(1,1) -1- UAE3006 exec summary rs_fix 7/28/03, 12:04:08 PM Sponsored by the Arizona Department of Transportation and conducted by The University of Arizona Office of Economic Development CYBERPORT TM 7/28/03, 12:03:47 PM What is CyberPort? (1,1) -2- UAE3006 exec summary rs_fix 7/28/03, 12:06:32 PM CyberPort is a new way of thinking about cross-border trade. CyberPort is not a place, but a process for the safe, secure and efficient movement of people, goods and information through the U.S.-Mexico border. It is a system-wide process designed to simultaneously increase both security and trade-flow efficiency. A more efficient and effective border-crossing process can be achieved through coordination, cooperation, technology, planning and design. Now is the time to undertake a new effort to redefine and implement an improved model for cross-border trade. involves: mul transportatio among nation and streamlin border-crossi widespread a technology, a progressive p the U.S. Burea Border Protec SENTRI, ITDS, You can help to make CyberPort happen. Establish the Nogales port as a national model and pilot test site. CyberPort is multinational in its approach and considers the impacts of cross-border traffic at the local, state, and regional levels. The goal of CyberPort in Arizona is to increase the capacity of Nogales, San Luis and Douglas to serve as safe, secure and efficient gateways between the United States and Mexico. Nogales, as Arizona’s primary commercial port-of-entry, is naturally positioned to serve as the port of choice for western U.S.-Mexico trade. UAE3006 exec summary rs_fix 2 The implemen In addition to the doubling in approximately 2.7 million in 1 (1,1) -1- UAE3006 exec summary rs_fix 7/28/03, 12:06:32 PM Edmonton Seattle Portland Helena Las Vegas Los Angeles 10 San Diego Calexico San Luis Nine Rules fo Safety = Security = Trade Safety and security do not have to come at the expense of trade facilitation. CyberPort is based on the principle that safety, security and trade-flow efficiency can be mutually reinforcing concepts. In today’s security environment, border ports-of-entry have had to increase levels of inspection and enforcement while operating with limited capacity to accommodate significant increases in U.S.-Mexico trade. 1. Share the Work Enable the user to prepare for process. Giving users a secure legitimate and, literally, chec in time and labor savings as w choke points. Pre-payment of pre-clearance for security stre Through participation in safety and security compliance programs, enforcement agencies are able to maximize the use of risk management to facilitate the border-crossing process for legitimate trade. 2. Give Preferred Treatment Specific incentives to save tim users to modernize their tradi to facilities, as well as low-ris process and reduce the chance also are needed to encourage preferred safety and security Arizona is Losing Ground Arizona’s primary port-of-entry in Nogales serves as a principal gateway for U.S.-Mexico trade and is a keystone to the CANAMEX corridor. Total U.S.-Mexico surface trade has more than doubled in terms of value from $88 billion in 1994 to approximately $200 billion in 2002. Salt Lake City San Francisco The Challenge 40 Phoenix However, trade through Nogales has not grown at the same rate as the entire U.S.-Mexico border. The Nogales border port-of-entry has lost one quarter of its relative market share since 1995. 8 Tucson Nogales 10 El Paso Douglas Hermosillo Guaymas Ciudad Obregón Laredo Culiacán McAllen Brownsville Mazatlán Tepíc Guadalajara Mexico City Manzanillo Puebla Securing a Competitive Advantage Geographic position alone cannot maintain Arizona’s competitiveness in the global marketplace. Regulatory, process and infrastructure improvements are critical to ensuring that Arizona maintains strategic access to the markets of North America and beyond. Significant improvements at the port-of-entry and throughout the trade-flow process are required to maintain Nogales as a port of choice and to secure Arizona’s position as a primary gateway for U.S.-Mexico trade. Solutions Outside the Box To address these issues in Arizona and position the state as a national and global leader, the Governor’s CANAMEX Task Force commissioned the Nogales CyberPort Project. The CyberPort concept was derived from creative input from binational industry and agency stakeholders as well as detailed analyses of legal, logistical and commodity-flow issues. CANAMEX Trade Corridor Nogales serves as a principal gateway for U.S.-Mexico trade. Arizona’s natural tradeshed encompasses 14 states in the western U.S. and Mexico and extends to serve the entire U.S. for southbound trade destined for western Mexico. It also includes Mexico’s 13 southern states for trade destined for the western U.S. and Canada. Arizona’s tradeshed is that of the CANAMEX Corridor. In addition to key north-south access, Arizona is also positioned along three major east-west freight corridors: I-8, I-10 and I-40. 3. Staff to Demand Industry and agencies on both create a flexible framework fo of human resources to accomm day, week, month and year. St for services. 4. Build to Demand No matter how rapidly process of peak flows will create a bot to accommodate the demand. facilities and infrastructure m to accommodate demand the v 5. Maximize Technologies The application of new techno and manufacturing supply-cha greater levels of productivity A uniform platform for the ide technologies in a multinationa The University of Arizona Offic PO Box 210458, Tucson, AZ 85 Telephone 520.621.4088 http CYBERPORT UAE3006 exec summary rs_fix 1 (1,1) -2- UAE3006 exec summary rs_fix 7/28/03, 12:05:45 PM The implementation of CyberPort NAFTA and the Global Marketplace The development of the CyberPort as an ideal universal concept enables involves: multiple modes of its application elsewhere in the United States, specifically along the U.S.-Mexico border. The CyberPort concept works in support and transportation, cooperation agreement with the 22-Point U.S.-Mexico Border Partnership Action Plan as well as the 30-Point U.S.-Canada Smart Border Action Plan. among nations, decentralization The CyberPort concept can be applied to international border ports-of-entry throughout the world. While great diversity exists and streamlining of the among international border ports-of-entry, the CyberPort concept serves as a comprehensive framework for developing place-specific models border-crossing process, appropriate for use anywhere. Implementation of the CyberPort concept in Nogales and at Arizona’s widespread application of new other commercial ports-of-entry will require a sustained and focused effort. Significant gains come at significant cost and demand a dedicated technology, and building on commitment on behalf of government officials and the trade community. It is critical that business leaders, federal, state and local government all progressive programs within recognize the importance and urgency in meeting the needs of the border. the U.S. Bureau of Customs and Nogales Relative Share of Northbound U.S.-Mexico Surface Trade by Year 8% Border Protection such as FAST, 7 6 SENTRI, ITDS, ACE and C-TPAT. 5 4 3 2 1 0  1994 1995 1996 1997 1998 1999 2000 2001 2002 The Goals of Cy The goal of the Nogales CyberPo seamless, flexible and integrate movement of trade. The project the port compound to consider a development of innovation and trade-flow process — from the p CyberPort aims to reduce conge needs of government agencies a How CyberPort The CyberPort concept optimize decentralization of border-cros the trade-flow process where ea and effective. The CyberPort co of technology, logistics and inf procedural and regulatory envir CyberPort’s Gu The CyberPort concept is based for new global trade. Technolog these principles and serves to u CyberPort’s guiding principles i integrated systems; incentivize infrastructure capacity and desi new technology; shipment trans measurement; multimodal solut Total Value of U.S.-Mexico Surface Trade by Year in Billions USD 250 200 150 100 50 0  1994 1995 1996 1997 1998 1999 2000 2001 2002 In addition to the doubling in value of total U.S.-Mexico surface trade, northbound commercial truck crossings have experienced a similar increase from approximately 2.7 million in 1994 to over 4.4 million in 2002. This growth has simply outpaced the increase in capacity at many border ports-of-entry. The CyberPort concept diagram congestion in the conventional CyberPort concept that relieve c payment and permitting); pre-c facilities for qualified users. The Goals of CyberPort Destination/Origin The CyberPort concept optimizes a mix of consolidation and decentralization of border-crossing procedures at locations throughout the trade-flow process where each is the most appropriate, efficient and effective. The CyberPort concept integrates the modernization of technology, logistics and infrastructure along with reforms in the procedural and regulatory environment. Secondary U.S. Customs All inspections, fees, permits. Drug/Weapon Screening Rapid Enforcement Lanes Superbooth Processing Shipments requiring agricultural inspections may be sealed and released to local inspection site. Primary U.S. Customs Mexico How CyberPort Works Local, Regional Warehouse Agricultural inspections at local warehouse or joint-use facility. CyberPort The goal of the Nogales CyberPort Project is to achieve a coordinated, seamless, flexible and integrated system for the safe, secure and efficient movement of trade. The project looks beyond technology and beyond the port compound to consider a holistic, system-wide approach to the development of innovation and advancement throughout the entire trade-flow process — from the point of origin to the point of destination. CyberPort aims to reduce congestion and bottlenecks while meeting the needs of government agencies and the trade community. United States (1,1) -2- UAE3006 exec summary rs_fix 7/28/03, 12:04:09 PM CyberPort’s guiding principles include: coordination and cooperation; integrated systems; incentivized pre-clearance; risk management; infrastructure capacity and design; shared information; maximizing new technology; shipment transparency; performance standards and measurement; multimodal solutions; and multinational partnerships. Secondary Mexico Customs Primary Mexico Customs Joint U.S./Mexico Public/Private Examination Zone CyberPort The CyberPort concept is based on principles that respond to nine rules for new global trade. Technology is a thread that runs through each of these principles and serves to unify the solution that CyberPort offers. CyberPort CyberPort’s Guiding Principles U.S. and state agriculture and vehicle safety inspections, permit issuance and fee payment. Dedicated Access Existing Areas of Congestion Conventional Origin/Destination CyberPort Origin/Destination Pre-cleared and pre-certified shipments. The CyberPort concept diagram illustrates the U.S.-Mexico trade-flow process under conventional and CyberPort scenarios. Critical areas of congestion in the conventional process are upon approach to customs facilities and within secondary customs compounds. Key elements of the CyberPort concept that relieve congestion are off-site inspections (particularly for agriculture and truck safety); pre-certification (electronic fee payment and permitting); pre-clearance (sealed shipments from C-TPAT compliant warehouses and carriers); and dedicated access to customs facilities for qualified users. 7/28/03, 12:04:08 PM (1,1) -1- UAE3006 exec summary rs_fix 7/28/03, 12:05:44 PM Nine Rules for New Global Trade 1. Share the Work Enable the user to prepare for a transaction at the front-end of the process. Giving users a secure opportunity to establish themselves as legitimate and, literally, check themselves through the process results in time and labor savings as well as reduced congestion at processing choke points. Pre-payment of fees, pre-issuance of documents and pre-clearance for security streamlines the trade process significantly. 6. Execute Placeless Transactions The placeless transaction is where e-trade meets e-government. The only thing that must physically change hands in the world of trade is the good itself. All other aspects of a transaction can occur electronically. The advantage to electronic commerce is clear. However, tremendous coordination involving complex information management systems is required. 2. Give Preferred Treatment Specific incentives to save time and money must be provided to encourage users to modernize their traditional ways of operating. Dedicated access to facilities, as well as low-risk designations, help speed the trade-flow process and reduce the chance of time-intensive inspections. Incentives also are needed to encourage users to invest in new technology, maintain preferred safety and security standards and make infrastructure upgrades. 7. Manage Risk Risk management is perhaps the single greatest principle affecting the physical flow of international commerce. It is imperative that customs and other government inspection agencies have the greatest amount of information possible to make a well-informed assessment as to the legitimacy of a transaction or shipment. Users need to be given the opportunity to demonstrate their legitimacy, thereby significantly reducing the chance of inspections. Inspection agencies need to trust users that demonstrate legitimacy and users need to trust inspection agencies to use the secure information provided in strictest confidence. 3. Staff to Demand Industry and agencies on both sides of the border must work together to create a flexible framework for staffing that allows for variable allocation of human resources to accommodate changes in demand throughout the day, week, month and year. Staffing levels must respond to high demand for services. 4. Build to Demand No matter how rapidly processing operations occur, the sheer volume of peak flows will create a bottleneck if there is not sufficient space to accommodate the demand. Variations in flow need to be reduced while facilities and infrastructure must be flexibly designed and large enough to accommodate demand the vast majority of the time. 5. Maximize Technologies The application of new technologies throughout the trade-flow process and manufacturing supply-chain is essential to experiencing greater and greater levels of productivity as well as maximizing safety and security. A uniform platform for the identification, testing and application of new technologies in a multinational user environment must be developed. 8. Share Inspection Responsibility Every trade shipment is subject to a multitude of authorities at the local, state and federal levels. A redundancy of inspection often occurs when there is a breakdown in coordinated enforcement protocol. Agencies can help one another simply by knowing what each are trying to achieve and the protocols by which they operate. This may be demonstrated in developing a binational protocol that provides for accountability in re-sealing shipments inspected in transit. Ultimately, shared access and inspection responsibility must be granted by trading countries, where each is able to establish a designated zone in which to perform pre-inspections in the country of origin. Redundant inspections must be eliminated. 9. Measure Performance Significant data gaps are the most pressing variable inhibiting comprehensive measures of success. Standard classifications of trade and standard metrics by which to measure it are essential. The data must then be gathered in a consistent fashion and time frame among countries. The establishment of standards of success and the measurement of that success is critical to addressing current needs and planning for the future. The University of Arizona Office of Economic Development PO Box 210458, Tucson, AZ 85721-0458 Telephone 520.621.4088 http://oed.arizona.edu Arizona Department of Transportation-Transportation Planning Division 206 South 17th Avenue, Phoenix, AZ 85007 Telephone 602.712.8143 http://www.dot.state.az.us CYBERPORT CyberPort is a trademark owned by the Arizona Board of Regents on behalf of The University of Arizona.