Facilitating trade

Blog | 13 June 2017

Leonardo.Macedo.jpg

Leonardo Macedo, senior tax and customs auditor at Receita Federal, considers what the joint UN-CEFACT white paper on blockchain means for trade facilitation

The UN Centre for Trade Facilitation and Electronic Business (CEFACT) has published a project proposal white paper on the use of blockchain technology for trade facilitation. In a nutshell, the project scope is to look at how existing UN/CEFACT deliverables could be used by blockchain application developers, possible changes to existing UN/CEFACT deliverables, or new deliverables, that could be considered in order to support blockchain trade-facilitation related applications, and how blockchain technology could be used to facilitate trade and related business processes.

Reading the proposal, it is clear that blockchain applications can be important instruments for trade facilitation. IBM and a few private and public stakeholders are already testing pilots on the use of blockchain for trade facilitation. Two of IBM’s pilots are the Singapore Customs Declaration initiative, and the cross-border shipping operations of flowers from Mombasa (Kenya) to Royal Flora (Netherlands).

After watching these two trade facilitation pilot projects, I foresee that many of the WTO Trade Facilitation Agreement (TFA) policies can achieve exponential results. For instance, export declarations can be automatically converted into import declarations, improving accuracy and maximising pre-arrival processing. Electronic payments can be made by the supplier to deliver the goods as Deliver Duty Paid (DDP), formalities and documentation requirements can be eliminated for several border agencies, and risk management can be optimized.

Post-clearance audit can also be initiated during pre-clearance, release times for imported goods can be substantially shortened, Authorised Operators (AO) accreditation can be simpler, and Single Windows (SW) national platforms can function in shared ledgers – in other words, the possibilities for trade facilitation when using blockchain are countless. In my opinion, they go far beyond the WTO TFA.

By contrast, there are still challenges to overcome when using blockchain. Some of these difficulties include the scalability of the chain, the intensive computation needs, the nodes storage capacity, and the businesses model to support the chain. Nevertheless, while the challenges exist, I am enthusiastic and acknowledge that the use of blockchain for trade facilitation is very promising.

Following the UN CEFACT proposal, other governments, organisations, and companies should start investigating how blockchain can impact their international trade business. From my perspective, IBM, Maersk, Kenya, Singapore, the Netherlands and the US can give powerful examples of its use for trade facilitation.

Leonardo Macedo is a senior tax and customs auditor at Receita Federal,

Give Feedback