CBP expects to deploy its Silicon Valley Innovation Program project on the use of blockchain for pipeline oil and gas in late 2024, the agency said in a document posted ahead of the March 29 meeting of the Commercial Customs Operations Advisory Committee. The new capability, which is being developed by CBP’s Petroleum, Natural Gas and Minerals Center of Excellence and Expertise and trade modernization office alongside the DHS Silicon Valley Initiative, will use “distributed ledger-based software to qualify pipeline-borne crude oil and natural gas” for USMCA treatment, the document said. “If deployed as expected in late 2024, this will likely be the first active component of ACE 2.0,” CBP said.
Blockchain
Blockchain is a technology used for digital interactions and serves as the underlying component of cryptocurrencies. A blockchain is a distributed ledger maintaining transactional records which are grouped into interconnected blocks. The blocks include unique identifiers based on the data of the previous block. If the data are changed in one block, its identifier changes, which then changes every subsequent block. This effect makes blockchain tamper resistant since the network is difficult to alter, providing a resilient method of record keeping.
Blockchain has potential uses in the transmission of customs data, allowing parties throughout the supply chain to provide data while ensuring the integrity of that data. However, CBP began moving away from blockchain technology specifically in 2021, instead exploring uses of distributed ledger technology in general and placing a focus on interoperability.
CBP will in 2023 begin testing two projects under the DHS Silicon Valley Innovation Program (SVIP) “that will connect CBP with trade users,” the agency said in a document released ahead of an upcoming meeting of the Commercial Customs Operations Advisory Committee. The projects are being used to “verify some ACE 2.0 concepts” to inform CBP’s development of ACE 2.0, “which could begin as early as 2025,” CBP said.
Sen. Bill Cassidy, R-La., told an audience at the American Association of Exporters and Importers conference June 15 that his discussion draft of a Customs modernization bill elicited some consternation, but that it was shared because he was trying to figure out "how do we get stakeholders in a good place so that we can have a customs modernization package?"
TUCSON, Arizona -- CBP is considering giving filers the option of using blockchain technology for entry filing as it develops ACE 2.0, Celeste Catano of E2open said May 4 at the National Customs Brokers & Forwarders Association of America annual conference. Filers would have the choice between setting up a distributed ledger to talk to CBP’s distributed ledger, or use ABI calls to CBP’s system, she said.
CBP is moving away from relying on blockchain for its trade processing "for a number of reasons and moving more toward interoperability," Vincent Annunziato, director of CBP’s business transformation office, told an April 22 meeting of the Commerce Department's Advisory Committee on Supply Chain Competitiveness. "One of the reasons we are moving into interoperability is not to not invest in blockchain, but to allow private sector, all of you, to invest in the technologies that you would like to use in order to communicate with the government," he said. CBP has been looking into making use of the technology for several years (see 1711080023).
Sen. Bill Cassidy, R-La., says Congress needs to counter trade-based money laundering, perhaps by directing federal agencies to track shipping manifests and financial information in real time. One-way trade-based money laundering happens when one party sells another party goods at an artificially low rate, and the receiving party is able to sell the goods for the true value, Cassidy's white paper said. Currently, he said, "There is no requirement that the information contained in the manifest match the information in the invoice."
CBP is "conducting integration testing to prove compatibility of a blockchain platform with multiple partner systems," according to an update from the emerging technologies working group ahead of the Oct. 3 Commercial Customs Operations Advisory Committee (COAC) meeting. CBP began an initial "proof of concept" in September as the agency considers the potential for the distributed ledger technology (see 1808200040). "Portions of the NAFTA / CAFTA import process, specifically verification of intellectual property and relationships between licensees and licensors, have been identified as good candidates for improvement if a transition to a more digitized, decentralized system is undertaken," it said.
It's odd to be talking about blockchain in terms of regulatory policy, said Aaron Arnold, a fellow at Harvard University who studies trade controls to prevent proliferation of weapons of mass destruction. "The technology itself is meant to disintermediate actors," he said during a panel on blockchain and trade security at the Stimson Center, a Washington think tank that focuses on security.