Friday, 4 April 2008

US CBP suspends GTX Program

A senior U.S. Customs and Border Protection official said this week that CBP has suspended its plans to develop a global trade exchange system that would have expanded the amount of trade data collected by the agency. In his prepared testimony for an April 3 hearing of the House Appropriations Subcommittee on Homeland Security, Deputy Commissioner Jay Ahern also recommended that 100 percent scanning of U.S.-bound maritime cargo containers be limited to high-risk trade lanes. Ahern discussed the progress CBP has made in implementing its various supply chain security programs, but he pointed out that these efforts are focused on the ocean environment and that there are other areas that need to be addressed as well.
Ahern told the committee that after considering comments from the trade community CBP has concluded that “further consideration of the GTX concept is premature at this time and may not be a prudent use of limited resources.” CBP is still finalizing its so-called 10+2 security filing, which will require additional data elements from importers and vessel carriers, and Ahern indicated that CBP will assess the benefits of that initiative before going ahead with efforts to gather even more supply chain information.GTX was envisioned as a privately operated, self-sustaining (e.g., user-fee based) system that would collect commercial transaction data not currently available to CBP from parties in the supply chain who have contracted or provided services for the production or movement of international shipments. CBP officials said this additional information would allow the agency to be more precise in identifying risks and to thus conduct fewer and better-targeted cargo inspections. Homeland Security Secretary Michael Chertoff characterized GTX as a preemptive move designed to forestall congressional efforts to impose strict supply chain security mandates, like 100 percent physical inspection, that could hinder the flow of trade. The trade community, however, has consistently expressed concerns about what information would be required, who would have access to it and how GTX would benefit supply chain security and the participating companies.

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1 comment:

Jim Cleveland said...

GTX was/is the vision of Deputy Secretary Michael Jackson. His recent departure from DHS is critically positive for two reasons. He is now free to pursue and accept the rewards that will come as a result of his years of service and talent; and DHS is now without the vision and leadership needed to build a GTX that is a benefit to both homeland security and Trade. The first reason is obvious and the second should be if one had any involvement with Operation Safe Commerce (OSC). OSC was originally conceived by Dr Stephen Flynn as a “public/private partnership that responds to the twin imperatives for greater port security and facilitated flows of legitimate international commerce”. As a participant in OSC I personally managed two factory installations (Manila and Scotland) for container content assurance; and instrumented 150 containers for security and tracking. We took counsel from major importers. We worked with 3PLs; interfaced with foreign customs organizations, CSI Field Operations and the Taiwan military to build the knowledge base for end to end supply chain security with commercial value. All of the good work that a hard fought $56 million in grants and 13 OSC demonstrations had achieved was effectively erased by the worst of government dysfunction, misguided self interests, and an overall ineptness.

I am not in lock step with Dr. Flynn’s position or recommendations for supply chain security. On the other hand, his representation of the failures of DHS to accomplish its mission cannot be argued. Having experienced the international supply chain environment and the DHS bureaucracy I understand the nature and complexities of both. Due to the departure of key personnel, DHS today is less capable than in 2004 during the prosecution of OSC. All of which however, represent the perfect storm for a business development guru with access.

I attended two conferences where Deputy Secretary Jackson was the keynote speaker. On both occasions he presented his GTX vision and encouraged the private sector to go forward and build the concept. He assured that the market, security and prosperity would follow sans government legislation. Had the Deputy Secretary remained there is some likelihood DHS could have developed a functional GTX, since it replicates what was accomplished by OSC four years prior. There are many examples where government R&D has resulted in private sector market creation. I can think of none that compare with the complexity and challenge of transparent supply chain security. The ability of DHS to successfully develop GTX and spur the supply chain security market within the private sector was highly unlikely. Mr. Jackson’s departure from DHS and the departure of DHS from GTX open the door to business development of transparent supply chain security with an objective of true basis point improvement.