Three new Senior Experts

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We have the pleasure to announce that the following three top experts in illicit trade and maritime security have recently joined the CBRA’s Consulting Team, as Senior Consultants: Ms. Vittoria Luda di Cortemiglia, Mr. Michael Ellis and Mr. Lars W Lorenzen. We work closely with them in monitoring new calls and preparing project proposals – and, once new projects are funded, they play a key role in executing the actual research, consulting and training work. In the meanwhile, each one of them carries out other “non-CBRA professional activities”. In today’s CBRA Blog we introduce all the three of them, by sharing their short bios below. Please do not hesitate to contact us in case you see interesting joint project opportunities in the future! Have a great weekend everyone, Juha.

Ms. Vittoria Luda di Cortemiglia, Senior Consultant, Illicit Trade and Human Trafficking, Italy

Ms. Luda di Cortemiglia is a senior researcher and consultant with extensive experience on various criminal justice and supply chain security issues at international level. Experience specifically includes applied research and analysis as well as project management and training for professionals, in the field of illicit trafficking and supply chain security, including trafficking in persons, trafficking in counterfeit products, illicit trade in precious metals, illegal waste trade and eco-crimes, cybercrime and misuse of technologies. After graduating in Law at the University of Turin, Italy, 1999, Ms. Luda di Cortemiglia obtained a Master degree in International Relationships and Diplomacy at St. John’s University, New York, USA, in 2001, joining the United Nations in October 2001. Until September 2016 she has coordinated the programs and activities of the Emerging Crimes Unit at the United Nations Interregional Crime and Justice Research Institute (UNICRI). She has acted as UNICRI Focal Point for the United Nations Crime Prevention and Criminal Justice Programme Network (PNI), and from 2009 until 2016 she represented UNICRI within the United Nations Inter-Agency Coordination Group against Human Trafficking (UN-ICAT).

Mr. Michael Ellis, Senior Consultant, Illicit Trade in Global Supply Chains, United Kingdom

Mr. Ellis has nearly 40 years of experience in law enforcement, coming from an operational policing background. He served with the London Metropolitan Police fighting against serious international and organised crime for 20 years, He was then engaged in the corporate security function in multinational firms, dealing with anti-counterfeit and illicit trade issues on a global basis for a further 16 years. Michael was with Universal Music, with IFPI, the music industry’s trade association, and with Beiersdorf. Most recently he was the Assistant Director of Police Services at INTERPOL and the Head of the INTERPOL Program on Traffic in Illicit Goods and Counterfeit. Michael was responsible for managing and coordinating INTERPOL’s global strategy to fight against this criminal activity, and he lead the police organisations international efforts in this area. Michael has a Master’s degree in Social Science, where he specifically researched the extensive links between organised crime and illicit trade and counterfeiting. Michael joined CBRAs consulting team on 1 October, 2016, as a Senior Consultant. He will be involved in various projects related to illicit trade and counterfeit goods in global supply chains.

Mr. Lars W Lorenzen, Senior Consultant, Maritime and Port Security, Denmark

Mr. Lorenzen has had a career with the Maersk Group spanning 37 years within a number of business units, notably within container transportation in the broadest sense. His particular knowledge and expertise covers the operational, equipment management, security, safety, standardization and regulatory sphere. He has been leading the Maersk Group work in obtaining and maintaining US C-TPAT and EU AEO-F supply chain security certifications and validations since the inception of both initiatives, while engaging with customers in shaping their profiles. As part of his security tasks, Lars has built and maintained a security response programme for the Maersk Line organisation, being also the focal point and first responder to security breaches. For a period, he was a member of the WCO PSCG (World Customs Organization Private Sector Consultative Group). During the past 20+ years he has been an appointed national expert in standardization work, mainly within ISO TC104 and TC204, including leadership of working groups – while heading the Danish delegation. Lars has served as a civil expert to NATO and other military initiatives by appointment of the Danish Government for the past 12 years, providing commercial views and factual information relating to logistics, and in the course of this participated in developing and conducting table top and other exercises.

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Interview with Mr. Boley, SC Johnson, Switzerland

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17.11.2016: Today’s CBRA Interview with Mr. Bill Boley focuses on supply chain security management at SC Johnson

Hi Bill, and thanks for joining CBRA Interview, here at the TAPA EMEA Conference in Noordwijk, the Netherlands.

Good afternoon Juha, first I want to thank you and the CBRA team for all the great work you have done for the Supply Chain Security Community over the years. It seems that every time I attend an event CBRA is there…

We first met in 2008, and worked together on the World Bank Supply chain security guidebook, good ol’ times…. In your current job, which supply chain security standards and guidebooks your company follows?

Here at SC Johnson we actually first strive to meet the guidelines laid out in the WCO SAFE Framework of Standards. This is important for us as a global player, global citizen and manufacturer with many supply chains, to do our part in assisting Customs and Law Enforcement Agencies making the Global Supply Chain more safe and secure. At the same time, safe and secure supply chains support the overall optimisation and predictability, helping us to meet the customer and consumer demands. This is why we pursue the various AEO schemes already in place around the world, be it C-TPAT, EU AEO, or Kenyan AEO – in other words, we strive to certify so Customs can focus on the unknowns…  At the warehouse level we have adapted the TAPA FSR standard as the “SCJ standard”. As a global company with many different nationalities, languages and moving parts both upstream and downstream a universal standard written for the practitioners is a key for us. It is also a requirement for our service providers and the transporters moving our product. Soon we will start to give preferential consideration to those service providers who have the TAPA TSR certification, as part of the contract award process.

What about information on actual threats and risks with your global supply chain – which sources you use for that? 

As you are well aware, we are facing many threats around the world: stowaways, weapons and drug smuggling, hijackings, cyber threats particularly with the Internet of Things, and counterfeiting, just to name a few…  At SC Johnson we are fortunate to have a buy-in from our C-Suite on the importance of Supply Chain Security programmes and tools we have been implementing. We have established a Global Security Operations Centre at our World Headquarters and, our Product Supply, Logistics, and Procurement Leaders around the world are very proactive on the topic of supply chain security.  SCJ has actually built an own network of information providers such as BSI, IJet, OSAC, and of course Law Enforcement Agencies, as well as select Customs regimes. The TAPA IIS system, FreightWatch International, and yes, even CBRA, also feed into our information portal. Getting involved at every level to develop a community of interest on supply chain security is a key. As they say, it takes a network to defeat a network.

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Can you share any stories on how these supply chain security standards and risk information have helped you to do your job as a SC Johnson supply chain security manager better?

Yes absolutely, most recently we fell victim to two separate events. One was facility related while the other was on transport. We conducted an analysis on how our mitigation measures failed, and it became evident that we lacked timely, accurate and relevant information to change our measure to adapt to the latest Modus Operandi of the criminal networks. Delivery times to our facilities, pick-ups, chain of custody, liaison with local Law Enforcement and audits of our service providers have been instrumental. In fact, just last week local Law Enforcement in Nigeria was able to interdict and recover a high value shipment, thanks to our close communication and cooperation with the Government of Nigeria.

Yesterday I briefed you about our on-going TAPA study titled “Total Cost of Cargo Theft (TCCT)”… Would your company be interested to join the study?

SC Johnson would be very receptive to taking part of this study. First, as we have suffered Supply chain losses there is a misunderstanding on what is covered by insurance or not. And, second, if we can then place a more precise value or declaration on what those stolen finished goods will cost outside of the retail value, that would be great. Loss of customers or at least their confidence in a non-delivery, recovering our full costs of production, investigative costs, etc. are just some of the cascading effects and costs we encounter.

Great news, thanks a lot Bill, for both the interview and for agreeing to join the TCCT-study! Juha.

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Analytical method to identify the number of containers to inspect at U.S. ports to deter terrorist attacks (CORE1204)

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Summary: The requirement for 100% container scanning has been a burning topic, since U.S. Department of Homeland Security issued the initiative in order to prevent terrorists from smuggling weapons of mass destructions into the U.S. The paper explores how much it is reasonable to come down from the 100% inspection rate, if deterrence and cost of retaliation are considered in the model. Deterrence means the power to dissuade an attacker from attempting to smuggle weapons as opposite to use coerce or compel.  Retaliation cost describes the cost incurred by an attacker e.g. due to dismantling the attacker’s network. It is assumed the defender discloses in advance how many containers are inspected. The paper can be viewed here: https://www.researchgate.net.

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Full review: The study provides an economical model based on the game theory to estimate the optimal inspection rates in order to deter perpetrators from smuggling weapons into the U.S. The model assumes the customs or Border agency aims at minimizing the expected damages and cost of inspections while perpetrators are simultaneously trying to maximize their rewards. The used parameters are number of attackers, estimated damages, the cost of inspecting a container, the cost of a smuggling attempt, the cost of retaliation and the probability of detecting weapons. Retaliation cost describes the cost incurred e.g. due to dismantling the attacker’s network.  Cost of a smuggling attempt are the costs of acquiring, developing or manufacturing the weapons, and any logistical costs required to smuggle them into the U.S.  It is assumed the government agency announces publicly the inspection level and set of retaliation policies. Retaliation policy must pose a credible threat that means the governmental agency would retaliate even if that were not economically justified.

The study has four main limitations. First, the paper does not describe under what conditions the model works well or poorly. The quality of strategic and tactical intelligence, the efficiency of criminal investigation and prosecution processes, the extent of inter-agency cooperation and information sharing, the degree of private sector involvement and successfulness of awareness campaigns on retaliation policies are probably factors that influence on the model and its parameters. Second, the study does not provide numerical estimates to the parameters such as detection rates and cost of retaliation. Third, it is very unlikely that weapons of mass destructions are transported in containers into the U.S., what makes it difficult to assess the usefulness of the model in real life cases. Forth, costs of retaliation are not calculated and published by law enforcement agencies, thus criminals cannot make decision based on financial risks.

Despite of these limitations the CORE project can adapt the game theory and benefit from the paper. Traditionally law enforcement agencies highlight the number of seizures, arrests and successful prosecutions to measure operations and their impacts. The presented model brings two interesting components, a cost of crime attempt and a cost of retaliation. If criminal activities are financed and managed based on the same principles like legal ones, expected losses due to seizures of illicit goods or drugs are very likely calculated in the criminal business models. Consequently, making criminal business unprofitable is key to stop criminal activities. The approach enables to model the dynamic between costs and rewards from viewpoints of both law enforcement and criminal actors. In the other words, the model makes possible to study two dimensions in the Innovation Agenda, societal costs and friction costs caused by implemented security measures.

Reference: Bier, Vicki M. & Haphuriwat, N. (2011). Analytical method to identify the number of containers to inspect at U.S. ports to deter terrorist attacks. Annals of Operations Research, 187(1), 137–158.

 

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Progress in combating cigarette smuggling: controlling the supply chain (CORE1203)

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Summary: The paper presents cases how government agencies have reduced illicit tobacco trade by making the industry liable for controlling their supply chains. Tobacco companies were required to monitor the movement of lawfully manufactured tobacco products in their supply chains, and even retrospectively track the route taken when products were seized due to suspected excise fraud. According the paper illicit trade was substantially reduced, if manufacturers stopped delivering lawfully manufactured tobacco products in amounts that exceeded the tobacco market in the countries with lower excise duties. The criminal market dried out due to unavailability of illicit tobacco products that had been smuggled to the countries of higher excise duties by organized criminal groups. The document can be viewed at: http://tobaccocontrol.bmj.com.

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Full review: The paper focuses on excise fraud and organized smuggling of originally legally produced tobacco products to the United Kingdom, Spain and Italy. Based on internal company documents and court judgments the authors summarize evidence how the tobacco industry was involved directly and indirectly in the large-scale excise fraud. First, the companies delivered intentionally large quantities of tobacco products to the countries of low excise tax rates and uncontrolled distribution network. Then organized criminal groups shipped the purchased tobacco products illegally through their smuggling networks into the countries of higher excise duties.

The cutting off the tobacco supply to the illicit market is the key to intervene in large-scale organized tobacco smuggling. According the article by means of legislative and punitive interventions tobacco industry was forced to implement new export polices and practices. Tobacco companies invested in tracking and tracing systems that helped to identify points where shipped tobacco products diverted from the legal supply chain to the illicit markets. The companies implemented security processes in order to clearly identify they business partners and ensure business partners had no criminal records. Government agencies increased information sharing and inter-agency cooperation on a national and international level.  The interventions led to a substantial fall in customs seizures and a rise in legal sales.

CORE project can learn two things in the article. First, the global scope and multifaceted nature of the illicit tobacco trade requires visibility over shipment processes and efficient collaboration between governmental agencies and private sector. Second, the study implies risk to investigations and punitive damages made tobacco companies to pay attention in which markets their products finally end up. In other words, enforceable measures not voluntary agreements made industry liable for controlling their end-to-end supply chain and reduce societal risk.

Reference: Lara Joossens, L., & Raw, M. (2008). Progress in combating cigarette smuggling: controlling the supply chain. Tobacco Control, 17(6), 399–404.

 

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Governmental actors in supply chains & Governmental procedures, compliance and risk management – CASSANDRA Compendium Chapters 4 & 7, 2012 (CORE2007c)

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Summary: The fourth and seventh chapters of the CASSANDRA compendium elaborate on the roles of government agencies in international logistics and supply chain security (SCS). A broad range of government actors – customs, police agencies, border guards and many others – play a crucial role in enforcing and facilitating cross-border traffic through the global supply chains. These government agencies are critical stakeholders to be involved in the development, design and implementation of the two central CASSANRA concepts: the end-to-end data pipeline and the risk-based approach to cargo inspections and company audits. The CASSANDRA compendium highlights that there are important differences in the national laws and regulations, even within the European Union, that complicate international government collaboration. The differences in the legal framework and organisational cultures must be taken into account when designing new SCS solutions in the CASSANDRA and other projects. The CASSANDRA compendium is available for download: www.cassandra-project.eu. Review by Toni Männistö (CBRA)

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Full review: The CASSANDRA compendium describes how the role of government agencies in the cross-border supply chain operations is changing. The trading community and high-level policy-makers are strongly advocating trade facilitation, to make international commerce faster, more cost-efficient and less cumbersome. To address the demand for trade facilitation, many border control agencies are adopting risk-based approaches for controlling cross-border trade and travel. They exploit information increasingly to identify and target high-risk cross-border movements while facilitating low-risk traffic. To further lowering administrative hurdles to the cross-border trade, many government agencies are eliminating duplicative and redundant reporting requirements and building modern ICT systems to enable fast and reliable digital exchange of data and information.

Many law enforcement agencies are also facing budget cuts and increasing work loads, which forces them to look for new ways to increase productivity. Increased collaboration among border control agencies has been proposed as a solution for boosting productivity. The efforts towards further coordinated border management (CBM) are clearly manifested as joint-border control posts, regional single window systems (an online interface enabling trading companies, customs and other border control agencies to exchange trade-related information) and mutual recognition agreements (MRA) that harmonize customs and security related regulatory requirements across jurisdictions.

Reference: Hintsa, J. and Uronen, K. (Eds.) (2012), “Common assessment and analysis of risk in global supply chains “, Compendium of FP7-project CASSANDRA, Chapters 4 & 7

 

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Better Management of EU Borders through Cooperation, 2011 (CORE1114)

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Summary: This report by the Center for the Study of Democracy investigates existing forms of cooperation between Border Guards and customs administrations in the European Union. The study highlights obstacles to cooperation and proposes solutions and best practices for overcoming them. The study finds that despite the common policy interest on border agency cooperation and the associated pan-European standardisation efforts, the individual Member states decide the extent and forms of customs-border guard co-operation on their own. As a result, the current state of border agency collaboration and potential for improvements differ substantially between the member states. The main differences arise from the institutional set-up (e.g., number and roles of border control agencies), powers and competencies of the border control agencies, and the legislative basis (especially legal differences in terms of privacy, data protection and confidentiality of trade information). Download the report here: http://ec.europa.eu. Review by Toni Männistö (CBRA)

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Full review: The study concludes with a large number of recommendations for the European Union, the member states, and for the customs and border guards. The European Union should generate political will to act upon remaining challenges of border agency cooperation by creating awareness through public debates, communications and impact assessments. The EU bodies should act mediators to reconcile institutional interests of different border control agencies. The EU could also commission pilot projects on border agency cooperation, encourage joint training and increase funding of related research and development activities. Also the mandate of Frontex could be expanded to cover customs cooperation.

The individual member states should, according to the report, also mediate negotiations between border control agencies to overcome possible conflicts of interest. The member states should also evaluate impacts of various forms of customs-border guard cooperation.

The border guards and customs administrations themselves should identify and exchange best practices for strengthening their mutual collaboration. The agencies, the report recommends, should take responsibility for the pilot projects and for evaluating outcomes of the different forms of cooperation. To further improve the cooperation across the entire EU customs union, the customs and border control agencies should use Frontex more as their platform to conduct joint operations at the EU’s external border.

Reference: Center for the Study of Democracy, (2011), “Better Management of EU Borders through Cooperation”, Study to Identify Best Practices on the Cooperation Between Border Guards and Customs Administrations Working at the External Borders of the EU

 

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Interview with Dr. Vittoria Luda di Cortemiglia

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CBRA Interview with Dr. Vittoria Luda di Cortemiglia, Program Coordinator with the Emerging Crimes Unit at the United Nations Interregional Crime and Justice Research Institute, UNICRI, Torino, Italy.

Hi Vittoria, and thanks for joining a CBRA Interview – can you first tell a bit who are you and what you do?

I am the Programme Coordinator of the UNICRI Emerging Crimes Unit. Since joined the U.N. in 2001, I have been in charge of the coordination of a number of applied-research programmes in the field of illicit trafficking and emerging crimes, including environmental crimes, cybercrimes, counterfeiting, and organized crime in general.  I am UNICRI Focal Point for Strategic Approach to International Chemicals Management, SAICM, as well as UNICRI Focal Point within the UN Inter-Agency Coordination Group on Human Trafficking, ICAT.

Can you explain us bit more about UNICRI, including the governance model and the research areas?

UNICRI is a United Nations entity created by the Economic and Social Council of the United Nations, ECOSOC, in 1967 to assist Intergovernmental, Governmental and Non-Governmental Organizations in formulating and implementing improved policies in the field of criminal justice. The Institute is part of the United Nations Crime Prevention and Criminal Justice Program, which report annually through the UN Commission on Crime Prevention and Criminal Justice, CCPCJ, to the ECOSOC.

UNICRI is involved in research projects and capacity building activities in a broad number of areas, ranging from environmental crimes; human trafficking; trafficking in goods and products – including precious metals, pesticides, counterfeiting as well as chemicals, biological, radiological and nuclear risks; terrorism and foreign fighters; hate crimes and hate speech; cyber-security; urban security; violence against women; and, maritime piracy.

UNICRI, CBRA and other partners have just finished a 2-year FP7-project called CWIT, focusing on identifying and quantifying criminal and non-compliance problems and proposing solutions against illicit trade and logistics in electronic waste materials. What was the biggest thing you learned during the project, and which of our recommendations you find as most important when moving to the future?

The CWIT project has been a great experience from a personal as well as professional point of view, as gave me the possibility to work side by side with a number of wonderful professionals from the WEEE industry, enforcement agencies, international organisations, lawyers, academia and consultants specialised in supply chain security.

The objectives of the project were quite ambitious, as CWIT aimed at identifying the policy, regulatory, procedural and technical gaps as observed in today’s business environment, and at suggesting tangible improvements. The CWIT team produced set of recommendations to support the European Commission, law enforcement authorities and industry practitioners in countering the illegal trade of WEEE in and from Europe.

With regards to the recommendations which I consider particularly important are the ones related to the necessity of establishing robust and uniform legal framework and relevant implementation. As mentioned in the final CWIT report, without a clear and comprehensive legislative base, enforcers and prosecutors are powerless to address illegal WEEE flows. At the very minimum, a clear and global definition of what constitutes WEEE is the basis for improving detection, inspection, and enforcement and sentencing rates related to illegal WEEE trade.

In parallel, harmonisation and enhancement of penalty system is needed to increase the effectiveness of the existing legal framework.  In fact, penalties for the illegal trade in e-waste vary greatly in terms of monetary fines and prison durations. Today, the participation in WEEE illegal activities does not appear risky to offenders due to the low probability of being prosecuted and sentenced. Even when successfully prosecuted, penalties foreseen in legislation and penalties applied in court decisions are typically very low. For these reasons, it is important to also enhance prosecuting and sentencing, so that WEEE trade and environmental crimes in general are not considered a low- priority/low sentenced area.

UNICRI kindly invited CBRA to Torino last October to join a 2-day workshop on “Illicit Pesticides, Organized Crime and Supply Chain Integrity”. Can you elaborate on this emerging supply chain crime area, including about the estimated size and the negative socio-economic consequences of the problem?

Illicit pesticides cover a wide variety of products, including obsolete pesticides, unauthorized imports, counterfeit or fake pesticides; re- or up-labelled pesticides and refilled containers. Estimates of the illicit pesticides penetration of the legal market range from 10 to 25% – both in the EU and at international level-, representing several billion annually (USD 6-10 billion at global level and USD 1.1 billion at European level).

Besides the evident risks for human safety and health and environmental risks, illicit pesticides also pose serious threats to the economies and security. The agricultural market is extremely important for a large number of countries and companies and might be jeopardize by the introduction of illicit pesticides which can deeply affect the local and national economies. The economic losses have multiple sources and victims and long-term consequences, in particular possible loss of harvest/crop, soil and water contamination affecting the cultivable lands, decrease in innovation, reputation challenges with a decrease of exports, etc. The penetration of the pesticides market by criminal actors, including organised crime groups attracted by high profits and low risk of detection, prosecution and sentencing is another worrying trend.

Do you foresee opportunities for future research projects in the field of illicit pesticides?

Many national and international actors are becoming more and more aware of the threats posed by illicit pesticides to the legal supply chain. The attention and awareness of the problem is increasing at international level. In particular, the World Customs Organisation and the Organisation for Economic Co-operation and Development are becoming increasingly active in the field and it would be interesting to establish joint actions so as to raise awareness, capacities and response to secure the legal supply chain of such products. Indeed, through this research, we realised that the issue of illicit pesticide is neither well acknowledged nor well-documented. Our study is one of the first detailing the mechanisms and trends in the trafficking of illicit pesticides, the involvement of criminal actors, networks and organised crime groups and related criminal activities, as well as identifying the risks for the supply chain and pesticide markets.

UNICRI is very interested in continue working with partners, including CBRA, on this issue. The report details a number of initiatives which UNICRI stands ready to launch supporting countries in addressing the challenges of illicit pesticides, in particular research, raising stakeholders’ awareness, training and technical assistance programmes, supporting in capacity building activities and reinforcing national and international cooperation.

Thanks Vittoria for this interview – and we are of course more than willing to join a project-team on this highly important illicit pesticides trade and supply chains -topic

Border Agency Cooperation, Part 2 of 3

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Our second blog on Border Agency Cooperation (BAC) focuses on a conceptual model developed by CBRA. We have crafted this “CBRA-BAC15” diagram to visualize a set of key BAC actions and primary beneficiaries, with contributions by Dr. Toni Männistö (supply chain security post-doc researcher at CBRA), Mr. Gerwin Zomer (TNO, technical manager for the FP7-CORE project) and by Ms. Susana Wong Chan (education and training materials developer at CBRA).BAC-1

The diagram is cut to three sectors: on left side, the supply chain companies are the primary beneficiaries of BAC actions; on the right side, the government agencies form the primary beneficiary group; and on the bottom area, both supply chain companies as well as government agencies benefit from BAC actions. Each of these three sectors contains five examples of concrete border agency cooperation actions – 15 in total – explained in a moment by using real examples, whenever available in the literature or by expert suggestions. In the center of the diagram lies a circle with the more generic “smart cross-border improvement actions”, applicable to virtually any work in global trade facilitation.

The diagram should not be considered exhaustive, when it comes to all optional actions to improve BAC in a given country or region or globally. Some of the 15 key actions may be strongly interconnected, or, partially overlapping. Some of them may apply mainly on national multi-agency environment, and some of them mainly on international e.g. customs-to-customs environment. Also, the division of the key actions into the three beneficiary groups can and should be challenged, by the interested audiences. But, let´s start now by listing and illustrating the key 15 BAC actions:

Supply chain companies as the primary beneficiary (left sector in the diagram). The following five BAC actions can bring immediate benefits to the companies operating in supply chains, in terms of saving administrative costs and speeding up the supply chain – less work dealing with various certifications and audit visits, less variation and IT costs with import/export data filing and less waiting times at the borders.

  • Harmonized ´trusted trader´ & other certification programs: In the European Union, the European Commission´s implementing regulation (No. 889/2014) updates the references to the aviation security legislation in force, including recognition of the Known Consignor (KC) status and its relevance to Authorized Economic Operator (AEO), and framing the scope of recognition of the common requirements between the respective programs.
  • Coordinated company visits & audits: Closely linked to the previous BAC-action, in the Netherlands, the Dutch Customs executes joint audits on AEO security (customs) and known consignor/regulated agent (air cargo) with the Dutch Immigration and air-police agency – during the application phase, as well as during periodical audits.
  • Harmonized data filing requirements: Despite a global, harmonized data model, harmonized tariff codes and standards on clearance procedures, there are many differences in operational import, export and transit procedures and information requirements between countries. This results in additional complexity of IT systems for globally operating traders and logistic service providers. An example is the pre-arrival security declarations, where harmonization would be most useful e.g. between the Importer Security Filing, “10+2” in the US and the Entry Summary Declaration in Europe – Multiple Filing, supported by Standard Trader Interface, under development within the Union Customs Code, UCC.
  • Synchronized border interventions & inspections: The Article 4 of the Greater Mekong Sub-region Cross Border Transport Agreement on Facilitation of Border Crossing Formalities calls upon the contracting parties to progressively adopt measures to simplify and expedite border formalities by carrying out joint and simultaneous inspection of goods and people by respective competent authorities of agencies such as customs, immigration, trade, agriculture, and health. It further provides for single-stop inspection and urges the national authorities of adjacent countries to carry out joint and simultaneous inspections.
  • Harmonized operating hours: This applies particularly in the context of two neighboring country customs offices – having same opening hours across the border helps to maximize the daily throughput volumes. As the Article 8 of the World Trade Organization´s Trade Facilitation Agreement puts it, “Each Member shall, to the extent possible and practicable, cooperate on mutually agreed terms with other Members with whom it shares a common border with a view to coordinating procedures at border crossings to facilitate cross-border trade. Such cooperation and coordination may include: … alignment of working days and hours … “. In the ASEAN region, the Article 7 of the ASEAN Framework Agreement on the Facilitation of Goods in Transit urges the contracting parties to “coordinate working hours of the adjacent border posts”.

Government agencies themselves as the primary beneficiary (right sector in the diagram). The following five BAC actions can provide instant benefits for the cooperating government agencies, in terms of cost savings and improved efficiency – in other words, identifying more violations and catching more bad guys with less total spending.

  • Sharing of agency intelligence, information & data: Customs Mutual Assistance Agreements (CMAAS), signed bilaterally by Canada Border Services Agency (CBSA) and eight counterparties during years 1979-2010 (European Community, France, Germany, Mexico, the Netherlands, South Africa, South Korea and the United States) provide Canada with a legal basis to share customs information to prevent, investigate and combat customs offences, particularly customs fraud, and to provide reciprocal mutual assistance to ensure the proper application of customs laws. Under CMAAs Canada may share customs information pertaining to: persons, goods and means of transport; activities planned, on-going, or completed, that constitute or appear to constitute a customs offence in the territory of the country requesting the data; proven law enforcement techniques; new and emerging trends, means or methods of committing customs offences; and facilitation of risk assessment activities, within the mandate and authority of the CBSA.
  • Joint investments in common resource pools (equipment, facilities etc.): In Finland the Customs Administration and the Border Guard share common premises and equipment. Each authority has a designated role in the servicing and maintenance of the equipment. X-ray machines are largely the responsibility of Customs. Road-testing equipment, such as lorry brake-testing pads, is also maintained by Customs. All equipment can be shared and operated by each agency upon request. Thus, although the equipment belongs to one agency, it can be easily relocated to the other agency, enabling smoother processing of the workflow without unnecessary and lengthy administrative procedures, thereby reducing costs.
  • Joint teams: In the Netherlands, “HARC” – Hit and Run Cargo Rotterdam team, is a joint operation of Dutch Maritime Police, Dutch Customs, the Fiscal and Economic Crime Agency and the Ministry of Justice collaborating operationally in narcotics enforcement. Joint teams differ from Joint operations below by being a long-term / permanent set-up; while Joint operations “come and go”.
  • Joint operations: A joint operation Meerkat, (23-27 July 2012) involving the World Customs Organization and INTERPOL against the illicit trafficking of cigarettes, tobacco and alcohol in East and Southern Africa, resulted in the seizure of tons of illicitly traded products in seven countries. Operation Meerkat saw Customs and police authorities carry out some 40 raids at seaports, inland border crossing points, markets and shops in Angola, Kenya, Mozambique, Namibia, South Africa, Tanzania and Zimbabwe. More than 32 million cigarettes – equivalent to 1.6 million packets, 134 tons of raw tobacco and almost 3,000 liters of alcohol were seized, resulting in national authorities initiating a number of administrative investigations into tax evasion and other potential criminal offences.
  • Collaborative criminal investigations & prosecutions: In the United States the Border Enforcement Security Task Force (BEST) units gather officers from more than 100 different law enforcement agencies under one roof. The objective is to identify, investigate, disrupt and dismantle transnational organizations posing the greatest threat to border security, public safety and national security, by employing the full range of federal, state, local, tribal and international law enforcement resources. Over the years, the BEST has become a successful interagency law enforcement collaboration model that’s keeping the US safer.

Both supply chain companies as well as government agencies as beneficiaries (bottom sector). The five BAC actions can bring instant benefits to all parties in cross-border supply chains, in terms of lowering costs and improving performance, from supply chain company and from governmental agency perspectives.

  • ‘Single window’ -type import/ export/ transit data submissions: In the Netherlands, the authorities have designed Digipoort, the government’s ‘electronic post office’ for businesses. It provides the communication infrastructure for the exchange of digital information between companies and government authorities. Digipoort enables companies to submit import and export information at a single entry point aimed at multiple government authorities.
  • Common risk indicators, risk profiles & targeting systems: In Finland, common databases are linked to the different agencies’ operational and risk management databases, leading to a common approach when a ‘signal’ is recorded. Some control and enforcement officers have access to each other’s systems on a need-to-know basis, with levels of restricted access determined by rank and functional responsibility.
  • Mutual recognition of supply chain inspection procedures & outcomes: As part of the European Union funded research and development project FP7-CORE ( http://www.coreproject.eu/ ), the phytosanitary and customs administrations in Kenya and the Netherlands are working towards mutual recognition of controls carried out by Kenyan authorities, as well as the exploitation of digital phytosanitary certificates and other trade documents, between the two countries. Outside of the research world, mutual recognitions (MR) of customs inspections are being explored in the context of EU MR Agreements, for example with Japan.
  • Cross-training and empowering manpower: In Finland, Customs officers have been trained by the Border Guard to inspect identification documents and visas, among other procedures. Border guards have, in turn, received basic Customs training, which includes the search of vehicles and the recognition of prohibited and restricted goods, such as drugs, alcohol, and counterfeit items.
  • Joint public-private partnership arrangements, training sessions etc.: In 2011 in Hong Kong, the Customs and Excise Department established a Joint Liaison Group with the representatives of shippers, freight forwarders and truck drivers for exchanging operational views and comments on the Road Cargo System “ROCARS”. Moreover, Customs also launched an extensive publicity program and established outreach teams to assist the industry stakeholders to get used to the ROCARS. Following other government departments are listed on the ROCARS web-site http://www.rocars.gov.hk/ : Commerce and Economic Development Bureau, Census and Statistics Department, and Transport Department.

Finally, the center circle of the CBRA-BAC15 diagram highlights the basic, classical principles of trade facilitation – naturally in the context of multiple agencies dealing with cross-border regulations, procedures, IT-systems and data requirements:

  • Simplification & Harmonization: agencies work together with the first aim to streamline certification requirements and procedures, to minimize the number of data elements required from traders etc.; and the second aim to unify the rules and requirements facing supply chain companies.
  • Interoperability & Synchronization: agencies invest in improving interoperability between their inspection technologies, IT-systems etc.; they also work together to better synchronize their supervision and control processes, particularly for the benefit of supply chain companies.
  • Transparency & Predictability: agencies keep each other well informed of their current regulations, procedures, operations etc., as well as planned future changes – such proactive approach helps to minimize surprises and related hassles.

This concludes the second of three parts of our Border Agency Cooperation (BAC) blog. In Part 3 – to be published sometime in February – we focus on the overarching institutional arrangements on Border Agency Cooperation, including establishment of single border agencies (e.g. in the US and Australia); creation of one-stop border posts, OSBPs (multiple examples across the world); carrying work permanently on behalf of other agencies etc. We also plan to discuss bit more on the benefits and costs of BAC, as well as the main challenges and obstacles in BAC-projects across the globe. Talk to you again in February, Juha Hintsa.

 

Bibliography / sources for the examples and cases attached to the 15 BAC key actions:

  • Harmonized ´trusted trader´ & other certification programs: Commission Implementing Regulation (EU) No 889/2014 of 14 August 2014 amending Regulation (EEC) No 2454/93, as regards recognition of the common security requirements under the regulated agent and known consignor programme and the Authorised Economic Operator programme.
  • Coordinated company visits & audits: Email exchange with a Dutch Customs expert
  • Harmonized data filing arrangements: Interview with a Dutch supply chain and trade facilitation expert (29 January 2016); and AnNa Master Plan Extended Collaboration Project Book, December 2015. Available for download at: http://www.annamsw.eu/
  • Synchronized border interventions & inspections: Jain, S.R. (2012), “Coordinated Border Management: The Experience of Asia and the Pacific Region”, World Customs Journal, Vol. 6 No.1. (CBM25).
  • Harmonized operating hours: Article 8 (Border Agency Cooperation) of the WTO Agreement on Trade Facilitation of 15 July 2014; and Jain, S.R. (2012), “Coordinated Border Management: The Experience of Asia and the Pacific Region”, World Customs Journal, Vol. 6 No.1.
  • Sharing of agency intelligence, information & data: “Customs Cooperation Case Study for Canada”, paper submitted by Canada (Canada Border Services Agency – CBSA) for the July 2012 WTO Symposium on Trade Facilitation.
  • Joint investments in common resource pools (equipment, facilities etc.): “Coordinated Border Management”, WCO News, February 2015, No. 76.
  • Joint teams: “Customs find cocaine buried in cocoa bean shipment”, NL Times 25.5.2015, Available online at: http://www.nltimes.nl/2015/05/25/customs-finds-cocaine-buried-in-cocoa-bean-shipment/ (accessed 28 January 2016).
  • Joint operations: “WCO and INTERPOL joint operation against illicit trafficking in Africa leads to tobacco and alcohol seizures”, WCO Press Release, 27 August 2012. Available online at:   http://www.wcoomd.org/en/media/newsroom/2012/august/operation-meerkat.aspx (accessed 28 January 2016).
  • Collaborative criminal investigations & prosecutions: “Coordinated Border Management”, WCO News, February 2015, No. 76
  • ‘Single window’ –type import/ export/ transit data submissions: “Coordinated Border Management”, WCO News, February 2015, No. 76.
  • Common risk indicators, risk profiles & targeting systems: “Coordinated Border Management”, WCO News, February 2015, No. 76.
  • Mutual recognition of supply chain inspection procedures & outcomes: The Consistently Optimised REsilient ecosystem, CORE FP7 project, EU. See online at: http://www.coreproject.eu/ (accessed 28 January 2016).
  • Cross-training and empowering manpower: “Coordinated Border Management”, WCO News, February 2015, No. 76.
  • Joint public-private partnership arrangements, training sessions etc.: “Road Cargo System (ROCARS) (Hong Kong China)”. Available online at: http://www.wcoomd.org/en/topics/wco-implementing-the-wto-atf/atf/border-agency-cooperation.aspx (accessed 28 January 2016).

Border Agency Cooperation, Part 1 of 3

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“A beloved child has many names”, goes an old Finnish proverb. This saying applies quite well in the conblog-210116text of ´smart cooperation between multiple agencies when dealing with cross-border supply chains, goods movements and transports´. The World Customs Organization talks about Coordinated Border Management (CBM); the European Union about Integrated Border Management (IBM); the World Bank about Collaborative Border Management (CBM); and Organization for Security and Cooperation in Europe about Comprehensive Border Management (CBM). Cross-border Research Association is aligning with a fifth term: Border Agency Cooperation (BAC), a term used in the Trade Facilitation Agreement of the World Trade Organization. Despite minor differences in scope, priorities, underlying principles and philosophies among these five terms (and possibly even more), one can easily agree that the work carried out under any and all of them aims to coordinate activities across and within various border control agencies, for the benefit of both governmental agencies themselves as well as supply chain companies.

Our first blog on Border Agency Cooperation, BAC, provides an illustrative worst case example on how complex, slow and expensive a cross-border supply chain execution comes when no cooperation takes place between relevant government agencies, neither nationally nor internationally. The illustration is about meat export from Latin America (Country X) to the European Union (Country Y), with maritime transport in reefer containers.

A well-known beef producer in country X– also the first Authorized Economic Operator (AEO) beef producing company in the region – has just signed an annual contract with a beef importer and distributor in country Y. As this is the producer ‘s first export deal to the EU, the producer needs to ensure that all licenses and certificates are up to the EU standard. Organizing health certificates, certificates of origin, sanitary certificates, export licenses – and what have we – takes weeks and weeks of time. There is no communication or procedures in place between the various agencies and officials to facilitate the process, no coordinated company visits or audits, no sharing of information, and no mutual recognition of inspections.

When all documents are finally in place, and regular exports can start, the beef producer and it´s forwarding agent face the burden of filing export data to customs, to sanitary agencies, and to national security agencies – with somewhat similar datasets, but with no single-window filing opportunity. And when export controls and inspections take place – which happens often – there is no synchronization of inspection times between the different agencies. One agency might come to inspect the reefer container on Monday noon, second one on Wednesday morning, and third on Friday afternoon – another week lost in the beef supply chain lead-time.

Once the consignment is happily on board towards the EU, one continues to experience lost BAC opportunities: no data is passed from country X customs or sanitary agencies to their counterparties in country Y, to enable pre-arrival compliance control and risk assessment. In case of criminal suspicions – e.g. when supply chain insiders exploit beef shipments for cocaine smuggling – no intelligence is shared between police and customs, from country X to country Y. The option of joint law enforcement operations between country X and Y police and customs agencies has never been even considered. Even on national level, both in country X and Y, the agencies are not co-operating neither on risk profiling and targeting systems, nor during criminal investigations and prosecutions – what a waste of resources when it comes to catching and convicting the bad guys…

In the meanwhile, some ten days later, the ship arrives at a major sea port in country Y. For the importer, there is no option for single-window data filing; instead, import data must be transferred separately to all different agencies in country Y. As the customs administration in country Y has no Mutual Recognition Agreement (MRA) in place with country X customs – neither when it comes to AEO certificates nor when it comes to recognizing inspections carried out at export – it treats the import as a “medium to high risk” one, calling for physical inspections. And as the sanitary agency does not share any common resources with the customs administration – particularly no joint inspection facilities and equipment, including x-ray machines – and even the daily opening hours are different from the customs hours, the sanitary agency carries out their own inspections only two days after the customs intervention. And finally, improving the situation does not seem likely, as there are no joint public-private partnerships, and no export/import compliance training sessions or similar in place, neither in country Y nor in country X.

This concludes the first of three parts of our Border Agency Cooperation (BAC) blog. In Part 2 – to be published next week – we will present CBRA´s conceptual model (Hintsa J., Dec.2015) on BAC key actions and beneficiaries: which key actions to take in order to speed up the logistics chain, to save costs with all actors, to increase overall predictability, and to improve government agency performance e.g. in terms of number of seizures and convictions. In the BAC Blog Part 2, we plan to present some preliminary experiences and real-life results from FP7-project CORE. Please stay tuned!

Punta Cana Resolution, Resolution of the Policy Commission of the World Customs Organization on the Role of Customs in the Security Context, WCO 2015 (CORE2004)

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The new Punta Cana Resolution sets guidelines for customs’ security roles in the combat against the new wave of terrorism, as manifested by recent attacks in Tunisia, Turkey, Lebanon, France and Mali. The resolution highlights that the customs authorities are typically the first line of defense against transnational crime, terrorism and extremism: the customs control cross-border movements of people, cargo, money and modes of transport and thus protect communities against terrorists that may exploit international supply chains to move materials, funds or operatives across borders. Building on the previous WCO instruments and agreements, especially on the WCO Security Programme, the Punta Cana resolution is the customs community’s action plan and renewed pledge of solidarity that provides a diplomatic backdrop for further counterterrorism activities. More information at: http://www.wcoomd.org/en/media/newsroom/2015/december/wco-issues-the-punta-cana-resolution.aspx

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The new Punta Cana Resolution sets guidelines for customs’ security roles in the combat against the new wave of terrorism, as manifested by recent attacks in Tunisia, Turkey, Lebanon, France and Mali. The resolution highlights that the customs authorities are typically the first line of defense against transnational crime, terrorism and extremism: the customs control cross-border movements of people, cargo, money and modes of transport and thus protect communities against terrorists that may exploit international supply chains to move materials, funds or operatives across borders. Building on the previous WCO instruments and agreements, especially on the WCO Security Programme, the Punta Cana resolution is the customs community’s action plan and renewed pledge of solidarity that provides a diplomatic backdrop for further counterterrorism activities.

The Punta Cana resolution encourages customs administrations worldwide to intensify collaboration within the customs community and with other border control agencies, both domestically and internationally. In case of missing or obsolete counter-terrorism strategy, the resolution urges customs to add new security roles in their mandates and activities. The Punta Cana document also recommends customs to pay close regard to the WCO’s previous agreements and instruments, such as the WCO Compliance and Enforcement Package, SAFE Framework of Standards and the WCO Security Programme. At more practical level, the resolution promotes the use of the full range of modern detection and investigation techniques, especially advance risk profiling on the basis of Advance Passenger Information (API) and Passenger Name Record (PNR). The resolution also calls governments from around the world to provide necessary financial and human support so that their national customs administrations can contribute towards the goals of the WCO Security Programme.

The Punta Cana Resolution informs CORE consortium about the changing risk landscape where the threat of transnational terrorism is high again. The Resolution also reminds the CORE’s risk cluster of the three cornerstones of effective border security management: collaboration, technology and human resources. The Punta Cana document also gives an overlook on the customs’ security priorities over the following years. For example, the global customs community will likely invest a great deal of time and money to develop new risk profiling systems that tap into new data sources such as the Advance Passenger Information (API) and Passenger Name Record (PNR). The same trend towards better risk profiling is likely to define also the future cargo security efforts at the borders.

Reference: WCO, 2015. Punta Cana Resolution, Resolution of the Policy Commission of the World Customs Organization on the Role of Customs in the Security Context.

CORE2004

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