Free Trade Confronts
Global Terrorism

by Marjorie Florestal

You probably have never given much thought to those innocuous 40 x 8 feet steel structures, narrow and windowless, that are used to transport over 90 % of world trade. But experts say the shipping container made globalization possible. How? Before the invention of the shipping container, goods were individually and manually loaded onto a ship piece by piece in “break bulk,” an expensive process that often took days to complete and subjected goods to theft or breakage. Worse yet, when they arrived at their destination port, the process had to begin all over again.

The shipping container allowed goods to be packed at the place of production; later, the same container would be transported by rail or truck to a seaport where the same container would be hoisted by crane onto a ship and delivered to the ultimate consumer. Because it was "intermodal"--capable of traveling seamlessly by rail, truck, and sea--the container drastically reduced shipping costs. Businesses could now cheaply export (and import) computers, bicycles, clothing, toys, and all manner of goods. And that, in part, led to the globalization explosion.

But in a post-September 11 world, the shipping container has become both a curse and a gift. The containers pose difficult challenges for world security. In seeking to address those problems, the United States has created some additional burdens on the trading system. I argue those burdens are not justified by the threat shipping containers pose, and developing countries bear a disproportionate share of those burdens.

Terror and Trade: Defining the Problem

Just one month after the September 11 attacks, the shipping container was transformed from a link in the trade supply chain to a possible means of exporting terrorism. On October 26, 2001, Italian officials intercepted Rizik Amid Farid, an Egyptian national and reputed Al-Qaeda member, in a container bound for Canada. Farid carried with him a Canadian passport, along with several airport security passes, and an aircraft mechanic certificate that allowed him entry into sensitive areas in New York’s John F. Kennedy airport, as well as Newark International, Los Angeles International and Chicago-O’Hare ( photo credit).

Unfortunately, this was not the first high-profile example of people using shipping containers to advance potentially dangerous ends. In 2004, Abdul Qadeer Khan, the father of Pakistan’s atomic bomb, confessed to smuggling nuclear equipment and technology to Libya, Iran and North Korea in a smuggling network that spanned 15 years. Khan purportedly shipped all of his nuclear materials inside containers.

How could it be so easy to infiltrate the most important link in the global trade supply chain? Before September 11, 2001, almost nine million containers entered the United States each year, but only about 2 % were ever inspected. For the most part, U.S. Customs and Border Protection (“Customs”)—the agency charged with protecting the nation’s land and sea borders—had no idea what was really in those containers. It relied on the unverified information shippers provided in their cargo manifest documents. That system was routinely abused; in addition to the two examples I cited above, a 2000 U.S. government report noted that containers have been used to smuggle into the United States everything from illegal arms and munitions, to drugs, to undocumented workers.

But Customs had far greater concerns: If a shipping container could house an Al Qaeda operative, could it also hold a “dirty bomb”? Could a terrorist stow a nuclear device in a container, ship it to one of the nation’s busiest ports, and then detonate that device by remote control upon arrival? The “nuke-in-a-box” scenario, which would have seemed far-fetched before September 11, now drives U.S. container security policy.

Protecting the Homeland: The Container Security Initiative

Membership in CSI comes with significant benefits. The idea is that containers arriving from CSI ports are deemed "safe" and ordinarily will not be subject to additional inspection in the United States. They receive "head of the line" privileges. Moreover, if the unthinkable happened and the nation's seaports were closed because of a terrorist threat, CSI-containers would again receive preferential treatment once normal business resumed. For a company considering where to source its products, working with a country that has a CSI-certified port makes good business sense because it minimizes potential risks that goods will stagnate in some port somewhere (even a single day’s delay at Customs adds almost 1% to the cost of goods). The problem with CSI is three-fold:

• Phantom Sightings The U.S. government itself acknowledges the nuke-in-the-box scenario, around which CSI is designed, is unlikely to occur;


• Forever Insecure The Initiative does not adequately protect the United States' interests--or anyone else's for that matter; and


• Global Security In my view, the program as implemented violates World Trade Organization rules

No Nukes is Good Nukes: Assessing Risk in a post-Sept. 11 World

After CSI came into being, The General Accountability Office, the investigative arm of the U.S. Congress, researched the nuke-in-the-box scenario. The GAO found "an extensive body of work by the FBI, think tanks, academics and business organizations all concluded that the likelihood of containers being used to move WMDs to the United States is low." That is not to say there is no possibility of a special delivery of nukes, nor does it require Customs to sit back and do nothing. But the program Customs puts in place must be proportionate to the perceived harm. If there is a low probability that the next shipment of containers will bring nuclear Armageddon, Customs should not completely overhaul the system in such a way as to drastically and disproportionately impact some of the world's poorest countries (more on that below).

“You Cannot Ensure Your Security Without Ensuring Global Security.”

A few years ago, I attended a speech by Mikhael Gorbachev at McGeorge Law School in which the former Russian leader noted globalization had changed the terms of the game: No longer can a country retreat in isolation behind high walls allowing others to fend for themselves. "You cannot ensure your security without ensuring global security," he said. Gorbachev was right. The new brand of war is not one in which states marshal a huge army to meet the enemy on the battlefield. Today, the battlefield is our roads, bridges, mass transit systems, and centers of commerce. The battle takes place not on some distant shore but in our homes, restaurants, schoolhouses and embassies. And the enemy is not another state actor, but a loosely-organized group of individuals who are desperate, disenfranchised, and eager to seek revenge.

In the face of that reality, why would Customs implement a plan that is so state-bound? A shipping container arriving from Europe or Asia is no more secure than one arriving from Latin America if terrorists are able to intercept the container at sea (in fact, there have been security breaches in CSI-certified ports). Customs' reply is simply that "efforts had to begin somewhere . . . " While that may well be true, in establishing a program that privileges the rich countries of Europe and Asia at the expense of poor ones elsewhere, we are in fact jeopardizing rather than enhancing our own security.

In The Pentagon's New Map: War and Peace in the Twenty-first Century, a book that caused quite a stir a few years ago, Thomas Barnett claims modern instabilities in the world order will arise from those countries left out of the “functioning core” of globalization. In short, countries that are marginalized and do not receive the benefits of globalization become either a safe haven for terrorists; alternatively, they pay a high price by becoming proxy targets for terrorist acts--as was the case when terrorists bombed U.S. embassies in Kenya and Tanzania back in 1998.

The truth is terrorists will always find and exploit the weakest entry point. As Admiral Walter F. Doran, U.S. Pacific Fleet Commander, noted “The global war on terrorism is like watching water running downhill. Water always goes to the place of least resistance.” By constructing a program that further marginalizes the trade of poor countries, CSI is inadvertently enabling these countries to become the place of least resistance for terrorists.

War, Security and the World Trade Organization

War and trade have always been linked. The Opium Wars, for example, were a successful attempt by Great Britain to force China to accept certain trade concessions (like opening more ports to foreign trade). In fact, the World Trade Organization (in its previous form as the GATT) was created just after World War II as an attempt to create stronger economic ties in hopes of preventing another catastrophic war.

But the WTO does not ignore the possibility that countries might have to take action to protect their national security interests. The "National Security exception", or GATT Article XXI, provides: "Nothing in this Agreement shall be construed . . . to prevent any contracting party from taking any action which it considers necessary for the protection of its essential security interests." Traditionally, Article XXI has been viewed as a carte blanche allowing a country to take any action it deems necessary as long as the magical words "national security" are uttered. Space does not permit me to lay out the full legal argument here (check out my academic article Terror on the High Seas: The Trade & Development Implications of U.S. National Security Measures if you are dying to find out), but I maintain Article XXI must incorporate a "development dimension" precisely because our national security is inextricably linked with the fate of developing countries. This development dimension would require countries imposing security measures to first assess their impact on developing countries. Had such an assessment been made in the case of CSI, it would have been clear the program unduly impacted developing countries while failing to increase U.S. security to any appreciable degree.

What would a more balanced CSI that incorporated a development dimension and was designed to address the new terrorism look like?

(1) CSI would include technical assistance-capacity building as well as development assistance as part of its core structure. Without such assistance, developing countries cannot effectively be brought into the security fold.

(2) CSI would have made some provisions for transfering the technology necessary to implement the program (X-ray machines, etc.) as well as the know-how to use them.

(3) The participation of developing countries would not have been "saved" for last. It is of course impossible to construct a list of developing countries that under all circumstances should be incorporated in CSI and future security measures. But it is possible to develop a set of parameters for admission that do not rely exclusively on a country’s economic status. In the first instance, those countries that have the requisite equipment in place should not be denied admission (under this provision, Jamaica, South Africa and Malaysia, all of whom are now CSI members, would have been accepted into the program earlier).

Conclusion

In an age of global terrorism, new security measures must be adopted to ensure trade continues without being unduly hampered. In crafting these new measures, however, we must ensure developing countries are not further marginalized by the world trading system. If we cannot find a way to bring the benefits of globalization to poor countries, we will all suffer the consequences.

Suggested Readings

Marjorie Florestal, Terror on the High Seas: The Trade and Development Implications of U.S. National Security Measures (this is the place to go for a more academic take on this subject, with lots of legal analysis, footnotes, etc.)

Marc Levinson, The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger (a lively and informative take on the invention of the shipping container).