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Pilot Test of Blockchain for NAFTA/CAFTA-DR Certifications Could be Launched This Year

Monday, March 19, 2018
Sandler, Travis & Rosenberg Trade Report

U.S. Customs and Border Protection is planning to launch this year a pilot test of the use of blockchain technology for the certifications of origin used to qualify goods for preferential treatment under NAFTA and CAFTA-DR. CBP is also moving forward with a pilot test for the automation of carnets and is considering a similar initiative for NOAA form 370, the fisheries certificate of origin, which is used to declare the dolphin-safe status of all imported frozen and processed tuna products.

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 (though specific documents in those records, such as certificates of origin, are not) but are decentralized across that network, making them virtually incorruptible. This security has made blockchain a promising technology for recording a wide range of activities, including customs and trade-related transactions.

Following a two-day Department of Homeland Security workshop last fall, CBP met with members of the trade community in January to further refine requirements for the use of blockchain in the three use cases identified above. Participants in follow-up discussions were asked to provide the following information related to each use case: current state of operations, forms, and workflow; future state of operations, focused on how blockchain would alter the current state; and metrics to demonstrate success. Based on this information, NAFTA/CAFTA-DR certifications and carnets were identified as the best candidates for a blockchain pilot.

To meet the goal of launching a blockchain pilot in 2018, CBP will conduct user story refinement sessions and establish a timeline and milestones for delivery. The Commercial Customs Operations Advisory Committee’s Emerging Technologies Working Group will be leveraged to support follow-on actions.

CBP will be looking for additional stakeholders to get involved in each use case to further refine their scope and develop proof of concept/pilot objectives. Companies interested in participating in the NAFTA/CAFTA-DR use case should contact ST&R’s Tom Gould at (213) 453-0897.

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