Shipping Association of Jamaica Luncheon

Remarks by Ambassador Cobb

at the

Shipping Association of Jamaica Luncheon

June 25, 2003

AS PREPARED

Thank you President Maragh, and members of the Shipping Association of Jamaica's Managing Committee, for the opportunity to speak to you today.  Let me first express, on behalf of the U.S. Embassy community, our sympathy on the loss of Pauline Gray this past April.  Her early work with the JSA, her work with the JEA, and her efforts with the recent creation of the Jamaica BASC chapter, all showed her commitment to the shipping industry and to the strengthening of Jamaica's economy.  Pauline was a colleague and a friend to many in the American community; I admired her dedication to Jamaica and to the SAJ.  Her character and leadership will serve as an inspiration to us in the years to come.

I know that Pauline was very interested in the topics that you have asked me to address today: port security and the fight against terrorism.  I'm going to approach those issues through the prism of economic development, and particularly from the viewpoint of trade and competitiveness.

As many of you know, I come from the private sector, and deeply believe that commerce is the lifeblood of any vibrant nation.  But if trade is the lifeblood, then transportation forms the very veins and arteries of that nation.  Right now, the United States faces two particular overriding imperatives:  securing the nation from acts of terrorism, while at the same time maintaining and promoting economic vitality.  On the other hand, Jamaica's greatest imperatives are, in my view, one: addressing the economic challenges of the country by renovating the basic infrastructure necessary for economic growth, -- by that I mean certain areas of physical infrastructure, workforce development, and regulatory mechanisms -- and two: countering the exploitation of this nation by international criminal opportunists.  These national imperatives of our two countries are far more closely interrelated than the casual observer might realize.

From our earliest histories, both Jamaica and the United States have been trading nations, importing what we've needed, and exporting products -- primarily goods, but also services -- where we've enjoyed competitive advantages.  This pattern continues to today, growing more sophisticated, but still based on fundamental economic principles, supply and demand, comparative advantages and competitiveness, and productivity.  Some of you know that when I first visited Port Bustamante, I was struck by the enormous volume of transshipment trade, and immediately appreciated that Jamaica -- through you -- was seeking to capitalize on the comparative advantage of Jamaica's geographic location, its fine harbor, and the investments made in port facilities development.  I am one who believes that this port has the ability to significantly contribute to Jamaica's economic development.

Now -- America sees nearly 20 million containers cross its borders every year.  We have no intention of giving that up.  That trade, meeting the needs of American consumers and industry and helping fuel global economic growth, will continue and in all likelihood will grow.  The question is where those containers will come from.  The answer is from "trusted ports" - ports that have validated security procedures in place.

Even before the attacks of September 11, 2001, on the United States, attention was being paid to the vulnerability of America's borders, in both the movement of people or goods.  Many of you in the audience will remember and were involved with Steve Flynn, the U.S. Coast Guard officer now at the Council on Foreign Relations -- and members of the Shipping Association, the Port Authority, and UWI faculty, specifically Senator Trevor Munroe, joined in considering the vulnerabilities of U.S. ports, the likely impacts of such vulnerabilities, and the need for preemptive preparation by United States ports and by ports shipping to the United States.

I don't need to tell this audience about exploitation of legitimate shipping by drug traffickers, or about the high, sometimes crippling, cost to carriers when they are discovered transporting, though even unwittingly, illicit cargo.  Well, with the wake-up call of the terrorist threat coming on top of existing exploitation of commercial shipping by international crime, the United States tightened up on inspection processes.  Right now, according to U.S. Secretary for Homeland Security Tom Ridge, all high-risk vessels are being inspected -- at substantial cost to U.S. taxpayers and admittedly at a cost to the carriers.  And high-risk cargo containers are being searched with attendant delays in delivery or transshipment.  This is part of the defense in depth, the layering of layers of security that follow a comprehensive plan for America's ports.  

These defensive layers include greater information sharing with our international partners; increased levels of inspection; state-of-the-art technology and added intelligence on crews, cargo and vessels long before they reach our shores.  The bottom line is that identifying and dealing with high-risk cargo -- at the earliest possible point -- protects the entire international supply chain and all the world's major seaports.  While it is onerous, it is proportional to the risk.  Our real job now is to become sophisticated enough at this business - the U.S. and all our partners -- that we delay only the high-risk elements and we expedite legitimate commercial trade.

In testimony before the U.S. Congress a few weeks ago, Steve Flynn noted that, "examining 100 percent of all containers is not only wasteful, but it violates an age-old axiom in the security field that if you have to look at everything, you will see nothing."  Skilled inspectors look for anomalies and invest their finite time and attention on that which arouses their concern.  This is because they know that capable criminals and terrorists often try to blend into the normal flow of commerce, but they invariably get some things wrong because they are not real market actors.  But, too aggressive an inspection regime that introduces substantial delays and causes serious disruption to the commercial environment, can actually undermine an enforcement officer's means to conduct anomaly detection.  Accordingly, allowing low risk cargo to move as efficiently as possible through the intermodal transportation system has the salutary security effect of creating a more coherent backdrop against which aberrant behavior can be more readily identified.

So how can trade be facilitated in the face of these layers - these concerns?  Experts have noted that deciding which cargo container rates facilitated treatment requires satisfying two criteria.  First, an inspector must have a basis for believing that when an originator loaded the container, it was filled only with goods that are legitimate and authorized.  Second, once the container is moving through the global system, an inspector must have the means to be confident that somewhere along the way (particularly at transshipment ports) it has not been intercepted and compromised.  If an official cannot point to a reliable basis for assuming these two criteria are satisfied, in the face of a heightened terrorist alert, that officer must assume that the container poses a risk and target it for examination.

The risks to both national security and to business are real.  Members of the JSA know how easy it has been to compromise shipments with narcotics at enormous cost to the carriers.  Now, however, we are not just talking about narcotics.  If a terrorist were to use a container as a weapon-delivery device, like drug traffickers use containers to ship their wares, the terrorist could use high explosives such as those used in the attack in Oklahoma City or some form of chemical weapon, as used in the subway attack in Tokyo.  While few expect a nuclear weapon, a "dirty bomb" spreading radioactive waste is well within the realm of possibility.  Various terrorist organizations, inimical to the interests of the Western Hemisphere, are known to have the necessary technologies, and it would be naive in the extreme to assume that terrorist organizations are not aware of vulnerabilities in port security or of the direct, and even more devastating, indirect economic impact -- in the United States and around the world -- of an attack that has exploited transportation security vulnerabilities.

So, the United States is seeking to provide greater security for our homeland, while at the same time seeking to facilitate the trade that is essential for economic development.  We understand that confidence in the supplier is a major criterion for supplier selection; we understand that in transportation, confidence in the supplier is going to be measured by confidence in the security process.

Now, this isn't just a matter of customer preference or U.S. regulations.  There is the absolute imperative to become compliant with the International Ships and Port Security (ISPS) code by July 2004 -- just a year away.

The good news is that Jamaica is ahead of the curve.  Even before implementation of the ISPS code by the International Maritime Organization in London in December 2002, JPA had established a security committee, the Maritime Authority was participating in IMO deliberations, fixed and mobile x-ray machines to allow certification of container contents were under consideration - and are now contracted.  Closed circuit television monitors are being installed at the wharves, cruise ship terminals and container terminals; standardized ID systems are being implemented; all port workers are subject to vetting; harbor patrols are being expanded, the BASC Chapter is at work among exporters.  I know you know what is being done here.  So let me talk about what the future will bring.

Most of you know the story of the two travelers in Africa that suddenly realized they were being stalked by a lion.  One of the travelers immediately sat down, took off his heavy boots, and started putting on his trainers.  His companion said, "What are you doing, there's no way you can outrun a lion?"  His partner looked at him, and simply and factually stated, "I don't need to outrun the lion.  I just need to outrun you."  Who is the lion in this case?  Other ports in the region are seeking to gain the "lion's" share of direct and transshipment trade to the United States.  [Panama Example]

Several countries in the region, including the Dominican Republic, the Bahamas, Trinidad and Tobago, and Barbados, are fervently pursuing ISPS compliance in an effort to gain the comparative advantage in the shipping industry. 

Moreover, I can assure you that American investors are examining very carefully how countries are responding to code responsibilities, to control of international organized crime and to preparation for acts of terrorism.  Our Economic and Commercial Section at the Embassy receives calls on a regular basis from companies interested in doing business in this region.  Frequently, they ask about the threat of terrorism.  Not yet a big issue here - but companies want to know how capable law enforcement is, how strong the legal framework is, and how safe their investments will be.  The prospects for vibrant economic growth and foreign investment in Jamaica will depend, in a very large part, upon the answers to those questions. 

Contemplating failure to reach ISPS standards is to contemplate disaster; just reaching these standards, though, will not be enough to ensure the viability of Jamaica's shipping industry, whether to the U.S., Europe, regionally, or to any other destination.  The ISPS code is just one daunting element.

The U.S. government is working actively with Jamaica and governments throughout the Caribbean to help ensure that your country is adequately prepared to deal with the threat of terrorism and transnational crime, while continuing to grow in prosperity and openness.   As part of these efforts, one risk-based analysis has already been completed by the U.S. Coast Guard and GOJ authorities for the container port.  The master plan for security, as prepared by local authorities, is excellent.  An assessment of vulnerabilities is scheduled for Kingston Wharves this August.  Of course, in each case, the true measure is not the thoroughness of the plan, per se, but the thoroughness of the implementation.  As always, actions speak louder than words.

While much of the work of security and of combating terrorism and international crime falls to government agencies, it is obviously critical that private industry and organized labor contribute by lending their support and their ideas as appropriate. 

As I've mentioned, Jamaican shipping interests have made a very good start in insuring the integrity of the process.  Now, the key is in the follow-through.  What can you do to ensure that Jamaica remains globally competitive in the shipping industry?  Instead of settling for minimum ISPS compliance, work with the Port Authority, your customers, the Maritime Organization, your public officials, and each other to achieve as much of the comprehensive ISPS schedule as possible, to achieve a higher level of competitiveness in international trade.  Part A of ISPS code is essentially mandatory by next year.  Part B provides an opportunity for "bonus points."  Its tougher, more difficult - but I know for a fact that others in your region are going to try to achieve Part B compliance - and in my mind, Jamaica should too. 

Secondly, it would be useful to encourage elected officials to remain diligent in their efforts to approve contracts and implement policies regarding matters of port security.  I believe they will be receptive to your input.

Finally, we would probably agree, Jamaica should first focus on her own ports before working on a regional solution.  Caribbean regional security is important.  It is important to you and it is important to the United States.  First, however, each country within this region must take active responsibility for protecting its own borders and its own interests then join together to protect the region as a whole. 

Insuring the integrity of Jamaica's transportation systems is clearly a subject of mutual interest to our two countries.  The U.S. Government will continue to work with Jamaica, through training and analytical efforts, support of public/private partnerships such as BASC, and collaborative law enforcement efforts.  But do not have illusions that the U.S. will be playing anything but a supporting role in Jamaican efforts.  Ports, carriers, and agents throughout the world must engage in this quiet but fierce competition to become established as security exemplars, to reap the inevitable benefits - and, in fact, to avoid the crippling costs of being found non-competitive.  Self-interest demands a proactive response by the members of organizations such as yours.  Fortunately, competition breeds strength; and I am confident that your industry and your leadership is strong and that Jamaica has a unique opportunity to excel in exporting and in the business of transshipment of the world's commerce.

I wish you much success.