

 

blog2105164

Main references / bibliography:

  • CEN (2013), “Logistics: specifications for reporting crime incidents”, EN 16352:2013-06
  • CEN (2012), “Supply chain security (SCS): Good practice guide for small and medium sized operators”, CEN/TR 16412:2012
  • CEN (2006), “Expert group: Supply chain security”, approved by CEN/BT/WG161, 14.1.2006
  • EC (2012), “Commission Staff Working Document on Transport Security”, SWD(2012), 143 final.
  • EC (2006a), COM(2006)79 final, 2006/0025(COD), COMMUNICATION FROM THE COMMISSION TO THE COUNCIL, THE EUROPEAN PARLIAMENT, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS on enhancing supply chain security Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on enhancing supply chain security, (SEC(2006)251)
  • EC (2006b), SEC(2006)251 COMMISSION STAFF WORKING DOCUMENT. Annex to the COMMUNICATION FROM THE COMMISSION TO THE COUNCIL, THE EUROPEAN PARLIAMENT, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS on enhancing supply chain security and Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on enhancing supply chain security - IMPACT ASSESSMENT - {COM(2006)79 final}
  • Hintsa, J., Ahokas, J., Männistö, T. and Sahlstedt, J. (2010), “CEN supply chain security (SCS) feasibility study”, CEN/TC 379 Supply Chain Security, Final report, 15.12010

 

 

AEO benefits, or, no benefits, that’s the?

“To be, or not be – that is the question”, was Prince Hamlet wondering already some 412 years ago. 400 years later, the CBRA research team started to raise the question of “AEO benefits, or no AEO benefits – that is the ?”…

 

Around year 2004, we first started to study the emerging AEO-types of programs in Europe and globally, working intensively with multinational companies (clothing, cigarettes, machinery etc.), and with multiple governments. Initially, we reviewed any data available from C-TPAT, StairSec, BASC and TAPA programs, and later we concentrated on EU AEO and all other AEO programs across the globe. After 12 years of research our intention is to publish an academic journal paper summarizing all the knowledge from the literature as well as from our own research on AEO benefits for Customs administrations and for supply chain companies – focusing on the tangible, realized benefits, instead of “paper tiger / lip service” types of benefit checklists.

As the last step of data collection, we are now launching the study: “Customs Supply Chain Security Programs (AEO, C-TPAT etc.) - Survey on Supply Chain and Government Benefits – WCO 3rd Global AEO Conference, Cancun, Mexico, 11-13 May 2016 - Research project by CBRA, ZLC, UCR, HEC UNIL and FP7-CORE”. This survey is a direct follow-up with the one CBRA did in the 2nd Global AEO Conference in Madrid two years ago. Ms. Susana Wong Chan from the University of Costa Rica and Cross-border Research Association is presenting the survey in Cancun next week, and collecting as many replies as possible, in person during the conference (and by email after).

We have three main questions in the Cancun AEO survey, each one with multiple sub-questions (all questions are presented with a five-point Likert scale, plus one option for “cannot say”):

  • Question for Customs administrations, supply chain companies, and all other experts in cross-border supply chains and Customs supply chain security programs: How often are the supply chain security program certified companies in your country benefiting from the following Customs granted incentives?
  • Question for Customs administrations only: What are the benefits for the Customs administration in your country arising from the supply chain security program?
  • Question for supply chain companies only: What are the additional benefits for the supply chain companies in your country, arising from the supply chain security program participations / certifications?

blog 08.05.20162The full list of questions and sub-questions is shared at the end of this blog. In addition, you can download the questionnaire in word-format, in English and in Spanish, at:  http://www.cross-border.org/downloads/

 

 

 

 

 

 

 

 

Why don’t (near) perfect AEO benefit -papers exist yet in the literature? One would think that the topic attracts lots of academics to carry out such research, and to publish their exciting findings, rather sooner than later… Well, it is quite challenging topic to study: where is the objective, non-biased data located, and how do you get access to it? How to deal with all the politics linked to the topic, as maybe many countries would like to be perceived as “leading edge AEO program holders, with a set of fantastic, innovative benefits delivered to the trade and logistics…”? How to differentiate between all the AEO marketing materials and incentive promises from what is actually implemented on the ground, for the real benefit of supply chain companies; and so forth..? To expand on these thoughts, one could revisit our article on the WCO News No 74 of June 2014. The table on page 45 includes a row on challenges and peculiarities with different categories of possible AEO benefits, sharing following observations and notes:

  • As some of the Customs granted benefits existed in many countries before the AEO era, companies which have enjoyed “such pre-AEO benefits” may fear a potential reduction in existing trade facilitation measures - instead of the introduction of truly new benefits.
  • Due to the dynamics in the cross-border flow of goods, outcomes might vary considerably over time – ‘seeing is believing’; in particular, the benefits linked to ‘elevated threat’ and ‘post-incident recovery’, may appear quite theoretical until such situations actually emerge (and the benefits materialize – or, not).
  • Some could also consider that the AEO system may become a technical trade barrier – the ´become an AEO or die´ scenario.
  • Some might think that an AEO program deters crime, as criminals would rather choose an easy target (i.e. a non-AEO target), for example in the case of warehouse theft; and, alternatively, other might think that an AEO program attracts criminals, as they know there are likely to be fewer Customs interventions – the smuggling of narcotics, for example.

 

Blog_080520163Dear CBRA Blog reader: although this is very challenging research topic, and one should not dream of reaching “one ultimate truth out there” – we kindly ask that if you are in Cancun 11-13 May for the 3rd Global AEO Conference, please take 10 minutes to reply the questionnaire..! Next to the good vibrations gained from participation in this highly important study, you will join a lucky drawing of a nice Costa Rican souvenir! In Lausanne, 9 May 2016, Juha Hintsa.

 

 

 

 

 

 

 

PS. List of benefit survey questions, for the CBRA Blog readers:

Customs Supply Chain Security Programs (AEO, C-TPAT etc.) - Survey on Supply Chain and Government Benefits – WCO 3rd Global AEO Conference, Cancun, Mexico, 11-13 May 2016 - Research project by CBRA, ZLC, UCR, HEC UNIL and FP7-CORE

 

Question for Customs administrations, supply chain companies, and all other experts in cross-border supply chains and Customs supply chain security programs: How often are the supply chain security program (AEO, C-TPAT etc.) certified companies in your country benefiting from the following Customs granted incentives?

Use the following scale: Very frequently – Frequently – Occasionally – Rarely - Never / Not applicable in our country (or, this is nothing specific for certified companies) - Cannot say

  • Are companies submitting entry/exit summary declarations with reduced data sets?
  • Are companies benefiting from reduced number of data elements in their final declaration?
  • Are companies benefiting from increased paperless processing of import/export shipments?
  • Are companies offered the option of audit-based / account-based controls (versus only transaction-based controls)?
  • Are companies having access to / pre-qualification with various simplified customs procedures?
  • Are companies self-managing their bonded warehouses?
  • Are companies benefiting from tax privileges, such as speedier tax refunds and compensation?
  • Are companies benefiting from financial guarantee waivers, reductions or rebates?
  • Are companies benefiting from reduction of any Customs fees or charges?
  • Are companies benefiting from access to self-audit or reduced audit programs?
  • Are companies allowed to conduct self-assessments when Customs automated systems are not functioning?
  • Are companies benefiting from designated Customs contact points / assistance by Customs supply chain security experts?
  • Are companies benefiting from training provided by Customs experts?
  • Are companies enjoying easier access to other governmental certification in the supply chain, e.g. in aviation security?
  • Are companies benefiting from the option to manage clearance formalities, inspections etc. at the business site?
  • Are companies benefiting from a minimum number of cargo security inspections?
  • Are companies being notified of the intention to release goods prior to their arrival? (“pre-clearance”)
  • Are companies benefiting from “extended Customs office opening hours”, during high peak / congestion times?
  • Are companies benefiting from choice of place of controls, if selected for control?
  • Are companies benefiting from priority treatment of consignments if selected for control?
  • Are companies benefiting from priority use of non-intrusive inspection techniques when examination is required?
  • Are companies guaranteed a priority Customs processing during a period of elevated threat conditions?
  • Are companies guaranteed preferential treatment at border crossings in post-disaster/post-attack situations?
  • Are companies guaranteed a priority in exporting to affected countries after a security incident?
  • Are companies benefiting from expedited processes to resolve post-entry or post-clearance inquiries?
  • Are companies benefiting from priority response to requests for ruling from Customs?
  • Are companies benefiting from privileges in any kind of non-criminal legal cases?
  • Are companies enjoying tangible benefits due to mutual recognition agreements / arrangements (MRAs) with 3rd countries?

blog 08.05.20164

 

Question for Customs administrations only: What are the benefits for the Customs administration in your country arising from the supply chain security program (AEO, C-TPAT etc.)?

Use the following scale: Strongly Agree – Agree - Neither Agree nor Disagree – Disagree - Strongly Disagree - Cannot say

  • Better overall allocation of governmental resources
  • Improved indirect tax revenue collection
  • Improved prevention of trafficking and illicit trade
  • Improved detection and/or seizures in trafficking and illicit trade
  • Improved prosecution to judgements -ratio (= higher percentage of successful prosecutions)
  • Increased confiscations of criminal assets and/or proceeds of crime
  • Improved collaboration with supply chain companies
  • Improved collaboration with other national government agencies
  • Improved international collaboration with Customs administrations in other countries

 

Question for supply chain companies only: What are the additional benefits for the supply chain companies in your country, arising from the supply chain security program participations / certifications (AEO, C-TPAT etc.)?

Use the following scale: Strongly Agree – Agree - Neither Agree nor Disagree – Disagree - Strongly Disagree - Cannot say

  • Improved customer service
  • Improved customs loyalty
  • Increased market share/ gaining more new customers
  • Improved security commitment of employees
  • Improved company image and credibility
  • Reduced overall vulnerability of the supply chain
  • Improved supply chain resiliency
  • Reduced cargo theft incidents
  • Reduced tax fraud incidents
  • Reduced illicit trade / trafficking incidents
  • Reduced insurance fees
  • Improved inventory management
  • Fewer delayed cross-border shipments
  • Reduced lead time variability in the cross-border supply chain

blog 08.05.20165

 

PPS. Related literature by the Cross-border Research Association team and key partners:

Most of these papers are available for download at ResearchGate, https://www.researchgate.net/profile/Juha_Hintsa/publications . And all of them can be naturally requested by email ( cbra@cross-border.org )

Hintsa, J., Mohanty, S., Rudzitis, N., Fossen, C. and Heijmann, F. (2014), “The role and value of customs administrations in minimization of socio-economic negative impacts related to illicit import flows in freight logistics systems- three preliminary cases in Europe – FP7-CORE”, Proceedings of the 9th WCO PICARD Conference, September 17-19, 2014, Puebla.

Hintsa, J. (2013), AEO – MRA Study for RTC- Thailand Europe Cooperation TEC-II, PDSC: Implementation of international standards on Supply Chain Security leading to a secure Trade Environment and to increased Trade Facilitation (Activity Code : TRA 4), Final Report, Bangkok.

Urciuoli, L. and Ekwall, D. (2012), “Possible impacts of supply chain security certifications on efficiency - a survey study about the possible impacts of AEO security certifications on supply chain efficiency”, Proceedings of Nofoma Conference, June 6-8, 2012, Naantali.

Hintsa, J., Männistö, T., Hameri, A.P., Thibedeau, C., Sahlstedt, J., Tsikolenko, V., Finger, M. and Granqvist, M. (2011), Customs Risk Management (CRiM): A Survey of 24 WCO Member Administrations, Study for World Customs Organization (WCO), February 28, 2011, Lausanne

Hintsa, J., Hameri, A.P., Männistö, T., Lazarescu, M., Ahokas, J. and Holmström, J. (2010), ”Conceptual model for measuring benefits of security in global supply chains”, Proceedings of the the 3rd International Conference on Transportation and Logistics (T-LOG), September 6-8, 2010, Fukuoka City.

Hintsa, J., Ahokas, J., Männistö, T. and Sahlstedt, J. (2010), “CEN supply chain security (SCS) feasibility study”, CEN/TC 379 Supply Chain Security, Final report, January 15, 2010

Hold on, before blaming it on the OGAs!

It is common since many years already that the global customs community is pointing their “blaming finger” to other government agencies – OGAs – when it comes to identifying root causes behind too long cargo release times at sea ports and other border crossing points, high costs for importers and exporters to conduct international trade, and so forth. Now, without denying this as a plausible scenario, the CBRA research team proposes to take one step backwards, by first building a solid framework for analyzing and deeply understanding what is actually happening at the borders with Customs and all the other agencies, before rushing to conclusions on “who is to be blamed for poor / expensive cross-border performance…”. Therefore - for both educational purposes (FP7-CORE, work package 19.1) and for analytical purposes (Border Agency Cooperation study with the Organization of Islamic Cooperation, OIC), we have produced the following “universal border control task list” - naturally understanding that a perfect single universal list cannot exist. The list is first exploited during April-May 2016 in the OIC Embassy survey (here in Switzerland), to explore who is responsible for specific cross-border controls in various OIC member countries, and to what extent customs is performing tasks on behalf of other (border) agencies. Later, we plan to use the this as a “de-facto border agency control check-list” in our future studies, across the globe.

Again, the first step before analyzing which agencies to blame, is all about understanding what are the typical cross-border control tasks all about, considering all three task categories:

  • Border control tasks which typically cover all commodities;
  • Border control tasks which typically focus on specific commodities; and
  • Other border agency control areas.

 

Now, lets go through all three of them, starting with the first one, and followed by the other two:

Border control tasks which typically cover all commodities:

  • Calculation and collection of indirect border taxes:
    • customs duties
    • sales / value added taxes
    • excise taxes
  • Calculation and collection of other import/ transit/ export fees and taxes (e.g. environmental fee at export)
  • Compilation of trade statistics

Border control tasks which typically focus on specific commodities:

  • Control of import quota restricted products
  • Calculation and granting of export subsidies
  • Control of product safety / conformity of goods / trading standards (please separate agencies per product category, if necessary)
  • Control of food, drinks, cigarettes, pharmaceuticals (including for general health and safety purposes)
  • Control of energy related materials / products (e.g. oil and coal, could be for export taxation purposes etc.)
  • Enforcement of intellectual property rights / fight against copyright infringements / anti-counterfeit
  • Control of plant diseases, pests and extraneous species (i.e., phytosanitary controls)
  • Animal quarantine and controls (i.e. veterinary controls, including pet controls)
  • Control of any biohazards (including deliberate ones)
  • Control of CITES protected species (i.e. endangered fauna and flora)
  • Control of natural resources under license requirements, harvesting quotas etc. (including specific fish, wood, minerals, diamonds etc.)
  • Control of cultural artifacts (stolen / looted, and/or illicitly traded)
  • Control of any stolen goods (including vehicles, machinery, cargo etc.)
  • Fight against drugs / illicit narcotics trafficking (including pre-cursors)
  • Control of waste flows (including those in the Basel Convention on transboundary movements)
  • Control of dual use / strategic goods
  • Control of dangerous goods / hazardous materials
  • Control of explosives and weapons:
    • explosives (including pre-cursors)
    • small arms and light weapons
    • defense / war materials
  • Control of nuclear and radioactive materials

Other border agency control areas:

  • Conveyance / cargo transport security and safety controls:
    • for maritime, including sea ports
    • for aviation, including airports
    • other modes: road, rail, inland waterways etc.
  • Traveler, crew and immigration controls:
    • visa and passport controls
    • trafficking of human beings and people smuggling
    • asylum seekers
    • passenger cars and vehicles in terms of temporary admission
  • Control of weight of cargo (including for road safety purposes)
  • Cash controls (cash smuggling and counterfeit currency)
  • Cyber security (customs and supply chain IT systems, critical infrastructure IT etc.)

 blog-270416-2

 

Dear CBRA Blog and CBRA Monthly readers: we kindly invite your inputs to make the list more comprehensive / better in the future, so please send us an email with your ideas, to cbra@cross-border.org . And thanks already now to the multiple experts from national Customs administrations and international organizations for your valuable help so far– it has been great working with you on all these studies, keeping them as pragmatic as possible… (detailed acknowledgements will be published later). And it goes without saying that soon we will start looking on the next-step aspects on customs versus other government agencies, in the context cross-border supply chain costs and delays – please stay tuned for more!

Three calls for journal and conference papers

This CBRA Blog advertises three important calls for papers in 2016: Special Issue for Journal of Transportation Security (to be published in 2017); the 11th WCO Customs-Academia PICARD Conference (Sep.2016); and the 7th European Intelligence and Security Informatics Conference (Aug.2016).

 

1. Journal of Transportation Security, Special Issue: Enhancing supply chain security through government-to-government and government-to-business partnerships and collaboration

Journal of Transportation Security (JTRS): The 9/11 terrorist attacks and the subsequent events have compelled stakeholders to understand transport security as more than a single element of the global networks that move people and goods. Once a routine component of modern transportation, security now represents a vital necessity and an urgent national priority. The Journal of Transportation Security probes the relevant aspects of many critical areas of study, including supply chain and logistics; information technology; public policy; international business; political science; engineering; transportation; economics; and counterterrorism, among others. This journal is the first to take a global, apolitical, and in-depth multidisciplinary look at the field. The mission of the journal is to disseminate new research, thought, and analysis for teachers, researchers, policy makers and practitioners around the world who view transportation security as a critical element in the post 9/11 world.

Partnerships and collaboration play a crucial role in the fight against crime in the global supply chains. Investments in traditional security areas such as physical security, personnel security, and IT security no longer suffice. Both government and business actors should extend their security efforts beyond their organizational boundaries, by fostering relationships with each other. Further government-to-government and government-to-business collaboration has a great potential to improve security of the supply chain and regulatory compliance of the trading community, while facilitating trade and logistics for the legitimate, security aware companies. The scope of collaboration covers a broad range of activities, including sharing of information and data; investing in common resource pools and sharing resources; and agreeing on optimum protocols for conducting inspections and audits in the supply chains. Enhancing the information exchange, for example, would help governments and companies to prevent and detect security breaches in supply chains and to recover faster once the breaches happen. In principle, both government and business actors share a common goal of mitigating crime in the global supply chains. Priorities and procedures, however, differ markedly between various business actors (e.g., shippers, carriers, freight forwarders) and government agencies (e.g., customs, police and transport security authorities).

Call for abstracts for the JTRS Special issue is open until 30 September 2016, please visit: www.springer.com ...   

(CBRA / Dr. Juha Hintsa is the lead guest editor for this special issue; and abstract review panel consists of multiple experts in FP7-CORE project).

 

 

2. The 11th Annual WCO Picard Conference - Manila, Philippines - 27-29 September 2016

The World Customs Organization and the Philippine Bureau of Customs are pleased to announce the 11th annual WCO Picard Conference. You are invited to submit your research for presentation at the conference. Papers should focus on Customs or, more globally, the regulation, dynamics, and practices of international trade. Although not required, writers could consider submitting research on the following topics: Digital Customs; security; taxation and other revenue matters; and illicit trade.

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Call for papers is open until 15 June 2016, please visit: www.wcoomd.org...

(CBRA / Dr. Juha Hintsa is part of the Scientific Board for the conference; and he also belongs to the PICARD Advisory Group).

 

 

 

3. The 7th European Intelligence and Security Informatics Conference (EISIC) - Uppsala, Sweden – 17-19 August 2016

Intelligence and Security Informatics (ISI) research is an interdisciplinary field of research that focuses on the development, use, and evaluation of advanced information technologies, including methodologies, models and algorithms, systems, and tools, for local, national and international security related applications. Over the past decade, the ISI research community has matured and delivered an impressive array of research results that are both technically innovative and practically relevant. The 2016 European ISI Conference is the seventh ISI conference to be organized by the European ISI community. The conference was first held in 2008 and has been organized annually since 2011.

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Call for papers is open until 18 May 2016, please visit: http://www.eisic.eu/call.aspx

(CBRA / Dr. Toni Männistö delivers a keynote presentation on FP7-CORE, focusing on Supply chain security education and training (CORE WP19.1) ).

SIECA delegation visiting Europe in June 2015

I had a great pleasure to be the lead host for a 12 person SIECA delegation visit to Europe in June 2015. We spent two days in the Netherlands, one day in Belgium and two days in Switzerland in an action-packed tour, visiting several border areas, governmental offices and beyond.

The idea to organize a one-week customs and international trade visit tour to Europe first came when Mr. Roman Stoll from the Federal Customs Administration of Switzerland and I paid a four-day visit at the SIECA Secretariat in Guatemala City in March 2015. There we had several meetings and discussions on World Trade Organization´s Trade Facilitation Agreement, WTO TFA, implementation plans with the SIECA management – Ms. Carmen Gisela Vergara Mas and Mr. Javier Gutierrez; with Customs management and experts from all the six SIECA member countries; and with representatives of the Intra-American Development Bank. Some weeks after the Guatemala-visit, SIECA and IDB confirmed the willingness to come over to Europe, to learn about good practices in international trade, supply chain and border management in the Netherlands, Belgium and Switzerland. And after couple of hundreds of emails and phone calls – myself acting as the focal point in arranging the visit – we were ready to welcome the SIECA Delegation to Europe between Monday 1 June and Friday 5 June, 2015.

blog 22.03.20161Monday-Tuesday we had a full agenda in the Netherlands. Monday started by presentations on Dutch Customs in general, and Schiphol Customs in specific, focusing on risk management, coordinated border management, and the SmartGate solutions at the Schiphol Airport. This was followed by a roundtable discussion with representatives from the Dutch Ministries of Foreign Affairs and Economic Affairs, as well as with an expert from the air cargo industry. During Monday the SIECA delegation gained firsthand knowledge for example on One-Stop Shop (OSS) implementation steps in the Netherlands: Step 1. Information exchange; 2. Joint inspections; 3. Training specialists; 4. Joint risk analysis by both inspections and selection by Customs; and Step 5. One inspection inspects for the other. The program on Tuesday consisted of a tour in Port of Rotterdam, at the APM 2 Container terminal; as well as a visit to the Central command post of nuclear detection and an X-ray container scanner. In between we had a typical “Dutch sandwich” lunch, kindly offered by the hosts. The delegation enjoyed seeing the ultimate high level of automation at the new container terminal, as well as visiting a pragmatic “one stop inspection room”, where multiple border agencies work together inspecting containers flagged for manual inspections.

Wednesday was spent in Brussels, Belgium. In the morning, the trade representatives of the SIECA Delegation went to the European Commission, DG TRADE, for EU-SIECA related discussions. In the afternoon, most of the delegation visited the World Customs Organization, where the meeting started with discussions with the WCO Secretary General Dr. Kunio Mikuriya and the WCO Deputy Secretary General Mr. Sergio Mujica. This was followed by a presentation on WTO Trade Facilitation Agreement and the linked WCO Instruments, by Ms. Heike Barczyk, the Deputy Director of Compliance and Facilitation Directorate at the WCO. Lastly, we had a brief presentation and roundtable discussions on the European Flagship Supply Chain Security Research, Development and Demonstrations project called FP7-CORE. This discussion was joined by Mr. Nik Delmeire, the Secretary General of the European Shippers Council; Ms. Nicolette van der Jagt, the Secretary General of CLECAT, the European association for forwarding, transport, logistics and customs services; and myself, Dr. Juha Hintsa, Founder of the Cross-border Research Association. After the meeting at WCO, it was time to fly from Brussels to Basel, Switzerland.

blog 22.03.20162Thursday-Friday we had a packed program in Switzerland. Despite some “navigation challenges” with our three-car convoy, we arrived on time from Basel to Bern at the Directorate General of the Federal Customs Administration. We heard several interesting presentations focusing on performance mandate, tasks and strategy of Swiss Customs; on international affairs section and it’s relevant international cooperation program; on shifts from traditional revenue collection to environmental and incentive taxes; and on strategy and challenges regarding future customs clearance systems and platforms – all this by three top experts from Swiss Customs. I presented the outcomes of Swiss Customs and Cross-border Research Association -visit to SIECA in March 2015, suggesting some specific areas and priorities for future co-operation activities. Next, the Delegation visited the Federal Department of Foreign Affairs, where the discussions focused on Swiss foreign policy in Central America and bilateral cooperation Switzerland - Central America; as well as on political and economic regional integration in Central America. After a quick photo session on the Bundeshaus terrace facing over River Aare, our journey continued towards the Swiss Customs facilities at the Zurich Airport. Again, there were some “logistics challenges” on the way to Zurich, when one of our three cars suddenly lost all engine coolant – fortunately a gas station was close by, and a road service company (car + mechanic) happened to be there. At the Zurich Airport, the SIECA Delegation learned a lot of details about Swiss Customs operations with air cargo and passenger flows. And as the last agenda item, we met a cute black Labrador retriever, who together with his trainer showed how effortlessly he finds illicit goods hidden in air cargo boxes and pallets…

On Friday morning – last day of the journey – we had again an early wake-up call at our hotel in Basel. We were warmly welcomed by Swiss Customs Officers at the Basel/Weil- Motorway border-crossing point – the highest volume customs clearance point in Switzerland. First the hosts explained about facts and figures on Basel/Weil, topped with interesting information on customs risk management processes and IT-systems. Now we all know that on average 3500 trucks cross the Basel/Weil border per day, and that around 600 million CHF is collected annually as indirect taxes at that border crossing point. After that we took a rooftop view over the border area premises, discussing further Import/Export/Transit -procedures, as well as visited the Swiss Transito-Cabins / Checkpoints. From the motorway we drove to the Swiss Customs House at the Basel Port, visiting the famous tri-border-point between Switzerland, Germany and France. There the Delegation learned about the barge traffic on River Rhine – the same river we saw three days earlier at Port of Rotterdam. From the Basel Port, we drove again to Bern, this time to visit the State Secretariat for Economic Affairs, SECO. Lively discussions took place on the SECO rooftop meeting room on topics including EFTA – Central American FTA, as well as Bilateral Economic Relations Switzerland – Central America. And after lunch kindly offered by SECO, we headed towards Geneva for the final meeting of the week: World Economic Forum, WEF, where we all arrived just in time to learn about the organization and the key activities of WEF, including: the work of the WEF in Latin America, with updates from the Latin American Summit; and, the work of the WEF on trade and investment policy and implementation, including Policy Directions, Enabling Trade Index, Enabling Trade implementations. The United Nations Economic Commission for Europe, UNECE, was kind enough to explain about latest developments and trends in single window projects and implementations. And lastly, I shared briefly select work on trade facilitation and supply chain security research and education materials by the Cross-border Research Association and HEC University of Lausanne.  I highlighted the important developments taking place within the FP7-CORE project - referring naturally to our meeting two days earlier at the World Customs Organization.

This concludes the brief summary of the SIECA week in Europe, and now I would like to thank all the SIECA Delegation members for coming over and spending the five days with us, here on the old continent:

  • Costa Rica: Mr. Jhon Fonseca, Vice Minister Foreign Trade; and Mr. Luis Fernando Vasquez Castillo, Costa Rica Customs.
  • El Salvador: Mrs. Luz Estrella Rodriguez, Vice Minister Foreign Trade
  • Guatemala: María Luisa Flores Villagran, Vice Minister Foreign Trade; and Mrs. Maria Elisa Chang, Guatemala Customs.
  • Honduras: Jeronima Urbina, Director of Economic Integration
  • Nicaragua: Eddy Aldolfo Artola Garciá, Director Risk Management of Nicaragua Customs.
  • Panama: Melitón Arrocha. Minister Foreign Trade; Mrs. Diana Salazar, Vice Minister Foreign Trade; and Mr. José Gómez Núnez DG of Panama Customs.
  • SIECA Secretariat: Carmen Gisela Vergara Mas, Secretary General
  • Intra-American Development Bank: Mr. Jaime Granados

And last but not least, warmest thanks to all the local hosts: Dutch Customs Administration; Dutch Ministry of Foreign Affairs; Dutch Ministry of Economic Affairs; European Commission DG TRADE; World Customs Organization; Federal Customs Administration of Switzerland; Federal Department of Foreign Affairs of Switzerland; State Secretariat for Economic Affairs of Switzerland; and World Economic Forum.

CBRA Blog by Juha Hintsa

blog 22.03.20163PS. If your country / region would be interested on a similar European field visit, please contact us – we could organize the practical details for the next delegation, possibly every 1-2 years (of course the actual hosts need to agree to the visit in the first place, that goes without saying…). And one final note: next time a bus and a professional driver need to be rented, please!

 

FP7-CORE Education – Two new diagrams

Today’s CBRA Blog presents two new diagrams which have been recently designed and developed in the context of FP7-CORE Education and training work (Work package 19.1). The information visualized in the diagram is based on CBRA’s supply chain security research work since year 2001, particularly from the past 5-6 years.

Some background information on the first diagram of crime types in global supply chains has been presented before for example in CBRA’s Blog of 13 October 2014 – Crime taxonomies from Athens. In the center of this diagram we list the crime types - including document fraud and cybercrime - which in the supply chain criminal context are performed in order to succeed with the actual economic or ideological crime, e.g. cargo theft or terrorism.

The left area of the circle lists four examples of crime types, which typically are of primary concern for supply chain companies: cargo theft, sabotage, parallel trade and product specification fraud. With such crime types it is commonly up to the companies to prevent, to detect and to react – of course, law enforcement agencies can be called for any time there is reasonable suspicion of such activities (and naturally in certain cases the government agencies may even be the first ones to detect and react, e.g. in case of armed robberies and truck hijackings).

The right area of the circle deals with supply chain incidents where the authorities typically focus on prevention, detection and reaction: fraud in indirect border taxes; trafficking / violations in cross-border restrictions and prohibitions; human trafficking; and exploitation of illicit labor. From supply chain perspective one can characterize them as “a priori non-disruptive illegal activities – only if / after authorities detect the violations, the supply chain is disrupted and the involved supply chain companies can get in trouble”.

Lastly, on the bottom area of the circle, we list four supply chain crime areas where the prevention typically is in strong interest of both supply chain companies and governmental agencies – and, the detection and (instant) reaction varies on case-by-case basis: counterfeiting, sales channel violations, sea piracy and terrorism. Counterfeiting hits revenues on both sides of the equation, and, with many products can also be health damaging or even lethal. Not having proper sales licenses, and/or selling to unauthorized buyers – for example cigarettes and alcohol, dual use and strategic goods etc. – can again harm both the involved companies and the society as a whole. And of course, sea pirates hijacking cargo ships; bombs exploding and bringing planes down; and terrorists attacking critical supply chain infrastructures, all are in the best interest of both companies and government agencies to prevent, to detect, and to react – in the fastest and most effective possible manner.

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The second new educational diagram below depicts the negative socio-economic impact areas – six in total – caused by twelve typical smuggling and trafficking activities. The data behind it has been presented before e.g. in CBRA’s Blog of 14 January 2015 – Socio-economic damages. Inside the square we present the six societal impact areas – the larger the area, the more links there are between the trafficking activities and the negative impacts. As an example of a “big area”, seven different types of trafficking typically lead into increasing market place distortions and/or unfair competition. In the other extreme, only trafficking in stolen cultural products leads to losses in cultural heritage.

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That’s all for the CBRA Blog today – please let us know if you see this type of visualization as beneficial when teaching and learning about the big picture of supply chain security!  Thanks, Juha Hintsa ( email: cbra@cross-border.org )

COSO. Enterprise Risk Management — Integrated Framework – Executive Summary. Committee of Sponsoring Organizations of the Treadway Commission. September 2004. (CORE1106)

Summary: The Committee of Sponsoring Organizations of the Treadway Commission, COSO, defines Enterprise Risk Management, ERM, as a process, effected by an entity’s board of directors, management and other personnel, applied in strategy setting and across the enterprise, designed to identify potential events that may affect the entity, and manage risk to be within its risk appetite, to provide reasonable assurance regarding the achievement of entity objectives. The entity objectives are set forth in following four categories: (i) Strategic – high-level goals, aligned with and supporting its mission; (ii) Operations – effective and efficient use of its resources; (iii) Reporting – reliability of reporting; and (iv) Compliance – compliance with applicable laws and regulations. According to COSO, ERM enables management to effectively deal with uncertainty and associated risk and opportunity, enhancing the capacity to build value. Within the context of FP7-CORE project – and, supply chain security management in general – ERM can be seen as a useful approach particularly when it comes to aligning security risk appetite and strategy; to enhancing security risk response decisions; and to reducing security related operational surprises and losses. Some other ERM aspects such as seizing opportunities (“positive risks”) may not apply in supply chain security management context. One more interesting note, which could also be applied for supply chain security: everyone in an entity has some responsibility for ERM. This executive summary document is available for download at: http://www.coso.org/documents/coso_erm_executivesummary.pdf

Supply chain security education materials

Blog-29.02.16FP7-CORE is the European flagship research and development project in supply chain security and trade facilitation, running from May 2014 to April 2018. In today´s CBRA Blog we focus on education and training material development – Work package 19, Task 19.1 – in the CORE-project.

The CORE Task 19.1 - Education and training materials development – has an impressive set of partners: INTERPOL, World Customs Organization (WCO), European Shippers Council (ESC), European association for forwarding, transport, logistics and customs services (CLECAT), International Road Union (IRU), and Technical University of Delft (TU Delft) as the established big players; ourselves Cross-border Research Association (CBRA) as the Task leader (and an enthusiastic lecturing body in supply chain security and trade facilitation); as well as the BMT Group, as the Work package 19 leader. We first started interaction with the entire Task 19.1 team during summer 2014, when the CORE-project had just been kicked off, and everything was still in it´s infancy.

Today, at the end of February 2016 - near two years into the project - we are about to launch the full scale production of the CORE education and training materials. We vision content to be produced in three parallel categories: CORE Flagship Handbook (CFH); Partner-specific materials; and Other education content. Content which is considered to be near-final can be published on-the-fly for example at CBRA´s web-portal, www.cross-border.org , where a new section is planned for the “CORE Education” (like the “CORE Observatory” which has been live since last autumn). Having just over two years left with the CORE-project, we are right on schedule to start the full production of education and training materials!

CORE Flagship Handbook (CFH) will be the main joint outcome of Task 19.1, thus we welcome INTERPOL, WCO, ESC, CLECAT, IRU, TU Delft and BMT to work closely with us in the production, review and piloting of the Handbook. In our current plans the Flagship Handbook has the following four sections, each section having multiple chapters (typically between two and six chapters per section):

  1. Introduction to CORE innovation agenda; including explaining key CORE themes and concepts; and frameworks and models.
  2. CORE outcomes, findings and results – written primarily in the context of the 16 CORE-Demonstrations.
  3. Interpretation of CORE results per key stakeholder group: customs, police, cargo owners, logistics sector, security sector and academics
  4. Future research and development roadmap – focusing on gaps and shortcomings; critical assessment on what works and what doesn’t by the end of CORE-project.

Partner specific materials typically fall into two sub-categories. First one is generic, introductory materials which would be of relevance to 1-2 stakeholder groups – for example Supply chain management 101 for police officers. Such materials can quite easily be developed within Task 19.1, using CORE supply chains and trade lanes as examples. At the same time, such basic education material would not be of relevance for supply chain companies, thus it should not be published in the CORE Flagship Handbook, CFH. Second sub-category is on detailed technical content, which again would be relevant to 1-2 stakeholder groups. An example could be technical review on risk management tools for the logistics sector.

Other education material may consist of the following content buckets, listed in a rough “simple to more complex” -order: Factsheets; Quizzes; Basic case studies; Comprehensive case studies; Videos and animations; Serious games, and so forth. It is still early days to decide what makes sense to develop – and for what we have adequate resources, skills and budgets. Maybe we will start with some simple factsheets, quizzes and basic case studies – this is still to be discussed among Task 19.1 partners.

Finally, the plans regarding the CORE Education web-portal are still in a preliminary stage. We could have a simple dropdown menu at www.cross-border.org , for example with the following selection options: Introductory materials; Technical sections; and Factsheets & quizzes. In the last category we could share first outcomes of Task 19.1 work. Here, just like in all other aspects of CORE Task 19.1, we welcome ideas and feedback from the Task 19.1 team, and from the whole CORE Consortium – and even beyond, from any interested stakeholders and potential future users of CORE Education materials!

In Lausanne on 29.2.2016 - CBRA Blog by Juha Hintsa

Border Agency Cooperation, Part 2 of 3

Our second blog on Border Agency Cooperation (BAC) focuses on a conceptual model developed by CBRA. We have crafted this “CBRA-BAC15” diagram to visualize a set of key BAC actions and primary beneficiaries, with contributions by Dr. Toni Männistö (supply chain security post-doc researcher at CBRA), Mr. Gerwin Zomer (TNO, technical manager for the FP7-CORE project) and by Ms. Susana Wong Chan (education and training materials developer at CBRA).BAC-1

The diagram is cut to three sectors: on left side, the supply chain companies are the primary beneficiaries of BAC actions; on the right side, the government agencies form the primary beneficiary group; and on the bottom area, both supply chain companies as well as government agencies benefit from BAC actions. Each of these three sectors contains five examples of concrete border agency cooperation actions – 15 in total - explained in a moment by using real examples, whenever available in the literature or by expert suggestions. In the center of the diagram lies a circle with the more generic “smart cross-border improvement actions”, applicable to virtually any work in global trade facilitation.

The diagram should not be considered exhaustive, when it comes to all optional actions to improve BAC in a given country or region or globally. Some of the 15 key actions may be strongly interconnected, or, partially overlapping. Some of them may apply mainly on national multi-agency environment, and some of them mainly on international e.g. customs-to-customs environment. Also, the division of the key actions into the three beneficiary groups can and should be challenged, by the interested audiences. But, let´s start now by listing and illustrating the key 15 BAC actions:

Supply chain companies as the primary beneficiary (left sector in the diagram). The following five BAC actions can bring immediate benefits to the companies operating in supply chains, in terms of saving administrative costs and speeding up the supply chain – less work dealing with various certifications and audit visits, less variation and IT costs with import/export data filing and less waiting times at the borders.

  • Harmonized ´trusted trader´ & other certification programs: In the European Union, the European Commission´s implementing regulation (No. 889/2014) updates the references to the aviation security legislation in force, including recognition of the Known Consignor (KC) status and its relevance to Authorized Economic Operator (AEO), and framing the scope of recognition of the common requirements between the respective programs.
  • Coordinated company visits & audits: Closely linked to the previous BAC-action, in the Netherlands, the Dutch Customs executes joint audits on AEO security (customs) and known consignor/regulated agent (air cargo) with the Dutch Immigration and air-police agency - during the application phase, as well as during periodical audits.
  • Harmonized data filing requirements: Despite a global, harmonized data model, harmonized tariff codes and standards on clearance procedures, there are many differences in operational import, export and transit procedures and information requirements between countries. This results in additional complexity of IT systems for globally operating traders and logistic service providers. An example is the pre-arrival security declarations, where harmonization would be most useful e.g. between the Importer Security Filing, “10+2” in the US and the Entry Summary Declaration in Europe - Multiple Filing, supported by Standard Trader Interface, under development within the Union Customs Code, UCC.
  • Synchronized border interventions & inspections: The Article 4 of the Greater Mekong Sub-region Cross Border Transport Agreement on Facilitation of Border Crossing Formalities calls upon the contracting parties to progressively adopt measures to simplify and expedite border formalities by carrying out joint and simultaneous inspection of goods and people by respective competent authorities of agencies such as customs, immigration, trade, agriculture, and health. It further provides for single-stop inspection and urges the national authorities of adjacent countries to carry out joint and simultaneous inspections.
  • Harmonized operating hours: This applies particularly in the context of two neighboring country customs offices – having same opening hours across the border helps to maximize the daily throughput volumes. As the Article 8 of the World Trade Organization´s Trade Facilitation Agreement puts it, “Each Member shall, to the extent possible and practicable, cooperate on mutually agreed terms with other Members with whom it shares a common border with a view to coordinating procedures at border crossings to facilitate cross-border trade. Such cooperation and coordination may include: … alignment of working days and hours … “. In the ASEAN region, the Article 7 of the ASEAN Framework Agreement on the Facilitation of Goods in Transit urges the contracting parties to “coordinate working hours of the adjacent border posts”.

Government agencies themselves as the primary beneficiary (right sector in the diagram). The following five BAC actions can provide instant benefits for the cooperating government agencies, in terms of cost savings and improved efficiency – in other words, identifying more violations and catching more bad guys with less total spending.

  • Sharing of agency intelligence, information & data: Customs Mutual Assistance Agreements (CMAAS), signed bilaterally by Canada Border Services Agency (CBSA) and eight counterparties during years 1979-2010 (European Community, France, Germany, Mexico, the Netherlands, South Africa, South Korea and the United States) provide Canada with a legal basis to share customs information to prevent, investigate and combat customs offences, particularly customs fraud, and to provide reciprocal mutual assistance to ensure the proper application of customs laws. Under CMAAs Canada may share customs information pertaining to: persons, goods and means of transport; activities planned, on-going, or completed, that constitute or appear to constitute a customs offence in the territory of the country requesting the data; proven law enforcement techniques; new and emerging trends, means or methods of committing customs offences; and facilitation of risk assessment activities, within the mandate and authority of the CBSA.
  • Joint investments in common resource pools (equipment, facilities etc.): In Finland the Customs Administration and the Border Guard share common premises and equipment. Each authority has a designated role in the servicing and maintenance of the equipment. X-ray machines are largely the responsibility of Customs. Road-testing equipment, such as lorry brake-testing pads, is also maintained by Customs. All equipment can be shared and operated by each agency upon request. Thus, although the equipment belongs to one agency, it can be easily relocated to the other agency, enabling smoother processing of the workflow without unnecessary and lengthy administrative procedures, thereby reducing costs.
  • Joint teams: In the Netherlands, “HARC” - Hit and Run Cargo Rotterdam team, is a joint operation of Dutch Maritime Police, Dutch Customs, the Fiscal and Economic Crime Agency and the Ministry of Justice collaborating operationally in narcotics enforcement. Joint teams differ from Joint operations below by being a long-term / permanent set-up; while Joint operations “come and go”.
  • Joint operations: A joint operation Meerkat, (23-27 July 2012) involving the World Customs Organization and INTERPOL against the illicit trafficking of cigarettes, tobacco and alcohol in East and Southern Africa, resulted in the seizure of tons of illicitly traded products in seven countries. Operation Meerkat saw Customs and police authorities carry out some 40 raids at seaports, inland border crossing points, markets and shops in Angola, Kenya, Mozambique, Namibia, South Africa, Tanzania and Zimbabwe. More than 32 million cigarettes – equivalent to 1.6 million packets, 134 tons of raw tobacco and almost 3,000 liters of alcohol were seized, resulting in national authorities initiating a number of administrative investigations into tax evasion and other potential criminal offences.
  • Collaborative criminal investigations & prosecutions: In the United States the Border Enforcement Security Task Force (BEST) units gather officers from more than 100 different law enforcement agencies under one roof. The objective is to identify, investigate, disrupt and dismantle transnational organizations posing the greatest threat to border security, public safety and national security, by employing the full range of federal, state, local, tribal and international law enforcement resources. Over the years, the BEST has become a successful interagency law enforcement collaboration model that’s keeping the US safer.

Both supply chain companies as well as government agencies as beneficiaries (bottom sector). The five BAC actions can bring instant benefits to all parties in cross-border supply chains, in terms of lowering costs and improving performance, from supply chain company and from governmental agency perspectives.

  • ‘Single window’ -type import/ export/ transit data submissions: In the Netherlands, the authorities have designed Digipoort, the government’s ‘electronic post office’ for businesses. It provides the communication infrastructure for the exchange of digital information between companies and government authorities. Digipoort enables companies to submit import and export information at a single entry point aimed at multiple government authorities.
  • Common risk indicators, risk profiles & targeting systems: In Finland, common databases are linked to the different agencies’ operational and risk management databases, leading to a common approach when a ‘signal’ is recorded. Some control and enforcement officers have access to each other’s systems on a need-to-know basis, with levels of restricted access determined by rank and functional responsibility.
  • Mutual recognition of supply chain inspection procedures & outcomes: As part of the European Union funded research and development project FP7-CORE ( http://www.coreproject.eu/ ), the phytosanitary and customs administrations in Kenya and the Netherlands are working towards mutual recognition of controls carried out by Kenyan authorities, as well as the exploitation of digital phytosanitary certificates and other trade documents, between the two countries. Outside of the research world, mutual recognitions (MR) of customs inspections are being explored in the context of EU MR Agreements, for example with Japan.
  • Cross-training and empowering manpower: In Finland, Customs officers have been trained by the Border Guard to inspect identification documents and visas, among other procedures. Border guards have, in turn, received basic Customs training, which includes the search of vehicles and the recognition of prohibited and restricted goods, such as drugs, alcohol, and counterfeit items.
  • Joint public-private partnership arrangements, training sessions etc.: In 2011 in Hong Kong, the Customs and Excise Department established a Joint Liaison Group with the representatives of shippers, freight forwarders and truck drivers for exchanging operational views and comments on the Road Cargo System “ROCARS”. Moreover, Customs also launched an extensive publicity program and established outreach teams to assist the industry stakeholders to get used to the ROCARS. Following other government departments are listed on the ROCARS web-site http://www.rocars.gov.hk/ : Commerce and Economic Development Bureau, Census and Statistics Department, and Transport Department.

Finally, the center circle of the CBRA-BAC15 diagram highlights the basic, classical principles of trade facilitation – naturally in the context of multiple agencies dealing with cross-border regulations, procedures, IT-systems and data requirements:

  • Simplification & Harmonization: agencies work together with the first aim to streamline certification requirements and procedures, to minimize the number of data elements required from traders etc.; and the second aim to unify the rules and requirements facing supply chain companies.
  • Interoperability & Synchronization: agencies invest in improving interoperability between their inspection technologies, IT-systems etc.; they also work together to better synchronize their supervision and control processes, particularly for the benefit of supply chain companies.
  • Transparency & Predictability: agencies keep each other well informed of their current regulations, procedures, operations etc., as well as planned future changes – such proactive approach helps to minimize surprises and related hassles.

This concludes the second of three parts of our Border Agency Cooperation (BAC) blog. In Part 3 – to be published sometime in February – we focus on the overarching institutional arrangements on Border Agency Cooperation, including establishment of single border agencies (e.g. in the US and Australia); creation of one-stop border posts, OSBPs (multiple examples across the world); carrying work permanently on behalf of other agencies etc. We also plan to discuss bit more on the benefits and costs of BAC, as well as the main challenges and obstacles in BAC-projects across the globe. Talk to you again in February, Juha Hintsa.

 

Bibliography / sources for the examples and cases attached to the 15 BAC key actions:

  • Harmonized ´trusted trader´ & other certification programs: Commission Implementing Regulation (EU) No 889/2014 of 14 August 2014 amending Regulation (EEC) No 2454/93, as regards recognition of the common security requirements under the regulated agent and known consignor programme and the Authorised Economic Operator programme.
  • Coordinated company visits & audits: Email exchange with a Dutch Customs expert
  • Harmonized data filing arrangements: Interview with a Dutch supply chain and trade facilitation expert (29 January 2016); and AnNa Master Plan Extended Collaboration Project Book, December 2015. Available for download at: http://www.annamsw.eu/
  • Synchronized border interventions & inspections: Jain, S.R. (2012), “Coordinated Border Management: The Experience of Asia and the Pacific Region”, World Customs Journal, Vol. 6 No.1. (CBM25).
  • Harmonized operating hours: Article 8 (Border Agency Cooperation) of the WTO Agreement on Trade Facilitation of 15 July 2014; and Jain, S.R. (2012), “Coordinated Border Management: The Experience of Asia and the Pacific Region”, World Customs Journal, Vol. 6 No.1.
  • Sharing of agency intelligence, information & data: “Customs Cooperation Case Study for Canada”, paper submitted by Canada (Canada Border Services Agency - CBSA) for the July 2012 WTO Symposium on Trade Facilitation.
  • Joint investments in common resource pools (equipment, facilities etc.): “Coordinated Border Management”, WCO News, February 2015, No. 76.
  • Joint teams: “Customs find cocaine buried in cocoa bean shipment”, NL Times 25.5.2015, Available online at: http://www.nltimes.nl/2015/05/25/customs-finds-cocaine-buried-in-cocoa-bean-shipment/ (accessed 28 January 2016).
  • Joint operations: “WCO and INTERPOL joint operation against illicit trafficking in Africa leads to tobacco and alcohol seizures”, WCO Press Release, 27 August 2012. Available online at:   http://www.wcoomd.org/en/media/newsroom/2012/august/operation-meerkat.aspx (accessed 28 January 2016).
  • Collaborative criminal investigations & prosecutions: “Coordinated Border Management”, WCO News, February 2015, No. 76
  • ‘Single window’ –type import/ export/ transit data submissions: “Coordinated Border Management”, WCO News, February 2015, No. 76.
  • Common risk indicators, risk profiles & targeting systems: “Coordinated Border Management”, WCO News, February 2015, No. 76.
  • Mutual recognition of supply chain inspection procedures & outcomes: The Consistently Optimised REsilient ecosystem, CORE FP7 project, EU. See online at: http://www.coreproject.eu/ (accessed 28 January 2016).
  • Cross-training and empowering manpower: “Coordinated Border Management”, WCO News, February 2015, No. 76.
  • Joint public-private partnership arrangements, training sessions etc.: “Road Cargo System (ROCARS) (Hong Kong China)”. Available online at: http://www.wcoomd.org/en/topics/wco-implementing-the-wto-atf/atf/border-agency-cooperation.aspx (accessed 28 January 2016).

CORE-Observatory

Enhancing security through efficiency focus- Insights from a multiple stakeholder pilot implementation (Sternberg et al. 2012)

Summary

Efficiency and security are said to be opposing goals of logistics operations: when security goes up, efficiency decreases, and vice versa. Yet, it is suggested that information technologies could improve efficiency and security simultaneously. Sternberg et al. (2012) investigate this hypothesis: whether and to what extent increased attention to efficiency results in improved security in carrier operations in a seaport context. In a longitudinal case study, they research carrier operations in connection with port terminals carrying out Roll-in Roll-out (RoRo) operations on trailers at the port of Gothenburg. They find that investments in new ICT solutions, in fact, remove some of the barriers to higher efficiency and improve security against cargo theft and terrorism. In particular, they report that ICT investments increased efficiency in terms of reduced waiting times and increased ability to plan port operations (pre-arrival notification) and fast positioning of trailers in a port. The new ICT solutions also increased security in terms of more secure document handling (decreases the risk that sensitive information falls into the hands of criminals), better anomaly detection (helps customs identify trailers that are most likely tampered in-transit) and increased visibility. The abstract is available at: http://onlinelibrary.wiley.com.

Review by Toni Männistö (CBRA) based on his doctoral thesis.

Global supply chain design considerations: Mitigating product safety and security risks (Speier et al. 2011)

Summary

There is a broad consensus among supply chain professionals that supply chain disruptions are very bad for business: supply chain glitches commonly lower operational performance and reduce shareholder value. Regardless of this, there is surprisingly little research on supply chain design strategies that have the highest potential to mitigate the risk of disruptions. Based on interviews with 75 US-based managers, an industry survey and a case study, Speier et al. (2011) identify types of SCS strategies and examine how contextual factors influence business managers to select a set of SCS design strategies. They argue that the depth and breadth of security initiatives depend mainly on top management mindfulness, operational complexity, product risk and coupling. The abstract is available at: http://www.sciencedirect.com.

Review by Toni Männistö (CBRA) based on his doctoral thesis.

The displacement effect in cargo theft (Ekwall 2009)

Summary

Cargo theft has always been a problem for shippers and logistics service providers. Even so, regardless of the persistent efforts to reduce cargo theft, crime continues to strive. This classic supply chain security paper by Daniel Ekwall analyzes and explains why cargo theft continues to occur in the transport network despite all implemented countermeasures. Focusing on Swedish transport and logistics facilities, the Ekwall’s research builds on interviews with six subject matter experts, survey with four terminal operators, and macro-statistics from TAPA (Transported Asset Protection Association). The paper finds some evidence on crime displacement in terms of method (modus operandi): cargo thieves target increasingly cargo in-transit because logistics facilities are nowadays better protected. However, displacement is likely to be partial in contrast to complete displacement. This means that absolute theft risk can be reduced. Download the abstract here: http://www.emeraldinsight.com.

Review by Toni Männistö (CBRA) based on his doctoral thesis.

Estimating the Operational Impact of Container Inspections at International Ports (Bakshi et al. 2011)

Summary

The US government is pushing a new 100 % screening regime for US-bound containers in foreign ports to mitigate the risk of weapons of mass destruction entering US soil. The 100 % regime, however, is a major concern for foreign port operators because the current Container Security Initiative (CSI) regime seems not to be scalable for high inspection rates. The paper of Bakshi et al. (2011) simulate impacts of two container inspection regimes (the CSI and a new one) in terms of port congestion, handling cost and dwell time. To carry out the simulation, the authors use discrete event queuing network simulation with real container movement data from two of the world’s busiest container terminals. The analysis shows that cargo inspections many times disrupt optimized logistics processes at seaports. In particular, inspections extend the transportation leadtime because shipments lose time as they (i) are moved to an inspection site, (ii) queue for inspection to start, (iii) pass inspections themselves. Download the abstract here: http://pubsonline.informs.org.

Review by Toni Männistö (CBRA) based on his doctoral thesis.

CASSANDRA compendium. Standards in supply chain management (Ch. 9)

Summary: Chapter 9 of the CASSANDRA compendium lists and discusses various standards that set the context for international supply chain management. The chapter focuses especially on management standards (e.g., ISO28000), technical standards (e.g., RFID, electronic seals and barcodes), standards for exchange of information among supply chain stakeholders (e.g., UN/EDIFACT and XML messaging), and customs security standards (especially the World Customs Organisations’ SAFE Framework of Standards). GS1 Global Visibility Framework and other industry standards are included in the discussion, as well. The chapter points out that because a large variety of standards are already available, the challenge is not a lack of standardisation but the lack of harmonisation between different standards. The section also concludes that even if the diversity of standards was harmonised, the next step would be to ensure that the standards would be consistently implemented in different contexts.

CASSANDRA compendium. Private sector perspectives on risk management (Ch. 5) and crime prevention and security management in supply chains (Ch. 6)

Summary: Chapters 5 & 6 of the CASSANDRA compendium provide a general overview on supply chain security risk management from the private sector perspective. Explaining the essentials of supply chain risk management, Chapter 5 introduces commonly used risk management models and tools (e.g., risk matrices and risk registers), discusses various classifications of supply chain risks, and elaborates current trends of risks and risk management in the supply chain context. Chapter 6 focuses on specific challenges of supply chain security risks - the risks that arise from intentional, man-made criminal activities such as terrorism, theft, trafficking, and sabotage. The chapter explains a few early classifications of supply chain security risks (e.g., motive-based typology and taxonomies based on private sector perspectives). Following the classifications of security risks, the chapter puts forth a few models for managing security risks in the supply chain context (e.g., the 8-layer model for supply chain security management). The chapter concludes with a detailed case study on security management of an international security company and a comparison of supply chain security management and the total quality management (TQM) management philosophy. The CASSANDRA compendium is available for download: www.cassandra-project.eu. Review by Toni Männistö (CBRA)

MARITIME SECURITY – DHS Progress and Challenges in Key Areas of Port Security, GAO, July 2010 (CORE1064)

Summary: This GAO report analyses the progress the US Department of Homeland Security (DHS) has made in maritime supply chain security over the past five to ten years. The report raises problems that the DHS and its component agencies – the Coast Guard and the Customs and Border Protection (CBP) – have encountered regarding improvement of risk management, reduction of the vulnerability to threats of small vessels, implementation of security assessment in foreign ports, and the overall progress in supply chain security.  The report states that so far the Coast Guard has carried out risk assessments, but their results do not allow effective comparison and prioritization of risks across ports. The Coast guard has also identified points of vulnerability related to waterside attacks by small vessels, reached out to the general public to encourage recreational sailors to report anomalies, started tracking of small vessel, tested equipment to screen small vessels for nuclear material and conducted security maneuvers such as vessel escorts. Nevertheless, resource constraints and technical problems prevent the Coast Guard to protect the US coastline and maritime infrastructure from small-vessel threats effectively. Moreover, the Coast Guard has been assessing security in foreign ports, but the lack of the agency’s resources and certain countries’ reluctance to collaborate with the US authorities have slowed down the global security assessment. Finally, as for the general supply chain security, the DHS has been running the Secure Freight Initiative (SFI) in foreign ports to test the feasibility of the 100% scanning of US-bound shipping containers with non-intrusive inspection (NII) technologies and radiation detection equipment. The findings of the SFI pilots indicate that the 100% scanning is not a feasible policy because it would disrupt port logistics, damage international trade and raise healthy concerns, among other things. The report is available for download at: www.gao.gov/assets/660/659087.pdf.

MARITIME SECURITY – Progress Made, but further actions needed to secure the maritime energy supply, GAO, August 2011 (CORE1061)

Summary: The GAO report discusses actions the US Coast Guard and the Federal Bureau of Investigation (FBI) have taken to strengthen security of energy tankers and offshore energy infrastructure – that produces, transports, or receives oil and natural gas – from terrorist attacks. The report’s key recommendation is that the Coast Guard need to assess risks to all offshore facilities in the US territorial waters, to improve emergency response plans in case of oil spills and to design performance measures for emergency response activities. This GAO document focuses on a rather narrow field of critical infrastructure, the US maritime energy infrastructure, which is not in the CORE’s scope. The CORE’s risk cluster might consider useful the description how the Coast Guard has applied its Maritime Security Risk Analysis Model (MSRAM) to determine risk of the US maritime energy infrastructure. The report is available for download at: www.gao.gov/new.items/d11883t.pdf.

 

TRANSPORTATION SECURITY INFORMATION SHARING – Stakeholder Satisfaction Varies; TSA Could Take Additional Actions to Strengthen Efforts, GAO, June 2014 (CORE1020)

Summary: This report presents and discuses findings of a survey on stakeholders’ satisfaction to the US Transportation Security Administration’s security-related activities and to the way the TSA disseminates information about its activities. The survey’s scope is the overall US transportation system, covering aviation, rail, and highway modalities and transport of passengers and freight. Given the broad scope and the US-centricity of the survey, this report is not very relevant for CORE. The education and training cluster could anyhow learn how security-related user satisfaction surveys are done and how to establish a mechanism for collecting regular user feedback. The report is available for download at: http://gao.gov/assets/670/664350.pdf.

MARITIME SECURITY – Progress and Challenges with Selected Port Security Programs, GAO, June 2014 (CORE1019)

Summary: The report provides a comprehensive review of progress and challenges of various port security activities and programs the Department of Homeland Security (DHS) has carried out since 9/11. In essence, the report is a summary and an update of a number of more detailed GAO reports on maritime supply chain security. The report states that needs to strengthen further its efforts on maritime domain awareness through intensified communication among maritime stakeholders. Regarding the US domestic port security, the report recommends DHS to reassess its Port Security Grant Program (PSGP) that allows ports to request funds for security projects and to improve quality of vulnerability assessment in US ports. The report also urges DHS to overcome challenges of risk-based targeting and scanning of US-bound shipping containers.  The findings and recommendations of this report help CORE consortium understand the current state of the US maritime security regime. This understanding benefits particularly the demonstrations of WP9 and WP14. Also educational and training as well as risk clusters of CORE may find the report’s information useful. The report is available for download at: www.gao.gov/assets/670/663784.pdf.