UNECE Less and Better Data to build Trust

UNECE Less and Better Data to build Trust and Efficiency Pioneering Paperless Trade: The way covered and the way ahead A Community Model for Paperless Trade Development Experience of the Digital Trade and Transportation Network Peter Stokes CEO, Digital Trade and Transportation Network Ltd UN/CEFACT

UNECE q q q Tradelink Highlights and Single Window for Hong Kong SAR Government Trade Documents Evolution to Community Single Window Digital Trade and Transportation Network (DTTN) q q q Agenda Community Model Functions and Features of the DTTN Costs and Benefits Model for Worldwide Paperless Trade Interconnections Inhibitors and Success Factors for the Development of Paperless Trade UN/CEFACT

UNECE Single Window for Hong Kong SAR Government Trade Documents (B to G) and Tradelink Highlights UN/CEFACT

UNECE Tradelink’s Shareholders u The HKSAR Government 42. 49% u Banks 10. 33% u Terminal Operators 15. 29% u Industry Associations 7. 78% u China 5. 30% u Airline 5. 30% u Textile Industry 4. 73% u Telecommunication 8. 78% UN/CEFACT

UNECE HKSAR Government Trade Document Single Window via Tradelink (1/2) v Original 7 year franchise (1997 - 2003) for Government trade documents, with mandatory electronic submission extended as a license for 2004 - 2008 – Over 53, 000 company subscribers – 17 million transactions/year – All documents digitally signed & encrypted for open network transmission, using Recognized Digi-Sign Certification Service’s certificates UN/CEFACT

UNECE HKSAR Government Trade Document Single Window via Tradelink (2/2) v Network of 27 Service Centers Ø Paper to electronic conversion for organizations who have not “computerized” Ø Key factor in mandatory electronic submission program UN/CEFACT

UNECE Tradelink’s Electronic Services Trade Related Government Services as the Basic Building Block All Traders Textile Traders & Manufacturers q Import & Export Declaration q Certificate of Origin q Dutiable Commodities Permit q Shipping Order Service q Trader Documentation Service for Regional/Global Trade q China Processing Trade/Cross Border Documentation Service q q q Production Notification Textile Trader Registration Scheme (TTRS) Notifications Certificate of Origin Forwarders & Carriers q Carrier Notification q Shipping Order / US Customs AMS q Manifest q Textile Trader Registration Scheme Notifications UN/CEFACT

UNECE Pan Asian e-Commerce Alliance (1) Established in July 2000, aims to facilitate secure cross border paperless electronic services for efficient global trade Members Number of Customers CIECC (China) 10, 000 KTNet (Korea) 30, 000 Crimson. Logic (Singapore) 25, 000 Trade-Van (Taiwan) 25, 000 Tradelink (Hong Kong) 53, 000 Dagang. Net (Malaysia) 2, 000 TEDMEV (Macau) 2, 000 CAT (Thailand) 2, 000 TEDI Club (Japan) 80 149, 080 UN/CEFACT

UNECE Pan Asian e-Commerce Alliance (2) Trust in cross border transactions through: • Legal framework for electronic Cross Border trade transactions • Mutual Recognition of Digital Certificates amongst members of the Alliance, Six Certification Authorities recognized (HK, Taiwan, Korea, Singapore, Japan, China) Secure Cross Border Trade Transaction Service • • Commercial invoice, ASN/Packing List, Scan / Pack Import Pre-Declarations based on Export data UN/CEFACT

UNECE Evolution from Government Single Window to Community Single Window Start Electronic Submission of Government Trade Documents Mandate Electronic Submission of Trade Declarations - Trade Declaration - - - Export License Certificate of Origin Production Notification Initiate Cross Border Paperless Trade Projects - Pan Asian E-commerce Alliance - Bolero - Trade. Card US Customs AMS Manifest Textile Trade Notifications - Shipping Order - Commercial Invoice - Packing List 1997 2000 2003 Community Single Window for Paperless Trade with Worldwide Interconnection Government Documents Trade, Manufacturing Logistics, Finance, Commercial 2006 UN/CEFACT

UNECE The Digital Trade and Transportation Network (DTTN) A Community Model UN/CEFACT

UNECE Guiding Principles for the DTTN Public/private sector Logistics Development Council initiative to improve HK’s competitiveness and to make HK the regional e-Logistics hub of choice q Neutrality q Non-exclusivity q Transparent, accountable & responsible operations q Minimum intervention to any participant’s business processes & relationships q Facilitate & respect market forces q Easy to access & use UN/CEFACT

UNECE Governance Framework q Digital Trade and Transportation Network Limited ownership principle Ø Ø Ø 51% by Tradelink 21% by Government 28% by industry associations q Operating Agreement to assure a neutral and q Industry Based DTTN Standards Advisory Group – advise, review and endorse document structure and interconnection standards community focused DTTN operating framework UN/CEFACT

UNECE Three Layer DTTN Model Valueadded Services Core Messaging Infrastructure (DTTN Ltd) Standards and Protocols Value-added services such as financial products, multi-modal integration, distribution Layer 3 management Open, neutral, secure, reliable and shared electronic infrastructure messaging Layer 2 Local and international standards for security, trade documents, Layer 1 codes, protocols UN/CEFACT

UNECE Community Role of the DTTN Sellers Buyers Freight Forwarders Carriers / Portals (Inttra, GTNexus) DTTN Core Messaging Infrastructure e. g. Tradelink Communications Gateway Security Services Document Customer Exchange & Management Transformation Government & Agencies Inspection Agencies Web Services Banks & Financial Institutions Support & Operations Management Insurance Institutions Terminals UN/CEFACT

UNECE Functions and Features of the Digital Trade and Transportation Network (DTTN) UN/CEFACT

UNECE q DTTN Services – Core Infrastructure Reliable, secure transformation and delivery of legally recognized electronic documents Ø Reliable, secure delivery – local, China, globally Ø Any-to-any protocol & document transformation § § Ø q e-Mail, FTP/S; HTTP/S; AS 1, AS 2, eb. MS 2, Multiple Character Sets Documents stored on-line for 2 years, offline for 7 years Low Cost Single e-Channel to all trading partners Ø q Excel; XML; EDIFACT, ANSI X 12; Flat file, Cargo-IMP; use existing in-house system with minimal changes Community interconnections e. g. Tradelink’s 53, 000 traders & forwarders; 30+ major ocean carriers via INTTRA/ GTNEXUS UN/CEFACT

UNECE DTTN Document Exchange Services (1/2) Supports ten major trade & logistics processes for import / export between HK-PRD (truck, rail, river) & overseas via Ocean / air; q q q Purchase Process (Purchase / Sales Order; Order Confirmation) Get products ready for delivery (Packing List / ASN; Commercial Invoice; Inspection Certificate; Insurance) Local and overseas transportation (Booking; Shipping order; arrival notices; transport documents - Master / house waybill - sea / air; cargo receipt; transport set; Equipment Interchange Receipt; delivery / release order) UN/CEFACT

UNECE DTTN Document Exchange Services (2/2) q Integration with Government Trade document providers - GETS (Trade Declaration, Certificate of Origin, Textile Notifications, Dutiable Commodities Permits, Manifest…) q Settlement Process (Letter of Credit; Company Guarantee; Bill of Exchange; L/C collection letter; document arrival notice) [Depends on Bank participation] q Key document ownership transfer & “print right” with local on-line payments (transport documents e. g EIR; local trade services invoice; payment instruction / confirmation) UN/CEFACT

UNECE Development of DTTN Canonical XML Document Structures q Following UBL Methodology to develop Canonical XML Structures for over 60 major international / local trade documents q The DTTN Standards Advisory Group, comprising relevant industry associations, has reviewed and endorsed over 50 documents q Exploring the submission of these document structures to UBL for incorporation within UBL V 2. 0, as part of proposed alignment with UN-e. DOCS under the UN/CEFACT framework UN/CEFACT

UNECE DTTN Interconnection Example – Purchase to Delivery Goods Tracking Locations Goods Status (RFID / EPCGlobal) 6. Shipment Status (EDIFACT) 5. BL (EDIFACT) 2. SO, CI, PL (EDIFACT) Forwarders 3. Master SO (EDIFACT) Physical Delivery 4. Master BL, Shipment Status (EDIFACT) Buyer 1 1. PO (X 12) DTTN 4. Shipment Status (X 12) 1. PO (Excel) Seller 2. SO, CI, PL (Excel) 5. BL (Excel) 3. Master SO Carriers 4. Master BL Shipment Status 3. Master SO (EDIFACT) 4. Master BL, Shipment Status (EDIFACT) SO - shipping order CI - commercial invoice PL - packing list BL - bill of lading Application Service Provider 3 6. Goods / Shipment Status (Web Services/XML) Application Service Provider 2 6. Shipment Status (Web) Buyer 2 UN/CEFACT

UNECE Cost and Benefits of the Digital Trade and Transportation Network (DTTN) UN/CEFACT

UNECE Low Cost Community Infrastructure q q Charges based on each successfully transformed and delivered document Initial connectivity, annual & customisation fees will apply Final pricing details to be determined by DTTN Ltd Board closer to launch Special Incentives for Pilot Users Ø Ø Ø Waive document charges for the duration of the pilot, waive initial connectivity charges Rebates may accrue for each document transacted during the pilot Be a part of the DTTN marketing program UN/CEFACT

UNECE What are the benefits of the DTTN q q q q Cut operation costs through reduced delays, double handling / data entry & minimized errors Save time and cost for document delivery e. g. EIR, HWB Better financial management e. g. credit, cash flow Easy, cheap & fast to interconnect with trading partners – any-to-any protocol & document transformation Retain existing business against competition Ø more timely, accurate and value-add services Visibility along the supply chain Significant business and efficiency opportunities Ø “Just in time” supply chain management; Ø e-access to more trading partners UN/CEFACT

UNECE Digital Trade and Transportation Network Model for Worldwide Paperless Trade Interconnections UN/CEFACT

UNECE Interconnecting for Paperless Trade UN/CEFACT

UNECE HK SAR Overseas e-Logistics Platform(s) / or Direct Buyers Model for Worldwide Paperless Trade Interconnections 1 a. PO 3 c. import documents 1 b. draft import Customs documents (for import of raw materials 2 a. SO, CI, PL 1 a. PO 3 a. BL, CI, PL 3 b. draft import customs documents (if export via HK) 4. Cargo Status, Shipment Advice Hong Kong e-Logistics Hubs (DTTN) 2 b. SO Confirmation 2 d. BL 3 a. BL, CI, PL 3 b. draft import customs documents (if export via HK) Overseas Customs 1 c. import customs documents National and regional e. Logistics Hubs in China Mainland Customs 1 a. PO 1 b. draft import customs documents 1 c. import customs documents 2 a. SO, CI, PL 2 b. SO Confirmation Suppliers in the Mainland 2 d. BL 3 a. BL, CI, PL 4. Cargo Status, Shipment Advice 1 a. PO (copy) International Carriers / Forwarders 2 a. SO, CI, PL 2 d. BL 2 b. SO Confirmation 2 d. BL 4. Cargo Status, Shipment Advice 3 a. BL, CI, PL 4. Cargo Status, Shipment Advice Buying offices in the Mainland SO - shipping order CI - commercial invoice PL - packing list BL - bill of lading UN/CEFACT

UNECE Inhibitors for Paperless Trade (1/2) q q q Lack of IT sophistication for Small and Medium Enterprises difficult to compete against multi -nationals High cost in integrating with local and overseas trading partners Government acceptance of electronic documents from overseas (e. g. Certificate of Origin) is limited UN/CEFACT

UNECE Inhibitors for Paperless Trade (2/2) q q q No commonly accepted trust framework for cross border paperless trade Paper documents dominate for payment and settlement Lack of coordinated and neutral interconnected platforms to streamline the “total” trade chain for all parties UN/CEFACT

UNECE Motivators for Paperless Trade q Efficiency / competition for international trade q Government Mandate q Increasing drive towards integrated global digital supply chains Metcalfe’s Law Value of a Network = (Number of Connected Parties)2 UN/CEFACT

UNECE To make Cross Border Paperless Trade happen we need to……. q q q Request US and European Governments to accept electronic Certificates of Origin Support the Financial community’s drive to accept cross border electronic documents for settlement Find ways to increase acceptance of a common cross border trust framework for paperless trade Expand hub-hub interconnections between major consumer markets (North America / Europe) and major supplier bases (Asia) Show demonstrable benefits for “expanded pilot” project as a platform to develop a critical mass of users in focus areas UN/CEFACT

UNECE The Digital Express Link to your Business Partners Worldwide UN/CEFACT