AS SECURITY BATTLES COMMERCE, U.S. CUSTOMS IS IN THE MIDDLE

War On Terror Has Inspectors Examining More Ships And Delaying More Deliveries

STATEN ISLAND, N.Y. -- Customs Service Inspector Brent Egbert and his
partner Wayne Wilcken stepped carefully through the dark, damp cargo hold
of a 900-foot container ship at Howland Hook Marine Terminal here. Freight
trailers were stacked eight-high above them, waiting to be unloaded.

Armed with radiation detectors, 9mm pistols and bolt cutters, the men aimed
their flashlights at each trailer to see if seals had been tampered with,
and peered into corners of the cavernous hold where terrorists could stow away.

These inspectors are on the front lines of one of the most difficult policy
questions facing Washington in the aftermath of Sept. 11: Can the country
look out for business interests at the same time it is defending itself
against terrorists?

The Customs Service, a 213-year-old agency tucked inside the Treasury
Department, oversees more than 16 million containers of goods that arrive
in the U.S. annually by ship, truck, rail and air. The agency is charged
with collecting duties and fees on those shipments, and also with barring
contraband. Until the terrorist attacks, that meant spot checks on a
minuscule percentage of shipments, mostly focused on illegal drugs.

Now inspectors are concentrating on potentially more-deadly material. In
the past 10 months, inspectors here have pulled out three times as many
containers for special examination -- by hand and by gamma ray -- as they
did in the same period a year ago. Inspectors nationwide are striving for a
similar uptick, and a month-old initiative focusing more attention on
containers from "high risk" countries is driving the numbers up further.

Customs officials nationwide haven't intercepted any terror-related
materials since Sept. 11. But just Tuesday, the nearby Port of Newark,
N.J., ordered a Liberian freighter to a restricted zone at sea for further
inspection. Inspectors had detected radiation and heard suspicious sounds
in some of its cargo containers. Customs officials would give no further
details Wednesday night.

The extra scrutiny complicates the already-difficult balance the agency
must strike between security and commerce. Too much attention to security
will slow the flow of materials that are essential to keeping American
factories running in today's low-inventory, global economy. Too much
attention to keeping goods moving risks letting materials for another
terror attack slip by.

Both President Bush and Customs commissioner Robert Bonner have declared
that security is the top priority. Mr. Bonner has called the safety of sea
freight an international weak link. "There's virtually no security for what
is the primary system of global trade, and yet the consequences of a
terrorist incident using a container would be profound," he said recently
in a presentation at the Center for Strategic and International Studies in
Washington.

At the same time, Mr. Bonner and Homeland Security Director Tom Ridge have
assured business leaders that security won't supersede free trade --
notably during a June 19 conference call from the Roosevelt Room of the
White House with 11 leaders of companies that import and export.

Congress itself is trying to find the right balance, as it debates
legislation creating the new Homeland Security Department. The House has
proposed that the security-policing function of the Customs agency be moved
into Homeland Security, while keeping the agency's freight-regulating
function under Treasury's jurisdiction to maintain its independence. The
Senate's bill would shift the whole Customs agency into Homeland Security
- -- a move advocated by the Bush administration, on the theory that it would
be easier for one department to weigh the agency's dual goals.

These bureaucratic arguments reflect a much broader national struggle
between business interests and security advocates. When the federal
government limits immigration, for example, it rubs against companies'
desire for both skilled and unskilled laborers. When the Justice Department
issues terrorist alerts for shopping malls, it knows it may drive down
retail sales. Financial institutions complain that new regulations to crack
down on money laundering can slow the legitimate flow of money and create
new costs. One new Customs proposal would require advance notice of what's
going into U.S.-bound shipping containers at least 24 hours before they are
loaded in foreign ports. That plan, the shippers say, will be expensive and
cause backups.

Lobbying over the final shape of the Homeland Security Department, business
groups have tried to ensure that their interests won't be minimized. The
U.S. Chamber of Commerce persuaded the House to make two changes to its
bill. One was to add this task to the secretary's job description: "Ensure
that the overall economic security of the United States is not diminished
by efforts, activities, and programs aimed at securing the homeland." The
other was to establish a special assistant to the secretary, as a
designated link with the private sector. The Chamber of Commerce hopes to
persuade the Senate to make the same changes to its bill.

Security advocates argue that business interests simply aren't the top
priority right now. "If there is a breach of security in the future, their
businesses are going to implode because everything will be shut down," says
James Pasco, executive director of the Fraternal Order of Police, the most
influential law-enforcement organization in Washington and one that
officially advises Mr. Ridge.

There are few places where the stakes are more apparent than here at the
busiest port complex on the East Coast, where the Howland Hook terminal
sits across from Port Elizabeth and Port Newark just off New York Harbor.
On a recent day at Port Elizabeth, Inspector Sophia Arden looked at
electronically filed records of incoming shipments still 2,000 miles from
arrival: historical artifacts from New Guinea; a shipment of yam flower
from Nigeria; licorice root from Afghanistan. The notice of a cargo of
clothing from South Africa caught her eye. It was the 17th shipment in
three months by the importer, a relatively new firm that had never had a
shipment checked. What was more, this shipment was prepaid, a common tactic
of drug dealers.

With a single keystroke on Ms. Arden's computer, a little red stop sign
popped up next to the importer's name. The container would be gamma-rayed
and inspected by hand when it arrived in three days' time. That meant it
would have to sit at the terminal over a weekend. In this case, no problems
were found, but the shipment had to wait five or six days all told.
Containers that aren't flagged are free to be picked up the same day they
arrive, while more-involved inspections can delay cargo for as much as 10 days.

A computer system automatically picks some containers for further
inspection, based partly on the history of drugs or other contraband being
found in containers from certain shippers or ports of origin. Inspectors
and specialists stationed at the ports flag more containers for closer
inspections. Those reviews generally begin with gamma-ray scans of the
entire containers, to look for anomalies such as different densities of
cargo or strange shapes, and can intensify to full searches that include
unloading by hand.

Later the same day at Howland Hook, Customs supervisor Michael Hegler
didn't wait for a gamma-ray scan before he ordered a hand search of a
container in port. He was checking an inventory with unexceptional cargo:
80,000 pounds of ground cumin seeds packed in 50-pound bags. But he noticed
it came in on a ship from Ankara, Turkey, after originating in Beirut. "Why
would a shipment from Beirut go to Turkey first?" Hegler asked.

Within minutes, inspectors and a group of four National Guardsmen begin
examining the cargo on an outdoor loading dock. First, they used a metal
rod to dip into the sacks on the back of the trailer, looking for anything
unusual and exposing enough cumin to make the Customs dock smell like a
restaurant. Then they began unloading the sacks, an all-day process that
yielded no contraband. Because cumin isn't perishable, the container then
fell to the back of the line for reloading. In the end, it sat for more
than a week before leaving the facility.

"The computers and other technology we have are a tremendous tool, but it
comes down to somebody pulling all of this stuff off the trailer
sometimes," says Chief Inspector Kevin McCabe. Sometimes a decision depends
solely on where a ship comes from. Containers on ships from regions labeled
high risk -- such as northern Africa, the Middle East and central Asia --
more often are searched and gamma-rayed, and get checked a second time for
radiation and seal tampering.

"These days there's no such thing as low risk," Mr. McCabe says. "There's
high risk and higher risk."

In the 10 months ended Aug. 1, Customs carried out extended searches on
18,000 containers -- or about 2% of all the cargo handled -- at the five
port facilities in the New York-New Jersey area. That's up from 6,000 in
that period the year before.

Other containers went through routine checks of their manifests and
shipping histories, and visual inspections of the cargo containers for
broken seals or radiation. More than 60% of shipments, however, are from
the top 1,000 importers, who have at least 20 years of records on file with
Customs.

Many of those companies are gaining smoother passage by agreeing to upgrade
their employee-background checks and monitoring of their own loading docks
and plants, as well as the security measures their suppliers and carriers
use. In return, the companies' trucks are equipped with transponders that
allow them to be waved through land ports electronically, subject only to
occasional spot checks.

Nearly 400 companies are participating, including the founders of the
program, General Motors Corp., Ford Motor Co., Target Corp., Sara Lee
Corp., Motorola Inc., BP America and DaimlerChrysler AG.

Customs also is trying some new initiatives to bolster security
internationally. It has reached agreements with some of the 20 largest
container-ship ports around the world to station U.S. officers to work
alongside their foreign counterparts to inspect shipments before they head
for U.S. shores. It plans to pursue the same agreements at large foreign
airports.

Meanwhile, debate in Washington continues over the future shape of the
Customs service. Some companies fear that whether its functions are split
or the agency is moved whole to the Homeland Security Department, a
confusing bureaucracy will result. Tom Wickman, spokesman for GM, said
manufacturers may find that shipments meeting freight regulations will
still be held up by new law-enforcement procedures. "We're watching it
carefully," he said.