Blockchain Adoption as a Cure for Cross-Border Trading

The U.S. Customs and Border Protection is planning to test a blockchain application against their current system to determine how distributed ledger technology can improve its existing processes.

These moves highlight countries' increasing interest in employing blockchain technology in their customs and border operations.

Blockchain for digitizing customs documents in the EUElsewhere, the Directorate-General for Taxation and Customs Union, which develops policies and operational systems for the European Customs Union, explored the applicability of blockchain in customs and taxation with a focus on utilizing blockchain as a notarization service.

The Union is looking into using blockchain to digitize ATA Carnet, an international customs document used in 87 countries for temporarily admitting goods duty-free.

To avoid the aforementioned problems as well as achieve additional time and cost savings on security procedures, customs administrations in Mexico, Peru and Costa Rica are working with the Inter-American Development Bank to develop a blockchain application called Cadena.

Global Trade Connectivity Network and world wide interest in blockchainA joint development by monetary authorities in Singapore and Hong Kong, the Global Trade Connectivity Network is a blockchain-based cross-border infrastructure for digitizing trade, finance-related data and documents between the two regions.

Direct costs include all costs related to border and customs procedures, while indirect costs refer to costs incurred through delays at the border.

Since the results of these measures have a real-life impact on trade costs, one can see blockchain potentially bringing improvements to at least three areas, particularly for customs and border clearance, shipment tracking and frequency of on-time delivery.

The move by governments around the world to employ blockchain to improve cross-border trade marks a step toward paperless customs processes, which originally began with the digitization of information flows by making trade-related data and documents available and exchangeable electronically.

Blockchain, on the other hand, if implemented in border protection, will ensure real-time availability and immutability of customs documents while saving considerable costs on excessive paperwork.