ASIA PACIFIC ECONOMIC COOPERATION
TRANSPORTATION WORKING GROUP
FOURTEENTH MEETING – SEOUL, KOREA

OCTOBER 1998

TRANSPORTATION ELECTRONIC COMMERCE
DRAFT COLLECTIVE ACTION PLAN

Submitted by Australia

September 1998

Agenda Item

To seek agreement on the draft collective action plan and to agree on cooperative measures which will facilitate the use of electronic commerce in the transportation chain and related trading sectors within APEC

BACKGROUND

At its 13^th meeting in Mexico City, 20-24 April 1998, the TPT-WG agreed to submit to the SOM Task Force on Electronic Commerce a statement of its contribution to the Leaders work program on electronic commerce. In the statement to the Task Force the TPT-WG undertook to progress several activities. Amongst these activities is the development of a collective action plan to promote the take up of electronic commerce in the transportation and related trading sectors in member economies, a draft of which is to be considered at TPT-WG 14.

The purpose of the collective action plan is to identify action priorities, which will provide further impetus to electronic commerce work in the TPT-WG as well as meet the specific needs of economies. It was agreed in Mexico that the collective action plan approach used by the SCCP should be used as the model to develop these action priorities.

In order to obtain information for the development of the Collective Action Plan, Australia invited TPT-WG member economies to provide answers to the following three questions:

1. What is the current state of EC implementation in the customs, quarantine and banking sectors?
2. What can individual economies contribute to the TPT-WG electronic commerce work?
3. What would individual economies like to see the TPT-WG do in electronic commerce?

At the time of preparing this paper, Australia has received responses from seven economies. These responses are summarised in Attachment A. Economies which have yet to respond are still encouraged to submit their input to Australia.

PROPOSED COLLECTIVE ACTION PLAN

In light of comments received and previous issues raised in the TPT-WG, Australia proposes that the TPT-WG consider the following action priorities as part of its Collective Action Plan:

1. Adopt standards for EDI messages, and related implementation guidelines, that are consistent with the "Principles and Rules" developed by the International Transport Implementation Group (ITIGG), which is associated with the UN/EDIFACT system;
2. Extend use of electronic messages for reporting manifest information to Port Authorities throughout all APEC economies;
3. Establish and use bureau services for linking EDI with other simpler and less costly forms of electronic commerce;
4. Examine the feasibility of establishing a "single electronic window" for communication with export inspection authorities on matters related to the export clearance of goods;
5. Remove any legal or institutional requirements for the use of paper documents in the processes associated with international trade and transport (refer to recommendations in Australian paper on 'Requirements for Paper Documents'); and
6. Improve and increase facilities (eg banking) for settling financial transactions by EDI and other electronic means suited to international transport and related trading activities.

The above actions are included in Attachment B as a table, which will need to be completed on the basis of advice from economies. In this regard it is proposed that the task of coordinating and following up individual actions be spread between several economies. Economies, which are willing to nominate for this work, are requested to inform Australia as soon as possible.

The details required to complete the table in Attachment B are expected to be finalised at TPT-WG14.

Cooperation with CTI-SCCP

It is proposed that the TPT-WG consider implementing some of the action priorities in cooperation with the Committee on Trade and Investment's Sub-Committee for Customs Procedures (CTI-SCCP). EDI Message Standards and Removal of Paper Documents are the two key issues that could be progressed jointly with the SCCP. This is in line with the recommendation of the APEC Electronic Commerce Task Force endorsed by SOM and Trade Ministers in June 1998 for continued close coordination between sub-fora for APEC work on electronic commerce.

SCCP Electronic Commerce Developments

In response to Leaders’ directive for an APEC electronic commerce work plan, the SCCP meeting in June 1998 agreed to coordinate its electronic commerce activities and build on work already done. As part of this initiative Australia now coordinates the informal Virtual Customs Group (VCG), made up of interested electronic commerce experts in APEC Customs administrations. The VCG is similar to the TPT-WG e-commerce list. The SCCP is aiming to create a Virtual APEC e-commerce think tank which could be hosted on a single Internet WWW site. The VCG recently conducted a survey on e-commerce implementation and aspirations amongst APEC Customs administrations. Responses received from 13 SCCP members together with information from the TPT-WG were compiled into a Customs e-commerce compendium. The APEC Customs EC Compendium indicates that the SCCP and TPT-WG have similar objectives and requirements based upon common concerns and considerations such as paperless trading, electronic reporting, and international standards. Copies of the relevant SCCP electronic commerce papers will be distributed to economies at the electronic commerce group meeting on 19 October. Australia would be grateful for any comments economies may have on these papers, in particular, the conclusions to the Overview paper on e-commerce implementation.

EDI Message Standards

There is a significant lack of uniformity in the use of standards for EDI messages for customs, quarantine and banking messages. While some comply with the UN/EDIFACT system, many others are propriety in nature. Messages using propriety standards add significantly to the cost of dealing with many trading partners in an international trading environment because users have to install different software in order to comply with the different standards of trading partners.

This issue of EDI standards is expected to be addressed in Phase 1 of the TPT-WG's new electronic commerce project, which has been approved by BAC for TILF funding in 1999 (subject to endorsement by SOM in September and final approval by Ministers in November). The new project also lends itself to possible cooperation between the TPT-WG and the SCCP. Please refer to the summary of the draft request for proposal on page 6 of the Australian paper "Proposal to Implement Phase 1 of the Proposed New Electronic Commerce Project". The SCCP Program to Implement UN/EDIFACT electronic message standards was approved by BAC in 1996 and is co-managed by Australian and Philippines Customs authorities. The project is aimed at implementing UN/EDIFACT in all APEC Customs administrations by end 1999 and includes training courses and expert missions. Australia is proposing that the two sub-foras look closely at syncronising the TPT-WG project with the SCCP project. This includes both sub-fora working with commonly identified economies (those requiring assistance), customs administrations and business participants.

The following is for information only. TPT-WG member economies should also be aware of the work of the Asia Council for the Facilitation of Procedures, and Practices for Administration, Commerce and Transportation (AFACT). This organisation has recently replaced the Asian EDIFACT Board and is linked to the worldwide system for EDI standards based in Geneva, and known as the Centre for the Facilitation of Procedures, and Practices for Administration, Commerce and Transportation (CEFACT). One of AFACT's terms of reference is to:

develop methods to facilitate transactions, including the relevant use of information technologies such as UN/EDIFACT and Electronic Commerce.

Korea is the Chair Elect for AFACT.

Australia is willing to participate in the work involved in coordinating TPT-WG actions to progress the issue of EDI message standards.

Manifest Information for Port Authorities

The use of electronic messages for reporting manifest information to port authorities has the potential to generate significant benefits for shipping companies and the port authorities themselves. Shipping companies can simply draw on the manifest information they already have to prepare for customs clearances and commercial purposes without having to prepare separate paper documents. Port authorities can use the information received by EDI to calculate port charges based on cargo quantities (eg wharfage), and also record relevant information for their own statistical needs covering cargo handled by the port.

The Sydney Ports Corporation has recently introduced a system for the electronic receipt of manifest information. The system will soon be introduced into other major Australian ports. Australia can provide information on this system to TPT-WG economies to assist their consideration of whether such a system would suit the situation in their ports.

E-Form Bureau Services

These services are designed to link EDI with less expensive and sophisticated electronic commerce systems. They are of particular value to small and medium sized enterprises whose volume of transactions may not warrant the installation of EDI. Through bureau services an electronic message can be sent through the Internet on a standardised electronic form (E-Form) to a bureau which then converts the message into an EDI form for onward transmission to other parties fitted with EDI facilities.

This type of service has considerable potential to introduce electronic commerce to a much wider range of businesses on a cost-effective basis.

Australia is willing to participate, together with other economies familiar with E-Form bureau services, in researching this issue, providing relevant information to TPT-WG economies and developing relevant recommendations for consideration by the TPT-WG.

"Single Electronic Window" for customs and quarantine communications

There has been a strong push in Australia, mainly from exporters to have a facility established whereby communications covering livestock, agricultural and fish commodities subject to both customs and export inspection clearances could be handled through a single channel. This allows commercial parties to reduce time and money in meeting their reporting requirements as the information required by both customs and quarantine authorities can readily be included in the same message instead of in two separate messages.

A Single Electronic Window (SEW) facility was introduced in Australia in July 1998 to cover meat exports. The facility is scheduled to be extended to dairy products by November 1998 and then progressively to other commodities subject to export inspection.

The SEW facility not only benefits exporters but also a number of other parties in the transport chain (eg. freight forwarders), since the efficient movement of goods depends, to a significant extent, on the existence of an efficient documentary system that can keep ahead of the physical movement of goods.

Australia is willing to participate with other interested economies in further examining this issue and providing relevant information and recommendations to TPT-WG. It is suggested that the TPT-WG seek to pursue this issue in collaboration with the CTI's Sub Committee on Customs Procedures (SCCP) and quarantine authorities.

Removal of Legal And Institutional Requirements For Paper Documents

The following commitments were made by the TPT-WG in its effort to address the issue of requirements for paper documents, which hinders the transition to a paperless trading environment:

At TPT-WG 8 in September 1995

"As soon as practicable within the next ten years, member economies should seek to eliminate the requirement for paper documents (both regulatory and institutional) for the key messages relevant to international sea and air transport and trade."

"TPT-WG members should, where appropriate, approach the relevant portfolios in their own economies for assistance in removing requirements for paper documents covering international trade and transport, where satisfactory facilities for transmitting documents in electronic form can be made available; and

"Within the next twelve months, APEC economies should endeavour to prepare a program of actions aimed at removing, as far as practicable but no later than the year 2005, requirements for paper documents (both regulatory and institutional) for the key messages relevant to international sea and air freight."

Australia believes that this is an issue that could best be progressed jointly by the TPT-WG and the SCCP. To this end it is proposed that representatives from the transport and customs sectors in each APEC economy collaborate in developing programs aimed at removing requirements for paper documents. It would be helpful if APEC economies agreed to exchange information on progress made on this matter.

Australia would be willing to undertake the task of collecting and disseminating information concerning the current work being done in Europe to find acceptable arrangements for handling bills of lading in electronic form (BOLERO project).

Other economies may wish to take the lead in researching and reporting on other work outside APEC, which is relevant to the goal of removing requirements for paper documentation. This could include work on the authentication of electronic messages and the development of a model law on electronic commerce (this should include work by the United Nations Commission on International Trade Law). Australia would be willing to participate in this work.

Improve And Increase Facilities For Settling Financial Transactions

The provision of efficient electronic commerce systems, such as EDI, for financial transactions is of major importance to improving the efficiency of the documentary processes associated with international trade and transport. In order to improve the information flow and movement of goods across international borders within APEC, it is imperative that we have financial payments systems that are relatively inexpensive for business and are capable of accepting variable payment. Existing financial systems are often slow and expensive.

The importance of integrating payment systems with electronic commerce transactions was raised at the June 1998 meeting of the SOM EC Task Force. The main barrier appears to be trust. There has been some progress in this area. For example, the Imperial Bank in the US issues letters of credit on-line over the Internet; the bank assumes liability for non-payment. Also, a group of leading international conglomerates including General Electric and Electrolux have issued a statement calling on the global banking industry to endorse and implement full financial EDI messaging using the EDIFACT global standard.

The Australian trading community is also pressing for improved electronic banking facilities, including a greater use of the Internet as the medium. At present business to business electronic payments streams all require the use of proprietary bank solutions. The Chase Manhattan Bank recently commenced an Internet financial EDI (FEDI) service with a major Australian retailer. Under this service the retailer sends standard UN/EDIFACT multiple payment instruction messages, called PAYMUL, to Chase, which does the processing and forwards the electronic payment instructions to other banks in an appropriate format, and prints out and posts cheques when required. This is a first in Australia. In addition, the SWIFT network, an international banking network used by all major Australian banks for high value payments, will carry the UN/EDIFACT FINPAY message from October 1998. FINPAY is the financial EDI inter-bank message, which provides the capability for the local Australian banks to exchange financial EDI messages between themselves.

As financial transactions are an intrinsic part of managing transport transactions, it is recommended that the TPT-WG play a role in placing this issue on the APEC agenda. The issue of improving electronic banking is not being addressed in specific APEC sub-fora. The SOM EC Task Force is proposing to address this issue along with other electronic commerce issues in its matrix of current/potential work in APEC sub-fora.

Australia seeks the views of member economies on how best the TPT-WG could pursue this role. Australia would be willing to participate with other economies to promote the use of electronic banking in the transportation chain within APEC, including the implementation of full financial EDI services using the global UN/EDIFACT message, and the Internet as the medium.

The SCCP is also seeking to extend the use of Electronic Funds Transfer to meet Customs revenue collection needs.

RECOMMENDATIONS

It is recommended that:

1. Economies that have yet to respond to the three questions (under 'Background' on page 2) are encouraged to submit their input as soon as possible.
2. Economies consider and agree on the draft collective action plan as summarised in Attachment B.
3. Economies decide on a feasible activity for each action priority and target date for achievement of the agreed activity.
4. Economies, which are able to contribute their electronic commerce expertise, nominate as coordinator(s) for each action priority.
5. Economies agree that the TPT-WG cooperates with the SCCP, quarantine and banking authorities in implementing the action priorities where appropriate, including cooperation between the TPT-WG and the SCCP in the implementation of the TPT-WG new electronic commerce project.
6. Economies agree that the TPT-WG take on the role of ensuring that electronic banking issues are placed on the APEC agenda and addressed by an appropriate APEC sub-fora.

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