The use of a blockchain-based smart import declaration to reduce the need for manual cross-validation by customs authorities

Abstract

For determining the correctness of an import declaration lodged by a declarant within international shipping, customs authorities rely on manual cross-validation of the declaration with other trade documents. However, the sheer volume of import declarations lodged annually makes it impossible to manually cross-validate each declaration. Smart contracts have the potential to automatically aggregate relevant information from blockchain-based ledgers for lodging and cross-validation. In this paper we explore how such smart contract could be implemented. We demonstrate that a smart import declaration can be used to automatically aggregate information from different sources (e.g., pro forma invoice data elements stored on the blockchain ledger). However, technical and organizational considerations that are inherent to blockchain technology need to be addressed for the smart import declaration to be acceptable for both customs authorities and declarants. It is therefore suggested that future work focusses on data standards required to enable automatic aggregation of relevant trade information and the generation of the import declaration and governance of the smart import declaration by customs authorities to assure correctness.

Blockchain-based smart contract for international business – a framework

“…Martincus et al (2015) referred to the use of BT for customs' import-declaration, whereas Hu et al (2016) pointed out BT can prevent fraud, such as undervaluation of imported goods' transaction value to reduce legitimate custom duties. Several authors (Weigand and Bukhsh, 2011;Okazaki, 2018;Segers et al, 2019) substantiated that BT aids in the cross-validation of information provided in the import declaration and builds trust between the customs and 2017) proposed transactions to be signed by at least two parties to ensure the data's correctness. In case of the exchange of proforma invoice data elements, the consignor and consignee could sign the transaction so that customs authorities can rely on correctness.…”

Rise, Fall, and Recovery of Blockchains in the Maritime Technology Space

“…The sample studies focused on maritime applications of blockchain technology. The most promising application of blockchain is expected to digitize the container shipping and third-party logistics business-the electronic bill of lading in particular [15,[26][27][28]. A number of consortiums have initially committed to delivering a blockchain solution in the container shipping business, including Cargo Smart and IBM's TradeLens [25,29].…”

“…One of the major challenges in blockchain implementation in the maritime industry is the lack of standardization in data elements [7,28]. In addition, a key restraining point lies in the fact that none of the international governing bodies assume authority and responsibility about the blockchain development [7].…”

How to organize for AI? An interview with Yao-Hua Tan

“…However, the large portion of manual processes and a growing trade volume have made the goal to inspect all incoming and outgoing cargoes an illusion (Heijmann et al, 2020). For the Netherlands alone, the customs authority processes an estimated amount of comprised some 160 million declarations annually, a figure that and is expected to increase to over 500 million by 2022 (Segers et al, 2019). Multiple approaches have taken place to address this apparent dilemma in many countries and important projects funded by the European Commission were conducted in joint collaboration between authorities, businesses and research institutions (see Table 1).…”