U.S. Customs and Border Protection Update: Automated Commercial Environment/ International Trade Data System Ms. Valarie Neuhart Import Specialist April 29, 2004

Agenda U.S. Customs and Border Protection (CBP) Modernization Data Flows Automated Commercial Environment (ACE) and International Trade Data Systems (ITDS) Benefits Benefits to Department of Transportation (DOT) Agencies e-Release and Truck Manifest

U.S Customs and Border Protection Modernization Modernization is a 15-year initiative to modernize and integrate CBP to support the core business processes ACE is the first step The CBP Modernization is a 15-year initiative that CBP has undertaken to modernize its technology and the way it does business. Modernization is NOT just an Information Technology (IT) project. Modernization is like an umbrella, covering core business processes of Cargo In and Out, Enforcement, and Passenger In and Out. The ACE is the first modernization initiative that focuses on Cargo In and Out. We will be adding elements of security targeting, passenger in/out, and mission support since 9/11. We will discuss exactly what ACE is in a few moments. The main objective of Modernization is to provide the right information to the right people at the right time and place.

ACE/ITDS Vision To implement a secure, integrated, government-wide system for the electronic collection, use, and dissemination of the international trade and transportation data essential to the missions of federal agencies. The ITDS was chartered in 1995 as part of the National Performance Review. In 2001, ITDS was integrated with Customs Modernization and ACE design and development. The goal is to implement an integrated government-wide system for the electronic collection, use, and dissemination of international trade data. As trade levels increase and security concerns continue to grow, we have to hit a balance between data needs, security needs, data requirements, and trade facilitation.

Integration of ITDS with ACE Integrated government-wide functionality for the electronic collection, use, and dissemination of international trade data Develop and integrate Participating Government Agencies (PGAs) functionality in ACE Supports mission requirements for border processing of commercial shipments, conveyances, individuals, and access to trade data with interface for government agencies Improve compliance and enforcement of government trade requirements (e.g., security, public health, safety, export control) Reduce the cost and burden of processing trade transactions for both the trade community and the government The ITDS exemplifies the government’s effort to recognize the demands of enterprise-wide, business-to-business communications. The goals of ITDS are to: Become the government’s standard that supports all federal trade agencies Improve compliance with Government trade requirements (e.g., public health, safety, export control, etc.) Provide the trade community with a standard data set for import/export and in-transit for goods and transportation (conveyance and crew) Provide users with access to more accurate, thorough, and timely international trade data Facilitate inter-agency coordination of risk assessment for cargo, conveyance, and crew Provide the trade with a single-window filing interface with a harmonized government-wide data set for import/export, and in-transit information on goods, transportation, and crew Reduce the cost and burden of processing international trade transactions for both the trade community and the Government

Current Data Flow – All Methods EPA Environmental Safety ATF Alcohol, Tobacco, Firearms, Explosives FSIS Traders Food Safety Importers and Exporters DEA Drug Enforcement FDA Food and Drug Safety Carriers GIPSA Truck, Air, Rail, and Sea Agricultural Standards ITA Trade Promotion and Enforcement ERS Passengers Economic Information and Research International Air, Land, Sea FWS Fish, Wildlife and Plants In today’s environment, international commercial data is generally provided to federal agencies on an individual basis, often resulting in the same data being communicated multiple times to multiple agencies. This slide represents the stove-piped systems that do not communicate with each other. Methods of communication employed include, telephone, fax, paper, in many cases snail mail, and all too infrequently, electronic transmission. In many cases, the communication is one-way because we do not have the capability for two-way electronic communication. These methods are not only costly and inefficient for everyone, they also lack the capability to provide the real-time information that is so essential: for trade to successfully participate in the highly competitive business environment to Government agencies in their effort to fulfill their varied missions. Critical to this process is the elimination of stove-piped systems. FAS Foreign Marketing NHTSA Truck and Automobile Safety Solid Lines = All Methods of Communication Broken Lines = Two Way Electronic Communication CBP Import Export Passengers NRC Radioactive Material Sample List Of Agencies

U. S. Customs and Border Protection ACE/ITDS Data Flow EPA Environmental Safety ATF Alcohol, Tobacco, Firearms, Explosives FSIS Food Safety DEA Drug Enforcement Traders FDA Food and Drug Safety Importers and Exporters GIPSA Agricultural Standards ACE/ITDS ACE/ITDS ITA Trade Promotion and Enforcement Carriers ERS Truck, Air, Rail, and Sea Economic Information and Research FWS Fish, Wildlife and Plants The CBP is not the only agency critical to this process. The more agencies on board, the closer we come to meeting both government and trade information needs and reducing the reporting burden on the trade community. The way to do this is through ACE/ITDS. This slide represents the vision of ACE/ITDS – secure, integrated, two-way communication through a single window – between international trade interests and the government. These steps to integration include: The trade community will electronically transmit its information to a single destination for multiple federal agencies. The ACE/ITDS will distribute the information to involved agencies. Only those agencies with a legal or regulatory interest in the information will receive data, and they will receive only that portion of the data for which they have a legal or regulatory access authority. An integrated ACE/ITDS will provide the real-time information, in a useable electronic format, to federal agencies to further their missions with regard to: Border Clearance Preventing Acts of Terrorism Protecting the Public Health and Safety Trade Enforcement Trade Promotion The ultimate vision is to improve national security and public safety while facilitating legitimate trade through accelerated border clearance. FAS Foreign Marketing U. S. Customs and Border Protection NHTSA Truck and Automobile Safety CBP Import Export Passengers Border Compliance NRC Radioactive Material Sample List Of Agencies

ACE/ITDS Benefits More Effective Enforcement and Analysis Efficiency Availability of pre-arrival information Cargo tracking Access to more accurate and timely transaction information Enable comprehensive risk management Promote multi-agency collaboration of enforcement initiatives Efficiency Promote information sharing among federal, state, and local government agencies Accelerate border clearance Reduce costs Eliminate paper systems Trade Facilitation Provide single-window transaction filing for the trade community Harmonize government data requirements Improved visibility of conveyance and cargo status More Effective Enforcement and Analysis: Information available before arrival of cargo – in many cases before cargo is laden Cargo can be tracked from foreign lading to delivery Timely access to transaction-level information for both government and trade More thorough, accurate, and timely assessment of information to address threats to national safety and security Facilitates multi-agency efforts Efficiency: Facilitates information sharing Provides capability to accelerate border clearance Reduces costs – fewer transmissions of data, shorter border times, reduces use of paper Trade Facilitation: Single, secure transmission of data, which is distributed to only those agencies with a right to access the information Data sets harmonized across federal agencies and with World Customs Organization More complete and timely knowledge of cargo status

Initial ACE/ITDS Participating Government Agencies Animal and Plant Health Inspection Service Federal Communications Commission Food and Drug Administration (FDA) Federal Motor Carrier Safety Administration (FMCSA) Maritime Administration (MARAD) U.S. Army Corps of Engineers U.S. Census Bureau U.S. International Trade Commission These eight agencies are currently in various stages of development of their ACE/ITDS functionality. The agencies in red are specific to DOT. Each has developed and submitted to ACE/ITDS their agency’s Concept of Operations and their functional requirements. The Federal Motor Carrier Safety Administration will be the first agency to be integrated into ACE/ITDS. The FMCSA Integration will occur in the e-Manifest: Truck (Release 4) later this year.

Agencies Targeted for 2004 U.S. Fish and Wildlife Service (FWS) Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) National Highway Traffic Safety Administration (NHTSA) Food Safety Inspection Service (FSIS) Bureau of Labor Statistics Federal Maritime Commission Trade Development Import Administration Foreign Trade Zone Board U.S. Transportation Command Agricultural Marketing Service U.S. Nuclear Regulatory Commission (NRC) Federal Aviation Administration (FAA) Environmental Protection Agency (EPA) Bureau of Transportation Statistics (BTS) The 15 agencies listed have been identified by the ITDS Board of Directors as agencies targeted to commence developmental activities in 2004. The agencies in red are specific to DOT. While they are in various stages of assessing the complete impact that ACE/ITDS could have on their agency, each has at least preliminarily explored the potential benefits that ACE/ITDS provides, and has expressed interest in further participation. Total impact for each agency is reassessed at each phase of ACE/ITDS development.

ACE Benefits Specific to Transportation Agencies Access to electronic manifest information for all modes of transportation Collection of paper forms and data entry replaced by electronic data submittals and data dissemination Electronic verification of transportation related licenses, permits, and certificates Advanced information on carriers, conveyances, and crew for risk and regulatory compliance assessments More timely and complete information for statistical transportation analyses All transportation agencies are interested in manifest information since it identifies the carriers, conveyances, and crew. Currently there is great reliance on the collection of paper forms by transportation agencies. The time, expense, and errors associated with data entry and dissemination can be eliminated by electronic data submittals. Transportation agencies require licenses and permits for various purposes. ACE/ITDS will provide the ability to verify proper licenses and permits as soon as manifests are filed, in advance of arrival at the border. The filing of electronic manifests will also provide the ability to screen and perform compliance assessments on carriers, conveyances, and crew as soon as manifests are filed, in advance of arrival at the border. The Trade Act of 2002 requirement for the advance electronic filing of manifests, along with ACE/ITDS, will greatly improve the completeness, accuracy, and timeliness of bill of lading level data for transportation statistics.

Additional DOT Specific Benefits Improved Truck Safety at the Nation’s Land Borders (FMCSA) Better Control Over Imported Autos & Automobile Components (NHTSA) More Detailed Knowledge About the International Transport of Hazardous Materials by Air (FAA) Better Compliance With the Nation’s Cargo Preference Laws (MARAD) Better Focused, More Timely Transportation Data to Improve Federal Policy and Public Understanding (BTS & MARAD) The border system of the future must gain a new ability to identify low- and high-risk traffic, speeding low-risk traffic on its way, while focusing the attention of border security personnel on high-risk traffic. - The President’s Budget, Protecting the Homeland The benefits to joining the ACE/ITDS program are numerous. Examples of how this program will benefits your agency include: More timely data and information Reduced agency processing of paper forms Improved agency targeting of high-risk imports and exports Integrated agency risk analysis and clearance processing Improved inter-agency information exchange Increased customer/stakeholder satisfaction Improved visibility of cargo status Continuity of operations

DOT Context for ACE/ITDS DOT plans on five agencies interfacing with ACE/ITDS BTS, Bureau of Transportation Statistics FAA, Federal Aviation Administration FMCSA, Federal Motor Carrier Safety Administration MARAD, Maritime Administration NHTSA, National Highway Traffic Safety Administration Other DOT agencies and organizations are expected to satisfy their international transportation-related data needs through BTS. They include: FHWA, Federal Highway Administration FTA, Federal Transit Administration FRA, Federal Railroad Administration RSPA, Research and Special Programs Administration OST, Office of the Secretary Saint Lawrence Seaway will get any international trade-related vessel data it needs through MARAD.

Initial Seven Land Border Sites U.S./Canada ports of entry Blaine, Washington Port Huron, Michigan Detroit, Michigan Buffalo, New York Champlain, New York U.S./Mexico ports of entry Otay Mesa, California Laredo, Texas These initial land border sites will be the first to gain access to ACE. The ACE rollout to these sites is scheduled to occur between Fall/Winter 2004 and Summer 2005.

e-Release and Truck Manifest CBP Officer at Primary checks ACE screen for results of CBP and PGA analysis As trucks approach border Radio Frequency signal transmitted to ACE CBP Officer decides to: Release Shipment OR Here you see an example of what will be offered from e-Manifest: Trucks (Release 4). ACE will transform the way CBP does business at the borders by: Providing timely, useful, accurate, and actionable information to the line officers Enabling line officers to access intelligence and other agency information quickly, and to share that information quickly and directly to PGAs Expediting the movement of legitimate commerce. The ACE Secure Data Portal will eliminate multiple system sign-ons. This will include other PGA requirements as well. (i.e. Hazmat warnings) Currently, the primary CBP Officer has to wait for the truck to arrive at the booth, view the paperwork, then toggle to the pertinent systems or to multiple systems, and do multiple “releases.” ACE will provide all relevant data, “on your screen”, through a paperless system, and in a “single-button” decision process. New features, never available previously, include driver photos, enforcement data, history files, PGA data, etc. To become an ACE Secure Data Portal account, importers must be Customs-Trade Partnership Against Terrorism (C-TPAT) certified and managed. Carriers do not have to be C-TPAT certified (this is the only exception to the rule). Hold and Examine

Automated Truck Manifest Provides means for submitting: Trip data Transponder #, port of entry, date/time, carrier, and vehicle Crew data (ID # for drivers and crew) Conveyance data (ID #) Shipment data (bill of lading, containers, commodities, quantity, HAZMAT info, etc.) Allows for carrier notifications for arrival, release, holds, PGA actions, etc. Automated truck manifest – allows carriers to submit a manifest electronically. It will be the foundation for “multi-modal” manifest which will be provided in later ACE releases.

Trade Act of 2002 e-Manifest Requirements The Trade Act of 2002 made the filing of electronic manifests mandatory for all carriers and established the advanced filing requirements. Electronic manifest will be filed for all modes of transportation. All carriers will be required to submit through e-manifests in advance of arrival. This chart depicts the required transmission times when cargo declaration data must be received in AMS by CBP for all modes of transportation. There are different requirements for trucks who are Free and Secure Trade participants. FAST participants are C-TPAT certified and have repetitive, low risk shipments.

Trade Act of 2002 e-Manifest Implementation Timeframe Transportation Mode I mplementation V essel Voyages Commencing March 4, 2004 or later Air Beginning in August 2004 (phas ed in by port through December 2004 ) Rail 90 - days after Final Rule (FR) notice This timeline shows the various implementation dates for each mode of transportation as outlined in the Trade Act of 2002 Final Rule of December 3, 2004. Truck 90 - days after FR notice

Back-up Slides

Account Creation (Release 2) WHAT ACE Secure Data Portal CBP: Account Managers for initial accounts Trade: Initial 41 account participants Review CBP entry data in near real time Manage issues and resolve problems more effectively Enable uniform customer support Support Informed compliance Provide easy access to summary reports, Harmonized Tariff Schedule (HTS), and compliance rate data National information WHO BENEFITS Release 2 launched in June 2003; 41 importer accounts now have access to the ACE Secure Data Portal. Release 2 enables a subset of total business requirements, giving the trade community the ability to query and see reports of account financial and transaction data. Key Features: Quick Views – shows snapshot of data for the last three years. The data can be sorted and viewed for HTS numbers, brokers, and ports that have the highest value for the year. Online Action Plan – used to keep track of plan for resolving outstanding issues Significant Activity Log – means of communications between account and account manager with memos, letters, and e-mails. SAL entries generated at the Importer of Record (IR) number level will also be displayed at the account level. Reports – importers will be able to query 40 different reports regarding Entry Summary Line Items, Aggregate Importer Reports, Aggregate Entry Summary Compliance Reports, and Cargo Exam Discrepancy Details Reports. Port Specific and Aggregate information will be offered.

Periodic Payment (Release 3) Initial account revenue periodic statements and payments (monthly) Automated Clearinghouse (ACH) credit and ACH debit Additional account functionality CBP: Entry specialists, National Finance Center Trade: ACE account participants Enables importer accounts to designate brokers to file on their behalf Expands account management to enable brokers to view entry summary historical data Expands account profile to include carriers Moves from transaction-based to account-based payments Enables CBP and trade community to track open items Requires fewer payment transactions and decreases daily workload Quick access to important updates and revenue reports WHAT WHO BENEFITS Release 3 is scheduled for release in summer 2004, with the operational deployment scheduled for fall 2004. This release will feature: Enhanced security and account management capabilities Initial account revenue capabilities. Account management enhancements include: Expansion activities to include 1,100 importer accounts with access to ACE Secure Data Portal Importer accounts can designate brokers to file on their behalf Account set up in ACE expanded to include brokers and carriers Notifications and alerts, revenue reporting, SAL search, and sort. Initial Account Revenue includes: Moving from transaction-by-transaction processing to consolidated statement (Release 3 Account Revenue begins transitions of duty payments from a transaction-by-transaction process to a consolidated Periodic Monthly Statement with payment by Automated Clearinghouse Debit or Credit participants. Only ACH Debit and Credit will be accepted for periodic payment in Release 3.) Entry Summary data will be passed from the Automated Commercial System (ACS) to ACE on a “real-time” basis.

e-Manifest: Trucks (Release 4) Cargo and enforcement processing for trucks eRelease and automated truck manifest, including in-bond Consolidated interface for inspectors EDI and ACE Secure Data Portal Transponder & proximity card CBP: Land border inspectors Trade: ACE account participants Expands to truck carriers and their authorized agents initially at seven selected land border ports Provides standard automated manifest at land ports Enhances security in the supply chain Enables inspectors to make faster, better, earlier decisions WHAT WHO BENEFITS Release 4, which is scheduled to launch in fall 2004, will provide enhanced security and commercial account capabilities. This functionality will initially be available at seven ports: Buffalo, NY Detroit, MI Port Huron, MI Blaine, WA Laredo, TX Otay Mesa, CA Champlain, NY ***El Paso, TX, is tentative Release 4 speeds processing at land border ports and enhances security by allowing the registration of crew and conveyances as part of the carrier account. In addition with transponder technology, ACE can identify Truck ID and activate the retrieval of manifest and entry data for inspectors. The proximity card readers will identify the driver and retrieve information about the driver in advance prior to entering the booth at the port. Key Features: eRelease – the electronic process of releasing cargo by matching truck manifest with ACS and ACE release mechanisms Automated truck manifest – allows carriers to submit a manifest electronically and take advantage of eRelease Consolidated interface for inspectors – allows inspectors to review data in one screen instead of multiple computer systems. In bond – automates In-bond via the manifest, Customs Automated Forms Entry Systems (CAFES), and QP

New Technology WHAT WHO BENEFITS Selectivity and Cargo Systems: Releases S1, S2, and S3 Technology prototypes: Intelligence Information Factory (IIF), Knowledge Base Risk Management (KBRM), TRAP-EZE Flexible selectivity parameters to allow users to define criteria Consolidated findings repository Criteria management and reporting capabilities Initial risk identification and mitigation Automated support tools for intelligence analysis process On-line collaboration capability to capture and share knowledge Possible means of automatically generating screening criteria WHO All CBP and PGA users who create and define selectivity and criteria Analysts at the National Targeting Center (NTC) Select land border ports There are three releases for the Cargo and Selectivity system. Each stage will be designed to add new functionality to the base system. Release S1 will provide support to current and planned enforcement/compliance programs. It will provide manifest selectivity for all modes of transportation and enable detection of trade activity criteria management, including PGAs. Releases S2 and S3 will provide links to external data sources (to be identified) that can add value to the Automated Targeting System (ATS) data warehouse and provide centralized access to CAPPS findings to analysts to help build and refine selectivity criteria. Release S2 will support entry/entry summary selectivity, liquidation and reconciliation, authorized movements (in-bond, FTZ, warehouse) and enable system generated analysis, requests, and criteria. Release S3 will extend selectivity to mail, courier, hand-carry and pipeline, as well as extend analysis, requests, and criteria. BENEFITS Supports enforcement/compliance programs Provides centralized access to Customs Automated Port Profiling System (CAPPS) findings Provides framework on which sets of analysis tools can be configured and integrated for specific applications Improves quality of analysis

Global Business Blueprint (GBB) Define the scope for future ACE capabilities beyond e-Manifest: Trucks (Release 4) Identify potential organizational impacts (e.g., responsibilities, policy changes, and performance measures) Identify opportunities for improvement across cargo- management business processes Determine the best use of software solutions to develop an integrated ACE solution that builds upon initial ACE capabilities Develop or refine existing program strategies, including project schedule, cost, and rollout approach The GBB project team is currently defining the scope of implementation for releases after e-Manifest: Trucks (Release 4). The GBB is part of the continuous improvement effort of CBP to support ACE Modernization in an efficient and cost-effective manner. The GBB project runs from January to May 2004 The GBB covers the full shipment lifecycle of moving cargo across the border, processing entries, and providing transaction detail for enforcement activities. GBB expected results: solution framework to guide future releases, including functional scope, high-level process design, technical architecture, and initial organization impact description of the “to be” processes fit-gap analysis to determine how SAP and supplementary technology will support ACE

Future Capabilities of ACE Automated and consistent manifests – Includes air, sea, trucks, and rail Ongoing expansion of Accounts – Includes exporters, carriers, brokers, and importers Import Activity Summary Statement (IASS) – Includes reconfigured entries, which will be an aggregation of merchandise by release. This will provide the ability to aggregate shipments and make better use of analytical tools. Security and commercial account capabilities – Enhanced and expanded to offer additional functionality for the end user Release messaging capabilities – Includes interface to legacy systems for the air, sea, and rail environments All of the functionality proposed for Releases 5-7 will continue to be integrated into future releases as defined by the GBB team PGA groups’ input is vital to GBB and collected PGA requirements will continue to be integrated into ACE