Deputy Commissioner McAleenan’s Keynote Address at the East Coast Trade Symposium
Remarks as prepared for December 2, 2016
Thank you, Maria Luisa. It’s a pleasure to see all of you here at the East Coast Trade Symposium, and I would like to thank you for taking the time to join us. We know that you are all very busy, especially around this time of year, and your presence at this event is a testament to the importance of global trade and the work that we do together to keep it efficient and secure.
Before I begin, I would like to thank Commissioner Kerlikowske for his leadership, for all he has accomplished, and for his work in building a strong framework, both in partnership with industry and in making great strides in streamlining our trade processes, for the challenges and opportunities that lie ahead.
It has been an extreme privilege for me to serve under Commissioner Kerlikowske. He is approaching 43 years of law enforcement experience. He has led police departments in three U.S. cities, been a beat cop, and served in the military before that. He has brought a tremendous amount of experience to U.S. Customs and Border Protection and we have been extremely fortunate to benefit from his leadership. On a personal note, I have learned something new from him every day and I hope to emulate a number of his leadership qualities going forward.
At CBP, we are committed to continuing the momentum we have in our trade efforts with all of you. Our mission of trade facilitation and security is critical to the nation and the global economy, and on behalf of the career leadership at CBP, I can assure you that we will do everything we can to ensure a smooth transition.
On that note, I also would like to acknowledge and thank some of the key individuals for this transition—our trade leadership within the agency—Executive Assistant Commissioners Brenda Smith and Todd Owen, as well as Assistant Commissioners Phil Landfried and Mark Koumans. I also want to recognize the efforts of Maria Luisa Boyce, who has done so much to enhance our culture of trade community collaboration and partnership. She has been a wonderfully positive presence—some might say, force of nature—on our trade team. Her legacy of relationships and co-creation will serve us well in the months ahead. I also want to recognize and thank Valerie Neuhart and our Office of Trade Relations staff for all of the work they did in putting this terrific event together. They are a great team and none of this could have been accomplished without their efforts. Please join me in giving them a hand.
Over the last day and a half, you have heard from CBP’s leadership team, our foreign government partners, WCO leaders and industry experts on supply chain security, the international outlook, North American efforts, and key issues and initiatives in trade facilitation and trade enforcement. And we have discussed the initiatives, projects, and changes that allow us to build on where we are today as we move towards the vision that we have for the future.
In the time that we have this afternoon, I would like to focus on three areas that set the framework for what’s next for our trade mission and our efforts, both together as partners and as an agency:
- First, Change—the changes that we see affecting the trade environment, and consequently, CBP’s trade mission;
- Second, Opportunity—how the progress we have made thus far positions all of us to continue driving the evolution of facilitation, security, and enforcement in international trade; and
- Third, Continuity—continuity of CBP’s mission, continuity of our operations, and in particular, continuity of our partnership with you, our trade stakeholders.
So let me begin with change—what is changing in the trade environment and what progress have we made that prepares us for what’s next?
Transition brings change; the mandates in the Trade Facilitation and Trade Enforcement Act, bring change; and evolution—or should I say revolution—in consumer behavior will bring change, as will continued advances in technology—all of which will alter the landscape of how we respond and interact with international trade.
We are already seeing the impact of these changes in the trade environment and in CBP’s trade mission.
Trends in Consumer Behavior: E-Commerce
There has been a great deal of discussion at the Symposium and at CBP about the change in consumer behavior and in supply chains brought about by e-commerce.
The seemingly simple act, which virtually all of you are doing this time of year, of making consumer purchases over the internet has dramatically impacted the way many of you do business, and has raised consumer expectations around speed and service.
It has also allowed many new players, particularly those with medium, small and “nano” sized businesses to participate in global trade. Not long ago, the import/export world was dominated by large corporations, and of course by value. It still is. But now, small- and medium-sized import and export businesses are flourishing. In fact, according to the latest statistics from the U.S. Department of Commerce, 98 percent of all U.S. exporters are small- and medium-sized businesses.
These changes have brought a new level of complexity to your business, as well as ours. Instead of a handful of major importers, CBP instead faces a large number of small importers; and CBP is responsible for screening all of those individual parcels for drugs, weapons, cash, intellectual property rights violations, and more. Unfortunately, ordering illicit commodities from overseas can be as easy as a few mouse clicks or taps on your smart phone.
While this complexity presents challenges in terms of assessing risk, targeting, and facilitating the movement of goods, the progress CBP has made in partnership with industry, positions us to meet this challenge head on.
In particular, the foundation we built for advance information on shipments through the Air Cargo Advanced Screening pilot initiative has put us in a great position to address e-commerce and its implications for smaller cargo.
This highly successful pilot—which continues today—enables express consignment couriers, passenger carriers, and freight forwarders to provide pre-departure shipment information to CBP and TSA for joint analysis early in the supply chain. (I am happy to report that we are just about finished with the development of the new proposed regulations to make this approach permanent, and it will begin to work its way through the multilayered approval process this month.)
This kind of advance information allows CBP to assess risk and make better decisions regarding the movement of goods without slowing down air cargo. As e-commerce grows, we will likewise grow from this framework to better operate, adapt, and address the new challenges and complexities posed by the changing landscape.
Trade Facilitation and Trade Enforcement Act: Focus on Enforcement
Another change we have witnessed this past year was the passage of the Trade Facilitation and Trade Enforcement Act of 2015. Among the Act’s provisions, in addition to formally establishing CBP, was a clear signal that economic competiveness and enforcement of our trade laws are among the country’s highest priorities.
And consistent with the Act, CBP has been and continues to enhance its trade enforcement posture—particularly in the areas of anti-dumping and countervailing duties; the prohibition on the importation of goods manufactured by forced labor; and enforcement of intellectual property rights. And we are continuing to lean forward.
I understand that there are many concerns about what this means for trade—and the speed and predictability of the systems and processes we have built together. In the last week, I have heard some amazing statistics from large importers and exporters. One company, a C-TPAT member and active CEE partner had 11 examinations in 90,000 shipments in fiscal year 2016, and was working to improve on that number! Another major importer briefed that they are exceeding their goal for 98% of imports being released prior to arrival. We will not slide back on these achievements.
On this topic, I’d like to highlight two things. First, trade enforcement does not change our mission to facilitate, nor does it lessen its importance. In fact, fundamental to economic security is the facilitation of trade—the vast majority of which is lawful—and this facilitation will continue to be a CBP commitment.
Many of our initiatives and programs, as highlighted by Commissioner Kerlikowske in his remarks yesterday, demonstrate this continued commitment—like the Centers of Excellence and Expertise; or the transition to ACE and the Single Window that have transformed and streamlined our processes and interactions; or our automated export manifest pilots which allows us to more accurately assess risk while avoiding delays.
Second: I want to assure you that we are not building this enforcement posture alone. We are building upon what we have already accomplished through our strong partnership with industry.
The enforcement conversation we have today will be very different than our conversation of 10 years ago. CBP, through the use of technology and innovation in our operating environment has become more sophisticated in its approach to trade. We are much more agile in our ability to address evolving risk, challenges, and changes in the supply chain – much of which can be credited to the education and shared problem solving which has resulted from sitting down at the table with representatives of the trade community through COAC subcommittees, trade associations, the CEEs, C-TPAT, and direct connections.
In the same way, we are collaborating with the private sector to implement renewed enforcement efforts.
So we ask for your continued proactive support and partnership. You, as industry, know your supply chains inside and out. Our efforts to enforce trade laws and level the playing field will be much more effective if we have a sophisticated understanding of your process and sourcing and who is acting in the global trading environment.
We ask for your help for enhancing our understanding with what you’re seeing and how products move throughout and between supply chains, so CBP can better focus our resources on those that aren’t playing by the rules.
A strong partnership with industry in this area will further enhance CBP’s ability to enforce the laws so that no one is taking advantage of the openness of our economy. Moreover, this partnership gives us the opportunity to assure the American consumer, that we are enforcing the laws and leveling the playing field to allow for fair and competitive trade, while making sure that the American consumer has access to safe, affordable products.
Advances in Available Technology
Finally of the three, a major change agent which affects both trends in e-commerce and our trade enforcement efforts, is technology. Technology continues to advance. And the technology available to us continues to change our options for how we facilitate trade and enforce the laws; how we interact with you, our stakeholders, as well as our partner government agencies; not to mention how we interact with the rest of the world.
A shining example of this is the work that we have done on the United States single window. Of course we should recognize that the single window is more than just a technological achievement. It serves as the foundation of the coordinated border concept: to enable the entire U.S. government to work together across departments and agencies through a coordinated approach to move imports and exports rapidly and securely across our borders. We call this “One U.S. Government” at the border.
This approach makes it easier for U.S. businesses to communicate with the various regulatory agencies, and in turn, better facilitates trade and creates efficiencies for U.S. businesses as they compete in the global economy.
But this advancement would not have been possible without the right technology. Building the technology framework of the Single Window is a critical “necessary condition” to coordinated border management.
Going forward, we are looking to continue refining both the technology and the operational processes used to carry out the multitude of missions represented at the border. The Border Interagency Executive Council, a senior executive level government body tasked to improve coordination among the dozens of agencies with import and export requirements, gives us the forum to do that.
As a member of the BIEC, CBP has led the conversation to help expand the application of risk management principles that will truly result in streamlined cargo processing. We are working to bring the principles of “bi-directional education” and “co-creation” to the BIEC by fostering conversations between the government and the private sector, and advocating for government rules and requirements which make sense in your business environment.
I look forward to continuing the important work of the BIEC and working with the interagency on further alignment to increase the transparency and the predictability of our trade processes, and I will be emphasizing the value of this network to the incoming transition team.
So what’s next?
This bring me to my second area of focus today: Opportunity.
This is where the changes we see, the progress we have made, and the foundation we have built come together to create a launching pad for our future work.
Even as we continue to refine the capabilities of the Single Window here in the U.S., what’s next is our opportunity to drive the international discussions on standards and mechanisms for harmonizing single windows across borders. But how do we do that? Our first step is to actualize our recently established vision of a “North American Single Window Approach.”
We look forward to being able to share what we learn as we work with our trade and government partners in Canada and Mexico. As you heard at our North American summit this morning, we are working with our counterparts to find the best ways to facilitate the movement of cargo and enforce trade laws among our three nations.
It’s very easy for us to say that “our exports are going to become another country’s imports.” But as we dig deeper, we have to navigate through legislative and regulatory aspects, process concerns, semantic differences, and technical challenges. In this age of cyber threats, how do we do it safely and make certain it’s not a hindrance to commerce? As government agencies, and as economic operators, we have legal and resource limitations. We are also looking at information sharing principles recognized by the World Customs Organization. How can we put these developing principles into practice given recent technological developments?
We need to find an innovative way to share trade data while complying with all the necessary and appropriate safeguards. And we can begin by utilizing our opportunities where we have existing alignment.
I believe that the adoption of the right technology and the right governance models to drive coordinated action between industry and government stakeholders can truly change the face of international trade movements across borders.
The unique identifier—for both entities and commodities.
We can solve this.
I understand that this has been an ongoing discussion for quite some time, but we are finally in a place—and we have the opportunity— to accomplish this.
When we factor in advances in technology, now is the right time to make this happen. Whether it is enabled by coordinated governance structure like ICANN and emerging technology innovations like block chains, the U.S. can work with partners and the WCO to set standards as we have historically done. We can build on the progress we have made; and continue utilizing the collaborative approaches we have built between industry and government. This would build predictability, enable better risk management, and better facilitate cross-border movements of cargo across the world.
The unique identifier is the key to harmonizing Single Windows.
And it’s the key to effectively implementing our Mutual Recognition Arrangements through which CBP drives unifying supply chain security and trade compliance standards between our Customs-Trade Partnership Against Terrorism and similar foreign programs to better secure and facilitate global cargo trade.
Today, we have mutual recognition arrangements with 10 countries around the world plus the European Union and more are on the way. Our goal is to create conditions that will reduce the burdens on U.S. exporters in these other markets. And we want to ensure that our mutual recognition arrangements with other countries provide bi-directional benefits.
Unique identifiers for entities and commodities will help us get there and provide us with an opportunity to better secure and enhance supply chains in North America and would place us in a better position to enforce laws, protect the American economy and America’s place in the global economy.
And we can solve this together, building on the progress we have made, the lessons we have learned, and the partnerships we have built.
This brings me to my closing and last point of focus for today—continuity. In particular, the continuity of our partnership with you, our trade stakeholders.
We have learned that CBP cannot do this alone. It is of paramount importance that our stakeholder partnerships remain strong and that everything we do is grounded and informed in the reality of the movement of trade through your supply chains.
All of the programs and initiatives that we have developed and executed, and that have set us up for the next step today—highlighted by Commissioner Kerlikowske yesterday, and in my remarks today—have been through collaboration and coordination with the trade community.
This coordination allows us to remain current and competitive in a changing trade environment—learning how the supply chain is changing and what is working. We will continue our engagement with the trade community both on a tactical level and a strategic level.
This partnership is also vital to our enhanced efforts in trade enforcement. As earlier noted, your partnership, collaboration, and participation are essential to helping us to protect the economic security of the United States, of which facilitation also plays a major role. And we are committed to both enforcing the laws to keep trade fair and competitive and facilitating the legitimate trade we encounter at our borders.
With your help, we can continue to advance confidently. Thank you all for your continued partnership and support. I hope you find the afternoon panels valuable and I want to wish you happy holidays and safe travels.