Muziri, Amber Road,Silk,Spice, Incense route to Modern Global Trade – Series VII

SAP GTS -Restricted Party List screening features

In SAP RPL feature available in GTS compliance management

SAP SPL flow

In SAP GTS, RPL feature available in module called compliance management, the available feature can do screening of FI, HR and logistics. SPL Content has to be sourced from third party service providers. SAP supports standard and Fuzzy logic. . Additionally, screening can be scheduled or to run ad-hoc as new business partners are added. Further, those required denied party lists can be updated with the latest versions of the lists (delta-files) from the issuing government agencies and international authorities. The SAP-GTS system would maintain those lists as well as log all updates and screenings. The SAP-GTS software would then identify if any business partner is a reasonable match to an entry on the denied party lists. The SAP-GTS software would then block any business connected to the software for that “possible positive” identification. The SAP-GTS software would then notify the company’s authorized compliance team or legal team for further verification. If a positive match is encountered then the compliance/legal team are obligated to alert the appropriate authorities.

Content

SPL Master Data which can be get it from third party service provider. SAP GTS supports screening against multiple lists. Content can be uploaded either manually or automatically through PI interface.But SAP doesn’t own SPL master data.

The PST.AG is the official data provider for SAP GTS. All data are available also in SAP-XML format.

Data Loader is the module offered by PST that automatically transfers current data in SAP-GTS. This module replace manual uploads in SAP-GTS and secures the verification and execution of business processes based on the current valid directives.

MK Denial services also supplying SPL Master data as XML files.

Customer can use content life cycle management (CLM) to manage contents provided by third party agents who is supplying SPL Master data. Every GRC 10.0 version has this package. No separate license is required. It is excellent tool to manage content. It can be used in SPL and also in other areas process control , risk management and access control.

Display

SPL Screening with the Web UI

Sanctioned Party List Screening in GTS Area Menu with SAP GUI

Sanctioned Party List Screening with Mobile App

Logic

Standard and Fuzzy logic

o Creating and Managing SPL Master Data
o Generating a Comparison Index for SPL Master Data
o XML Upload of Sanctioned Party Lists

SAP Trex 7.0 supports fuzzy logic

Search in
„ Unstructured data (documents)
„ Structured data (business objects)
„ Full text
„ Attributes
Different search modes
„ Exact
„ Linguistic: stemming, etc.
„ Fuzzy: Search error tolerant
„ Wildcards and truncation’s ( * or ? )
„ Phrase search for complex expressions
„ Boolean operators (AND, OR, NOT…)
„ Highlighting / HTML conversion
„ Content Snippets (Abstracts)
„ Federated search

Trex supports multiple languages

Evaluation
o Monitoring SPL Master Data
o Checking Upload Logs

Reports

Can be downloaded in excel format

Oracle GTM

Oracle has six GTM match engine to choose from

  • Dice
  • Metaphone
  • Soundex
  • Exact Match
  • Sub string match
  • Key word match

If Comparing John Paul to Jon Pal

System breaks into four string combinations

  • John compared to Jon
  • Paul compared to Pal
  • John compared to Jon
  • Paul compared to Pal

formula

Bigram factor is calculated for each combination

  • [ JO, OH , HN ] with [ JO , ON]

Field Match factor

Weighted against the length to calculate Field match factor

Every bigram combination is weighted against total word length

If Field match factor > threshold in Service Parameter

Then Multiply Field match factor by Weight in Service Parameter

Determine if total value in last step is greater than threshold in Service Preference

You now have the ability to define the match direction (forward, reverse, both) and threshold at the individual field level when using the Dice Engine. This capability allows you to configure GTM’s RPLS matching logic to calculate a match factor for the forward case i.e., match factor based on party value length and/or the reverse case where the match factor is based on the denied party value length. This enhancement improves the overall match quality by reducing the number of false positives.

The Dice Engine now supports Reverse Matching (i.e. with respect to Denied Party) • Available options are Forward, Reverse and Both • The Match Direction and Threshold can now be set at the Individual Field Level

In Oracle GTM 6.3.4 , work flow can be created separately for contract party screening (Batch) and transaction party screening. The Denied Party List Data Download now automatically checks the current Agency Code List to insure that Agency Codes included in the latest download already exist in the Agency Code list – if they do not already exist the new Agency Codes are automatically added to the list. Null fields ignored for determining match considerably reduce false positive cases

Review match factor helps to compare how match calculated between a party and restricted party . It provides the following information

Forward Matching Threshold

Reverse Matching Threshold

Highlights the matched Word

Modified Match Factor (based on weight age)

Overall Tolerance Check

Display the actual match value with tolerance values

Like SAP GTS, oracle GTM supports adhoc screening, but simulation without updating in the database is not available in GTM

Amber road

Content
Amber road is supplying content to clients. That gives bigger benefits for client, because Amber road supplies restricted party screening (RPS) software as part of Export Management suite.It enables exporters to quickly screen customers, suppliers, and other trading partners against over 300 restricted party lists from government institutions worldwide. Providing accurate and  up to date content of restricted parties is the strength of Amber road. Since Amber road’s is not sharing publicly documentation, knowledge has to be acquired from information available in Internet domain. Integration of content and software is generally challenge in SAP GTS and GTM, but here it is minimized, since vendor supplying both software and trade content (Sanctioned Party Lists). Since company is taking ownership of content, client not necessary to bother much about audit issues. Also company is providing automated feeds integrated with software so that real time update of content is possible. If you depend on third party service provider there will be possibility of time lag and delay in update causing slipping of sanctioned party potentially cause non-compliance.

Logic

Amber road use advance word matching technologies, exact matching is not sufficient to demonstrate reasonable care, solution should be capable to compare how similar trade party and sanctioned party. Typical text matching algorithm can produce results with 90% accuracy and 35% false positive. But, Computational linguistics matching can bring 99.6% accuracy and less than 1 % false positive, lesser false positive rates can result in tremendous gain in productivity for compliance team.

Amber road also offered as on demand software (or) Software as a Service [SAAS]

amberroad

on-demand (or) cloud allows you to focus on your core business and

a) avoid investing in hardware;

b) avoid investing in software;
and c) eliminate the cost of additional IT resources and data centers to run the application

The objective of this article series is to understand the complexities of global trade management business in terms of documentation and regulations. All functionalities of individual software’s not covered here. Choosing a right software is very critical for business, one is investment another is time.

How to choose a right GTM software for  your organisation, what are the criteria’s need to consider to decide a software, why we need to implement a GTM software, whether we need to implement on-premises or cloud. I see  there is a huge potential for cloud in Global Trade Management process in terms of  documentation, managing compliance and reporting to customs authorities. We see in detail about the prospects of cloud replacing on-premises (or) traditional software in detail after completing analysis of all areas of global trade business. In my series of article next i am going to discuss about license requirements as part of meeting compliance

Muziri, Amber Road,Silk,Spice, Incense route to Modern Global Trade – Series VI

Basic process flow of Restricted Party List screening RPS 1) RPL master data can be inputted in to RPS software via manual entry, by text flat file loading or XML messaging. Also data can be uploaded through middleware from service provider server to RPS software available with client. This process can be set up as a batch job based on frequency of new file from third party service provider

2) RPS software with a screening logic or search algorithm can be capable to do evaluation in a sequential manner. Screening  information will be stored as record for audit trail. Screening happens against Business partner master data, this data can be either within RPS server or in external Master Data in order management system.

3) Match is a result of screening. System generates match after comparison

4) Match generated can be reviewed in work queue or in dashboard by compliance team . Work queue can be internal within application or web hosted one. In web based software, a compliance manager can view list of blocked customer and vendors and then take decision with regards to release or continue to block. This process can be controlled through email notification workflow for authorization and approval based on hierarchy within compliance team

5) The output of the results can be generated as reports . Match is generated based on screening logic or  search algorithm only. Algorithm is the crucial factor for the performance of screening, in fact this feature decides how best that particular RPS software performs . Algorithm is nothing but a set of rules to perform a function in a sequential manner, starting from a initial input of master data upload proceeds through a finite number of successive steps eventually producing a “output” of possible match entries.

Governance Risk Compliance Framework policy is required for a company to decide upon what to include in screening and what to exclude . This is possible only after consultation with legal and compliance team. This is specific to company and it depends on products it selling , we have seen earlier in detail about GRC framework in previous article series.

Rpl_Event

The basic specification of Restricted Party Screening software are the following
– Check
-Monitor
-Report
-Audit
Check and throw a match or generate a message successful check without any match when  a new list or new RPL master data input uploaded in system
Monitor , if there is a change in field level of a business partner master or change in address in transaction level created in order management system generate a alert message . Basically, the change in feeder system has to trigger a screening in RPS software synchronously.
Report can be viewed in dashboards by compliance team to decide upon match generated after screening
Audit trail is a record of activity happened in RPS software and in order management system for screening purpose .  It has information of initial introduction of RPL master data and match comparison generated and subsequent action taken by compliance team. Since entire sequence is available it can be verified later for validation in case of compliance audit

The variations between screening software’s available in the market is  based on features like the way data input in to the system, search algorithm strategy and report functionality in the form of dashboard or work queue. There is another important feature is native language support other than English and other European languages. RPS list can be in any languages like in Mandarin, Arabic, Japanese and any other foreign languages. These languages are currently not supported by many software’s. SAP and oracle also not directly comparing, it is transliterating  RPL master data into  English to identify match. Having multi-lingual check helps to verify with original master RPL data , transliteration may cause conversion of text wrong

We can do comparison of features available in SAP GTS, Oracle GTM and Amber road in detail in next article

Muziri, Amber Road,Silk,Spice, Incense route to Modern Global Trade – Series V

Know what you need : GRC framework  is the starting point to decide what type of RPS software is required. When company has huge volume of transaction in a day, it will be mammoth task for compliance team to verify every block and check its background before release it or keep it on hold. Blocks are generated based on comparison between Restricted party list master data and business partner exist in order management system. If the number of false positive is more it is laborious process for compliance manager to release it and update reason for audit purpose. In a situation, if genuine case skips as negative, then there is a possibility company ship the goods to sanctioned party, which may cause penalty or loss of export privileges. So it is like walking in razor edge to implement a software with a well balanced approach of less false positive blocks without compromising genuine match to block. Restricted Party List master data created from various sources. Data from various sources collated and prepared in a format to upload in RPS software. Sources here can be either government or non-government agencies. Products like SAP GTS nominates third party service providers to share SPL details with client. They used to supply these information in XML format. There are GTM vendors like Amber road provides RPL information to their clients directly whenever there is update. We will understand now what is list type?.The Sanctioned Party List is categorized in some countries. This means that it is divided into sub-lists.The Sanctioned Party List type represents this type of sub-list
Example
The Sanctioned Party List in the U.S., known as the Denied Party List, is divided into the following sub-lists.
– SDN (Specially Designated Nationals)
– SDNT (Specially Designated Narcotics Traffickers)
– SDNN (Special Designated Nationals Narcotics)
– SDT (Specially Designated Terrorists)
– EOC (Entity of Concern)
– DOS (Department of State, Debarred Parties)
Specially Designated Nationals and Blocked Persons (SDN) are individuals and entities located anywhere in the world. SDN’s can be frontal companies, parastatal entities, individuals determined to be owned or control by or acting for or on behalf of, targeted countries or groups. They also can be specially identified individuals such as terrorists or narcotics traffickers. U.S. persons are prohibited from engaging in any transactions with SDNs and must block any property in their possession or under their control in which an SDN has an interest.
OFACOFAC is providing information of SDN/ NON-SDN and it can be downloaded in excel format

How lists are generally structured? Lists are structured with following fields :-

1) Type – whether individual or entity

2) Name :- Name 1 and Name 2

3) ID# reference ID # this a key field

4) Program- It is a defined code and It can be either specific to country or comprehensive, the objective of this program is to implement trade restrictions and blocking of assets in line with foreign policy and national security goals of country. Every program has a tag definition .Country specific sanctions like Ukraine \ Russia specific, particular economic activity or export to this country is allowed based on US government interest.  When an exporter plan to ship any goods to Ukraine / Russia it is a requirement to request for license from Office of Foreign Asset Control OFAC authorities. Authorities will review application and issue license with a validity period.

Specially Designated Nationals List (SDN) can be country specific or program defined by OFAC

Consolidated Sanctions List is a non SDN list , though this is not part of OFAC list the records in these consolidated files may also appear in SDN list . The goal of these consolidation is to reduce the number of list related files, this has to maintained to have automated sanctions screening program.

Find below list of program provided by a third party service provider. The list by no means exhaustive. Now you can ask a question, how many lists are there do I need to screen with all. One service provider is offering 240 list, and normally US exporter is screening with 90 global lists in that 12 government lists are there to stay compliant.  The answer for how many lists do I need to screen, depends on how many customers company dealing with how frequently you are doing drop shipments and what products / services offered. If your products are falling under ITAR, then it is necessary for you do double check to stay complaint.

BALK – Western Balkans (OFAC)

BYE – Blocked Yugoslav Entities

CBW – Chemical Biological Weapons

CTL- Canadian Restricted Entities

BXA – End user Requiring License Entity list (BXA)

EUS – European Sanction List

FBI- FBI most wanted list

GPC – Global Proliferation Concerns

INKSA – Iran, North Korea and Syria Nonproliferation Act

JPC- Japanese Proliferation Concerns (MITTI)

MT- Missile Technology concerns

MVI – Merchant Vessel Iraq

MVV – Merchant Vessel Vietnam

SDNB- Specially Designated Nationals, Belarus

SDNC- Specially Designated Nationals, Cuba

SDNK- Specially Designated Nationals, N.Korea

SDNL- Specially Designated Nationals, Libya

SDNLB – Specially Designated Nationals, Lebanon

SDNLR – Specially Designated Nationals, Liberia

SDNS- Specially Designated Nationals, Sudan

SDNSM – SDN Designated Nationals Sergei Magnitsky

SDNSO – Specially Designated Nationals of Somalia

TCO – Transnational Criminal Organizations

TDO – Table of Denial Orders (BXA)

UKPC – UK Proliferation Concerns (Concern List Only)

UNS- United Nations Security Council Sanctions

WB- List of Debarred / Ineligible firms

We have sanctioned parties list one side and other side master data from order management system. How we are going to do comparison to identify match . one fool proof method could be screening for exact match on a name. For example when “John Paul”  matches ” John Paul” then you have a match. Unfortunately, in real world sanctioned parties are not that easy to catch,when your customer may order your product in disguise with alias name or purposely change spelling to avoid detection. John Paul and John Pal with 100% match rate will definitely get slips in the crack. Accurate screening solutions should be reasonably taking care of all loop holes and provide results with high level of accuracy and low level of false positives. A business partner who is dealing with your company will have Name, Street, City, Country and Zip code. Other side, RPL master data also will have Name and Address information. We have both these information side by side. Now we need to implement search algorithm to identify any match is there between these two records. We will do comparative study in next article how this is handled in RPS software’s available in market

Muziri, Amber Road,Silk,Spice, Incense route to Modern Global Trade – Series IV

The objective of this article series is to understand the complications in running global trade business and how GTM software can help to run smoothly.

We will see Compliance, Preference, Content, documentary letter of credit and Customs Management

First, we see how Restricted Party Screening Framework can be constructed as part of Compliance policy for a company:-

Develop RPS Framework

Define scope of screening: Identifying which are the Business partners need to be screened is the first step to construct a RPS framework. Business partners means not only customers alone. Customers, Suppliers, Financial Institutions like banks through which your customer making payments to you, there is a need to verify the background of the bank which issues Letter of credit on your customer behalf. It may have a branch in Sudan or Syria or may deal with banks of embargo countries. Also it is required to verify service providers like customs brokers, forwarding agent and transporters to stay complaint. Companies also should start RPS Screening within inside. HR departments should start using RPS software for background check as part of pre-employment screening. Employers need to ensure they are not recruiting a candidate who are in denied party list. As part of GRC Framework, visitors also should be screened when they visited company offices and production sites. It is the responsibility of export controlled technology products manufacturing companies to protect trade secrets for purposes of national security, foreign policy and counter-terrorism under the export control rules of the State, Commerce, and Treasury Departments. So maintaining trade secrets is not only for staying competitive and also it is part of export compliance. Companies planning to do acquisition also has to do proper scrutiny for compliance history and verify any violation history exists for selling company. All enforcement agencies impose successor liability so it is the responsibility of buying company to check antecedent of company which decided to sell. It is better to keep   philanthropy activities of company also under the lens of compliance. It is necessary for company to do background verification check before granting money as part of charity work. It is imperative to implement a good RPS software solutions to verify the charity organization history before providing aid. It is the responsibility of the company make sure your financial grant is not distributed to wrong parties. Screening is necessary to be part of Governance, Risk and Compliance policy framework, and it is also  required to extend to brokers, commission agents, dealers, insurance companies, hotels, car dealers ,as a whole name any partners your company dealing with. If your company conducts business with a black listed party, or if  found to be associated with a denied party due to poor internal security in IT infrastructure, improper pre-employment screening, supplied to denied party, distributed donations to parties who are blacklisted  may result in revoking of trade privileges, fine and loss of reputation of company. A well-defined GRC Framework policy is crucial to prevent lapses

Fully automated:

What is fully automated means is, how system has to decide block or not to block a transaction when there is a match or a possibly positive match detected in feeder order management system. RPS Software solution should be capable to do screening large volume of data  with less  intervention manually, compliance manager’s responsibilities  should be confined with verifying the resultant value is positive or  false positive . How we decide automated system and how much to automate and what are the criteria’s has to be set, is the big question in front of us before deciding a solution :-

– Average volume of international transactions created in year

– Average volume of transactions relevant to check means there is no need to verify stock transport order, intercompany shipments under one company code

– But end-user (or) ultimate consignee is third-party then it is necessary to check

– How master data for Trade or Business partners maintained

– When and how RPL master data updated in your system

– Volume, timing and control are the key factors to decide how you are going to construct a solution for your RPL Screening requirements. Third party service providers for compliance check like MK Denial and Choice point sharing data of Restricted Parties from various sources. Sources is listed and supplied to companies in XML format or directly uploaded in server if interface is there. Compliance manager (or) clerk can n keep RPL Master Data as spreadsheet and verify whether any match is there before creating sales order in order management system. But, this is time-consuming process and it will be very difficult to do when you have large volume, say 4,000 transactions in a year. An ideal solution should be have an option to check real-time and in batch, hundreds and thousands of partners at one time. Both batch processes and real-time verification is very critical when you are maintaining list from various sources with different validity dates. Currently, an average US exporter must screen twelve different government lists to stay compliant, if your company is doing business from other countries additional lists also needs to be verified to maintain compliance. If the volume is very high it will be very difficult to maintain accuracy

– Timing is when to perform screening.

– When any new master data created for Business partner, for which screening is required

– When master data modified in system

– When new content of RPL master data updated in system.

– When address is changed in transaction level. This is possible for drop shipment scenarios

– check of name and contact when attention details updated in transaction level

– Control is the standard of comparison for checking results of screening processes. You can have either synchronous (or) asynchronous screening. When document or master data created (or) modified in order management system, if RPS software runs automatically screening generates results then it is synchronous check. The displayed result in screen can have blocked and released documents. To block or to release decided by system based on RPL master data available in RPS Software. This process is completely system driven. In asynchronous mode, RPL Check run as background processing through batch job or in dialog. When you run screening as batch job, the check results will be displayed blocked and released documents same as synchronous. If you run screening as dialog, system generates results directly Asynchronous is advantageous when you have large number of back end system documents as it is not performance intensive. We see next what SPL specialist has to do when there is a block. How list prepared by third party service providers. How we control false positive block.

 

Muziri, Amber Road,Silk,Spice, Incense route to Modern Global Trade – Series III

This is continuity of my previous article about developments in Global Trade business and also how evolving regulations by individual governments in customs areas  posing challenges for International Trade managers and compliance to run export and import operations successfully. We have seen so far the customs declaration of US. Now we see customs declaration formalities in European Union.

NCTS

New Computerized Transit System (NCTS) is a European wide system for electronic declaration, it controls both community and common transit. It involves all European Union and EFTA. NCTS  connected with 3000 customs offices in European Union and its central domain exists in Brussels.

In the EU customs declarations are mostly submitted electronically. However, every member state has its own system. For the Netherlands this is SAGITTA, for Germany it is ATLAS (Automatisiertes Tarif- und Lokales Zoll-Abwicklungs-System ), United Kingdom has CHIEF
(Customs Handling of Import and Export Freight  )and for Belgium it is PLDA (Paper Less Douane en Accijnzen) Austria has e-ZOLL France has DELTA and EFTA country Switzerland has e-Dec

How Global Trade Management software’s available in market, supports declaration to customs authorities we see later in this article series..

We first analyse compliance issues  faced by exporters and importers in the form of screening requirements. Restricted Party List (RPL) screening is one of requirements of a company as part of  trade compliance when there is a inward or outward movement of goods,services or human across borders.

Why RPL Screening is required

Screening is required as part of Export Management program for a company involved in International Trade to meet full compliance of  foreign trade law of a country

When RPL screening is not done

If an exporter fails to do screening and done shipments to a party which is sanctioned by government it can results in Sanctions or fines, even loss of export privileges.

What do i need to understand about Sanctioned Party List  or Restricted  Party List Screening

-No product can be shipped to any party on a denial list

– End user / Install site information necessary to know for all restricted product orders. (What is restricted product orders we can see in license requirements).

– Distributors, Freight forwarders, and depots are not end users.

– Ultimate consignee is the final party  receives the product. Ultimate consignee is not end user in all instances.

-End user may be different from consignee, if products falls under restricted it is necessary to do screening. Where are they? who are they? what business they are in?

– Screening is not intended to check credit capability of buyer. It is intended to check whether the user is sanctioned by any government agencies

What information require to do RPL Screening ?

-List of denied parties : Master data with list of parties forbid by government to receive goods or not to  receive goods from them

–  Source : Government authorities interacting with various agencies publish information about restricted parties. Source is a important element in screening that is the base for denial of exports to particular buyer which has to be stored in database for audit purpose

– Starting period : From which date on wards particular party falling under the category of restricted. Starting period is nothing but validity start date of sanctioned party published by government agencies. When government agencies publish lists, they include validity period starting from and to. Status reviewed periodically and updated as  Restricted party again or exclude  from lists.

Who can provide information ?

– Government websites like export.gov, bis.doc.gov and individual countries government websites

– The companies supplying Global Trade Management software like Amber road, Choice point , Integration point also provides this information

– MK Denial is the service provider generally supports for SAP GTS.

How this information can be provided by service provider ?

– Service provider can send this classified information as XML format either through email or directly uploaded in your server with a middle ware support. Individual customers also verified and replied by service providers via email. Those communications require to store it for audit review

Alternatively this information can be downloaded directly from government websites as spreadsheets and verify it with your customer database.

How companies are managing this today?

Many companies are downloading this information from government websites and storing it as spreadsheets and comparing with prospective customer / existing customer master data in their system. The problem with this approach is, it  is very difficult to keep a track of source of information and when that  party declared as restricted.Also very difficult to maintain consolidated list of restricted parties with source information and validity period. Screening your customer base manually is not only inefficient but also impossible in many cases. So there is a need of defined criteria to find out optimal Restricted Party Screening Solution (RPS) software which helps compliance manager to perform screen/monitor/audit of customer and vendor details both in master data level and in order / PO creation level . Below criteria’s can be considered to identify suitable software for your   needs :-

– Screening scope with flexibility to expand

– Fully automated

– Integrate with Order management system

– On Demand Solution

-Matching accuracy with less false positives

-Well defined workflow and escalation support

Based on this criteria’s we will  construct a RPS Framework to develop compliance program suitable for company’s needs…

(To be continued)

Muziri, Amber Road,Silk,Spice, Incense route to Modern Global Trade – Series II

This is continuation of my previous blog about history of Global Trade business. In this article we see how institutional development brought many progress in International Trading worldwide. Customs formalities and government regulations changed over the years prompt companies to develop IT infrastructure to meet timely execution of their global supply chain. The history of modern global trade can be considered to start with Global Agreement of Tariff and Trade (GATT).

After World War II, the United Kingdom and the United States submitted proposals to the Economic and Social Council (ECOSOC) of the United Nations regarding the establishment of an international trade body that was to be named the International Trade Organization (ITO).ECOSOC convened a conference, the United Nations Conference on Trade and Employment in 1946 to consider the UK and U.S. proposals. A Preparatory Committee drafted the ITO Charter and it was approved in 1948 at the conference in Havana, Cuba. The Charter is often referred to as the Havana Charter or the ITO Charter.The first round of trade negotiations took place while the Preparatory Committee was still working on drafting the Charter because the participants were anxious to begin the process of trade liberalization as soon as possible. Their results were incorporated into the General Agreement, which was signed in 1947.Since the original signatory nations expected the Agreement to become part of the more permanent ITO Charter, the text of the GATT contains very little “institutional” structure. This lack of detail within the agreement has created increasing difficulties as the GATT membership and roles governing trade between so many of the world’s nations have grown. The GATT has functioned as an international organization for many years even though it has never been formalized as such.

ECOSOC established an Interim Commission for the ITO that is referred to as ICITO. Unfortunately, when it came time for the members to ratify the ITO Charter, the Congress of the United States refused and the ITO never became a reality. The GATT survived, but remained intact only due to the Protocol of Provisional Application of the General Agreement on Tariffs and Trade which was concluded in 1947 and which entered into force in 1948.The GATT completed 8 rounds of multilateral trade negotiations (MTNs). The Uruguay Round (the 8th round) concluded with the signing of the Final Act on April 15, 1994, in Marrakesh, and produced the World Trade Agreement (WTO) and its annexes.

During the GATT period from 1947, there were lots of development happened in International Trade front. Bretton woods significant one in International trade, the agreements sowed the seeds of International Bank for Reconstruction and Development (IBRD, which is part of today’s World Bank Group) and the International Monetary Fund (IMF). These development started after end of Great Depression and world war II. The countries realised the fact there  is a need of change in economic climate which is able to achieve only by trade co-operation. This article intended to explain development of customs activities and in turn cause complications of business so i don’t want to digress from my core topic. But people who wants to know more in this area can search for Euro currency market and Oil shock . These two major developments happened between 60’s and 70’s.

Institutional infrastructure to support international trading are

  • Customs regulations of individual government- AES (US),ATLAS(Germany),CHIEF(UK), ATLAS / NCTS / CHIEF / SAGITTA
  • Hassle free formalities for Export and Import activity in a country
  • Information flow between individual company to customs of every country
  • Inter country communication flow between customs of various activities
  • Institutional support of ICC, WTO, WCO and UNCTAD
  • Regional Trade Agreement (RTA’s)

AERP and AES in US Customs.

The Bureau of the Census, responsible for collecting US export statistics, introduced the Automated Export Reporting Program (AERP) to the US in 1970. This program permitted exporters and forwarding agents to declare their export transactions each month directly to the Bureau of the Census by using electronic media. Consequently, creating a paper Shipper’s Export Declaration (SED) was no longer necessary. The Bureau of the Census combines data received electronically and on paper to produce official US foreign trade statistics.

The advantages of issuing the AERP declaration instead of the paper SED included reduced costs, reduced administration, and faster generation of trade statistics. Until December 31, 1999, you could transfer the AERP declaration to the Bureau of the Census in three ways:

  • Direct computer transmission
  • Magnetic tape
  • Diskette

The system selects data from the intermediate database VESED, creates the information relevant to the declaration, and writes the information in a special file. This file forms the basis for creating a magnetic tape or diskette for the AERP.

The Automated Export System (AES) is a joint venture between the U.S. Customs Service, the Foreign Trade Division of the Bureau of the Census (Commerce), the Bureau of Export Administration (Commerce), the Office of Defense Trade Controls (State), other Federal agencies, and the export trade community. It is the central point through which export shipment data required by multiple agencies is filed electronically to Customs, using the efficiency of Electronic Data Interchange (EDI).

From 2001 US customs has brought in Focus Based Risk Assessment in Customs audit. In March 2003, the U.S. Customs Service became part of the U.S. Customs and Border Protection. The auditing pattern changed from Transaction to process validation. It means earlier before 2001 it was Compliance Assessment and after 2001 it was Focused Assessment . Focused Assessment starts with Internal Control Review , Test only area at risk, Transparent – on the Web AND Includes Models for Compliance c Continue reading

Muziri, Amber Road,Silk,Spice, Incense route to Modern Global Trade – Series I

International trade has got a long history there are evidences Romans trade with India in 1st century CE. Pattanam , a small village in Kerala once was a busy port town called Muziri visited by foreigners for trade.There are evidences of export and import happened in this place. (Source http://en.wikipedia.org/wiki/Muziris) . Amber Road is the ancient trade route for transfer of amber from Baltic to Mediterranean sea. Silk route is a china silk traded between china and other Mediterranean regions. The incense route was a network of trade routes extending over Arabian peninsula and Mediterranean region. Traders created the demand for the commodity they brought along with them to another country where it is not available. Historically international trade has many challenges, traders moved to unknown countries where the acceptance of their commodity is a big challenge. Colonial trade of North Atlantic ocean and establishment of British colonies in different parts of Asia, given an impression trade is an entry to make the country slavery.

History of Foreign Trade Law

I have come across one web site which gives details list of export and imports of different parts of the world in ancient period

http://orias.berkeley.edu/spice/textobjects/imports-exports.htm#india

If we try to explain  international trade history we have to go way back Greek period. Classical Athens known for trading activities as early as fifth or fourth century BC. Athens was said to have imported grain from South Russia, Sicily and Egypt; Salt fish from Spain or the Black sea. From Mediterranean region they imported Spices , Textiles and luxurious goods . Basically, the Greeks import what is necessary for them can call it as “Corn and Grain Trade” There was no rules and regulation mostly people involved were foreigners who supplied what required for locals. But there was a primitive form of customs and commercial rules set mostly by foreigners. There was so called ‘Emporial Laws’ . These laws dealt with import and export supply of goods mainly corn and grain. Litigation under emporial law heard before a special court Nautodikai  and from middle of fourth century onwards before Thesmothetal. Commercial self interest driven those laws, in detail information not available. I want to highlight one more interesting point here ,Athens and other countries had commercial treaties for imports we have seen. For example the treaty between Athens and Leucon I of Bosporous merchants in 4th century. It exempted the import duty the ships of Bosporous merchants. There was some kind of Preferential agreement exists in those days itself

Reference :

Periplus of the Erythraean Sea – Wikipedia, the free encyclopedia

Romans also has done exports and imports. Unlike Greeks, Romans trade and commerce largely regulated by state legislation and the customs of the trade. Trade and commerce governed by ancient codes (Refer http://www.unrv.com/government/laws.php ) .What is interesting to note here Roman kings had commercial treaties with foreigners to safe guard interest of their own merchants. Since Rome then was strongest countries in the world treaties were favorable to their interest. But this was organised one and had treaties with many nations in the world.

Ancient India has good trade relations with Romans. You can refer http://en.wikipedia.org/wiki/Indo-Roman_trade_and_relations to understand Indo Roman trade. There is a book available in Internet “Foreign Trade and Commerce in Ancient India” by Prakash Charan Prasad has more insights how trade and commerce exist in ancient India.

The value of Indian trade may be estimated from the well-known passage of Pliny, in which he recorded that India drained the Roman empire of fifty million sesterces every year. The wealth of early India is confirmed by the lament of Pliny the Elder in Historica Naturalis (Natural History), completed in 77 AD that all of Rome’s coffers were being emptied into India to satisfy Roman demand for transulent Indian muslins. Pliny’s statement is corroborated by the discovery, in India, of innumerable gold coins of the Roman emperors, which must have come here in course of trade. Most of the coins have been found. Most of these coins have been found in South India, and their evidence is corroborated by many passages in classic Tamil literature. We read of ‘Yavanas of harsh speech’ with many wares; of foreign merchants thronging sea-port towns like Mamallapuram, Puhar, and Korkai; or busy customs officials, and those engaged in loading and unloading vessels in the harbor. The wealth of the Roman Empire reached India through the ports of Kalyan, Chaul, Broach, and Cambay in Western India. Tamralipti was an important port in Bengal. It carried on trade with China, Lanka, Java and Sumatra. In the Andhra region, the ports were Kadura and Ghantasala, Kaveripattanam (Puhar) and Tondail were the ports of the Pandya region. The ports of Kottayam and Muziris were on the Malabar coast. There was a great maritime trade between India and Southeast Asia and China. The rulers of India facilitated trade by building and maintaining lighthouses at the necessary points and by keeping sea routes free and safe from pirates. (source: India: A Country Study 1985)

Refer http://www.ancientindia.co.uk/staff/resources/background/bg16/ to know about list of commodities export and import from India

The earliest form of body of rules and customs which we now call it as a International commercial law was found in rules and customs governing merchants and maritime matters which were then broadly called as maritime law. The Lex Rhodia de jactu was body of law developed in the island of Rhodes two or three centuries before Christ. The rules and customs laws varied in each European state based on local law and customs as a result maritime law also varied. After fifteenth and sixteenth century sea borne trade internationalized, moving from Mediterranean to Atlantic this create a demand for uniformity for international and customs law. It was interesting fact that English were late entrants in European Union .Lex Mercatoria one of the early forms of international commercial law or international trade law

Ancient china was one of the world’s oldest civilization. Silk road was the recognized trade which refers to route of trade in the north west of china linking china with central Asia, the middle east and Europe. For centuries, Japanese , Koreans, Iranians , Arabians and Vietnamese and merchants from south east asia arrived in china by sea. Chinese textiles, porcelain, and crafts exported out of china by sea. Gold, Indian and Iranian gems, Soybeans and grapevines Chinese generally imported. This was happened through silk road and ships too.There was license system exist in china,during han dynasty trading with foreigners without license was punishable by death penalty . There were references about Bills of exchange during Tang dynasty period, one of the flourishing period in Chinese history. They were named feiqian named flying money. Also there were references of Tang code which describe about Foreign Trade and customs law.

Japan was mainly traded with china and Korea. Japanese mainly purchase copper coins, porcelians, books, paintings perfumes and medicines. Inline with Tang code Japanese also had ritsuryo (legal code). Japanese also has Bills of Exchange called Kaisen,Saifu or Warifu to facilitate commercial transactions

The Incense trade route or the Incense Road of Antiquity (see also the spice trade) comprised a network of major ancient land and sea trading routes linking the Mediterranean world with Eastern and Southern sources of incense, spices and other luxury goods, stretching from Mediterranean ports across the Levant and Egypt through eastern Africa and Arabia to India and beyond. The incense land trade from South Arabia to the Mediterranean flourished between roughly the 7th century BCE to the 2nd century CE. The Incense Route served as a channel for trading of goods such as Arabian frankincense and myrrh Indian spices, precious stones, pearls, ebony, silk and fine textiles;and East African rare woods, feathers, animal skins and gold. (Reference : Wikipedia)

I am not going in detail about the development of Foreign Trade between Seventeenth, Eighteenth and Nineteenth century.It will be more academic research which is not the objective for me. Also, there are so many articles and detail available in Internet to know about it. When i do research about Foreign Trade in historic period i am surprised to find out what we call it as present day development exists more than thousand years back. We will see development in Foreign trade in terms of institutional and regulations in next article. ….