CBP to Begin Preliminary 'Proof of Concept' NAFTA/CAFTA Blockchain Test in September
ATLANTA -- A “proof of concept” set to begin in September will provide for brainstorming and early-stage testing on the use of blockchain technology in processes related to NAFTA and the Central America Free Trade Agreement (CAFTA), Vincent Annunziato, director of CBP’s Business Transformation and Innovation Division, told a group of reporters at the CBP 2018 Trade Symposium on Aug. 14. CBP will consider not only the technical capabilities of blockchain and any business benefits but also whether use of the technology fits with the agency’s regulatory and policy scheme.
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Among other things, CBP will look at whether blockchain can be used in country of origin verification procedures, so the supplier can send origin information directly to CBP and the importer doesn’t have to worry about “tracking a piece of paper” from the carrier to the broker and into its own files. By the end of 2018, once the proof of concept is completed, CBP and trade community participants will put together an assessment and make recommendations based on the results of testing. CBP had been planning to launch the test this fall after the Commercial Customs Operations Advisory Committee identified NAFTA and CAFTA origin procedures as a viable starting point (see 1805090031).
The proof of concept functions as a relatively informal “brainstorm,” with little in the way of resources invested and room for false starts and failure. Under the proof of concept, CBP will meet as a “holistic group,” coming up with a “business engineering plan as to how we think we’re going to run the project.” Then the agency will “bring in the trade” to confirm that CBP’s underlying assumptions are correct, and whether anything was missed, should be added, or wasn’t done right, Annunziato said. Only then will CBP go into development. And for now, that development won’t go directly into ACE, but rather “into its own area,” he said.
Annunziato was careful to distinguish the proof of concept from a pilot. The proof of concept is merely intended to see if new technology works for specified uses, and once it’s complete the proof of concept will be taken down. Should CBP find a given use of blockchain promising, it may then create a “more robust” pilot that works “within the confines” of any regulations and policies that needed to be changed and could lead to operational changes. CBP has also said it is developing a proof of concept to test the use of blockchain for intellectual property rights enforcement (see 1807300011). Annunziato said the agency has a “number of different scenarios,” including use of the technology to verify complex licensing arrangements.
Longer term, consideration of blockchain remains in its early stages and much remains up in the air as to how it will affect trade. For example, CBP might in some cases mandate submission of data like it does with ACE by actively creating a blockchain for a given purpose and making everyone join it and submit data in a specified way. Or it could be a more passive route by having a certain level of access to an existing blockchain and pulling the data it needs. “We’re not exactly sure how the whole lay of the land is going to take place,” Annunziato said.
CBP is attempting to get in front of an expected massive increase in blockchain investment in the private sector by working on interoperability standards with the Department of Homeland Security (see 1808140018). The agency also will soon launch a study with Texas A&M University, also to include members of the trade community and subject matter experts, that is intended to examine how blockchain technology may advance in the next five to seven years. In part, the agency will be looking at “how early in the process can we start collecting data and how it’s going to come in,” he said. “I would say, I don’t think we’re going to change what we collect; I think we’re going to change how we collect it.”