Protection Without Protectionism: Reconciling Trade and Homeland Security

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For decades, criminals have used cargo containers, trucks, andtrain cars to illegally bring narcotics, weapons, and people acrossU.S. borders. The vulnerabilities that smugglers exploit are alsoavailable to terrorists.

The attacks on the USS Cole in the port of Yemen in2000 and the French oil tanker Limburg in 2002 illustratethe direct threat that terrorism poses to seagoing vessels. Anotherprospect is that ships, trains, or trucks could be used inconventional suicide attacks, much like hijacked airliners wereused on 9/11. A cargo ship or train car could also be exploded orsunk in a port or rail yard, damaging the facility and blockingcommercial traffic. The worst-case scenario would involve a weaponof mass destruction entering the country via trade channels. Even arelatively modest nuclear weapon detonated in a major seaport wouldkill between 500,000 and 1 million people, directly destroy up to$500 billion worth of property, cause losses due to tradedisruption of $100 to $200 billion, and impose further indirectcosts of up to $1.2 trillion.

The Department of Homeland Security has begun implementingprograms and procedures designed to safeguard the transportationand supply chains. States, shippers, port authorities, exporters,manufacturers, and foreign governments all have important roles toplay in that effort. Federal rules and regulations are necessarybut should be as open-ended as possible. They should set securitygoals and verify how well the private sector meets them, rarelymandating specific technologies or processes. Securing the tradingsystem against terrorism is a regrettable but real cost of doingbusiness internationally, and consumers and companies should not beinsulated from those costs.

The challenge for U.S. policymakers is to improve security whileminimizing the loss of liberty and the benefits of economicopenness. The task is made more difficult by domestic intereststhat press for measures that unfairly hinder their foreigncompetitors without appreciably improving U.S. security.

Aaron Lukas

Aaron Lukas, formerly chief speechwriter and strategic advisor for the Office of the U.S. Trade Representative, is an analyst at the Cato Institute's Center for Trade Policy Studies.