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The World Trade Organization and Trade Finance Global have released their latest taxonomy of blockchain projects in international trade, organized into what they present as a “periodic table” for the industry.
The original version of the periodic table was released in winter 2019. Much has changed since then: despite the pandemic, several indicators used in the table show that blockchain commerce innovation projects around the world are reaching ever greater maturity.
On a scale of one to five, project maturity was rated at 2.3 on average in December 2019. As of this month, the same figure stands at 3.3. To translate it into non-numerical terms, these projects are now “in the early stages of production and are up and running,” according to the WTO and the TFG.
According to the report, blockchain, also known as distributed ledger technology or DLT, has two main advantages from an international trade perspective. First, it improves transparency, supporting what analysts also call “traceability” capabilities, which is useful for guaranteeing the authenticity of products and thus increasing customer trust.
The other advantage of DLT is the digitalization of commerce: rationalization of commercial documentation, processes and secure exchange and monitoring of data. Here, the report identifies what it believes remains the “weakest link” in the chain:
“Any digital process will only be as strong as its least digitized link. For many international trading systems this means integrating customs. While several governments are testing or considering the use of DLT for their customs operations and single windows, most projects remain in a conceptual or pilot phase. “
Latin America is a precursor on the customs front. The report positively cites the development of a DLT project called Cadena by ICT specialists from Mexico, Peru, Chile and Costa Rica in collaboration with Microsoft and IDB. Cadena turns to customs agencies and supports mutual recognition agreements between what are defined as “authorized economic operators”, all within a framework established by the World Customs Organization.
Elsewhere, progress has been made with proof-of-concept and pilot concepts for customs by the US Customs and Border Protection Office for NAFTA / CAFTA, as well as the Shanghai “Single Window” project, the Customs Clearance Project of Korean exports and the European project Proof of concept of the ATA carnet of the Union DG Taxud.
Aside from that, the DLT-based TradeLens project has increasingly integrated customs authorities and an Avanza Innovations digitalization project for DLT commercial documentation has integrated with Dubai Customs. However, the report is directed on the limitations of optimizing blockchain commerce:
“While these are significant positive developments, it is not enough. If the industry is to continue to push the boundaries in terms of digitalization of commerce, it must start to see more movement on this front. ”
