Establish an International Trade Data System

Establish an International Trade Data System

We've Got Fresh Tropical Fruit

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]

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.