I'm really excited to be here with all of you to mark the 10th anniversary of the Senators' Trade Conference. I want to thank WCIT, its leadership and staff over the past 10 years for helping to make this conference our state's top forum for discussing timely and provocative trade issues.
Here in the state of Washington, we know better than anybody that trade impacts all of our lives. We all come to the table – and to this conference -- with different viewpoints whether it’s a local company that makes products to sell overseas, a local storeowner who relies on trade to stock the shelves, a dockworker or truck driver who relies on trade for their livelihood, a farmer who grows products for export, or a family that can buy the things it needs because we trade with the world.
No matter where we come from – no matter how trade touches our lives – we all know it's important to have a forum where we can discuss the most pressing trade topics. And over the years, we've had some really tough discussions on China, the environment, labor, wages and more.
But we've always walked away at the end of the day knowing that – even if we disagree – we all want to make sure Washington state stays strong. I think we all realize that if we can't trade with the world and if we can't sell the things we make – our state cannot move forward.
Today I want to talk about three challenges that I see facing our state and our country as we try to move forward on trade. The first challenge is deep anxiety over new trade agreements. The second challenge is our long-term ability to help shape and enforce trade agreements so they benefit our state and our country. And the third challenge – in the post 9-11 era – is making commerce more secure without slowing trade to a crawl.
Let's start with that first challenge because it is one that is front and center today in Washington, D.C., and throughout the country. There is a strong and very public sense of anxiety about making new trade agreements. It's based on legitimate concerns and an underlying uncertainty that we must address. Let's remember that concern about trade does not take place in a vacuum. It's taking place in a context where people don't feel secure about their jobs or their place in the economy.
I think one of the reasons that we’re seeing CAFTA become such a controversial issue is because people don’t feel secure today. They don’t think they’ll have their job in five years; they don’t think their pension or retirement plan will still be there for them; they get a new job, and they don’t have healthcare; or they don’t feel they have the training to get a new job. So when you come along and say – “You’re going to have to compete in a global environment” – that can be a scary thing. And the concerns that I hear are legitimate.
The Bush Administration is doing a poor job explaining to the American people what we want our economy to look like and how we compete and win in the global economy. If the Bush Administration does not make changes, they will see support for their trade policies continue to erode. But it’s not just about talking to people and telling them to feel more secure. You have to address the underlying structural problems that drive that insecurity. We certainly don't have enough support for efforts that help people make transitions from the jobs of today to the jobs of tomorrow.
As the top Democrat on the Senate Committee that handles workforce issues, investing in job training and other support programs has been one of my top priorities and I can tell you today that we are not doing enough. Every family and every business knows that the ever rising costs of healthcare are driving a lot of economic decisions today. We have got to do more to get these costs under control while retaining the high quality we in the Northwest have come to enjoy and expect from our healthcare system.
And right now, because of the stubbornness of the Bush Administration, the Congress is debating a transportation bill that will not meet the growing needs of our country. And unfortunately, the Congressional majority is acquiescing to this mis-guided approach. The result will be inadequate investment in the infrastructure that will make our country stronger, more efficient, and competitive.
And we must also work to stabilize and secure our retirement system. We must work with industry and labor to confront today’s private pension problems. And instead of arguing over whether to privatize Social Security we should be talking about how we can secure it for future generations of Americans.
So if we want to move forward on trade, we have to meet people where they are by acknowledging and addressing the real concerns they have about global competition and – more than that – by making serious investments that make us strong at home. We must improve job security, healthcare, infrastructure and retirement security, so American workers can feel confident about meeting the competition head-on.
The second challenge I see is making sure the United States has a seat at the table so we can shape trade agreements that support our economy and reflect our values. If we stop building trade relationships with the rest of the world, we will surrender our ability to participate in defining the rules of trade. If the U.S. opts out now from trade agreements because of these real concerns, then we’ll be sitting on the sidelines as places like China and South America reach their own trade agreements. They'll write the trade rules without a thought to what it means to American workers or American priorities like labor and the environment. If we walk away from the trade table, we lose our voice.
And this challenge is not just limited to writing trade agreements – it also affects our ability to enforce trade deals. We need to make sure that when trading partners are breaking the rules – or not keeping their promises, we can make things right.
A good example of that is the current dispute between the United States and Europe over subsidies to Airbus. For years, I've been raising my concern within our government that Europe is breaking the rules by subsidizing Airbus. Those European subsidies are one reason why our county has lost 700,000 aerospace jobs in the past 15 years. I called for our government to pull out of a trade agreement that allowed some subsidies – and not long after, our government did just that. I called for our government to tell the Europeans that if they aren't serious about ending subsidies, we would file a trade case with the WTO and our government has done that.
Today, the United States government is pushing back at the highest levels. I’ve worked closely with the Bush Administration on this fight. We don't agree on much, but I commend their work on this trade fight. Without rules in place, this fight would not be possible.
I worked closely with the former US Trade Rep. Robert Zoellick, and I’m developing a good relationship with the new Trade Rep – Rob Portman. We sat down in my office a few weeks ago for a meeting, and I was very pleased by his depth of knowledge and his commitment to stand up for fair trade and for American workers. The European subsidy dispute is just one example of that second challenge I mentioned – making sure we keep a seat at the table so we can shape and enforce trade agreements.
The third challenge is this: how can we make trade more secure without slowing it to a crawl and how can we find the right balance. If we have absolute security, we’ll curtail trade, and if we have completely open trade, we won't have enough security.
For the past few years, I've been meeting with leaders in government and industry to figure out how we can strike the right balance. One thing I know for sure is that it's better for us to work together now to design a security system on our own terms than to wait for an attack and force a security system in a crisis atmosphere.
I've spent several years exploring this challenge and meeting with stakeholders to get their ideas. As a result of that work, I've developed a new legislative proposal, and today, I want to outline it for you. It provides a comprehensive blueprint for how we can improve security while keeping trade efficient. At its heart, this challenge is about keeping the good things about trade – speed and efficiency – without being vulnerable to the bad things about trade – the potential for terrorists to use our engines of commerce.
For decades, the people in this room and your peers around the world have worked hard to create an open, efficient trade system. That system relies on cargo containers to move the vast majority of the world's commerce from factory to market. The cargo container has reduced the cost of trade – helping American businesses and creating American jobs. We can be proud of the efficiency and speed of our container trading system. But that system was designed for a different time: before terrorist attacks on American soil and before fanatics took jetliners and turned them into missiles. Our container trading system was designed for a world before September 11th.
Here we are, almost four years later – and we still haven't made our maritime cargo system as secure as it needs to be. Six months after the September 11th attacks, I held a hearing to examine the vulnerability of cargo security. Many of the concerns that were raised at that hearing are still dogging us today.
Based on the research I've done, cargo containers represent a dangerous vulnerability for our country. Let me give you one example.
A few years ago in Italy, dockworkers noticed something strange about one cargo container. They opened it up and found an Egyptian man inside, but this was not your average stowaway. This man was a suspected Al Qaeda terrorist, and he had all the tools of the terror trade. His cargo container had been outfitted for a long voyage with a bed, toilet, heater and water. He had a satellite phone and a laptop computer. He also had security passes and mechanic certificates for four U.S. airports. That happened in 2001. Friends, it can still happen today. But don't take my word for it.
The head of Customs and Border Protection said that – quote "the container is the potential Trojan Horse of the 21st century." End quote. And the 9/11 Commission said that terrorists may turn from targeting aviation to targeting seaports because – quote "opportunities to do harm are as great, or greater, in maritime or surface transportation." End quote. The U.S. Government recently uncovered an Al Qaeda training manual. The book suggested that terrorists try to recruit workers at "borders, airports and seaports."
There are two main scenarios we need to think about.
First, a group like Al Qaeda could use cargo containers to smuggle weapons and personnel into the United States. They could split up a weapon and ship it to the U.S. in separate containers. Those pieces could then be reassembled anywhere in the U.S. So the first danger is that terrorists could use cargo containers to get dangerous weapons into the U.S.
Second, terrorists could use a cargo container itself as a weapon. A terrorist could place a nuclear, chemical, or biological weapon in a container and then detonate it once it reaches a U.S. port or another destination inside the U.S. Either scenario is frightening. Experts who have looked at this report see some disturbing possibilities.
One study said if a nuclear device was detonated at a major seaport, it would kill up to 1 million people. Many of our ports are located near major cities. Others are located near key transportation hubs. For example, if a chemical weapon were detonated here in Seattle, the chemical plume could contaminate the rail system, Interstate 5 and SeaTac Airport. They could detonate a dirty bomb or launch a bioterror attack. Any of these scenarios could impose a devastating cost in human lives, but that's not all.
We also know that Al Qaeda wants to cripple our economy. Cargo containers offer them a powerful way to do that – and the damage goes beyond lives. An attack launched through our ports would also have a devastating economic impact. That's because – after an attack -- the federal government is likely to shut down our ports to make sure that additional hazards weren't being brought into the country. It's similar to what we did with airplanes after 9/11.
When we stopped air travel, it took us a few days to get back up to speed – and it costs our economy a great deal. But if you stopped cargo containers without a system in place, it could take as long as 4 months to get them inspected and moving again. That would cripple our economy and could even spark a global recession.
Today, cargo containers are part of the assembly line of American business. We have just-in-time delivery and rolling warehouses. If you shut down the flow of cargo, you shut down our economy. If our ports were locked down, we would feel the impact at every level of our economy. Factories won't be able to get the raw materials they need. Many keep small inventories on hand.
Once those inventories run out, factories will be shut down and workers will be laid off. We'd see the impact in our stores. Merchants won't be able to get their products from overseas. Store shelves will go bare, and workers will be laid off. One study concluded that if U.S. ports were shut down for 12 days, it would cost our economy $58 billion.
In 2002, we saw what just closing down a few ports on the West Coast would do. When West Coast dockworkers were locked out, it cost our economy about $1 billion a day. Imagine if we shut down all our ports – not just those on the West Coast.
Dr. Stephen Flynn, a national security expert, has said that a three-week shut down could spawn a global recession. It's clear that we are vulnerable and that an attack would do tremendous damage. And if our ports were shut down, we don't have a system in place for getting them started again. There is no protocol for what would be searched, what would be allowed in, and even who would be in charge.
Now, I want to acknowledge that we have made some progress since 9/11. We've provided some funding to make our ports more secure. I've fought for port security grants to make sure we're controlling access to ports. And our local ports are on the cutting edge of security. We’ve implemented the 48 hour rule so we have a list of what's supposed to be in a container before it reaches the U.S. We are adding some more detection equipment to American ports – but remember – once a nuclear device is sitting on a U.S. dock – it's too late. Customs created a program that works with foreign ports to speed some cargo into the U.S. It's a good idea, but it has not been implemented well.
The Government Accountability Office just issued a report. It found that if companies applied for C-TPAT status, we gave them less scrutiny simply for submitting paperwork. We never checked to see if they actually did what they said they were going to do – we just inspected them less.
In fact, even when U.S. Customs finds something suspicious at a foreign port, they can't force a container to be inspected. They can ask the local government, but those requests are frequently rejected. Because we can't enforce those agreements through our State Department, our Customs officials don't have the power they need and potentially dangerous cargo arrives at U.S. ports without being inspected overseas.
I am deeply concerned about this issue because I know that maritime cargo – especially container cargo – is a critical part of our economy. As this group well knows, my interest in trade goes back to my childhood. My dad ran a store. He relied on imports to stock the shelves in our store. International trade helped put food on our table, and I've never forgotten that. So I want to make sure that we close the loopholes that threaten our ability to trade while we protect lives and our economy.
I've worked on this challenge for several years. I've held hearings; I wrote and funded Operation Safe Commerce; and I've been meeting with various stakeholders. This proposal has to work for everyone in the supply chain: importers, freight forwarders, shippers, terminal operators and workers like longshoremen, truck drivers, and port employee—all the people who are on the front lines as our eyes and ears and the same people who would be among the first to be hurt if an incident occurred. So after meeting with people and reviewing reports and studies, I’m putting together a bill to strike the right balance.
I've built my proposal around five common-sense ideas. First, we need to start screening cargo overseas before it ever gets loaded on a ship that's headed for the United States. That means we need to raise the security standards for all cargo and we need to front-load the screening.
Second, because there are so many cargo containers coming into our country, we need to make the haystack smaller. Instead of looking at a small percent of all containers, we need to be able to separate the containers that we know are secure from the ones that need more scrutiny.
Third, we need to give businesses incentives to adopt better security. Companies are going to do what's in their financial interest and we can use market incentives to make the entire industry more secure.
Fourth, we need to minimize the impact of any incident. Right now if there were a terrorist attack through one of our ports, there would be a lot of confusion. So we need to put one office in charge of maritime cargo security and create protocols for resuming trade after an incident. We can't afford to leave cargo on the docks for weeks. We need a plan that tells us in advance – what cargo will be unloaded first and how we'll get the system back on its feet.
Finally, we need to monitor and secure cargo from the factory floor overseas to the local store down the street. There are vulnerabilities at nearly every step of the supply chain. A secure system is going to start at the factory overseas and continue until that cargo reaches its final destination.
My proposal is called the GreenLane. It says that if companies will adhere to a strict set of security standards, they will have predictable treatment as they ship to the U.S. and theirs will be the first cargo considered for entry into our country in the event of an incident. Let me walk through the main parts of my bill.
First, it raises the security standards for everyone across the board. It directs the Department of Homeland Security to take all the best practices and lessons learned and create new standards that will establish a new floor of security for everyone.
Second, it creates what I'm calling a GreenLane. If shippers agree to follow the higher security standards of the GreenLane, they get a series of benefits. To be certified as GreenLane cargo, you need to track packages from factory floor. Everyone who touches cargo needs an identification card. Every thing that is stuffed into a container needs to be scanned and shared with the Department of Homeland Security. You need to use a Container Security Device to secure your container. Now remember, the GreenLane is optional. No one has to participate. I believe that companies will want to participate because they'll get benefits in return.
What are those benefits?
If there is an attack and ports are shut down, GreenLane cargo is the first to be unloaded. And I think GreenLane cargo should be subject to lower bonding requirements, lower Customs fees, and a regular payment schedule of duties and fees. In addition, GreenLane participants will have less stolen merchandise and they'll be able to give their customers real-time tracking of where products are in the supply chain.
Finally, it sets up a plan so that trade can be resumed quickly and safely after an attack. Today there are no protocols – there is no guide on how to get the system going again. My bill will create one and it will let the most secure cargo – the GreenLane cargo – in first.
My bill also does some other things. It expands port security grants. It makes sure we continue to monitor our security system to make sure it's working. It makes sure that a company's cargo data is not available to competitors. It sets a uniform standard for security so shippers and others have some certainty – rather than a hodgepodge of different standards.
There have been a lot of commissions and studies on port security, and I’ve paid close attention. That’s why my proposal accomplishes what these studies call for. The 9/11 Commission said that we need "layered" security; that we need to centralize authority so we can have more accountability; and that federal agencies need to share information better. My bill implements all of those recommendations.
The Government Accountability Office looked at current Customs programs and identified some troubling shortcomings. My bill addresses those concerns. It increases scrutiny of shipments; it provides benefits to shippers – but only after we've verified that they've improved security; and it ensures we keep testing the system to make sure it's secure.
In closing, I want to summarize the benefits of the GreenLane approach. The GreenLane stops dangerous cargo before it leaves foreign ports. It gives U.S. officials in foreign ports the authority to inspect suspicious containers before they are loaded for departure to the United States. By empowering U.S. officials overseas, the GreenLane stops dangerous cargo before it ever sets sail for America. The GreenLane makes the haystack smaller. It allows the U.S. government to focus its limited resources on suspicious cargo. The GreenLane ensures that we are inspecting and stopping any cargo that poses a threat. The GreenLane cuts down on smuggling of weapons, people, drugs or other illegal cargo.
A smaller haystack and strict overseas security measures will allow U.S. and foreign officials to better stop criminal actions. The GreenLane protects America’s economy in the event of a terror attack and it provides a secure, organized way to quickly resume cargo operations after any emergency shut-down. Because any shut down of ports has the potential to cost the U.S. economy billions of dollars a day, the GreenLane will minimize the economic impact of a terror attack. And the GreenLane creates market incentives for everyone in the supply chain to improve security and take responsibility for the cargo they handle.
If we deal with the challenges we face now -- in an organized, comprehensive way, I believe there are ways we can meet these challenges as we make our economy stronger and our state and nation safer and I believe my GreenLane plan is a good way to do just that.
Friends, right now, we have a choice and a say in how we deal with the cargo security challenges facing us. But if we wait for a disaster, we won't have a say, and we won't have a choice. If we agree on a system now, we'll have a role in shaping it and making sure it's sensitive to the need for free-flowing commerce. Let's make the changes on our terms, now, before there's an incident. If we wait until after there's an incident, we risk drastic actions that hurt everyone in the supply chain. We have the opportunity to create effective, efficient systems and put them in place now, and I invite you to join me in that effort.
Before I close, I'd like to thank our expert panelists for joining us today and sharing some of their wisdom, and I’d like to commend the Washington Council on International Trade for once again hosting this important event. Most importantly, I want to thank the contributing sponsors of the conference. Without their support, this would not have been possible.
Their names are listed in your program, but I also want to recognize them individually: Microsoft, The Boeing Commercial Airplane Company, Port of Seattle, Weyerhaeuser, Port of Tacoma, Holland America Line, Skyway Luggage Company, Agilent Technologies, Bell Harbor International Conference Center, Center for West European Studies, European Union Center, Greater Seattle Chamber of Commerce, The Prosperity Partnership, Starbucks Coffee Company, UW Business School – Global Business Center, and Wells Fargo HBSC Trade Bank. To each of our sponsors who have helped make this event possible -- thank you.
It's been a pleasure to speak with you today, and I look forward to working with all of you as we move our state and our nation forward. I want you to know that when it comes to safe, efficient trade and continued economic growth, I'll continue to be your partner in the United States Senate.