Thursday, January 17, 2002
Commissioner Robert C. Bonner
Speech Before the Center for Strategic and
International Studies (CSIS)
It is a privilege to address the Center for Strategic and International Studies, and to speak to this distinguished audience.
For over forty years, CSIS has defined the term "informed foreign policy leadership," through its unrivaled expertise in global affairs. The collective knowledge of this unique community of scholars and experts has contributed greatly to the growth and stability of our world over the last four decades by presenting thoughtful policy proposals on subjects ranging from global aging to global organized crime. Indeed, for several years, I served on the CSIS Steering Committee looking into the global organized crime phenomenon.
Now, we find ourselves in a profoundly important fight to defend the security of the United States and the world from attacks by international terrorists organizations.
For over two hundred years, the United States Customs Service has done a great deal to promote national and international stability, by protecting America from threats arising overseas by facilitating international trade so important to the U.S. and world economy. That is why it was such a distinct honor for me to be selected by the President to serve as Commissioner of Customs, and to lead a great organization whose origins stretch back to the very founding of our Republic.
Indeed, in the summer of 1789, with the United States on the brink of bankruptcy, the first Congress passed legislation authorizing the collection of duties on imported goods, and created the U.S. Customs Service to enforce the new tariff laws. The press of that day referred to the Tariff Act of 1789 as the "second declaration of independence," because it meant financial independence, and an assured source of revenue for the new federal government.
Naturally, there were those who resisted the Tariff Act, and who tried to skirt payment of the new duty by outrunning Customs on the high seas. For that reason, then Secretary of the Treasury Alexander Hamilton proposed that Customs retain, and I quote, "a few armed vessels, judiciously stationed at the entrances of our ports, that might at a small expense be made useful sentinels of our laws." And Customs officers and agents still stand as sentinels to protect our country from smuggling and contraband. Thus, Customs has always been known first and foremost as the nations preeminent border agency, "Americas frontline." For most of our history, that frontline was defined by the land borders and seaports of the United States. It now also includes all international airports, international mail and courier facilities as well. These "border" entry points are the locations at which the majority of our 20,000 employees conduct their work each day, processing travelers and goods, inspecting cargo and mail, seizing illegal drugs, money and counterfeit goods, and conducting criminal investigations. And Customs still intercepts smugglers on the sea and in the air, too, using a fleet of 113 boats and 132 aircraft.
Though we continue to devote resources to traditional threats, our priorities since September 11th have shifted dramatically to the war on terrorism.
We are doing everything within our power to prevent terrorists and terrorist weapons from entering the United States.
I want to talk to you today about what the Customs Service did immediately in response to the events of September 11th, and some of the core initiatives we have undertaken since that day to bolster Americas homeland security. Id also like to speak to you about some of the ideas we are working on now, and in particular our vision to secure an indispensable and vulnerable link in the system of global trade indeed, the primary system for global trade the oceangoing sea container.
Immediately following the terrorist attacks on September 11th, at about 10:05 a.m. on September 11, Customs went to a Level 1 alert across the country at all border entry points. Level 1 requires sustained, intensive anti-terrorist questioning, and includes increased inspections of travelers and goods at every port of entry. Because there is a continued terrorist threat, we remain at the Level 1 alert today.
As part of our response, we also implemented round-the-clock coverage by at least two armed Customs officers at every Customs location, even at low volume crossings along our northern border. To do this on a 24 by 7 basis, and to keep trade moving at our high volume ports in Michigan, Buffalo, and elsewhere -- we temporarily detailed about 150 Customs inspectors to our border with Canada. Customs inspectors are, in many places, working 12 to 16 hours a day, six and seven days a week, and have been doing so now for four months.
We are also heavily involved on the investigative front of the war on terrorism. Weve assigned many of our special agents to the Joint Terrorism Task Forces across the country and at the SIOC at FBI Headquarters. At one point, almost a third of our investigative workforce, over 1000 agents, were engaged in investigations related to the terrorist attacks. That proportion has gradually declined since October. We have also contributed approximately 110 agents to the federal sky marshal program. In addition, we are leading the effort to freeze and seize terrorist assets and finances through U.S. Customs longstanding expertise in anti-money laundering operations.
As part of our response to September 11th, we also moved quickly to enhance the quality and quantity of advanced information coming into Customs, especially in the area of passenger processing.
We promptly sought and secured legislation, which made the submission of data on incoming international passengers to Customs Advanced Passenger Information System, or "APIS," mandatory for all airlines. That law was passed last November as part of the Aviation Security Bill. The law was not effective until January, this month. But in November Customs had received API information voluntarily from many airlines for several years, but in light of 9-11, it was essential to make it mandatory. I told the airlines that balked at submitting APIS data to comply with new regulations or face 100% questioning and inspection of all people and luggage disembarking from their flights. Not surprisingly, nearly all the airlines came around quickly and began supplying Customs with the needed information, even before the law took effect.
Technically, the law comes into effect this Saturday, January 19th. For those airlines not in compliance with the new requirements, our message is clear: international flights for which Customs does not have APIS data pose a national security risk to the United States, and they will be treated as such. The law will be enforced, and if need be we will deny landing rights to those airlines that fail to comply.
We are also working to address another critical front in the battle against terrorism, and that is the protection of our nations trade. In November, I proposed a new Customs Trade Partnership Against Terrorism to the trade community at a Customs Trade Symposium I hosted. I am pleased to tell you that we are entering into partnership with some of the biggest U.S. importers. This Customs-Trade partnership will vastly improve security along the entire supply chain, from foreign vendors to our land borders and seaports.
"CT-PAT," as its acronym is known, builds on past, successful models between Customs and the trade designed to prevent commercial shipments from being used to smuggle illegal drugs. The good news is that we already have much of the security template in place to protect trade from being exploited by terrorists. Our challenge now is to apply that to as broad a range of the trade community as possible.
In working with importers in the battle against terrorism, we are looking at such criteria as where their goods originated; the physical security and integrity of their overseas plants and those of their foreign suppliers; the background of their personnel; the means by which they transport goods; and those who they have chosen to transport their goods into our country. We are examining the security practices of their freight transporters, and the routes their shipments travel.
We are also reaffirming to importers the importance of knowing their customer, and we are assessing the overall "air-tightness" of their supply chains, from factory floor, to loading dock, to transportation to our border. Every single link in that chain will be made more secure against the terrorist threat.
At the same time, Customs will provide incentives to companies who partner with us to improve our national security against the terrorist threat. Those companies that adopt or have a program that meets security standards will be given the "fast lane" through border crossings, and through seaports and other ports of entry. We are working on initiatives now to make that happen.
Let me briefly describe other Customs initiatives to defend against the terrorist threat, in addition to partnering with the trade:
- We are pursuing initiatives to harden our borders, and to install sensors and remotely monitor low-volume ports of entry so that they do not have to be staffed on a "seven by twenty-four" basis.
- We will be deploying additional, existing x-ray and gamma ray inspection technology and radiation detectors that are useful to detect terrorist weapons to the northern border and at our seaports. Such equipment will speed inspections required for Level 1 alert.
- We are looking for new technology to better detect weapons of mass destruction although I want you to know that we have nearly 4,000 radiation pagers dispersed among our inspectors at the borders and seaports, who use these devices to detect nuclear weapons and weapons-grade materials.
We are also working with the Canadian and Mexican governments to improve information exchange and adopt benchmarked security measures that will expand our mutual border and will reduce the terrorist threat to most of the North America continent. We can no longer afford to think of "the border" as merely a physical line separating one nation from another.
On December 12th, I traveled to Ottawa with Governor Tom Ridge, who signed the Smart Border Declaration between the U.S. and Canada with Canadian officials. U.S. Customs was a key player in the discussions that led up to this bilateral agreement. In fact, we have been meeting regularly with our Canadian counterparts on ways to strengthen northern border security since September 11th.
The declaration signed by Governor Ridge was the culmination of some of those efforts. The Smart Border Declaration focuses on three primary areas: the secure flow of people and goods; investments in common technology and infrastructure to expedite trade and minimize threats; and coordination and information sharing in our joint enforcement efforts to defend our mutual border.
An action plan put together to advance the Smart Border Declaration includes such measures as the adoption of permanent resident cards with biometric identifiers. It paves the way to do more clearance of people and goods away from the border. Specifically, it calls for the exchange of information that will allow us to do more prescreening of people and goods entering the U.S. from Canada, and vice-versa, far in advance of their arrival at the border. We are also working towards shared border facilities to expedite trade and travelers. And we will integrate our systems for intelligence and information gathering to improve our mutual targeting abilities.
Likewise, the customs administrations of the United States and Mexico are in the midst of a crucial bilateral effort to secure our southwest border, improve international trade processing, and strengthen enforcement.
These are furthers step in building the system of layered security that I believe is essential in the wake of the events of September 11th. Customs is building those layers through our efforts to harden our national borders; through our partnerships with international industry; and by stepping up our integrated border security efforts with Canada and Mexico.
Whereas before September 11th we saw this type of cooperation with the private sector and with foreign governments primarily in terms of streamlining the flow of trade, we now see it in a far more compelling light. And that is as a critical first step in defending our borders and our country, and in identifying and dealing with potential threats well before they reach our seaports, airports and land crossings.
In his latest article on the topic of homeland security in the January issue of Foreign Affairs, Stephen Flynn, whose writings some of you may be familiar with, refers to the attacks of September 11th as having exposed, and I quote, the "soft underbelly of globalization." And by that he means the international networks of travel and trade that, throughout the past decade and beyond, were thought to be relatively secure and thus served as the primary low-cost basis for fostering economic prosperity and our global system of commerce.
Flynn -- who I believe has some excellent ideas and who has stated the case for addressing our domestic vulnerabilities to terrorism as forcefully and eloquently as anyone -- goes on to note that:
is not just that the United States offers an almost limitless menu of enticing targets. It is that the existing border management architecture provides no credible means for denying foreign terrorists and their weapons entry into the United States to get access to these targets. Given the limited staff and tools border inspectors have to accomplish their mission, they face horrific odds."
To be sure, I agree with Mr. Flynn that border agencies like Customs face "daunting" challenges. We usually call this slide the "windows of opportunity for drug smuggling," but we could easily apply it to the opportunities for terrorists as well. As you can see, each year U.S. Customs processes close to half a billion passengers combining air and sea; over sixteen million containers that arrive by truck and in ships; about a million aircraft and 130 million cars. Every car, every truck, every person, every boat, every train and plane becomes a potential means for terrorists to exploit our open borders.
And those border flows are growing. To take the example of trade alone, last year the Customs Service processed 25 and a half-million trade entries. These are the individual import transactions that accompany each shipment of goods. There could be multiple entries, and there often are, within each container we process. Consider that in the last five years alone, Customs has witnessed a 60% increase in the number of trade entries processed, from 16 million in 1996 to the FY 2001 figure of more than 25 million entries. And we expect trade to continue to grow at a rate of 8-10% per year.
That Customs faces steep odds is crystal clear. The numbers show it. But where I take some issue with Mr. Flynn is in his assertion that we have no credible means for denying criminals, including foreign terrorists, access to commercial travel and trade.
The fact is that we do currently employ a wide variety of means to sift out threats from the vast flows of legitimate travel and trade. But in the wake of September 11th, it is obvious that we must do more. We must do more to push our sphere of activities outward, from points of entry in the U.S. to points of origin abroad. And we must do a better and more accurate job of pinpointing the threats. That is why we are looking to develop and expand the techniques we currently use to manage risk at our national borders to customs operations outside the United States.
Much has been made recently of the fact that Customs manages to inspect only about 2% of the total volume of trade entering the country each year. Taken alone, this statistic sounds alarmingly low. But Customs inspections are not based on just a random selection say, one out of fifty. It is based upon a sophisticated targeting process.
The Customs Service employs a multi-layered strategy of risk management and targeting to sort out suspicious goods from legitimate trade. That strategy is focused on the use of good strategic and tactical intelligence in targeting incoming goods; intelligence which we are getting much more of from the intelligence community. Every day, I receive a CIA intelligence briefing at Customs Headquarters.
But we also rely heavily on the advance information we receive on incoming shipments to select cargo or containers for inspection, and we deploy of state-of-the-art inspection technology at our ports of entry. Risk targeting also involves the application of sophisticated computer systems to sort and analyze the mountains of data that accompany imports into the United States. We are building powerful new systems right not to do that better.
The fact is that Customs already engages in a great deal of prescreening of people and goods entering the country using these techniques. This cues us as to who and what are "high-risk" and who and what are not. But, given the threat from international terrorist organizations, I believe the prescreening we do is not enough, nor is it done early enough in the process of arrival at our borders.
Let me provide you with what I believe is one of the most compelling examples.
Last May 25th, Malcom McLean passed away at age 85. Probably not many of you know who he was. He died in relative obscurity, though he was arguably one of the greatest contributors to the growth of the world economy in the 20th century. In an editorial on his death, the Baltimore Sun stated that "he ranks next to Robert Fulton as the greatest revolutionary in the history of maritime trade." Forbes Magazine called him "one of the few men who changed the world."
You see, Malcom McLean invented the shipping container in the 1930s in New Jersey, while sitting at a dock waiting all day for cargo he had carried there in his truck to be reloaded onto a ship. He figured out a better way to pack goods and transport them by sea which was to secure them in large steel boxes that could be easily loaded onto ships. And in so doing he came up with an idea that changed the face of global trade.
McLeans invention revolutionized the ease and efficiency of cargo shipping, as did his company, Sea-Land. He did for the ocean lines what highway construction in this country did for the U.S. trucking industry. Today, approximately 90% of cargo moves by container, much of it stacked dozens of stories high on huge transport ships that ply the sea lanes between the worlds mega-ports. Over 200 million containers per year are now moved between those ports, constituting the most critical component of the global trade. Oceangoing sea containers make up a vital artery of the U.S. economy as well. This chart shows the proportion of imports moved into the U.S. by ocean container, by dollar value. As you can see, vessel container traffic accounts for the vast majority 46% -- of the value of incoming cargo. Air cargo accounts for 23% of import value, while 31% arrives by other means chiefly by truck and by rail from Canada and Mexico.
As significant as sea container traffic is to the U.S. economy, we are less dependent on it than most other exporting nations, particularly those in Asia. That is because such a significant amount of U.S. trade is done over our land borders, with our NAFTA partners Canada and Mexico. But consider the example of South Korea, where it is estimated that 99.7% of the countrys trade by volume goes through its ports. In a country where merchandise exports and imports make up about 31% and 33% of GDP, respectively, the containerized shipping industry is absolutely critical to the national economy. Japan, Singapore, the EU, all industrialized nations, rely heavily on containerized shipping.
Thus, from both a logistics and economic perspective, we should be very concerned about the global trade and the ways it could be impacted by a catastrophic event involving sea containers. The effects would be far-reaching. Given the picture I just described, it is no wonder that one of the most lethal terrorist scenarios being discussed these days is the use of ocean-going container traffic as a means to smuggle terrorists and weapons of mass destruction into the United States. And it is by no means far-fetched.
Some of you may recall that last October, Italian authorities found a suspected Al Qaeda operative locked inside a shipping container bound for Canada. Inside the container were a bed and bathroom for the journey to Halifax, as well as airport maps, airport security passes and an airplane mechanic's certificate.
Of ever-greater concern are the possibilities that international terrorists such as Al Qaeda could smuggle a crude nuclear device in one of the more than fifty thousand containers that arrive in the U.S. each day. One can only imagine the devastation of a small nuclear explosion at one of our seaports.
As horrific as this damage would be, one must also consider what would become of the global shipping industry and global trade if a sea container were used to smuggle and then detonate a nuclear device. Simply put, the shipping of sea containers would stop. The American people, for one, would not likely permit one more sea container to enter the United States until there was a significantly greater assurance such as 100% inspections that no additional terrorist weapons would be smuggled into the country. Governments in other major industrial countries would no doubt adopt a similar policy, thus bringing the global economy to its knees.
Sound farfetched? One need only look to the fate of the airline industry after September 11 to speculate on how the detonation of a sea container would stop global sea container trade. What happened after September 11? All airline traffic in the United States stopped for almost a week, costing the airlines and the American economy billions of dollars. The airline industry still has not recovered from this loss, and the lingering reluctance of some Americans to travel by air.
And if anyone is wondering about the impact of a 100% inspection rate on our just-in-time economy, consider the situation in which the U.S. auto industry found itself in the days after the terrorist attacks. Ford, GM, and Daimler Chrysler, all of whom are dependent on a regular flow of auto parts from Canada and Mexico, could not get critical materials in time due to border back-ups, threatening a vital part of our economy. The fate of several major plants, and thousands of jobs, hinged on the delays cost by just two days of increased wait times.
The detonation of a nuclear device smuggled by way of a sea container would have a far greater impact upon global trade and the global economy. Even a two-week shutdown of global sea container traffic would be devastating, costing billions. But the shutdown would, in all likelihood, be much longer, as governments struggled to figure out how to build a security system that could find the other deadly needles in the massive haystack of global trade.
Obviously, such a shutdown would greatly impact the American economy, sending the prices of major imported products spiraling upwards. Cities and seaports dependent upon sea container trade would be crippled, as business would dry up resulting in massive layoffs. Indeed, the layoffs of airport workers at Reagan National Airport after September 11 would seem tiny compared to the layoffs associated with even a temporary shutdown of global trade.
In addition, countries whose economies are particularly dependent upon robust sea container transit -- like the Netherlands, Singapore, Japan, or as noted before, South Korea -- would be profoundly impacted, and would teeter on the edge of economic collapse.
So, the stakes are high and the system is vulnerable, and we must do everything in our power to establish a means to protect the global sea container trade, and we must do it now before some devastating event occurs. We must devise and implement a system to detect and deter threats to this vital segment of our infrastructure.
For that reason, I am proposing a new Container Security Initiative that would establish a security architecture for the protection of global sea container trade. Despite the daunting size and scope of the container shipping industry, I believe this is a very feasible initiative and I believe we can make it work. How do we do that?
First and foremost, we concentrate our efforts on the "mega-ports" of the world, the largest container ports -- and specifically those ports that send the highest volumes of container traffic into the United States.
Container traffic flowing into the U.S. arrives from two predominant areas Asia and Europe. The mega-ports within those regions can easily be identified. What is extremely important to note here is that these top ten ports just ten ports -- account for nearly half of all the container traffic entering the U.S.
With the exception of Rotterdam at number five, the top half of the list is dominated by the Asian countries, as Im sure youre not surprised -- Hong Kong, Shanghai, Singapore and Kaohsiung in Taiwan. And just to show you where those goods are headed, weve listed the top ten U.S. ports at which they arrive.
Here are the numbers behind the mega-port list. This gives you a look at the annual "throughput" of the top ten mega-ports in terms of their exports, by number of containers, to the U.S. Hong Kong is at the top, with close to 350,000 container shipments in the first ten months of 2001.
We also have it broken out in terms of the overall percentages. The top ten ports account for almost half of containers coming into the United States. Again, Hong Kong is the top exporter of container traffic to the United States. It is responsible for approximately 10% of vessel containers coming into the U.S. Shanghai, Singapore, Kaohsiang, Rotterdam and Pusan all hover around five percent. The remaining four ports in the top ten send anywhere from two to four percent.
I believe the United States must work in partnership with the governments where these mega-ports are located to build a new international security standard sea containers. If we can begin by focusing at least on these top ten ports, we will go a long way towards securing almost half of all container traffic coming into the U.S. Moreover, I believe that if the largest mega-ports commit to this concept, others will follow. And if defending our global system of trade is not a compelling enough reason to join, we can offer further incentives, such as expediting the processing of containers "prescreened" at those mega-ports that participate in the Cargo Security Initiative. This would be similar to the benefits we have in mind for those companies who participate in the Customs-Trade Partnership against Terrorism.
At the same time, in providing such incentives Customs would not abdicate its right to conduct trade compliance exams. Those would still be conducted at the U.S. port of entry. But having your containers checked and pre-approved for security against the terrorist threat at a mega-port participating in this program should and likely will carry tangible benefits. For one thing, it is likely that more containers would be routed to and through those ports.
What are the core elements of the container security initiative? It includes prescreening of containers overseas. A first step in this direction begins by examining and comparing our targeting methods with those of our international partners. And we should consider dispatching teams of targeting experts to each others major seaports to benchmark targeting and to make sure that all high risk containers are inspected by the same technology that can detect anomalies requiring physical examination inside the container.
The crux of good targeting is advance information. Customs uses it every day in the extensive targeting that we do on vessel cargo that arrives in U.S. ports. We know what is in 98% of the containers that land on our shores, thanks to a system known as the Automated Manifest System, or AMS. Customs has developed an extensive database of information on the shipping industry, its patterns, and all who participate in it through the manifests that every shipper is required to submit. The Automated Manifest System sorts through that vast database and picks up all the anomalies and all the red flags. Whatever deviates from the norm or is otherwise high risk is scrutinized at the port of entry. That system has functioned as Customs main method of picking the needles out of the haystacks, and it has served us very well.
However, that works fine for seizing drugs and other contraband. But even if we select a container for inspection by x-ray technology at the port of entry on the suspicion that it contains a weapon of mass destruction, by that time it could be too late. And that is fundamentally why we need to push our zone of security back further in the importation process.
Along with that, we must enhance the quality and quantity of advance information we receive from shippers. Here in the U.S., we are attempting to get shippers and importers to provide more complete information up-front in the import process. While having the shipping manifest is certainly helpful, a complete set of data would include the entry form that is currently submitted by the importer once his or her cargo arrives. Legislation now pending before the Congress would require that information earlier, before arrival at the port of entry. For Customs, it would increase the amount of information we can input into our targeting systems, and thereby enhance our ability to spot the red flags.
In addition, I want to see that information made available to U.S. Customs not just before arrival at our own ports of entry, but before containers even arrive at the mega-ports from which they are transshipped to the U.S. For example, we should know all there is to know about a container that arrives in Rotterdam and is destined for the U.S. before it arrives in the Netherlands. And if an anomaly appears, we should inspect it at that port, the outbound port the port of origin; not the port of destination.
Such outbound inspections of containers at the mega-ports will be enhanced by making the latest x-ray inspection machines and radiation detectors available to or required by all who participate in the Container Security Initiative. The use of inspection technology is a major asset in our current efforts to inspect cargo coming inbound to our ports of entry, both in terms of our ability to expedite trade and to detect security breaches in containerized cargo. I am talking about devices such as mobile, truck and seaport container x-ray systems that obviate the need for physical inspection of containers and provide us a picture of what is inside the container. I envision the mega-ports being able to exchange images obtained through the use of such equipment electronically, and to have the capacity to consult with one another on any anomalies detected prior to the release of the cargo for its destination overseas.
Other technology we are exploring includes a crane-mounted radiation detection system to detect radiological materials in containers. This system would supplement the four thousand radiation pagers currently in use by Customs officers that I alluded to earlier.
Were also moving ahead on the development of electronic seals that would alert us to cargo tampering while in transit. Here is a version of an electronic seal thats being used right now. Though this isnt exactly what Customs would use, you can get the idea from this seal. It functions like a padlock, with a transponder attached. It fits over the holes on the handle of a container. Anyone seeking to breach the container would have to remove the pin, like so. But once that happens, a signal goes out to alert the shipper, the importer, or Customs. And you can guarantee that container will be intercepted and examined well before its arrival.
Thanks to President Bushs Terrorism Supplemental Bill, which he signed last week, U.S. Customs will be able to acquire more non-intrusive technology to protect America. The bill provides substantial funding for additional inspection technology. We plan to make very good use of it, and I would like to see the mega-ports acquire more of this technology as well, to conduct outbound inspections of containers headed for the U.S.
Ive made an effort to sketch out a few core pillars in the Container Security Initiative. This is a concept that we are still busy refining. However, I believe it is the logical "next step" to the Customs-Trade Partnership Against Terrorism. It brings us up to another level in our layered security framework, from the factory floor to a major choke-point in the global trading system.
As with any new proposal, implementation of this initiative will not be easy. But the size and scope of the task pales in comparison with what is at stake. And that is nothing less than the integrity of our global trading system upon which the world economy depends.
Even before September 11th, with our world becoming more and more interconnected in so many ways, this was the direction we were heading with our efforts to create seamless borders for global commerce. Now, after that fateful day, our agenda has taken on a much greater security dimension, and an indisputable sense of urgency.
And as I have discussed today, our twin goals of facilitation and enforcement are more tightly bound than ever. In protecting America against a terrorist threat, we are looking not only to save lives; we are looking to save livelihoods.
Of course, this is not just Customs challenge. It is the challenge of everyone in this room, of everyone who serves the cause of maintaining Americas freedom and security, as CSIS has done for the past forty years.
Together, we must strive, as Tom Friedman put it so well the other day in the New York Times, "to maintain a free and open society while being a little less open, a little less trusting, a little more vigilant and a little more risk-averse."
If history is any guide, I know we will succeed.
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