United StatesChange Country

Digital Trade Technologies Revamp Customs and Border Protection

By Elliot M. Kass

To keep pace with the rapidly changing commercial landscape and the ways in which new industry players and technologies are transforming the global supply chain, U.S. Customs and Border Protection has launched “The 21st Century Customs Framework.”1

The Customs and Border Protection initiative, announced at the tail end of 2018, coincides with a similar undertaking by the World Customs Organization (WCO) that aims to facilitate the rapid movement of goods and people across borders. That initiative is dubbed “SMART borders for seamless Trade, Travel and Transport.”2

 

Seeking Digital Solutions to Simplify Cross-Border Transport

 

Both initiatives are examining how new digital technologies, combined with the latest data management techniques, can simplify and secure cross-border transport as well as further automate and standardize the customs process. Chief among the issues the Customs and Border Protection agency is investigating are:

 

  • How the agency, which falls under the U.S. Department of Homeland Security, can work better with e-commerce platforms to identify and deter illicit shipments.
  • Which technologies would be useful to increase border security and predict the likelihood of unlawful actions by people and business entities?
  • What changes Customs and Border Protection needs to make to its legal and policy framework to accommodate digital technologies already adopted by the private sector.
  • What data should importers and the customs agency be sharing to facilitate trade and enforcement.
  • Which international best practices for customs and border security should the agency adopt.
  • If there are ways the agency can improve its process for collecting duties and fees.

The issues under review at the WCO are very similar and include enhancing border security and automating common customs procedures. The mission of the WCO, founded in 1952 as an independent intergovernmental body, is to improve the efficiency and effectiveness of customs operations and to promote international commerce. The organization represents 183 national customs administrations that collectively process 98 percent of world trade.3

 

Worldwide Efforts to Digitize Customs Are Paying Off

 

Both the Customs and Border Protection and World Customs Organization initiatives are in line with ongoing efforts by countries worldwide to digitize their customs administrations. Such moves are yielding substantial time savings and productivity gains, according to the World Bank’s Doing Business 2018 report. Digital systems “allow traders to exchange information with customs and other control agencies electronically,” the report states. “They also use risk-based assessments to limit physical inspections to only a small percentage of shipments, reducing customs clearance times.” This work, the World Bank authors add, makes “the time and cost for complying with border formalities negligible.”4

 

The World Bank report documents the rollout of electronic data interchange (EDI) systems in customs declarations. These systems allow traders “to file standard information and documents through a single entry point to fulfill all import, export, and transit-related regulatory requirements, then share relevant information with all parties involved in trade, including private participants such as banks and insurance companies, as well as public agencies such as immigration and vehicle registration authorities," according to the report.5

 

A case in point is the Automated Commercial Environment (ACE) cargo processing system, rolled out by the Customs and Border Protection agency in early 2018. ACE is a single-window system for commercial cargo companies to submit all of their import and export documentation for review and approval. Development of the system, an almost 20-year effort, was finally thrown into high gear several years ago as business adoption of digital technology took off.6

 

Before ACE was deployed, import-export businesses frequently were required to submit documentation separately to different government agencies, using a paper-based process. The single-window system makes it possible for them to submit all of their paperwork electronically to multiple agencies at the same time. Per Customs and Border Protection, this will help small and midsize businesses (SMBs) reduce their costs in a variety of ways, including through the use of a periodic monthly payments program, which allows ACE users to compile the taxes and duties for each of their import transactions into a single monthly bill. This, the agency says, will reduce their administrative costs and expedite receipt of their shipments.7

 

But ACE may still have a way to go before fulfilling its potential. An investigation by American Shipper finds that because various government agencies are using the single-window platform to impose new data requirements on importers, the system is adding to their administrative burden instead of easing it.8

 

The

Takeaway:

Initiatives by the Customs and Border Protection agency and the World Customs Organization to streamline customs procedures with digital technology may eventually pay off for SMBs, by simplifying customs procedures, reducing administrative costs, and expediting cross-border shipments. Meantime, businesses may wish to follow these efforts closely to better anticipate any changes to import and export requirements.

Elliot M. Kass - The Author

The Author

Elliot M. Kass

Elliot Kass is a journalist who has covered global business and technology from New York, London, and San Francisco for more than 30 years.

Sources

1. “Public Meeting: 21st Century Customs Framework,” Federal Register; https://www.federalregister.gov/documents/2018/12/21/2018-27716/public-meeting-21st-century-customs-framework
2. “World Customs Organization dedicates 2019 to transforming frontiers into SMART borders for seamless Trade, Travel and Transport,” World Customs Organization; http://www.wcoomd.org/en/media/newsroom/2018/november/world-customs-organization-dedicates-2019-to-transforming-frontiers-into-smart-borders.aspx
3. “WCO in brief,” World Customs Organization; http://www.wcoomd.org/en/about-us/what-is-the-wco.aspx
4. “Doing Business 2018,” World Bank; http://www.doingbusiness.org/
5. “Electronic Platforms Dataset,” World Bank; http://www.doingbusiness.org/~/media/WBG/DoingBusiness/Documents/Methodology/Other/DB2018_TAB_Electronic-
6. “FCW Insider: Jan. 7,” FCW; https://fcw.com/blogs/fcw-insider/2019/01/jan07topstories.aspx
7. “The ACE Basics,” U.S. Customs and Border Protection; https://www.cbp.gov/sites/default/files/assets/documents/2017-Nov/ACE%20Basics%20-%20November%202017_0.pdf
8. “A Moving Target,” American Shipper; http://digital.cenveomobile.com/publication/frame.php?i=487093

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