CBP Pipeline Pilot Could Inform ACE 2.0 Development, Use of Tech in Import Process, Broker Says

NEW ORLEANS -- While a CBP pilot on pipeline imports may not at first glance have relevance for many importers, the ramifications of the pilot could have wide-ranging effects for importers and customs brokers as CBP applies any lessons learned to its development of ACE 2.0, according to Amy Magnus of A.N. Deringer.

The pipeline pilot, which Magnus said hasn't yet started but has been under development for a "couple of years," is testing the use of distributed ledger technology, where parties throughout the supply chain lodge data about a shipment that is "immutable" and can then be "available to those who need to know," Magnus said during an April 26 panel discussion at the National Customs Brokers & Forwarders Association of America's annual conference. The use of the technology for progressive filing touches on many of the current challenges brokers and importers face, she said.

"With what's been going on lately with forced labor and having to track goods all the way back into the supply chain, with qualifying for certain free trade agreements, for determining what has become almost an impossible thing now -- determining the country of origin of a product -- some of these things have become more difficult over time because of the way that goods are sourced," said Magnus, who is NCBFAA's senior counselor.

The pipeline product is one way for CBP to "imagine a different way of doing things because, clearly, there will be a different way of doing things in our future," Magnus said. The pilot, which is funded by the Department of Homeland Security's Silicon Valley Innovation Program, would use distributed ledger technology to allow Canadian wellhead operators, who are often reluctant to provide the information needed for USMCA certificates, to provide the data, Magnus said.

Crude oil also sometimes needs different additives from non-USMCA countries in order for the crude oil to flow through pipelines better, and having a distributed ledger could help certain importers prove that the oil they are importing is from Canada even if additives in the oil are not, also facilitating their USMCA claims, she said.

"It qualifies the goods in a way where maybe they could not qualify before because they couldn't get the necessary information to prove their USMCA claim. So that might be why an importer has some interest in some of this," Magnus said. She said that pipelines are "pretty basic" and only focus on crude oil but that "playing in this arena, and trying to understand how these non-traditional parties like a wellhead operator could lodge information in a place where it became accessible ... might be very helpful."

CBP is also conducting other pilots testing distributed ledger technology, including one for steel, which involves information like country of smelt, Magnus said.

For the pilots, "there's more to this than just satisfying" CBP or partner government agency requirements, Magnus said. For instance, in the steel pilot, "they might want to be able to prove" the steel is meeting "emissions standards," she said. "These are things that Customs and maybe the PGAs" might be interested in, "but these are new things that might be of interest to parties other than just Customs and even some of the PGAs," Magnus said.

CBP is considering making use of distributed ledger technology optional in the future (see 2205040064), and "it will not be required, at least probably in my lifetime," and "probably not in your lifetime either," Magnus said. "But there may be clients that you have that may see some benefits in participating."

Even though the concepts "might be somewhat threatening to us as brokers, I think that we need to try to figure out how we can get involved early and leverage some of the usefulness of what's going on here, and make sure that we channel it to our benefit," Magnus said.