PACIFIC BASIN ECONOMIC COUNCIL
UNITED STATES MEMBER COMMITTEE | EVENTS | U.S. EVENTS | 2002 APC | HOLDER

The PBEC US Annual Policy Conference 2002 Getting Back to Business: Pacific Rim Growth and Security Remarks by Robert W. Holder Since September 11, a new landscape on American, and indeed global, Business has formed. No longer is the flow of information as free and open as it once was. Examples abound: but perhaps none more dramatic than the reaction of the Nuclear Regulatory Commission (NRC) which completely shut down its web site in early October 2001. The site included detailed information such as the longitude and latitude coordinates of 103 U.S. nuclear power plants. The site also included technical data on plant operations, detailed engineering schematics of plant systems and components and aerial photographs. The NRC quickly went from having too much information on the Internet to having none. Neither answer is the correct, but what is? How do you strike a balance between security and the need to know, and at what cost? However, before we embark down the information superhighway, we must first understand the political, business and national security ramifications the terrorist attacks had on international trade. To understand this you must first understand the American mindset. Our President has declared War on terrorism. He has the backing of the Congress and the American public. President Bush also made it very clear that if you are not with us on this effort your standing with the U.S. may require re-evaluation, possibly impacting our relations with some trading partners. Designations for selected countries such as most favored nation status, and existing free trade agreements may be questioned. As is so often the case, where politics goes so follows business and business opportunities. Corporations generally seek political and economic stability, and a cooperative working agreement between host nation governments in order to engage in any business pursuits of substantial fortune. Absent stability and cooperative trade agreements, there is uncertainty, and therefore little chance of taking advantage of any market opportunity without assuming great risk. To take this type of risk from a business perspective is a fool hearty endeavor at best. Corporations cannot afford to put their buildings, people, intellectual property, patents and other valued assets at risk. Nations states, both friend and foe in all regions of the world, need to understand how serious the United States is on combating terrorism. With this new reality there is inevitable uncertainty in all world markets. The paradox is that at the same time, during this period certain goods and services are needed even more. I lay this foundation to introduce the changing environment from a U.S. perspective. Despite the economic slowdown and difficulties faced by citizens and corporations, the government Information Technology (IT) sector remains strong. Although cost reductions have taken place, government IT requirements remain imperative, with additional focus on addressing cyber security, efficient e-government, and integration of leading edge technologies such as smart cards and biometric controls. As you can already see, the United States plans to leverage IT to combat terrorism. The changes that IT will bring to America's national security posture will have a profound effect on international trade and the way business will be conducted in the future. The following example will help illustrate my point: Border Security has become a high priority of the U.S. Customs service since Sept 11. "Before that day our main focus was on trade compliance" Customs commissioner Robert C. Bonner said. Now we work to keep terrorist and the implements of terror out of the United States. This is a sampling of what we do: Obtain more accurate and timely advance manifest information on all forms of entry and shipments. The information helps Customs workers sort goods before they arrive at ports so shipments can move faster. Deploying extra inspection technology at seaports and the Canadian border to detect terrorist weapons. Looking for new technology to detect weapons of mass destruction Customs inspectors in the field use 4,000 radiation detection devices to spot weapons and weapons-grade materials Working with the Canadian and Mexican governments to increase information exchange and security measures and borders controls Inspectors use gamma ray imaging systems to examine trucks, containers cargo and passenger vehicles for hidden compartments. It only takes five to 10 minutes to perform eight to ten high-quality checks using these systems. It doesn't stop there. The United States has concentrated its efforts on homeland security which include the tracking of foreigners, boarder control and the possibility of a national identification card across all fifty states just to name a few. This means that, in the near term, international business travel will be inconvenient to some and troublesome to most. Corporations and Governments at the federal, state and local levels are locking down their Information Technology systems. When it emerged less than a decade ago, the World Wide Web was quickly embraced as the bright new medium that could help reinvent government and revitalize democracy. But gradually government policy-makers have also seen that the web can be used in harmful ways. To that end, Congress has banned some unclassified government information from federal web sites and is considering legislation to grant sweeping exemptions from the freedom of information act in the name of cybersecurity. I want now to address the questions posed as discussion topics in my area of expertise for this forum. The first - Are there new risks in the transfer of information and data exchange? The risk to data transfer and information exchange remains high while the risk may have decreased slightly since 9/11 because of all the security measures placed on both government and commercial systems those systems remain significantly under protected. As I mentioned earlier, look for some information to disappear in the coming months from the Internet and the likely classification of many more new documents for national security reasons. To some this is a troubling prospect. One of the core tenets of democracy is open government. To hold the government accountable, the public must be allowed to know what the government is doing. Therein lies the dichotomy between free and open access and security. Secondly - How have companies and governments responded to the increased need for accurate, timely, credible and secure information flows? There has always existed this need-however, the emphasis on secure and accurate information has now become the focal point of future design and implementation strategies. Lastly, what are the new issues that can be expected to emerge in the marketplace? The ability to collaborate and integrate disparate systems is emerging as the number one requirements on the IT community. Not far behind is the ability to secure the information and turn raw data into information and then knowledge for decision-makers. Governments globally in 2002 will be focused on security, both defense and cyber related. Demands continue for increased capabilities in digital government and the citizen-centric demands for joined-up government and one-stop shopping for services. While governments are shifting budget priorities and reducing spending, they still expect to accomplish more with fewer resources. Governments will be looking to industry for new funding models, public- private partnerships and performance-based contracting. EDS is well positioned to deliver innovative solutions to meet the demands of the emerging global threats and challenges. As a global leader in technology outsourcing for all levels of government, and corporations EDS is well positioned to deliver innovative solutions to meet the demands of the emerging global threats and challenges. In conclusion, what impact do all of these changes in security-procedures, timeliness, access etc … have on trade? Can trade and security coexist and at what cost? In my opinion, YES. There will always be the need for trade. Globalization is here to stay. As I said earlier, corporations need the ability to participate in the free exchange of goods and services around the world in order to prosper. However, in the new realities of the war on terrorism, adjustments to respect the new securities restraints will be necessary. From a political perspective, EDS supports Congressional efforts to grant President Bush Trade Promotion Authority or "Fast Track". EDS supports increased trade liberalization in the new round of global trade negotiations at the World Trade Organization. We also support changes that would allow increased information sharing between government and industry, such as the FOIA exemptions I mentioned earlier. Like other corporations, we are optimistic the war on Terrorism will not stifle continued economic growth and free trade - we just have to achieve a balance - for the protection of all Americans. This concludes my remarks. Thank you very much for your time and attention. I will be happy to address any questions.