CBP Is 'Pivoting Away From Blockchain,' Says Annunziato

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).

Blockchain may still be one way to communicate with CBP, but it won't be the only way, he said. "Distributed ledger technology is a broader form of blockchain" while "blockchain is a very specific form of technology," he said. "Distributed ledger technology, in some cases, gives you the same bang for the buck for a lot less money. In some cases you may want to use your legacy system. Or maybe in other cases you want to use a more modernized system with concepts of technology that we haven't even gotten to. What we're doing is using a standards-based approach and this is what's allowing us to open up."

One problem with blockchain is that "you have to do an awful lot of customization," he said. For example, if two companies invest in two different blockchains, "the companies want you to invest in their software and then use all across your supply chain so everybody is forced into it or they'll charge you the expense of having to make that customization," said Annunziato. "We're trying to relieve that layer."

Annunziato previously mentioned blockchain as potentially playing a big role in the 21st Century Customs framework (see 2008200004). Asked about where cryptocurrencies might eventually fit in, he said the Treasury Department will need to answer the specific questions about government use of cryptocurrencies. Still, "I do believe that faster ways of being able to pay need to be happening," he said. Within the 21st Century framework, which he said he couldn't provide details on, "one of the things we are trying to do is get this information up front so that the only thing that you are doing after arrival, barring having to make changes, is pay at the line," he said. "And if you can pay at the line, that makes it a lot simpler of an approach and certainly more closely related to the systems that are out there."

The need for CBP is to "connect the dots," regardless of the technology used, said Annunziato. One phrase being increasingly used is "digital twin," which is a "representation of the physical item." That representation consists of three things: what the product is, who is in control and where it is, he said. "If you solve those three things, you've not only benefited the government, but you've benefited yourselves on the private sector side," he said.

The importance a consumer places on a product's origin and that it is legitimate will be "the battlegrounds of the future," he said. CBP has tested the use of a "verifiable credential" issued by the owner of the license "that says the company that was bringing that in was legitimate," he said. Verified legitimacy would help to narrow the scope of what CBP must focus on and create a "whole different ballgame." These ideas would allow facilitation and security to rise at the same level, too, he said.