A blockchain essentially functions as a distributed ledger that records transactions in a verifiable and permanent way

A blockchain essentially functions as a distributed ledger that records transactions in a verifiable and permanent way

The US Customs and Border Protection (CBP) agency is preparing to conduct a second test on the potential use of blockchain technology in a move that could bring more transparency, efficiency and security to trade processing.

The focus of the second test will be on intellectual property rights, according to a CBP report.

CBP began assessing the use of blockchain in November 2017, and last year tested the technology for the certifications of origin used to qualify goods for preferential treatment under NAFTA and DR-CAFTA.

This test found the tool achieved almost instantaneous communications between CBP and the trade, improved documentation of receipt, and expedited agency processing. Other benefits included eliminating manual documentation requirements and duplicative data entry, early capture of potential issues, receipt of full data (certificate of origin, entity data) with the initial submission of the entry summary, enhanced targeting, easier access to and more direct communication with the importer, and easier access to back-up documentation when required.

A blockchain essentially functions as a distributed ledger that records transactions in a verifiable and permanent way. Blockchain records are transparent to all who have access to the network but are decentralised across that network, making them virtually incorruptible. This security has made blockchain of interest for recording a wide range of activities, including customs and trade-related transactions, according to a note from trade law specialist Sandler, Travis & Rosenberg.

The technology is increasingly making inroads in the textiles and apparel industry due to the potential it has to transform the way information and transactions are captured, owned, stored, and shared among companies and whole ecosystems. Not only does this radically increase transparency across the supply chain, but also enables much easier end-to-end tracking of products.

CBP has been working toward testing its ability to use blockchain to facilitate shipments based on known relationships between intellectual property rights holders and licensees. A "live fire" system test is anticipated this month, the trade law firm says, as well as an assessment of the associated legal, policy, technical, and operational issues will be conducted thereafter, the agency says.

Other proof of concept tests that have been or will soon be initiated will address verifiable credentials (that is, legitimising a business or person via automation), purchase order to entry (combining shipping and entry data, reverse engineering the entry/entry summary processes to remove dependency on the HTS), and tracking oil shipments from spigot to importation.