After Two Decades, American Trade May Finally Get a Needed Upgrade

This is a guest post by Robert Maxim, research associate, competitiveness and foreign policy, for the Council on Foreign Relations Studies program.

In 1989 the government of Singapore launched an innovative improvement to its trade infrastructure. The project, known as TradeNet, was a “single window” system that allowed exporters and importers to file trade documents and pay government fees through an electronic one-stop shop. Four years later the United States began to create its own single window, the International Trade Data System (ITDS). Promoting exports and supporting small businesses have been top priorities for Presidents Clinton, Bush, and Obama, and single window systems help accomplish both of those goals. Despite this, the United States’ single window has remained unfinished since the early 1990s, even as dozens of other countries--some as rich as Japan and others as poor as Senegal--have successfully established their own. Last Wednesday President Obama signed an executive order mandating that U.S. federal agencies complete work on the U.S. single window by 2016. If this deadline is met, the U.S. will finally complete a little-known project that has been stuck in development for over two decades. For the world’s largest trading nation, a single window will be an important upgrade that brings its trade technology into the 21st century.

In 1993 a U.S. Customs Service task force recommended that the U.S. establish a single window program, and two years later Treasury chartered an office to oversee its creation. In 1999 the office was transferred into U.S. Customs Service, which began work on a pilot system, and in August of 2001 an ITDS pilot went live at the port of Buffalo. However, within a month the pilot program was taken down due to security concerns following the September 11th terrorist attacks. In the wake of September 11th, Customs focused its efforts on creating new programs to protect America’s ports, like the Container Security Initiative (CSI) and the Customs-Trade Partnership Against Terrorism (C-TPAT). As a result, trade facilitation initiatives like ITDS took a backseat. In 2006 Congress passed the SAFE Port Act, which required the Secretary of the Treasury to implement ITDS. However, the SAFE Port Act did not set a deadline for the project, and the single window remained incomplete. The president’s executive action on Wednesday finally established that deadline.

In the United States, exporting or importing goods can involve up to forty eight federal agencies, and in some cases can require nearly two hundred paper forms. Many of these forms collect redundant information, and much of the information that traders submit by paper is then manually typed into a computer, increasing the chance of human error. In contrast, a “single window” allows traders to fulfill all requirements to export or import through a single digital portal. An electronic system sorts through the information, automatically routes it to relevant recipients (such as government agencies, banks, and insurance companies), and returns a response to the trader indicating whether all of the necessary information has been provided. By only requiring users to enter information once, and by processing information electronically rather than by hand, a single window system saves time and increases accuracy. Prior to creating TradeNet, Singapore’s government had established a two day standard for handling trade documents. After implementing it, the typical processing time fell to under ten minutes. Additionally, by creating a single electronic form, versus over twenty paper forms prior to implementation, TradeNet saved money for Singapore’s government and businesses.

Completing ITDS supports a critical plank of President Obama’s trade strategy: increasing U.S. exports, particularly among small- and medium-sized businesses. Administration officials frequently remark that companies that export grow faster and pay higher wages. However, they also note that fewer than one percent of U.S. companies export. Many small businesses don’t have the manpower to interface with multiple government agencies. A single window system will help address this problem, and make exporting easier for smaller firms.

Each year, the chairman of the ITDS board of directors submits a progress report to Congress. The 2013 report laid out a roadmap for implementing many of the program’s core requirements by the end of 2016. But establishing a timeline on paper is always easier than executing it. Meeting the president’s deadline will be a difficult task, and will require close coordination by nearly fifty federal agencies. Nonetheless, if ITDS is successfully completed it will conclude a two decade effort, streamline a maligned bureaucratic process, and aid U.S. firms of all sizes as they seek to sell U.S. goods abroad.