Challenges in Implementing Challenges in Implementing Trade Facilitation & Trade Facilitation & e- -Business over the Internet Business over the Internet e 13 th Northeast Asia Economic Forum 17-18 September 2004, Seoul, Korea Kenji Itoh Executive Director, JASTPRO Former UN/CEFACT Vice-Chair 2007/12/3 JASTPRO (R) 1
Contents Contents What is AFACT? – Asia Pacific Council for 1. Trade Facilitation & e-Business UN/CEFACT & its Vision 2. Current Situation in Trade Procedures & e- 3. Business The World Before XML – Traditional EDI to 4. XML/EDI Future of Trade Facilitation & e-Business 5. 2007/12/3 JASTPRO (R) 2
1. 2007/12/3 JASTPRO (R) 3
AFACT - - Mission Mission AFACT � AFACT aims to support in the Asia Pacific region policies and activities, especially those promoted by UN/CEFACT (United Nations Center for Trade Facilitation and Electronic Business), dedicates to stimulate, improve and promote the ability of business, trade and administrative organizations, to exchange products and relevant services effectively in a non-political environment. 2007/12/3 JASTPRO (R) 4
AFACT – – Terms of Reference Terms of Reference AFACT The principles of the mission statement are to be achieved by: � Analyzing and understanding the key elements of international transactions and working for the elimination of constraints; � Developing methods to facilitate transactions, including the relevant use of information technologies such as UN/EDIFACT and ebXML; � Promoting both the use of these methods, and associated best practices, through channels such as government, industry and service associations; � Coordinating its work with UN/CEFACT and other relevant international, regional and non-governmental organizations; and � Enhancing the cooperation among the AFACT members and promoting the objectives of the mission statement in the Asia Pacific region. 2007/12/3 JASTPRO (R) 5
AFACT Structure AFACT Structure 2007/12/3 JASTPRO (R) 6
2. What is the global framework? 2. What is the global framework? UN/CEFACT Organisation Organisation UN/CEFACT UN/ECE CTIED (Committee on Trade, Industry & Enterprise Development) UN/CEFACT (UN Centre for Trade Facilitation & Electronic Business) UN/CEFACT Forum meets twice a year: Forum Management Group TBG ICG TMG ATG (Applied (International LG (Information (Techniques & Technologies Trade & Business Content (Legal Group) Methodologies Process Group) Management Group) Group) Group) 2007/12/3 JASTPRO (R) 7
Organization of UN/CEFACT Organization of UN/CEFACT Forum & Permanent Groups Forum & Permanent Groups LG TMG ICG TBG ATG • WG1 - Meta Data • WG1 - Supply Chain • WG1 - Business • WG1 - EDIFACT • WG1 - ODR • WG2 - Libraries • WG3 - Transport processes • WG2 - XML • WG2 - Cross Border • WG4 - Customs • TG1 - BCF/UMM • WG3 - Other Certification • WG5 - Finance • TG2 - BPSS Technologies • WG3 - RosettaNet • WG6 - AE&C • TG3 - UBAC (Jointly • WG7 - Statistics with LG) • WG8 - Insurance • WG2 - Core • WG9 - TT&L Components • WG10 - Healthcare • WG3 - e-Business • WG11 - SS, E&S Architecture • WG12 - Accounting & Auditing • WG13 - Environment • WG14 - BPA • WG15 - ITP • WG16 - Entry Points • WG17 - Harmonization & Documentation 2007/12/3 JASTPRO (R) 8
United Nations Organisation United Nations Organisation Security Council International Court Trusteeship Council of Justice Economic & Social Secretariat Council General Assembly Regional Economic Commission ICAO ECA (Economic Commission for Africa ） UPU ECE (Economic Commission for Europe ） ITU ECLAC (Economic Commission for Latin America and WMO Caribbean Sea ） IMO ESCAP (Economic & Social Commission for WTO Asia Pacific) WIPO ESCWA (Economic & Social Commission for West-Asia) UNCTAD UNCITRAL Functional Committee Sessional, Permanent, Ad hoc Committee 2007/12/3 JASTPRO (R) 9
UN/CEFACT Vision for Trade UN/CEFACT Vision for Trade Facilitation & e- -Business Business Facilitation & e � Its vision is to develop and promote simple, transparent, effective processes for global commerce 2007/12/3 JASTPRO (R) 10
Objectives Objectives � Its objective is to contribute to the growth of world trade by making practical contributions to trade facilitation and e-Business which measurably benefit developed, transition, and developing economies, and their enterprises, irrespective of the size of the enterprise. � Established in Geneva in 1997, it has a global remit and encourages close collaboration between public organisations and private business. 2007/12/3 JASTPRO (R) 11
3. Current Situation in Trade 3. Current Situation in Trade Procedures & e- -Business Business Procedures & e 2007/12/3 JASTPRO (R) 12
Success or Failure? Success or Failure? Did EDI reach critical mass after 25+ years? Using EDI 98% 95% EDI Capable 5% 2% FORTUNE 10000 The rest of all Business that should be exchanging information (1000 in the top 10 Economies) electronically
UN/CEFACT The worldwide activity of the United Nation's Economic Commission for Europe Costs for Trade Procedures Costs for Trade Procedures Sources: The survey has been made in the US by DOT and NCITD （ National Committee for International Trade Documents ） in 1970-1971. And the Report of “ Paper Work or Profits in International Trade ” was published in November 1971. 2007/12/3 JASTPRO (R) 14
UN/CEFACT Costs for Trade Procedures Costs for Trade Procedures The worldwide activity of the United Nation's Survey by US DOT and NCITD (1970 – – 1971) 1971) Economic Commission for Europe Survey by US DOT and NCITD (1970 � 46 enterprises/government agencies involved; � 28 enterprises/one agency of 46 engaged in the export business of a single commodity; � 125 documents in total used; � Average 46 documents used for one unit of export/import business, and more than 360 copies produced; � In the US, estimated that 828 million documents and 6.5 billion copies produced per year trade; 2007/12/3 JASTPRO (R) 15
UN/CEFACT Costs for Trade Procedures (2) Costs for Trade Procedures (2) The worldwide activity of the United Nation's Economic Commission for Europe � 64 man/hour used for an average unit of export/import procedures; � In the US, 1 billion man/hour expended per year for producing documents of export/import, which equal to 144 million man/day works; � Average document production cost: $351.04 per unit export/import business of trade ($375.77 for export & $320.58 for import); � Estimating based on the total trade value, the total cost of document production reached 6.5 billion $ per year (equal to 7.5% of the US export/import total amount). 2007/12/3 JASTPRO (R) 16
UN/CEFACT Costs for Trade Procedures in Japan Costs for Trade Procedures in Japan The worldwide activity of the United Nation's Economic Commission for Europe Based on Trade Statistics Based on Trade Statistics 9000 9000 9000 9000 495.9 + 403.3 = 899.1 Billion US$ 899.1 X 5%=44.955 Billion US$ 8000 8000 8000 8000 7000 7000 7000 7000 6000 6000 6000 6000 Export Export Export Export 5000 5000 5000 5000 Import Import Import Import 4000 4000 4000 4000 Total Total Total Total 3000 3000 3000 3000 2000 2000 2000 2000 1000 1000 1000 1000 0 0 0 0 2000 2000 2000 2000 2001 2001 2001 2001 2002 2002 2002 2002 2003 2003 2003 2003 (Unit = 100Mil US$, US$1=\110) Source: “The World 2004” by JETRO 2007/12/3 JASTPRO (R) 17
Electronic Business Today Electronic Business Today � EDI - limited to large organizations � Expensive implementations that many companies can’t afford � High cost-of-entry; inflexible. � No business communicates solely in its supply chain – need to exchange messages outside industry boundaries � XML initiatives underway for specific industries – attempts at verbatim translation of EDI to XML � Consensus required on common requirements � No common infrastructure means incompatibility, reinvention and segregated pockets of communication 2007/12/3 JASTPRO (R) 18
UN/CEFACT What is EDI? What is EDI? The worldwide activity of the United Nation's Economic Commission for Europe (Electronic Data Interchange) (Electronic Data Interchange) Application to Application Between Companies Based on Standardized Business Data Company B Company A 2007/12/3 JASTPRO (R) 19
Strong Points of EDI Strong Points of EDI � Cross sectorial standards � Formalized data flows (messages/transaction sets) � Open standards � Secure and legal interchanges � Available tools and service providers � Proven business benefits 2007/12/3 JASTPRO (R) 20
Weak Points of EDI Weak Points of EDI � Implementation Mechanics � Maintaining and Updating the Standards � Cost of Implementation, steep on-ramp � Time to Implement � No provision for process and information exchange, data only 2007/12/3 JASTPRO (R) 21
Is There A Problem? Is There A Problem? General consensus today that EDI implementation takes: Too much time Too much energy Too much process
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