Modernizing Customs Procedures with Distributed Ledger Technology: Requirements for Issuing the Certificate of Origin

Abstract

Over the last decades, globalization in manufacturing and in international trade has led to unprecedented complexity in customs procedures. A basic requirement for Customs Authorities is to determine the origin of products and materials/ inputs in order to perform the appropriate customs procedures. This paper investigates the potential of Distributed Ledger Technologies (DLT) to address the challenges of determining correctly the origin of products in order to safeguard the public revenues, accelerate clearance procedures and promote the international trade. The paper analyzes the requirements of the clearance procedures of imports under preferential trade agreements, discusses the unique attributes of DLT and presents DLT implementations in customs procedures and in international trade. Then it provides a requirements analysis and an architecture for the development of DLT-based system for the handling of the origin of products in customs procedures.