Blurred single windows

   Sometimes symbolic moments present themselves in just the right way.
   Case in point: in the midst of a robust discussion at a recent World Customs Organization technology conference, a Nigerian customs official stood up and bemoaned the language barrier that prevents better cooperation between his country’s customs agency and those of its neighbors, most of whom speak French while Nigerians use English.
   Right on cue, the official’s concerns were answered by a panelist from Mexico, who replied in Spanish. The only problem was the Nigerian official didn't have a translation headset and thus couldn't understand the response.
   In many ways, this seemingly simple problem epitomizes all the impediments toward bringing the concept of globally networked customs to fruition. If language is a pretty straightforward barrier, there are a host of other bureaucratic, cultural, and procedural roadblocks preventing neighboring countries from integrating their single window platforms in a more cohesive way.
   Intriguingly, technology is not an impediment, but rather a facilitator. And much of the discussion at the aforementioned WCO conference, held in Freeport, Bahamas in early May, focused on the role that technology can play in bringing to bear regional partnerships that facilitate trade while protecting borders.
   The concept of single windows is nothing new. The WCO has released reams of materials on the subject in the last few years, and single window implementations date as far back as 15 years. The organization is trying to build momentum for the topic, as it sees clear benefits if neighboring nations work to harmonize the platforms through which they collect key customs and trade-related data. With much of global trade tied to goods movement within a geographic region, the idea of these regional, interoperable platforms—also known as globally networked customs—is to capitalize more fully on the idea that one country’s exports is another country’s imports.
   How significant is the problem?
   “It is commonly acknowledged that considerable redundancy exists in the information that a trader is required to provide for carrying out commercial, transport and regulatory procedures,” Satya Prasad Sahu, commissioner for Indian Customs’ single window, wrote in a February article for the WCO’s magazine, WCO News.
   To wit, an Australian project in 2005 to standardize the data sets required for international trade collected 7,649 data elements from 41 government agencies, Sahu said in the article. That number was reduced to 3,993 with the elimination of duplicate elements within agencies, and harmonized to 650 after a first quick review.
   In all, 22 agencies collected the name of the exporter on 118 different forms. The names were used 212 times on those 118 forms, described in 61 dif¬ferent ways, and required in 16 different formats, ranging from 20 to 300 characters in length.
   And that was just in Australia. Multiply that across a regional cluster of trading nations, and it quickly becomes clear the burden such documentation processes place on individual shippers. 
   Little surprise there are significant roadblocks to such regional developments around the world. By one count, there are 66 countries that currently have implemented a single window platform—that is, a single system into which import and export documents are filed and which give traders visibility into the approval or rejection of those documents across all or some relevant regulatory agencies.
   By any measure, the topic of single window alone is a complicated, amorphous, and often misunderstood topic. Depending on the country implementing the single window, it might encompass documents required by dozens of national agencies, or merely a handful tied to duty collection.
   The system might be developed and administered by the government, or it might be developed by a software company and administered by the government. Or it might be developed and administered by a private third party under a public-private partnership.
   While the WCO has strived to create a singular data model to homogenize development of single window systems, the reality is countries create systems that meet their own customs and security needs.
   All of which makes the idea of regional clusters of single windows working in tandem to create greater efficiency seem like a far off dream. Or perhaps, a goal that lurks perpetually in the distance.

Working Hard. That’s not to say that customs officials and software providers in various regions are not working hard to bridge the gap between single windows. Trade facilitation is a clear goal for many nations, both developed and developing, and better coordination in the collection of critical import/export documentation is seen as a way to foster trade growth and the economic benefits that accompany it.
   The benefits of a regional approach are numerous. For one, in practical terms, it’s far easier establishing such bilateral agreements than it is one involving multiple nations across multiple regions.
   Pulak Chakrabarti, president and chief executive officer of Chakrabarti Management Consultancy, said at the WCO conference that such regional agreements allow customs agencies to avoid multiple investments, since the work done to certify parties by one agency can be leveraged by the other. It also prevents traders from having to be certified multiple times, helping customs authorities achieve their goal of facilitating trade.
   Ramesh Siva, lead e-government specialist for the World Bank, said customs agencies have to be realistic about such regional goals.
   “The challenge is determining a clear business rationale,” he said. “Is there a value in terms of security? Is there a value to traders? Is there a value to the customs authorities? Unless you can determine that value upfront, don’t even start.”
   Another issue is data sharing.
   “Many administrations don’t want to share their data,” said Paul Hillaire, permanent secretary of the Caribbean Customs Law Enforcement Council. “But they want to see others’ data.”
   Jhon Fonseca, vice minister for Costa Rica’s Ministry of Foreign Trade, told the conference that Central America could greatly benefit from a trade facilitation deal that would include customs coordination, according to a study officials in the region conducted.
   Fonseca said collaborative trade facilitation among Central American countries could boost imports and exports by 4 to 11 percent (depending on how far-reaching the regional pact is), boosting tax revenue to the nations in the process.
   The fact that the study showed tax revenue could increase shows the benefit of empowering trade, since most government finance officials believe reducing trade barriers erodes revenue, he said.

Difficult Execution. These exercises are sound in theory, but difficult to execute in practice.
   “(Single windows) tend to be homogenous in terms of their underlying objective – to simplify trade,” Michael Eads, managing director of the South African software company Sovereign Border Solutions, told American Shipper by email. “But the actual systems themselves are anything but. The term ‘single window lite’ has even been created to accommodate a rather simplistic approach to single window.
   “To be very clear, however, unlike a customs IT system, which relies heavily on international standards, each single window application is a bespoke exercise. Once you bring in the other border agency requirements (agriculture, health, standards, etc.) the complexity increases dramatically. So at the end of the day, single window is not a piece of software you can implement. There are shared elements for sure (how you deal with your traders, managing payments, messaging, etc.) but each agency has its own regulatory underpinning and related requirements, forms, and processes.”
   That is to say, reconciling all the elements of a single window within the customs realm is hard enough—but when you consider all the elements outside of customs, it seems improbably difficult.
   Eads and Ziyaad Butler, Sovereign’s director of business strategy, said a regional single window, where there is interoperability of systems and integration of service offering, “does not yet exist as far as we know. There are a number of regions with operational single windows but there is limited integration between these to establish regional integration.”
   What’s more, Eads and Butler said that while the WCO and United Nations have laid out their definitions for what a single window is and what its benefits are, “neither is a blueprint for single window. It does not and cannot exist within the current environment. The reality is that there probably aren’t many single windows that can claim to have used these guidelines prescriptively, and beyond a high-level, as the context for each country differs.”

Ray Of Hope? The best working example of regional integration would be the ASEAN model, Eads and Butler said, where over the past five to six years, countries in that region have been attempting to harmonize data and infrastructure models to enable a regional single window.
   The functional process requires data from individual single windows to be transferred to a central ASEAN repository for processing and dissemination (based on authentication and requirement).
   “This harmonization, however, only became possible when a common data model (the WCO Data Model) was established between the members,” they said. “To date, they have not been able to establish a fully functioning and seamless regional single window, and they are probably the most advanced region in this regard.”
   Again, Eads and Butler noted the primary hurdle is overcoming the original mandate of a single window, which tends to be to improve trade facilitation for that country, and not on a regional basis.
   “Experience has shown that when countries are developing single windows, the considerations begin at a strategic level with regard to trade facilitation and global integration,” the Sovereign Border Solutions executives said. “However, when design and development of the system commences, the reality is that most single windows consider national and internal interests before regional and international. The argument (and it is a strong argument) being that they would have to get it working in their country for their traders before they can look externally. The challenge with this approach is that many single windows never take that leap to become externally focused.”
   Also inhibiting the development of regional single windows are simple funding concerns. Eads and Butler explained that, for instance, the model for single window in Asia, Europe, and the Middle East is largely driven and owned by governments (usually operated by customs or another government agency).
   “In this model the single window system and IT services are purchased by the government to establish and operate the single window, so the IT provider works with the government to establish the single window and then hands over operational control,” they said.
   The model in Africa, however, tends to work differently. A number of the single windows in operation in the region are established as public-private partnerships, where an IT company usually owns a percentage of the venture (with the government as the other shareholder) and operates the single window independently, with oversight from the government.
   “This model allows the IT provider to invest an initial capital amount to establish the single window and recoup costs based on usage,” Eads and Butler said. “Some of these contracts are limited, with the intention being to eventually hand over control to the government (a build, operate, transfer, or BOT, model).
   “Both these models have a significant dependency on the IT providers to identify and provide the service based on the specific needs and requirements of the country. This would somewhat inhibit their view to building a system that would be focused on integration outside that country,” they explained.
   Intikhab Shaik, group executive for business systems at the South African Revenue Service, said during the WCO event that the complexities of building regional integration lie in the nuances of using the WCO’s Data Model. On the one hand, the Data Model is a template that would allow different single windows to synchronize.
   “But we must be able to adapt the WCO Data Model to our country, include new data elements, and to remove duplicate elements,” he said. “You need an integrated, digitized case management system because if customs officials are not equipped to do their job correctly and you can’t have an interchange of data, you can’t have regional integration.”
   Shaik did laud a program between southern African nations (one that functions like the European Union’s authorized economic operator program) that has proven valuable to member nations in the Southern African Customs Union. The success of this preferred trader program showed that regional integration is possible, and that the benefits are tangible.

North American Impact. So what does this mean for North American traders?
   The U.S. Department of Homeland Security in late 2014 said a goal of the implementation this year of the U.S. single window via the Automated Commercial Environment (ACE) is to “be well positioned for future interoperability with other national or regional single window systems.”
   In 2013, the Canada Border Services Agency (CBSA) and U.S. Customs and Border Protection agreed to develop their own single windows in such a way as to create data harmonization between them.
   “It is desirable to have a common language for trade, both nationally and when possible, internationally,” the agreement said. “Traders who import into both Canada and the U.S. would benefit if the required data were harmonized between the two countries.”
   But for now, there is little regional interoperability between the U.S. and Canadian customs. That may come once ACE goes live—it’s difficult to imagine a scenario where the United States’ neighbors would want to integrate with a system that hasn’t even been fully implemented, yet.
   John Bescec, director, global trade compliance and standards at Microsoft Corp., said the technological infrastructure for such globally networked customs clusters exist, primarily through cloud-based applications, since cloud solutions can be tailored for the specific needs of customs and traders more readily than an on-premise, single instance system.
   The idea of building applications filled with such sensitive material as import and export documentation in a cloud environment, however, will likely prevent many governments from going this route, even if the connectivity would be more natural with that architecture.
   Another complicating factor, according to Jonathan Koh, senior director of the trade facilitation center of excellence for software developer CrimsonLogic, is that some single windows are developed with a port-centric mentality, while others are focused on broader trade facilitation.
   “Both in developed and developing countries, finding an improved way to conduct cross-border trade transactions is now an imperative and pressing need,” Koh wrote in a 2011 discussion paper, Ten years of Single Window Implementation: Lessons Learned for the Future. “This requires connecting national single windows. Networked single windows effecting electronic exchange of information along the international supply chain is a natural progression in the increasingly globalized trade environment.”
   Koh also noted in his paper that private sector alliances aimed at harmonizing cross-border documentation were taking root in Asia and Africa, but that “their efforts are only part of the picture and need to be complemented by the corresponding government policies to truly effect cross-border exchanges.”
   In an email, Koh told American Shipper that while the white paper may not be new, it still provides a good background on the current issues.   
   “Many aspects of regional single window integration remain to be defined,” Koh said. “This includes data harmonization, creating an effective legal framework for data exchange within a single window network, and a sustainable business model for the service providers.”
   More ominously, Koh wrote in the paper that “the future for global exchange of information in interregional supply chains is remote, as there's currently no framework for data exchange on a global level. There's no internationally accepted model to establish an information exchange for containerized cargo along such an international supply chain.”
   Four years on, there’s still hope that the WCO, progressive customs authorities and the technology providers can foster the development regional single window frameworks. The benefit to global shippers would be undeniable.
   But the pragmatic view is that true regional cohesion is far off other than a few isolated instances. For now, the development of individual single windows remain the priority for most trading nations.

This article was published in the July 2015 issue of American Shipper.