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Speech to Customs Brokers and Freight Forwarders

Hon Rick Barker

Speech to Customs Brokers and Freight Forwarders Federation of New Zealand annual conference, Rydges Hotel Rotorua 30 May 2003

Speech to Customs Brokers and Freight Forwarders Federation of New Zealand annual conference, Rydges Hotel Rotorua 30 May 2003

Good morning, it's great to be here today with you all. If you don't know already, I love being the Minister of Customs. Customs is such a critical part of our business world and economy.

The people working in Customs and associated industries are dedicated to their tasks and the professionalism and innovation that they apply to their respective jobs constantly impresses me.

I am certainly impressed by the number of people attending this Customs Brokers and Freight Forwarders Federation Annual Conference. This says to me that you are committed to your businesses and your wider industry and that you want to ensure you are doing the best in the uncertain business and political climate we all now live in.

And it is uncertain. We are all now living and working in an unstable world - a new and hostile environment. And we know why. No one of us could ever have imagined that day, less than two years ago, when armed terrorists turned civilian passenger planes into weapons. Planes were crashed into the two towers of the World Trade Centre in New York, into the Pentagon in Washington and into a field in Pennsylvania.

More than three thousand people lost their lives on September 11 2001.

When we woke to the news here in New Zealand we were transfixed by the most extraordinary images of the World Trade Centre crashing to the ground. We all watched and listened in horror to stories told by survivors, firemen, paramedics, priests, journalists, photographers and the families and friends of loved ones - stories of bravery, of terror, of suffering, of loss, of pain.

And in those sobering hours and days following September the 11th we all knew something fundamental had changed in our world. We knew there would be tremendous fallout from those acts of terrorism that had attacked the very heart of the world's superpower.

But at the same time we didn't fully understand the implications of those attacks on us - we felt safe and secure in our distant corner of the world. And we didn't fully appreciate that those frightening and hideous attacks would impact on us directly, on the way we do our jobs and on our businesses.

But in hindsight it is obvious.

Border security has become the paramount issue. September the 11th brought an immediate focus on aviation security and enhanced security measures were rapidly put in place at airports and on aircraft.

But attention quickly turned to maritime security. Ships and port facilities were identified as "soft" targets. Containers could be used to conceal and transport weapons of mass destruction and even terrorists themselves. Ships could even be used as weapons.

The United States is moving swiftly to protect its 300 ports.

We have to respond just as swiftly to ensure the smooth flow of New Zealand's $33 billion dollar annual export trade. The United States is our second largest export market. Fourteen percent of our exports go there.

The New Zealand Customs Service has taken the initiative in developing a response, which I will talk further on shortly.

Shipping containers are vital to this country's trade, as approximately 900 thousand shipping containers cross New Zealand's borders each year.

If we put our collective heads in the sand and did nothing - we put our trade and our economy at risk. There is no choice for us but to take our place and play our part in global security. We owe it to New Zealanders and to our fellow citizens around the world.

Border security is the new headline, but there is real action behind it.

I want to tell you that this Government is fully committed to improving our border security; our economy, our lifestyle and our livelihood depend on it. We are not narrowly focused - all Government agencies that have any involvement in the border are working as one - in our jargon we are taking a Whole of Government Approach.

The Government has directed Customs to lead the development of our response to the changing international environment in relation to supply chain security.

No longer can security and counter terrorism be solely the job of a few elite agencies.

Fourteen Government agencies are now working together to ensure the safety of all New Zealanders, their freedom to travel and the continued flow of trade in and out of New Zealand.

Among those agencies are the Police, Intelligence Agencies, Defence, the Prime Minister's Department, Immigration, MAF and of course, Customs.

And that is where you, the country's Customs Brokers and Freight Forwarders come into the picture.

You too have a critical role to play in this new environment.

Recently Customs reviewed the way it manages exports and trans-shipped cargos. The Service focused on containerised sea cargo. And identified the need for further work in the export area in particular to meet international requirements.

You will be aware the United States is rolling out an initiative called the Container Security Initiative - CSI - around the world, starting with the top 20 ports. This initiative involves stationing US Customs officers in those ports to pre-screen cargo.

The New Zealand Customs Service quickly saw the problems for New Zealand in that approach - for a start, our biggest port is number 78 on the US list so we would be waiting a long time for their attention - but even more importantly, arrangements with individual ports would create huge regional distortions.

Having only one port in NZ able to ship containers direct to the US would see regional development stagnate.

Our Customs Service looked at what the United States was wanting - which is comfort about the security of containerised goods being shipped to them - and came up with a uniquely New Zealand approach.

The US Commissioner of Customs, Robert Bonner visited Wellington recently, and was impressed with that approach. He made it clear to me that he has trust and confidence in the New Zealand Customs Service, and wanted to build on that strong customs-to-customs relationship.

I want to take this opportunity to congratulate Robin Dare and his team on their initiative.

There's some way to go before this system places New Zealand traders inside the US comfort zone, but we're on the right track.

The problem you see is that if the worst happens and a terrorist incident happens in a US port, then trading partners outside the US comfort zone will see their trade grind to a halt. If we can be a trusted source, we hope we would be able to keep our trade flowing in those circumstances.

So what is New Zealand Customs doing?

As you know Customs has begun initiatives to improve the quality and timeliness of information about inbound, outbound and transit cargo. Most of you use the computerised entry processing system - it is an efficient system to process information fast and I think you will all agree that it works well.

But there is room for improvement.

Of course, in our current climate, it goes without saying that the current system of providing derogations from the 48-hour pre-lodgement requirement for export entries has to go - and you know this.

That system just doesn't line up with today's security expectations. But Customs will be working with individual exports to assist them to organise their systems to meet the pre-lodgement requirements.

Right now the World Customs Organisation is working on international standards for export and import data. We don't know exactly when it will determine a set of world data standards.

The current target date is 2005. But I want to let you know that international standards are on the way and they will bring changes for the electronic interface we share.

The sharing of information and data is the strongest weapon we have in the global fight against terrorism.

By knowing the names of travellers in advance - and for example, how and when they paid for their air ticket - we can identify high-risk airline passengers. It is the same for cargos.

By knowing in advance the content of cargos and transport details we can identify high-risk cargos. We can then undertake appropriate checks and advise appropriate authorities. The bottom line here is that the data has to be quality data - it must be accurate.

As you are aware, Customs has for some time been concerned about the quality of import and export entry data submitted by industry.

Eighty percent of entry errors identified in a recent snapshot sample related to tariff classification, country of origin and Customs value.

You will recognise the impact of these errors - particularly when it comes to assessing risk in terms of counter terrorism.

It's for this reason that Customs wants to certify Customs Brokers and others who use the electronic entry processing system - to ensure they possess or pass a certain competency assessment.

Again we need to work together in the name of border security to minimise risk. We are not on our own here, the United States is moving to licence freight brokers and other export agents to improve the quality of data.

Of course, in our current climate, it goes without saying that derogations have to go - and you know this.

That system just doesn't line up with today's security expectations. You know that by using our advanced IT systems your entries can be lodged and cleared within 15 to 30 minutes.

So just a reminder - derogations will be phased out by September and from March next year they will be a thing of the past - a relic of a bygone, benign age.

The future lies in new security systems and Customs has developed a system to provide assurance about the security of the whole supply chain.

The Secure Export Partnership Scheme is one of the cornerstones of improved cargo security. It is in its early days but Customs has just signed up three significant players in the export sector to work with it on a pilot for what will be a voluntary scheme.

The Port of Napier, Hawke's Bay meat producer Richmond and Auckland-based manufacturer Argent Metals Technology will work with Customs to provide security over people, premises and processes.

They will also be able to provide an official assurance around the packing and contents of containers from a security standpoint. Tamper-indicator seals will be applied to these containers and they will be checked at transfer points.

Transport and storage will have to meet agreed security plans and standards.

These pilot partners will assist Customs in developing a practical and workable scheme that will then be opened up to all interested parties, towards the end of this year.

The objective is to provide an internationally recognised level of security across the New Zealand supply chain - with the aim of facilitating smooth cargo clearance at the destination. The United States was the first to require increased security, but you can be sure that other trading partners will follow suit - I expect that in the future, the EU, Australia, Asia, will all insist on it.

What New Zealand Customs is aiming to do is to proactively develop a security system that will meet all new requirements likely to emerge from trading partners. If we do it properly this time we'll only have to do it once. In other words, we're future-proofing our system.

I urge you all to work with your clients and encourage them to embrace this scheme. While it will be voluntary - it will become absolutely critical to exporting in the future. Customs' export security programme is based on the same principles that are applied to imports. First there is the electronic reporting of information about shipments and then there is an intelligence-based risk assessment.

Thirdly, high-risk cargos are examined using both X ray equipment and physical inspections. And finally, the supply chain checks I have outlined. You will see the detail of the scheme in legislation I am soon to introduce to Parliament, which is designed to tighten up security and lay the framework for greatly improved supply chain security.

You all have an integral role to play in supply chain security, to ensure the smooth export and import of cargos.

Your aim must be to minimise the impact of heightened security on exporters and importers. We don't want New Zealand goods held up for weeks or months at a west coast port in the United States - if we can do something about it.

Recognising the importance of security and responding accordingly is critical for you. Your paperwork has to be provided in advance and with considerably fewer errors than we see now.

Being ready to embrace further security measures will front-foot your business. Ultimately the future of your businesses will depend on the quality of the security service you offer your clients. As Government agencies are pulling together to protect New Zealand so we in the wider Customs industry have to pull together to keep our country safe and our exporters and importers in business.

I know you are committed to this and I thank you.


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