DHS Study on Cross-Border E-commerce Proposes New AEO Program, Data Sharing Rules

Trade Update • MAY 11, 2021

The Borders, Trade, and Immigration Institute, a Department of Homeland Security Center of Excellence led by the University of Houston, published a report last month on the challenges posed by emerging technologies to cross-border e-commerce. This independent study was conducted to help Customs and Border Protection and its stakeholders understand how to leverage these new technologies, which research suggests would provide economic advantages and better risk assessment capabilities, while also expanding CBP’s data-sharing efforts.

A Growing Compliance Challenge

Advancements in technology have encouraged an increasingly competitive e-commerce marketplace, that has changed how global trade operates. Today, e-commerce accounts for more than 12% of global trade of physical goods, both business-to-business (B2B) and business-to-consumer (B2C or retail) sales. The U.S. International Trade Commission estimates that global e-commerce totaled over $27 trillion in 2016, with B2B comprising over 85% of that total.

According to the report, this explosive growth of e-commerce in recent years has led to an increased risk of trade violation and the potential for sales of harmful or unsafe goods. The widespread lack of pre-arrival data such as seller information, product identifiers, or product classification can lead to delayed processing times and, potentially, compromised import safety and security.

Specific gaps and challenges facing CBP it terms of obtaining complete and accurate data of cross-border e-commerce shipments, include:

• data held by intermediaries;
• seller or intermediary without physical presence;
• fragmented data; and
• low data quality.

Overcoming ‘Data Gaps’ in E-Commerce

Adopting technological advancements could be one way to overcome these data gaps in e-commerce, the report said.

“With more of the market relying on e-commerce, it is even more critical that we do what we can to protect it from bad actors in this ever-evolving digital marketplace,” said DHS Science & Technology Directorate Program Manager Theophilos Gemelas.

BTI developed a variety of options to mitigate the data sharing gaps, including establishing new and effective authorized economic operator (AEO) programs* specifically tailored to the cross-border e-commerce marketplace and requiring data sharing irrespective of localization laws restricting data flows across borders.

Additionally, the researchers found that providing AEO certification to compliant stakeholders and developing a new federated data platform and information and communications technology infrastructure could both increase the probability of CBP gaining accurate data as well as boost economic efficiency for customers, importers, and other relevant stakeholders.

*Current AEO doctrine is not applicable to e-commerce.

Additional Information

Find out more about CBP’s current E-Commerce Strategy which emphasizes enforcement initiatives, such as streamlining enforcement processes, leveraging enforcement partnerships with partner government agencies and foreign governments, and improving data collection from CBP targeting systems and field personnel.