UN/CEFACT An Introduction to the work of the UN Centre for Trade Facilitation and Electronic Business Ray Walker OBE Ray Walker OBE Chairman, UN/CEFACT Steering Group Special Adviser on Trade Processes and Electronic Business to the UK Department of Trade and Industry to the UK Department of Trade and

Overview What is the Centre’s Goals and Vision? What is the Centre’s Goals and Vision? How did it start? How did it start? How is it organised and how does it work ? How is it organised and how does it work ? What is Trade Facilitation and what benefits does it bring? What is Trade Facilitation and what benefits does it bring? What are the key issues in e-business? What are the key issues in e-business? Points to take home Points to take home

UN/CEFACT’s Fundamental Goals and Vision Fundamental Goals To accelerate the growth of global commerce so that the economic benefits arising from it can sustain a secure, integrated, but diverse world, where there are no “divides” and which is culturally respectful Vision Simple, Transparent, Effective Processes for Global Commerce

UN/CEFACT – Background 1965: Early work on trade documents in Sweden 1965: Early work on trade documents in Sweden 1968: UN task force established in Geneva 1968: UN task force established in Geneva 1970: Working Party 4 established; Trade Facilitation work starts 1970: Working Party 4 established; Trade Facilitation work starts 1973: Work starts on EDI (TDI) 1973: Work starts on EDI (TDI) 1978: First global trade data elements directory published (UNTDED); Legal work starts 1978: First global trade data elements directory published (UNTDED); Legal work starts 1983: First international EDI syntax published; 1983: First international EDI syntax published; 1987: UN/EDIFACT syntax approved as an ISO standard 1987: UN/EDIFACT syntax approved as an ISO standard 1990: First UN/EDIFACT messages published 1990: First UN/EDIFACT messages published 1996: Over 150 UN/EDIFACT messages developed and approved 1996: Over 150 UN/EDIFACT messages developed and approvedwww.uncefact.org

UN/CEFACT – Background 1997: UN/CEFACT established 1997: UN/CEFACT established 1999: ebXML project launched 1999: ebXML project launched 2001: ebXML approved. 2001: ebXML approved. To date over 30 practical Recommendations have been made to governments to improve Trade Facilitation and e-business To date over 30 practical Recommendations have been made to governments to improve Trade Facilitation and e-business Many Guidelines for best practice have been published Many Guidelines for best practice have been published The use of Business Process Information Modelling unites the approach to both Trade Facilitation and e- business issues The use of Business Process Information Modelling unites the approach to both Trade Facilitation and e- business issueswww.uncefact.org

UN/CEFACT - Organisation Plenary: Centre’s highest decision making body Steering Group: Centre’s management and coordination body Groups: Main bodies for undertaking or supporting the work programme Working groups: Sub–element of a Group dedicated to a specific work item Projects: Sub–element of a group or Working Group Projects: Sub–element of a group or Working Group

UN/CEFACT - Organisation Plenary is made up of delegations from UN member states and international organisations representing the public and private sectors e.g. World Customs Organisation, International Chamber of Commerce, EAN International All delegations have the same rights e.g. An international organisation has the same rights as a member state All delegations have the same rights e.g. An international organisation has the same rights as a member state This is a very special feature which emphasises our objective of an open interface between public organisations and private business This is a very special feature which emphasises our objective of an open interface between public organisations and private business

UN/CEFACT - Organisation The Chair, and the 5 Vice Chairs (2 from ECE member states, 2 from other UN regions and 1 from international organisations) are elected by the Plenary. Currently, the Chair is from Germany, and the Vice – Chairs are from Japan, Nigeria, UK, USA and the IAPH. Steering Group (CSG) is also elected by the Plenary and is chaired a one of the VC nominated by the Chair and approved by the Plenary CSG meets physically 4 times a year but works daily by e- mail

UN/CEFACT - Work Programme The current work programme includes the analysis and modelling of business processes particularly in global trade, the rationalisation of international trade procedures, the development of electronic business exchange standards (e.g.UN/EDIFACT, ebXML), coding, and associated legal aspects The current work programme includes the analysis and modelling of business processes particularly in global trade, the rationalisation of international trade procedures, the development of electronic business exchange standards (e.g.UN/EDIFACT, ebXML), coding, and associated legal aspects It is carried out through empowered permanent and ad hoc working groups and through joint ventures It is carried out through empowered permanent and ad hoc working groups and through joint ventureswww.uncefact.org

Proposed New Group Structure There will be five Groups, three operational and two in support. There will be five Groups, three operational and two in support. Operational Groups Global Commerce Processes Group Global Commerce Processes Group Information Content Management Group Information Content Management Group Standards and Technologies Application Group Standards and Technologies Application Group Support Groups Techniques and Methodologies Group Techniques and Methodologies Group Legal Group Legal Group

The Groups and their Initial Constituents Global Commerce Processes Group – GCPG Global Commerce Processes Group – GCPG Business Process Analysis (BPAWG) Business Process Analysis (BPAWG) International Trade Procedures (ITPWG) International Trade Procedures (ITPWG) Trade Facilitation Policy and Best Practice* Trade Facilitation Policy and Best Practice* Specification of Common Business Processes (eBTWG) Specification of Common Business Processes (eBTWG) Specification of Reference models (BPAWG/ITPWG) Specification of Reference models (BPAWG/ITPWG) Specification of UN Recommendations (ITPWG) Specification of UN Recommendations (ITPWG) * Proposed New Working Group

The Groups and their Initial Constituents Information Content Management Group – ICMG Information Content Management Group – ICMG Semantic Rules* Semantic Rules* Code Directories (CDWG/EWG) Code Directories (CDWG/EWG) Library Management (eBTWG) Library Management (eBTWG) Business Information Objects Reference Library (eBTWG) Business Information Objects Reference Library (eBTWG) Catalogue of Common Business Processes Catalogue of Common Business Processes Business Document Library (eBTWG) Business Document Library (eBTWG) Core Component Library (eBTWG) Core Component Library (eBTWG) TDID/TDED (EWG) TDID/TDED (EWG) * Proposed New Working Group

The Groups and their Initial Constituents Standards and Technologies Group (STAG) Standards and Technologies Group (STAG) Business Domain Groups (EWG) Business Domain Groups (EWG) Cross Domain Harmonisation (EWG) Cross Domain Harmonisation (EWG) Cross Domain Assessment and Approval (EWG) Cross Domain Assessment and Approval (EWG) Technical Production and Maintenance (EWG) Technical Production and Maintenance (EWG) Core Component Technical Specification (EWG/eBTWG) Core Component Technical Specification (EWG/eBTWG) Design Rules (EWG) Design Rules (EWG) Syntax Rules (JSWG) Syntax Rules (JSWG) UN/EDIFACT Messages(EWG) UN/EDIFACT Messages(EWG) XML Schemas/DTDs * XML Schemas/DTDs * * Proposed New Working Group

The Groups and their Initial Constituents Techniques and Methodologies Group (TMG) Techniques and Methodologies Group (TMG) UN/CEFACT Modelling Methodology-UMM (TMWG) UN/CEFACT Modelling Methodology-UMM (TMWG) Base (Meta) Specifications (eBTWG) Base (Meta) Specifications (eBTWG) Technical Research in Trade Facilitation and e- Business* (*/TMWG) Technical Research in Trade Facilitation and e- Business* (*/TMWG) * Proposed new activity

The Groups and their Initial Constituents Legal Group (LG) Legal Group (LG) Legal Processes and Issues Legal Processes and Issues UN/ECE Legal Recommendations UN/ECE Legal Recommendations Legal Guidelines and Legal Advice to UN/CEFACT Groups Legal Guidelines and Legal Advice to UN/CEFACT Groups

The UN/CEFACT Forum It is important to understand that neither the Operational or Support Groups are Silo’s. They are intimately related and collectively will be called It is important to understand that neither the Operational or Support Groups are Silo’s. They are intimately related and collectively will be called The UN/CEFACT Forum The Forum will meet twice a year with all the Groups and their Working Groups present.

ebXML ebXML is set of interoperable specifications developed by over a 1000 experts worldwide covering infrastructure ( the technology of message interchange) and content (the messages) ebXML is set of interoperable specifications developed by over a 1000 experts worldwide covering infrastructure ( the technology of message interchange) and content (the messages) The specifications are freely available and are being implemented by major vendors today The specifications are freely available and are being implemented by major vendors todaywww.ebXML.org

UN/ CEFACT UN/ CEFACT S IMPLE, T RANSPARENT AND E FFECTIVE P ROCESSES FOR G LOBAL B USINESS.

What are International Trade Transaction Costs ? The costs of meeting commercial, governmental, transportation and payment procedures in international trade, compared with the costs of meeting the equivalent procedures in national trade Procedures are the collection, presentation, communication and processing of information in paper or electronic format

How do these extra costs occur ? Every international trade transaction involves a minimum of 7 participants. They are: Exporter, Freight Forwarder/Transporter, National Customs, Foreign Customs, Importer, Importer’s Bank, Exporters Bank All deep sea or air transactions have at least 10 participants (Add a minimum of 2 Air/Sea Ports and one Carrier) For movements that transit third countries add at least another 2

How do these extra costs occur ? Each movement incurs procedural costs as it moves along the transaction chain Information exchange costs are very high e.g. each deep sea shipment involves at least 24 documents/information exchanges Over 80% of the information exchanged is the same!

The International Trade Transaction involves: Participants Participants Procedures Procedures Documents especially aligned documents Documents especially aligned documents Data exchange (EDI, XML) Data exchange (EDI, XML)

Example transaction: seaport [delivery_ order] [lc_ request] Import Forwarder Import Shipping Line Exporter (Shipper) Importer (Consignee) Import Liner Agent Export Forwarder Export Shipping Line Export Liner Agent Issuing Bank Import Customs Import Port Authority Import Transporter Import Stevedore [bill_lading] [bill_ lading] [arrival _ notify] [goods_ available] [manifest] [stowage_plan] [customs_ release] [customs_ declare] [manifest] [eta] [discharge_permit] [cargo_declare] [manifest] [eta] [manifest] [stowage_ plan] Export Port Authority [manifest] [stowage_ plan] [ship_ details] [ship_ ins_act] [manifest] Export Stevedore [load_list] [load_ instruct] [manifest] [pre_arrival] [arrival_notify] [ship_ instruct] [ship_ request] [manifest] [bill_ lading] Export Customs Export Transporter Insurance Corresponding Bank [bill_lading ] [lc_ [ins_contr_req] [ins_contract] [remittance_ advice] [delivery_ order] [bill_lading] [lc] [exp_ declare] [exp_ approval] [commercial _ Invoice] [despatch_ notice [bill_ lading] [bill_lading] [clearance] [delivery_ order] [arrival_ notify] [manifest] [bill_lading] [stowage_plan] [manifest] [trans_ notify] [trans_ interest] exportimport

How much are the extra costs? How much are the extra costs?

Expressed as a percentage of invoice value, studies have shown that the extra costs are between 2% and 7 %

How much are the extra costs? How much are the extra costs? 7% NCITD (USA) 1971 published study (deep sea markets) 7% NCITD (USA) 1971 published study (deep sea markets) 2% SITPRO (UK) 1987 unpublished study (EU markets only) 2% SITPRO (UK) 1987 unpublished study (EU markets only) 2% Cechini report (EC) 1988 published study (EU markets only) 2% Cechini report (EC) 1988 published study (EU markets only) 4% SWEPRO (Sweden) 1994 published study (all markets ) 4% SWEPRO (Sweden) 1994 published study (all markets )

How much are the extra costs? How much are the extra costs? 3 % is probably a good working average The actual costs will depend on the market and on the level of Trade Facilitation measures in place

Can these extra costs be reduced?

YES but it requires leadership, knowledge and effort!

Can these extra costs be reduced? Most CEO’s have no experience of international trade, and in general, little interest in effective export practice Some CEO’s also seem to think that “one size fits all”

Can these extra costs be reduced? Applying Trade Facilitation and other best practice techniques in can substantially reduce the extra costs – by up to 60%

What is Trade Facilitation?

It is the technique that improves the ability of entities to exchange products and services through the simplification, rationalisation, and whenever possible, the elimination of procedures

Effective trade facilitation Effective trade facilitation is achieved through the combination of : Rigorous analysis of the international trade transaction process Simple and efficient information exchanges Skillful implementation of best practice within companies Effective cooperation between commerce and government Successful inter-governmental policy negotiations Practical steps at border points

What are the key issues in e-business?

e-business:what is it? It is the use of Information and Communication Technologies (ICT) to radically improve business and administrative processes and practices It is the use of Information and Communication Technologies (ICT) to radically improve business and administrative processes and practices But it is not just about technologies; it is equally about rationalising and integrating the underlying business processes But it is not just about technologies; it is equally about rationalising and integrating the underlying business processes

e-business is already well established! Globally EDI, Bar Coding, CAD/CAM are widely used in all sectors of industry and commerce. EDI, especially UN/EDIFACT, is also extensively used in many government departments worldwide e.g. Customs, Purchasing, Healthcare, Statistics, etc. EDI, especially UN/EDIFACT, is also extensively used in many government departments worldwide e.g. Customs, Purchasing, Healthcare, Statistics, etc.

e-business developments Collaborative business concepts (e.g. online exchanges) and supporting applications, including Portals, with contract, transaction and security tools, are appearing almost on a daily basis Collaborative business concepts (e.g. online exchanges) and supporting applications, including Portals, with contract, transaction and security tools, are appearing almost on a daily basis In this development frenzy it is very easy to lose focus In this development frenzy it is very easy to lose focus

e-business:what should I focus on? Framework issues need to be carefully considered Framework issues need to be carefully considered Interoperability - deploying products that are built on open standards and which can work together - is critical Interoperability - deploying products that are built on open standards and which can work together - is critical Agreeing common data definitions, with precise and unambiguous meanings, and using them in all exchanges with business partners is the foundation of success Agreeing common data definitions, with precise and unambiguous meanings, and using them in all exchanges with business partners is the foundation of success

e-business: what are the framework issues? Relevant Law Relevant Law Trust & Security Trust & Security Intellectual property rights Intellectual property rights Privacy Privacy Consumer protection Consumer protection ICT Standards ICT Standards

In today’s world information standards are absolutely critical to interoperability and, therefore, the key to the success of e-business In particular, structured information exchanges are fundamental