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Crippling border checks unnecessary

International free trade, within and beyond the EU, is the core of our world economy and measures to promote free trade are often highly vaunted. However, in real life it is a very different matter: in recent times border checks have become far more severe, on the one hand because of anti-terrorism measures and on the other hand because of growing concerns about food safety. As a trading nation this costs the Netherlands in particular an enormous amount of money. Effective use of ICT could really help to keep these costs down without compromising safety and security.

Border checks involve not only physical inspections but also a huge amount of paperwork. On average an export company has to send 30 documents to a wide range of government institutions for every container they export. Each year more than 10 million containers pass through the Port of Rotterdam, so that is a lot of paperwork. And worldwide this costs hundreds of millions of dollars every year.
These checks pose a dilemma for the Dutch government. Safety and security are of great importance, but if other European countries decide to set less stringent standards in their border checks, we could find a large amount of trade that currently passes through the Netherlands being diverted to other countries.

If we want to keep up our levels of safety and security as well as maintaining our strategic position as a trading nation, ICT innovation could be a useful tool. In this case the solution is an electronic container seal (e-seal) which can be fitted to a sea container. The e-seal is a sort of combination of GPS and mobile phone and transmits information about the precise location of the container. The equipment also uses an internet connection to allow Customs officers direct access to relevant information in the business information system of the owner of the goods in the container as well as the transport company. In practice this information is already stored in the ERP systems of these companies, who have to keep it properly up to date for their own administration. At present they have to fill in all this information on government forms manually. This is not really necessary and involves a high risk of human error.

Border checks can be made far simpler if companies give Customs direct access to this information. Customs officers can use a laptop or smart phone to quickly see what is in the container and where the container has travelled from. Instead of time-consuming inspections, supervision can be shifted to secure and meticulous business information systems. This is a task which is already covered by the government with regard to levying of taxes and audit statements.

The gain: 30 fewer documents per sea container, but more importantly, far quicker world trade and many millions worth of cost savings.
The system does require a certain measure of mutual trust between the government and the business sector. It can be compared to the ‘green lane’ procedure at airports where the passenger indicates himself whether or not he has anything to declare. This principle can also be applied to goods transport. Of course Customs can still carry out spot checks to compare the contents of the container against what is stated in the company records. It will be far less attractive for businesses to commit fraud, because this will entail tampering with their primary business information, and if the information does not tally, they will have a problem with the tax authorities, for example, as well as Customs.

The technology required is already available and the benefits are clear.  The real challenge lies in international political collaboration, as we are talking about complex political negotiations between a range of trading partners, the European Commission, the World Customs Organization, the United Nations and the World Trade Organization. Just as with every major ICT innovation, only 20% depends on the technology, and the rest on the willingness of the politicians.

Prof. Yao-Hua Tan is professor of Information and Communication Technology at TU Delft.

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