Allowing for heightened security by serving as an encrypted ledger, blockchain technology is gaining traction across a wide range of industries and applications. Earlier this month at the Customs and Border Protection (CBP)’s 2018 Trade Symposium in Atlanta, CBP Business Transformation and Innovation Division Director Vincent Annunziato announced that they would begin “live fire testing” the technology to verify NAFTA and CAFTA certificates of origin.
Transforming Trade Authentication
This unique technology offers a range of benefits, and may completely transform trade authentication as we know it — a fractured, tedious process that relies heavily on authenticity and data. When goods come in from suppliers in other countries, reliable information is needed to verify their origin and contents. This involves countless documents, seals, and marks used to ensure authenticity — but these documents and certifications can be corrupted, and often result in disorganized, messy processes.
Blockchain technology can streamline trade authentication, allowing for enhanced safety and higher efficiency. Serving as an “incorruptible distributed ledger,” blockchain improves security and easily identifies trademark violations and fraudulent goods. The safeguards built into the technology also eliminate many unnecessary steps from the trade authentication process, including the use of paper.
“Why would we need to have that absolute signature if we know the government of Australia is sending me something, and I can, without a shadow of a doubt, know that it’s Australia or France or Switzerland? All I need is the data. I don’t need paper anymore,” said Annunziato.
Enhancing Data
Blockchain will also provide an immediate wealth of data that was simply not possible using paper records. CBP is currently working with the Commercial Customs Operations Advisory Committee (COAC) to identify IP licensees and licensors. This, Annunziato explained, will allow information regarding rights and licenses to be immediately accessible to the holder.
“You can now follow generationally what’s going on. … It’s a worthwhile venture for the rights holders.” Along those same lines, CBP is also looking to develop an app centered on trademarks. The level of detail provided by the app would go beyond mere authentication, he said, delving into the smallest details of a product, like the stitching on a Louis Vuitton handbag.
Addressing Key Challenges
Despite this high potential, there are still some wrinkles to work out. The CBP has 47 partner agencies that must be on board with the technology and work to integrate it into operations. “Data without borders sounds good if you’re only looking at shipping, but you have to take into account that we have importation entry data coming in, and [those agencies] … aren’t just going to give up [the] sovereignty of their laws and their rules.”
To address this, CBP is working with private sector partners and the Department of Homeland Security Science and Technology Directorate to establish an “interoperability standard.” As CBP Commissioner Kevin McAleenan explains, not all blockchains are the same. Some focus on establishing origin data from the outset of the transaction, while others add and share data through the life of the shipment. So, there needs to be a common language among all involved parties in order to fully realize the benefits of the technology. “As industry tries to adopt blockchains more broadly, the ability to understand what they mean — and to apply in our decision-making — is going to require that interoperability standard,” said McAleenan.
Looking Ahead
Laying the groundwork for interagency communication and standards will allow CBP to get a head start on the inevitable widespread implementation of blockchain technology. In fact, they believe that their efforts are killing two birds with one stone. According to Annunziato, “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 is to “prepare ourselves in a proactive way … for when private industry begins to really take off with this technology.”
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