Blockchain technology can be used to facilitate a proposed customs arrangement between Brexit Britain and the European Union according to the recently released whitepaper which led to ministerial resignations.
The British government is suggesting the implementation of a Facilitated Customs Arrangement (FCA) for goods and food, with services and free movement of people excluded from the trade deal offer.
The proposed arrangement suggests Britain can carry out customs for the European Union. The whitepaper says:
“Where a good reaches the UK border, and the destination can be robustly demonstrated by a trusted trader, it will pay the UK tariff if it is destined for the UK and the EU tariff if it is destined for the EU.”
If the destination can not robustly be demonstrated, they will charge whichever is the higher tariff and then track their destination. If they end up at the lower tariff destination of within UK or EU, whichever it may be, they then receive a repayment from the UK government.
If this is accepted by the EU and the UK parliament, it addresses the concerns over the Irish border as it sounds like there won’t be a border where goods are concerned between UK and EU.
However, it does all sound very complex, therefore the British government says they will “continue to explore options to use future advancements in technology to streamline the process.”
One such technology is the blockchain. They do not mention it by name, but they could not be more clear to what they are referring when they say they will be:
“Exploring how allowing data sharing across borders, including potentially the storing of the entire chain of transactions for each goods consignment, while enabling that data to be shared securely between traders and across relevant government departments, could reduce the need for repeated input of the same data, and help to combat import and export fraud.”
Chain of transactions clearly refers to the blockchain which is being implemented in supply chains with a number of global brands, such as Walmart and General Electric, testing blockchain implementations in global supply chains.
In the shipping industry, which is in many ways at the forefront of supply chains, blockchain tech has been called “one of the most promising technologies in logistics.” On the announcement of a blockchain consortium in shipping, they said:
“The solution can speed up the entire flow of transport documents, reduce the requirement for data entry by up to 80 percent, simplify data amendments across the shipping process, streamline the checks required for cargo and reduce the burden and risk of penalties for customs compliance levied on customers.”
A blockchain implementation could also allow the EU itself to check the data, without having to trust the UK government. Suppliers could even themselves input the data on the blockchain, making the process fully transparent from an administrative perspective.
Whether that one mention of chain of transactions, however, was simply in passing or suggests they’ve actually undertaken studies as well as perhaps tests/pilots to see how blockchain tech could be used in such arrangement, is unclear, but this very new potential customs arrangement may well allow for grand scale testing of very new technology.