FROM THE OFFICE OF PUBLIC AFFAIRS

Mr. Chairman, on behalf of the Treasury Department and all of the agencies of the federal government who are working together to create an international trade data system I want to thank you and the members of the Subcommittee for giving us the opportunity to appear here today. THE ENVIRONMENT

Let me begin by describing to you the environment in which we are working. The United States is the world's largest exporter and its largest importer. On the export side, the U.S. economy depends heavily on world markets to support a higher rate of growth. Although exports in 1998 were down slightly from the previous year, largely because of the Asian financial crisis, they were up by a little over 70 percent from 1990. About one of every ten U.S. jobs, and one of every five manufacturing jobs, is supported by exports.

The U.S. economy is also heavily dependent on imports. The competitiveness of U.S. manufacturers and the quality of life for U.S. consumers depend on having access to materials and goods from around the world. Indicative of this, the value of imports into the United States in 1998 was up by about 85 percent over 1990.

Because international trade is so important to the U.S. economy, the cost of government procedural requirements affecting international trade, and specifically information reporting requirements imposed on import and export transactions, is a burden on the performance of the economy as a whole.

This burden is not imposed as a matter of conscious policy. Rather, as laws have been enacted to implement trade agreements; prevent unfair trade practices; protect the environment, RR-3073 consumers, animal and plant health, and endangered species; ensure highway, rail, and air safety; better regulate immigration; impose economic sanctions on hostile regimes; and prevent export of sensitive technologies to inappropriate destinations, new requirements for reporting have been superimposed one on top of another, despite efforts to limit the cumulative burden.

Although there are no reliable cost figures for the United States alone, the United Nations Council on Trade and Development estimates that worldwide the cost of documentation requirements for international trade accounts for 4 to 6 percent of the cost of goods traded. In other words, the cost of preparing documentation is equivalent to a tax of 4 to 6 percent on the value of goods.

Today, separate reporting and data systems are maintained by U.S. federal government agencies involved in all aspects of the international trade process, including regulation of goods, transportation, and immigration. Exporters and importers deal with numerous paper and electronic systems, and are confronted with duplicative, incompatible, and non-uniform data reporting and record-keeping requirements.

These multiple information collection systems are not only costly and burdensome for both government and the trade community, they also limit the effectiveness of individual agencies in carrying our their enforcement and regulatory responsibilities at the border. Agencies generally do not have access to information that other agencies collect, or have the benefit of knowing what enforcement or regulatory actions other agencies have taken in response to that information. They act in isolation rather than in concert with each other.

Finally, those who need access to statistical data on international trade, including Congressional committees that enact trade policy into law, must often research several potentially incompatible sources because the systems do not use standard data or technology.

The International Trade Data System (ITDS) is intended to rationalize the federal government's collection and use of international trade data. ITDS is aimed at: (1) reducing the cost and burden of processing international trade transactions and transport for both government and the private trade community by substituting standard electronic messages for the multiple and redundant reporting - often on paper forms - that occurs today; (2) improving enforcement of and compliance with laws and regulations that apply at the border to carriers (for example, highway safety and vessel clearance), people (drivers and crews of commercial conveyances), and goods (several hundred laws including those addressing public health and safety, animal and plant health, consumer protection, enforcement of trade agreements, etc.); and (3) providing convenient access for Congress, Executive Branch agencies, and the public to international trade data that are more accurate, complete, and timely.

The ITDS will serve many agency automated systems, including Customs' Automated Commercial Environment (ACE), by distributing to those systems information collected electronically from importers, exporters, carriers, and other parties to international trade. The information collected will consist of a standard set of data that meets the needs of all U.S. Government agencies.

ITDS will also serve as a common payment point for taxes and fees paid to multiple government agencies, much as American Express or VISA provides a single billing and collection point for a variety of charges incurred by its customers.

Finally, ITDS will serve as a custodian of records for information it collects, and as a convenient, single point of access to all Federal government data international trade bases for persons - who will have different levels of access - seeking information about U.S. international trade.

The International Trade Data System (ITDS) Project Office has been established at the Department of the Treasury in accordance with the Vice President's memorandum of September 15, 1995. The need for the implementation of the ITDS to be managed by an inter-agency board was the recommendation of a government-wide task force representing fifty-three of those agencies. The board was to be given the authority to "recommend and, if necessary, direct individual agencies to modify their processes and systems to conform with the principles for an integrated International Trade Data System." The task force report concludes that "authority to make cross-agency decisions that would be vested in this Board is the only way possible to obtain the multi-agency re-engineering of the international trade processes that will be required to make the International Trade Data System a reality." Agencies represented on the Board include Treasury, the Customs Service, the Food and Drug Administration, the Immigration and Naturalization Service, the Transportation Department, the Agriculture Department, the Commerce Department, the U.S. Trade Representative, and the U.S. International Trade Commission. ITDS DEVELOPMENT

Initially, it was envisioned that there would be three principal tasks to construction of an ITDS: (1) creation of a standard set of data to satisfy the needs of all users without redundancy, (2) design of a single point of collection from which data would be distributed to all agencies requiring them, (3) and design of a single point for accessing all data collected by the system, regardless of where they are stored.

However, as the project developed, participants have taken advantage of opportunities created by the project to address other objectives. For example, a module for data on trade in services will be included in the ITDS, certain processes for clearing trucks and trains entering the U.S. will be re-engineered to take advantage of dedicated short-range communications technology (transponder readers) being deployed by the Department of Transportation, and data definitions will be developed with an eye toward the possibility of future harmonization of U.S. trade data with data collected by our major trading partners, particularly the G7 countries and Mexico.

Much of the ground work has been accomplished. With the participation of all the involved agencies, an effort to identify their international trade data requirements was completed in 1997. Those data requirements are being converged with harmonized data sets being developed by the G7 countries so that we will be closer to the vision of having a "passport" for goods that will be universally accepted for both export and import purposes.

The ITDS information architecture, or design report, was completed in September 1998 and presented for public review and comment on the Internet through http://www.itds.treas.gov, and at a public hearing on November 5, 1998. Key sections of the report are the Project Summary, the Concept of Operations, the Project Implementation and Transition Plan, and the Cost/Benefit Analysis. These can be found at the above Internet address. PILOT PROJECTS

ITDS pilots are being deployed this year at the Ambassador Bridge in Detroit, the Peace Bridge in Buffalo, and at the rail crossing at Laredo, Texas. The current plan is for the Customs Service, the Immigration and Naturalization Service, the Federal Highway Administration, and the Food and Drug Administration to be the initial participating federal agencies. However, in order for the pilot to succeed, the Customs Service must agree to process the electronic message received from ITDS through Customs' border cargo selectivity system. We are hopeful that we can complete arrangements with Customs in time to keep to the schedule for beginning the pilots this year. THE WAY FORWARD

At this time, no decision has been made to advance the ITDS beyond completion of the Design Report, although the project is funded at the level of $5.4 million in FY 1999, with a similar amount proposed in FY 2000, in order to conduct pilots and to continue testing. If a decision is made to deploy the ITDS, full system functionality could be achieved in three years, and full deployment to all ports and all agencies could be achieved in a fourth year (although major ports and major users would be served at an earlier time). The full four-year cost for deploying the system would be $268 million. This cost projection assumes that all ports of entry will be provided with equal capabilities. However, alternative deployment strategies are being analyzed that may significantly reduce this cost estimate.

There are a number of actions that are needed for the ITDS to proceed. These include providing for the long-term interagency management of the ITDS, removing any statutory or regulatory obstacles to sharing of a single collection of data among the agencies that need them, and working on outsourcing of operation of the system to the private sector under government ownership and supervision.

Allow me again to thank you and your colleagues, Mr. Chairman, for your interest in the International Trade Data System Project, and for giving us an opportunity to appear here today. I shall be happy to answer any questions you may have and to provide any written material you may want.

Thank you.