CBP Testing Blockchain to Verify NAFTA and CAFTA Certificates of Origin

U.S. Customs and Border Protection’s (CBP) Business Transformation and Innovation Division Director, Vincent Annunziato, stated that CBP will begin testing blockchain technology functions within a live environment. According to American Shipper, the CBP blockchain test will involve the technology’s ability to validate NAFTA and CAFTA certificates of origin. Annunziato states that CBP is investigating the technology to prepare for potential increased adoption of blockchain by private industry in coming years.

Current CBP Pilots

​As other markets and foreign governments have been investigating blockchain, CBP has become one of the early U.S. government entities to launch a limited test of the technology. CBP hopes that the data gathered from a blockchain verification process will provide more accurate data on goods from the exporting country and verify that the suppliers and importers are compliant with U.S. regulations. The test will run alongside existing systems for three weeks as CBP verifies certificates of origin on goods imported under the North and Central American Free Trade Agreements (NAFTA and CAFTA).

While CBP’s Automated Commercial Environment (ACE) has automated the large majority of U.S. trade processes, blockchain has the ability to further remove redundant paper-based processes, such as hard copy signature verification of the origin of goods from certain countries.  Blockchain would allow for the simultaneous sharing of verification data across multiple government and private entities in a given supply chain.  These early tests also allow CBP to develop internal IT requirements and begin working with industry to identify an interoperable standard among different blockchain systems to allow for a broader scale exchange of data with its public and private partners. 

While blockchain has potential benefits for greater speed and reliability of data transfer than traditional automation, just as the case has been with developing ACE as the U.S. single window, CBP would face challenges with integrating the technology across U.S. partner government agencies (PGAs), who have shared responsibility in validating goods as they enter the country.

While CBP’s blockchain tests appear promising to many advocates of the technology, it should be recognized that the agency will not likely be attempting a wide-scale adoption any time in the near future. The outcome of the current tests will, to an extent, contribute to CBP’s pace in conducting further tests, but it is more likely that CBP’s longer-term future with blockchain will be determined by how quickly the agency is driven to adapt to the private sector’s pace and scale of the technology’s use. It is also possible that regional field offices or local ports around the U.S. will conduct their own limited tests with certain carriers.