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Full steam ahead

Despite opposition, DHS moves forward with data exchange project.

The Homeland Security Department may be sailing into choppy waters as it tries to create a new data warehouse for exchanging trade information despite objections from much of the U.S. trade community.

The House has appropriated $15 million for the Global Trade Exchange, or GTX, for fiscal 2008, and Secretary Michael Chertoff said Nov. 15 that DHS will soon release a solicitation for test demonstrations of the concept. The scope of the project is not known, but industry representatives suggest it could cost tens of millions of dollars.

Although DHS intends to move forward, there are strong undercurrents that may slow the warehouse’s deployment. Several trade organizations are asking for a hold on establishing the global exchange until the idea can be fully vetted. The trade groups want to ensure the security and confidentiality of the data and clarify its ownership.

“The global trade exchange has been created in a vacuum,” said Jonathan Gold, vice president of supply chain and customs policies at the National Retail Federation. “It is very disconcerting.”

Sharp criticism
Lawmakers echo those concerns. “For months, Congress and industry stakeholders have been trying to learn about this initiative without success,” Reps. Bennie Thompson (D-Miss.), chairman of the Homeland Security Committee, and Ed Markey (D-Mass.), a member of the panel, wrote in a Nov. 19 letter to Chertoff.

“The department is moving forward blindly on security initiatives without consulting with the very industry representatives that it will call upon to assist it if and when a terrorist attack were to occur,” they wrote.

Although DHS is plowing ahead on the ambitious global trade exchange, it has taken no action on an industry request to endorse a more modest plan for maritime security information sharing.

“Getting the government to help stand up a maritime information sharing and analysis center has been difficult,” said Philip Murray, chairman of the Maritime Security Council, a 20-year-old nonprofit group of shippers, port authorities and other maritime stakeholders. Several other information-sharing and analysis centers have received federal funding, but neither the Coast Guard nor the Navy has been willing to support a $2 million plan to set up an information exchange for situational awareness among more than 700 worldwide ports, Murray said.

High level support
Although that initiative has temporarily stalled without DHS support, the global trade exchange is being promoted at the highest levels of the department. Former Deputy Secretary Michael Jackson and other Customs and Border Protection officials have promoted the idea for two years as part of the Secure Freight Initiative.

The warehouse would be owned and operated by a private-sector entity as a tool to improve risk assessments of ocean containers and identify cargoes that require the most inspection, Jackson said in a June speech. It would collect large volumes of commercial-transaction data from all parties involved in the production and movement of international shipments. This presumably would include purchase orders and fulfillment schedules.

The warehouse would collect information and data under the department’s Secure Filing Initiative for which a Notice of Proposed Rulemaking is expected in several weeks, Chertoff said Nov. 15. He also said DHS is sensitive to industry needs.

“We’re going to make sure that we address concerns about security and operational demands by proceeding forward in concrete steps,” Chertoff said.

Skeptics abound
But several large trade organizations, such as the Joint Industry Group — which represents importers, exporters, law firms and other commercial entities involved in international trade — and the National Customs Broker and Forwarder Association of America, have expressed serious reservations about the project and its possible impact on commerce and security.

“We approach GTX with great skepticism,” the brokers and forwarders wrote in a white paper. “Congress should communicate the same reaction and insist that certain key questions are addressed before a decision to proceed is made.”

Both trade groups said sharing confidential business data with foreign governments in the exchange would be a problem not only in terms of protecting U.S. competitiveness but also for national security reasons because the data could be vulnerable to leaks.

“What is being contemplated for the GTX is collection of large volumes of data,” said Jon Kent, Washington legislative affairs representative for the brokers and forwarders group. The need to share data is counterintuitive for logistics firms, most of which have a strong belief in the proprietary nature of their transactions, he said.

“The last thing a logistics company wants is to have the sources of their merchandise made public,” Kent said. “They cannot feel comfortable if those things are given to a private-sector company.” DHS may be able to allay those fears by limiting the amount of data requested and offering benefits to companies that comply with the new data rules, he added.

Frozen out
Deployment of the global trade exchange is coming at an awkward time. DHS also is attempting to implement the Secure Filing Initiative, under which CBP will demand more information from importers and cargo owners. There are questions about whether the global trade exchange will be redundant once that initiative is in place. “We are concerned that GTX may be duplicative,” Murray said.

But one of the puzzling aspects of GTX, several executives said, is why industry members have not been consulted on the project as they were on other trade initiatives, such as the Secure Filing Initiative, in which they have been closely involved with CBP. A DHS spokeswoman did not return phone calls requesting comment.

Kent said, “There is a lot of angst about the GTX.”

Source: WashingtonTecnology by Staff writer Alice Lipowicz. She can be reached at alipowicz@1105govinfo.com

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