Seanad debates

Thursday, 11 March 2010

2:00 pm

Photo of Feargal QuinnFeargal Quinn (Independent)
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I know this issue is not the Minister of State's area of responsibility but it is a matter of concern and is worth expressing. The law that relates to this matter is called HR1 and was enacted in 2007 as part of the United States response to the attacks of 11 September 2001. It means that all containers bound for the United States will have to be scanned at the port of exit, for instance, in ports in Ireland. The 100% scanning policy is based on the scenario that terrorists might try to smuggle a weapon of mass destruction into the United States inside a shipping container. However, the US law does not require containers on ships leaving the United States bound for Ireland or the European Union to be scanned in the same way, and this is understandable.

While it is understandable that the United States wants to protect itself and enhance its own security, the law will have a massive impact on business worldwide, including on businesses in Ireland. The policy entails the installation of 2,100 scanners worldwide at a cost of $8 million each. Interviews conducted by European Commission showed that neither terminal operators nor customs authorities are ready to bear these costs. The cost of sending a container to the United States would rise by a massive amount, by about 10%.

Irish ports are not ready to introduce all this scanning and other necessary equipment and it is probably fair to say that currently we do not have the money to do so. It could cost of tens of millions of euro to do so at each port and this could result in a massive backlog of containers in Ireland bound for the United States. This would create a huge break in trade and severely affect our economy. There would be longer shipping times and the Irish taxpayer might have to foot a large part of the bill to implement the United States requirement.

The European Union anticipates that for the smaller or older ports in Ireland, the costs would be so high that it may not longer be financially viable for them to continue shipping to the United States. It must be remembered that the 100% container scanning law is an extraterritorial and unilateral measure by the United States which will, in effect, supersede any Irish or European legislation. Legislation and control measures laid down by Ireland and the EU will be usurped by those of a third country.

The European Commission published three new external impact studies on 17 February on the 100% container scanning law. The three studies predict higher costs without ensuring any greater security. The conclusion of the report is that the 100% mandate is the wrong course for the global supply chain. The first study estimates the investment required in the European Union to bring the European Union customs industry in line with the United States law would be approximately €430 million. Extra operating costs for customs offices would total another extra €200 million and some 2,200 extra staff would have to be recruited. Given that Ireland currently accounts for approximately 10% of EU exports to the United States, it would be reasonable to assume that the cost of investment at Irish ports to bring us up to the United States standard would be approximately €43 million. On top of this, it could cost Irish ports more than €10 million to perform scanning in the first year of the legislation coming into effect. European Union ports, including Irish ports, that would be unable to adapt the new US law would lose market share and there would be greater congestion in the other ports. The fact is that, at best, the 100% scanning requirement is a trade impediment and, at worst, it is pure protectionism. Much needs to be done in this respect.

The United States is Ireland's largest export market, accounting for approximately 21% of our exports in the first half of 2009. In 2008, according to the Central Statistics Office, seven Irish ports exported goods to non-EU countries, including the US. The introduction of 100% scanning will particularly affect the competitiveness of Irish ports which have significant US-bound exports, for example, Bantry Bay, Shannon-Foynes Port, Cork Port and Dublin Port, which could face a reallocation of the market share, possibly to other EU or even Asian ports, depending on their ability to implement the US legislation. At the same time a number of Irish ports with a small US-bound export volume, for example, New Ross or Tralee-Fenit, would be at risk of closure or may lose this part of the business as it would be unrealistic for them to invest in the required infrastructure and equipment. Ireland needs to use its disproportionate influence in the United States in dealing with this matter, in particular given the possibility that President Obama will visit here in the summer. What is the Minister doing? Have negotiations taken place with the Obama Administration to emphasise the effect H.R. 1 could have on Ireland? Given that Ireland relies so much on trade with the USA, we need a policy now. I am anxious to bring the matter to the attention of the Department.

Photo of John CurranJohn Curran (Minister of State, Department of Community, Rural and Gaeltacht Affairs; Minister of State, Department of Education and Science; Minister of State with special responsibility for Integration and Community, Department of Justice, Equality and Law Reform; Dublin Mid West, Fianna Fail)
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I am taking this matter on behalf of the Minister for Transport, Deputy Dempsey.

There are currently no container vessels trading directly between Irish ports and the United States. Therefore, there are no direct costs for any ports in Ireland as a consequence of this legislation.

The United States legislation, Implementing Recommendations of the 9/11 Commission Act of 2007, unilaterally introduced a 100% scanning requirement for US-bound containerised maritime cargo to be in place by 1 July 2012. The legislation requires that a container loaded on a vessel outside the United States shall not enter the United States, unless it is scanned by non-intrusive imaging equipment and radiation detection equipment before it is loaded on such a vessel.

Containerised traffic from Ireland, destined for the United States, is carried on so-called feeder vessels to other European ports where the containers are transferred to other vessels departing for the United States. These ports are directly affected by the legislation, as the containers would require to be scanned in the port before being loaded onto such vessels. The matter will be kept under review and any implications for Irish ports arising from the legislation, or any amendments to it, will be closely monitored by all the relevant Departments.

By way of providing further background information on the matter, the Minister can report that in April 2008 the European Commission, with support from EU member states and the business community, carried out a preliminary impact assessment of 100% scanning. This was sent to US Customs Border Protection, CBP, and included in the report of the Department of Homeland Security to the US Congress in June 2008. The paper pointed out that if 100% scanning was introduced in European ports, it would be excessively costly, unlikely to improve global security, would absorb resources currently allocated to EU security interests and disrupt trade and transport within the Union and worldwide. It advocated shifting the policy focus towards developing a package of measures to cope with the wide diversity of security risks and address supply chain security not only from a national perspective but also as a global and complex challenge. An alternative package is suggested by the European Union based on the principle that all exports and imports undergo comprehensive and effective multi-layered risk management processes using a range of methods and technologies commensurate with the risks associated with specific consignments and that no consignment should go unchecked.

In December 2009 the US Government Accountability Office issued a report on the requirement to scan 100% of US-bound containers. It noted that Customs and Border Protection had been unable to achieve 100% scanning at any of the limited number of participating foreign ports. The programme faces numerous challenges, including technology problems, high costs and opposition from some foreign governments. The report puts the cost of 100% container scanning as high as $1.6 billion, plus the increase in time for cargo to be processed.

On Wednesday 17 February the European Commission published a Commission staff working paper on secure trade and 100% scanning of containers. The paper reports the main conclusions of three studies on the impact on EU customs, transport and trade of the US legislation requiring 100% scanning at foreign ports of US-bound maritime containers conducted by DG's TAXUD, TREN and TRADE. The three studies confirm a negative impact of scanning all freight containers destined for the United States and predict higher costs without ensuring greater security. Notably, the investment required in the European Union to bring the EU customs industry into line with the US law is estimated at approximately €430 million. Extra operating costs for customs offices would total €200 million a year, while 2,200 extra staff would have to be recruited. The cost of sending a container from the Union to the United States would rise by approximately 10%. EU ports unable to adapt to the new US law would lose market share and there would be greater congestion in other ports. Total lost trade in the Union and the United States would be close to €10 million a year and as high as €17 billion at global level.

It is understood the Department of Homeland Security intends to issue a blanket two-year extension of the 2012 deadline as authorised by law.

Photo of Feargal QuinnFeargal Quinn (Independent)
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I appreciate what the Minister of State said. Currently, no containers are trading directly between Irish ports and the United States. The Minister of State confirmed my figures. This would have a huge effect at European level. Obviously, therefore, it would have an effect on Ireland. I am pleased an investigation is taking place and that it looks likely there will be a two-year extension. The matter has been put off for two years but it is of such importance that I urge the Department to emphasise that we cannot allow this to happen or ignore it. I am not sure how easy it will be to solve the problem because the United States will be loath to step back from something it proposed. While I am pleased with the information the Minister of State gave, I am disappointed that no containers are trading directly between Ireland and the United States, although Irish containers pass through other European ports.

Photo of John CurranJohn Curran (Minister of State, Department of Community, Rural and Gaeltacht Affairs; Minister of State, Department of Education and Science; Minister of State with special responsibility for Integration and Community, Department of Justice, Equality and Law Reform; Dublin Mid West, Fianna Fail)
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The Senator said he was disappointed that no containers were trading directly between Ireland and the United States. We would all like to see development of our trade in that regard. It is expected there will be a two-year extension to the 2012 deadline which will allow an opportunity to address the issue, in particular given the fact that 100% scanning is not being achieved in areas where it should be.