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Reengineering Through Information Technology

Recommendations and Actions

IT06: Establish an International Trade Data System

Imagine this: A local businessman operates a specialized market in selling fresh tropical fruits and vegetables that have an extremely short shelf life. His business was made possible thanks to the new international trade data system that eliminates duplicate import forms and allows speedy preclearance of international exports and imports.

The United States is competing in a global economy. The volume of goods traversing international borders continues to grow. Over 40 federal agencies collect, process, analyze, and disseminate vast amounts of international trade data to accomplish various trade-related governmental functions, which include the collection of duties and the enforcement of trade and contraband statutes. To accomplish its mission, the U.S. Customs Service developed and operates the Automated Commercial System (ACS). Today, this computer system collects complete trade data on 95 percent of all U.S. import transactions, facilitates the movement of goods by means of electronic releases, and interacts with more than 1,500 trade participants.[1]

Using ACS, Customs has established information-sharing capabilities with several agencies including the Fish and Wildlife Service, Food and Drug Administration, Internal Revenue Service, and Department of Transportation. Work is in process to develop data exchange capabilities with the Food Safety Inspection Service; Environmental Protection Agency; and Bureau of Alcohol, Tobacco, and Firearms. Additionally, data exchange capability exists with some foreign governments, such as Canada and Singapore, for trade statistics and visa verification. Canada, Mexico, and the United States are developing ways to develop uniform trade documentation and procedures among the three countries.

Trade data information requirements are growing. For example, in 1986, one ocean carrier began receiving bill of lading and manifest data electronically. In 1993, 76 carriers electronically supply ocean bills of lading for 80 percent of all ocean import tonnage. In 1984, brokers and importers represented 8 percent of all Customs data entries. In 1993, 1,324 brokers and importers provide 93 percent of the data entered into ACS. They use the system to obtain release of cargo, pay duties, update importer data, and carry out many more functions. ACS maintains 855 million trade records. On a daily basis, there are over 350 million requests for information, and 600,000 transactions are processed.[2]

The Office of the United States Trade Representative, Department of Commerce, International Trade Commission, and other agencies have access to a number of other trade databases to support the development of trade policy and the conduct of international trade negotiations. These have been maintained on computer facilities operated by the National Institutes of Health (NIH). However, NIH has advised these agencies that new computer facilities need to be located to support these databases. This presents an opportunity to revise and integrate these databases for governmentwide access.

The U.S. Customs Service and other trade agencies have implemented electronic systems to interface with the private sector for business transactions. However, two different information-sharing standards are now in use--the American National Standards Institute Accredited Standards Committee X.12 and the United Nations Electronic Data Interchange for Administration, Commerce, and Transport (UN/EDIFACT). The UN/EDIFACT standard is a compromise between the U.S. standard and the European Transportation standard.[3] In late 1992, the American National Standards Institute voted to migrate to the EDIFACT standard by 1997.[4] Close coordination of this migration effort among federal agencies is needed to facilitate electronic commerce and the development of interoperable computer systems.

Need for Change

A basic problem in today's trade environment is that various government agencies tend to develop costly systems and procedures on the basis of their individual needs for trade information. In many cases, individual agencies require duplicative reporting, resulting in enormous and unnecessary costs to those U.S. interests involved in international trade. In addition, the approach to system standards within the government is fragmented.

Federal trade agencies and the private sector must have access to trade data rapidly and accurately not only to enforce compliance with existing laws and to account for revenues, but also to support U.S. efforts effectively in a global marketplace. The executive branch uses trade data in determining duty ratios, and Congress uses trade data to make trade policy determinations. Although ACS maintains 95 percent of current import data, there is not a similar reliable source of export information. The Office of the U.S. Trade Representative, for example, may have to go to 11 sources other than the U.S. Customs for necessary trade information. There is no single source of reliable, accessible trade data.

Without a single source, the same information is often entered on many different forms during many different processes. For example, one customs broker estimates that there are 14 different processes now required for an import transaction. The number of required processes depends on the type of goods coming into the United States.[5] For some goods, multiple agencies must be notified and provide approval. Paperwork related to export shipments is also very costly to the private sector. It is estimated that for a single export shipment as many as 40 different paper documents may be required. The total cost of these documents is estimated at between $150 and $200 per transaction, or higher.[6] A customs broker is responsible for the import transaction declaration on goods, which may be likened to a tax return being filed for all imports.

In addition to Customs documentation, other government agency regulations require the submission of forms for foreign trade transactions. The Fish and Wildlife Service, the Environmental Protection Agency, and the Department of Transportation, for example, require large volumes of forms. At one time it was estimated that in excess of 4 million trade-related documents are submitted annually to government agencies other than Customs.[7]

Since the import and/or export data must be entered on each form, often manually, delays are frequent. The result can be missed delivery, spoiled goods, and lost windows of opportunity (especially when trading with other countries). These actions result in lost revenue both to U.S. businesses and the government.

Federal agencies must provide or make available selected trade information to partners of the United States. These partners include the trade community (brokers, importers, exporters), the transportation community (carriers, freight forwarders, couriers, the Bureau of Transportation Statistics), and foreign governments. Other major users of comprehensive trade data are the Trade Policy Committee and various congressional oversight committees.

Existing agency databases and computer systems are limited in their ability to integrate and disseminate trade data since none were designed to support such a broad community of interest. For example, limitations to ACS include difficulty in retrieving information, costly hardware expansion, and 10-year-old software programs that are difficult and expensive to maintain. Customs has established a Future Automated Commercial Environment Team (FACET) to address these shortcomings and chart a course for a future system.

An International Trade Data System, an expansion of the current U.S. Customs Service ACS, is needed to provide the following enhancements:

---more accurate and complete trade statistics and data,

---standardization of both import and export data collection,

---reduction of government and trade community processing time and costs,

---knowledge to promote informed compliance with trade statutes,

---elimination of duplication and unnecessary reporting,

---enhanced fraud detection capabilities,

---improved financial controls, and

---immediate access to trade data.

The existence of a reliable and easily accessible source of both import and export trade information would streamline the trading process, eliminate duplication and unnecessary reporting, and enhance American competitiveness in the international marketplace. All the trade data users will benefit from such a system; examples of its applications include the following.

---ACS is accessible via Treasury's Consolidated Data Network, which offers the potential of a single communications network to link the various law enforcement agencies responsible for guarding against money laundering, the export of controlled high technology, and the importation of narcotics, hazardous waste, and other contraband.

---With an electronic means of using export data in one country as import data to another and the corresponding rapid access of information, a Customs official could evaluate a shipment before its arrival at the border. Additionally, the system could provide information to analyze and reject risky cargo and accept non-risky cargo.[8]

Action

Develop and implement a U.S. Government International Trade Data System. (2)

By April 1994, the Secretary of the Treasury should begin developing an International Trade Data System. The Treasury should seek technical support for the project from the United States Trade Representative; the International Trade Commission; the Departments of State, Labor, Agriculture, and Commerce; and other stakeholders. An implementation plan should be completed by January 1995, and submitted to the Government Information Technology Services Working Group for approval.

This project would be accomplished by establishing an integrated database for the collection and dissemination of all international trade data through the expansion and redesign of the U.S. Customs Service Automated Commercial System. To implement the recommendation, Customs should expand FACET and make the team responsible for developing a system design for a commercial environment that will reflect the future needs of the U.S. government and the trade community.

The federal government must provide leadership to develop and pursue a coordinated national electronic data interchange (EDI) policy for interacting with domestic and international organizations. To date, there has been no U.S. effort to assess the political and business requirements for developing a comprehensive approach for the use of EDI. Migration to EDIFACT as a standard is now endorsed, although questions still exist regarding its management and use--particularly its relationship to other standards and responsiveness to regional and national concerns. As a part of its trade data system infrastructure, the federal government should provide proactive leadership in supporting worldwide EDI policy and standards. Specifically, it should designate a single government entity as the EDI policy and coordinating body.

Cross References to Other NPR Accompanying Reports

Department of the Treasury, TRE10: Modernize the U.S. Customs Service.

Endnotes

1. U.S. Department of the Treasury, Customs Service, "Automated Commercial System Fact Sheet," February 1993, p. 1.

2. Ibid., p. 3.

3. UN/EDIFACT, Introduction to UN/EDIFACT (April 1991.)

4. See ASC X12 EDIFACT Alignment Task Group, "EDIFACT Alignment Ballot Results," June 29, 1993.

5. Telephone interview with the Chief Executive Officer of the Fritz Company, New York, July 1993.

6. Lavery, Hank, "Crossing the Ocean of Paperwork," Global Trade and Transportation, vol. 113, no. 4 (April 1993), pp. 31-32.

7. Telephone interview with FACET Study Group, U.S. Customs Service, Washington, D.C., August 25, 1993.

8. Ibid.

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