Perimeter Clearance Strategy TO REALIZE A SMART BORDER

Perimeter Clearance Strategy to Realize a Smart Border for the 21 st Century Perimeter Clearance IS NOT u Elimination of the Canada - US border u Creation of a Customs Union like the E. U. u Full harmonization of Visas, immigration policies and import rules © 2002 Perimeter Clearance 2

Perimeter Clearance Strategy to Realize a Smart Border for the 21 st Century Perimeter Clearance Vision “The US and Canada working closely together to strengthen protection of the external borders and expediting the movement of low-risk people and goods at the common border between the two countries. ” © 2002 Perimeter Clearance 3

Perimeter Clearance Strategy to Realize a Smart Border for the 21 st Century Beneficiaries u Governments Tourism Industry u Travelers Airports u General Public Ports u Communities Airlines u Importers/Exporters Railways u Shipping Lines Manufacturers u Trucking Firms © 2002 Perimeter Clearance 4

Perimeter Clearance Strategy to Realize a Smart Border for the 21 st Century Benefits u Increased efficiencies in logistics, just in time manufacturing and reduced storage costs u Reduced border processing delays u Reduced transportation costs u Enhanced security u Lower fuel consumption u Higher utilization rates u Stimulation of trade and travel u Substantial Reduction in Environmental © 2002 Perimeter Clearance 5

Perimeter Clearance Strategy to Realize a Smart Border for the 21 st Century Key Elements of Perimeter Clearance u Perimeter Security u Perimeter Clearance for Goods u Economic Security Through Expedited Low Risk Cross Border Trade and Travel © 2002 Perimeter Clearance 6

Perimeter Clearance Strategy to Realize a Smart Border for the 21 st Century Canada-U. S. Land Border Crossing Movements Streamed by Risk Assessment Pre-Determined Low Risk (Expedited) ? Car s ? Unknow n Other (Not Pre-Registered) ? Other (Not Pre-Registered) High Risk (Not High Cleared) Risk (Not Cleared) ? Unknow n Commercial Trucks Pre-Determined Low Risk (Not Cleared) High Risk (Not Cleared) Cleared as Low. Note: CSA = Customs Self Assessment; NCAP = National Customs Automation Prototype; PARS = Pre-Arrival Review System; BRASS Risk 7 = Border Release Advanced Screening and Selectivity, FIRST = Frequent Importer Release System, PAPS = Pre-Arrival Processing (CSA NCAP PARS BRASS FIRST PAPS RNS Line Release & Empties) © 2002 Perimeter Clearance Cleared as Low. Risk

Perimeter Clearance Strategy to Realize a Smart Border for the 21 st Century Canada-U. S. Land Border Crossing “Traffic Streaming” NO PRE-SCREENING REGULAR CARS BOOTHS 2 -LANE APPROACH ROAD (mixed streams) NEXUS-TYPE CARS (20+%) PLAZA ENTRANCE EXPEDITED PROCESSES AUTOMATED VERIFICATION PRE-CLEARED A KNOWN LOW RIS TRUCKS (80%) REGULAR TRUCKS NO PRE-SCREENING © 2002 Perimeter Clearance UNKNOWN RISK Applicable for Entrance in Either US or Canada And Either In-Country, or In-Other-Country 8

Perimeter Clearance Strategy to Realize a Smart Border for the 21 st Century Key Actions to Achieve Traffic Streaming There are three immediate actions that must be advanced in the near term: 1) Achieve regulatory requirements for the Processing Zone Concept: The global competitiveness of Canadian and American businesses depend on the capabilities provided for by the Processing Zone Concept. Realization of this requires Canadian legislation to provide for authorities to customs and immigration officers. This will be essential to efficient border management, achievement true joint facilities, securing border crossing infrastructure and elimination of congestion. These in turn will enable the facilitated processing of known low-risk goods and people to shift focus to high-risk groups. 2) Bi-National Data Sharing: Adopting a standard and implementing inter-agency and bi-national data sharing is critical to Perimeter Clearance communication of information. This item is particularly important for Customs processing. This would allow for enhanced security and expediting processing such as first point of arrival processing, and sea container targeting. Without achieving this, Canada would be precluded from participating in a Perimeter Clearance Strategy. 3) Deployment of NEXUS at land borders: The expedited land border program for passenger vehicles is needed to support the growth in traffic and to alleviate current congestion. Expediting this traffic is important to the growth of tourism, as well as to linking expedited systems to be deployed on other modes (e. g. marine, air). Moreover, its deployment is one of the main requisites for achieving access of pre-cleared trucks to primary processing booths. © 2002 Perimeter Clearance 9

Perimeter Clearance Strategy to Realize a Smart Border for the 21 st Century Case

Perimeter Clearance Strategy to Realize a Smart Border for the 21 st Century Goods Flow 1: 1 CURRENT International Goods Clearance to Tra Destinations (Point of First Arrival) 2 3 Marine or Air Canada Reporting Prior Customs to Arrival Review Secondary Examination 1 PERIMETER 2 Sealed & Transported to US Border Admission to Canada 4 Sealed & Transported to Rail/Truck US Border Registered Driver Advanced Marine or Air Canada/US Cargo Sealed Information Reporting Prior Customs Admission to Canada Transmission to Arrival Examinationand conditionally released for U. S. Delivery Key Benefits u u 5 Eliminates full initial Customs inspection at US/Canada Border thereby reduces congestion and delay at the border Increases security, as cargo is pre-screened for risk level determination & is inspected at point of first arrival Increases knowledge and time for destination country’s custom service before actual goods arrive at the 49 th parallel for subsequent admissibility review decisions and further review if required 6 Primary US/Canada Border Release Examination (Rail/Truck) Secondary Examination Detention 3 4 5 7 Delivery Assessment to US & Destination Redress 6 7 Expedited Delivery Assessment Transborder Lane to US & (for Random/Selected Destination Redress Checks) Challenges u Requires data sharing and computer system interoperability between Canada and U. S. Customs Agencies u Requires 24/7 port operation and inspection equipment/technology resources u Requires cross designation between U. S. and Canada Customs to perform reviews and inspections in point of first arrival country on instructions and to the standards of the destination country u An alternative, after passage by Parliament of companion legislation to airport pre-clearance, is expanding preclearance to land borders and seaports to perform the admissibility review and inspections. u Initial Review indicates cross-designation at seaports would © 2002 Perimeter Clearance be the less costly and preferred course of action 13 Reduces costs and delays for both governments and supply chains Transmission of information to / from the INTEGRATED INFORMATION SYSTEM u Reduces train disassembling at 49 th parallel

Perimeter Clearance Strategy to Realize a Smart Border for the 21 st Century Goods Flow 2: Transborder Clearance: Pre-determined Lo U. S. or Canadian Goods Crossing in Either Dire Similar but very limited -- no expedited access to primary processing (delayed in regular truck & car queues) CURRENT 1 2 Complete Registration and approval for low-risk designation (Companies, Goods, Drivers) EDI/Internet Transmission of Shipment Data to Customs PERIMETER 3 4 Customs Review/Decision Prior to Arrival or For Line Release and BRASS bar code is wanded at arrival Key Benefits u 80% of trucks can clear at primary without queuing u Facilitates just in time delivery u Reduces costs and enhances competitiveness u Reduces train disassembling at 49 th Parallel u Delivery to Destination 6 Assessment & Redress Challenges Eliminates waiting delays and congestion at the border u Expedited Transborder Lane (Random/Selected Checks) 5 Significantly reduces environmental discharges of hydrocarbons, carbon monoxide (CO) and nitrous oxides (NOx) Transmission of information to / from the INTEGRATED INFORMATION SYSTEM Requires implementation of a joint low-risk passenger system (NEXUS) as 85% of vehicles are cars. Known lowrisk car traffic needs to be facilitated to allow streaming of pre-determined low risk trucks for expedited access u Requires streaming of traffic (see diagram on subsequent page), segregating and facilitating known pre-approved lowrisk, queuing all unknown and other cars and trucks for increased scrutiny. This is key to improved security and efficient processing of pre-determined low risk trade and people u © 2002 Perimeter Clearance Coalition u Requires driver registration u Requires legislation to permit US/Canada officials to administer own statutes in the other country to allow primary examinations to be performed in the most efficient way 14

Perimeter Clearance Strategy to Realize a Smart Border for the 21 st Century Goods Flow 3: Transborder Clearance: High or Unkn US or Canadian Goods Crossing in Either D PERIMETER CASE 1 : REPORTING PRIOR TO ARRVIAL AND RISK DETECTED 1 2 Complete Registration and approval for low-risk designation (Companies, Goods, Drivers) 3 EDI/Internet Transmission of Shipment Data to Customs 4 Examination Customs Upon Review/Decision Arrival Prior to Arrival and Finds risk 5 6 Release Secondary Examination 7 Delivery Assessment to & Destination Redress Detention PERIMETER CASE 2 : INITIAL REPORTING AT ARRIVAL 1 2 Arrival at US/Canada Border Unannounced Customs Primary Examination 3 4 Refer to Customs Secondary Compliance Verification/ Examination Release 5 6 Delivery Assessment & to Redress Destination Detention CURRENT SYSTEM is essentially the same for both cases, with higher volumes in these categories than would occur with the proposed perimeter clearance system. Key Benefits u Proposed Perimeter and Pre-Determined Low Risk Clearance System will result in more importers and carriers applying for expedited programs with streaming access. u Allows identification and increased focus on the “other than known low risk” category, thereby increasing enforcement capability and threat detection. Transmission of information to / from the INTEGRATED INFORMATION SYSTEM Challenges u Requires appropriation of required staff, technology, inspection equipment and intelligence capability to process this risk category at a pace which avoids congestion buildup, so as to prevent expedited access of pre-determined low risk to the border crossing. © 2002 Perimeter Clearance 15

Perimeter Clearance Strategy to Realize a Smart Border for the 21 st Century Order of Magnitude Benefits from Perimeter Clearance: GOODS MOVEMENT Lower operating costs Lower cross border logistics Reduction by 20% of cross border logistics ~$4 billion/ year Flows through to Lower Cost of Products Reduced facilitation costs Higher degree of logistics choices Efficient border facilities Just-in-time production efficiencies Increased Trade in Goods due to reduced Costs Delay Time Savings Operating Cost of Trucking & Rail $200 million / year Efficient border facilities Delayed costs of building new facilitie ~$100 million/ year Just in Time & Logistics Efficienci 8% reduction in non-border logistics ~$5 billion/ year Additional new economic function locating in Canada/US Stimulated New Economic Activity © 2002 Perimeter Clearance 16

Perimeter Clearance Strategy to Realize a Smart Border for the 21 st Century Environmental Benefits from Perimeter Clearance ENVIRONMENT Reduced Queues 50% less emissions at land border crossings 71, 000 lbs HC 990, 000 lbs CO 124, 000 lbs NOx Health Care Costs, loss of life, pain & suffering, lost productivity Reduced Emissions Less fuel Consumption Health Lower Costs environmental enhanced footprint Savings security and facilitation Delay Time Savings 75% of trucks & 65% of cars eliminated from queuing 4. 4 million hours saved / year Gasoline & Diesel Trucks: $3 million / year Cars : $2 million / year More efficient use of existing facilities & infrastructure © 2002 Perimeter Clearance 17

INTEGRATED INFORMATION SYSTEM Perimeter Clearance Strategy to Realize a Smart Border for the 21 st Century Int’l Departures from U. S. /Canada Pre-registration VISITOR NO CARD International Arrival to Canada (Entry Tracking) Entry Process Visit/Stay in Canada U. S CANADA BORDER Connecting Flights to U. S. 18 © 2002 Perimeter Clearance Aircraft Gate Exit Tracking NO CARD PERIMETER © 2002 Perimeter Clearance Coalition Aircraft Gate Exit Tracking Transit to U. S. Entry Process Visit/Stay in U. S. 18

Perimeter Clearance Strategy to Realize a Smart Border for the 21 st Century Passenger Flow 1: International Travel to either Canada (One Country Admission) WHERE APPLICABLE A CURRENT 1 2 Visa Application International Marine or Air Arrival Customs Clearance 1 A PERIMETER CARDHOLDERS Perimeter Card (one-time application) + Visa if applicable International Marine or Air Arrival 3 Admission to Country 2 3 Expedited Biometric Kiosk Clearance Admission to Country Key Benefits u Improve risk management u More secure visa application process u Confirmation of international arrival with positive identification u Provide capabilities for determining identity of individuals with documents lost in transit u Challenges Faster transaction times for processes; more efficient flow in passenger traffic Transmission of information to / from the INTEGRATED INFORMATION SYSTEM u Securing transmission of information from different points of the globe u Developing incentives for non-visa requiring visitors to apply for Perimeter Card © 2002 Perimeter Clearance 20

Perimeter Clearance Strategy to Realize a Smart Border for the 21 st Century Passenger Flow 2: International Travel to Canada & U. S (Dual Country Admission) INTRANSIT PRECLEARANCE WHERE APPLICABLE A CURRENT B Visa Application (Canada) (US) 1 3 2 International Marine or Air Arrival Customs Clearance 4 Admission to First Country U. S. /Canada Border (land/air/sea) 5 Admission to Second Country INTRANSIT PRECLEARANCE A PERIMETER CARDHOLDERS 1 2 Perimeter Card (one-time application) + Visa (single window process) if applicable International Marine or Air Arrival Expedited Biometric Kiosk Clearance Key Benefits 3 4 Admission to one country or both Expedited US/Canada Border Processes (land/air/sea) 5 Arrival to Second Country Challenges u Maintenance of sovereignty in admission policies u u Common platform for providing admission to one country or both, coded to the individual Establishment of single-window visa process & crossdesignation u Faster transaction times for processes; more efficient flow in passenger traffic Securing transmission of information from different points of the globe u Developing incentives for non-visa requiring visitors to apply for Perimeter Card u u Streamlining steps and queues for the passenger Transmission of information to / from the INTEGRATED INFORMATION SYSTEM © 2002 Perimeter Clearance 21

Perimeter Clearance Strategy to Realize a Smart Border for the 21 st Century Passenger Flow 3: Travel Between US & Canada 1 US/Canada Border Clearance (all modes of transport) CURRENT A PERIMETER CARDHOLDERS 2 Admission to Other Country 1 Perimeter Card (one-time application) Expedited Positive Identification Clearance (all modes of transport) Key Benefits 2 Admission to Other Country Challenges Faster transaction times for processes; more efficient flow in passenger traffic Common expedited processes between countries u Awareness of programs for frequent travellers u Common bi-national standards for positive identification u Shared card between different modes of transport u Privacy and data sovereignty u Builds upon CANPASS/INSPASS/NEXUS projects u Positive identification procedures for buses & rail modes u Positive identification of individuals and their vehicles u Maintenance of current processes for infrequent travelers u Transmission of information to / from the INTEGRATED INFORMATION SYSTEM © 2002 Perimeter Clearance 22

Perimeter Clearance Strategy to Realize a Smart Border for the 21 st Century Passenger Flow 4: Outbound International Travel 3 b 1 CURRENT SECURITY Marine or Air Check-in 2 3 Boarding Gate TRANSIT VIA OTHER PERIMETER COUNTRY 4 Destination Aircraft or Marine Flight SECURITY 3 b PERIMETER CARDHOLDERS 1 EXIT CONTROL Marine or Air Check-in 2 3 Boarding Gate Key Benefits TRANSIT VIA OTHER PERIMETER COUNTRY Aircraft or Marine Flight 4 Destination Challenges u Exit tracking foreign nationals to visa stays u u Integration of airline check-in process to Perimeter Card & positive identity authentication Appropriate level of biometrics to be implemented for exit control u Faster transaction times for processes; more efficient flow in passenger traffic Exit tracking for non-visa foreign nationals with adequate level of positive identity verification u Platform for “hit-lists” to prevent passage through security screening of terrorist suspects or other threats Identity verification for API database entries for non. Perimeter Clearance u Boarding card differentiation (e. g. color) for Perimeter Clearance cardholders to trigger use of biometric prior to boarding u u u Exit-tracking to be integrated with passenger/baggage match systems and to supplement advanced passenger information/passenger name record data transmissions Transmission of information to / from the INTEGRATED INFORMATION SYSTEM © 2002 Perimeter Clearance 23

Perimeter Clearance Strategy to Realize a Smart Border for the 21 st Century Order of Magnitude Benefits from Perimeter Clearance: PASSENGER TRAVEL Passenger Time Savings Time Value of Money Time savings More efficient facilities (border /passenger terminal) Transportation Carrier Market Development (e. g. air services) Increased Tourism Expenditures Increased trade in services $125 million / year $35 Higher Throughput on Existing Facilitiesmillion / year Deferred Capital Expansion Costs Airports & Ports New transportation services $50 million / year Addition of 1% more traffic from improved connection times $10 Million/ year Increase in Business travelers due to assurance of improved security $1 Increase in Tourism & Accommodation Billion / year Expenditures Addition of 1% more tourism expenditures. © 2002 Perimeter Clearance 24

Perimeter Clearance Strategy to Realize a Smart Border for the 21 st Century Summary

Perimeter Clearance Strategy to Realize a Smart Border for the 21 st Century Recent Key Developments - All Relevant To Perimeter Clearance We have an important partner on the northern border who has been very helpful --- and that is Canada. There are numerous examples where cooperative efforts with the Canadians have helped to protect the northern border. ” U. S. INS Commissioner Ziglar © 2002 Perimeter Clearance Coalition 29

Perimeter Clearance Strategy to Realize a Smart Border for the 21 st Century Recent Key Developments - All Relevant To Perimeter Clearance “We are working with Canada on biometric cards for permanent residents on a voluntary basis to monitor expedited entry and exit at the Northern Border” US Homeland Security Director Gov. Tom Ridge NBC Meet the Press Feb 3, 2002 The United States and Canadian tradition of cooperation and coordination has been longstanding, and is critical to the security of the northern border. The tradition was further promoted with the …Our Shared Border Accord. Along with commercial goods, the Accord addresses common security issues. ” U. S. INS Commissioner Ziglar October, 2001 Testimony before Congress on Northern Border Issues Perimeter Clearance © 2002 30

Perimeter Clearance Strategy to Realize a Smart Border for the 21 st Century Perimeter Clearance Coalition email: info@perimeterclearance. com web site www. perimeterclearance. org Gerry Bruno - Vancouver Paul Ouimet - Vancouver Solomon Wong Vancouver Henry Ristic - Chicago Roland Dorsay - Ottawa (604) 717 -1800 Allan Cocksedge - Ottawa Roland Dorsay - Ottawa (613) 782 -2336 J. D. Phillips New York (716) 754 -8824 © 2002 Perimeter Clearance Mo Garfinkle - Washington, DC Elliott Seiden - Washington, DC 32

Perimeter Clearance Strategy to Realize a Smart Border for the 21 st Century Perimeter Clearance Coalition Members WASHINGTON AIRPORTS TASK FORCE VANCOUVER PORT AUTHORITY Greater Vancouver Regional District A WORKING PARTNERSHIP OF 21 MUNICIPALITIES AND 1 ELECTORAL AREA CASCADE GATEWAY BORDER SECURITY COALITION © 2002 Perimeter Clearance 33