Managing the Risks to Trade

Welcome

Thank you very much Mike Smith.

Good afternoon ladies and gentlemen. It's a pleasure to be invited here to wrap-up the fifth Secure Trade in the APEC Region Conference.

On behalf of the Australian Government I want to extend my thanks to everyone who has participated in this conference over the past two days.

I also want to recognise the participation of our international guests who have come here to Sydney to share their ideas and their experience.

I know that Australian trade and security experts value the ideas of other professionals from economies across the APEC family.

Over the past two days, you've talked about better ways to secure the movement of people and trade.

And by exchanging ideas you sharpen government and business insights about the more complex aspects of trade - such as supply chain security - and the risks that go with it.

I know that every government agency in every APEC economy values being able to pick up the phone to talk to their counterparts elsewhere in the region for advice.

Just as APEC is designed to promote trade, we want to make sure that secure trade is not an afterthought but part of the substance of APEC.

We take the view that the economies in the APEC family will shape the 21st century.

APEC includes some of the world's largest and most developed economies and some that are small and still developing.

But its membership is linked by a common commitment to free and open trade and investment - the Bogor Goals.

We all agree that free and open trade and investment is the best way to raise prosperity for the nearly 3 billion people who live in the 21 APEC economies.

We've made solid gains. Poverty has fallen dramatically.

Per capita real GDP in APEC economies has grown by 26 per cent in APEC economies between 1989 and 2003; against 8 per cent in non-APEC economies.

About 70 per cent of trade between the 21 APEC economies is with each other.

And APEC economies now account for more than half of global GDP and nearly half of world trade.

Everyone agrees that market-led solutions and freeing up trade are among the best ways to secure APEC's agenda.

We certainly take the view in Australia that opening up markets is a sure-fire way for economies to get wealthier.

But it's also clear that governments and business need to work together to manage the risks that come from open economies.

Businesses have packed goods for trade across international borders as long as anyone can remember.

But it was only recently, in the late 1950's when the shipping container was invented, that world trade really boomed.

The humble shipping container, or as some describe it, "the box", transformed the economics of shipping.

In US dollars, loading cargo onto a medium-sized ship used to cost $5.83 a ton back in 1956. By some figures, today, it costs less than 16 cents a ton.¹

Now, some may find it hard to be excited about something that has "all the romance of a tin can."²

But without the box, there would be no globalisation. Without the box, shipping certain products over long distances almost wouldn't be worth the cost.

Today, about 90 percent of the world's cargo moves by box.

The invention of the box, alongside jet freight and faster telecommunications, has helped turbo-charge world trade.

Today, shoes made in Vietnam can be shipped in huge loads for sale in Sydney; and fresh produce can go from a Tasmanian farm to a Japanese supermarket in hours.

But as you all know, there are threats to this high speed commerce.

As security experts tell us, if criminals can use shipping containers to smuggle illegal drugs, then terrorists could plausibly use them to smuggle weapons to inflict mass casualties.

There is tension between the needs of international security and of world trade and there can never be zero risk while ever we want the movement of people and freight across borders to grow our economies and give our citizens a better standard of living.

Governments are working hard to bring down barriers to trade. But we also have to look after the security of our citizens.

At the same time, new technology, transport and logistical models are transforming supply chains between businesses.

It's possible for suppliers to trace, for instance, a single razor blade from sheets of steel blanks through to its final place on a supermarket shelf.

And competition is driving suppliers to get things delivered to market as quickly as they can.

So can we marry security with rapidly evolving supply chains? I think we can.

Indeed, I think that if it's managed well, effective security measures can help business manage risks.

The key is public and private sector collaboration.

Let's take the government side first. In every APEC economy there are a range of government agencies that manage the secure movement of people and trade.

For instance, there are customs services; immigration services; transport agencies and policing and intelligence units. Each has an important role in clearing the flow of passengers and trade as fast as they can.

I appreciate that it's already complex work to co-ordinate agencies within an economy, let alone between economies.

I know that the APEC Business Advisory Council (ABAC) has been coordinating the development of so-called "Single Windows" for all APEC economies.

Single Windows mean that businesses involved in import and export need only enter data once in electronic format, usually through an internet portal, to provide the data needs of all Government agencies.

For business, the Single Windows initiative is of great value, because it means less time and less cost.

Let me tell you briefly about Australia's experience.

In the transport sector, we have strengthened air cargo security, including using the latest technology for detecting explosives.

And we apply several layers of security throughout the supply chain. This includes using and trying out new technology, better training for staff, tighter regulations, and more frequent checking of air cargo operator's security compliance.

Australia has committed more than $100 million to strengthening air cargo security.

In our maritime sector, Australia requires that all port facilities, offshore facilities and ships, assess risk and implement security plans in response to these risks.

But the great thing is that many initiatives help both trade and security.

In our immigration sector, we dealt with more than 23 million people movements into and out of Australia over 2005 and 2006.

This scale of people movement puts pressure on governments to make sure, for instance, that people really are who they say they are.

Identity fraud is serious. And with organised crime involved, identity fraud is a major organisational, economic and security risk.

We need to fight identity fraud. But we also want to make travel easier for business people and others.

One way that APEC economies are dealing with this risk is through developing ePassports that contain biometric technology.

Biometrics includes using voice, iris, hand or fingerprint recognition-or a photo or signature-to verify a person's identity.

APEC has a Business Mobility Group that has made progress on ePassports. APEC Ministers have called for all APEC economies to introduce machine-readable travel documents with biometrics if possible, by 2008.

I'm pleased to say that since October 2005, all new Australian passports have contained a biometric.

Now, on the business side, there are probably too many good security initiatives for me to mention in one afternoon speech.

I know that all the businesses involved here are at the forefront of using technology and other ways to secure supply chains.

I've noticed a couple of initiatives.

Let me mention the Biometrics Institute. The Sydney-based Institute draws members from the private and public sector to research and promote the use of biometrics.

At the moment, I'm told the Institute is developing a project to test the vulnerability of various biometrics. Once this project eventually goes commercial, companies would be able to test for risks in biometric products and devise counter-measures to address those risks.

Another company I want to mention also based here in Sydney is Harcor Security Seals. They're Australia's first specialist supplier of security seals for uses ranging from luggage tags to shipping containers.

Harcor produces security seals that comply with the United States' Customs-Trade Partnership Against Terrorism, or the C-TPAT program. Harcor seals also comply with the World Customs Organisation's international standards.

I know you've talked about the lessons learned from implementation of the US C-TPAT at this conference. The most important lesson we have learned is that governments and industry share responsibility for the security of global supply chains.

I understand a lot of the discussions have mentioned the complex range of international security standards that now apply to trade.

But whether you're a small or medium sized business or a multinational, I know you want to work with governments to try to harmonise these standards.

Governments and businesses in APEC economies increasingly agree on what we want from security standards:

We want harmony; we want consistency and we want certainty.

Today's global supply networks means that an incident affecting one key link can rattle the entire chain.

We're working by recognising each other's Authorised Economic Operators. Government and Industry can do more to help trade flows if they can work together to recognise each other's secure traders too.

We are working to prevent disruption to trade flows. And we're working on trade recovery so we can get trade flows up and running again quickly after any disruption.

At the fifth APEC Transportation Ministerial Meeting that I recently hosted, Ministers agreed to identify best practice, share information and assess regional compliance with security standards.

This will be followed up with capacity building efforts in the region-one of APEC's strengths.

Ministers also agreed to go back and make sure that their local regulations and practices are more consistent with international security standards.

Harmonising standards apply just as much to the movement of people as well as goods.

In APEC, governments are collaborating with each other on passport data to make border controls more efficient and smooth out travel for business people.

World trade simply doesn't happen without the hard work of business people. And business travellers need to be able to move freely but securely.

Delays in travel because of visa requirements and immigration processing are an irritating cost to business.

That's why the APEC Business Travel Card is one product that deserves to be talked about a bit more. I think it's a great example of the kind of public and private sector collaboration that we've been talking about.

The Card offers two main benefits for business people:

First, it opens up priority immigration processing. Cardholders can use special immigration lanes to enter and exit major international airports throughout the APEC region.

And second, it gives business people visa pre-clearance. Cardholders can lodge one application with their home government and can travel to 16 APEC economies without having to apply separately for visas.

The visa pre-clearances are valid for 3 years and permit multiple entries for up to 16 foreign destinations.

To a business person, the Card can represent the equivalent of hundreds of individual visas. That's a big saving in time and money.

To APEC economies, the Card scheme improves border security because the initial background screening is done by the applicant's home economy. This helps frees up border resources to concentrate on higher risk areas.

So far, 18 APEC economies already participate in the Card scheme. I'm pleased the United States has signed up this week, which will no doubt add to the 22,000 current active cardholders.

Canada, Mexico and Russia are not yet part of the Card Scheme.

But people are working to extend the Card to all 21 APEC economies. It was one of the issues discussed at the APEC Senior Officials Meetings going on in Cairns this week.

The Card is an example of APEC's strengths in collaboration. It came about because business and governments saw a need. And both sides have worked together to make the Card a product of APEC's architecture.

Conclusion

In the same way, I want to see APEC use its unique structures to manage risks to trade.

APEC works by agreeing on a goal without setting down rigid rules about how its members should pursue it.

And APEC's strength lies in its ability to build consensus about problems and their solutions.

APEC is designed to promote trade. So it's fitting that APEC develop architecture for the stability of trade.

So in closing this conference, I'd like to thank you again for sharing your ideas about security and trade. And I look forward to seeing them being taken up as part of APEC's agenda.

Thank you.