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Technology lifts customs burden off business

The line of freight trucks at the Finnish-Russian border can be over 20-km long, and a container can need over 50 different documents to reach its destination. It is essential security and taxation, but it has created an enormous burden for business. Now one EU project is recruiting technology to both improve security and reduce administration.

The ITAIDE project is tackling customs, security and administration with a broad-front approach. It is just as well because it is an enormous problem, and an intractable one. The Electronic Data Interchange (EDI) was set-up in the 1970s to create electronic documents for transport, yet 70% of documentation is on paper.

Customs has recently stepped up security which usually increases red tape and paperwork – an inherently error-prone process with names, quantities and other essential information getting mixed up. Incorrect data could even be vulnerable to a terrorist attack.

Customs and business are well aware of this administrative burden, as the EDI effort shows, but up to now attempts to solve the problem rested on replacing paper documents with electronic ones, rather than a fundamental redesign of the whole system.

ITAIDE is addressing this system redesign by tackling three fundamental aims of the e-Customs Strategy of the European Commission: creating a single customs window, establishing Authorised Economic Operators and creating interoperability across Europe.

Not reinventing the wheel
The single window means all services can be accessed through one point, electronically, with unified electronic forms to present all the information a tax service needs for tracking all types of VAT, excise or duties.

Second, once fully up and running, some businesses will be registered as ‘Authorised Economic Operators’. “This [is] for operators who have sophisticated enterprise resource planning (ERP) systems who can show they can securely track their products,” says ITAIDE’s coordinator Yao-Hua Tan of Free University Amsterdam’s Information Management Group. This makes sense because customs and businesses share a common aim: intimate knowledge of the supply chain. “If businesses share this information with the tax office, then the tax office can outsource control to the businesses,” he explains.

It means businesses essentially become their own taxman. “There’s huge advantages for both customs and businesses. Customs essentially recruit businesses into their efforts, and businesses get a green-lane treatment where they are much less checked,” notes Tan.

Trickiest of all, though, will perhaps be developing interoperability between the widely diverse business and customs computer systems around Europe. Here, ITAIDE is not reinventing the wheel. “We’re not creating a new IT platform to work across Europe, rather we’re creating a suite of redesigned tools, web services and standards to make all the different systems work together.”

It is a tough technical challenge, but with 54 months 11 partners (including such big names as SAP, Nordea and IBM) in seven countries, and a total budget of €7 million, €5.8 million of which comes from the EU, ITAIDE has the resources to do it.

Social and technical solution
They also have the right approach. ITAIDE uses a three-step methodology, called e3-Control, to design e-customs procedures. It starts with an ideal system, where everybody behaves as they should, then it analyses potential risk cases when people do not act as they should. Finally, it proposes control procedures to mitigate these risks. It is an iterative process and over time it can develop effective controls with the minimum of fuss.
Even more important, though, ITAIDE is also analysing transport from an organisational network perspective. The aim is to use technology to fit in with the real world, rather than trying to force the real world to respond to technology.

There are frequent feedback loops of the ITAIDE results with EU-DG Taxation and Customs, UN/CEFACT and the World Customs Organisation. So what will a new customs service look like?

ITAIDE is just into its second year of work, but it has already developed systems that have been piloted successfully by customs services in Britain, the Netherlands and the USA. The project set up a 'Beer Living Lab', a live, small-scale test of some of the technologies they are working on. In the test, containers were fitted with TREC, tamper-resistant embedded controllers that are electronic seals for tracking the movement and delivery of a container.

“In the past, a document would be sent from the tax office to the exporter, the exporter to transporter, transporter to importer, from the importer to its home tax office, and then back to the tax office in the exporting country to show the consignment had arrived. With TREC, all that happens automatically,” remarks Tan. ITAIDE successfully demonstrated that technology could solve the problem while enhancing security.

Christian Nielsen | alfa
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