Collaborative Cross-Border Transportation Planning & Strategies Karen Borlaug Phillips Vice President – U.S. Public & Government Affairs Transportation.

Collaborative Cross-Border Transportation Collaborative Cross-Border Transportation Planning & StrategiesPlanning & Strategies

Karen Borlaug PhillipsKaren Borlaug Phillips

Vice President – U.S. Public & Government Vice President – U.S. Public & Government AffairsAffairs

Transportation Border Working Group MeetingTransportation Border Working Group Meeting

Washington, DCWashington, DC

April 30, 2004April 30, 2004

General Environment/Policy ChallengesGeneral Environment/Policy Challenges

The continued free flow of commerce is essential to both the U.S. and The continued free flow of commerce is essential to both the U.S. and Canadian economies, at the same time that border security is being Canadian economies, at the same time that border security is being strengthened to protect against terrorist threatsstrengthened to protect against terrorist threats

Intense interest by policymakers in strengthening the security of all Intense interest by policymakers in strengthening the security of all elements of the transportation supply chainelements of the transportation supply chain– Secure flow of goodsSecure flow of goods– Secure infrastructureSecure infrastructure– Coordination & information-sharingCoordination & information-sharing

The key question becomes one of how to enhance security while The key question becomes one of how to enhance security while ensuring the smooth flow of legitimate cross-border commerceensuring the smooth flow of legitimate cross-border commerce

Businesses on both sides of the border depend on this, as do the Businesses on both sides of the border depend on this, as do the transportation companies that carry the freighttransportation companies that carry the freight

The U.S. & Canadian governments have been active in their efforts to The U.S. & Canadian governments have been active in their efforts to address this dual mandateaddress this dual mandate

CN OverviewCN Overview

CN clearly has a key interest in this CN clearly has a key interest in this vital issuevital issue

CN is the 5th largest railroad in North CN is the 5th largest railroad in North AmericaAmerica ( (in terms of revenues) with in terms of revenues) with extensive operations across Canada & extensive operations across Canada & in the U.S. to the Gulf of Mexico – in the U.S. to the Gulf of Mexico – 2003 revenues of C$5.9 billion2003 revenues of C$5.9 billion

CN reaches into Mexico through a CN reaches into Mexico through a Marketing Alliance with the Kansas Marketing Alliance with the Kansas City Southern RailroadCity Southern Railroad

Diversified traffic portfolio, one-third Diversified traffic portfolio, one-third of which is cross-border trafficof which is cross-border traffic

Security is one of the cornerstones of Security is one of the cornerstones of CN’s operationsCN’s operations

CN NetworkCN Network

Railroad Industry OverviewRailroad Industry Overview

Trucks may be more visible at the border, but freight railroads in the U.S., Trucks may be more visible at the border, but freight railroads in the U.S., Canada & Mexico form an integrated network that provides service Canada & Mexico form an integrated network that provides service throughout North Americathroughout North America

Railroads transport an important portion of cross-border freight Railroads transport an important portion of cross-border freight movements – over movements – over 17% (by value) of U.S./Canada movements17% (by value) of U.S./Canada movements

After the horrible events of September 11, 2001, the rail system remained After the horrible events of September 11, 2001, the rail system remained reasonably fluid – it is important, however, to guard against any future reasonably fluid – it is important, however, to guard against any future border closures or major slowdownsborder closures or major slowdowns

The railroad industry has undertaken a number of specific security-related The railroad industry has undertaken a number of specific security-related activities since September 11:activities since September 11:– Created task forces on key issuesCreated task forces on key issues– Established 4 alert levels with specific actions to thwart terrorist Established 4 alert levels with specific actions to thwart terrorist

threatsthreats– Established a 24/7 railroad security operations centerEstablished a 24/7 railroad security operations center– Actively participates in the Surface Transportation Information Sharing Actively participates in the Surface Transportation Information Sharing

Analysis CenterAnalysis Center

Smart Border DeclarationSmart Border Declaration

After the September 11 attacks the governments of Canada & the After the September 11 attacks the governments of Canada & the U.S. worked together closely to address cross-border security U.S. worked together closely to address cross-border security concernsconcerns

One of the most visible examples is the December 2001 “Smart One of the most visible examples is the December 2001 “Smart Border Declaration” signed by Secretary Ridge and then-Deputy Border Declaration” signed by Secretary Ridge and then-Deputy Prime Minister Manley, from which the 30-point Smart Border Action Prime Minister Manley, from which the 30-point Smart Border Action Plan emergedPlan emerged

The declaration provides an important framework for collaboration The declaration provides an important framework for collaboration between the two countries on security & facilitation of commercebetween the two countries on security & facilitation of commerce

Both governments can point to progress on all 30 points in the Both governments can point to progress on all 30 points in the Action PlanAction Plan

The lead agencies have been the Department of Homeland Security The lead agencies have been the Department of Homeland Security (particularly the Bureau of Customs & Border Protection) & Canada (particularly the Bureau of Customs & Border Protection) & Canada Customs (now the Canada Border Services Agency) to further Customs (now the Canada Border Services Agency) to further enhance the effectiveness of security effortsenhance the effectiveness of security efforts

Smart Border DeclarationSmart Border Declaration

Key principles:Key principles:– Distinguish between high-risk & low-risk people & cargo, Distinguish between high-risk & low-risk people & cargo,

allowing government officials to concentrate their efforts allowing government officials to concentrate their efforts where most neededwhere most needed

– Upgrades of border infrastructure to allow greater speed & Upgrades of border infrastructure to allow greater speed & facility of cross-border movementsfacility of cross-border movements

– A safer & more intelligent border due to significant A safer & more intelligent border due to significant information & intelligence sharing between U.S. & Canadian information & intelligence sharing between U.S. & Canadian government agenciesgovernment agencies

The Smart Border Declaration has provided an opportunity to The Smart Border Declaration has provided an opportunity to make needed security enhancements at the bordermake needed security enhancements at the border

Major Freight Security InitiativesMajor Freight Security Initiatives

A number of important freight security initiatives have come A number of important freight security initiatives have come out of the Smart Border Accord and through the initiatives out of the Smart Border Accord and through the initiatives of the U.S. & Canadian Customs agencies.of the U.S. & Canadian Customs agencies.

– Free & Secure Trade (FAST)Free & Secure Trade (FAST)

– Container Security Initiative (CSI)Container Security Initiative (CSI)

– C-TPATC-TPAT

– Advance Cargo Information RegulationsAdvance Cargo Information Regulations

• Customs & Border Protection Customs & Border Protection

• Food & Drug AdministrationFood & Drug Administration

• Canada Customs modal requirements to be put into Canada Customs modal requirements to be put into place this yearplace this year

Major Freight Security InitiativesMajor Freight Security Initiatives

April 2003 Rail Declaration of April 2003 Rail Declaration of PrinciplesPrinciples– U.S. Customs is installing VACIS U.S. Customs is installing VACIS

& radiation detection machines & radiation detection machines along the U.S./Canada border to along the U.S./Canada border to screen cargo entering the U.S. screen cargo entering the U.S. by railby rail

– Equipment to be installed at 9 Equipment to be installed at 9 border crossing points border crossing points accounting for 90 percent of rail accounting for 90 percent of rail traffic entering the U.S. from traffic entering the U.S. from Canada – at 2 locations Canada – at 2 locations (Sarnia/Port Huron & (Sarnia/Port Huron & Windsor/Detroit) the equipment Windsor/Detroit) the equipment will be placed on the Canadian will be placed on the Canadian side of the borderside of the border

– U.S. & Canada Customs U.S. & Canada Customs agencies have worked together agencies have worked together closely on this initiativeclosely on this initiative

Border Security – Key ConcernsBorder Security – Key Concerns

As a company operating on both sides of the U.S./Canada As a company operating on both sides of the U.S./Canada border, there are 4 issues of critical importance to CN:border, there are 4 issues of critical importance to CN:

– ensuring that security is enhanced but that cross-border ensuring that security is enhanced but that cross-border commerce is not impeded;commerce is not impeded;

– modal equity;modal equity;

– harmonized information requirements for U.S. & Canadian harmonized information requirements for U.S. & Canadian government agencies & within U.S. agencies; &government agencies & within U.S. agencies; &

– utilization of a risk management approach to the utilization of a risk management approach to the maximum extent feasible in all new government maximum extent feasible in all new government regulationsregulations

It is also critical that infrastructure on both sides of the It is also critical that infrastructure on both sides of the border is sufficient to ensure smooth commercial flows while border is sufficient to ensure smooth commercial flows while implementing security mandatesimplementing security mandates

Role of the Trade CommunityRole of the Trade Community

The trade community has been active in working with the U.S. & The trade community has been active in working with the U.S. & Canadian governments on border security initiativesCanadian governments on border security initiatives

An example is COAC, a 20-member panel with representatives from a An example is COAC, a 20-member panel with representatives from a broad spectrum of trade-related companies, that advises the broad spectrum of trade-related companies, that advises the Departments of Homeland Security and Treasury on Customs-related Departments of Homeland Security and Treasury on Customs-related matters – COAC has been active in the creation of C-TPAT & in matters – COAC has been active in the creation of C-TPAT & in development of the Trade Act advance notification rulesdevelopment of the Trade Act advance notification rules

Most recently, DHS has asked COAC to form a subcommittee to address Most recently, DHS has asked COAC to form a subcommittee to address various mandates of the Maritime Transportation Security Act – various mandates of the Maritime Transportation Security Act – including performance standards for a “smart container”including performance standards for a “smart container”

Government interaction with business is essential – not only to ensure Government interaction with business is essential – not only to ensure that the trade community’s concerns are understood & addressed, but that the trade community’s concerns are understood & addressed, but also to assist the government in developing rules that are as effective as also to assist the government in developing rules that are as effective as possible in promoting security while continuing to allow legitimate tradepossible in promoting security while continuing to allow legitimate trade

ConclusionConclusion

The outstanding cooperation between the U.S. & Canadian The outstanding cooperation between the U.S. & Canadian governments that we have seen since September 11, 2001 is governments that we have seen since September 11, 2001 is essential & must continueessential & must continue

Secretary Ridge frequently speaks of his agency’s dual Secretary Ridge frequently speaks of his agency’s dual mandate of enhancing security while ensuring the smooth flow mandate of enhancing security while ensuring the smooth flow of commerce – security & economic conditions throughout of commerce – security & economic conditions throughout North America make success imperativeNorth America make success imperative

Government consultation with the trade community is essential Government consultation with the trade community is essential & it is crucial that businesses on both sides of the border & it is crucial that businesses on both sides of the border continue to emphasize to our respective governments the continue to emphasize to our respective governments the importance of the U.S./Canada trading partnership in the importance of the U.S./Canada trading partnership in the context of these security initiativescontext of these security initiatives