The SAFE Framework of Standards Good morning, ladies and gentlemen. I am honored to be here at the 2008 World Customs Forum. There is perhaps no more appropriate place to discuss a topic important to us all – managing secure trade lanes and the future of facilitation. Bob Struthers World Customs Organization Training on the New EU Implementations on Road Transport and Foreign Trade: Istanbul Turkey 25-26 June 2009 Copyright © 2006 World Customs Organization. All rights reserved. Requests and inquiries concerning translation, reproduction and adaptation rights should be addressed to copyright@wcoomd.org 1

The World Customs Organization (WCO) is the only intergovernmental organization with competence in Customs matters.  Please just go through the content of this slide Copyright © 2006 World Customs Organization. All rights reserved. Requests and inquiries concerning translation, reproduction and adaptation rights should be addressed to copyright@wcoomd.org 2

Facts and Figures Established in 1952 as the Customs Co-operation Council Renamed WCO as working title in 1994 Headquarters in Brussels 6 regional representatives Currently representing 174 members from all geographic regions and at different stages of development Members process > 98% of all international trade The Convention establishing a Customs Co-operation Council, now known as the “World Customs Organization”, entered into force in 1952 with 17 participating countries. After years of membership growth, in 1994 the Council adopted the working name World Customs Organization, to more clearly reflect its transition to a truly global intergovernmental institution. The WCO has 6 Vice-Chairs representing 6 regions. Today the WCO consists of 174 Members, spread throughout the world, which are responsible for processing over 95% of all international trade. The WCO employs plus minus 130 Staff members and has an annual operating budget of around 15 million Euros. Copyright © 2006 World Customs Organization. All rights reserved. Requests and inquiries concerning translation, reproduction and adaptation rights should be addressed to copyright@wcoomd.org

WCO SAFE Framework Recognition of risks to the security and facilitation of the international trade supply chain led the WCO to take bold action. WCO Council Resolution, June 2002, forming a Joint Customs-Industry Task Force on Security and Facilitation. In the 15 to 20 years prior to 9/11, Customs administrations, particularly in the developed world, began focusing more on trade facilitation rather than continuing to support unnecessary Customs controls. Indeed, some questioned the continued need for Customs control procedures. At the WCO, this trade facilitation focus lead to the negotiation of the Revised Kyoto Convention on the Simplification and Harmonization of Customs Procedures between 1995 and 1999. I will discuss further on Revised Kyoto Convention later in this presentation. However, 9/11 caused the world to refocus on Customs control and recognize a simple truth that every nation has an absolute right to determine who and what crosses its national borders. The instrument of this exercise of sovereign control is, and always has been Customs. After 9/11, the stark recognition of the venerability of international trade lead WCO Members to seek to secure the global supply chain that serves the world economy. Acting on this realization, WCO Council passed a Resolution in its June 2002 session to create a Task Force on Security and Facilitation, Jointly populated with Customs and Industry representation. Copyright © 2006 World Customs Organization. All rights reserved. Requests and inquiries concerning translation, reproduction and adaptation rights should be addressed to copyright@wcoomd.org 4

SAFE Framework of Standards Adoption at the Council in June 2005 Framework Letter of Intent to implement the Framework 156 WCO Members make commitment to implement Revised version published in 2007 Copyright © 2006 World Customs Organization. All rights reserved. Requests and inquiries concerning translation, reproduction and adaptation rights should be addressed to copyright@wcoomd.org

electronic information Core Elements of SAFE FOUR CORE PRINCIPLES Advance electronic information Risk management Outbound inspection Business partnerships Harmonise the advance electronic information requirement on inbound, outbound and transit shipments. Commit to employing a consistent risk management approach to address security threats. Outbound inspection of high-risk consignments being exported, preferably using non-intrusive inspection methods. Customs will provide benefits to businesses that meet minimal supply chain security standards and best practices. The WCO Framework is comprised of four core elements. First, the Framework harmonizes advance electronic manifest information requirements on inbound, outbound, and transit shipments. Second, each Member that joins the Framework must commit to employing a standardized risk management approach to address terrorism and other security threats. Third, the Framework requires the inspection of outbound high-risk containers by non-intrusive inspection equipment, such as large-scale x-ray machines and radiation detectors, at the request of the destination Member. Lastly, the Framework defines the concrete benefits to be received by businesses that commit to implementing the Framework’s standards. The Framework will therefore create standardized criteria for identifying businesses that offer a high degree of security in return for which they will receive such tangible benefits such as speedier clearance of low-risk cargo through customs and fewer customs inspections. Copyright © 2006 World Customs Organization. All rights reserved. Requests and inquiries concerning translation, reproduction and adaptation rights should be addressed to copyright@wcoomd.org 6

Two pillars The WCO Framework rests on two twin pillars: Customs-to-Customs network arrangements. Customs-to-Business partnerships. (Authorised Economic Operator (AEO) concept) Copyright © 2006 World Customs Organization. All rights reserved. Requests and inquiries concerning translation, reproduction and adaptation rights should be addressed to copyright@wcoomd.org

Objectives of the Framework Certainty and predictability at a global level Integrated supply chain management for all transport modes Allow Customs to meet the challenges of the 21st Century Closer cooperation among Customs administrations Stronger Customs-to-Business cooperation Tangible benefits for businesses Seamless movement of goods 8 Copyright © 2006 World Customs Organization. All rights reserved. Requests and inquiries concerning translation, reproduction and adaptation rights should be addressed to copyright@wcoomd.org 8

Pillar 1 Customs-to-Customs 9

Integrated Supply Chain Management Cargo Inspection Authority Pillar 1 covers the following: Integrated Supply Chain Management Cargo Inspection Authority Modern Technology in Inspection Equipment 10

5) High-risk Cargo or Container 6) Advance Electronic Information Pillar 1 continued: 4) Risk Management 5) High-risk Cargo or Container 6) Advance Electronic Information 7) Targeting and Communication 11

8) Performance Measures 9) Security Assessments 10) Employee Integrity Pillar 1 continued: 8) Performance Measures 9) Security Assessments 10) Employee Integrity 11)Outbound Security Inspections 12

All the containers bound to US Starting from 1 July 2012 US SAFE Port Act H.R. 4954 All the containers bound to US Starting from 1 July 2012 Possibility to extend the date of application for 4 additional years Pilot projects in 3 ports: Port Qasim, Pakistan Port Cortes, Honduras Southampton, UK 13 Copyright © 2006 World Customs Organization. All rights reserved. Requests and inquiries concerning translation, reproduction and adaptation rights should be addressed to copyright@wcoomd.org 13

Pillar 2 Customs-to-Business 14

Authorized Economic Operator in the SAFE Program “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.”  Please just read the content of this slide Copyright © 2006 World Customs Organization. All rights reserved. Requests and inquiries concerning translation, reproduction and adaptation rights should be addressed to copyright@wcoomd.org

Pillar 2 covers the following: Partnership - ensure that their internal policies and procedures provide adequate safeguards against the compromise of their shipments and containers Security - incorporate pre-determined security best practices into their existing business practices. 16

Pillar 2 continued: 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. 4) Technology - maintain cargo and container integrity by facilitating the use of modern technology. 17

Pillar 2 continued: 5) Communication -The Customs administration will regularly update Customs-Business partnership programs to promote minimum security standards and supply chain security best practices. 6) Facilitation - The Customs administration will work co-operatively with Authorized Economic Operators maximize security and facilitation 18

Authorized Economic Operator Requirements and benefits 2007 supplement introduced: 13 detailed AEO requirements sections (e.g. cargo, conveyance, premises security) Section listing possible benefits (eg reduced data sets, minimum number of cargo inspections etc) Validation and Authorization procedures  Please just read the content of this slide Copyright © 2006 World Customs Organization. All rights reserved. Requests and inquiries concerning translation, reproduction and adaptation rights should be addressed to copyright@wcoomd.org

AEO and Mutual Recognition A WCO Member Customs administration recognizes the AEO authorization system in another WCO Member Customs administration as equivalent to its own Standardized approach to AEO authorization in SAFE provides a solid platform for the development of international systems of mutual recognition of AEO status - bilaterally, sub–regionally, regionally and, in the long term, globally Authorized Economic Operator status and the possibility of mutual recognition of your AEO status by other Customs administrations are the real tangible benefits that the SAFE Framework offers to the private sector operators in the global supply chain. The EU has enshrined AEO status and its benefits in the new EU Customs Code. The US Customs Trade Partnership Against Terrorism (C-TPAT); Canada’s Partners in Protection, Sweden’s Stair-Sec, Jordan’s Golden List, Singapore’s Secure Trade Partnership, Malaysia’s Customs Golden Client, Japan’s AEO Programme, New Zealand’s Secure Exports Scheme (SES) and China’s AEO Programme, are examples of some of the AEO programmes that offer trade facilitation benefits to economic operators who secure their supply chain. At the SAFE WG Meeting in October 2008, the WCO introduced a draft Compendium of Best Practices in AEO Implementation and requested comments from WCO Members and the private sector through the PSCG. Copyright © 2006 World Customs Organization. All rights reserved. Requests and inquiries concerning translation, reproduction and adaptation rights should be addressed to copyright@wcoomd.org

AEO and Mutual Recognition Will afford the foreign AEO the same benefits as a national AEO Improve predictability and efficiency of operations Tangible benefits to trade a challenge: Mutual Recognition widely regarded as the ‘holy grail' of benefits. Authorized Economic Operator status and the possibility of mutual recognition of your AEO status by other Customs administrations are the real tangible benefits that the SAFE Framework offers to the private sector operators in the global supply chain. The EU has enshrined AEO status and its benefits in the new EU Customs Code. The US Customs Trade Partnership Against Terrorism (C-TPAT); Canada’s Partners in Protection, Sweden’s Stair-Sec, Jordan’s Golden List, Singapore’s Secure Trade Partnership, Malaysia’s Customs Golden Client, Japan’s AEO Programme, New Zealand’s Secure Exports Scheme (SES) and China’s AEO Programme, are examples of some of the AEO programmes that offer trade facilitation benefits to economic operators who secure their supply chain. At the SAFE WG Meeting in October 2008, the WCO introduced a draft Compendium of Best Practices in AEO Implementation and requested comments from WCO Members and the private sector through the PSCG. Copyright © 2006 World Customs Organization. All rights reserved. Requests and inquiries concerning translation, reproduction and adaptation rights should be addressed to copyright@wcoomd.org

Members’ AEO Programmes EU AEO US Customs Trade Partnership Against Terrorism (C-TPAT) Canada’s Partners in Protection Jordan’s Golden List Singapore’s Secure Trade Partnership Malaysia’s Customs Golden Client Japan’s AEO Programme New Zealand’s Secure Exports Scheme (SES) and China’s AEO Programme Korea’s AEO Programme Authorized Economic Operator status and the possibility of mutual recognition of your AEO status by other Customs administrations are the real tangible benefits that the SAFE Framework offers to the private sector operators in the global supply chain. The EU has enshrined AEO status and its benefits in the new EU Customs Code. The US Customs Trade Partnership Against Terrorism (C-TPAT); Canada’s Partners in Protection, Sweden’s Stair-Sec, Jordan’s Golden List, Singapore’s Secure Trade Partnership, Malaysia’s Customs Golden Client, Japan’s AEO Programme, New Zealand’s Secure Exports Scheme (SES) and China’s AEO Programme, are examples of some of the AEO programmes that offer trade facilitation benefits to economic operators who secure their supply chain. At the SAFE WG Meeting in October 2008, the WCO introduced a draft Compendium of Best Practices in AEO Implementation and requested comments from WCO Members and the private sector through the PSCG. Copyright © 2006 World Customs Organization. All rights reserved. Requests and inquiries concerning translation, reproduction and adaptation rights should be addressed to copyright@wcoomd.org

Members’ AEO Programmes ….but bear in mind that 156 WCO members have committed to Implement SAFE! Major , ongoing Capacity Building support required (Columbus Programme) Authorized Economic Operator status and the possibility of mutual recognition of your AEO status by other Customs administrations are the real tangible benefits that the SAFE Framework offers to the private sector operators in the global supply chain. The EU has enshrined AEO status and its benefits in the new EU Customs Code. The US Customs Trade Partnership Against Terrorism (C-TPAT); Canada’s Partners in Protection, Sweden’s Stair-Sec, Jordan’s Golden List, Singapore’s Secure Trade Partnership, Malaysia’s Customs Golden Client, Japan’s AEO Programme, New Zealand’s Secure Exports Scheme (SES) and China’s AEO Programme, are examples of some of the AEO programmes that offer trade facilitation benefits to economic operators who secure their supply chain. At the SAFE WG Meeting in October 2008, the WCO introduced a draft Compendium of Best Practices in AEO Implementation and requested comments from WCO Members and the private sector through the PSCG. Copyright © 2006 World Customs Organization. All rights reserved. Requests and inquiries concerning translation, reproduction and adaptation rights should be addressed to copyright@wcoomd.org

Current Developments Compendium of AEO programmes, including Mutual Recognition Arrangements (MRA), to raise awareness of other programmes Guidance “How to set up an AEO Programme” SMEs and AEO Authorized Economic Operator status and the possibility of mutual recognition of your AEO status by other Customs administrations are the real tangible benefits that the SAFE Framework offers to the private sector operators in the global supply chain. The EU has enshrined AEO status and its benefits in the new EU Customs Code. The US Customs Trade Partnership Against Terrorism (C-TPAT); Canada’s Partners in Protection, Sweden’s Stair-Sec, Jordan’s Golden List, Singapore’s Secure Trade Partnership, Malaysia’s Customs Golden Client, Japan’s AEO Programme, New Zealand’s Secure Exports Scheme (SES) and China’s AEO Programme, are examples of some of the AEO programmes that offer trade facilitation benefits to economic operators who secure their supply chain. At the SAFE WG Meeting in October 2008, the WCO introduced a draft Compendium of Best Practices in AEO Implementation and requested comments from WCO Members and the private sector through the PSCG. Copyright © 2006 World Customs Organization. All rights reserved. Requests and inquiries concerning translation, reproduction and adaptation rights should be addressed to copyright@wcoomd.org

Scope and Objectives of the Research (AEO Compendium) Since June 2005 156 Members have signed SAFE Framework to Secure and Facilitate Trade; Research Objective: to evaluate the progress in Pillar II on AEO implementation; Data used: in-house information (reports; previous questionnaires, open search) and targeted requests to Members; Scope of study: 40 programmes in 67 countries (due to EU-27 that has a single programme) on all continents 25 programmes identified for targeted approach Information is being verified through the national administrations (personalised requests) Database of AEO contact persons is being formed Copyright © 2006 World Customs Organization. All rights reserved. Requests and inquiries concerning translation, reproduction and adaptation rights should be addressed to copyright@wcoomd.org

AEO Typology I (25 programmes) Programme type: Security/customs compliance – 14 Security – 5 Customs compliance – 6 Type of operator: importers, exporters, logistic operators (carriers, forwarders, shipping companies, airlines), customs brokers, warehouse operators. Some countries (i.e. USA) included special categories for ports and foreign manufacturers. Legislation: all programmes envisaged voluntary participation in the programme. most countries introduced amendments to their current legislation (mainly Customs Codes) or passed new legislation specifically for AEO; some countries, like Canada, Singapore or Australia have not introduced any specific legislation to provide for an AEO. Copyright © 2006 World Customs Organization. All rights reserved. Requests and inquiries concerning translation, reproduction and adaptation rights should be addressed to copyright@wcoomd.org

AEO Typology II (25 programmes) Further plans: Development of new electronic applications; Improvement of procedures; Enlarging the scope of programme (import/export) or elaborating it to include more types of operators; Adding a security component (for customs compliance programmes)

Mutual Recognition Arrangements Japan NZ AU CN CA MY USA JO SN JP EU NO CH US Singapore Korea Argentina BR Concluded MRA To be concluded Studies/consultations in place Copyright © 2006 World Customs Organization. All rights reserved. Requests and inquiries concerning translation, reproduction and adaptation rights should be addressed to copyright@wcoomd.org

And the future….? Sustained Capacity Building Support SAFE Survey Case studies on AEO mutual recognition – best practice Mutual Recognition Standards? Authorized Economic Operator status and the possibility of mutual recognition of your AEO status by other Customs administrations are the real tangible benefits that the SAFE Framework offers to the private sector operators in the global supply chain. The EU has enshrined AEO status and its benefits in the new EU Customs Code. The US Customs Trade Partnership Against Terrorism (C-TPAT); Canada’s Partners in Protection, Sweden’s Stair-Sec, Jordan’s Golden List, Singapore’s Secure Trade Partnership, Malaysia’s Customs Golden Client, Japan’s AEO Programme, New Zealand’s Secure Exports Scheme (SES) and China’s AEO Programme, are examples of some of the AEO programmes that offer trade facilitation benefits to economic operators who secure their supply chain. At the SAFE WG Meeting in October 2008, the WCO introduced a draft Compendium of Best Practices in AEO Implementation and requested comments from WCO Members and the private sector through the PSCG. Copyright © 2006 World Customs Organization. All rights reserved. Requests and inquiries concerning translation, reproduction and adaptation rights should be addressed to copyright@wcoomd.org

WCO SAFE Framework Thank you very much 30 Copyright © 2006 World Customs Organization. All rights reserved. Requests and inquiries concerning translation, reproduction and adaptation rights should be addressed to copyright@wcoomd.org 30