The Hindu Business Line : Protection without protectionism...

THE US' goal to "push the border outward" by minimising the chances of terrorist infiltration of trade networks through a raft of recent border protection measures has evoked concern among its trading partners, particularly developing countries, as being costly to their exporting community.

Allaying the apprehensions of developing countries is a comprehensive monograph by an independent think-tank, Cato Institute in Washington. A policy analyst of Cato's Centre for Trade Policy Studies, Mr Aaron Lukas, who authored the study maintains "the challenge for US policymakers is to improve security while minimising the loss of liberty and the benefits of economic openness."

In the aftermath of 9/11 terrorist attack on New York and Washington, the Homeland Security Act of 2002 crated the Department of Homeland Security (DHS), encompassing 22 previously disparate domestic agencies with a remit to analyse threats and intelligence, guarding America's borders and airports, protecting critical infrastructure and co-ordinating the efforts of other agencies — Federal, State and local — in the fight against terrorism.

While DHS zeroed in on activities that directly affect travellers such as an expanded air marshal programme, tightened airport security and fingerprinting of foreign visitors, a less appreciated but more challenging task is reducing the risk of a terror attack executed via the mechanism of trade. Mr Lukas argues that ironically the single most visible element of the trading system — the cargo container — remains low-tech and insecure. While instructions on how to break into a shipping container in a trice of time abound on the Internet, most container seals now in use are designed to detect intrusion, not stop it.

It is in this backdrop that the Container Security Initiative (CSI), launched in January 2002, is at the core of the federal government's bid to make the sea trade more secure. This is also the only formal federally administered programme in operation today designed to detect weapons of mass destruction (WMD) and to deter terrorists from exploiting the vulnerabilities of containerised cargo worldwide. CSI seeks to integrate five components — the US inspectors in foreign ports, intelligence from outside the shipping community, advance knowledge of container contents, better passive screening technologies and `smarter' cargo containers — to reduce the risk of terrorism.

The initial implementation of CSI has focused on securing the participation of the world's 20 largest foreign ports, which cumulatively account for over 70 per cent of inbound container traffic to the US. Eventually, the goal is to have all ports that handle the US-bound traffic enrolled in CSI. Since the launch of CSI, Bush Administration claims that it has more than doubled the number of containers it physically inspects from about 2 per cent to 5 per cent. Another step forward has been the implementation of a "24-hour rule" that requires carriers to file detailed cargo manifests with CBP a full day before a US-bound container is loaded onto a vessel in a foreign port.

Even as these initiatives to secure safe entry of cargos to the US from abroad have bolstered confidence, governments in developing countries voiced concerns over the cost of CSI, Mr Lukas said, adding that at a recent WTO meeting, members of India's delegation argued that CSI "may penalise developing countries, who may not be able to afford the installation of the required facilities at their ports, and, thus be unable to join the US initiative." Though personal radiation devices and radio-isotope identifier devices have been distributed to various CSI ports, much of the cost of upgrading security would be borne by foreign ports and governments, and hence issues of implementation are likely to crop up, Mr Lukas notes.

Yet another safety measure in the wake of anthrax attacks on the US citizens was the Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (the Bioterrorism Act) and the rules were scheduled to go into effect on December 12, 2003. The World Shipping Council (WSC), however, reports that the US Food & Drug Administration (FDA) — charged with enacting US bioterrorism countermeasures — has announced a grace period to allow exporters and shipping lines to adjust to new rules. When fully operational, WSC reckons that the Bioterrorism Act would apply to 12 per cent of cargoes shipped to the US now worth some $50 billion per year.

As provisions of these Act require that every facility in the world that produces or stores food bound for the US to register with the FDA and have a US agent, developing countries exporting perishable agricultural, food and marine products, including India consider this new piece of US legislation as the most burdensome trade-security legislation passed by Congress to date.

The monograph aptly cautions that while guarding against terrorism is paramount, it is also vital that security does not become an alibi for domestic protectionism.

Trade analysts here concur with this at a time when the developing countries are groaning under a flurry of non-tariff barriers in the garb of standards, technical parameters and repeat trade defence measures such as anti-dumping and anti-subsidy probes.