The US Customs and Border Protection agency is assessing the use of blockchain technology in a move that could bring more transparency, efficiency and security to trade processing.
CBP’s Commercial Customs Operations Advisory Committee (COAC) has established a working group to evaluate the implications and potential application of the technology, which is used by the financial industry to share information securely.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
“One of the areas we’re looking at is if blockchain can be used to secure certificates and licenses that are electronically submitted,” said COAC member, Celeste Catano, and global product manager for supply chain software firm BluJay Solutions.
“A lot of licenses are generated by foreign governments and those documents have seals and signatures that have to be presented to customs when goods enter the country. We want to make sure that the technology can prevent documents from being manipulated in any way.”
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.
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.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataEarlier this year, US commodities specialist The Seam began setting up what is thought to be the first trading system for the global cotton industry built on blockchain technology.
Because blockchain technology benefits from a network effect, whereby a service becomes more valuable the more participation it has, the cotton industry is being urged to sign up as consortium members, helping to build a single, shared blockchain to record, track, and trade all of the world’s cotton markets in real-time.
Cotton trading turns to blockchain technology
According to customs and international trade law firm Sandler, Travis & Rosenberg, the Department of Homeland Security has conducted a two-day workshop on blockchain for COAC’s new emerging technologies working group. On the first day it provided an overview of blockchain and how it is currently being used, while on the second day participants discussed various cases where the use of this technology might be feasible.
“More than a dozen proposed uses were identified, including capturing and keeping track of partner government agency licenses and permits, certificate of origin reporting, free trade agreement product qualification, carnets, and bonded movement tracking,” the law firm says.
“CBP now plans to work with the COAC working group to further evaluate the workflow processes of some of these cases and how blockchain technology could be used, although no specific timeframe has yet been established.”
