Supply Chain Security Study Guide

1. Introduction

Security of international trade came into sharp focus following the terrorist attacks on the United States in September 2001. Governments and international bodies moved quickly to harden supply chains against terrorism and related criminal activity, and the response shaped the customs and trade environment that freight forwarders work in today.

This module covers the building blocks of a supply chain and how international terrorism reshaped cross-border trade. It then walks through the layered programs that followed: US measures including CTPAT, the Container Security Initiative, advance manifest reporting, and TSA air cargo rules; international frameworks led by the WCO, IMO, and ICAO; and regional responses from the European Union and APEC. The closing sections set out how Customs and business each contribute to securing global trade.

2. Background to supply chain security

Learning objectives

Government and business were concerned that international terrorists could use supply chain systems to carry weapons of mass destruction, or to destroy critical parts of the supply chain itself. This drove momentum for new supply chain security standards at national, regional and global levels. Many of these programs were introduced quickly after 9/11 but have now become a permanent feature of international trade:

National measures alone are not enough. Governments have recognized that they must work with the private sector and with other governments to secure the supply chain end to end. This has produced a coordinated international approach, delivered through international organizations and through the industries that operate the supply chain.

2.1. Elements of a supply chain

Terminology

Supply chains are central to any understanding of international trade. A full study of supply chain management is beyond this module, but a small number of definitions will help you make sense of the security initiatives that follow.

The role of information in the supply chain

Supply chain management coordinates the design, procurement, and flow of goods, services, information and finances from raw material to parts supplier to manufacturer to distributor to retailer to consumer.

The process includes:

Effective supply chain management gets the right goods to the right place, at the right time, in the right quantity, and at acceptable cost. This depends on coordination and feedback at every link in the chain, and information management is the foundation that holds it together.

The efficient and secure exchange of trade information is therefore central to international trade. As covered in Module 1, trade documents remain the primary way information moves across the supply chain, despite advances in information and communications technology. Billions of documents are exchanged each year, and UNCTAD has noted that traders and transport operators sometimes handle up to 40 original documents per shipment, with as many as 200 data elements on average and significant repetition between forms.

Cost is only part of the problem. Paper-based, non-standardized documents are slow, error-prone, and ill-suited to the speed and complexity of modern trade. They raise administrative costs for business and compliance costs for government. Simplified, internationally aligned documents allow common rules across countries and regions, and they are the first step toward electronic submission and Customs automation.

Improving effectiveness

The following three principles determine how effective a supply chain is: transparency, efficiency, and predictability. 

The Efficiency principle is the broadest in practice. The measures below show how it is applied without weakening compliance objectives.

3. International terrorism

This chapter explains why governments now treat international terrorism as a direct threat to the supply chain. To respond well, you first need to understand how modern terrorist groups operate and the kind of damage an attack on a supply chain could cause.

Learning objectives

The extracts below are drawn from a range of reports examining the growth of international terrorism and the way that terrorist groups operate.

In a report published by the Centre for Defence and International Security Studies (CDISS), terrorism is defined as follows:

Over the last thirty years globalization has accelerated. Easier travel, the information technology revolution, and the spread of worldwide communications and financial networks have made the world smaller and more connected.

These benefits have not been confined to legitimate actors. Globalization has also extended the reach of terrorist groups and criminal networks. It has given terrorist organizations the ability to operate globally, to the point that global terrorism has become the largest challenge to globalization itself.

Global media also gives any terrorist incident worldwide exposure within minutes, often in real time. Terrorist groups can therefore reach a much wider target audience and publicize their cause across the world.

The nature of any specific attack is hard to predict, but the aim is consistent: cause fear, create major disruption, and gain maximum exposure. Many possible attacks on the supply chain would meet all three of these aims.

The use of cargo containers to carry weapons of mass destruction into major ports is a primary concern. Many ports and the transport infrastructure that connects them, road and rail, sit at the heart of major cities. The detonation of a container at a port, or while moving through the road or rail system, would deliver each of the three terrorist aims above.

3.1. Economic impact

The impact of terrorism is felt not only in the country of attack but also in countries linked to it through trade. A significant attack on the United States, for example, that closed United States seaports and airports for any length of time, would have a major impact on a key trading partner such as China.

The impact is not only short term. A study by the Australian Department of Foreign Affairs, Combating Terrorism in the Transport Sector – Economic Costs and Benefits, found that:

The study found that one of the major impacts is the operating cost burden on governments and businesses as they put security measures in place. Businesses must also hold larger inventories in case of disruption and pay higher insurance premiums. Over time, these costs can reduce productivity.

The economic impact on countries that cannot meet new supply chain security standards may be even more significant. Many developing countries already face difficult trade conditions, including challenging terrain, limited infrastructure and long distances from trading partners. Transport costs make up a larger share of the value of their exports than is the case for richer countries (World Bank 2003). Adding the necessary security measures may be financially difficult for suppliers and governments in these countries. The result may be that their trading partners turn instead to suppliers in countries that can meet the standards.

4. United States response

Learning objectives

Following 9/11, the United States Government introduced a series of supply chain security initiatives, most of them sitting under the Department of Homeland Security (DHS), created in 2002. DHS comprises more than 20 federal agencies, including Customs, Immigration, Coast Guard, Secret Service, and the Transportation Security Administration (TSA). Most of the initiatives covered here are operated by United States Customs and Border Protection (CBP). They were created through separate legislation and funding cycles, so they are not always integrated, but many have become templates that other governments and international bodies have since adopted or adapted. CBP describes its approach this way:

The United States has continued to strengthen its supply chain measures over the last 15 years. The initiatives covered in this chapter are important to study because, in many cases, they have set the template for international, regional, and other national responses to supply chain security.

4.1. 24 Hour Advance Vessel Manifest Rule

Under the Advance Manifest Rule (AMR), the carrier must submit detailed cargo data to CBP at least 24 hours before containers are lifted onto a US-bound ship. The original requirement was 14 data elements, transmitted electronically. Containers can only enter the United States if this information has been provided to Customs at least 24 hours before loading. CBP uses the data to pre-screen containers of concern before arrival and to select containers for inspection at the port of entry. Vague descriptions such as "freight all kinds" (FAK), "said to contain…" (STC), "chemicals", and "foodstuffs" are no longer acceptable.

In practice, ocean carriers and NVOCCs (non-vessel operating common carriers) set their own earlier deadlines on shippers, on top of the 24-hour cut-off, so they can collect, process, and transmit the data to CBP on time. Containers may sit idle at the port for an extra day on top of the typical 2–3 day wait. Perishables such as food are often at the farm gate 24 hours before being loaded into a container and put on a ship, in order to maintain freshness.

The rule is no longer exclusive to the United States. China Shanghai Customs introduced a 24-hour manifest rule in 2014.

4.2. 10 plus 2 – Importer Security Filing (ISF)

After several years of operation, the United States determined that the information provided by carriers under the original 24-hour AMR was not sufficient for security screening, particularly information from earlier in the supply chain. The SAFE Port Act of 2006 introduced 12 additional data elements: 10 from the importer and 2 from the carrier.

Importer requirements (the "10")

For four of these elements — manufacturer (or supplier), ship to party, country of origin, and commodity HTSUS number — the importer may submit a range of responses initially. More accurate data must follow as soon as it becomes available, and no later than 24 hours prior to the ship's arrival at a US port.

Two additional importer elements must be submitted as early as possible, but no later than 24 hours prior to the ship's arrival at a US port:

Carrier requirements (the "+2")

In addition to the existing 24-Hour Rule, the carrier must submit:

4.3. Air Cargo Advance Screening (ACAS)

ACAS was introduced after a terrorist attempt in October 2010, in which explosives were concealed in packages on a US-bound aircraft from Yemen. CBP and TSA worked with the private sector to identify ways to strengthen air cargo supply chain security, including a way to collect cargo information at the earliest practical point in the supply chain. The ACAS pilot was the result of this work. Participation was initially voluntary, but is now mandatory for all airlines and carriers flying to the United States.

4.4. Container Security Initiative (CSI)

Under the Container Security Initiative (CSI), the United States and partner governments push inspections and screening upstream to the originating ports. The goal is a series of bilateral agreements that allow the exchange of Customs officers and more screening of shipments at the outbound port. CBP officers work with host Customs officers to ensure that containers are targeted and screened using non-intrusive inspection (NII) and radiation detection technology. The aim is for CBP's overseas CSI teams to review every manifest before containers are loaded on vessels destined for the United States. Where the volume of trade prevents the local team from reviewing every bill, CSI targeters at the National Targeting Centre — Cargo provide additional support so that 100 percent review is still achieved.

4.5. Customs Trade Partnership Against Terrorism (CTPAT)

CTPAT encourages supply chain parties to improve security and rewards them with benefits such as reduced cargo examinations. The basic process is:

The 2024 CTPAT Impact Report states that the program now has 10,869 partners, with 2,407 validations completed in 2024. Membership remains voluntary, but companies that have not joined are likely to find it more difficult to partner with companies certified under CTPAT or other World Customs Organization (WCO) accredited security programs (Authorized Economic Operator).

4.6. Secure Freight Initiative - 100% container scanning

In December 2006 the United States Department of Homeland Security commenced the initial phase of the Secure Freight Initiative (SFI), deploying nuclear detection technology at six foreign ports:

n  Port Qasim in Pakistan

n  Puerto Cortes in Honduras

n  Southampton in the United Kingdom

n  Port Salalah in Oman

n  Port of Singapore

n  Port Busan in Korea (Gamman Terminal)

Port Qasim, Puerto Cortes and Southampton commenced scanning all maritime containers destined for the United States for nuclear or other radiological materials in October 2007.

Under SFI, an integrated scanning system, consisting of radiation portal monitors (RPM) provided by the United States Department of Energy (DOE) National Nuclear Security Administration and non-intrusive inspection (NII) imaging systems provided by CBP, is used to scan containers as they move through the pilot locations. Through optical character recognition (OCR) technology, data from these systems is integrated and provided to CBP officers, who can use it, alongside customary data sources, to determine whether the container should be referred to the host nation for secondary examination before being loaded onto a vessel destined for the United States.

In 2010, after funding cuts, CBP rebadged the overseas scanning initiative from SFI to International Container Security (ICS). The ICS program is operational and is currently scanning all United States-bound containers laden in the Port of Qasim, Pakistan; Port of Shuaiba, Kuwait; and, in a limited capacity, Salalah, Oman. CBP is negotiating with the Governments of Jordan and Egypt to begin scanning operations at the ports of Alexandria (Egypt) and Aqaba (Jordan). CBP is also negotiating with the Government of Pakistan to expand scanning operations to the port of Karachi. During 2010, the SFI pilots at the ports of Busan, Southampton and Puerto Cortes officially ended by mutual agreement between DHS and those Governments.

4.7. Transport Security Agency - Air Cargo Security Regulations

TSA was established by the federal Aviation and Transportation Security Act (ATSA) of November 2001. Section 110 of the new law charged the TSA with:

The latest TSA Cargo Screening Program web page states that:

5. International Response

Learning objectives

A number of international organizations responded to the terrorism threat by developing international standards to guide member countries in implementing appropriate responses. This chapter looks at the responses of the World Customs Organization (WCO), the International Maritime Organization (IMO), and the International Civil Aviation Organization (ICAO).

5.1. WCO Framework of Standards

After 9/11 it became clear that Customs administrations across the world would be expected to deliver a higher level of trade security. For many member administrations still working to implement better trade facilitation, the new expectation was both significant and seemingly contradictory.

Over the next three years the WCO developed guidelines for Customs administrations to secure global trade in a way that continued to facilitate it. A central part of this approach is the recognition that Customs needs to partner with business in a new and more integrated way. The result was the WCO Framework of Standards to Secure and Facilitate Global Trade (SAFE Framework). The original SAFE had two pillars: Customs-to-Customs network arrangements, and Customs-to-business partnerships. A third pillar has since been added: Customs-to-Government networks.

In developing SAFE, the WCO based its standards on existing WCO instruments (e.g. Revised Kyoto Convention) and on other measures developed for security and trade facilitation. The Framework was adopted by the WCO Council in June 2005. The vast majority of members have since expressed their intention to implement the Framework, even though it is not strictly legally binding.

The most recent edition of SAFE (2025) has the following aims:

Five Core Principles

The WCO recognized the need for capacity building strategies to enhance members' ability to implement the Framework.

Pillar 1 Customs to Customs  

The Customs-to-Customs pillar requires member administrations to work cooperatively, within agreed standards, to move cargo quickly and securely. The major focus of this pillar is the adoption of technology that allows for the quick identification and examination of suspect cargo. The requirements include the provision of advanced electronic information on cargo, automated targeting tools, and modern technology (X-ray, gamma ray and similar) for cargo inspection.

Pillar 2 Customs to Business 

The Customs-to-Business pillar establishes a partnership between Customs administrations and the private sector to ensure private sector involvement in securing the supply chain. Critically, businesses that can provide a high degree of security guarantees through these partnership arrangements are rewarded with expedited processes. As SAFE itself states:

To the extent that Customs can rely on its partners in the trade community to evaluate and address threats to their own supply chain, the risk confronting Customs is reduced. Therefore, companies that demonstrate a verifiable willingness to enhance supply chain security will benefit. Minimizing risk in this way helps Customs in performing their security functions, and in facilitating legitimate trade.

The six standards of Pillar 2 are:

Pillar 3 Customs cooperation with other agencies 

Many government agencies cooperate with Customs in the area of supply chain security. Partnering agencies include, but are not limited to, transport security authorities, interior authorities (such as police), agencies operating at the border (such as quarantine and standards), and licensing agencies (such as those for dual use goods). The forms of mutual cooperation are varied: agencies may share common facilities, equipment and databases, exchange information, and jointly conduct targeting and risk assessment, program validations, or inspections. Cooperation may also include aligning the various agencies' security programs and control measures.

Cooperation across agencies is essential at the national level. Given the nature of the global supply chain, effective cooperation must also be promoted bilaterally and multilaterally between organizations representing different sectors and regulatory areas, in order to foster international harmonization and reduce the burden on both trade and government.

To assist with the implementation of this Pillar, members are referred to WCO tools and instruments including the Revised Kyoto Convention, Coordinated Border Management Compendium, Single Window Compendium, AEO Compendium, and Risk Management Compendium.

Changes introduced in SAFE 2025

The WCO released its 2025 iteration of the SAFE Framework of Standards at the end of June 2025. The 2021 version remains largely unchanged, but has been adjusted in several places. As the Secretary-General of the WCO, Ian Saunders, states in his introduction:

The key changes in this iteration of SAFE are:

These changes have been delivered through the following adjustments:

A new paragraph has been inserted into the commentary on Pillar 1, Standard 1, Sealing:

A new paragraph has been inserted into the commentary on Pillar 1 in relation to the cargo declaration:

A new paragraph has been added to Standard 1 of Pillar 2:

A new sentence has been added to the commentary in Pillar 2, Standard 5:

A new paragraph has been added to the commentary in Pillar 2, Standard 6:

A new paragraph has been added to the commentary under Pillar 3, Standard 1:

5.2. Authorized Economic Operators (AEO)

The standards of Pillar 2 speak extensively of Authorized Economic Operators (AEOs). The Framework defines an AEO as:

In June 2006 the WCO Council adopted a document defining and setting the criteria for AEOs. AEOs include companies that have been approved by, or on behalf of, a national Customs organization as complying with WCO or equivalent supply chain security standards. The WCO has emphasized that the AEO program shall be voluntary, not mandatory.

In 2007 the WCO incorporated the AEO Guidelines into the Framework of Standards document. Under "Conditions and Requirements for Customs and the Authorized Economic Operator", the WCO has set out the following elements to consider when deciding whether a company should be granted AEO status:

An issue that emerged with the global roll-out of AEO programs is mutual recognition: where Customs in one country recognizes a company's AEO status in another country and provides equivalent benefits. For companies that operate across many countries, recognition of AEO status across borders is essential. Although mutual recognition is a key principle of the WCO guidelines, the practical work of getting each country comfortable with another's standard of validation has proved more difficult. Mutual recognition between the United States CTPAT program and the EU AEO program took more than four years to develop.

In 2007, the United States and the EU started work on Mutual Recognition between the CTPAT and EU AEO supply chain security programs. The initial steps were an in-depth comparison of the United States and EU AEO programs and a pilot in which CBP observed security components of the EU's AEO audit process.

To achieve mutual recognition of their respective CTPAT and AEO programs, the United States and EU had to work on the following:

CBP and the EU Taxation and Customs Union Directorate agreed language for the United States-EU Mutual Recognition Decision, and it was signed in May 2012. The United States now has 19 MRAs in place, while China and Korea both have more than 30.

To make mutual recognition work, the key issues are common AEO requirements and consistent risk management approaches. Customs administrations need to use uniform criteria when assessing AEO status if companies are to benefit from worldwide participation in AEO programs. Companies need to be able to present information in the same format across different countries; otherwise the administrative burden makes full participation difficult.

5.3. International Maritime Organization (IMO) - Port and ship security

In December 2002, 108 member states of the IMO adopted a series of measures to strengthen maritime security, with the aim of preventing and suppressing acts of terrorism against shipping. Adopting an international security code for shipping and ports was seen as essential, given the central role shipping plays in international trade.

The IMO adopted a number of amendments to the 1974 Safety of Life at Sea Convention (SOLAS), the most far-reaching of which enshrines the new International Ship and Port Facility Security Code (ISPS Code). The Code contains detailed security-related requirements for Governments, port authorities and shipping companies in a mandatory section (Part A), together with a series of guidelines about how to meet these requirements in a second, non-mandatory section (Part B). The IMO also adopted a series of resolutions designed to add weight to the amendments, encourage the application of the measures to ships and port facilities not covered by the Code, and pave the way for future work on the subject (IMO 2006).

The International Ship and Port Facility Security Code

In essence, the Code takes the approach that ensuring the security of ships and port facilities is fundamentally a risk management activity. To determine appropriate security measures, an assessment of the risks must be made in each particular case.

The purpose of the Code is to provide a standardized, consistent framework for evaluating risk, enabling governments to offset changes in threat with changes in vulnerability for ships and port facilities.

To begin the process, each Contracting Government conducted port facility security assessments.

This risk management concept is set out in the Code through a number of minimum functional security requirements for ships and port facilities.

Each ship (or class of ship) and each port facility presents different risks. The way each will meet the specific requirements of the Code is determined and ultimately approved by the Administration or Contracting Government, as the case may be.

To communicate the threat at a port facility or for a ship, the Contracting Government will set the appropriate security level. Security levels 1, 2, and 3 correspond to normal, medium, and high threat situations, respectively. The security level creates a link between the ship and the port facility, since it triggers the implementation of appropriate security measures for both.

The preamble to the Code states that, as threat increases, the only logical counteraction is to reduce vulnerability. The Code provides several ways to reduce vulnerabilities. Ships will be subject to a system of survey, verification, certification, and control to ensure that their security measures are implemented. This system will be based on a considerably expanded control system as stipulated in the 1974 SOLAS Convention. Port facilities will also be required to report certain security-related information to the Contracting Government concerned, which in turn will submit a list of approved port facility security plans, including location and contact details, to IMO.

The Code entered into force on July 1, 2004. According to IMO in 2005 (IMO 2005), 94% of contracting parties to SOLAS have approved security plans for over 97% of declared port facilities.

5.4. International Civil Aviation Organization (ICAO)

Under Article 54(l) of the Chicago Convention, the ICAO Council adopts SARPs to safeguard international civil aviation. The security SARPs are contained in Annex 17.

Response after 9/11

ICAO acted quickly. In less than 10 months, seventeen new standards were added to Annex 17, jointly developed by ICAO, Contracting States, and industry. The new standards covered:

A worldwide audit system, the Universal Security Audit Programme (USAP), was put in place at the same time. Trained, certified audit teams check Contracting States' compliance with Annex 17 and require corrective action where deficiencies are found. After two audit cycles between 2006 and 2012, the ICAO Council moved to a Continuous Monitoring Approach (USAP-CMA) on 1 January 2015.

Later amendments

Annex 17 has been amended several times since:

Beyond Annex 17

A Diplomatic Conference under ICAO in September 2010 adopted two air law instruments to suppress unlawful acts against civil aviation:

n  Convention on the Suppression of Unlawful Acts Relating to International Civil Aviation

n  Protocol Supplementary to the Convention for the Suppression of Unlawful Seizure of Aircraft

The two treaties further criminalize the act of using civil aircraft as a weapon, and of using dangerous materials to attack aircraft or other targets on the ground. They also provide for the unlawful transport of biological, chemical and nuclear weapons, and their related material, to be punishable. Making a threat against civil aviation may also trigger criminal liability (ICAO 2010).

6. Regional responses

Learning objectives

6.1. European Union

As an immediate reaction to 9/11, the EU implemented an "anti-terrorism action plan" (October 2001), followed by "The Framework Decision on Combating Terrorism" (June 2002). These increased cooperation between Europe's national governments within the EU, and with the rest of the world.

The attacks in Madrid and London led the EU to update its response to terrorism further. In December 2005 the EU agreed a new counter terrorism strategy. A key element of the response in 2005 was the urgent implementation of all previously agreed strategies.

Customs related security initiatives

At the end of July 2003, the European Commission presented to the Parliament and Council a series of measures to address security issues. The package brought together the basic concepts underlying the new security-management model for the EU's external borders, such as a harmonized risk assessment system. The security amendments to the Community Customs Code (Regulation (EC) n° 648/2005 of 13 April 2005) were published in the Official Journal of the European Union on 4 May 2005.

Through these amendments the EU introduced a number of measures to tighten security around goods crossing international borders. The measures aim to deliver faster and better-targeted checks.

The implementing provisions of the security amendments entered into force on 26 December 2006 and apply within the following timeframe:

One of the main elements of the Customs Security Program is the creation of the AEO concept. Member States are entitled to grant AEO status to any economic operator that meets common criteria relating to the operator's control systems, financial solvency, and compliance record. The EU AEO Program entered into force on 1 January 2008, but member states have been accepting applications to join the program since October 2007.

The EU has issued AEO Certificates in all member states. By April 2023, the EU had issued 18,375 AEO Certificates to companies meeting security requirements. Following Brexit, the EU announced that it would no longer recognize certificates issued by UK Customs and Border Protection.

Figure 2 Source: European Commission  

Air cargo security

In January 2003 the EU established common rules for civil aviation security when it brought into force Regulation (EC) No 2320/2002. The regulation prescribed the security criteria for air cargo, courier and express parcels. It covered specific security controls, the regulated agent, criteria for known consignor, and processes for all-cargo aircraft.

Commission Regulation (EC) No 831/2000, adopted on 2 June 2006 and in force from 1 January 2007, laid down more harmonized rules on air cargo security. The changes related to Regulated Agent Obligations, Security Controls, Known Consignor Qualification, Account Consignor Qualification and Transhipment Security Controls (EC 2007).

In September 2008 the EU and the United States agreed standards for air cargo screening on half of flights between their respective countries by February 2009 and on all flights by 2010. The agreement ensures that the United States and the EU use the same screening equipment, provide the same training to screeners, and impose the same security requirements for the facilities where cargo is screened (TSA 2008b). 100% screening with the United States was not achieved in 2010, although significant progress was made.

In August 2011 the EU published new rules on security measures for cargo coming from non-EU countries. The main elements of the rules, which came into effect on 1 February 2012, are:

6.2. Secure Trade in APEC Region (STAR)

In 2002, APEC Leaders agreed that terrorism represented a severe threat to the region, and decided that a new Secure Trade in the APEC Region (STAR) Initiative would be introduced as a matter of urgency. Over the following years APEC members have held annual STAR conferences to develop the initiative. Discussions at the STAR Conferences have focused on policies and procedures to enhance security and efficiency in the APEC region's seaports, airports and other access points, including: port and airport security; shipping container security; coastal patrol; capacity building; financial assistance; and private sector initiatives. The STAR initiative also fosters coordination between public and private entities, which is essential to counteract terrorist threats through the supply chain.

7. Conclusion: The Roles of Customs and Industry

Customs' ability to meet the challenge

Customs administrations around the world have important powers that allow them to inspect all cargo imported and exported from a country. With this power usually comes the power to refuse entry of goods, and the power to facilitate or impede entry. Customs is also the agency to which importers and exporters provide information about their cargoes, and Customs can mandate the form in which that information is provided and the timing of its provision. It is natural, therefore, for Customs administrations to be the agency primarily tasked by governments to secure trade against the threat from international terrorism.

The SAFE Framework provides the guidelines that help WCO member administrations take on this new role, which most governments expect them to undertake. The difficulty is in ensuring that all countries involved in the supply chain can meet the standards set out in the WCO Framework. For developing countries, this challenge is significant: unless they can be seen to be adopting the international standards for supply chain security, they face the risk of becoming an unfavorable trading partner.

7.1. The challenge for all Customs administrations

The Customs role in supply chain security will see growth in capacity building for Customs administrations across the world. Customs administrations will have to work more closely together to deliver improvements in supply chain security. This involves sharing information about exported goods, undertaking cargo inspections at the point of export when the importing country has security concerns, and providing advance cargo (and passenger) information to support risk management.

To assist developing countries to meet the requirements of the WCO Framework, the WCO commenced a large-scale Customs capacity building program in 2006 called the Columbus Program. Customs development advisors from many agencies have visited over 100 countries to support Customs modernization. Multiple donors, including international organizations, private companies and Customs administrations, have contributed funding, human resources, and expertise to its implementation.

7.2. Customs partnership with business

In developing the response to the terrorist threat, it became clear at both the international and national level that Customs administrations could not deliver the necessary improvements to supply chain security on their own. More frequent and stringent inspections at the border may have eased a country's security concerns, but the impact on trade would have been significant. Customs therefore needs to partner with business to achieve the balance between facilitation and security required to keep trade flowing.

In many countries this requires a different model of partnership from the traditional trader-regulator dynamic. Customs administrations need to work with companies involved in all aspects of the supply chain, and increasingly rely on them to undertake their own self-governance. Only a strengthened relationship with business will build the trust needed to keep trade flowing in an era of heightened security.

7.3. Customs cooperation with other agencies

Since the development of the SAFE Framework of Standards in 2005, the importance of cooperation between Customs and other government and inter-government agencies involved in international trade and supply chain security has increased. The WCO has recognized this and has introduced a number of key tools and instruments. The Coordinated Border Management and Single Window Compendiums, in particular, guide cooperation between Customs and other government and inter-government agencies.

The main objective of this cooperation is to make the government response to supply chain security challenges both efficient and effective. This means avoiding duplication of requirements and inspections, streamlining processes, and working toward global standards that secure the movement of goods in a way that also facilitates trade.

Many government agencies cooperate with Customs in the area of supply chain security. Partnering agencies include, but are not limited to, transport security authorities, interior authorities (such as police), agencies operating at the border (such as agriculture), and licensing agencies (such as those for dual use goods).

7.4. The role of business in securing international trade

Unlike Customs administrations, who view their increased role in securing international trade as an extension of their historical responsibilities, the role business is expected to play is new and far more challenging. Business has been asked to support the fight against terrorism through tougher controls. Restrictions imposed in the name of security have made the movement of goods more complex.

CTPAT and other international forms of Customs-private sector partnership (such as AEO and Regulated Agent) have placed considerable additional responsibilities on companies in the supply chain. Although these programs are voluntary, companies that do not participate are at a disadvantage.

Governments have developed extensive guidelines on the security requirements expected of supply chain businesses. Individual businesses must look after their own security and must also be aware of the security standing of others in their supply chain. CTPAT publishes minimum security criteria for nine different sectors of the supply chain, including importers, carriers across all modes, brokers, manufacturers, freight consolidators, and port and terminal operators (CBP 2006b). The breadth of the list reflects the reality that supply chain security depends on every link, not just the importer.

Carriers, freight forwarders, port authorities and terminal operators are each responsible for different stages in the supply chain process. The best procedures of one trusted trading partner are meaningless if other parties in the supply chain do not have effective security procedures of their own. This is the notion of an integrated supply chain. An integrated supply chain also requires close collaboration between industry and government.

Why Participate? Incentives & Benefits

Business Must Self-Assess Security

Beyond compliance with external requirements, businesses are expected to self-assess their own security practices across two dimensions:

Companies must embrace their role in supply chain security if they are to continue to do business. The benefit of compliance is the ability to remain an active participant in international trade and, in many countries, to receive expedited processing of their goods.

8. Bibliography

n   Asia Pacific Economic Co-operation (2011), Secure Trade in the APEC Region, Singapore. Available on the APEC Website - http://www.apec.org/Groups/SOM-Steering-Committee-on-Economic-and-Technical-Cooperation/Task-Groups/Counter-Terrorism-Task-Force.aspx

n  Australian Government, Department of Foreign Affairs and Trade (2004), Combating Terrorism in the Transport Sector – Economic Costs and Benefits, Canberra.   Available on the DFAT website - http://www.dfat.gov.au/publications/combating_terrorism/combating_terrorism.pdf

n  Carluer, Frederic.  2008. Global Logistic Chain Security: Economic Impacts of the US 100% Container Scanning Law. Universite´ of Le Havre. 

n  Civil Aviation Department, the Government of the Hong Kong Special Administrative Region (2006) Regulated Agent Regime, Hong Kong.  Available on Civil aviation Department website -
http://www.cad.gov.hk/english/rar.html

n  Department of Homeland Security (2008a), Fact Sheet: New Cargo Security Requirements for Maritime Carriers and Importers, Washington.  Available on the DHS website – http://www.cbp.gov/xp/cgov/newsroom/highlights/cbp_responds/container_sec_devices.xml http://www.dhs.gov/xnews/releases/pr_1227548591399.shtm

n  Department of Homeland Security (2008b), Remarks by Homeland Security Secretary Michael Chertoff at Brookings on the Nation’s Critical Infrastructure, Washington.  Available on the DHS website – http://www.dhs.gov/xnews/speeches/sp_1220876790967.shtm

n  Department of Homeland Security (2010), Statement by Secretary Napolitano on Increased Security Measures, Washington. Available on the DHS website – http://www.dhs.gov/ynews/releases/pr_1289237893803.shtm

n  Department of Homeland Security (2011), Borders and Maritime Security Projects. , Washington Available on DHS website - http://www.dhs.gov/ynews/testimony/archives/2009_decarch.shtm http://www.dhs.gov/files/programs/gc_1218476542736.shtm#10

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