Blockchain at the Border
United States Customs and Border Protection (CBP) vows to secure the nation’s borders and facilitate legitimate foreign trade and travel. Over the past few years, it has realized that blockchain, a digital, decentralized ledger, could assist in achieving its objective in a more efficient, transparent manner.
Earlier this month, American Shipper reported that CBP, the largest federal law enforcement agency of the US Department of Homeland Security (DHS), plans to initiate “live fire testing” of blockchain to verify import certificates in September. Using the technology, the agency aims to verify North American Free Trade Agreement (NAFTA) and Central America Free Trade Agreement (CAFTA) certificates of origin, Vincent Annuziat, Director of Business Transformation and Innovation Division at CBP, revealed during 2018 Trade Symposium hosted by CBP on August 14 at Atlanta, GA.
During a session with the media, Mr. Annunziato said, “Really what the government’s trying to do is twofold: One is to help blockchain along in a healthy manner for increasing market adoption, and the other thing is we’re trying to prepare ourselves in a proactive way to be ready for when private industry begins to really take off with this technology.”
The nation’s primary border control organization expects that blockchain for the NAFTA and CAFTA certificates will allow for more accuracy regarding goods from the exporting country and ensure compliance from non-US suppliers.
The director feels good about “data without borders,” — one of the basic elements of blockchain technology — when it comes to shipping. However, there is still skepticism over blockchain being implemented across the 47 partner government agencies of CBP, as the government moves ahead with integration of the technology in trade compliance space.
Outside of trade compliance, CBP has also teamed up with the Commercial Customs Operations Advisory Committee (COAC) to look at blockchain usage in intellectual property. The technology will be used to track IP licensors and licensees. Mr. Annunziato sees potential for it to do wonders in the area of trade facilitation.
CBP is also mulling over developing an app that would assist the agency with trademarks. For instance, the app could verify the authenticity of a Louis Vuitton bag and provide details on its physical properties. The agency is working on how its officers could use such app for examining IPs.
According to Annunziato, CBP plans to put an end to paper processes in US customs if blockchain is a success. He said that blockchain would only require data for verification, eliminating the need for paper with authorized government signatures.
CBP Commissioner Kevin McAleenan said in a statement, “Blockchain is not one thing. Everybody is looking at it from their perspective, from their ecosystem, if you will, from their business model. So there’s a lot of different blockchains. They’re looking at it in different ways.”
The commissioner brought to light that CBP has previously worked with big data. It used Animal and Plant Health Inspection Service data, as well as passenger record data, from over 100 different international air carriers. This was done to understand and reformat the data so that the agency’s analysts and systems could use it. McAleenan expects to face similar challenges with implementation of blockchain.
DHS Science and Technology Directorate (S&T), the department’s research and development division, recently awarded $192,380 to Austin-based blockchain startup Factom to beta test its software with CBP. The award, given under S&T’s Silicon Valley Innovation Program, aims to accelerate the adoption and development of technologies that assist in the mission of the department.
IBM and Maersk (a Danish logistics giant) started a joint blockchain shipping project dubbed TradeLens, in which 94 organizations are involved and 154 million shipping events have been captured. Through all these efforts, blockchain has the potential to become essential to shipping products around the world.