1、WCO/WTO Study Report on Disruptive TechnologiesJUNE 2022wcoomd.org wto.orgWCO/WTO Study Report on Disruptive TechnologiesJUNE 2022ContentsAcknowledgements 6Foreword by the WCO Secretary General 8Foreword by the WTO Director General 9Background 10Executive Summary 13I.Introduction:“disruptive”18 or(j

2、ust)“emerging”technologies?II.Holistic use of technologies 26 for Smart Customs of the future III.The technologies 30 1.Blockchain and distributed ledger 31 technology(DLT)A.What is blockchain technology?31B.PotentialuseinCustomsand37bordermanagementC.ImplementationbyCustomsin45 2021 2.Internet of T

3、hings(IoT)51A.WhatisIoT?51B.LinksbetweenIoTandother52 technologies C.Currentuseinlogisticsand55supplychainmanagementD.PotentialuseinCustomsand56bordermanagementE.ImplementationbyCustomsin58 2021 4|WCO/WTOThis publication has been prepared under the WCO and WTO Secretariats own responsibilities and w

4、ithout prejudice to the position of WCO and WTO Members and to their rights and obligations under the WCO and the WTO.The designations employed in this publication and the presentation of material therein do not imply the expression of any opinion whatsoever on the part of the WCO and the WTO concer

5、ning the legal status of any country,area or territory or of its authorities,or concerning the delimitation of its frontiers.The case studies presented in the Annex are based on reports submitted by the Customs authorities.They have been lightly edited and remain true to the original submissions.3.B

6、ig data,data analytics,artificial 63 intelligence(AI)and machine learning(ML)A.Whatisbigdataanddata63analyticsandhowcantheybeusedinCustomsandbordermanagement?B.Whatisartificialintelligence?64C.Howcanbigdata,dataanalytics,65artificialintelligenceandmachinelearningbeusedinCustomsandbordermanagement?D.

7、BenefitsandRisks67E.PotentialFutureUse68F.ImplementationbyCustoms72 in 2021 4.Biometrics 76A.Whatarebiometrics?76B.CurrentuseinCustomsandbordermanagement77C.Potentialfutureuse79D.Considerationsforestablishingabiometricsprogramme80E.Concernsaboutsecurityanduseofbiometricdata:81F.OngoingprojectsinCust

8、oms83 5.Drones 84A.Whataredrones?84B.Useofdronesforcross-border85deliveryofgoodsC.Regulatoryissues86D.PotentialimpactonCustoms86 6.Virtual,augmented and mixed reality 90A.Whatarevirtualreality,90augmentedrealityandmixed reality?B.Existingpractices92C.PotentialfutureuseinCustoms92andbordermanagement

9、7.3D printing 94A.Whatis3Dprinting?94B.PotentialimpactonCustoms96andbordermanagementIV.Strategy behind technology 100A.Developingandimplementingnew101 technology B.Cooperationwithother103stakeholdersV.Recommendations 104VI.Conclusion 107ANNEX-The case studies 1095Study Report on Disruptive Technolog

10、ies|TheupdatedStudyReportonDisruptiveTechnol-ogies(2022)istheresultofthecollectiveeffortoftheWorldCustomsOrganization(WCO)andtheWorldTradeOrganization(WTO)Secretariatsworking closelywith the Member Customs ad-ministrations,privatesectorrepresentativesandotherstakeholders.TheReportwaspreparedbyMilena

11、Budimirovic,zlemSoysanl,VyaraFilipo-vaandLesegoMmolaifromtheWCOandEmma-nuelleGanneandSheriRosenowfromtheWTO.ResearchassistancewasprovidedbyZakariaIm-essaoudenefromtheWTO.ThefinalizationoftheStudyReportin2019anditsupdatein2022wasmadepossiblethankstothecontributionsandsupportfrom:AngeloAl-bergo(Italia

12、n Customs),Sara Alsuwaidi(Feder-al CustomsAuthority of UnitedArab Emirates),Ferdinand Amaumo(Kenya Revenue Authority),Audrey Andr(Belgian Customs),Blanca LuisaBarandiaranAsparrin(PeruvianCustoms),ChahidAzarkan(DutchCustoms),NogaBalaban(Wave),KellyBelanger(CanadaBorderServicesAgency),JohnBescec(Inter

13、nationalChamberofCommerce/Microsoft),EltonCarlosBusarello(BrazilCus-toms),JohnByrne(IrishTaxandCustoms),LeonelAlbertoMolinaCabrera(GuatemalaCustoms),MiJangHongyYuangCho(RegionalTrainingCenterKorea),WilsonChow(HongKongChinaCustoms),WooYongChung(KoreaCustomsService),LoreCloots(Belgian Customs),SandraC

14、orcuera(In-ter-AmericanDevelopmentBank),EmmanueldeKerchove(EuropeanUnion,DGTAXUD),PascaleDehon(Canada Border Services Agency),Lies-bethDeprez(BelgianCustoms),Maria-LuisaEich-horst(USCustomsandBorderProtection),JorgeEduardo de Schoucair Jambeiro Filho(BrazilianCustoms),MarceloFiotto(ArgentinianCustom

15、s),Muriel-Gabrielle Franchomme(European Union,DG TAXUD),Mara Fernanda Giordano(Argen-tinianCustoms),BenoitGosselin(CanadaBorderServices Agency),Samuel Greene(US Customsand Border Protection),Frank Heijmann(DutchCustoms),ErickaMarielaBarillasHerrera(Guate-mala Customs),Theo Hesselink(Dutch Ministryof

16、Finance),JuhaHintsa(Cross-BorderResearchAssociation),AlfaIbrahim(NigeriaCustoms),ColmLeonard(IBM),Dr.EdwardKafeero(MnsterUni-versity),InnaKhorsheva(RussianCustoms),GeorgKotschy(European Union,DG TAXUD),AndrLamoureux,(Canada Border Services Agency),SharonLim(GeTSAsiaPteLtd),DanaLorenze(Ex-peditors),C

17、ristinaMartnLorenzo(Usyncro),ToniMnnist(Cross-Border Research Association),MatomeMathole(SouthAfricaRevenueService),MarcoMattiocco(Italian Customs),Ivy Milimo(Zambia Revenue Authority),Marcel Molenhuis(DutchCustoms),JonathanMorten(NewZealandCustoms),GustavoAntonioRomeroMurga(Pe-ruvian Customs),Chand

18、a Mwenechanya(Zam-biaRevenueAuthority),Chun-WahLawrenceNg(Hong Kong China Customs),Shirley Ng(HongKong China Customs),Maureen Ojowi(KenyaRevenue Authority),Abraham Omonya(KenyaRevenue Authority),Frank Orondo(Kenya Rev-enueAuthority),JonathanPage(CanadaBorderServicesAgency),SangyongPark(KoreaCustomsS

19、ervice),MarcusViniciusVidalPontes(BrazilianCustoms),ZahouaniSaadaoui(EuropeanUnion-DGTAXUD),AliyuGaladimaSaidu(NigeriaCus-toms),SaraSekimitsu(JapanCustoms),LatifaAlShamsiandMozaAlShamsi(DubaiCustoms,Unit-edArabEmirates),WeijianShao(ChinaCustoms),MichaSlegt(DutchCustoms),AdamSulewski(USCustomsandBord

20、erProtection),KeithTan(Sin-gaporeCustoms),RaoulTan(PortofRotterdamInternational),AndreaTang(InternationalFeder-ationofFreightForwardersAssociations,FIATA),TaksachanTangsuphoom(ThailandCustoms),An-gie Teo(Singapore Customs),LuceliaTinembart(International Federation of Freight ForwardersAssociations,F

21、IATA),HelenTse(HongKongChi-Acknowledgements6|WCO/WTO naCustoms),SamsonUridia(RevenueServiceofGeorgia),Rafael Mallea Valdivia(Peruvian Cus-toms),AlfredoVolpicelli(Italian Customs),CarolWest(InternationalFederationofCustomsBro-kers Associations,IFCBA),Stella Wong(HongKongChinaCustoms),YuriYanai(JapanC

22、ustoms),KayRenYuh(Info-communicationsMediaDevel-opmentAuthorityofSingapore).ThanksalsogotoalltheCustomsadministrationswhorespondedtotheWCOs2021AnnualCon-solidatedSurvey,andthuscontributedtoboththeWCO/WTOpaper“TheRoleofAdvancedTech-nologiesinCross-borderTrade:ACustomsPer-spective”andtothisStudyReport

23、.The updated Study Report on Disruptive Technologies(2022)is the result of the collective effort of the World Customs Organization(WCO)and the World Trade Organization(WTO)Secretariats working closely with the Member Customs administrations,private sector representatives and other stakeholders.7Stud

24、yReportonDisruptiveTechnologies|Foreword by the WCO Secretary General Understandingtheneedtokeepabreastofdevel-opmentsinthefieldofdisruptivetechnologiesandtoseektounderstandthechallengesandoppor-tunitiestheybringtoCustomsandborderman-agement,wearepresentinganupdatedversionoftheStudyReportonDisruptiv

25、eTechnologies.Inthethreeyearssinceitwasfirstpublished,ithasservedasanimportantsourceofinformation.However,consideringthenumerouspilotprojectsandprogressthathasbeenachievedinthemean-time,webelievethetimeisrighttoprovideanupdatetoensurethatMembers,thetradingcom-munityandotherstakeholdersarewellinforme

26、dabout the latest developments on the ground,thatcanfurthersupportimplementationofWCOstandards,suchastheRevisedKyotoConvention.IampleasedthattheStudyReportcomesasare-sultofafruitfulpartnershipwiththeWorldTradeOrganization(WTO),withwhichwehavelong-standingcooperationinmanydifferentfields,andmostrecen

27、tlyinthefieldofdisruptivetechnolo-gies.Customs,eventhoughanimportantinterna-tionaltradestakeholder,isneverthelessonlyonestakeholderintheglobalsupplychain.InsightsonthetechnologiesusedtodigitalizeglobalsupplychainsisanindispensablepartofthediscussionsarounddigitalizationofCustomsandborderman-agementa

28、ndmustbeviewedwithinabroaderframeworkofpaperlesscross-bordertrade.The2022StudyReportbuildsontheonepub-lishedin2019withlessonslearntandnewexpe-riencesgained.InthespiritofCustoms-Businesspartnership,andpublic-privatepartnershipmorebroadly,wehaveprovidedcasestudiessubmittednotonlybyCustoms,butalsobythe

29、privatesec-tor.Thetimeisripetoconsideralloptionsandtheoverallcontextbeforeoptingforthemostsuitablesolutions.TheWCOhasdedicated2022toscalingupCus-tomsDigitalTransformationbyembracingadatacultureandbuildingadataecosystem.Iamcon-fidentthatthisStudyReportwillcomplementtheWCOsextensiveeffortsinbuildingad

30、ata-drivencultureinCustoms.“Insights on the technologies used to digitalize global supply chains is an indispensable part of the discussions around digitalization of Customs and border management and must be viewed within a broader framework of paperless cross-border trade.”Dr.Kunio MikuriyaWCO Secr

31、etary General8|WCO/WTO Weliveinatimeofrapidtechnologicalchangethathasthepossibilityofprofoundlyalteringtheconductofinternationaltrade.Formanypeo-plekeepinguptodatewiththelatesttechnol-ogyandfullyunderstandingitsimplicationscanbedaunting.Thisreportwillhelpilluminatetheso-called“disruptivetechnologies

32、”thataremostrelevanttobordermanagement,aswellasassistgovernmentstobetterunderstandthechalleng-esandbenefitsoftheirusebyCustoms.Technologiesofthekindreferredtointhispublica-tionholdenormouspotentialtoaidgovernmentsinefficientandeffectiveadministrationofWTOtraderules.Asthispublicationshows,ourMem-bers

33、havefoundthattheuseofblockchainandtheinternetofthingscanplayaninstrumentalroleinimplementingtheWTOTradeFacilitationAgree-ment,forexample,throughimprovedtransparen-cyandinter-agencycooperation,andtheuseofdataminingformoreeffectiveriskmanagement.Thesetechnologiescanalsoenhanceadministra-tion of health

34、 and safety requirements throughbetter monitoring the movement of perishablegoodstodetectandavoidspoilage,andtheycanenableimplementationofelectroniccertificationsuchase-Phytocertificatesinamoreefficient,se-cureandtrustedmanner.Inaddition,thesetech-nologiescanallowCustomsandotheragenciestocapturemass

35、iveamountsofdatathatcanbeusedtosupporttheadministrationoftraderules.TheWTOisverypleasedtohavethisopportuni-tytocollaboratewiththeWCOonthispublica-tion.BothofourorganizationsareinterestedinprovidinginformationtoourMembersabouttheimpactofdigitaltechnologiesontradeanditsad-ministration,theopportunities

36、theyopenandthechallengesthatstandonthewaytotheirbroaderadoption.TogetherweareinauniquepositiontogathertheexperienceofourMemberstoprovideaglobalpictureoftheuseofthesetechnologiestoenhancebordermanagement.IhopethatthispublicationwillprovideausefulresourcetoinformpolicydebateandguideMem-bersonhowtheymi

37、ghtharnessthebenefitsofthese technologies.Foreword by the WTO Director General“Technologies of the kind referred to in this publication hold enormous potential to aid governments in efficient and effective administration of WTO trade rules.”Dr.Ngozi Okonjo-IwealaWTO Director General9Study Report on

38、Disruptive Technologies|Background10|WCO/WTO Based on the proposal submitted by theWCOPermanentTechnicalCommittee(PTC)delegates,theFutureofCustomstopicwaslaunchedatthe207th/208thSessionsofthePTCinMarch2015.ThiscameasaresultofdiscussionsontheroleofthePTC,whereitwasagreedthattheCommitteewouldtakeamore

39、activeroleindiscussingstrate-gicmattersandfuture-orientedtopics.TheMarch2015PTCdiscussednewandemerg-ingthreats,andhowthesewouldaffecttherolesandresponsibilitiesofCustomsinthefuture.ThediscussionsresultedintheestablishmentofaVirtualWorkingGroupontheFu-tureofCustoms(VWGFC)underthePTC,consistingof Cust

40、oms administra-tions,the private sector,internationalorganiza-tionsandacademia.TheGroup,whichconsist-edofoverthirtyMembers,worked on papers thatsteereddiscussionsinthePTCmeetingsonanum-beroftopics,suchastheCustomsinthe21stCen-turystrategicdocument,3Dprinting,drones,bi-ometrics,theInternetofThings(Io

41、T),etc.At its 215th/216th Sessions inApril 2017,thePTC discussed theway forward for the Group,twoyearsafteritsestablishment,toensuremorefocused and results-oriented discussions.Con-sequently,andbearinginmindtheimportanceofexploringnewandemergingtrendsforsuccessfulpolicymaking,thePTCdecidedthattheGro

42、upwould,amongstotherthings,focusonexploringdisruptivetechnologies,whichweregraduallybe-comingpartofpeopleslives.However,thebene-fitsofthesetechnologiesforCustomsandbordermanagementhadnotyetbeenfullyexplored.It was therefore deemed relevant to carry outfurtherexploratoryworkandresearchonthesetopics,a

43、ndtoprovidemoreinformationontheiruse,benefits,risksandroleinthesupplychain,inCustomsetc.Theaimwasalsototakeintocon-siderationtheinterlinkagesbetweenthedifferenttechnologiesandtogainamoreholisticpictureofhowtheyimpactorsupportCustomswork.ThePTCmovedontothedevelopmentoftheStudyReportonDisruptiveTechno

44、logies,collatingalltheworkalreadycarriedout,includingpapersdeveloped by a num-berofitsMembers,and,more broadly,bringingtogether relevant open-source information,aswellastheoutcomesofdiscussions in the PTCandotherWCOworkingbodiesandmeetings,in-cludingtheWCOITCon-ferences.The first version of theStudy

45、 Report was pub-lishedin2019,andhadthe objective of raisingawareness within the Customs community of the latest technologiesandtheirpotentials,providingpracticalexamplesandcasestudies,butalsosharingsomemoreas-pirationalandinnovativepropositionsontheiruseinthefuture.Bearinginmindthefluidityofthetopic

46、,theStudyReportismeanttobealivingdocument,tobeup-datedonaregularbasistoincludelessonslearntand recommendations stemming from ongo-ingdiscussions.Hence,this2022versionoftheStudyReportincorporatessomeofthedevelop-mentsandfindingscollectedinthecourseofthepastthreeyears.The first version of the Study Re

47、port was published in 2019,and had the objective of raising awareness within the Customs community of the latest technologies and their potentials,providing practical examples and case studies.11Study Report on Disruptive Technologies|BackgroundInearly2021,theWCOpartneredwiththeWorldTradeOrganizatio

48、n(WTO)intheworkondisrup-tivetechnologies,whichresultedinthecollectionofsurveyresultsontheuseofparticulardisruptivetechnologiesbyCustomsandthedevelopmentofajointpaper,“TheRoleofAdvancedTechnologiesin Cross-border Trade:A Customs Perspective”,thatissummarizedinmoredetailbelowinthesectiononjointWCO-WTO

49、initiatives.Duringthecourseof2021and2022,twoTECH-CONsandanumberofWCOregionalworkshopsondisruptivetechnologieswereheldwiththeaimof further raising awareness of the possibilitiesthesetechnologiesofferinfacilitatingandbettercontrollingthecross-bordermovementofgoodsthroughthesharingofrecommendationsandl

50、es-sons learnt.Theresultsofthesurvey,thepaper,andthere-gional workshops have been incorporated intothisupdateoftheStudyReport,whichhasbeencarriedoutjointlybytheWCOandtheWTO.Lastly,the case studies from the 2019 versionwereupdated,whererelevant,orremovedifcon-sidered redundant.New case studies that d

51、e-scribesomeofthelatestprojectsusingdisruptivetechnologieswereprovidedbyMembersandoth-erstakeholdersandannexedtotheStudyReport.12|WCO/WTO Executive Summary13StudyReportonDisruptiveTechnologies|Executive SummaryI.Introduction:disruptive.or(just)emerging technologies?Therehasbeenasignificantuptakeofdi

52、sruptivetechnologies,inparticularblockchain,theInternetofThings,artificialintelligenceandmachinelearn-ing,sincetheStudyReportwasfirstpublishedin2019,includingintheCustomsdomain.However,therearestillopportunitiesforbroaderimplemen-tation,whichiswhytheWCO,theWTOandoth-erstakeholdersarelookingintothese

53、andothertechnologies,withaneyetowardsidentifyingthekeybenefitsforsupportinginternationaltradeandeconomies more broadly,as well as identifyingwaysinwhichtheycanassistCustomsadministra-tionsinfulfillingtheirobjectives,suchasensuringtradefacilitation,safety,security,andfairrevenuecollection.Numerousini

54、tiatives,includingwebi-nars,online conferences,policy documents andcapacitybuildingwork,havebeencarriedoutbyboth organizations in thepastthreeyearswiththeaimofsupportingtheirMember-shipsintheseendeavours.II.Holistic use of technologies for Smart Customs of the future2021hashighlightedthecrit-ical ro

55、le that Customs playinenablingglobaltrade.Tomake global supply chainsofthefuturemoreefficient,SmartCustomshavetomin-imizeCustomsclearancetimeandcosts,whilein-telligentlymanaginginboundandoutboundgoodsandvehicles.Disruptivetechnologiesneedtobeusedincombination.Furthermore,numerousel-ementssuchascyber

56、security,datacollaboration,identifiersandothersneedtobeconsideredwhenimplementinginnovativesolutions.III.The technologies1.Blockchain technologyBlockchainspotentialtofacilitateCustomspro-cesses is multifaceted,from Customs clearancetointer-agencycooperation,certification,identitymanagement,complianc

57、emanagement,revenuecollectionandpost-clearanceaudit.Throughthistechnology,thesamecopyofaledgerisinstant-lyavailabletoallpartiesatdifferentnodesinthemost updated,trusted,secure and immutablemanner,obviatingtheneedtomaintainseparateledgersbyeachpartyasperthecurrentpractice.Consideringthepotentialofblo

58、ckchain,theWCOandtheWTOhavebeenexploringtheuseofthistechnologyintheCustomsdomainforthelastfewyears.Accordingtotheresultsreceivedthroughthe WCOs 2021 Annual Consolidated Survey(ACS),blockchainanddistributedledgertechnol-ogy(DLT)isstillinanexperimentalphaseforCus-toms,witharoundathirdofCustomsauthorit

59、ieswhorespondedtothesurveytestingitthroughproofs of concept(22 Members)and pilot pro-jects(15Members)usingmainlyprivate(permis-sioned)blockchains,whileonlytwoCustomsad-ministrationshavereportedafulldeploymentofthistechnology.26Customsauthoritieshaveplansforthistechnologyinthenextthreeyears,whileanot

60、her45haveindicatedthattheyhavenoplansinplaceforitasyet.2.Internet of ThingsStatista estimates that,by2025,theInternetofThings(IoT)willbemadeupofover30billiondevicesworldwide(morethanfourdevicesperperson).Customscanworktowards strengthening co-operation with certain stakeholders(shippers,carriers,for

61、wardersetc.)thathaveemployedIoTapplications,with aview to promptly obtaininganyinformationthatcorrespondstocertainriskfactors.Thus,Customsadministrationswouldbeabletofocusonusinganalyticaltoolstoidenti-fy high-risk and low-risk shipments and supplychainsbasedoninformationcollectedthroughIoTtechnolog

62、y.ThefactthateverythingthatisconnectedtotheInternetorinteractingwithitcanbegeo-locatedisnowanimportantnewparameterwhichmayalsoprovidenewopportunitiestoCustoms.HalfoftherespondentstotheabovesurveyindicatedthattheyusedIoTinCustomsbusinessprocess-es,and9percentplannedtodeploythem.How-ever,asmanyas40per

63、centhadnoplanstouseTo make global supply chains of the future more efficient,Smart Customs have to minimize Customs clearance time and costs,while intelligently managing inbound and outbound goods and vehicles.Disruptive technologies need to be used in combination.14|WCO/WTO Executive Summarythetech

64、nology,fornow.Ofthe72respondentsdeployingIoT,themajorityindicatedthatthiswasinrelationtoX-rayorcomputedtomography(CT)scanning,andsignificantnumbersusedQRcodeand barcode readers,automated licence platereadersandcameras,aswellaselectronicseals(e-seals).3.Big data,data analytics,artificial intelligence

65、 and machine learningUse of big data,data analytics,artificial intelli-gence(AI)andmachinelearning(ML)inCustomsandbordermanagementpresentsatremendousopportunity in the cross-border movement ofpeopleandonthecommercialside.Ashugevol-umesofdataaregeneratedbypeopleandgoodsmovingacrossborders,thisgroupof

66、technologiesprovidestheabilitytomakesenseofthishugeandever-increasingamountofdata.Thesetechnolo-giescanbeusedtoingestthisdata,andtodetectandpredictpatternsmoreaccuratelythanhumanscan.Visual search and facialrecognition technology,andbehavioural and predictiveanalyticsthatarealreadybe-ingusedinothers

67、ectors,canalsobefurthertailoredforuseinCustomsandborderman-agement.AccordingtotheWCOsACS,almost 45%of Customs au-thoritiesuseeitherdataanalyt-ics,orAI/ML,orboth.Thereare numerous case studiesthatarefocusedonriskman-agement and targeting,im-proving tariff classificationand revenue collection,fighting

68、 fraud includingundervaluation,advanceanalyticsforAuthorizedEconomicOperators(AEO),andmanymore.4.BiometricsGovernments and organizations all around theworldarechoosingbiometrictechnologytocom-batidentityfraudandsecuritybreaches,secureconfidentialdata,reducecostsandimproveover-alluserexperience.Biome

69、tricsisarapidlygrow-ing field in the information technology sector,withfingerprintrecognitionexpectedtoremainthemostdominantformofbiometrictechnology.Customsadministrationsareuniquelysituatedtodemonstrateusefulmethodsofinteragencyco-ordination,whichbiometricsrequires.Customsadministrationsalsohaveal

70、onghistoryofcoordi-nationandinteragencywork,astheyenforcelawsandregulationsforpartnergovernmentagencies.Theyareoftenco-locatedwithimmigrationagen-cies,andcanworktopromotetheadoptionandfacilitationofsuchefforts.Customs agencies,other government partnersandprivateactorsshouldmonitorthisfieldclose-lyto

71、identifyadditionaluses,potentiallyforthefollowingpurposes:verifyingidentitiesandcon-trollingtheaccessofCustomsoperators;identi-fyingthedifferentactorsinthesupplychainsuchasCustomsbrokers,freight-forwarders,logisticsoperatorsandothers;etc.5.DronesDronesarealreadyanintegralpartoftheinter-nationaltrade

72、supplychain,pushing regulators to be-comemorecomfortablewith the technology,andthereby developing a legalframeworkthatdeterminesthe conditions in whichthey will operate.Studiesindicate that the integra-tionofdronesinthetradeenvironment can supporteconomic growth.Howev-er,integrating them suc-cessful

73、lyandsafelyrequiresallplayersinthemarkettobepreparedandengagedintheprocesstoensurethatthesupplychaincanfullyrealizethebenefits.Inthetradeenvironment,modesofphysicaldeliveryofgoodsarebeingcontinuallyre-defined.DronesarealreadybeingusedbysomeCustomsadministrations for surveillance and monitoringpurpos

74、es.Some are increasingly using dronesto monitor port areas and coastal regions.Thisinvolves surveillance not only to combat drugsmuggling but also to provide aerial assistance.Aremote-controlleddronewithahigh-definitioncamera for underwater surveillance has alreadybeenusedtogoasdeepas50metrestoperfo

75、rmadetailedscanofaboat.Use of big data,data analytics,artificial intelligence(AI)and machine learning(ML)in Customs and border management presents a tremendous opportunity in the cross-border movement of people and on the commercial side.15Study Report on Disruptive Technologies|Executive SummaryCus

76、tomsneedtomonitor,analyseandcompre-hendemergingdevelopmentsintheuseofdrones,andrelatedregulatorydevelopments,andcomeupwithanappropriatepolicyresponse,togetherwith potential adjustments of Customs proce-duresandrequirementswhereneeded.6.Virtual,augmented and mixed realityAsregardsCustoms,augmentedand

77、mixedreal-itycanbeusedtoprojectvisualassistanceinthephysicalworld,e.g.whencarryingoutaphysicalinspection.Anotherpotentialuseisthevisualizationofbigdatasets.Whenusingmixedreality,datacanbeprojectedinthephysicalworldasdigitalartefactsthatcanbemanipulatedasrealobjects.Theuseofvirtualrealitysolutionsfor

78、CustomstrainingpurposeshasbeensuccessfullyemployedbygovernmentsandtheWCOtoimproveinspec-tors efficiency in identifying prohibited items.Virtualtrainingprogrammesofferinspectorsthechancetohonetheirskillsandknowledgeoftheirdutiesandresponsibilitiesinalow-riskvirtualen-vironment,whilefollowingaprogress

79、ionsystem.7.3D printingAccording to some reportsaround1.4million3Dprint-erswereshippedgloballyin2018,with an estimated 8millionunitstobeshippedin2027.Therearepredictionsthat 3D printing could po-tentiallyhaveamajorimpactontheworkofCustomsinthefuture.Some feel that Customs should be involved inmonito

80、ringthevirtualsupplychain,andtheques-tionhasbeenraisedastohowthiscouldthisbeachieved,includingwhetherexistinglegalinstru-mentsaresufficienttocoversuchresponsibilities.Ingeneral,thecooperationofCustomswithtaxauthoritiesandotherrelevantagencies(possiblyasanewdimensionofcoordinatedborderman-agement)isr

81、egardedasimportantinthisfield.Theimplicationsof3Dprintingfororigin,valua-tion,IPR,andsecurity,andforVATinparticular,havebeenstressedintheWCO.Ithasevenbeenpositedthattheremaybeaneedtoredefinetheterm“goods”inthefuture.Challengesremaininassessingtheoverallimpactof3Dprinters,asstressedbythe2021OECDtrade

82、policyreport.Inresponse,thenewheading84.85foradditivemanufacturing(3Dprinters)wascreatedaspartofthe2022editionoftheWCOHarmonizedSystem(HS2022)andenteredintoforceinternationallyon1January2022,whichwillenablebetternationalmonitoringof3Dprintersandtheirimpactontrade.IV.Strategy behind technologyThereis

83、aneedtoharnessthelatesttechnologiesas traveller and trade growth,including e-com-merce,hassignificantlyoutpacedthetypicalpub-licserviceevolution,challengingourconventionaloperations,programmepoliciesandlegislation.Technologiessuchasblockchain,biometricsandartificialintelligencearemorethanbusinessena

84、-blers,they set expectationsfor our clients and changehowwework.Itisessential,however,tofocustechnolog-ical changes on those key to an organizations mandate,asotherwisethereisariskofovercommitting.Options for the implemen-tation of emerging tech-nologies must be evaluatedbasedontheservicesrequiredan

85、dtheneedsoftheOrganization.Thehighrateoffailureinlarge,multi-yearIT-enabledprojectshasresultedinor-ganizationsmovingawayfromlargeITsystemde-velopmentandinsteadselectingtechnologiesthatcaneasilymigratetonewhardwareinthefuture.Keytothenewmethodologiesusedistheprinci-pleoffailingfast,andrecoveringquick

86、ly.Options for the implementation of emerging technologies must be evaluated based on the services required and the needs of the Organization.16|WCO/WTO Executive SummaryV.RecommendationsTheWCOandtheWTOhaveextensivelyexploredthetopicofdisruptivetechnologies,sharingexpe-riencesanddiscussingthediffere

87、ntprojectsandlessonslearnt.Anumberofpossiblerecommen-dationshavebeenconsideredforpolicymakers.TheyincluderecommendationsonhowCustomsandtheprivatesectorcancooperateinmakingbestuseofdisruptivetechnologiesforthepur-poseoffacilitatingandsecuringtrade.VI.ConclusionThereisageneralunderstandingoftheneedtok

88、eepabreastofthedevelopmentsinthisfieldandcontinuouslyseektounderstandthechallengesandopportunitiesthatthelatesttechnologiescanbringtoCustomsandbordermanagement.Informationonnumerouspilotprojectsandproofsofconcept(PoCs)sharedbytheCustomsadminis-trationsandotherstakeholdersshowtheinterestinexpandingth

89、euseofthesetechnologies,aswellastheconfidenceinthebenefitstheywillbringtoCustomsinachievingitsobjectivesandsupport-ingcross-bordertrade.TheStudyReportwillcontinuetobeupdatedwiththelatestinsightsandinformationonpilots.Drones are already being used by some Customs administrations for surveillance and

90、monitoring purposes.Some are increasingly using drones to monitor port areas and coastal regions.This involves surveillance not only to combat drug smuggling but also to provide aerial assistance.17Study Report on Disruptive Technologies|I.Introduction:“disruptive”or(just)“emerging”technologies?18|W

91、CO/WTO I.Introduction:“disruptive”or(just)“emerging”technologies?When we talk about“disruptive technologies”,what exactly do we mean?According to theCambridgeDictionary,adisruptivetechnologyisa new technology that completely changes thewaythingsaredone.Eventhoughwecannotbecertain which technologies

92、will accomplish thisinthefuture,thepublichasoverthepastyearsbroadly accepted“disruptive technologies”as atermwhichreferstoblockchain,theInternetofThings,artificialintelligence,virtualreality,drones,3Dprintingandothercutting-edgetechnologies,whicharethesubjectofthisStudyReport.The termemerged from an

93、 examination of thefailureofoncedominantcorporations,whenthetechnology their dominance was based uponchanged.The authors Clayton M.ChristensenandJosephL.Bowerintroducedthisideaintheir1995 Harvard Business Review article“Disrup-tiveTechnologies:CatchingtheWave.”Theyex-aminedthehard-disk-driveindustry

94、toillustratetheirpoint.Theyfocusedonthechallengesfacedbyacorporationastheyattemptedtointroduceanewtechnologywhichoftenstruggledagainsttheexistingdominantforceinthemarketplace.Insubsequentwork,itwasarguedthatdisrup-tivetechnologydidnotdisruptatasinglepointintime,butthatwhatwasdisruptivewasthepaththet

95、echnologyfollowedfromafringeproducttothemainstream.Whenwespeakofdisruptivetechnologiesordis-ruptiveinnovationwearenottalkingaboutaneg-ativereactionwithinacertainmarket,butratherthenaturalevolutionoftechnology.Ourlivesareenrichedinmanyrespectsbydisruptivetechnol-ogies.Historyisfulloftechnologiesthatt

96、rans-formedthewaywedobusinessorliveourlives.AccordingtotheWTOWorldTradeReport2018,weareenteringanewerainwhichaseriesofin-novationsthatleveragetheInternetcouldhaveamajorimpactontradecostsandinternationaltrade.TheInternetofThings(IoT),artificialintel-ligence(AI),3Dprintingandblockchainhavethepotential

97、 to profoundly transform the way wetrade,whotradesandwhatistraded.Thiscomesasaconsequenceofanumberofforces.Thepasthalf-centuryhasseenamassiveincreaseinpro-cessingandcomputingpower,anequallyenor-mousdeclineinitscost,andwidespreadadoptionofpersonalcomputers.Thishasbeenaccompa-niedbyanequallyrapidincre

98、aseinbandwidththecarryingcapacityofacommunicationsystemthathasprovedtobeanimportantcatalystfortheswiftgrowthoftheInternetandmobilenet-works.Finally,theabilitytoturnmanyformsofinformationthatonceexistedsolelyinanalogueformintodigitalinformation,andtocollect,storeandanalyseit,hasexpandedenormously.Tod

99、ay,we are also seeing the rise of quantumcomputing,whichharnessesthephenomenonofquantummechanicstodeliverahugeleapforwardincomputationtosolvecertaintypesofproblems.Namely,quantumcomputersandalgorithmsarebeingdesignedtosolvecomplexproblemsthattodays most powerful supercomputers cannotsolve,andneverwi

100、ll.ThesecomplexproblemshavelotsofvariablesinteractingincomplicatedAccording to the Cambridge Dictionary,a disruptive technology is a new technology that completely changes the way things are done.19Study Report on Disruptive Technologies|I.Introduction:“disruptive”or(just)“emerging”technologies?ways

101、,forexample,sortingouttheidealroutesforafewhundredtankersinaglobalshippingnet-workorfindingtheprimefactorsofalargenum-ber.Sincequantumcomputingisgoodforsolvingcertaintypesofproblemsbutnotothers,itisnotexpectedtoreplaceclassicalcomputing,buttoextendandcomplementit.1Customsauthoritiesarekeyactorsinint

102、ernationalsupplychains.TheextenttowhichtheyleveragedisruptivetechnologiestoimproveCustomspro-cessescan,asaresult,haveanimportantimpactoncross-bordertradeprocessesandsupplychainoperations.ThekeyunderstandingmustbehowCustomsreactsnotonlytotheuseoftechnol-ogybyitsstakeholders,butalsohowitutilizestheeme

103、rgenceofnewtechnologieswhichitselfchangesthemannerofconductingbusiness.Thechallenge for Customs administrations,like anyconsumer,isthatthefer-vourwhich surrounds anemerging technology candominateanydiscussionsonreformandrenewal.However,paramount toCustoms administrationsis the ability to ensurethate

104、fficiencyandeffec-tiveness are constantlyimproved,and the latesttechnologies are in mostcases aimed at achievingthese goals.It should also be notedthat disruptive technolo-giescanbeacatalystforstrategicdecision-mak-ing,withanadministrationhavingtoreviewtheemergenceofatechnologyandtomakeastra-tegicde

105、cisiononitsuseintheshorttomediumterm.Having direct frontline interaction withtrade,Customsmustbeawareof,andadaptto,thewaytradeinnovatesanddevelops.Thiscanbeobservedthroughthedevelopmentofsupplychains and the manner inwhich information iscreatedandstored,whichisevidentintheemer-genceofblockchaintechn

106、ologyandthemannerinwhichithascaughttheimaginationofmany.Blockchain technology is a prime example ofwhereaCustomsadministrationmustbeawareofhowtradeisadaptingtoanewenvironment.1 The Quantum Decade,IBM Institute for Business Value,2021,https:/ the detailed examinations containedwithinthisStudyReport,i

107、tisapparentthattech-nologiessuchasblockchainanddistributedledgertechnology(DLT),theInternetofThings(IoT),ar-tificialintelligence(AI)andmachinelearning(ML)haveeitheralreadyhadasignificantimpactonin-ternationaltradeandCustoms,orpromisetodosointhefuture,offeringbothtradeandCustomsadministrations multip

108、leopportunitiestoembraceaddedefficienciesandef-fectiveness.There hasbeenasignificantuptakeofthesetechnologies,inparticularsincetheStudyReport was first pub-lishedin2019,includingin the Customs domain.However,there are stillopportunitiesforbroaderimplementation,whichiswhytheWCO,theWTOand other stakeh

109、oldersare looking into these and other technologies,withaneyetoidentifyingthekeybenefitsforsupportinginternationaltradeandeconomiesmorebroadly,aswellasidenti-fyingwaysinwhichtheycanassistCustomsad-ministrationsinfulfillingtheirobjectives,suchasensuringtradefacilitation,safety,security,andfairrevenue

110、collection.One of the major challenges facing the digitaleconomyisthedigitaldividebetweendevelopedand developing countries.This divide remainswideintermsofaccesstobroadbandservicesande-commerce platforms,quality of infrastructureandlegalframework.Therefore,whatneedstobetakenintoconsiderationaretheca

111、pacitybuildingprogrammeswhichcansupportamorebalancedspreadofadoptionacrosstheglobe.Customs authorities are key actors in international supply chains.The extent to which they leverage disruptive technologies to improve Customs processes can,as a result,have an important impact on cross-border trade p

112、rocesses and supply chain operations.20|WCO/WTO I.Introduction:“disruptive”or(just)“emerging”technologies?a.WCO initiativesPromoting the findings from the Study Report on Disruptive TechnologiesSincetheadoptionoftheStudyReportinJune2019,theWCOhasshareditsfindingsandthecase studies in many different

113、international fo-rums,including with Customs,international or-ganizations,theprivatesectorandacademia.Theaim has been to continuously and consistentlyraiseawarenessofthepossibilitiesandbenefitsofthesetechnologiesforCustomstodayandinthefuture,aswellastopotentiallytriggernewinitia-tives.Ithasbecomeevi

114、dentthatthreegroupsoftechnologiesinparticular,moresothananyoth-ers,wereeitheralreadytransformingtheworkofCustomsorelsepromisingtoplayasignificantroleinitsfuturework,thussupportingthefacilitationandsecurityofcross-bordertrade.Thesetechnol-ogiesareblockchain/DLT,theInternetofThings,andbigdata,dataanal

115、ytics,artificialintelligenceandmachinelearning.Data analytics project(BACUDA)TheBACUDAdataanalyticsprojectwaslaunchedin2019andfallswithintheremitoftheCapaci-tyBuildingDirectorate,withthemainpurposeofguidingMembersinembeddingdataanalyticsintheirorganizations.ItisfundedbyCustomsCoop-erationFund(CCF)Ko

116、reaandiscomprisedofdataanalyticsexpertswhousetheirexpertisetocol-laborateonappliedprojects.TheyproducenewalgorithmsandmethodsspecificallytailoredtotheneedsoftheMembers,inregardtoapplyingdataanalyticsintheCustomsdomain.ByorganizingcapacitybuildingactivitiesthatenableMemberstodeploythesealgorithmsande

117、mbedthemintotheircurrentprocesses,theprojectaimstoprovideintrinsicsupporttotheMembers.Currently,therearemultipleonlinecoursesonthetopicofdataanalyticsinthefieldofCustoms,inadditiontoapracticalintroductiontothemethodsprovidedbytheexpertteam,includingtheDATEalgorithm,whichisusedtodetectfraudulenttrade

118、,andtheHSearchalgorithm,whichaimstorecommendHSCodesafterreceivingthecommoditydescriptionasaninput.Theteamaimstoaddtotheplethoraoftrainingprogrammes.Byaddingmorelanguag-estocourses,thecourseswillbemademoreac-cessibletoawideraudience.Toenrichtheskillsofalreadyknowledgeableparticipantsinthefieldofdataa

119、nalytics,moreadvancedcourseswiththefocusshiftedtowardstheapplicationofnewalgo-rithmsinthefieldofCustomswillbeintroducedinthefuture.Additionally,a scholarship programme is being conductedfor12CustomsanddataexpertsfromeachregionoftheworldincollaborationwiththeSungKyunKwanUniversityinKorea.Thecurricu-l

120、umencompassessomeofthemostrelevanttop-icsinthedataanalyticsfieldandaimstodeveloptheparticipantsintodrivingforcesintransform-ingtheirrespectiveorganizationsintodatadrivenones.Fiveregionalworkshopshavealreadybeenheldatthemanagementleveltoraiseawarenessofdataanalytics.Specificcapacitybuildingactivities

121、tookplaceatthenationallevel,suchasanassessmentofcurrentdataanalyticscapacitiesintheMem-beradministrations,andpilottestsofalgorithms.Thesewereveryfruitfulforboththeexpertgroupand the Members.Further technical assistancetoMembersviadiagnosticmissionsandaccred-itationofexpertswillbeexecutedaccordingtoM

122、emberrequests.WCO TECH-CONsIn2020and2021,duetothedisruptionscausedbytheCOVID-19pandemic,theWCOhelditstechnologyconferencesinavirtualmode.Theso-calledTECH-CONs(2020 WCOTECH-CON and2021WCOTECH-CON)wereanattempttocontinuethesharingofexperiencesontheuseoflatesttechnologies,amongstothers.Therewasgenerala

123、greementthattheuseoftechnologyhadacceleratedsincethebeginningofthecrisis.TheIt has become evident that three groups of technologies in particular,more so than any others,were either already transforming the work of Customs or else promising to play a significant role in its future work,thus supporti

124、ng the facilitation and security of cross-border trade.21Study Report on Disruptive Technologies|I.Introduction:“disruptive”or(just)“emerging”technologies?speakersechoedtheconclusionofconsultingfirmMcKinsey&Company,alongwithmanyothers,who noted that“responses to COVID-19 havespeededuptheadoptionofdi

125、gitaltechnologybyseveralyearsandmanyofthesechangescouldbehereforthelonghaul”.2ThesamehasbeenseeninCustoms.Withso-cialdistancingmeasuresinplace,therehasbeenaneedforcontactlessproceduresandwehaveseenarealmomentumintheuptakeofmanytechno-logicalsolutions,includingthroughtheuseofdis-ruptivetechnologies.R

126、egional workshops on disruptive technologies(2021 and 2022)InMarch2021,theWCOlaunchedaroundofregional workshops on disruptive technologiesaimed at further sharing experiences and dis-cussingthedifferentprojectsandlessonslearnt,and drawing possible recommendations for thefuture,whichhavealsobeenrefle

127、ctedfurtherinthisReport.ThefirstworkshopwasheldintheAsia/Pacificregion,followedbytheEuropeanre-gioninMay,theAmericasandCaribbeanregionin November 2021,and theworkshop for EastAfricanandWestandCentralAfricanregionsinJanuary2022.Theeventsrevealedthatexistingprojectshadprogressedfurtherandnewoneshademe

128、rged,butalsothattheuptakeofthetechnol-ogiesvarieddependingontheregionandthelevelofdevelopment.2 https:/ initiativesPublications and eventsOverthelastfewyears,aseriesofWTOeventsandpublicationshaveexaminedtheinterplaybe-tweendigitaltechnologiesandinternationaltradewithaviewtospreadingawarenessaboutthe

129、im-pactofdigitaltechnologiesontrade,fosteringdi-alogueamongMembersoftheinternationalcom-munity,andcatalysingaction.The2018WorldTradeReport(WTR)examinedthegrowingimportanceofdigitaltechnologiesandinparticularoftheInternetofThings,artifi-cialintelligence,3DprintingandBlockchainandhowtheyaffecttradecos

130、ts,thenatureofwhatistradedandthecompositionoftrade.TheReportdiscussed how international trade cooperationcanhelpgovernmentsbothseizetheseopportu-nitiesarisingfromthedevelopmentofthesetech-nologiesandaddressthechallenges.That same year,the WTO hosted a researchworkshoponblockchainandinternationaltrad

131、ein which the WTO publication Can BlockchainRevolutionizeInternationalTradewaspresented,followedupbyaseriesofpanelsontradefinance,Customs and border procedures,and logistics.Theworkshopdrewoninsightsfromavarietyofactorsacrossrelevantsectorstoaddresstheop-portunitiesandimplicationsassociatedwiththewi

132、despreadadoptionofthesetechnologiesinthemoderntradingsystem.With social distancing measures in place,there has been a need for contactless procedures and we have seen a real momentum in the uptake of many technological solutions,including through the use of disruptive technologies.22|WCO/WTO I.Intro

133、duction:“disruptive”or(just)“emerging”technologies?Indeed,althoughdigitaltechnologiescantrans-formthetradingsystemandbringaboutnewlev-elsofeconomicprosperityandgrowth,theyalsoposenewchallengestothemultilateralframeworkraisingquestionsaboutregulation,privacy,dis-tortionstoproductivity,andinequalityas

134、sociatedwiththedigitaldivide.As several WTO publications and events havenoted,digitaltradeandinformationtechnologieshavegivencountriesaccesstomarketsthatwerepreviouslyconsideredunreachable,andconsum-erchoiceshavelargelyexpandedase-commercehasexpandedthevarietyofgoodsavailabletoalocaldemographic.Foll

135、owingtheconclusionofthesecondphaseoftheWTOChairsProgramme(WCP)3,apublication,titledAdaptingtoTheDig-italTradeEra:ChallengesandOpportunities,wasreleasedin2021.Theresearchexaminedhowrapidadoptionofdigitaltechnologies,alongsidedomesticpolicyandgreat-er international coopera-tion,couldoffernewop-portuni

136、ties for economicgrowth and prosperity todevelopingcountries.In2019and2021,theWTOhosted the two GlobalTradeandBlockchainFo-rums which brought to-gether Members of thepublic and private sec-tors,and highlighted thepotentialtransformativeeffectsandchallengesnew digital technologies,notably blockchain,

137、couldbring about in the globaltrade system touchingissuesfromtradefinancetotransportationandlogistics,borderprocedures,andagriculture.Theforumsfostereddiscussionsaroundtheroleofinternationalorganizationsinpromotingaregulatoryandpolicyframeworkcon-ducivetothedeploymentofthesetechnologieswhilemitigati

138、ngtherisksthatmayarise.3 The WCP was a capacity-building project launched in 2010 which sought to enhance knowledge and understanding of the trading system among academics and policymakers in developing countries through research,curriculum development,and outreach activities.The first phase of the

139、programme ran from 2010 to 2013,the second phase ran from 2014 to 2018,and a third phase has been implemented since 2021.TwopublicationsmappingexistingDLTprojectsintradewerereleasedin2019and2020onthemarginsoftheForums.Surveysofkeyactorsinthefieldconductedaspartofthesestudieshigh-lightedtheimportantb

140、enefitsthatDLTcanbringintermsoftransparency,gainsinspeedandeffi-ciency,andreal-timeoverviewoftransactions,aswell as the challenges that this technology raises intermsofstandardization,governanceandregu-lation.Thepublicationsdiscussedongoingworkaimed at creating digital standards relevant fortradetod

141、rivedigitalinteroperability,aswellastheimpactoftheCOVID-19pandemicondigitaliza-tionefforts.Amorerecentpublication,AcceleratingTradeDig-itizationtoSupportMSMEFinancing,investigatedthepotentialofadvancedtechnologies,includingtheInternetofThings,bigdataanalytics,artifi-cial intelligence,quantum computi

142、ng,and DLT,to facilitate small busi-nesses access to tradefinance.Anew(February2022)WTO Secretari-at publication Trade inKnowledge-IntellectualProperty,TradeandDe-velopment in a Trans-formedGlobalEconomy,drawing together con-tributions from diverseset of scholars,analystsandinstitutions,providesin-d

143、epth discussions ofthe measurement,im-pact and regulation ofknowledge flows in theglobal digital landscape,rangingfromglobalvaluechainanalysisinthedigi-talcontexttotheadaptationoftraderulesfortheageofbigdata.Theworkinthisvolumeisprovid-ingthebasisaplatformforfurtherengagementinthisdynamicarea.Digita

144、l trade and information technologies have given countries access to markets that were previously considered unreachable,and consumer choices have largely expanded as e-commerce has expanded the variety of goods available to a local demographic.23Study Report on Disruptive Technologies|I.Introduction

145、:“disruptive”or(just)“emerging”technologies?E-Learning courseTheWTOandInternationalTradeCentrejointlydeveloped an online course on Introduction toBlockchainforTradethatisfreelyavailableandaimed at both technical and non-technical par-ticipants.It consists of four modules:(1)Whyblockchain?;(2)Whatisb

146、lockchaintechnology?;(3)Howcanblockchainbeusedininternationaltrade?;(4)Implementingblockchainfortrade.Work in WTO bodies and facilitiesWTOMembershavealsobeendiscussingtradedigitalizationandtheimpactofdigitaltechnolo-giesontradeinvariousWTObodiesandfacilitiesthatsupportdevelopingandLDCMembers.Members

147、arediscussinginitiativesonelectroniccommerceinboththeCouncilforTradeinServic-es(underthe1998WorkProgramme)andtheJointStatementinitiative.4 Dis-cussions address issuessuch as how to leveragetechnology to bridge thedigital divide;as well asthemeanstofacilitatedig-ital and paperless trade,electronic si

148、gnatures andauthentication,electronicinvoicing,and electroniccontracts.In 2022 and 2023 theTechnicalBarrierstoTrade(TBT)Committee will ex-plore the impacts thattechnicalbarrierstotrademayhaveontradeinin-tangibledigitalproducts(e.g.,artificialintelligence(AI),enterpriseapplications,cybersecurity,fina

149、n-cial technology,health IT,telecommunications,digitalmediasoftware,andsoftwareasmedicaldevices),andhowtominimizethoseimpacts.TheCommitteememberswillalsoshareviewsoncy-bersecurityregulation;digitalsolutionsforcon-formitycertificates;andchallengesandbestprac-ticesforconformityassessmentofgoodsobtaine

150、dthroughe-commerce.4 86 Members are part of the Joint Statement initiative on e-commerce.FundingfromtheEnhancedIntegratedFramework(EIF)hasbeensupportingleastdevelopedcoun-tries(LDCs)toleveragetechnologies,particular-lyfrontiertechnologies,toimproveproductivity,promotee-commerceandfacilitatecross-bor

151、derpaperlesstrade.TheEIFpartneredwiththeUNTechnologyBanktoconductaTechnologyNeedsAssessmentinselectedLDCs,andwithUNESCAPtoconductfeasibilitystudiesontheapplicationofemergingtechnologiesfordigitaltrade.c.Joint WCO-WTO initiativesThe WCO and the WTO have a long-standingpartnershipinwhichthetwoorganiza

152、tionshavecomplementary roles,whereby the WTO setsrulesininternationaltradeandtheWCOdevel-opstherelevantstandardsandtoolsrelatingtoborderformalities.Thetypicalareasofcoopera-tionareinCustomsvaluation,rulesoforigin,andtrade facilitation,whilemore recently the twoorganizations have alsoembarked on nume

153、rousjoint initiatives,such asthose relating to waysto mitigate the effectsof the COVID-19 pan-demic,and in the areaof paperless trade andtechnologies.Both or-ganizations provide ca-pacitybuildingandtech-nical assistance aimedat facilitating trade andCustomsformalities.TheWCOandtheWTOjointlydeveloped

154、apaper“TheRoleofAdvancedTechnologies in Cross-borderTrade:A CustomsPerspective”.ThepaperwasdevelopedbasedontheresultsoftheWCOs2021AnnualConsoli-datedSurveyandmorespecificallyitschapterondisruptivetechnologiesthatprovidedasnapshotof the level of implementation by Customs ad-ministrationsofthethreegro

155、upsoftechnologiesthatalreadyprovedtobeextremelyusefulintheCustoms environment or were promising to begame-changersinthefuture:blockchain/distrib-WTO Members have also been discussing trade digitalization and the impact of digital technologies on trade in various WTO bodies and facilities that suppor

156、t developing and LDC Members.24|WCO/WTO I.Introduction:“disruptive”or(just)“emerging”technologies?utedledgertechnology(DLT);bigdata,dataana-lytics,artificialintelligenceandmachinelearning;andtheInternetofThings.Thispaperintendstoshedlightonthelevelofimplementation,aswellasopportunitiesandchallengesf

157、acedbyCustomsindeployingtheabove-mentionedtechnologies.ThepapermaybeofparticularinteresttothoseWCOandWTOMembersintheprocessofimple-mentingtheWTOTradeFacilitationAgreement,whichaimstoreduceprocessingtimethroughtheuseoftechniquessuchasriskmanagement,Sin-gleWindow,exchangeofCustomsinformation,andauthor

158、izedeconomicoperators,tonamebutafew.Inaddition,thepapermayfurtherassistotherstakeholderstotakewellinformeddecisionsunderinitiativesaimedatfacilitatingandsecuringglobalsupplychains.The WTO also participated in the 2021 WCOTECH-CON and the regional workshops heldduringthecourseof2021andearly2022.Last-

159、ly,the two organizations partnered in updatingthisStudyReportinordertoensurethebroadertradeperspectiveandallrelevantstakeholdersareconsidered,duplicationisavoidedandthebiggestpossiblebenefitsarereapedindevelopingrele-vantprojects.25Study Report on Disruptive Technologies|II.Holistic use of technolog

160、ies for Smart Customs of the future26|WCO/WTO II.Holistic use of technologies for Smart Customs of the future2021hashighlightedthecriticalrolethatCus-tomsplayinenablingglobaltrade.Tomaketheglobalsupplychainsofthefuturemoreefficient,SmartCustomshavetominimizeCustomsclear-ancetimeandcosts,whileintelli

161、gentlymanaginginboundandoutboundgoodsandvehicles.Dis-ruptivetechnologiessuchasIoTdevicesareen-ablingautonomousequipmenttodriveeffectivemonitoringofcargoandtrackingofjourneys.IoTsensorslikesmartsealscanbeembeddedatcriticalcheckpointsinvehiclesandcontainerstodetectfraudandothercrimes,includingtamper-i

162、ng in containers and cargo that is not movingalongapprovedroutes,thusmakingcross-bordermovementssaferandfaster.Customsadministra-tionsarethenabletofocusonusingartificialintel-ligencetoautomatesupplychainsandprocesses,carryoutriskprofiling,andidentifyprioritycargo,andhigh-riskandlow-riskshipments,thu

163、sensur-ingbetterfacilitationandcontrols.AnotherexampleofSmartCustomsisimagerecogni-tionusedinX-rayscreeningmachines and detectors,cargo and vehicle inspec-tion systems,explosivesand drug detectors,wild-lifetraffickingdetectionordangerousliquiddetectors all can use IoT to trackandcommunicatedata.Robo

164、tic process automa-tion(RPA)and low codeautomationallowforrapiddeployment,andthiswasurgentlyneededduringthepandemic.RPAcanhelptospeedupCustomsprocessessuchasdataverification,mimicahumanworkerbyadapt-ingtochangingcircumstances,ordetectandre-solvecommonerrorsthatwouldotherwisetakeupconsiderabletimeand

165、humanresources.RPAallowsforautomationofsimple,repeatabletasksathighvolumes,withmuchgreateraccuracythanhumanscanprovide.Cyber security issuesCybersecuritytechnologiesarecrucialwhende-signing,procuring,implementing and operatingsecure systems for the Smart Customs of thefuture.This is particularly imp

166、ortant given thetrendofconvergenceofphysicalsecurityandITinfrastructureasincreasingvolumesofdataneedtobeprocessedandmovedtodigitalplatforms.Technology,workforce,and budget planningshouldbearcybersecurityinmind.Fieldcommu-nications,videosurveillance,groundsensorsandactuators,remoteandmobilevideosurve

167、illancesystemsorGPShavetobeprotectedfrompoten-tialattacksthatcouldputtheintegrityofanyfieldoperationatrisk,andpossiblyendangerlives.Thismeansverifyingallendpoints.Thatincludesnotonlycontractors,partners,andguestdevices,butalsoappsanddevicesusedbyemployeestoaccessworkdata,regardlessofdeviceownership.

168、IdentityIdentifiers,such as usernames,can be replacedwithIDsthatareself-owned,independent,andenabledataexchangeusingblockchainanddis-tributedledgertechnol-ogy to protect privacyandsecuretransactions.The benefits of decen-tralizedidentityaretheeliminationofredundan-cy and increased trustin an ecosyst

169、em,sincethereisasinglesourceoftruth.Identitytechnologiessuchasbiometricscansand touchless identityverification can play aroleinapost-pandemicscenarioastheycande-creasetheriskofdiseasetransmissionandpro-videaquickerthroughputofpassengersthroughgivencheckpointsduetolesstimebeingtaken.Data collaboratio

170、nData exists in Customs environments in vari-ousformatsonvarioustypesofrepositoriesondifferent clouds aswell as onvarious Customson-premises infrastructures.With the growingdatalandscape,twoofthemostcommoncapa-bilitiesrequiredtomanageaswellasextractvalueoutofCustomsandtradedataaredatacatalogu-ingand

171、datawarehousing.Integratingthesetwocapabilities gives Customs authorities the free-domtoquerydataontheirterms.Disruptive technologies such as IoT devices are enabling autonomous equipment to drive effective monitoring of cargo and tracking of journeys.27Study Report on Disruptive Technologies|II.Hol

172、istic use of technologies for Smart Customs of the futureBydesign,Customshavemultiplestakeholders,eachwithitsowninfrastructureandformats,butitneedstoexchangesignificantamountsofdatainreal-time.Thisinvolvesgainingtransparencyalongthesupplychain.Theevolutionoftradeinadigitalworldcouldberepresentedbyin

173、telligentconnectedtradewin-dows where,with real-time data collaborationachieved,newserviceswouldbeunlockedena-blingbettercapacityutilization,newvaluecrea-tion,costoptimization,andtrustedtransactionsthroughDistributedLedgerTechnology(DLT)andapplicationprogramminginterface(API)datain-tegration,whichpr

174、ovidesupplychainvisibility.Secure data sharing,analytics and governanceSecuredatasharingenablesbigdatasetstobeshared and updated while ensuring that datagovernancerulesareadheredto.Sharingtech-nologiesallowsdataaccesstobegiventonewpartnerswithoutrequiringthemtosetupnewinfrastructure.Data duplication

175、 is reduced oreliminated.Once stakeholders,assets and processes havebeendigitalizeditbecomescriticaltoenabledatacollaborationbetweenalltheseentitiestogener-ateinsightsintotrends,challengesandgaps,aswellascapacityusageandprofitability.Insightscanthenenabletheautomationandoptimizationofprocesses.Animp

176、ortantbuildingblockistheabilitytoperformriskprofiling.Withariskscor-ingforeacheconomicagent,theprocessesre-latedtoCustomsclearanceandtradefacilitationcouldbeautomated.Artificial Intelligence:machine learning and cognitive servicesCognitive services for Customs agencies helpimprovecomplianceandfacili

177、tationbyenablingCustomsofficerstomakebetterdecisions.Dataanalytics for example,automated selectivityrules has become an increasingly importanttoolforCustomsagencies.MLcapabilitieshelpsolvegeneralproblemssuchasanalysingtextforemotionalsentiment,analysingimagestorecog-nizeobjectsorfaces,convertingspee

178、ch(audio)totext,translatingthetextintomanylanguages,thenusingthetranslatedlanguagestogetan-swersfromaknowledgebase.ApplyingvariousAI components can significantly enhance Cus-tomsoperations.Visualsearchandfacialrecog-nitiontechnology,behaviouralandpredictivean-alytics,revenuecollectionmodels,classifi

179、cationofproducts,Customsaudits,risk-basedtargeting,analysingcontainerimagesfromX-rayscanners,logisticsmonitoring,identifyinghigh-riskpassen-gersandvehiclesetc.canallbetailoredforuseinCustomsandbordermanagement.Sharing technologies allows data access to be given to new partners without requiring them

180、 to set up new infrastructure.28|WCO/WTO II.Holistic use of technologies for Smart Customs of the futureHPC as the next maturity level in terms of big data processing in real timeHigh-performancecomputing(HPC)5isacom-pletesetofcomputing,networking,andstorageresourcesintegratedwithworkloadorchestrati

181、onservices for HPC applica-tions.Itincludesnext-gen-eration machine-learningtools to drive smartersimulations and empowerintelligent decision mak-ing.HPCallowsforauto-mated machine learning,auto scaling cloud com-puting,and built-in Dev-Opswhichtranslatesintobigdataprocessinginrealtimethroughtheinco

182、rpo-ration of intelligence andbuildingandtrainingnewAImodelsfaster.Itallowstherunningofverycomplexalgorithmsforriskprofiling,predictionofcargopositioning,aswellasimagerecognitionanddetectionofdifferentanomaliesincargoscans.Modern DevOps:microservicesMicroservices are an architectural approach tobuil

183、dingapplicationswhereeachcorefunction,or service,is built and deployed independent-ly.Microservicearchitectureisdistributedandlooselycoupled,soonecomponentsfailurewill5 HPC is a discipline in computer science in which supercomputers are used to solve complex scientific problems.HPC dramatically redu

184、ces the time,hardware,and cost required to solve mathematical problems critical to core functionality.On the other hand,quantum computing is a fundamentally different approach to computing than the type of computing we do today on laptops,workstations,and mainframes.It will not replace these devices

185、 but,by leveraging the principles of quantum physics,it will solve specific and often very complex problems of a statistical nature that current computers struggle to solve.not break the whole app.Independent com-ponentswork together and communicatewithwell-definedAPIcontracts.Customscanbuildmicrose

186、rviceapplicationstomeetrapidlychang-ingbusinessneedsandbringnewfunctionalitiestomarketfaster.Microservicesprovidemanybenefitsovermonolithicarchitec-tures.Theycanremovesingle points of failure(SPOFs)byensuringissues in one servicedonotcrashorimpactotherpartsofanappli-cation.Individualmicro-services c

187、an be scaledout independently toprovideadditionalavail-abilityandcapacity.De-vOpsteamscanextendfunctionalitybyaddingnewmicroserviceswith-outunnecessarilyaffectingotherpartsoftheap-plication.Usingmicroservicescanincreaseteamvelocity.DevOpspractices,suchasContinuousIntegra-tionandContinuousDelivery,ar

188、eusedtodrivemicroservice deployments.Microservices com-plement cloud-based application architecturesbyallowingsoftwaredevelopmentteamstotakeadvantageofseveralpatternssuchasevent-driv-enprogrammingandauto-scalescenarios.High-performance computing(HPC)allows the running of very complex algorithms for

189、risk profiling,prediction of cargo positioning,as well as image recognition and detection of different anomalies in cargo scans.29Study Report on Disruptive Technologies|III.The technologies30|WCO/WTO III.The technologies1.Blockchain and distributed ledger technology(DLT)A.What is blockchain technol

190、ogy?(DLT)Thetermblockchainisoftenusedinage-nericwaytorefertodistributedledgertechnolo-gy.However,technicallyspeaking,blockchainisonlyonetypeofDLT,onethatcombinestransac-tionsinblocksandlinkstheminalinearmanner.OtherDLTsvalidatetransactions,notblocks,andlinktheminanon-linearway.However,whatallthesete

191、chnologieshaveincommonistheirde-centralizedanddistributedarchitectureandtheuseofadvancedcryptographictechniques.ThisReport,likemanyothers,usesthetermsblock-chainandDLTinterchangeably.Blockchain is a type of so-phisticatedcryptographicdecentralized and distrib-uted ledger architecture,acontinuouslygr

192、owinglistofrecords.Ithasthecapabili-tytomoveanykindofdatasecurelyamongparticipantsinthenetwork(callednodes)onapeer-to-peerbasisand,atthesametime,makeare-cordofthatchange,move-ment,or transaction avail-able instantly,in a trustedandimmutablemannertoallparticipants.Noentitycon-trols it(it is decentral

193、ized)and data is distributed among the participantsinthenetwork(eachparticipanthasacopyoftherecords).Thedecentralizedanddistributednatureofblockchain,combinedwiththeuseofadvancedcryptographictechniques,makesitahighlysecuretechnology.Transactions or blocks added to the ledgerare linked to one another

194、 and time-stamped,making the technology inherently resistant tomodificationofthedata.Datarecordedonablockchaincannotbealteredretroactivelywith-outalteringallpreviousrecords,whichrequirescollusionofthenetworkmajority.Theimmu-tabilitythatblockchainprovides,combinedwiththefactthatrecordsarelinkedtoonea

195、nother,makesblockchainanextremelyusefultechnol-ogytotrackthefullchronologyofevents,e.g.alongthesupplychain.Blockchain was invented by Satoshi Nakamo-toin2008foruseinthecryptocurrencybitcoin,as its publictransactionledger.The invention of theblockchainforbitcoinmadeitthefirstdigi-tal currency to solv

196、ethedouble-spend-ing problem withouta need for a trustedauthority or centralserver.The bitcoindesign has been theinspiration for otherapplications.In recent years,thenumber of projects leveraging the technologyforapplicationsotherthancryptocurrencieshasbeenskyrocketing.Blockchainisnowbeingex-ploredo

197、rusedinareasasdiverseashealth,edu-cation,identitymanagement,voting,foodtrace-ability,transportation,document provenance,tradefinance,andofcourseCustomsprocesses(seeBox1below).Blockchain is now being explored or used in areas as diverse as health,education,identity management,voting,food traceability

198、,transportation,document provenance,trade finance,and of course Customs processes.31Study Report on Disruptive Technologies|III.The technologiesBeyondtheuseofblockchainbyCustoms(seesectionc.ImplementationbyCustomsin2021be-low),manyprojectsleverageblockchaintechnologytodigitizetradedocumentsand,throu

199、ghthis,solvethedouble-spendingissue,tofacilitatethesharingofinformationamongsupplychainstake-holdersandstreamlineprocesses,andtoenhancesupplychainmanagement(seefigurebelow).Manyprojectshavealsoemergedthatuseblockchaintotraceproductsalongthesupplychainwithaviewtoassertingethical,socialorenvironmental

200、claims;providingcustomerswithgreatertransparen-cy;trackingtaintedproducts,orcombattingfraud.Examplesinthisfieldincludeprojectsby:Everledger,whichhasplacedmillionsofdiamondsonablockchaintoverifytheprovenance(originandauthenticity)ofpreciousstonestocurbtheproblemofcounterfeitsandconflictdiamonds.Entri

201、esincludedozensofattributesforeachdiamond,includingthecolour,carat,andcertificatenumber,whichcanbeinscribedbylaseronthecrownorgirdleofthestone;Provenance,acompanywhichenablesenterprisefood,drink,beautyandfashionbrandstoprovetheirsocialandenvironmentalimpact;Source:DLT projects in Trade:Where do We S

202、tand?(2020)Box 1:DLT case studies in international trade32|WCO/WTO III.The technologiesVarious important features make blockchain ausefultechnologytoleverageininternationalsup-plychainmanagement:1.Increased security The decentralized and distributed architec-ture makes blockchain-based systems morer

203、esilient as it eliminates the single point offailure.The use of advanced cryptographic tech-niques makes blockchain highly secure andquasi-immutable.Onceaddedtotheblock-chain,recordsaretamper-proof,i.e.theycan-notbemodified.2.Greater transparencyThefullchronologyofevents(e.g.transactions)thattakepla

204、cearetracked,thusallowinganyonewith access,including regulatory authorities,totraceorreviewpriortransactions,providingafullaudittrail.3.Greater efficiency Blockchainsdecentralizedanddistributedna-tureandtheuseofadvancedcryptographictechniquesallowparticipantstointeractonapeer-to-peerbasis.Itprovides

205、“trust”be-tweenandamongunknownpartiestotrans-actbusinessandexchangeinformationwith-outanintermediary.Theuseofsmartcontracts,puterpro-gramsthatself-executewhencertaincondi-tionsaremet,makesitpossibletoautomatetransactions,thereby further reducing pro-cessing costs.4.Greater compliance Transactions ar

206、e verified and approved byconsensusamongparticipantsinthenetwork,makingfraudmoredifficult.Blockchainsolvesthedouble-spendingprob-lem,making documentary fraud more diffi-cult.Undertraditionalapproachestotradedigitalization,copying and replicating elec-tronicdocumentsiseasy.Keepingtrackofwhopossessest

207、heoriginalcanbecomepar-ticularlycomplexandleadtodouble-spendingproblems.Theimmutabilityandtraceability LVMH,CartierandPrada,whichinApril2021launchedtheAuraBlockchainConsortium,theworldsfirstgloballuxuryblockchain.Eachproductisgivenauniquedigitalidentifierduringthemanufacturingprocessthatisrecordedon

208、theAuraledger,allowingcustomerstoaccessthehisto-ryoftheproduct,includingitsorigin,components,environmentalandethicalinformation,proofofownership,awarranty,andcareinstructions;IBM Foodtrust,whichisapermissionednetworkthatconnectsparticipantsacrossthefoodsupplytoincreasefoodsafety,reducesupplychaineff

209、iciencies,minimizewaste,andenhanceconsumerstrust;Aircraft manufacturerswhichareexploringhowablockchainmighttrackdisparatepartsoftheirjetsastheymaketheirwayfrommachiningshopstothetarmac.SITA,anITsolutionproviderfor90percentofairlines,partneredwithShoCardtodevelopapassengeridentitymanagementappforairl

210、ines.Theappcombinesfacialrecognitiontechnologyandblockchain-baseddatatostream-linepassengerprocessingatairports.Continuation box 1:DLT case studies in international trade33Study Report on Disruptive Technologies|III.The technologiesfeatures of blockchain offer the guaranteethattheelectronicdocuments

211、areauthenticandhavenotalreadybeen“spent.”Byprovidingafullaudittrailoftransactions,blockchainmakescompliancemonitoringeas-ier.Figure 1:What are the blockchain benefits for trade?Greater compliance lessfraud,nodou-ble-spending audittrailthatmakescompliancemonitoringeasierGreater transparency fullchron

212、ologyofeventsIncreased security nosinglepointoffailure immutabilityanddataintegrity technicallyhighlysecureGreater efficiency peer-to-peerinteractions,greatertrust automationthroughsmartcontractsBlockchain is a useful technology to leverage in international supply chain management.34|WCO/WTO III.The

213、 technologiesSource:Digital McKinsey6Blockchainscanbepublic(thereisnocentralenti-tycontrollingthenetworkandeveryonecanreadandwriteontheledger)orprivate(asingleentityoragroupofentitiesconsorti-um-managesthenetwork).Inaddition,participationinthenetworkcanbesubjecttocertainconditionsper-missionedblockc

214、hainsoropen to anyone permis-sionless blockchains.An in-creasingnumberofprojectsareusinghybridapproachesthat combine componentsof both public and privateblockchains,tobenefitfromthehigherlevelofsecuritythatpublicblockchainsofferandhigherscalabilityofprivateblockchains.Mostprojectslaunchedinrelationt

215、otradeandCustomsarepermissionedorhybridblockchains.76 B.Carson,G.Romanelli,P.Walsh,and A.Zhumaev(2018),“Blockchain beyond the hype:What is the strategic business value?”,McKinsey&Company,Digital McKinsey,https:/ on 13 January 20197 WCO-WTO paper“The Role of Advanced Technologies in Cross-border Trad

216、e:A Customs Perspective”,2021With the blockchain technology,efficiencies inthesupplychaincanbeimprovednotonlyinthereductionofintermedi-ariesandpaper/manualtasks but also in im-proving certainty andpredictabilitybasedonthe reliable real-timedataavailabletoallthestakeholders in a sup-ply chain partici

217、patingin a blockchain.Thisallows for traceabilityandend-to-endvisibili-ty,thusenhancingsup-ply chain security andfacilitation.To beginwith,however,itwouldbenecessarytomapthedataelementsatdiffer-entpointsintimetodemonstratewhattheinputsareandatwhatlevel,aswellaswhattheoutputsare,perhapsatdifferentlev

218、els.Figure 2:Blockchain opportunities by industrial sector Although blockchain technology presents interesting features in terms of security,immutability,transparency,traceability and automation,its wide-scale deployment currently hinges on various challenges.OverallaverageAgricultureArtsandrecreati

219、onAutomotiveFinancialservicesHealthcareInsuranceManufacturing MiningPropertyPublicsectorRetailTechnology,media,andtelecomTransportandlogisticsUtilitiesHIGHImpactLOWFeasabilityHIGHAveragebysector35Study Report on Disruptive Technologies|III.The technologiesSource:IDATE Digiworld 20198Although blockch

220、ain technology presents inter-estingfeaturesintermsofsecurity,immutabili-ty,transparency,traceabilityandautomation,itswide-scaledeploymentcurrentlyhingesonvar-iouschallenges(seealsoBox3).Scalabilityre-mainslimited,existingblockchainnetworksandplatformsdonot“talk”tooneanother,andthereareanumberofunre

221、solvedlegalissues,rangingfromthelegalstatusofblockchaintransactionstothequestionofliability.98 Scientific Foresight Unit(STOA),EPRS|European Parliamentary Research Service,“Blockchain for Supply Chains and International Trade”(2020),https:/www.europarl.europa.eu/RegData/etudes/STUD/2020/641544/EPRS_

222、STU(2020)641544_EN.pdf9 WTO World Trade Report 2018:https:/www.wto.org/english/res_e/publications_e/world_trade_report18_e.pdfItmightalsobeaskedwhetherblockchainsaretrulyimpenetrabletocybersecurityissues.Lastbut not least,implementing blockchain systemscanberelativelymorecostly.Figure 3:Current and

223、future adoption of the case studiesDecentralizedmarketplaceCross-borderpaymentShippingtrackingsystemProofofautenticityBlockchainletterofcreditMaritimeinsuranceE-certificateoforiginEthicalsourcingtrackingBlockchain enabled.CurrentandForeseenAdaptionat202554.543.532.521.510.500PotentialImpa

224、ctonInternationalTradeLow ImpactHigh ImpactMarket readyProof of Concept36|WCO/WTO III.The technologiesSource:Digital McKinseyB.Potential use in Customs and border managementBlockchainspotentialtofacilitateCustomspro-cesses is multifaceted,from Customs clearancetointer-agencycooperation,certification

225、,identitymanagement,compliancemanagement,revenuecollectionandpost-clearanceaudit.Throughthistechnology,thesamecopyofaledgerisinstant-lyavailabletoallpartiesatdifferentnodesinthemost updated,trusted,secure and immutablemanner,obviatingtheneedtomaintainseparateledgersbyeachpartyasperthecurrentpractice

226、.Consideringthepotentialofblockchaintechnol-ogy,theWCOandtheWTOhavebeenexploringtheuseofthistechnologyintheCustomsdomainforthelastfewyears(seeBox2below).Figure 4:Five blockchain mythsMythRealityBlockchain is Bitcoin Bitcoinisjustone-crypto-currencyapplicationofblockchain Blockchain technology can be

227、 usedandconfiguredformanyotherapplicationsBlockchain is better than traditional databases Blockchainsadvantagescomewithsignificanttechnicaltrade-offsthatmeantraditionaldatabasesoftenstillperformbetter Blockchainisparticularlyvaluableinlow-trustenvironmentswhereparticipantscanttradedirectlyorlackanin

228、termediaryBlockchain is immutable or tamper-proof Blockchaindatastructureisappendonly,sodatacantberemoved Blockchaincouldbetamperedwithif50%ofthenetwork-computingpoweriscontrolledandallprevioustransactionsarerewrittenwhichislargelyimpracticalBlockchain is 100%secure Blockchainusesimmutabledatastruct

229、ures,suchasprotectedcryptography OverallblockchainsystemsecuritydependsontheadjacentapplicationswhichhavebeenattackedandbreachedBlockchain is a“truth machine”Blockchaincanverifyalltransactionsanddataentirelycontainedonandnativetoblockchain(eg.Bitcoin)Blockchain cannot assess whetheranexternalinputis

230、accurateor“truthful”thisappliestoalloff-chainassetsanddatadigitallyrepresentedon blockchain Five common blockchain mythscreatemisconceptionsabouttheadvantagesandlimitationofthe technology.1234537Study Report on Disruptive Technologies|III.The technologiesWCOAnexploratorydiscussionwasheldattheApril20

231、17PermanentTechnicalCommittee(PTC)meeting,whereIBMshareditsperspectiveandthepreliminaryoutcomesofthepilot,GlobalTradeDigitization(GTD),whichlatergrewintoTradeLens,ajointventurebetweenIBMandMaersk.Followingthat,thistopicwasdiscussedfromamoretechnicalperspectiveattheMay2017Informa-tionManagementSub-Co

232、mmittee(IMSC)meeting,andinmostoftheWCOtechnologyconferencesandWCOworkingbodymeetingsthatfollowed.TheMay2017IMSCexploredpotentialopportu-nitiesfortheuseofblockchaintechnology,andsuggestedcollectingcasestudiesandoutcomesofpilotsandotheremerginginitiativesconcerningitsuseinregulatoryandsupplychainmanag

233、ementprocesses.ItalsoidentifiedseveralcasestudiesofblockchaintechnologyinCustomsbusinesspro-cessesandoverallsupplychainmanagementforcarryingoutfutureworkthroughengagementwithrelevantstakeholdersandtechnologyexperts/solutionproviders.Furthermore,inJune2018,theWCOissuedResearchPaperNo.45“UnveilingtheP

234、otentialofBlock-chainforCustoms”toidentifypossiblecasestudiesandusesofblockchainforCustomsandotherborderagencies,withaviewtoimprovingcompliance,tradefacilitation,andfrauddetection,whiletouchingonassociatedadjustmentsinlegalandregulatoryframeworks.Theresearchpaperelabo-ratedtheaboveconceptsinmoredeta

235、il.Morerecently,atitsDecember2021meeting,thePolicyCommissionendorsedthelaunchofaFea-sibilityStudyonaGlobalCustomsDataExchangePlatformwhichisintendedtobebasedonblock-chaintechnology.ThisclearlyindicatestheinterestoftheWCOMembershipinmakinguseofthistechnologyanditsbenefits.WTOAresearchworkshopheldatth

236、eendof2018exploredthepotentialofblockchain/DLTtofacili-tatetradefinanceprocesses,transportationandlogistics,andborderprocedures.Anumberofcasestudieswerepresentedtohighlightthepotentialofthetechnology.Theworkshopalsodiscussedchallengesraisedbytheuseofblockchainfortrade.Discussionshighlightedtheneedfo

237、rgreatercoordinationbetweenallstakeholderstoaddressinteroperabilityandregulatorychallenges.Followingthat,twoGlobalTrade&BlockchainForumswereorganizedin2019and2021.The2019GlobalTrade&BlockchainForumprovidedanupdateoncasestudiesaimedatfacilitatinginterna-tionaltradeusingblockchain,intradefinance,trans

238、portationandlogistics,andborderprocedures.Italsoexploredthepotentialofthetechnologyfortradeinagricultureandintellectualproperty,andintroducedthecurrentpatentlandscapeofblockchain-relatedinnovations,itstrends,andnewchal-lengesarising.Asessiononstandardsaddressedwhetherdisruptivetechnologies,including

239、block-chain,mightlowerthecostofcertificationforMSMEsanddevelopingcountriesorwhethertheymightcreatenewbarriers,thechallengesthatmightariseasmanystandardswerebeingdevelopedindifferentorganizations,howregulatorswoulddealwithrisks,andtheneedforcooperation.Theses-siondiscussedexamplessuchasself-drivingve

240、hicles,pharmaceuticals,andagriculture,andhighlight-edtheimportanceofcoherentstandardsdevelopmentacrosstheInternetofThings,autonomoussystems,andblockchain.Discussionshighlightedtheneedformultilateralworkoninteroperability/standardization,theregulatoryframework,awarenessraisingandcapacitybuilding.Thei

241、mportanceoffosteringamulti-stakeholderdialoguewasstressed.Box 2:Discussions on blockchain at the WCO and the WTO38|WCO/WTO III.The technologiesThe2021GlobalTrade&BlockchainForumexploredtheopportunitiesthatblockchainopenstoen-hancetransparencyandefficiencyofsupplychains,anddiscussedissuesrelatedtodig

242、italidentityandtradeandhowtradeagreementscouldbeleveragedtodevelopacommonframeworkfordigitaliden-tities.Speakersalsonotedtheneedtoaccelerateworkonstandardization,andcalledongovernmentstoquicklyputinplaceregulationone-signaturesandelectronictransferablerecords.Continuation box 2:Discussions on blockc

243、hain at the WCO and the WTO39Study Report on Disruptive Technologies|III.The technologiesSource:IBM1010 W.Lehmacher,“Why blockchain should be global trades next port of call”(2017),World Economic Forum,https:/www.weforum.org/agenda/2017/05/blockchain-ports-global-trades/,accessed on 13 January 2019F

244、igure 5:Blockchain a shared,distributed ledgerBlockchainashared,distributedledgercantradethecontainerspaththroughthesupplychainwithexceptionaltransparencyandsecurity.Theflowergrowerreadiestheproductforinternationalshipment.Shipmentinformationisaddedtotheblockchain.As the container awaits transfertop

245、ort,officialssubmitapprovalselectronically.Blockchainconfirmsthetransactionandexecutesasmartcontract,releasingtheshipment.Thecontainerisloadedontotheship.Allpartieshaveend-to-endvisibilityofthecontainersprogressthroughthesupplychain.ThecontainerarrivesatthedestinationportandclearsCustoms.Retailerrec

246、eivestheflowersontimeandsignselectronically.Informationisrelayedbacktothe blockchain.40|WCO/WTO III.The technologiesAsfortheCustomsadministrationsandotherbor-deragencies,solutionsbasedonblockchaincansignificantlyimprovetheircapacityforriskanal-ysis and targeting,thus contributing to greatertradefaci

247、litation.Blockchain technology can potentially be used in Cus-toms business processes tovalidate the transactions/actions of different partiesin the international supplychain through permissionedblockchains-clearly defin-ingroles,responsibilities,levelsofaccess,andvalida-tionrightsforeachparty.Itcou

248、ld equip Customs withthe necessary tools to tack-le problems of compliance,as it provides an unbiasedtoolessentiallydesignedforuploadingandshar-inginformationbetweenunrelatedparties.Thiscanhelpintheend-to-endintegratedsupplychainmanagementinatransparentandtrustedmanner.Goingforward,thefollowingspeci

249、ficcasestudiesinCustomsandborderprocesseshavebeeniden-tifiedforfuturework:Customs declarationCreationofCustomsdeclarationdocumentsisaverycomplextask,involvingmultifariousactivi-ties.Therearechallengesincollating(oftenman-ually)thecorrectinformationfromvariousdoc-uments andvarious stakeholders,such a

250、s salesdata,productinformation,manufacturingdetailsandlogisticsinformation.Owingtooutsourcedservices and distributed data sources,this pro-cessiscumbersomeandinvolvesapotentialriskofnon-compliance.Inmanycases,tradersinvolvethird-partyproviderstohandletheCustomsdec-larationprocess.Blockchainscanhelpc

251、ollectalltheinformationre-quiredfromordering,preparingandshippingtheproductsinacommonledger.Ideally,thiswouldrequiretradedocumentstobeusedinelectron-icformatanddifferentstakeholdersinthesupplychaintobepartofablockchain,allowingforprovi-sionofinformationfromthemostreliablesources.Customscouldautomati

252、callypulltheinformationrequiredforaCustomsdeclarationfromthepri-marysources,whichwouldhavethebenefitofimproveddataqualityandimmutability.Thiswouldprovidebenefitsonthetradersideduetoasignificantreductionintheworkneededtoaccuratelyassemblethepiecesofinformationre-quiredforCustomsprocess-ing,andontheCu

253、stomssidebyreducingthemanualveri-ficationprocessesandhencethe resources required tovalidate declarations.Thiswould lead to faster Cus-tomsdeclarationprocessingandreducedend-to-endlead time,provided data issubmittedinastandardfor-mattominimizetheneedforreconciliation and facilitateprocessing.Thepilot

254、scarriedouttodatehavenotinvolvedasufficientnumberofstakeholderstoallowforpro-cessingofCustomsdeclarationsviaablockchainplatform,butsomeareworkingtowardsthatend(seetheUsyncrocasestudyintheAnnextothisStudyReport).Inter-agency cooperation:exchange of informa-tionThereareseveralchallengesinreceivingadva

255、nceelectronicinformationandsharingitwithothergovernmentagencies.Therecouldbeissueswithdataquality,datanotbeingsubmittedintime,andpotential inadvertent or deliberate mistakes indataduetoitchangingthroughmultiplehands.Blockchains can help overcome some of thesechallenges.Datasharingthrough“permissione

256、d”blockchains(adistributedarchitecture)inatrustedandsecuremannercanhelprealizethevisionofanend-to-end“datapipeline”.Thiskindofblock-chaincanbeoperatedbysupply-chainconsortia,accessedandupdatedbyallparticipants.Cus-tomsandothergovernmentagenciescansecureaccuratedata,rightfromthesource.Given the globa

257、lsecurity environment,and therenewedfocusontradefacilitationwiththeim-plementation oftheWTOAgreement onTradeFacilitation(TFA),thereisagreaterneedfordif-ferent government agencies to cooperate moreeffectively.Blockchainsmayopenupnewpos-As for the Customs administrations and other border agencies,solu

258、tions based on blockchain can significantly improve their capacity for risk analysis and targeting,thus contributing to greater trade facilitation.41Study Report on Disruptive Technologies|III.The technologiessibilities for these different agencies,includingCustoms,toshareinformationandresourcesbyus

259、ing a common distributed technical platform,especially in a Single Window environment11aswellasnewoptionsforcross-borderdataex-change,such as between and among differentSingleWindoworwithinaGloballyNetworkedCustoms(GNC)UtilityBlock(UB).12Thiscouldbeagoodcase study for blockchaintechnologyifallpartic

260、ipantshad a specific identifiercodethroughoutthetrans-actions,bearinginmindthatone of the common chal-lenges associatedwith thisisthattheentitiesareoftengivendifferentnamesbydif-ferentagencies.In a growing digital econ-omy,thistechnologycanalsohelpenhanceco-operationbetweenCustomsandTaxauthoritiesan

261、dtheexchangeofinformationbetweenthem,producingamoreharmonizedapproachtoreve-nuecollection,auditandriskmanagement,aswellastotheissueofCustomsvaluationandtransferpricing.Electronic certification/verification of regulatory requirementsTradersmustcomplywithanumberofrequire-ments,suchasnon-tariffrequirem

262、ents.Thereareincreasingobligationsforproductcertificationinviewofgrowingconcernsaboutproductqualityandsafety.Variouslicences,permits,certificates,andotherauthorizations(LPCO)mayberequiredforCustomsclearance,dependingonthenatureofgoodsandtherelatednationalregulatoryre-quirements.Severalpiecesofdataar

263、eneeded,including,forexample,dataconcerningthecertificationofin-putstoproducts(e.g.intellectualpropertyrights(IPR)of products,IPR of inputs/constituents).11 http:/www.wcoomd.org/en/topics/facilitation/instrument-and-tools/tools/single-window-guidelines.aspx12 http:/www.wcoomd.org/en/topics/facilitat

264、ion/activities-and-programmes/gnc.aspxFurthermore,anumberofassociatedactivitiesarecarriedoutbyvariousstakeholderssuchascerti-fiers,laboratories,producers,regulatorsandcon-sumers.Butoftenthisinformationisnotsharedbetweenallofthestakeholdersconcerned,lead-ingtoaniterativeprocessofinformationgather-ing

265、andcarryingoutthenecessarycertificationandverification.Blockchains can helpovercomesomeofthese challenges through holistic prod-uctlifecycledataman-agement.The com-munity of producers,laboratories,logisticsplayers,regulators,andconsumers can all joinhandsonablockchain,providingasharedprovenance,test

266、ing,certification,licensing,etc.withallrelevantactorshavingfullaccesstoallre-latedinformation.Furthermore,theblockchaincanenabletheim-plementationofelectroniccertificationofLPCO,such as e-Phyto certificates and e-CertificatesofOrigin(e-CoO)inamoreefficient,secureandtrustedmanner.Itcouldensurethatace

267、rtificateisissuedappropriately,andsignedproperlyanddigitallybyavalidregulatory/issuingagency,andatthesametimecouldalsopreventanyaltera-tion/manipulationofthecontentormisuseofane-certificatebyathirdparty.Wehavealreadyseenasignificantnumberofpro-jectsthatareaimedatimplementingelectroniccertificationan

268、dtheirvalidation,suchasinthecaseofe-CertificatesofOrigin.Identity managementBlockchaintechnologycanbeveryusefulintermsofmanagingtheidentityofmultiplestakeholdersandcustomersinasupplychain(particularlyinBlockchain technology can be very useful in terms of managing the identity of multiple stakeholder

269、s and customers in a supply chain(particularly in the e-commerce environment).42|WCO/WTO III.The technologiesthee-commerceenvironment).Bymovingawayfromcentralizeddatamanagement,itgivesuserscontrolovertheiridentity(knownasself-sover-eignidentity)andenablesthemtolimittheshar-ingofidentitydatatowhatiss

270、trictlynecessary.Blockchainenablesmoresecuremanagementandstorageofdigitalidentities.Italsopresentsinter-estingopportunitiestofacilitatetheverificationandmanagementofidentitiesacrossbordersandoffersconcreteadvantagesfortheimplementa-tionofmutualrecognitionagreementsonAEO,forexample,astheCadenaandbcon

271、nectprojectsinLatinAmericademonstrate.Revenue collectionBlockchain technology could enable any inter-mediaryinthesupplychaintocollectrevenueonbehalf of governments,potentially allowing du-tiesandtaxestobeautomaticallytransferredtotherespectiveauthoritiesusingsmartcontracts.Thiscouldbeusefulwhenimple

272、mentingnewmodelsof revenue collection onlow-value and small ship-ments(e.g.vendor collec-tion or intermediary col-lection)inthee-commerceenvironment.Lackoftransparencyalongthesupplychaincausesanumber of concerns,in-cludingthatthepricespaidmightbeaninaccuratere-flection ofthetruevalue,withrepercussio

273、nsonrev-enue.The greater trans-parencyin,andtraceabilityalong,thesupplychainthatblockchain enables couldhelpaddressissuesofundervaluationandmisdec-laration.Compliance managementBlockchaincouldprovetheprovenanceofdata,reducefraud,andenhancevisibilityinthesup-plychain,forexamplebyprovidingaccesstothec

274、ommercial documents,starting with the initialpurchaseorderbetweentheparties.Blockchaincanhelpmitigateandeliminaterisksaroundfoodsecurity,conflictminerals,counter-feitgoods,forcedandchildlabour,corruptionandsoforth.Furthermore,itcanassistinIPRman-agement,providingtransparentprocessesintheregistration

275、ofIPR,associatedauthorizations,en-forcement,andtaxationissues.Post-clearance auditAnotherpotentialcasestudyoftheblockchainisintheauditofCustomsdeclarationsandassoci-ated transactions and documents,in particularsystem-basedholisticauditwithanopportunitytolookintoeachandeverytransactionaltrail(asneede

276、d).Prerequisites to take into considerationToenablethefuture useofthistechnologybyCustoms,including the associated requirementsintermsofinvestments,resourcesandcapabili-ties,thereisaneedfirstlytobecomefamiliarizedwiththetechnology,andthentoexplorewhetherand for what purposesitcouldbeused,aswellas id

277、entifying the min-imum data needed forthe various regulatoryprocesses.Adashboardisneededtoaccessthedata;thiscouldbecon-nectedtotheblockchainplatform through theAPI to allow Customsand other agencies topull the required data.This could offer unpar-alleledconfidenceabouttheprovenanceofdataand enhanced

278、 visibilityinthesupplychain,forexamplebyaccessingthecommercialdocumentsstartingfromtheinitialpurchaseorder.TheWCOandtheWTOwillcontinuemonitoringrelateddevelopmentsonhowtheindustryisusingblockchaintoprovideguidancetoMembersandhelpthemtopreparethemselves,dependingontheirstrategicimperativesandprioriti

279、es.Asfortheuseofblockchainasanalternativepay-ment solution,there arevarious blockchain-en-abled payment solutions(the most well-knownbeing Bitcoin).These solutions were designedtobeequivalenttocash-completelydecentral-Blockchain could prove the provenance of data,reduce fraud,and enhance visibility

280、in the supply chain,for example by providing access to the commercial documents,starting with the initial purchase order between the parties.43Study Report on Disruptive Technologies|III.The technologiesizedandanonymousmonetaryexchanges.Thesefeatures could be easily exploited by criminalstomovemoney

281、around.Inthiscontext,under-standingtheseunregulatedcurrenciesandhowtheyworkisimportantfromarisk-managementpoint of view.However,other electronic pay-mentsolutionsarebeingbuiltonblockchainthatarenotanonymous.Variousbanksandmoneytransferorganizationsarelookingatusingblock-chain technology to create el

282、ectronic paymentsolutionswitharobustregulatoryframework,inwhichtheidentityofanindividualorcompanyismeticulouslyauthenticated.Thishasseveralben-efits:forexample,theblockchaincouldfacilitate,inacoupleofminutes,thenegotiationofcredit,a process which normally takes around two tothreedays.Anincreasingnum

283、beroftradefinanceprojectsalsoleveragetheblockchaintechnology.Mostmajorbanksinvolvedintradefinanceandalargenumberoffintechsandstart-upsarede-velopingblockchain-basedsolutionstofacilitatetradefinanceprocesseslikelettersofcredit,openaccounttransactions,orsupplychainfinance.Blockchainisessentiallyanetwo

284、rk,ratherthanastand-aloneITsystem.Therefore,implementingblockchainforCustomsmaymeanthatCustomsparticipateinanexistingblockchainapplications,orcreateaninitiativetointroduceanewblock-chainapp.Source:Entrepreneur Europe1313 Entrepreneur Europe,9 September 2017:https:/ 6:#8 Steps to build a blockchain s

285、olutionStep 1:FindingtheRightUse-CaseStep 5:Designing the Blockchain InstanceStep 6:ApplicationProgrammingInterface(APIs)Step 7:Designing theUserInterfaceandAdminStep 8:AddingFutureTechStep 2:ChoosingtheConsensusMechanismStep 3:ChoosingthePlatformStep 4:NodesDesign44|WCO/WTO III.The technologiesC.Im

286、plementation by Customs in 2021According to the results received through theWCOs 2021 Annual Consolidated Survey andthe WCO-WTO paper“The Role of AdvancedTechnologies in Cross-borderTrade:A CustomsPerspective”,blockchain/DLTisstillinanexper-imentalphaseforCustoms,witharoundathirdof Customs authoriti

287、es who responded testingitthroughproofsofconcept(22Members)andpilotprojects(15Members)usingmainlyprivate(permissioned)blockchains,whileonlytwoCus-toms administrations(Argentina and Uruguay)havereportedafulldeploymentofthistechnolo-gy.Twenty-sixCustomsauthoritieshaveplansforthistechnologyinthenextthr

288、eeyears,whilean-other45Membershaveindicatedthattheyhavenoplansinplaceyet.Figure 7:Types of blockchain in useNote:Total respondents numbered 44.Figure 8:Stage of adoption of blockchainNote:Total respondents numbered 110.Hybrid20%Permissioned(private)75%Pilotproject 14%Proofofconcept19%Fulldeployment

289、2%Plansinnext3years 24%Noplans 41%Permissionless(public)5%Plans in next3yearsESAEuropeAsiaandPacificPlans in next3yearsPlans in next3yearsNoplansNoplansNoplansPilotprojectPilotprojectProofofconceptProofofconcept6420MENAAMSWCANoplansNoplansNoplansPilotprojectPilotprojectPilotprojectProofof

290、conceptProofofconceptPlans in next3yearsPlans in next3yearsPlans in next3yearsFulldeployment6420AMS-SouthAmerica,NorthAmerica,CentralAmericaandtheCaribbeanEUROPE-EuropeESA-EastandSouthernAfricaMENA-NorthofAfrica,NearandMiddleEastWCA-WestandCentralAfricaAsia and Pacific-FarEast,SouthandSou

291、thEastAsia,AustralasiaandthePacificIslands45Study Report on Disruptive Technologies|III.The technologiesBenefits and challengesMembershaveexpressedthehopethattheuseofblockchainwillallowforbettertransparency,immutabilityandaccessibilityofinformation,anddataquality,aswellasthesharingofrelevantin-forma

292、tion on border management proceduresamongallstakeholders.However,alackofexpertiseandgoodpractices,aswellasassociatedcosts,arecurrentlyposingthebiggestchallengetoitsintroduction.Otherreasonsthatcouldhinderthesuccessofitsfulldeploymentcouldbealackofstandardizeddata-setsusedbygovernmentagenciesandecono

293、micoperators,alackofefficientgovernancesystems,andthepotentialforaproliferationofdifferentblockchainsolutionsthatarenotinterconnected.Despite a certain initial hesitancy,Customs ad-ministrationsarereasonablyoptimisticconcern-ingblockchainspotential;indeed,throughblock-chain,theyhopetoachievegreatere

294、fficiencyandreliabilityintheareasofriskmanagement,reve-nuecollection,andtradefacilitation.Theyarealsocomingtoseetheimportanceofpartneringearlywithindustrytoensurethattheprojectsrealizethebenefitsoftheuseofblockchaintechnologiesinthetradingenvironment,whileatthesametimeaddressingthebarrierstothis.Fig

295、ure 9:Main benefits of introducing blockchainFigure 10:Main obstacles to adopting blockchainNote:Total respondents numbered 87.Note:Total respondents numbered 95.Transparency,immutabilityandaccessibilityofinformationLowerverificationandtransactioncostsSharingofinformationamongstallrelevantstakeholde

296、rsinrealtimeIncreasedavailabilityofinformationfromdifferentsourcesIncreaseddataqualityAutomationthroughsmartcontractsDataprivacySecureITenvironmentEasytousetechnologyLackofexpertiseCostsLackoftractionontheuseofthetechnologybyotherstakeholdersLackofgoodpracticesLackofastandardizeddatasetusedbyeconomi

297、coperatorswithinthesupplychainLackofgovernmentstrategyLackoftrustinusingdatasharingplatformsExistinglegacysystems68525049454373|WCO/WTO III.The technologiesManyissuesneedtobediscussedinviewofthechallengesinbringingblockchaintechnologyintopractice.Theseissueswillstillneedtobeloo

298、kedintoaspartofthemanyongoingpilotprogrammes.Theyincludequestionsrelatingtosecurityandprivacy,forexample.Eachledgeriscryptographicallysecuredsothatpeoplearepreventedfromtamperingwithcurrentandpasttransactions.Thiskindoftamper-prooftransactionrecordhasbecomeasourceoftrustinallthetransactionhistorydat

299、aembeddedinaparticularcomputerizednetwork.Unlikecryptocurrencies(representedbyBitcoin),whoseownersdonotbehaveasindividualswithinthenetwork,otherkindsofblockchainapplica-tionsarenotimmunetothepossibleoutflowofpersonalorconfidentialinformation.InthewordsofaDeloittereport,manysuchapplications“requiresm

300、arttransactionsandcontractstobeindisputa-blylinkedtoknownidentities,andthusraiseimportantquestionsaboutprivacyandthesecurityofthedatastoredandaccessibleonthesharedledger”.Intheory,blockchainshaveanotablesecurityflaw:ifmorethanhalfofthecomputersworkingasnodestoservethenetworktellalie,theliewillbecome

301、thetruth.Thisiscalleda“51%attack”thepotentialdefectofblockchains,interalia,ofBitcointhatcouldoccurparticularlyintheprocessof“mining”.Morespecifically,whenthemajorityofthenetworkscomputingpowerhasbeentakenoverbyanattackeroragroupof)attackers,itispreventedfromspottingandrejectingafraudulentversionofap

302、ublicledger.Anotherconcernrelatestothedecentralizednatureofpublicblockchains;thenetworklacksacen-tralizedoverviewfunctionandthereforehasnoeffectivetrouble-shooterthatwillworkintheeventofacontingency,thusreducingtheresilienceoftheoverallsystem.Inotherwords,eachparticipantcouldsufferdirectlyfromextern

303、alshocks.Thisislessofanissueinthecaseofprivateandconsorti-um-permissionedblockchainswhoseparticipantsareknownandwhosegovernanceruleshavebeenagreedaspartofthedesignoftheplatform.Anotheroftendebatedissueisthequestionofscalability.PublicblockchainslikeBitcoinareoftencriticizedfortheirlackofscalabilityd

304、ueinparttotheconsensusprotocolusedtovalidatetheblocks.Newgenerationsofpublicblockchains,suchasCardano,aretryingtoaddressthisissue.Itisalsoworthnotingthatbecausetheyaremorecentralized,privateblockchainsdonotpresentthesamescalabilitychallenges.Ultimately,achoiceoftenhastobemadebetweenscalability,decen

305、traliza-tionandsecurity.ThisiswhatVitalikButerin,theco-founderoftheEthereumblockchain,calledthe“blockchaintrilemma”,theimprobabilityofablockchainobtainingallthreeofthesethreepropertiesatthesametime.Improvingoneofthesethreeaspectswouldmeanthattheothertwoarelikelytobecompromisedtosomedegree.Interopera

306、bilityisanotherissuethatneedstoberesolved.Inthecontextofsupplychains,blockchainisexpectedtobridgedifferentsupplychainpartiesandprocessestoincreasetheoverallsupplychainefficiency.Theproliferationofblockchainnetworksthatusedifferentdistributedledgertechnolo-giesandaregovernedbydifferentruleshasledtodi

307、gitalislands.Box 3:Other common general concerns raised47Study Report on Disruptive Technologies|III.The technologiesAreas of implementationCustomsauthoritiesareinvolvedinanumberofprojects and Proofs of Concept(PoCs)that areintendedtobringimprovementsinthefollowingareas:(i)informationexchangeandinte

308、roperabili-tyatnationalandinternationallevels(includingatthelevelofCustomsUnions);(ii)thedevelopmentofinternationalSingleWindowinterconnectivity,ensuringpropervalidationofcertificates(includ-ing certificates of origin,quality,sustainability,non-toxicity);(iii)informationsharingonAEOsandwithine-comme

309、rceenvironments;and(iv)ensur-ingaccesstologistics-relatedinformationinviewoftrackingandtracinggoodsalongglobalsupplychains.Numerous advantages have been ob-servedbyadministrationstakingpartinthesepi-lotprojects,suchasexpeditedprocessing,betterdataquality,transactiontransparency,enhancedtargeting,and

310、easieraccesstoimporters.Inothercases,however,Customssometimeslackanin-centivetojoinblockchainprojectsincaseswherethereareinsufficientnumbersofparticipantstoprovidetheinformationrequired.Ongoing projectsMostoftheblockchainprojectsarebeingimple-mentedinEurope,Asia/Pacific,andtheAmericasandCaribbeanreg

311、ions.SomeoftheseprojectsareelaboratedinmoredetailintheAnnextothisStudyReport.IntheEuropeanregion,blockchainisusedforthepurposes of VAT collection,protection of geo-graphicalindications,andcertificationofproductorigin.SeveralongoingpilotprojectsandPoCsarebeingtested.Forexample,theEUMemberStatesareexp

312、loringtheuseofblockchainforthesharingofVATinfor-mationbetweentaxationandCustomsauthoritiesthroughtheSEED-on-Blockchainprojectcoordi-natedbytheEuropeanCommission(DGTAXUD).Furthermore,blockchaincanautomateVATpay-mentsviasmartcontracts,includingpaymentofVATtothetaxauthoritiesandfromthetaxau-thoritiesto

313、acompany,thusacceleratingVATcol-lectionandreducingpaymentdelays.Figure 11:Project areasNote:Total respondents numbered 44.E-commerceIntergovernmentalexchangeofinformationatinternationallevelElectroniccertifications,permitsorlicensingSingleWindowenvironmentRiskmanagementandtargetingAutomatedcustomsde

314、clarationEnd-to-endsupplychaininterconnectivityOther262648|WCO/WTO III.The technologiesInJune2021,Italylaunchedtheblockchainpro-ject TRICK which provides for the certificationofhigh-qualitymanufacturingproducts,withtheobjectiveofplacingonthemarketproductsthathavealreadybeencertifiedatvari

315、ouslevels,fromsustainabilitycertification,withmaterialsderivingfromasustainableeconomy,tochemicalcertifi-cationofnon-toxicity,tocertificationoforiginofthegoods.Georgiahaslaunchedaprojectforissuingandval-idatingpreferentialCertificatesofOriginusingablockchain.IntheAsia/Pacificregion,blockchaintechnol

316、ogyis used to exchange Customs declarations anddocuments,aswell as logistics-related informa-tionwithaviewtotrackingandtracinggoods/partsandtransportunitsthroughoutglobalsup-plychains.ChinaandSingaporeCustomsarecooperatingindevelopinganInternationalTradeSingleWindowInterconnectionConsortiumBlockchai

317、n,exchang-inginformationonclearanceandlogistics/cargostatus,tofurtherleveragetheroleofaSingleWin-dowinimprovingtheportbusinessenvironmentandtradefacilitation.HongKongCustomsisconductingaPoCstudyinapplyingblockchaintoalicencemanagementsystem,whileMalaysiaispilotingtheuseofblock-chaintoprovidemoreeffi

318、cientAEOservices.AblockchainPoCwasconductedundertheaus-picesoftheSingapore-AustraliaDigitalEconomyAgreementtoachievedocumentinteroperabilityforcross-borderpaperlesstrade,allowingfortheissuanceandverificationofCertificatesofOrigin,inaccordancewithaninteroperabilityframework,theso-calledTradeTrustfram

319、ework.IntheAmericasandCaribbeanregion,blockchainistoalargeextentusedtofacilitateinformationexchangeonAEOs,butthereareothercasestud-ies as well.TheCADENAproject,implementedbyCustomsadministrationsofBolivia,Chile,Colombia,CostaRica,Ecuador,Guatemala,MexicoandPeru,andwith the support of the Inter-Ameri

320、can Devel-opmentBank(IDB),allowstheuseofblockchainasaregistrationsystemforAEOs.CADENAisaprojectusingtheLACChainecosystemwhichpro-videsaninfrastructureenablingthedevelopmentof different blockchain-based applications/pro-jectsinLatinAmericaandtheCaribbeanregion.LACChainrepresentsaglobalpublic-privatea

321、lli-ancepromotedbytheIDBInnovationLaboratory.AnotherprojectaimedatexchanginginformationonAEOsisMercosursbConnectProject,whichdeploys Blockchain Private Hyperledger Fabric1.4.ThefollowingMembercountriesarepartofthe bConnect system:Argentina,Bolivia,Brazil,Paraguay,andUruguay.Guatemalaisworkingonthede

322、velopmentofanewmaritimeandairdispatchmodel,whichisbasedonblockchaintechnology,takingasareferencethePortCommunitySystems(PCS).TheprojectaimstoautomateexportsintheCustomsTerminalinSeaPortApplicationPerformanceManagement(APM),and to develop web services for theexchangeofinformationwithotherterminals.Nu

323、merous advantages have been observed by administrations taking part in these pilot projects,such as expedited processing,better data quality,transaction transparency,enhanced targeting,and easier access to importers.49Study Report on Disruptive Technologies|III.The technologiesUnited States Customs

324、and Border Protection(CBP)conductedtheNorthAmericanFreeTradeAgreement/Central America Free Trade Agree-ment(NAFTA/CAFTA)PoCinSeptember2018,whichtestedtheapplicationofblockchaintech-nologyfortheentry/importsummarydeclarationsubmission process for NAFTA/CAFTA entries.Furthermore,inSeptember2019,CBPcon

325、ductedtheIntellectualPropertyRightsPoC,whichtestedablockchaintechnologyinfacilitatingshipmentsbasedonknownlicensingrelationships.In the MENA region,blockchain is used to ex-change Customs declarations and documents,suchasCertificatesofOrigin.Moroccan Customs haslaunched a cooperationproject with DHL

326、 andtheGermanInternation-al Cooperation Agencywithaviewtodevelop-ingaplatformrelyingonblockchain technology forcollectingthedataofeachpartytoaninterna-tional transaction(trad-ers,expressmailservice,Customs,otherstakeholders)andsharingit.The United Arab Emirates and Dubai Customshavedevelopedacross-b

327、ordere-commerceplat-form based on blockchain technology to facili-tate and track e-commerce movements,withinthenetworkofCustoms,e-commercecompanies,ports,couriers,third-partylogistics,freezoneau-thorities,andpermit-issuingauthorities.IntheESAregion,oneMember(Mauritius)hasreportedthatitisdiscussingwi

328、thpotentialsup-plierstheimplementationofaprojectfortrackingCertificatesofOriginusingblockchaintechnology,whileintheWCAregion,Customsauthoritiesarewaitingfortherelevantcapacityandknowledgetobedevelopedbeforemovingforwardwithablockchainagenda.A number of Customs administrations globallyhave partneredw

329、ith theTradeLens consortium,alreadymentionedabove,inordertopilottheuseofitsplatformbasedonblockchaintechnology.Theseare:Azerbaijan,Canada,China,Indonesia,Jordan,Malaysia,theNetherlands,Russia,SaudiArabia,Singapore,ThailandandUkraine.CanadaBorderServicesAgency(CBSA)providedfeedback onthe pilot projec

330、ts carried outwithTradeLens.Theyfoundthat,whiletherewasanincreaseinthevisibilityandtraceabilityofacon-tainer,additionaldatawas limited or not avail-able.As per the CBSAsassessment,the platformcurrently lacks a usefulvolumeofparticipants(specificallycargoowners/vendors,Customsbrokers,and maritime fre

331、ight car-riers).Duetothelimitednumberofparticipantsin-volved in the platform atthetimeoftheCBSAevaluation,andthefactthattheinformationinputbystakeholderswasvolun-tary(thatis,nolegalorregulatoryobligations),theamountofcontentanddataqualitywasincon-sistent and relied entirely upon the submitterstechni

332、calabilitytoprovidesuchinformationandtodosoattheirowndiscretion.Also,whileCBSAhadaninterestinthemovementofcontainersandtheiroriginprovidedbyTradeLens,itwasnottrulytheinformationthatwasrequiredforittoconductits core mission.Border management requiredmore information than was currently availableinTrad

333、eLens,suchasimporterdeclarationsandmanifestinformation,thatgoesbeyondwhatisrequiredtoenablethemovementofgoods.Customs authorities are involved in a number of projects and Proofs of Concept(PoCs)that are intended to bring improvements in many areas.50|WCO/WTO III.The technologies2.Internet of Things(IoT)14 Global IoT and non-IoT connections 2010-2025|StatistaA.What is IoT?TheInternetofThings,orIoT,