The WCO SAFE Framework of Standards

The WCO SAFEFrameworkofStandards CONCEPT, DEVELOPMENT, PROVISIONS AND IMPLEMENTATION Larry L. Burton Technical Officer World Customs Organization

THE VISION “ International trade is the key to successful and sustainable development of the world’s nations. An initiative that aims to secure this environment globally while promoting the flow of legitimate goods should receive maximum support and unconditional endorsement from all quarters.” Michel Danet, WCO Secretary General

THE IMPETUS • Witnessing use of global transport system as a terrorist attack delivery system; • Realization of the Consequences of Major Attack on the International Trade Supply Chain; • Security Council Resolution 1373 of September 2001, requiring enhanced border security; • WCO Council Resolution, June 2002, forming a Joint Customs-Industry Task Force on Security and Facilitation.

The Task Force:Process and Outcomes • Task Force met 6 Times (September 2002 to April 2004; • ISCM Guidelines; • Revised Data Model; • 27 Essential Data Elements; • UCR (Electronic Staple Concept); • Johannesburg Convention; • Council Endorsed Task Force Work.

A 21st CENTURY VISION • Need for International Standards; • Need to Link Security with Facilitation; • Standards Must Include Clear Benefits; • Include C-to-C & C-to-B Standards; • Need “Real-Time” Info. Sharing; • Use Intelligence and Risk-Based Controls; • Utilize “Single Window” Concept; • Work with other Int’l. Organizations; • Springboard for Raised Customs Profile.

HIGH LEVEL STRATEGIC GROUP (HLSG) • Formed by 2004 Council Resolution; • Need to Establish Momentum for a Critical Mass of Administrations; • Membership of Directors General Representing all 6 WCO Customs Regions; • Six Meetings held thus far in June & November 2004, April & Oct. 2005, and April & October 2006.

MANDATES OF THE HLSG • To Lead and Guide the WCO; • Build Upon Task Force Work; • Create Framework for the PC; • Further Develop ISCM Concept; • Define Sec. & Facilitation Standards; • Capacity Building recommendations; • Strategies for Implementation.

HLSG / WCO WORK • Creation of Comprehensive FOS Incorporating Several Components; • Main Body of FOS with 2 Pillars; • Pillar 1, Customs-to-Customs; • Pillar 2, Customs-to-Business; • AEO, Validation/Accreditation, Mutual Rec.; • Letter of Intent to Implement.

CONSULTATIVE PROCESS • HLSG Mandated to Involve Business; • Written Comments Solicited by WCO; • Joint Meetings to Consider Changes to Documents (Plenary and Syndicates); • Joint Members and Trade Editing Group Mutually Re-drafted Documents; • National and Regional Meetings Held; • Creation of Private Sector Consultative Group (PSCG)

CRITICAL ELEMENTS FOR THE FUTURE OF THE FRAMEWORK • Customs Needs the Trade and Must Maintain a Consultative Process; • Benefits to Traditional Customs Roles (Revenue Collection, Compliance Measurement, Fighting Commercial Fraud) = Natural by-products of FOS. Must be Fully Communicated; • Capacity Building is a Cornerstone; • Implementation is a Huge Challenge;

SAFE; FOUR CORE ELEMENTS • Common risk-management approach; 27 Key data elements • Advance electronic manifest information • Inspection of high-risk cargo at port of origin; export controls • Enhanced trade facilitation for legitimate trade; Authorized Economic Operator (AEO) concept

FRAMEWORK STRUCTURE: TWO PILLARS and 17 Standards • Pillar 1: Customs-to-Customs Cooperation; Using Commonly Accepted Standards to both Secure and Facilitate Trade (11 Standards). • Pillar 2: Customs and Business Partnership; Identify Secure Business Partners and Offer Benefits (6 Standards).

Pillar 1, Standard 1: Integrated Supply Chain Management The Customs administration should follow integrated Customs control procedures as outlined in the WCO Customs Guidelines on Integrated Supply Chain Management (ISCM Guidelines).

Pillar 1, Standard 2: Cargo Inspection Authority The Customs administration should have the authority to inspect cargo originating, exiting, transiting (including remaining on board), or being transshipped through a country.

Pillar 1, Standard 3: Modern Technology in Inspection Equipment Non-intrusive inspection (NII) equipment and radiation detection equipment should be available and used for conducting inspections, where available and in accordance with risk assessment. This equipment is necessary to inspect high-risk containers or cargo quickly, without disrupting the flow of legitimate trade.

Pillar 1, Standard 4: Risk-Management Systems The Customs administration should establish a risk-management system to identify potentially high-risk shipments and automate that system. The system should include a mechanism for validating threat assessments and targeting decisions and identifying best practices.

Pillar 1, Standard 5: High-risk Cargo or Container High-risk cargo and container shipments are those for which there is inadequate information to deem shipments as low-risk, that tactical intelligence indicates as high-risk, or that a risk-scoring assessment methodology based on security-related data elements identifies the shipment as high-risk.

Pillar 1, Standard 6: Advance Electronic Information The Customs administration should require advance electronic information on cargo and container shipments in time for adequate risk assessment to take place.

Pillar 1, Standard 7: Targeting and Communication Customs administrations should provide for joint targeting and screening, the use of standardized sets of targeting criteria, and compatible communication and/or information exchange mechanisms; these elements will assist in the future development of a system of mutual recognition of controls.

Pillar 1, Standard 8: Performance Measures The Customs administration should maintain statistical reports that contain performance measures including, but not limited to, the number of shipments reviewed, the subset of high-risk shipments, examinations of high-risk shipments conducted, examinations of high-risk shipments by NII technology, examinations of high-risk shipments by NII and physical means, examinations of high-risk shipments by physical means only, Customs clearance times and positive and negative results. Those reports should be consolidated by the WCO.

Pillar 1, Standard 9: Security Assessments The Customs administration should work with other competent authorities to conduct security assessments involving the movement of goods in the international supply chain and to commit to resolving identified gaps expeditiously.

Pillar 1, Standard 10: Employee Integrity The Customs administration and other competent authorities should be encouraged to require programs to prevent lapses in employee integrity and to identify and combat breaches in integrity.

Pillar 1, Standard 11: Outbound Security Inspections The Customs administration should conduct outbound security inspection of high-risk containers and cargo at the reasonable request of the importing country.

Authorized Economic Operator:Defined in SAFE Framework A party involved in the international movement of goods in whatever function that has been approved by or on behalf of a national Customs administration as complying with WCO or equivalent supply chain security standards. Authorized Economic Operators include inter alia manufacturers, importers, exporters, brokers, carriers, consolidators, intermediaries, ports, airports, terminal operators, integrated operators, warehouses, and distributors.

Pillar 2, Standard 1: Partnership Authorized Economic Operators involved in the international trade supply chain will engage in a self-assessment process measured against pre-determined security standards and best practices to ensure that their internal policies and procedures provide adequate safeguards against the compromise of their shipments and containers until they are released from Customs control at destination.

Pillar 2, Standard 2: Security Authorized Economic Operators will incorporate pre-determined security best practices into their existing business practices.

Pillar 2, Standard 3: Authorization The Customs administration, together with representatives from the trade community, will design validation processes or quality accreditation procedures that offer incentives to businesses through their status as Authorized Economic Operators.

Pillar 2, Standard 4: Technology All parties will maintain cargo and container integrity by facilitating the use of modern technology.

Pillar 2, Standard 5: Communication The Customs administration will regularly update Customs-Business partnership programs to promote minimum security standards and supply chain security best practices.

Pillar 2, Standard 6: Facilitation The Customs administration will work co-operatively with Authorized Economic Operators to maximize security and facilitation of the international trade supply chain originating in or moving through its Customs territory.

OUTCOMES FROM WCO COUNCIL • Adopted the SAFE Framework of Standards; • Extended the Term and Amended the Mandate of the HLSG; • Authorized a Business Committee (PSCG) to have Access to and Advise the HLSG on SAFE Framework Matters.

Consultation Process Refined:The PSCG • WCO Perceived Need for more Long Term and Distinct Trade Consultation Body; • Private Sector Consultative Group (PSCG) Formed; • Regional and Sector Representation • Selected by Sec. Gen. /2-year terms • Advisory Role to HLSG • Editing and Comment Role-5th HLSG

HLSG & PSCG Interaction • First PSCG Meeting Preceded 5th HLSG (Organizational Meeting in Brussels) • Meeting of HLSG and PSCG • PSCG presents HLSG with edited documents/ describes needs of business • HLSG takes PSCG comments under advisement

A New Look • Fifth HLSG directed Consolidation of 3 Key documents (AEO Conditions, Requirements and Benefits; Validation and Authorization; and, Mutual Recognition of Customs Controls & AEO Status • Sixth HLSG directed Consolidation of the SAFE Framework and AEO documents (to be presented to 2007 Council)

The Next Big Steps • 144 of 171 (Letters of Intent) • Recognition of Capacity Building Needs and Process Aided by Self Assessments • Diagnostic Missions • 51 Countries between January 2006 and June 2007 • 2-Person Teams, WCO/Joint/Member for 2 weeks in-country

NEXT STEPS (CONTINUED) • HLSG to be Dissolved after 7th and Final Session (April 2007) • Policy Commission and Council to Decide on Future Management Path • PSCG to Continue and Retain Role

DIAGNOSTIC METHOD:Measured against SAFE Standards A Top to Bottom Review of Customs: • Strategic Management • Budget Management, Procurement & Logistics • Legislation and Legal Policy • Compliance Issues – Import/Export, C&V, Overall • Enforcement Posture and Readiness

DIAGNOSTIC METHOD(Continued) • Information Technology and Communications • External cooperation and Communication • Governance (Corruption, Recruitment, Salary Structure, etc.)

FUTURE FOR THE SAFE • Continuation of Consultation involving Customs, Int’l Orgs. And Business; • Consideration and Consultation regarding Implementation and Administration of the FOS; • Recommend Uniform Interpretation and Application Measures for FOS; • Recommended Future FOS Amendments; • Consideration of any Other Relevant FOS Issues.

SUMMARY • Goals are: Securing Supply Chain; Enhancing Traditional Role Results; Facilitating Trade; and Creating Standardized Requirements and Expectations; • Trade has had and Continues to Play Major Role, as can be seen in creation of the Private Sector Consultative Group; • Success Ultimately Requires Commitment by Members; • Capacity Building is the Key to Globalizing Customs Standards on Security and Facilitation. • Mutual Recognition is the next big Frontier

WCO SAFE FRAMEWORKOFSTANDARDSLarry L. BurtonSenior Technical OfficerWCO - Brussels

The WCO SAFE Framework of Standards