Keynote Address By Mr S Iswaran, Senior Minister Of State For Trade & Industry And Education, At The Opening Of The Secure Trade In The Apec Region Conference (Apec Star Vii Conference), Thursday, 30 July 2009, 0900 Hrs, Grand Waterfront Corpthorne Hotel, Singapore

Ambassador Michael Tay, Executive Director of the APEC Secretariat

Ambassador Masafumi Ishii, Chairman, APEC Counter Terrorism Task Force

Distinguished Guests

Ladies and Gentlemen

Good morning.

Introduction

It is a pleasure to be here with you today for this 7th APEC STAR Conference.I would like to specially welcome the delegates from overseas, in particular those who are in Singapore for the first time.

The theme of this conference, “Enhancing Trade Security and Economic Resilience” is apt and timely, in light of the continuing threat of terrorism, the human suffering it can exact, and the damage it could inflict on international trade flows and the global economy.

The global trading landscape is constantly evolving to meet the demands for swifter, more efficient and cost effective trade.In today’s globalised economy, trade is a critical activity that contributes to development and growth.Economy activity, in manufacturing or services, has become even more distributed on a global scale.Now more than ever, with increasing interconnectivity across countries, it has become viable for different parts of a value chain to be located where the comparative advantage lies.It has, therefore, become more efficient to produce different components of even a single product in different locales.And to ensure that goods are finally assembled and delivered to consumers, the global supply chain has become increasingly sophisticated.And therein lies the challenge in the context of this conference - how do we ensure the security of this complex, critical yet vulnerable global supply chain and insulate it from the threat of terrorism.

Threats to the Global Supply Chain

An attack on the international supply chain, if successful, would first and foremost, dent confidence, in the security and reliability of the international trading system.But it is the downstream economic repercussions that would be the most destructive.A 2007 economic impact study on the effects of trade disruption showed that in the event of a terrorist attack on a major gateway port in the US, it would result in diminished trade equivalent to a 30-day US port closure, and cost major APEC economies that engage in significant volumes of trade with the US, up to US$137 billion in lost GDP.It will inevitably result in significant job losses, severe disruption to the lives of our people, and substantial impairment to the movement of goods.

Dealing with the threat

To counter such threats, we need to enhance the security and resilience of the global supply chain.It is crucial to develop and maintain the trust and relationships amongst all stakeholders so that we can continue to facilitate and promote international trade securely, efficiently and cost-effectively.

Several quarters within industry and government have already taken the initiative to plug security gaps in the supply chain.These measures include better use of security technology, improved supply chain management and processes, and enhanced information security to protect the integrity of cargo.Some economies have also conducted security programmes to screen containers for weapons of mass destruction.

Although a number of organisations have gone ahead to invest in measures to enhance the security of their supply chain and assure customers of the safety of their goods and supplies, many of these responses tend to be reactive and piecemeal.Economies need to understand the complexities of trade as a global activity, and move forward in a more coordinated and concerted manner to address the issue holistically.There is a critical need to promote and enhance collaboration among all stakeholders so that the entire supply chain, from point to point, across borders and continents, is secured.

Need for Consolidated and Harmonised Approach

To this end, collaboration by regulators such as customs and trade authorities across economies can help enhance the security of the global supply chain.This can be done through the development of common processes and protocols to enhance the security of goods moving across borders.These protocols, coupled with better information exchange, will help the authorities to conduct better risk assessments and, in turn, reduce red tape and duplicative security measures that could slow down the movement of goods and containers.

It is noteworthy that the World Customs Organisation (WCO) has developed the SAFE Framework of Standards which advocates an Authorised Economic Operator (AEO) programme.Under this programme, every member of the Customs Administration is to develop a domestic supply chain security programme.The intent is to adopt a risk-based, total supply chain security approach and to certify as many stakeholders in the supply chain as possible, as an AEO-certified company, while factoring in the needs and unique circumstances of individual economies.Since its inception in 2002, it is encouraging to know that more Customs Administrations have adopted this concept.On the whole, it will prove beneficial and efficient for members to work together to forge a common understanding and approach towards the security and facilitation of goods moving across borders.

The next step is to build international links to bridge these domestic supply chain security programmes.The WCO has recommended instruments such as Mutual Recognition Arrangements (or MRAs) to provide a framework for economies to establish and leverage on trusted and transparent relationships.It sets out the obligations and commitments of partners, based on best endeavour efforts, to keep exports safe and secure from unlawful interference.This framework allows economies to collaborate to improve both the security and facilitation of international trade.Countries will benefit through an early identification of high risk shipments which will allow them to mitigate the risk before export, leading to a lesser need for intervention by the importing Customs Administration.The onus therefore is on regulators to work closely with each other to develop a network of trust that can facilitate the speedy flow of goods and containers without compromising security.

Need for Public-Private Sector Cooperation

Finally, let me touch on the need for enhanced private and public sector partnership.Both the public and private sectors need to work closely together to put in place practical and effective measures and processes to secure the supply chain without impairing the efficiency of trade.For instance, whilst regulatory frameworks can be adjusted to facilitate the safe movement of goods and containers, businesses also need to consider security measures as an integral part of their overall business investment and operations.

Strengthening the security and resilience of the supply chain

I am encouraged to note that many companies have already made security an essential part of their overall business processes.In Singapore, we have MNCs and SMEs - such as IBM Singapore, Keppel Logistics, Poh Tiong Choon Logistics, YCH and Flextronics Technology, to name a few - who have institutionalised security in their business processes.

Last year, the WCO formed a working group chaired by Singapore to draft a set of guidelines on this important issue. Recently, the WCO also incorporated trade recovery into its Framework of Standards.These efforts by the APEC Economies and the WCO will certainly provide stakeholders the key directions and impetus to enhance the security of the supply chain, facilitate trade recovery, and, ultimately, sustain the continued flow of international trade and commerce.

Conclusion

The threat of international terrorism is real.It is a clear and present danger, as recent events in Jakarta vividly demonstrate.Terrorists have shown that they are adaptable and continually changing their modus operandi.Therefore, it is essential that you make security a core part of your business process.Through strong public-private sector partnership, we can build and strengthen the resolve and commitment of the international trading community to keep terrorism at bay and secure international trade flows.

I would like to conclude by commending APEC on the series of STAR conferences that have been organised for delegates to share ideas, experiences and perspectives on how to bring about secure international trade and economic resilience in the face of new and evolving challenges.I wish you all a fruitful 7th APEC STAR conference.

Thank you.