The WCO SAFE Framework of Standards

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The WCO SAFE Framework of Standards

• CONCEPT, DEVELOPMENT, PROVISIONS AND
  IMPLEMENTATION
• Larry L. Burton
• Technical Officer
• World Customs Organization

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THE VISION

• International trade is the key to successful
  and sustainable development of the worlds
  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

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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.

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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.

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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 Intl. Organizations
• Springboard for Raised Customs Profile.

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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.

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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.

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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.

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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)

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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

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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

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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).

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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).

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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Authorized Economic OperatorDefined 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.

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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.

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Pillar 2, Standard 2 Security

• Authorized Economic Operators will incorporate
  pre-determined security best practices into their
  existing business practices.

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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.

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Pillar 2, Standard 4 Technology

• All parties will maintain cargo and container
  integrity by facilitating the use of modern
  technology.

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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.

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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.

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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.

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Consultation Process RefinedThe 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

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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

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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)

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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

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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

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DIAGNOSTIC METHODMeasured against SAFE Standards

• A Top to Bottom Review of Customs
• Strategic Management
• Budget Management, Procurement Logistics
• Legislation and Legal Policy
• Compliance Issues Import/Export, CV, Overall
• Enforcement Posture and Readiness

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DIAGNOSTIC METHOD(Continued)

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

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FUTURE FOR THE SAFE

• Continuation of Consultation involving Customs,
  Intl 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.
  

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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

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WCO SAFE FRAMEWORK OF STANDARDS Larry L.
BurtonSenior Technical OfficerWCO - Brussels