Friday, August 17, 2007

The New Hermit Kingdom?

HR 1 became public law on August 3rd, 2007, after having passed the House and Senate votes and being signed into law by the President. This bill was a recommendation by the 9/11 commission, with one alteration: the requirement that 100% of cargo shipped into the United States be inspected before entering our borders. As reported by the World Shipping Council (in a statement dated June 30), this provision was opposed by the Department of Homeland Security, Customs and Border Protection, the U.S. Chamber of Commerce, all major cargo shipping organizations, ocean carriers, the European Commission, as well as the governments of Belgium, Canada, Denmark, Finland, France, Germany, Greece, Italy, Japan, the Netherlands, Norway, Poland, Portugal, Singapore, Spain, Sweden and the United Kingdom.

The reason for this was not cost nor a lack of belief in security, but because it is an unfeasible law. Section 1701 reads:

a) Container Scanning- Section 232(b) of the SAFE Ports Act (6 U.S.C. 982(b)) is amended to read as follows:

(b) Full-Scale Implementation-

(1) IN GENERAL- A container that was loaded on a vessel in a foreign port shall not enter the United States (either directly or via a foreign port) unless the container was scanned by nonintrusive imaging equipment and radiation detection equipment at a foreign port before it was loaded on a vessel.

For those not familiar with the mechanics of international commerce, here are the main problems with this bill:

1) Who will do the scanning? This is not addressed in the bill. The United States government does not have the resources, so will it be foreign governments? The importing companies? The cargo companies? The foreign ports? Let us remember that the last congress determined Dubai Ports World to be an unacceptable security risk in operating a U.S. marine terminal, yet are we now to assume Congress would allow this same company to scan incoming cargo?

2) Who pays for, operates and maintains the technology? This relates to the point above, yet is not answered by Congress.

3) Which standards do we apply? The rest of the world has different safety standards than those of the United States. We are not able to analyze all incoming cargo according to our own criteria, yet are we asking other entities to find the means to do so?

4) What if other countries decide they’ll do the same with us? The United States does not scan any outgoing cargo. In fact, it would not be able to scan all exports to all 600 ports around the world. Could not another government, or many of them, decide to implement similar legislation as ours and require we start doing so? Do we then terminate trade with these countries?

5) What is “nonintrusive imaging equipment” and what do we do with the data collected? No recommendations are made to this effect.

6) Who will analyze the data and when? Does our government analyze it? Do the foreign ports? Do we wait until all data has been analyzed before starting to import cargo? Do we just keep a file for our records?

Rep Jerrold Nadler (D-NY), a cosponsor of the bill, attempts to refute these objections. His press release on the matter includes this statement:

DHS will set the scanning standards and will have to address some of the logistics of how the scans are to be taken and transmitted to U.S. government officials. We intentionally gave DHS flexibility to work out implementation with foreign governments, particularly because port operations are not the same in every single country and at every single port.

Congress is therefore mandating operations to be taken in overseas ports, according to heretofore-unspecified U.S. standards, which the DHS is to implement at each overseas shipping origin. No discussion has yet been had with these “partners” concerning what the U.S. Congress has decided will take place in these “partners’” own ports.

The simple fact is that this law cannot be realistically implemented, even if we had prior agreement with all foreign countries involved. This, in reality, is not a law but a political stunt. It is one out of many that have been sprouting recently and that can do nothing but harm the health of the United States’ economy, all in the name of National Security.

The effects of these stunts can already be seen; for example: a) Royal Caribbean, the second largest cruise operator in the world, has established a starting point for its cruises in Panama, in order to avoid the ever-tightening Visa controls its passengers must undergo when departing from their current starting point in Miami. b) United States resort locations have long attracted foreign retirees who, because of stringent Visa requirements and terrorist fears, are now finding it harder and harder to buy houses in our country. As a real estate agent in Florida recently put it: "These people aren't taking American jobs, and they're not living on welfare, they're bringing their dollars to feed our economy." Well, they were in the past.

With our current account deficit setting new records, and the world awash in dollars, the U.S. needs to attract more foreign investment, not drive it away. The hysteria in Washington over the proposed Dubai Ports World acquisition of the P&O US ports operation was watched with incredulity from overseas, much like the furor caused by the failed sale of Unocal to the Chinese. With their money not wanted, and finding it difficult even to visit America to examine acquisitions, is it any surprise that foreign investors are turning to other countries for investment opportunities? Couldn’t this be one of the reasons why the dollar is at such a low level?

We should learn from history. The Ming dynasty in China was one of the strongest ever known. It had a standing army of 1 million, managed great explorations, maintained a flourishing iron trade, printed books in moveable type and oversaw a population of 160 million that was, in many ways, more advanced than the European continent. Following piracy along the coasts and currency inflation, the Ming rulers decided to close their borders, build up the “Great wall” and turn inward during the 15th century. This caused the iron industry to collapse, inflation to continue, rebellions to occur and, ultimately, allowed the Manchus to conquer China and establish the Qing dynasty.

These times require enhanced security, but they also require closer worldwide teamwork. Instead, the United States is closing in on itself, discouraging trade, tourism, and foreign investment. We need to remember that all Hermit Kingdoms throughout history have been unsuccessful. Let’s hope politicians don’t turn our country into a cautionary tale.

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