New DHS Report Examines Use of AEO Programs for E-Commerce
New authorized economic operator or trusted trader programs aimed at increasing data sharing within e-commerce are among the options suggested for reducing the information gaps at CBP, in a new report led by the University of Houston. “The team found that providing AEO certification to compliant stakeholders and developing a new federated data platform and information and communications technology infrastructure can both increase the probability of CBP gaining accurate data as well as increase economic efficiency for customers, importers and other relevant stakeholders,” the Department of Homeland Security said in a news release. The report was prepared by the Borders, Trade, and Immigration Institute at the University of Houston, which is sponsored by the DHS Science & Technology Directorate.
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The growth in e-commerce has resulted in “an increased risk of trade violation, and the potential for the release of harmful or unsafe goods,” due to a “lack of pre-arrival data such as seller information, product identifiers or product classification,” DHS said. A new AEO program, based on the AEO framework from the World Customs Organization, could lead to adoption of “higher standards of e-commerce functions,” the report said. A CBP official recently mentioned the agency is exploring giving incentives for more transparency into the supply chains (see 2104260014).
One possible feature of the AEO program would be for granting “beneficial customs status to the voluntary e-commerce intermediaries and online sellers that adhere to the guidelines and best practice requirements,” it said. The program could also “extend to the intermediaries and/or online sellers that have no physical presence in the U.S. but have U.S. customers,” it said. “These include, platforms or marketplaces operated by foreign entities, foreign warehouses and distribution centers, and oversea sellers who use e-commerce environment to sell merchandise to the U.S. consumers. Plurilateral collaborations and agreements are important aspects of an e-commerce AEO program that expands to the foreign e-commerce stakeholders.”
Among the challenges for the idea is that many countries have laws that restrict data flows across borders, the report said. “A key issue for policymakers would be designing effective e-commerce AEO programs, which requires data sharing in the face of emerging localization laws around the world,” it said.
Artificial intelligence and digital distributed ledgers are among technologies that “could bring benefits to data sharing including improved data quality, reduced labor cost for data administration and management. Increased automation, enriched data sources, enhanced data interoperability, and improved accountability.” For example, “AI based auto-classification tools could improve capabilities of e-commerce intermediaries to detect high risk products and determine if a product belongs to controlled categories with [Partner Government Agency] data requirements,” it said. “Decisions by e-commerce stakeholders will become increasingly automated by adopting such technologies.”
A “benefit that [digital ledger technology] could bring, after broad adoption, is to lower transaction costs and increase transparency,” it said. Such advanced data sharing operations would likely result in an increase in shipments where the stakeholders cooperate, a higher probability that the government obtains sufficient data for expedited entries, and improvements in the “economic efficiency of the importing process,” it said.