Full steam ahead

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."

Staff writer Alice Lipowicz can be reached at
alipowicz@1105govinfo.com.