The WCO SAFEThe WCO SAFE FrameworkFramework ofof StandardsStandards

CONCEPT, DEVELOPMENT, PROVISIONS CONCEPT, DEVELOPMENT, PROVISIONS AND IMPLEMENTATIONAND IMPLEMENTATION

Larry L. BurtonLarry L. BurtonTechnical OfficerTechnical Officer

World Customs OrganizationWorld Customs Organization

THE VISIONTHE VISION

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

Michel Danet, WCO Secretary GeneralMichel Danet, WCO Secretary General

THE IMPETUSTHE IMPETUS Witnessing use of global transport system as a Witnessing use of global transport system as a

terrorist attack delivery system;terrorist attack delivery system; Realization of the Consequences of Major Attack on Realization of the Consequences of Major Attack on

the International Trade Supply Chain;the International Trade Supply Chain;

Security Council Resolution 1373 of September Security Council Resolution 1373 of September 2001, requiring enhanced border security;2001, requiring enhanced border security;

WCO Council Resolution, June 2002, forming a Joint WCO Council Resolution, June 2002, forming a Joint Customs-Industry Task Force on Security and Customs-Industry Task Force on Security and Facilitation.Facilitation.

The Task Force:The Task Force: Process and OutcomesProcess and Outcomes

Task Force met 6 Times (September Task Force met 6 Times (September 2002 to April 2004;2002 to April 2004;

ISCM Guidelines;ISCM Guidelines; Revised Data Model;Revised Data Model; 27 Essential Data Elements;27 Essential Data Elements; UCR (Electronic Staple Concept);UCR (Electronic Staple Concept); Johannesburg Convention;Johannesburg Convention; Council Endorsed Task Force Work.Council Endorsed Task Force Work.

A 21A 21stst CENTURY VISION CENTURY VISION Need for International Standards;Need for International Standards; Need to Link Security with Facilitation;Need to Link Security with Facilitation; Standards Must Include Clear Benefits;Standards Must Include Clear Benefits; Include Include C-to-CC-to-C & & C-to-BC-to-B Standards; Standards; Need “Need “Real-TimeReal-Time” Info. Sharing;” Info. Sharing; Use Intelligence and Risk-Based Use Intelligence and Risk-Based

Controls;Controls; Utilize “Single Window” Concept;Utilize “Single Window” Concept; Work with other Int’l. Organizations;Work with other Int’l. Organizations; Springboard for Raised Customs Profile.Springboard for Raised Customs Profile.

HIGH LEVEL STRATEGIC HIGH LEVEL STRATEGIC GROUP (HLSG)GROUP (HLSG)

Formed by 2004 Council Resolution;Formed by 2004 Council Resolution;

Need to Establish Momentum for a Need to Establish Momentum for a Critical Critical MassMass of Administrations; of Administrations;

Membership of Directors General Representing Membership of Directors General Representing all 6 WCO Customs Regions;all 6 WCO Customs Regions;

Six Meetings held thus far in June & November Six Meetings held thus far in June & November 2004, April & Oct. 2005, and April & October 2004, April & Oct. 2005, and April & October 2006.2006.

MANDATES OF THE HLSGMANDATES OF THE HLSG To Lead and Guide the WCO;To Lead and Guide the WCO;

Build Upon Task Force Work;Build Upon Task Force Work;

Create Framework for the PC;Create Framework for the PC;

Further Develop ISCM Concept;Further Develop ISCM Concept;

Define Sec. & Facilitation Standards;Define Sec. & Facilitation Standards;

Capacity Building recommendations;Capacity Building recommendations;

Strategies for Implementation.Strategies for Implementation.

HLSG / WCO WORKHLSG / WCO WORK Creation of Comprehensive FOS Incorporating Creation of Comprehensive FOS Incorporating

Several Components;Several Components;

Main Body of FOS with 2 Pillars;Main Body of FOS with 2 Pillars;

Pillar 1, Customs-to-Customs;Pillar 1, Customs-to-Customs;

Pillar 2, Customs-to-Business;Pillar 2, Customs-to-Business;

AEO, Validation/Accreditation, Mutual Rec.;AEO, Validation/Accreditation, Mutual Rec.;

Letter of Intent to Implement.Letter of Intent to Implement.

CONSULTATIVE PROCESSCONSULTATIVE PROCESS HLSG Mandated to Involve Business;HLSG Mandated to Involve Business;

Written Comments Solicited by WCO;Written Comments Solicited by WCO;

Joint Meetings to Consider Changes to Documents (Plenary Joint Meetings to Consider Changes to Documents (Plenary and Syndicates);and Syndicates);

Joint Members and Trade Editing Group Mutually Re-drafted Joint Members and Trade Editing Group Mutually Re-drafted Documents;Documents;

National and Regional Meetings Held;National and Regional Meetings Held;

Creation of Private Sector Consultative Group (PSCG) Creation of Private Sector Consultative Group (PSCG)

CRITICAL ELEMENTS FOR THE CRITICAL ELEMENTS FOR THE FUTURE OF THE FRAMEWORKFUTURE OF THE FRAMEWORK

Customs Needs the Trade and Must Maintain a Customs Needs the Trade and Must Maintain a Consultative Process;Consultative Process;

Benefits to Traditional Customs Roles (Revenue Benefits to Traditional Customs Roles (Revenue Collection, Compliance Measurement, Fighting Collection, Compliance Measurement, Fighting Commercial Fraud) = Natural by-products of FOS. Commercial Fraud) = Natural by-products of FOS. Must be Fully Communicated;Must be Fully Communicated;

Capacity Building is a Cornerstone;Capacity Building is a Cornerstone;

Implementation is a Huge Challenge;Implementation is a Huge Challenge;

SAFE; FOUR CORE ELEMENTSSAFE; FOUR CORE ELEMENTS

Common risk-management approach; Common risk-management approach; 27 Key data elements27 Key data elements

Advance electronic manifest Advance electronic manifest information information

Inspection of high-risk cargo at port Inspection of high-risk cargo at port of origin; export controls of origin; export controls

Enhanced trade facilitation for Enhanced trade facilitation for legitimate trade; Authorized Economic legitimate trade; Authorized Economic Operator (AEO) conceptOperator (AEO) concept

FRAMEWORK STRUCTURE: FRAMEWORK STRUCTURE: TWO PILLARS and 17 StandardsTWO PILLARS and 17 Standards

Pillar 1: Pillar 1: Customs-to-Customs Customs-to-Customs CooperationCooperation; Using Commonly ; Using Commonly Accepted Standards to both Secure Accepted Standards to both Secure and Facilitate Trade (11 Standards).and Facilitate Trade (11 Standards).

Pillar 2: Pillar 2: Customs and Business Customs and Business PartnershipPartnership; Identify Secure Business ; Identify Secure Business Partners and Offer Benefits (6 Partners and Offer Benefits (6 Standards).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 Authorized Economic Operator:Operator:

Defined in SAFE FrameworkDefined 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 OUTCOMES FROM WCO COUNCILCOUNCIL

Adopted the SAFE Framework of Adopted the SAFE Framework of Standards;Standards;

Extended the Term and Amended the Extended the Term and Amended the Mandate of the HLSG;Mandate of the HLSG;

Authorized a Business Committee Authorized a Business Committee

(PSCG) to have Access to and Advise (PSCG) to have Access to and Advise the HLSG on SAFE Framework Matters.the HLSG on SAFE Framework Matters.

Consultation Process Consultation Process Refined:Refined:

The PSCGThe PSCG WCO Perceived Need for more Long Term WCO Perceived Need for more Long Term

and Distinct Trade Consultation Body;and Distinct Trade Consultation Body; Private Sector Consultative Group (PSCG) Private Sector Consultative Group (PSCG)

Formed;Formed; Regional and Sector RepresentationRegional and Sector Representation Selected by Sec. Gen. /2-year termsSelected by Sec. Gen. /2-year terms Advisory Role to HLSGAdvisory Role to HLSG Editing and Comment Role-5Editing and Comment Role-5thth HLSG HLSG

HLSG & PSCG InteractionHLSG & PSCG Interaction

First PSCG Meeting Preceded 5th HLSG First PSCG Meeting Preceded 5th HLSG (Organizational Meeting in Brussels)(Organizational Meeting in Brussels)

Meeting of HLSG and PSCGMeeting of HLSG and PSCG PSCG presents HLSG with edited PSCG presents HLSG with edited

documents/ describes needs of documents/ describes needs of businessbusiness

HLSG takes PSCG comments under HLSG takes PSCG comments under advisementadvisement

A New LookA New Look

Fifth HLSG directed Fifth HLSG directed ConsolidationConsolidation of 3 Key of 3 Key documents (documents (AEO Conditions, Requirements AEO Conditions, Requirements and Benefitsand Benefits; ; Validation and AuthorizationValidation and Authorization; ; and, and, Mutual Recognition of Customs Mutual Recognition of Customs Controls & AEO StatusControls & AEO Status

Sixth HLSG directed Sixth HLSG directed ConsolidationConsolidation of the of the SAFE Framework and AEO documents (to be SAFE Framework and AEO documents (to be presented to 2007 Council)presented to 2007 Council)

The Next Big StepsThe Next Big Steps

144 of 171 (Letters of Intent)144 of 171 (Letters of Intent) Recognition of Capacity Building Recognition of Capacity Building

Needs and Process Aided by Self Needs and Process Aided by Self AssessmentsAssessments

Diagnostic MissionsDiagnostic Missions 51 Countries between January 2006 51 Countries between January 2006

and June 2007 and June 2007 2-Person Teams, WCO/Joint/Member 2-Person Teams, WCO/Joint/Member

for 2 weeks in-countryfor 2 weeks in-country

NEXT STEPS (CONTINUED)NEXT STEPS (CONTINUED)

HLSG to be Dissolved after 7HLSG to be Dissolved after 7thth and Final Session (April 2007)and Final Session (April 2007)

Policy Commission and Council to Policy Commission and Council to Decide on Future Management Decide on Future Management PathPath

PSCG to Continue and Retain PSCG to Continue and Retain RoleRole

DIAGNOSTIC METHOD:DIAGNOSTIC METHOD:Measured against SAFE Measured against SAFE

StandardsStandards

A Top to Bottom Review of CustomsA Top to Bottom Review of Customs:: Strategic ManagementStrategic Management Budget Management, Procurement & Budget Management, Procurement &

LogisticsLogistics Legislation and Legal PolicyLegislation and Legal Policy Compliance Issues – Import/Export, C&V, Compliance Issues – Import/Export, C&V,

OverallOverall Enforcement Posture and ReadinessEnforcement Posture and Readiness

DIAGNOSTIC METHODDIAGNOSTIC METHOD(Continued)(Continued)

Information Technology and Information Technology and CommunicationsCommunications

External cooperation and External cooperation and CommunicationCommunication

Governance (Corruption, Recruitment, Governance (Corruption, Recruitment, Salary Structure, etc.)Salary Structure, etc.)

FUTURE FOR THE SAFEFUTURE FOR THE SAFE Continuation of Consultation involving Customs, Continuation of Consultation involving Customs,

Int’l Orgs. And Business;Int’l Orgs. And Business;

Consideration and Consultation regarding Consideration and Consultation regarding Implementation and Administration of the FOS;Implementation and Administration of the FOS;

Recommend Uniform Interpretation and Application Recommend Uniform Interpretation and Application Measures for FOS;Measures for FOS;

Recommended Future FOS Amendments;Recommended Future FOS Amendments;

Consideration of any Other Relevant FOS Issues.Consideration of any Other Relevant FOS Issues.

SUMMARYSUMMARY Goals are: Securing Supply Chain; Enhancing Goals are: Securing Supply Chain; Enhancing

Traditional Role Results; Facilitating Trade; and Traditional Role Results; Facilitating Trade; and Creating Standardized Requirements and Expectations;Creating Standardized Requirements and Expectations;

Trade has had and Continues to Play Major Role, as can Trade has had and Continues to Play Major Role, as can be seen in creation of the Private Sector Consultative be seen in creation of the Private Sector Consultative Group;Group;

Success Ultimately Requires Commitment by Members;Success Ultimately Requires Commitment by Members;

Capacity Building is the Key to Globalizing Customs Capacity Building is the Key to Globalizing Customs Standards on Security and Facilitation.Standards on Security and Facilitation.

Mutual Recognition is the next big FrontierMutual Recognition is the next big Frontier

WCO SAFE FRAMEWORKWCO SAFE FRAMEWORK OFOF STANDARDSSTANDARDS

Larry L. BurtonLarry L. BurtonSenior Technical OfficerSenior Technical Officer

WCO - BrusselsWCO - Brussels