Is This The World That You Know?

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Is this a description of a situation that gives you faith that The World As You Know It will continue?

THE YEAR 2000 PROBLEM AND THE GLOBAL TRADING SYSTEM

U.S. DEPARTMENT OF COMMERCE International Trade Administration Trade Development Office of Computers and Business Equipment April 1999

"Y2K failures in electronic systems and devices have the potential to cause supply and service disruptions. This report discusses the scope of interdependence in the world trading system and the importance of trade to economic interests."

The Global Trading System Infrastructure

"The international trading system, with its complex web of suppliers, distributors, customers, and transportation links, is supported by a critical infrastructure of products and services. . . . These sectors are highly computerized and interdependent and are particularly sensitive to dates for the smooth exchange of goods and services. These characteristics render them especially susceptible to Y2K-related problems. Breakdowns in any part of the trade support structure could slow or halt shipments of key imports needed to keep factories working, hospitals functioning, food in continuous supply, and people employed."

Energy Production & Distribution

"The reliable production of electric power and distribution of heating fuel by utilities around the world is fundamental to the trading system. Fossil fuels-coal, natural gas, and oil-are essential for the operation of most utilities. In the United States, over 65 percent of electric power is generated by coal and gas. Utilities are highly automated, with complex networks of generation plants and storage areas, transmission networks and pipelines, and distribution facilities. The ripple effects of Y2K-caused breakdowns in one part of the interconnected transmission grid could cause failures elsewhere down the line. (sounds like the Commerce Department backs up Andy) Utilities also have a large number of embedded chips in their equipment and facilities, some of which are susceptible to Y2K mishaps, but which are time-consuming and costly to locate and test."

Transportation Modes

"The efficient and reliable transportation of goods among countries and from port to customer within countries is critical to the trading system. The global transportation infrastructure includes airlines, shipping concerns, railroads, and trucking companies; these are operated by a wide variety of small and large entities. Especially important are the air cargo and maritime shipping sectors, which include customs facilities, cargo terminals, freight forwarders, and distributors, most of which depend on computer systems and embedded chips."

"Shipboard systems can have as many as 100 to 200 embedded microchips that control everything from navigation to refrigeration. In 1998, the U.S. Coast Guard surveyed marine manufacturers and discovered that over 20 percent of the embedded chips tested were not Y2K compliant."

"Port facilities and marine terminals could be vulnerable because of the many systems that are time dependent: fire detection systems, cargo tracking software, process flow controls for oil and chemicals, temperature controls, and alarms. Date sensitive sensors could cause an automatic shutdown response, which could trigger other fail-safe responses downstream. In addition, there is currently no established convention for setting time in microchips when they are manufactured. Chips manufactured in Asia may be running at Universal Coordinated Time (UCT) plus eight hours, whereas microchips manufactured in the United States may be running at UCT minus five hours. . . . Key seaports, canals, and waterways with large shipping volumes represent potential transportation bottlenecks, and the effects of Y2K breakdowns in these commercial hubs could be amplified."

Communications Channels

"As the scope and number of communication channels expand, dynamic and interdependent communications technologies become more complex. . . . However, the network's complexity and size make it difficult to predict if and where Y2K-related communications disruptions could occur, and they increase the difficulty of testing networks for Y2K compliance."

Financial Networks

"International trade and commerce depend on a smoothly functioning financial sector. In turn, the banking and financial sectors are heavily dependent upon computer networks for processing transactions and providing information. In many countries, investment services, banking, and insurance are the most advanced sectors in terms of Y2K-preparedness. Nonetheless, disruptions in the operation of banks and other financial institutions around the world could interfere with the banking system's ability to meet its obligations to customers and customers' ability to meet their obligations to banks.

One potential area of concern, for example, is the fact that most financial transactions include an electronic component, such as EDI, which is used to exchange information among financial institutions, clearinghouses, vendors, and borrowers. Table 6 lists the countries with the largest banks in terms of total assets. Japan has the largest number of these banks, followed by Germany, France, and Switzerland."

The Importance of Trade and Investment to National Economies

"The recent financial crises in Asia, Russia, and Latin America have demonstrated the interdependence of the trading system. . . . Y2K-related problems abroad have the potential to affect the commercial interests of the United States and other countries.

The U.S. Trade Perspective

"Industrial sectors around the world are dependent upon imports of key raw materials, machines, and equipment. Among the most important are petroleum products, minerals and metals, machine tools and general components, information technology and telecommunications equipment, and scientific and control instruments. Disruptions in the supply of any of these products due to Y2K-related mishaps could affect industrial output and economic activity."

Petroleum Products

"The United States, like many countries, relies heavily on energy shipments. It is the largest importer of crude oil and second largest consumer of natural gas. . . . The petroleum industry is highly dependent upon information technologies in every aspect of its business operations, including production, maintenance, finance, communications, security, safety, and delivery. Embedded microchips are widely used in the industry's distributed control systems."

Minerals and Metals

"The United States, like many other countries, is also heavily dependent on imports for particular minerals and metals. . . . The National Defense Stockpile contains quantities of scarce minerals to cover limited shortages, which can be released under a Presidential declaration of national emergency."

Machine Tools and Metal Components

"Machine tools, which are used for cutting and forming metal, are fundamental elements of the industrial base. . . More than 50 percent of U.S. machine tools are imported.

General components and parts, such as bearings, industrial fasteners, screw machine products, gears, valves, and pipe fittings, are also critical inputs for manufacturers of machinery and equipment. . . . As just-in-time delivery of components has become more widespread and manufacturers have reduced their parts inventories, meeting delivery schedules in a timely fashion has become ever more important for suppliers and users."

Information Technology and Telecommunications Equipment

"Computer and communication equipment manufacturers are highly dependent on the global trading system for the manufacture, distribution, and marketing of their products, and large volumes of electronic components are purchased from foreign suppliers, especially in Asia."

"The information and telecommunications sectors are essential to other parts of the global trading infrastructure, including the electronic transfer of funds, the distribution of electrical power, the control of gas and oil pipeline systems, the efficient delivery of raw materials and finished goods, and the delivery of responsive emergency services. In addition, IT companies are the primary source of Y2K remediation resources."

Scientific and Control Instruments

"Most scientific and control instruments contain embedded chips and incorporated software. . . . Interruption of the flow of instruments and parts imports could cause supply bottlenecks disruptive to manufacturers and end users."

International Investment

In addition to trade, foreign investment is important to many countries as a stimulus to employment and economic growth. . . . Financial transactions rely heavily upon computers and automated systems, which are usually components of large complex global networks. Y2K-caused errors in these highly integrated and interconnected systems could spread corrupted data (such as account information) instantaneously around the world. (sounds to me like the Commerce Department agrees with Andy and disagrees with Hoffmeister)

Information Technology Resources

"The degree to which countries have integrated information technologies into their economies is an indicator of their level of exposure to Y2K mishaps, as well as of their access to resources to mitigate such problems. Economies that are highly automated and in which computers, software, and networks are in widespread use have a greater chance of experiencing Y2K difficulties. (including our own, I would expect) At the same time, however, these economies also have greater access to the capital and human resources necessary to remediate systems and respond to Y2K-related needs. Countries that are less IT-dependent may have less Y2K exposure overall, but their essential services, such as power utilities and communications, may be highly computerized, while the resources to address potential problems may be in short supply."

International Cooperation and the Y2K Challenge

"Because of the potential risks to the trading system of Y2K failures, it is important that countries work together to share information, promote Y2K awareness, support remediation efforts, and encourage contingency planning among companies and organizations. . . . According to the World Bank, developing countries find it difficult to expend scarce resources on what is perceived to be an obscure and distant threat, when other social and economic problems are more pressing. Dealing with the Y2K problem is also complicated by software piracy (since vendors' "fixes" are unlikely to reach owners of unlicensed copies) and by obsolete computers and equipment (whose manufacturers may be defunct or difficult to identify)."

-- Hardliner (searcher@internet.com), May 06, 1999

Answers

this must be bogus. It doesn't jive with the info on the web page of Stephen M. Poole, CET.

-- a (a@a.a), May 06, 1999.

Thanks for putting the international commerce info in concise form, Hardliner. It's one of the most overlooked Y2K vulnerabilities. At one time I worked in an office on the 43rd floor of a building which overlooked a goodly part of the Mississippi River in New Orleans. No matter what time I was there (sometimes in the middle of the night) freighters, tankers and flotillas of barges could be seen plying the river. Maritime commerce plays a very large part in our everyday well-being and quality of life.

All ships must undergo intensive checks (particularly oil carriers) on a regular basis, where all mehcanical and electrical systems are checked for efficiency and safety. (Under the aegis of international Norske Veritas regulations; additionally, each country has its own safety regulations, some stricter than others.) Examination of embedded chips or any other computer system for Y2K compliance is not yet, as far as I know, part of those safety checks. A large percentage of ships fly under flags of convenience, such as Panama and Liberia. Those countries do not require nearly the level of safety as, say, Great Britain or the US. Hence, even if industralized countries require Y2K checks, I think I can safely say that Liberian- and Panamanian-registered ships will not be so required.

When something goes wrong and a maritime disaster occurs on a river like the Mississippi, it becomes obvious just how many entities and mechanisms are involved in the passage of goods into and out of this country. It's a finely tuned and complex method of commerce. And it's expensive. Just an extra half day in port for a ship can mean a loss in profits of hundreds of thousands of dollars. To help with the smooth flow of maritime commerce, the Coast Guard has a system of traffic control, involving lights, radar, radio and--computers. The Mississippi is not as commodious as it looks--only the central channel is dredged to a depth of more than about 40 feet. Heavily laden ships must be guided to certain docks where the water is kept to an accommodating depth. To give an idea of one of the difficulties--many ships' crews cannot understand English well enough to follow directions; different docks are painted different colors for ease of identification. If the lights are out. . . Well, yellow looks pretty much like gray at night, green much like blue.

Luckily, the strength of the River Pilots Union has meant that experienced human pilots are still required to guide ships on the Mississippi. However, even pilots cannot safely take a ship up or down the river in a heavy fog--especially when the electricity and, consequently, shore and river signal lights, buoy lights, radar and radio are inoperable. And how does a ship contact a pilot if the power is out and the back-up generator on shore has run through its fuel?

As amply demonstrated by the ship which took out a good deal of the docks, Riverwalk shops, and part of the Hilton in New Orleans, serious accidents can happen even on a bright sunny day with all traffic control aids operating. Down-time of some length in the Coast Guard's traffic control system could very easily result in a scenario reminiscent of a Mel Brooks movie. Providing ships can navigate across the oceans to get to the busy ports, that is.

The report above mentions the financial component of international trade. Money is electronically transmitted to overseas banks so that crews and pilots can be paid, ships chandlers compensated for their supplies, repairs made, and customs duties and dock fees paid. Not unimportant to local economies is the money spent ashore by ships' crews. If there is some interruption in the electronic transfer of funds and no means of sending instructions from a foreign country like Indonesia, Venezuela or Saudi Arabia, then Houston, we have a problem.

-- Old Git (anon@spamproblems.com), May 06, 1999.


The economic repercussions from Y2k will, in my opinion, be devastating. On this forum much is talked about concerning the state of readiness in the USA. Perhaps that will help with the recovery (if, indeed,we are ready enough to hold the infrastucture together) It will not prevent incredible problems worldwide. As a country we cannot survive at the level of living to which we have become accustomed without all the economic ties to the world remaining in place.

This reminds me of the spiderweb Infomagic talks about. Focusing on the US makes the picture so much brighter. When I factor in the rest of the world.....

-- Mike Lang (webflier@erols.com), May 06, 1999.


And, as one factors in the rest of the world, the time frame gets sickeningly longer. It may well look like a train crash filmed in SSSLLLOOOOOWWWWWWWW MMMMMOOOOOTTTTIIIIIOOOOOONNNNNNN........

Chyuck

-- chuck, a Night Driver (rienzoo@en.com), May 07, 1999.


To all, except Hardliner...

You can't have it both ways.

Think about it.

-- PNG (png@gol.com), May 07, 1999.



hardliner, good post

-- dick of the dale (rdale@coynet.com), May 07, 1999.

So what's the situation right now on the Danube River (Dunav in Yugoslavia, Donau in Austria) now that we've blocked it with downed bridges? Anyone with access to the European press read about this?

-- Spidey (in@jam.com), May 07, 1999.

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