1. New trade security environment Concerns for Developing Countries Geneva - 14 November 2003 Presented by José María Rubiato - prepared with Eva Spiliopoulos United Nations Conference on Trade and Development

2. 2 Contents Current initiatives and requirements:Current initiatives and requirements: US measuresUS measures ISPS CodeISPS Code Concerns for developing countries:Concerns for developing countries: Increased transport costsIncreased transport costs Increased operational costsIncreased operational costs CompetitivenessCompetitiveness Capacity to operate security systemsCapacity to operate security systems sel

3. 3 U.S. measures and derived requirements : CSI 1.Purchase, operation and maintenance of screening, detection and related IT systems – estimated unit cost: USD 1-5 million 2.Re-organisation of the functioning of the port: Allocate port capacity/storage space and offices for US Customs;Allocate port capacity/storage space and offices for US Customs; Hire and train staff to deal with container inspection;Hire and train staff to deal with container inspection; Adapt container yard surveillance technology;Adapt container yard surveillance technology; Organise information flows in the port.Organise information flows in the port.

4. 4 U.S. measures and derived requirements : 24-Hour Rule 1.Re-organisation of carriers’ activity: presenting cargo declarations 24 hours before loadingpresenting cargo declarations 24 hours before loading re-programming the loading operationsre-programming the loading operations preparing interface with AMSpreparing interface with AMS potential overall burden for carriers industry; USD 280 M/yr (OECD)potential overall burden for carriers industry; USD 280 M/yr (OECD) 2.Adjustment of shipper’s activity: more detailed and complete information to the carriersmore detailed and complete information to the carriers re-organising logistics operationsre-organising logistics operations 3.Re-organisation of the port functioning (increasing storage capacity, etc)

5. 5 U.S. measures and derived requirements : C-TPAT Develop and implement a program to enhance security throughout the entire supply chain by : 1.Checking identity of all participants to the supply chain 2.Ensuring the integrity of own partners’ premises 3.Developing programs/policies to ensure integrity of the supply chain 4.Controlling all access to vessel while in port/identify persons boarding 5.Ensuring seals are affixed on all loaded containers

6. 6 IMO regulations and derived requirements: Solas Convention and ISPS Code (1) 1.GOVERNMENTS : –determine and set security levels associated to specific security procedures; –control completion of and approve Port and Ship Security Assessments and Plans; –issue Ship Security Certificates; –cooperate with the IMO. 2.SHIPS : –get equipped with Automated Identification Systems (AIS); –display their Ship Identification Number; –get fitted with Ship Security Alert System.

7. 7 3.COMPANIES (vessel-owning and/or operating companies): - obtain the Ship Security Certificate after completion of several measures, such as: designate the Company Security Officer and Ship Security Officers undertake Ship Security Assessments, develop Ship Security Plans, provide adequate training for the Officers and the crew, ensure vessels are properly equipped to deal with security issues, etc. 4. PORTS : - undertake Port Facility Security Assessments: - develop Port Facility Security Plans; - designate Port Facility Security Officer; - ensure training, ensure sufficient equipment and staff, etc. IMO regulations and derived requirements: Solas Convention and ISPS Code (2)

8. 8 Examples of unit costs for selected IMO security measures  AIS transponder: USD 10.000 - 20.000  Displaying ship number: USD 5.000;  Ship security alert system: USD 2.000;  Company Security Officer: USD 37.500 - 150.000/yr  Classification Society Ship Security Assessment: USD 2.400 –Takes three 8-hour days;  Port Facility Security Assessment: USD 4.000- 8.000. Source of data: OECD report “Security in Maritime Transport: Risk Factors and Economic Impact, July 2003

9. 9 Concerns for developing countries (1) ADDITIONAL TRANSPORT COSTS: ADDITIONAL TRANSPORT COSTS: –Transhipment costs: to ship to the USA, systematic use of CSI ports may entail additional transhipment operations. –Increased freight rates: carriers levy fees to cover extra security costs. ADDITIONAL OPERATIONAL COSTS:ADDITIONAL OPERATIONAL COSTS: –ISPS Code implementation: estimated costs for developing country ship owners: USD 300 million (assuming that 28 % of world fleet controlled by developing countries) –Estimated costs for developing country ports to implement security plans: USD 1-2billion (UNCTAD estimate based on US Coast Guard estimation of $7 billion for US ports) –Implementation of security guidelines for shippers and other parties all along the supply chain (e.g. C-TPAT)

10. 10 Concerns for developing countries (2) COMPETITIVENESSCOMPETITIVENESS –Risk of exclusion from trade where security procedures require new technological and managerial capacity. –Risk of loss of competitive position between countries/ports/shippers/carriers unable to comply with current and forthcoming security requirements. –Non CSI ports may loose their attractiveness and traffic. –Non C-TPAT participants face greater scrutiny and delays when shipping to the USA. –Non ISPS-compliant ports would loose traffic as vessels would not call to these ports to avoid being denied entry in other ports.

11. 11 CAPACITY TO OPERATE SECURITY SYSTEMS: A bility to understand the new security environment as a whole?A bility to understand the new security environment as a whole? Necessary expertise ?Necessary expertise ? Managerial capacity to implement the required measures and keep updated with the future requirements of this area still in evolution ?Managerial capacity to implement the required measures and keep updated with the future requirements of this area still in evolution ? High level of technology required: available?High level of technology required: available? Concerns for developing countries (3)

12. 12 Conclusions Whatever the total burden of security measures may be, it will be proportionally much higher for developing countries and small players in general.Whatever the total burden of security measures may be, it will be proportionally much higher for developing countries and small players in general. Developing Countries face considerable new obligations and need financial support and technical assistance to develop a sustainable capacity to implement security measures.Developing Countries face considerable new obligations and need financial support and technical assistance to develop a sustainable capacity to implement security measures. Only in such a case, will they be able to benefit and not only suffer from security measures, which in the long term are expected to facilitate international trade.Only in such a case, will they be able to benefit and not only suffer from security measures, which in the long term are expected to facilitate international trade.

13. 13 THANK YOU ! José María Rubiato – jose.rubiato@unctad.org Eva Spiliopoulos – eva.spiliopoulos@unctad.org