The announcement of an agreement on the Trans-Pacific Partnership assures significant changes in global trading patterns. NAFTA (North American Free Trade Agreement) resulted in the tripling of U.S. trade with Canada and Mexico over the past 20 years. This new free-trade agreement reduces commercial barriers between 12 nations – including the United States and Mexico – that collectively account for 36 percent of the world’s gross domestic product. This agreement will likely generate another enormous surge in trade and promote additional economic growth and competitiveness.
Increasing trade inevitably means more congestion at our maritime ports and commercial crossings along the U.S. – Mexico border as trade requirements outpace physical infrastructure. Case in point: there has been no new rail line built between our two nations in over a century. This means we must find other ways to ensure ‘secure speed to market,’ moving commerce quickly and efficiently while ensuring the security of global supply chains.
Technology is the answer. We know how it has transformed and continues to transform business processes. We need to embrace technology and harness it to ensure the security of international trade, enable customs agencies to manage the supply chain, and reduce the costs of doing business for exporters and importers.
Both the U.S. and the Mexican customs agencies, US Customs and Border Protection (CBP) and the Mexico tax authority (SAT), have made a good head start. Programs such as the Container Security Initiative, Customs-Trade Partnership Against Terrorism (C-TPAT), and NEEC (Nuevo Esquema de Empresas Certificadas, the New [Plan] for Certified Companies) are well established and have proven that they offer a good return on investments in security. This is critical – if a new program does not positively affect the bottom line, there is little incentive for industry to embrace it. Customs agencies everywhere must develop security programs that simultaneously reduce the cost of doing business.
CBP and SAT have the dual missions of protecting both national security and economic security. These two agencies must ensure the integrity and security of our two countries’ borders and the global supply chain through effective enforcement. Their challenge is to transform trade processes by adopting innovative technologies and processes that lead to increased transparency and predictability. By expanding partnerships with the trade industry, they can enhance security and efficiency within the global supply chain.
Securing the Supply Chain
Just over 50 years ago the world was introduced to the “box that changed the world”— the shipping container. The container transformed the shipping industry from inefficient break bulk cargo to shipping by standardized containers. The chaotic process of stuffing, staging, loading, tracking, unloading, and securing cargo throughout the supply chain was tremendously streamlined.
Efficiency gains were exponential, trade volume dramatically increased, costs were reduced, and markets expanded. In today’s world, for reasons well known to all, we must ensure our international supply chains are secure. CBP does an extremely good job of protecting our supply chain through sophisticated assessment and targeting programs based on data analytics. Containers are approved for shipment to the U.S. before shipment from foreign ports and door seals are the industry standard for securing containers within the supply chain. Despite these efforts, containers are still vulnerable to hard-to-detect breaching.
Through the use of technology we can once again change the “box that changed the world.” Our firm, Global Security – Innovative Strategies (GSIS), has supported AT&T in developing a container security device that detects breaches of containers anywhere within the supply chain through the use of exterior and internal sensors. Together with CBP’s assessment and targeting capabilities, this technology exponentially increases container security and confidence in the integrity of the supply chain. We can create a virtual sterile corridor, thereby increasing speed to market.
Global commerce involves hundreds of different types of forms and numerous agencies in multiple countries. The system is time-consuming and costly for government agencies and private stakeholders. Within the United States, more than 45 federal agencies are involved in international trade. CBP must ensure all their requirements are fully complied with by importers and exporters.
For these reasons, CBP has been developing the Automated Commercial Environment (ACE) as the foundation for the U.S. “Single Window.” Its purpose is to allow traders to submit all import, export, and transit information required by regulatory agencies via a single electronic gateway. This eliminates the need to submit and process the same information numerous times by different government entities — some of which are automated while others still rely heavily on paper based processes.
When the system is fully implemented in late 2016, there will be one common set of harmonized data elements used by the entire U.S. government for any import or export transaction which will reduce redundancy, lower costs, and increase predictability for importers, exporters, and the government. SAT and customs agencies from other key U.S. trading partners are simultaneously developing electronic filing systems with processes that will be able to interact with each other.
When machine-to-machine analytical systems and greater in-transit visibility of container integrity are combined, there is enormous potential for cargo to move more quickly and more securely from point of origin to point of destination. Embracing the opportunity to work with the world’s customs agencies to develop global practices and standards will ultimately benefit the Trade Industry’s bottom line. The world’s Customs agencies and the trade industry must affirmatively embrace technology as a solution to the challenges of world trade in the 21st century.
Submitted to the U.S. – Mexico Chamber of Commerce for publication in ALLIANCE magazine