Customs: Crossing the Line

Trade flows across the Canada-U.S. border are surging, and customs authorities in both countries are struggling to clear shipments while still exercising the control that is expected of them. Current computer-based pre-clearance systems are running out of technological steam, and, fearing more frequent system crashes, both sides are working hard on upgrades.

The pressing issue for Canadians isn’t what’s happening here so much as what is-or isn’t-happening in the United States. The U.S. Customs Service’s Automated Customs System (ACS) is at 90% capacity and showing its age. The Americans want to replace it over the next three to four years, but Congress has not appropriated funding-the price tag is around $1.5 billion US. Cost isn’t the only issue: more than 100 different government agencies or departments have some degree of responsibility for import and export activity.

That creates a system full of redundancies and bad politics. An example is NATAP (the North American Transportation Automated Prototype). It was developed to offer drive-through customs clearance using transponder and Internet technology to transmit and pre-approve information about the cargo, truck, and driver. The truck would barely have to slow down as it crossed the border, unless Customs wanted to inspect the load.

But NATAP ended this year after failing to attract the industry participation government officials had sought. One problem was that the large-volume shippers interested in speedier clearance found themselves processing too much data and paperwork in order to pre-clear the freight. Another was that Customs and its parent Treasury Department couldn’t decide which agency should manage the system.

On this side of the border, the Canada Customs and Revenue Agency (formerly Canada Customs) is working on a five-year plan to upgrade its own data interchange systems. Participation in the current systems is solid: the agency receives 52% of its releases and 95% of its accounting documents electronically.

There are two key initiatives as the new system takes shape: carrier re-engineering and customs self-assessment.

Carrier re-engineering refers to the fact that, in the future, Customs authorities will require in advance specific data from all shippers and their carriers in order to expedite decisions about which trucks, drivers, and loads to stop. This will include requiring all drivers to submit to a background check and register with the CANPASS system (used to pre-clear commuters across the border). It also involves better identification of high-risk and low-risk shipments, and therefore an even faster border crossing.

“We’ll need a state-of-the-art ITS solution to achieve this,” says the CCRA’s Tim Hunt, “but we’re still deciding what the components of that will be, i.e., smart cards, proximity cards, transponders, or whatever.”

Customs self-assessment is described as a “whole new way of thinking” about identifying risk. “Rather than working on a shipment-by-shipment basis,” Hunt explains, “you look at the company as a whole: its compliance history, who they do business with, etc.” The goal is to identify low-risk, pre-approved cargoes, shippers, and carriers and offer a simpler clearance process. “There’d likely be only three data elements required,” Hunt notes, “and we wouldn’t even need any pre-arrival data transmitted. The truck would arrive at the border, and our people would simply confirm who the carrier is, who the importer is, and who the driver is, with the driver using some kind of electronic i-d and/or a biometric scanning process.”

For the “accounting” procedure, the Customs self-assessment philosophy envisions using selected data from the importer’s own accounting records. “If that firm’s internal-accounting systems are acceptable for the government’s audit and taxation requirements, they should be good enough for Customs, too,” Hunt observes.

“We want to keep things as simple and painless as possible for all concerned.”