CBP to Involve New Type 86 Entry in IPR Blockchain Test Case, Annunziato Says

CBP plans to make use of the new entry type meant for low-value shipments as part of the next blockchain "use case" involving intellectual property rights licensing, said Vincent Annunziato, director of CBP’s Business Transformation and Innovation Division. "We figured out a way to make it so we're tying in the data that we're getting off the licensing to the entry," he said of the test while speaking on a panel during the stakeholder's forum of the U.S.-Canada Regulatory Cooperation Council on Dec. 5. "And we're using that new type 86 that hasn't come out yet so a lot of the companies will get a chance to experiment." The new type 86 entry is planned as a way to handle de minimis shipments in the Automated Broker Interface, with a pilot program expected during calendar year 2019 (see 1810200002).

The agency "just finished" its analysis of the first blockchain test, which was completed in September (see 1810190049) and involved NAFTA and CAFTA certificates of origin. That assessment will eventually be released publicly, but will first go to the Commercial Customs Operations Advisory Committee so it can provide recommendations, he said. Annunziato said there were a few complaints -- mostly involving the necessity for suppliers to be involved -- and the pilot showed potential for significant time savings. CBP had to "dummy up" foreign suppliers because none were involved, he said.

CBP is now looking to add some more complexity to the test cases involved, Annunziato said. As part of the IPR test, the agency also may use a Microsoft product called HoloLens that can allow for a virtual reality 3D examination of a legitimate product to compare with an imported product, he said. There's also potential for pharmaceutical product verification through the blockchain, he said. After IPR, other potential use cases include pipelines to prove what "the stuff coming out of the spigot" is made up of, he said. The U.S. Postal Service is also looking at testing blockchain with CBP and is interested in its specifications, he said. Tracking the origins of raw materials, including diamonds, timber and precious metals, will be another likely area of blockchain testing for CBP, he said.

Companies should not be overly concerned with blockchain technologies making ACE obsolete any time soon, he said. "Blockchain is a layer," he said. "It won't so much affect what we collect, how we collect it. So I don't want to scare you that everything you've built over the last 20-30 years is just going to disappear. There's going to be a pretty fair amount of transition, but I don't think it's going to just eradicate" everything else. Still, "if the private sector is not watching out for this technology and it becomes a disruptive technology over the next five to 10 years and you're the company that is not there to react to it, you're going to be beaten down by all your competitors," he said. "It's time to look at it now. The government becomes an enabler. We are looking at stuff right now to see how we will fit into that little puzzle piece."

Industry should not expect the government to "build one big blockchain for everyone to sign onto," he said. More likely is the government being involved in other blockchains that have been built already, he said. As part of CBP's blockchain proof of concept involving the NAFTA and CAFTA certificates of origin, the agency built something called "veris delta," that is the "first system that was able to take multiple blockchains using one set of specifications and be totally agnostic to what software was used," he said. That reduces the need for customization and software "licensing costs," he said. Annunziato said he'd like to see Canada and other countries follow the U.S. in making those specifications a standard.

The Department of Homeland Security Science and Technology Directorate recently contracted with the University of Houston and Texas A&M to undertake a more comprehensive study of the technology, Annunziato said. That study won't be out for about a year, but it is hoped that it will provide some insight into "what will the blockchain future look like 10 years from now," he said. CBP is funding some of the testing, though the Department of Homeland Security is handling a lot of the costs involved, he said.