Over the Border

hen is "free trade" not really free? When it takes several hours, dozens of forms and often a middleman to move a commercial shipment across the border.

On the U.S.-Mexican border today, says Robert Ehinger of the U.S. Customs Service, queues of trucks waiting to cross into the United States sometimes extend for eight miles.

Once they reach the border, the trucks enter what he calls "a very hurdy-gurdy sort of environment. There's a combination of individual agencies performing their activities, all with their own forms and systems and so forth, all with their own processes, in a very tight federal compound. . . . All you have to do is go down to that environment and look at that and say, 'Gee, this doesn't look like free trade.'"

Ehinger, a career Customs employee, says he has spent 30 years trying to improve the system. His campaign began in 1962 on his first day as a GS-5 customs inspector. Paired up with an old-timer who showed him the ropes, he found that lesson one was learning how to hold all the rubber stamps and roll them properly across the forms. "I hated it. It was so offensive," recalls Ehinger, now a Senior Executive Service member on detail to the Treasury Department.

Now Ehinger is trying to consolidate the information from the paperwork-some of it little changed from two decades ago-and from an assortment of computer systems into a consolidated stream of bits and bytes that will be more useful and less burdensome to everyone involved in international trade.

Ehinger is managing a multiagency project involving more than 70 agencies that monitor, regulate, promote or coordinate international trade. Some of them, such as Customs and the Immigration and Naturalization Service, are well-known names in the fields of trade and international relations. Others, such as the Food and Drug Administration and the Fish and Wildlife Service, are not. Ehinger is trying to build a single system that will meet the agencies' needs and eliminate overlapping data collections.

Turf Battles

Every close observer of the bureaucracy knows that an agency will fight fiercely to defend its turf. In the information age, that turf includes information systems. As Ehinger's team of fewer than 20 government employees finishes its plans for the new system, he and his supporters are well aware that the most difficult part of their job may lie before them. In June, they will release a draft plan for implementation of the new International Trade Data System (ITDS). Then, Ehinger says, "we will be getting to the doing stage, and somehow that's always the point at which the debate gets a bit louder and the issues become sharper in focus."

They have gotten as far as they have with the strong backing of Vice President Al Gore and his National Partnership for Reinventing Government (formerly the National Performance Review). Gore appointed the nine-member board of directors that governs the ITDS project. The program office is attached, for administrative purposes, to Treasury, but Ehinger and his "skunk works," as he describes it, report to the board, which is headed by John P. Simpson, deputy assistant secretary of the Treasury for regulatory, tariff and trade enforcement.

Besides Treasury, board members represent eight other agencies with major roles in international trade. The board has worked well, Simpson says. "It hasn't produced the kind of chaos you might imagine," he volunteers, and it has served as a forum for airing divergent opinions about the project.

Perhaps more important, however, is the ITDS funding in President Clinton's fiscal 1999 budget. Even before seeing the final plans for the system, the administration has proposed to spend $5 million on it next year. That's on top of the $12 million spent in fiscal 1997 and 1998, when much of the most time-consuming work has been accomplished.

What the ITDS team will propose in June is a single system to collect all the trade information needed by each agency. The new system was developed after an intensive review of the kinds of trade data currently collected. It turned out that agencies now gather more than 1,700 separate pieces of information-type of goods, quantity, the manufacturer's name and address, the shipping firm's name and address, and so on, in many different data formats. About 700 different federal forms are used to collect the data.

Ehinger's team reduced that information to about 35 standard data elements, plus optional items for special cases, such as firearms imports or meat imports, without eliminating any information, he says. "The information is actually enhanced," Ehinger insists. No matter how obscure the form, the information will be collected centrally in electronic form and then dispensed to the agency that needs it. Because the data formats will be standardized, it will be much easier to see the big picture of who is importing and exporting which goods.

One result, Ehinger says, will be better-informed policy-makers. For example, the U.S. Trade Representative and others who negotiate trade agreements can do so with more facts at hand. Economic problems and opportunities may surface sooner, too.

Millions at Stake

But the biggest benefits may accrue to the nation's businesses. A United Nations Council on Trade and Development study found that government paperwork costs businesses at least 5 percent of the value of goods shipped in international trade-more than they pay in trade taxes or tariffs. A major automobile manufacturer reportedly undertook its own internal analysis and came up with similar figures. ITDS proponents call that expenditure a hidden tax and say their system will cut it dramatically.

Time is an issue for international trade, too. Ask the managers of Orbis Industries Inc., a San Diego company that operates an assembly plant just across the border in Mexico.

Orbis manufactures parts for computers, medical equipment or home appliances, putting together parts imported from many nations. It works as a contract manufacturer, and getting its products to its customers just when they are needed is critical.

Sometimes, Orbis' Ed Richards says, a truckload of completed parts "has to get to our dock in San Diego that afternoon so we can ship that day." That's why shaving hours or days off time spent at the border can mean a lot to his company.

Under the ITDS system, an importer or exporter will fill out the equivalent of one form online and will get one bill for import fees and taxes, a bill it will pay electronically. It will be a far cry from today's system, which often finds businesses writing a series of checks and hand-delivering them to various federal offices. Information such as the name of the business and nature of the shipment need not be reported again and again, as happens today, often in several different formats. Early on, the ITDS project team found that companies and individuals could save almost 2 million hours per year by consolidating just 25 international trade-related forms into one.

There will be benefits for the agencies, too. They can assign fewer people to collect information, freeing them to concentrate on their enforcement, revenue collection and regulatory responsibilities. They will receive the information in electronic form, with all the advantages of eliminating paper forms and data entry. Enforcement is likely to be more effective when more consistent information is readily available.

But the changeover will not be painless. ITDS will deliver the data to the user agencies, but some additional massaging may be necessary to get the information into an agency's existing computer systems. But the technical part of the project is easier to accomplish than "the human part-getting people working together," Treasury's Simpson told House subcommittee members at an October hearing.

Rocky Start

One of the problems has been getting people-especially in the Customs Service-to adjust to the prospect of not owning the source data nor collecting the money. "A couple of agencies have had a hard time agreeing to a harmonized data set," is all Simpson will say about the issue. But other sources report that after walking out of the initial organizational meeting for ITDS and then trying to kill the project on Capitol Hill and in the White House, Customs is cooperating.

Even when all the U.S. data is being collected once on behalf of all the agencies, importers and exporters still will be asked for the same kinds of information on the other side of the border. So the United States is participating in projects to harmonize data collection by the nation's trading partners. The goal is to let businesses submit standard information in the same format to the agencies of participating countries. Talks are in the early stages with the leading industrial nations, but they have progressed beyond that with our North America Free Trade Agreement (NAFTA) partners, Canada and Mexico.

In a high-tech showcase project called the North American Trade Automation Prototype (NATAP), the three nations are trying to eliminate most of the delays that characterize border crossings for trucks and freight trains. One reason for such delays is that trucks and train shipments often arrive without warning, so that inspectors and customs officials have to start with the basics, such as name of shipper and contents of the shipment.

At six border crossings where NATAP is being tested, importers and exporters assemble much of the needed data for a specific shipment in advance and then transmit it to the ITDS office in Washington via the Internet.

The three nations have agreed on a set of information-the equivalent of standard forms-to be supplied by exporters and importers, and on a means of sharing it.

The information is protected by a heavy-duty encryption system to keep it safe from prying eyes. But administering the encryption system is troublesome. The State Department must approve each user outside the United States, and the keys for encrypting and decrypting the data must be set up and maintained securely. The administrative chores are not yet automated.

A recent NATAP evaluation by a contractor found that this aspect of the system needed more work, but Ehinger says the problems can be resolved.

Advanced Technologies

Under the NATAP system, the ITDS office sends the data it receives about a shipment to the border stations before the truck or train arrives, enabling agents to review it and identify which elements of the cargo they might like to see or what further documents they might need. The cargo can be electronically sealed and truck locations tracked constantly by use of the global positioning satellite system, ensuring that drivers don't leave the main highway for byways where the truck's load might be tampered with or substituted.

The truck signals its arrival at the border by sending a radio signal from a transponder. The bugs still need to be worked out of the transponder system, the NATAP evaluation found, but, says Ehinger, "we're absolutely certain of its viability" as an approach.

Truck drivers have been pre-screened by the Immigration and Naturalization Service, and their photographs are available on Customs agents' computer screens so the agents can be sure the pre-screened individual is the one at the wheel. If Customs inspectors and their counterparts from other agencies are satisfied that they have the correct information and the right fees, the truck can roll right through both border stations with hardly a stop.

At least, that's the way the system should work. So far, though, conventional border processes have remained in place even for NATAP participants. So rather than saving time and money, the project has added to border hassles as companies file information electronically and then fill out the same old paper forms containing the very data they sent online.

They've had to get special software loaded onto their computers, establish Internet links with heavy-duty security procedures, and learn international codes for electronic business transactions, without much to show for their extra effort. What's more, says Jorge Sanchez of Orbis Industries, the software isn't easy to use. "Not many folks can afford to do every transaction twice," says Ehinger, explaining why few of the 300 U.S. companies enrolled in the year-old prototype project are using the NATAP system regularly.

However, later this year NATAP will graduate from prototype status and become an operational pilot project. Using redesigned software and upgraded technology, the six NATAP sites will begin accepting online information without the paper forms. That prospect amazes many participants, who note that not just dozens of U.S. agencies but also their counterparts in Canada and Mexico had to cooperate to make it happen.

Orbis officials say the new program will cut hours from their trucks' typical border crossings, which occur almost daily. They also welcome simpler, more understandable procedures. "Uncertainty is costly, no matter what," Sanchez says.

The Cost of the Process

Orbis' Richards adds that border crackdowns on drug runners can slow down traffic even more than usual. The federal agents at the border should "concentrate more on inspection and get away from just shuffling papers" for legitimate shipments, he says.

Ehinger says NATAP could make real the vision of free trade that NAFTA promised. When lawmakers and statesmen call for the opening of borders, they don't think about the process of getting goods across the border, but "it's the process that costs the money," he says. "Free trade means more than just taking away the tariff barriers and doing some work to try to harmonize the legal business codes among the three countries. It has to do with the process itself. It means that trucks and rail cars ought to be able to move across our borders with greater speed."

One reason the process has become cumbersome is the proliferation of agencies with border responsibilities. Ehinger points out that the government's culture and tradition encourage federal employees to think of their agencies first. When a new employee goes to work, he takes an oath of loyalty to his department or agency, not to the federal government as a whole, and that mind-set persists, Ehinger suggests.

"Getting the agencies to look at themselves as part of a process, as part of a function, as opposed to being individual agencies with individual missions, is very difficult," Ehinger says. "There's almost no provision for looking at what the government does in a functional or process way."

When agencies are pushed to review the commonalities of their processes and share data, they can become what some in the National Partnership for Reinventing Government call a "virtual agency." But what about reorganizing them to reduce the number of border agencies? Ehinger says that's not under discussion.

No Mergers

"The magic and the marvel of the electronic process is we can leave the organizations in place," he says. "We don't need to have the hubbub of a reorganization of the government or its agencies, which always seems to bring out the worst in everybody. . . . There's no reason to give the functions of the Department of Agriculture to the Food and Drug Administration or the functions of Customs to the Justice Department."

Two years into the ITDS project, Ehinger is ready to move past the study stage. "There comes a point where you have to make decisions and you have to move on," he says. "Otherwise, you just talk, and you don't end up doing." He says the project will need further endorsements from the White House and Capitol Hill if it is going to take off. But he sounds confident that the winds of public sentiment are on his side.

When the United States was a young nation, he says, imports were regulated to protect American businesses and collect tariff revenues. Now tariffs and duties are a smaller piece of the revenue pie, and free trade has prevailed over protectionism. The American people, meanwhile, have grown increasingly concerned about product purity and safety.

With imports increasing at double-digit rates each year and with so many agencies involved in regulating trade, he says, important information can fall through the cracks. "It's the old business about whether the right hand in the government knows what the left hand is doing," he says.

Because of its boldness in addressing that problem, ITDS has caught the eye of many government-watchers. "If this project is implemented as planned," says one Hill aide who favors the project, "it's at least a $25 billion-a-year tax cut for American businesses. But we all know why cross-cutting projects like this are few and far between. At the outset, anyone who's not a nut-case knows it's doomed to fail."

Even the man who guided the program through early stages as its reinvention "champion" at the National Performance Review cautions against overconfidence. Alan Proctor, former chief information officer at the Federal Trade Commission, told a House subcommittee last fall, "This is one of those efforts where the goal is incredibly easy to state and uniformly appealing to many, but where actually implementing the change will be a most challenging and difficult task."

Bob Ehinger and his board of directors hope they can prove the cynics wrong.