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 Letter of Introduction
 IT06 Report - Executive Summary
IT06 Report - Report On IT06 for the Government Information Technology Services Working Group (GITS) of the National Information Infrastructure Task Force (NII)
Technology Initiative Number Six, By the IT06 Task Force

(05/16/1995)

Introduction
IT06 Establishment of an International Trade Data System
IT06 Task Force
International Trade Today
Status of Present Day Trade Data Systems
Concepts and Principles of an International Trade Data System
Benefits of an International Trade Data System
Recommendations
Conclusion

Introduction
In June 1994, the National Performance Review (NPR) published a report entitled Reengineering Through Information Technology. The report states that the administration has identified technology as the "engine of economic growth'' and adds that "public officials should view information technology as the essential infrastructure for Government of the 21st Century''.

The report outlines -- in thirteen initiatives -- a three-part agenda for spreading information technology's benefits to the Federal Government. These initiatives are intended to be the Government's information technology road map for the future.

The report recognizes, though, that for various reasons -- some regulatory, some legislative, some cultural -- the Federal Government presently lacks access to the most efficient, cost- effective information technology products and services available. It also notes that the Government has previously lacked strong leadership in the information technology area as well as a coherent plan on how to most effectively tap information technology's potential.

The three part agenda in the report aims to: (1) Strengthen Leadership in Information Technology, (2) Implement Electronic Government, and (3) Establish Support Mechanisms for Electronic Government. The thirteen individual initiatives identified range from developing clear strong leadership within the Government, to implementing electronic benefit transfers of food stamps, to improving Government acquisition of information technology.


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IT06 Establishment of an International Trade Data System
The sixth recommendation (IT06), which this report addresses, focuses on the establishment of an International Trade Data System. This recommendation grew out of work already in progress at the Customs Service and other cooperating federal agencies to improve the handling of international trade. The initiative calls for the development of an electronic system to meet the needs of Federal Government agencies involved in international trade as well as the trade information needs of businesses and the general public.

To act on the NPR recommendation, a Government-wide IT06 task force was formed in September 1994. The task force presently includes staff from fifty-three cooperating Federal agencies involved with international trade and transportation issues. Over 150 information workers have contributed their efforts to this project.


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IT06 Task Force
The IT06 Task force consists of participants from 53 participating Federal agencies. The task force is led by a volunteer Steering Committee who, in turn, lead and direct four sub-committees. Supporting the IT06 Task Force and Steering Committee are two full-time staff from U.S. Customs International Trade Data Exchange Office (Intradex).

All committee members, and particularly the steering committee, have volunteered many hours to IT06 analyzing the licensing and permitting requirements , the operational requirements, the legal issues, the statistical reporting requirements, and the trade promotional requirements that need to be satisfied by an International Trade Data System. Attached as appendices are the reports of each of the sub-committees.

Among the first tasks completed by the Task Force was the drafting of a common vision for the International Trade Data System. It reads:

The U.S. Government in concert with the international trade community will develop and implement an integrated systems approach for the collection, use, and dissemination of international trade data. This effort will provide vastly improved service to U.S. businesses, increase U.S. competitiveness, reduce Government burden, and coordinate and streamline Government operations.

Agencies will cooperate to: establish standard international trade data requirements; eliminate collection, processing and reporting inefficiencies; provide more accurate and timely information for trade analysis; and more effectively disseminate international trade data for both Government and private sector purposes.

Through cooperative Government and international trade community efforts to eliminate redundancies, streamline processing, and share information, the U.S. Government and the private sector will achieve a significant step toward a "Government that works better and costs less.''

The purpose of the vision is to focus the working group on the tasks that lay before it, and to provide a compact for the individual agencies to work together for the Government as a whole.

A survey was completed of over 60 Federal departments, agencies, bureaus and offices involved in international trade. The survey includes the laws that each of the organizations enforces, the merchandise encompassed within their programs, any licensing and permitting requirements, and contact names and addresses. The Task Force staff is working to integrate the data into a relational database with an easy to operate interface. With continued development the database will be a useful tool for Federal users, state and local officials, and the public. The Commerce Department is considering using this a model for its public information trade kiosks in the main lobby of the new International Trade Building at the Federal Triangle. The public availability of this information will meet one of the recommendations of the NPR IT03 initiative to provide easy access to Government information and services.

The sub-committee reports were used to create a matrix of requirements for the International Trade Data System. These requirements are broken down into four categories, (1) Collection of data, (2) Processing and storing data, (3) Dissemination of data, and (4) Administration of the system. This structure of requirements will serve as a basis for further analysis and problem resolution as the project continues.

A high level model of how the Federal international process looks today was prepared using project management software. The model graphically depicts the very basic processes that are duplicated by many Federal trade agencies and will serve as the base line from which to develop a detailed design of the International Trade Data System.


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International Trade Today
The Federal Government has a variety of responsibilities with respect to international trade and a number of different systems have been developed to assist in meeting these responsibilities. Federal agencies are responsible for transactions involving both exports and imports. The responsibilities can be broken down into four areas.

One set of responsibilities involves the issuance of licenses and permits that under some conditions are required to move some goods internationally (such as the Bureau of Export Administration for the export high technology items, the Bureau of Alcohol, Tobacco, and Firearms for the importation of firearms, and the Department of Agriculture for the importation of some agricultural products). These responsibilities deal primarily with national security, public health and providing orderly markets for international trade.

Closely related are the functions of processing the actual export and import declarations for accuracy, collecting duties, taxes and fees, and performing actual examinations prior to release of international cargo (as done by U.S. Customs, FDA, the Department of Agriculture, and others). These functions include protecting the health, safety, and economic welfare of U.S. citizens, as well as enforcing trade and transportation laws.

A third set of functions is concerned with developing information about international trade and transportation through the compilation and analysis of statistical data. This information is used by agencies such as the International Trade Commission and the United States Trade Representative for negotiating and monitoring trade agreements. The data is also used by private businesses to locate new markets and monitor competition. It is used as well by enforcement agencies such as Customs and the International Trade Administration of the Department of Commerce for evaluating trends and trade practices.

A fourth set of functions involves providing information to the Government, private industry and the public to promote trade. A number of Federal systems such as the National Technical Information Service's FedWorld, STAT-USA's National Trade Data Bank, the Trade Policy Information System's COMPRO and the Foreign Agriculture Service's US TRADE system receive and distribute trade and market information for use by many federal agencies and the public.

These complex and often redundant processes and systems provide significant opportunities for the IT06 Task Force to improve Government service to U.S. businesses while reducing costs to both Government and business. As a bonus, a completely systematized approach to collecting, processing, evaluating, and distributing trade data will immeasurably improve their quality.

What follows is a discussion of the requirements that resulted from the work of the IT06 Task Force.


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Status of Present Day Trade Data Systems
The movement of international cargo depends heavily on the exchange of information among industry trading partners and Government agencies. Whether to secure the required licenses or permits to clear U.S. borders or to provide for the actual border crossing, significant amounts of information are required and exchanged. Many agencies have developed electronic capabilities to handle these data exchanges.

By tradition, agencies systems evolved their procedures independent of one another based on their own individual missions and requirements. Little, if any, attempt was made to establish common data and processing requirements among all the agencies in the trade process.

In recent years many agencies automated the traditional paper processes thereby incorporating in an automated world the inefficiencies inherent in the handling of paperwork. The result of this evolution is that the government has a mixture of expensive automated systems that duplicate data, do not interface well with one another, and, predictably, lose data. As a consequence, the government loses the optimal conditions that could be available for logical evaluation of the nation's trade posture.

Exporters and importers who must deal with these systems, some of which are electronic and some paper, are often confounded by the duplicative and non-uniform reporting and recordkeeping requirements of the various Federal agencies. Automated systems implemented in the 1980's to assist in processing international transportation and trade have reached or are now nearing the end of their expected life cycles. The systems may still handle transaction-by-transaction details, but do not often provide efficient analysis or reporting capabilities. As agencies plan replacement systems, they must plan on coordinating systems development.

Just determining which agencies regulate what commodities is a problem for businesses as well as Government. When the IT06 project began, there were thought to be about forty agencies involved in international trade. The exact number was not known because no central resource existed to identify the various agencies or their roles and responsibilities. In the first six months of this project, over sixty Federal agencies were identified that have a role in international transportation and trade regulation, monitoring or promotion. This experience further documented why the business community has difficulty knowing what rules they are required to follow, what information they have to report to whom, and why the process is time consuming and expensive.

Agencies use different methods to obtain required data, review their data and to make decisions about the disposition of goods and the handling of conveyances. As a result, traders cannot depend on consistent federal practices or processes. The ability to share and compare data collected in these individual domains is very limited, so determinations made by one agency are not normally conveyed or available to any other agencies. In many cases, because of their physical proximity to the borders, the U.S. Customs Service collects data on behalf of other regulatory agencies although no convenient method is in place for communicating that data to the responsible agency nor to obtain guidance from that agency. This lack of convenient communications contributes to serious gaps in enforcement and prevents easy compilation of trade information for enforcement purposes as well as government policy-making and public dissemination. There is no consistent method for completion of Federal trade processes.

An example of the benefits of shared communications is an experiment in data exchange between Customs and FDA that began in 1991. These agencies began to electronically exchange information on import declarations for commodities regulated by both agencies. An immediate discovery was how similar the data needs of the two agencies were. As a result, processing times decreased dramatically. Before the installation of the FDA electronic interface with Customs, average time to release of FDA regulated goods was more than 48 hours. Today, in the ports where the interface is fully functional, average release times have been reduced to less than 24 hours (when review is not required, release actually occurs within 15 minutes). This is a significant benefit to business, but it also frees up government personnel to do other work because electronic risk assessment can now help segregate low risk transactions from higher risk transactions.

Though imports and exports involve very similar commercial data and are often transacted by the very same business partners, federal agencies classify them using two different numbering systems. The schedule for exports is much less detailed than that for imports. The result is that comparisons of imports to exports are almost impossible to any but the most aggregate level of detail.

Because of the lack of standardization of requirements and the duplicative reporting of shipments to multiple Federal agencies, an increased potential exists for errors to occur and for significant discrepancies to be hidden. Also, little opportunity exists to maximize Federal enforcement strategies when trade information is known only by one agency. These conditions and the fact that so many Federal agencies perform their international processes independent of other Federal trade agencies create costly non-tariff barriers to U.S. businesses, hinder efficient traffic flow, add to Government and business costs, and make data analysis difficult. Today, the Department of Agriculture and U.S. Customs run independent targeting systems that do not coordinate with one another. It sometimes happens that the Department of Agriculture will examine a shipment, followed shortly thereafter by an additional examination by Customs. If agencies could share information on import transactions, the examination of containerized shipments could be coordinated for one time, thereby avoiding the costs to business of multiple openings and the resultant delays.

Joint examinations also facilitate the exchange of information. Recently, a shipment of grapes exported from Canada were accepted by Customs as Canadian origin. They were inspected, however, by the Department of Agriculture and identified from information as Chilean grapes. This coincidental experience suggests that the lack of shared information among agencies produces erroneous information, probably lost revenue for the government, and poor information for public policy formulation.


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Concepts and Principles of an International Trade Data System
The proposed International Trade Data System would integrate the different government trade and transportation data processes into a system that provides a standard means of gathering, processing, storing, and disseminating import and export trade data. Agencies would share data as needed to support their individual agency missions while maintaining agency specific requirements and information in their own files. The system would run on a standardized technology platform.

The system would provide for the electronic exchange of foreign issued licenses, permits, and other documents required of trading parties as well as allow the international electronic exchange of commercial data. It would allow for public and interagency notice of licensing and permitting decisions, and accommodate the decrementing of licenses. Control of the license and permit issuing processes, however, would be maintained by responsible agencies. At some point in the future, the process for filing an application for a license to the issuance of it could be fully electronic.

To accommodate a constantly changing economic and political world, the system would be designed to have the flexibility to be easily modified. New trade laws, regulations, license and permit requirements would be more easily incorporated into the integrated data system.

A very important part of the International Trade Data System would be to provide a convenient entry point for business to provide international trade data to all agencies needing to be involved in a transaction. Importers and exporters would only have to provide the information once and it would be routed among the appropriate agencies. Importers would not have to file identical information on a CF 7501 Form with Customs, an FDA Form 701 with FDA, an HS-7 Form with the Department of Transportation or an EPA 3520-1 Form with the Environmental Protection Agency. Names, addresses, descriptions, classifications, serial numbers would have to be provided only once and the information would be provided to all appropriate agencies.

The data system would also standardize trade and transportation data for both imports and exports that is used by the operational agencies. This standard data would be based on the information normally established among trading partners in the customary conduct of business. Such elements as commercial descriptions and quantities, names and addresses of parties to shipments, and departure and arrival locations, all of which are part of normal commercial information would be defined so that they mean the same thing to all users.

Standard definitions of terms, standard codes and abbreviations for countries, goods and conveyance modes, and unique transaction and shipment identifiers would simplify procedures and help streamline processes. The system would also use a standard, international communications protocol, such as United Nations/Electronic Data Interface for Administration, Commerce, and Transportation (UN/EDIFACT).

Those data elements determined to be necessary for monitoring specific goods, such as can size for food products (needed by the FDA), would be added to the commercial-level record of the International Trade Data System and made available to the applicable agency or agencies. By standardizing and minimizing the data collected and by eliminating duplicate data, agencies would be able to integrate many of their present systems for selecting and targeting potentially violative shipments and thus provide more efficient and effective enforcement of trade statutes and regulations. Improved analysis of trade and transportation flow and trends would also enhance trade promotion activities and provide a better basis for establishing and negotiating international trade policy.

Aggregate-level trade data, of the type now made available to the public by the Bureau of the Census, would be available electronically through the International Trade Data System to U.S. businesses and the general public.

The trade promotion component of the International Trade Data System would provide information on both exporting and importing to the international trade community. Based on the Department of Commerce's National Trade Data Bank for export promotion, the system would provide user-friendly electronic access to basic export and import information, market research reports, overseas contacts, duty rates, and information on international financial assistance. Reference material such as U.S. Export Regulations, Customs Regulations, and an International Trade Terms Directory would be on-line. A guide to U.S. agencies involved in international trade would be available. Access to U.S. contacts at the Federal, State, and local levels including names, phone and fax numbers, and e-mail addresses would be in the system. Most importantly, the public portions of the system would be readily available to the general public through the internet, and from kiosks in World Trade Centers, Federal Buildings, public libraries, and Customs Houses around the country.

Proof of concept for the International Trade Data System could be the North American Trade Prototype, a cargo and conveyance processing system being proposed jointly by Canada, Mexico and the United States under the auspices of the Heads of Customs Conference. This prototype, if approved for development, will allow the customs and immigration services, and other participating government agencies of all three countries to experiment with advanced processing and documentation systems and incorporate new techniques to facilitate and regulate the flow of trade among the three countries.

Key features of the Prototype are commercial transaction level information for all shipments, standard data elements and definitions, pre-arrival processing, Radio Frequency Identification Devices mounted on conveyances to provide advance notice of arrival, paperless transactions, and UN/EDIFACT communication protocol. Although the prototype would be limited in scope, the concepts that would be tested are a reflection of the full scale data system envisioned by this report.


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Benefits of an International Trade Data System

The benefits an International Trade Data System would provide are:

The use of standard data and descriptions for both imports and exports would allow, for the first time, direct comparison of imports and exports. It would reduce the chance for error in the preparation of import and export documents, and simplify and enhance analysis of trade data.

The present burden of requiring the international trade community to send data down several paper and electronic ramps to different Government agencies, with each agency duplicating, re- configuring, and even printing and resending that same data to other agencies down yet another path is costly and inefficient both for industry and the Government. By cooperating in the collection and use of naturally occurring commercial data, Government agencies could reduce the analysis and reporting burden. Reduction of government and trade community processing time and costs would result from this elimination of duplicate and unnecessary reporting.

Today, the use of nonstandard terms results in additional data being collected. For example, Customs uses a data element called the MID (originally Manufacturer Identification Number). The MID, which is derived from the seller's name and address on the invoice, may actually be the manufacturer, the seller, or the consignor. While this information is precise enough for Customs use, it is insufficient for FDA, who must unequivocally know the manufacturer of the product in order to evaluate the risk to public health. Thus, FDA shipments need to show the actual manufacturer in addition to the Customs MID.

Today, the Customs Service provides import data both manually and electronically to the Bureau of the Census. Customs also provides some export data to the Census Bureau manually while certain exporters provide other data electronically to them. The Census Bureau compiles and aggregates the data. They then publish the data for other agencies and the private sector. Clearly, a standardized set of data requirements and consistently verifiable means of receiving and processing the data would likely improve the speed and quality of information over the current processes.

New programs that reduce the opportunity for fraud in international transactions while reducing processing time and costs would be the norm in the data system. Programs such as the Electronic Visa Information System (ELVIS) and the newly developed "Electronic Meat Health Certificate'' are the prototypes of such processing. ELVIS provides accurate up-to-date information on foreign government issued textile visas required for entry into the U.S. It is also extremely effective in preventing counterfeiting of the visas. Currently, four countries participate in the program, China (mainland), Korea, the Philippines, and Singapore. With increased U.S. efforts to prevent illegal transshipments of textiles and apparel, foreign governments are strongly encouraged to participate in ELVIS, and more countries are expected on line in the near future.

The "Electronic Meat Health Certificate'' is a demonstration project among the government of Australia, the U.S. Department of Agriculture, and U.S. Customs to show that health certificates for fresh meat can be transmitted electronically between Australia and the U.S. These certificates certify that imported meat is free of disease, and are required by the Department of Agriculture before fresh meat can be imported into this country.

A document that could be a high priority for electronic transfer among governments through the Data System are phyto- sanitary certificates. These are documents issued by foreign governments that certify that the shipment of agricultural products is free of pests and disease. They are required by the Department of Agriculture on many shipments of agricultural products from almost every exporting country in the world. The ready availability of these documents electronically to agricultural inspectors would immeasurably speed the release of many shipments.

The International Trade Data System would provide Federal international trade agencies and other authorized users more timely access to important trade information. The system will have the potential to pass data along almost instantaneously, which will dramatically speed the movement of goods and information, improve enforcement agencies capability of protecting public health and safety, and supply time-critical policy information. Government agencies would have the ability to search and analyze trade transactions according to their needs. By collecting trade transaction and transportation information more efficiently and aggregating it more quickly and consistently, the International Trade Data System would provide more accurate and timely information to keep U.S. businesses competitive in a global economy.

The public information of the data system could be made widely available to the importing and exporting community and the general public through the internet and in kiosks in Customs Houses, World Trade Centers, and public libraries. This availability would raise the awareness of those Americans interested in international trade by providing easy access to world trade issues and by supporting business research and analysis that is vital to U.S. competitiveness.

The information in the data system would be international trade oriented and would encompass both import and export information. It would not duplicate the information found in the electronic bulletin board Fedworld, or the soon-to-be created Government Information Locator Service (GILS) and other public databases. These databases are domestically oriented and serve a different clientele than the one the International Trade Data System would serve.


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Recommendations
The Task Force recommends that the administration proceed with the development of the International Trade Data System. To oversee the development, it strongly recommends that an inter- agency IT06 Board of Directors be appointed, provided with the necessary resources, and given broad decision-making authority. The Board must have the authority to direct agencies to allocate budgets for the International Trade Data System, coordinate their system development with those of the system, and request staff to serve at various levels on a Secretariat.

The following actions must then be accomplished:

The purpose of the Board of Directors is to provide leadership and decision-making for an inter-agency project that surpasses the responsibilities and authority of any one agency. We suggest that the Board be selected from senior policy officials from the operational, statistical reporting, licensing and permitting, policy, and trade promotion organizations and appointed to a one year term. Because the Secretary of the Treasury was delegated the responsibility of developing and implementing the International Trade Data System, we recommend that a senior Treasury official be designated as chairman of the Board of Directors. The Custom's Intradex staff could serve as the Secretariat of the organization.

The project to date has been led by representatives from the U.S. Customs Service, the Federal Trade Commission, the Office of Management and Budget, and the IT06 Steering Committee which represents the agencies involved with international trade functions. In a relatively short period of time, the representatives of over fifty Federal agencies agreed upon the need and basic requirements of an International Trade Data System. However, the Committee has gone as far as possible. A system as complex as the International Trade Data System will require a significant initial investment of money and time in the planning stage. The Executive Office of the President, where the Office of Management and Budget has a role to improve Federal information technology practices, should review these concepts and recommendations. The Government Information Technology Services Working Group (GITS) of the National Information Infrastructure Task Force, which has specific oversight responsibility for IT06, and the Treasury Department, which is assigned primary responsibility for the development of the International Trade Data System, must confirm their support for this project. Further commitment by other Cabinet-level departments involved in international trade is also important to legitimize and reinforce the consensus efforts of those already participating in the development of this system.

As in all matters such as this, everyone may agree with the vision, but to work out details requires a willingness for change that is sometimes adverse to the direction taken by individual agencies. The IT06 Task Force believes that authority to make cross-agency decisions that would be vested in this Board is the only way possible to obtain the multi-agency re-engineering of international trade processes that will be required to make the International Trade Data System a reality. The Board of Directors must have the responsibility to address the alternatives and decide the direction for development of this system for the Government as a whole. It should be understood that these decisions and action will have to be achieved within agency budget ceilings. The Board will have the authority to recommend reallocation of existing resources as part of coordinating the development process. The Board will work with OMB on the development and implementation of cross-cutting budgets to fund the integration of the different agency systems.


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Conclusion
International trade flows into and out of the United States have grown from $82 billion in 1970 to over $1 trillion in 1994. The magnitude of these flows is such that an integrated data system is critical if the Government is to maintain public health and safety, enforce U.S. laws intended to prevent illegal trade practices, and enforce the U.S. export control laws, and serve the public's needs. The proposed International Trade Data System will improve the United States capability to encourage and expand international trade.

References
From Red Tape to Results
Creating a Government That Works Better & Costs Less
Reengineering Through Information Technology
(Accompanying Report of the National Performance Review. Vice President Al Gore. U.S. Government Printing Office. September 1993. Published June 1994.)

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