The streamlining, simplification and general improvement of trade processes has long been acknowledged as a significant driver of efficiency at national borders. These processes, and the use of modern technology within them, are considered key factors in the reduction of the time and cost of trading in most countries. However, developing countries – and sometimes their developed counterparts – face many challenges in streamlining trade processes using emerging technologies. While this is sometimes due to technical and regulatory difficulties, challenges can also arise from the sheer speed of change within the global trade landscape, lack of technical expertise and resource constraints. Many trade procedures still lack the required simplicity, transparency, compliance and quality assurance that could support traders, sustain Government revenue, broadly reduce the time and cost of trading, and improve the overall trader experience. Furthermore, trade revenue still constitutes a significant source of income for many developing country Governments. But new developments, such as the proliferation of cross-border e-commerce, have presented new challenges on compliance, quality controls and revenue collection. At the same time, new technologies such as blockchain could assist Governments to improve their overall trade processes, while helping to specifically deal with emerging challenges arising from high-volume, low-value trades driven by e-commerce. This could improve overall trade compliance and prevent potential revenue leakages. Cross border trade is becoming a mix of bulk containerized shipments and high-frequency e-commerce – individual items that cross borders at ever higher volumes— making the current trade landscape complex and trade compliance assurance difficult for Governments. Consequently, new technologies are required for Governments to successfully ensure quality controls, manage trade risks and sustain trade revenue. Digital technology – in the form of trade portals, trade reform trackers and single windows – already helps many Governments in significant ways, and blockchain has powerful capabilities that could further empower Governments to build infrastructure resilience, secure their paperless trade endeavours and smoothly process all forms of trade flows, whether bulk containerized trade or e-commerce. The primary technical features of blockchain – such as hash functions, timestamps, smart contracts and default encryption – are well-suited to various trade processes, including risk management, post clearance audits, data protection and process automation. More on the critical features of blockchain and how they can support Governments’ trade facilitation efforts is elaborated in the Global Report on Blockchain and its Implications on Trade Facilitation Performance, published by the United Nations Conference on Trade and Development in 2023. Blockchain is a relatively nascent technology that is considered complex. But there is already prevailing scepticism around the potential returns on investment, and this is coupled with a lack of insight into the proper implementation procedures. There are also general resource constraints around the expertise and funding needed to undertake these implementation processes. Thus, several Governments are not yet investing in building the technology, the technical expertise required, the regulatory environment or stakeholder preparedness to be able to implement it in their trade processes. Leveraging the technology’s capabilities to facilitate trade will require most Governments to put in place a number of regulatory, technical and policy measures for successful implementation and sustainable use. The potential of blockchain for the new age of cross-border trade, however, remains compelling, albeit with some challenges. Challenges exist around the legal and regulatory frameworks, technical incompatibilities with legacy infrastructure, scalability limitations of the technology, data privacy and security concerns, shortage of appropriate talent and expertise, user acceptance difficulties, resource constraints and cost concerns. Both developed and developing countries need to resolve these policy and technical challenges in order to achieve success in the implementation process as well as optimal use of the technology.

Blockchain is a digital database that holds information in a secure and distributed manner with numerous copies saved on many machines. While this creates redundancy, it also increases the resilience of applications built using the technology. The functional security, resilience and reliability of the applications deployed on blockchain are ensured by the strength and dependability of the blockchain itself. They are generally considered shared, immutable databases that facilitate the process of keeping records and tracking these records in real-time and in a shared environment, and thus they can build a trustworthy service in a not necessarily trustworthy environment (Clavin and others, 2020). Stakeholders in a blockchain keep servers/nodes and use them to validate and store data in the form of block-type data structures while inter-stakeholder coordination generates and updates the data through consensus algorithms and the security and integrity of the data is ensured through encryption (Lu, 2019). The code that runs and establishes a blockchain between the many different stakeholder computers ensures security by making unauthorized entries on the ledger very difficult and tampering nearly impossible (Green, 2022). These technical features and functionalities of the technology make blockchain particularly useful for certain Government and industry use-cases, such as supply chain management, trade processing, automation, record keeping, quality assurance, compliance and data protection. Key features of blockchain that can add value and yield efficiency gains in terms of trade facilitation are summarized in table 1.

The Trade Facilitation Agreement (TFA) of the WTO not only sets out obligations for countries to undertake necessary trade reforms but also serves as a key global technical and legal structure that provides significant guidance to countries looking to reduce the cost and time to trade, enhance their competitiveness and reach trade revenue targets. Digital technologies such as trade portals, single windows and reform trackers are generally implemented in the context of TFA provisions and have helped many countries meet TFA obligations. Harnessing the key technical functionalities of blockchain could help countries towards their TFA ambitions as well. Table 2 presents some of the functionalities of blockchain that are relevant to TFA provisions.

Thus, the three broad considerations in implementing blockchain technology to support Government trade processes comprise architectural design, stakeholder coordination and regulatory compliance. Once a Government has determined that it needs a blockchain-based system for certain trade processes after undertaking a needs assessment and has ascertained the country’s preparedness for the implementation of the technology through a readiness assessment, the Government’s implementing body must make important decisions around technical considerations, options and trade-offs in relation to the system’s design and architecture and the governance of the implementation process. Alongside this, a policy and regulatory environment that will support the implementation process must be built. Technical design choices will largely consider trade-offs around sovereignty, security, performance, feasibility, reliability, value addition and sustainability. These technical choices may also influence some aspects of the policy and regulatory choices. Some of the key questions for the implementing body to consider include:

• What kind of blockchain should be used for trade facilitation applications? Should a public permissionless blockchain be used or should the Government deploy its own private, sovereign blockchain?
• What are the cost considerations of these design options?
• If the Government wishes to deploy its own private blockchain, would it be feasible, reliable and sustainable in the context of existing infrastructure and the regulatory and policy environment or would some adjustments be needed?
• What policy, regulatory and infrastructure adjustments or overhauls would be needed in the existing environment for the technology to function optimally?
• If the Government chooses to build trade facilitation applications on a public permissionless blockchain network, would the Government be prepared to give up sovereignty and control over certain trade data?
• What kind of public permissionless blockchain systems already exist that could be well-suited to the envisaged trade facilitation use-case, if any?

Though potentially more cost-effective, public blockchain networks can bring both data sovereignty challenges as well as uncertainties around the transaction cost of recording data on the blockchain. Using a shared permissioned blockchain as in the case of regionally focused blockchain network, LACChain, also means full sovereignty over the network is not guaranteed even though cost of implementation could be minimal. This second option may require the Government to only design and operate a user-facing portal/applications on the shared consortium/regional blockchain together with regional counterparts. Lastly, if a Government builds a private blockchain, the Government will be required to run and maintain infrastructure to keep the network live at all times, in addition to bearing the associated operational and maintenance costs of the trade facilitation applications. This third option though could be costly, allows the Government great flexibility to choose the network features as may be suitable for its use in trade facilitation and beyond. Furthermore, this option, at the minimum, requires reliable electricity and internet connection to be secure and useful. Unfortunately, in most developing countries these two pre-existing conditions cannot be guaranteed. Thus, while building a private blockchain requires developing and maintaining the entire architecture, which could comprise the components shown in figure 1, building on a public permissionless blockchain or on a shared permissioned blockchain may only require the Government to build and maintain the user portals, business logic and host front-end data.

Thinking about the use-cases beforehand will help the Government choose the specific type of public or private blockchain required and make the right trade-offs around speed, security, reliability and sustainability. In any case, it is critical that the Government adopts a process that will cause the least disruption to existing trade processes and that it implements the blockchain in a controlled environment before going into production. As shown in figure 2, the development and deployment process should be sequenced as follows: design, proof of concept, pilots, beta testing, limited user access and final deployment. Lessons from each stage should be fully incorporated into the final product before full deployment, and each step should cover all the basic elements of a fully functioning and usable blockchain, including the application flow, the business logic and the middleware, as well as the user facing portals and interfaces that allow users to interact with the blockchain logic to deliver the intended trade facilitation processes, flows and user expectations. Finally, user credentials can be created and entered at the portal level or business logic level with various rights and access controls. The business logic and middleware (in other words, the smart contracts stored on the blockchain) can be programmed to have different pathways depending on the credentials of the user that logs in. This should grant different levels of authorization, rights and privileges to the user and should allow for multiplicity of use and user interactions within the same portal, as well as the compartmentalization of various logics and access rights based on the user type, user needs and user demands. Based on user-specific login details and taking cues from the stakeholder credentials during login, the smart contracts could be designed to render different business logics to the user portal and grant different user rights based on the stakeholder type, need and/or level of authority within the Government. This aspect, which is largely a policy, regulatory and compliance issue would be mainly informed by Government processes, stakeholder coordination mechanisms and leadership dynamics within the Government. Figure 3 demonstrates how multiple functionalities are possible using a multi-user interface or portal that could be built and supported by back-end blockchain. Such a set-up could give traders the opportunity to submit trade declarations while supporting customs officers to review, validate and approve the declarations.

Blockchain can be implemented in many ways either for a single use-case or for multiple use-cases. While the implementation could take many approaches in respect of technical considerations and trade-offs, the standard procedures, processes and methods of design, development and deployment do not differ significantly in the context of best practice. The key technical steps of implementation include identifying the use-case, testing, integrating portals and user interfaces, integrating the blockchain with existing infrastructure, and security protocols. Figure 6 shows the ten key technical steps in more detail.

To implement a blockchain for any purpose, defining the use-case based on the identified trade facilitation needs is the first and perhaps the most important step. Getting things right at this step will influence other subsequent steps such as the architectural design, and choices around speed and security as well as permissions and privileges of members. Identifying the specific problems that the blockchain is intended to solve and scoping the technical design accordingly will help the implementing body avoid difficulties later on in the implementation process. A blockchain that is intended to process payments of duties, for example, may need high speed and high sovereignty at the core architecture in order to avoid delays and infiltration, while a blockchain for trade audits would require higher storage and data protection capabilities. Identifying the use-case for the blockchain and scoping the problem it aims to solve informs the architectural design, as well as, various aspects of the policy considerations. Identifying and defining the purpose of the technology within the trade environment is a foundational requirement for the subsequent technical steps in building the blockchain. In the end, this step will largely inform the degree of decentralization, security and speed of the network as well as the adopted architectural parameter and technical specifications of the protocol.

The proliferation of different blockchain protocols over the years has brought to light the technical trade-offs that have to be made in deciding on the choice of protocol for a blockchain use-case. The chosen blockchain protocol necessarily influences the capabilities of the technology implemented, given the trade-offs to be made between speed, sovereignty and security. A well-distributed and largely decentralized blockchain protocol tends to be slow and lack speed but has high security. On the contrary, private/consortium blockchain networks tend to be fast in speed, high in storage, but lower in security and resilience. Furthermore, proof of work (POW) protocols such as that of Bitcoin, tend to be slower than proof of stake (POS) protocols such as those of Ethereum or Cosmos. Thus, depending on the use-case envisaged and defined in step one, some protocols and architecture may be unfit for the use-cases in trade measures and others will be more suitable. Key technical considerations largely cover specifications around speed, quality assurance, data integrity, storage, resilience and security. Collaboration with the private sector, industry and academia will be useful in building the architectural details of the implementation process.

Designing the architecture of the blockchain is the first hands-on technical step of putting the network together that serves as the foundation of the technology. Once the use-case is known and the protocol is chosen, the technical design process entails a deeper and more detailed step of putting together the core of the blockchain network. The technical design step involves the network architecture, consensus mechanism, node configuration, levels of authority of network participants, emergency restoration and recovery processes, cryptographic functions, risk management procedures, digital signature protocols and other parameters. It is recommended that at this stage, private sector consultants and experts from industry collaborate with the Government in the execution process. Blockchain is relatively complex and requires skills in multiple fields to be implemented. Most Governments, especially those of developing countries, still lack the expertise and skills within their agencies to execute all the technical details. Given the lack of in-house expertise to execute the deeply technical aspects of blockchain technology, collaboration with the private sector and industry experts is advised for a successful implementation process.

The complexity of blockchain brings with it significant chances of bugs, errors and code malfunctions. Hence, testing is a key step of the design, development and deployment process. This step usually entails unit and process assessments that allow for components as well as constituents of the code to be tested for risks, vulnerabilities and bugs. Testing is done within simulated environments in the form of testnets. It examines the network’s functionality, security and stability, simulates real-world scenarios and ascertains that the blockchain will work as intended and without major flaws. During this phase, all major network issues are identified and fixed. Before implementing the technology for trade processes, customs, authorized economic operators (AEOs), traders and other agencies should be involved in the key testing steps to ensure that the blockchain addresses all key user requirements and meets international standards. Testing allows the implementing body to identify major issues especially around security, compliance and interoperability and fix them ahead of deployment. This is an essential step in the development process of any blockchain and would usually entail key sub-processes as shown in figure 7 and detailed in box 1.

Smart contracts are self-executing codes, business logics and programs that are stored on the blockchain for specific logic and use-case purposes. While the blockchain itself is simply a distributed database with redundancies, smart contracts constitute the executive functionalities of the blockchain. They can serve as middleware between the blockchain database and the user-facing portal of the Government’s trade facilitation portal, or they can simply be used to process logic between one or more functionalities. They could further serve as the process logic that provides access credentials, authorization, rights and privileges to users within a blockchain ecosystem. Smart contract design is a particularly important component of the blockchain design process. While a blockchain database could be a general purpose infrastructure for many use-cases, smart contracts allow for specific use-case designs and serve as compartmenting infrastructure to deploy individual tasks and specific functionalities on the blockchain. For example, on a single blockchain, different smart contracts could be deployed to handle processes such as managing the digital identities of customs officers and AEOs, tracking and verifying trade document flows for audits, and automating authentication for the quality assurance of trade certificates and permits, all with the aim of meeting the Government’s trade facilitation needs. As process-logic software used to define the rules of the network and automate processes, smart contracts are thus particularly useful in attributing and compartmentalizing user rights and privileges, levels of authority and user access controls, as well as conditions for the revocation of such user rights and privileges and undertaking risk mitigation mechanisms within the network.

Deploying the blockchain within a production environment is a stage when the network goes live, begins to process records, produces data pockets, creates data chunks (called blocks) and a digital history of the blockchain network. It usually involves a coordinated process of synchronization of computational units (servers/nodes) which are part of the network until a simple majority have been established on what can be considered as common agreement of the true state of the network records. Once the genesis block is up, running and producing further blocks, the network can be considered stable and safe and can then deliver the data reliability required in terms of meeting integrity requirements. This stage of the implementation processes comes with design and policy choices. For example, the implementing body could deploy the network on sovereignly owned physical computational infrastructure such as servers (usually called a bare metals approach) or opt for a cloud-based service provider like Microsoft Azure or Amazon Web Services. Choosing a cloud-based service means the implementing body doesn’t own the infrastructure on which the network runs and thus gives up a level of sovereignty, although this choice may be cheaper. The implementing body may choose a third option where the blockchain is deployed using a Blockchain-as-a-Service (BaaS) platform such as the European Blockchain Services Infrastructure platform or the Blockchain-based Service Network in China, which allow any entity to deploy their own sovereign blockchain application without owning the digital infrastructure on which the blockchain runs. The implementing body gives up a level of autonomy and sovereignty with the use of these cloud-based option as well.

The most significant value proposition of blockchain is data integrity. Thus, when a blockchain experiences unauthorized intrusion and data tampering, it causes numerous problems regarding re-establishing the true state of records on the blockchain and usually requires a network reorganization which can be resource intensive. Security breaches of blockchain that require network reorganization in order to clean the erroneous data from the network also mostly require special expertise, something most Governments may not readily have at hand. Implementing security protocols is thus critical for the overall network health, data integrity, as well as stability and reliability of the information that is stored on the blockchain. These security protocols include technical measures to prevent attacks and unauthorized access through data encryption, reliable private key protection mechanisms, access controls, risk prevention and mitigation protocols such as activity logs, procedures on emergency updates, code reviews, security patches, network halts and reorganization and restart procedures. These ensure network protection to prevent unauthorized tampering, access and attacks on data stored on the blockchain network.

Although not technically part of the blockchain itself, user-facing portals and interfaces allow the average user to interact with the blockchain in a less technical manner. They also allow the business logic and process flow of the use-case applications of the blockchain to be experienced by the average user without deep technical expertise. Thus, they form the most critical part of the user experience and greatly influence the perceived user-friendliness, utility and value of the blockchain. As a complementary component of the business side of the blockchain, they are normally deployed as separate code with the sole function of ensuring that the user experience of the blockchain is optimal and efficient. This separate code can usually be designed by a separate team whose expertise lies in user interfaces and user experience but who, nevertheless, have good understanding of the technical primitives of blockchain and Web 3.0 in general. Implementation of these components can usually be done in a conventional Web 2.0 fashion.

Implementing blockchain should not be done in isolation of the existing trade facilitation digital infrastructure. Doing this will create data silos and lead to suboptimal outcomes. Integration with existing infrastructure should be at the centre of the implementation process from the start. Given that most Governments already have existing trade facilitation solutions such as trade portals, trade reform trackers and single windows, a blockchain should only help improve specific trade facilitation measures that are not already handled well by other conventional legacy systems. Thus, the blockchain implementation process must be done in a manner that ensures integration with existing legacy infrastructure and allow for the possibility of future integrations. For successful integration with existing infrastructure, the implementing body should be guided by the steps set out in box 2 and shown in figure 8. There are also three key forms of integration, as shown in figure 9 and detailed in box 3, and these forms can be combined.

Once integration has been well-executed, regular monitoring and maintenance is required of the digital solutions of the blockchain, the complementary applications and the pre-existing digital infrastructure both in house and at the level of the network. The implementing body must cultivate a culture of regular evaluation and updates to resolve any functional, security and performance issues that emerge from time to time. Network health is critical for the continuous functionality and usage of the blockchain. Consequently, the implementing body must constantly assess activity logs to ensure that there are no network attacks or unauthorized access. The implementing body must also ensure that access controls are constantly improved to keep the network well-protected and its data integrity guaranteed. Monitoring the network for any issues and performing regular maintenance tasks, such as network upgrades and software updates can be done both as preventative measures but also as mitigative measures. Also, as the Government’s trade facilitation needs evolve, new technical functionalities may be needed to meet the new needs. Stakeholders and users must also be constantly informed about digital hygiene and individual practices that keep data safe and protected. In table 4 the key technical implementation steps are summarised.

It is important to break down the work into deliverables and tasks to be caried out by the implementing body in order to achieve the ten milestones elaborated above. This is considered the work breakdown structure (WBS) which is a technical decomposition of the implementation process into smaller, more manageable tasks. It helps the implementing body properly scope the process, identify key requirements and organize resources efficiently. The technical breakdown of the design, development and adoption process of blockchain and its accompanying solutions are demonstrated as six broad steps in table 5 below.

Technologies like blockchain need a supportive policy environment to succeed. In general, policy considerations have become a determining factor for the success and sustainability of digital solutions. This is particularly true for the multi-stakeholder and multi-agency space of trade processes and procedures. Thus, the policy considerations of blockchain implementation for trade facilitation purposes centre on stakeholder-dynamics, inter-agency coordination, user empowerment, public-private partnership (PPP) and users’ digital hygiene, all of which are crucial for the long-term sustainability of the blockchain.

In the present section, issues of stakeholder empowerment, user support and inter-agency coordination, which are especially important for stakeholder ownership and support, are explored. Issues around data governance, user protection and standards are covered in the legal and regulatory section of the guide. The successful and sustainable implementation of blockchain for trade facilitation depends on implementation taking place in a multi-stakeholder manner, given that a combination of digital and physical infrastructure work in tandem in the trade environment and are managed by multiple agencies. Thus, a policy environment that will support critical trade infrastructure such as blockchain solutions necessarily requires a multi-stakeholder approach, a multi-structured set-up and a multi-user setting both within and across countries.

Furthermore, it is not only the trade policy environment that is multi-stakeholder in nature; the proper implementation of blockchain necessarily requires a multi-stakeholder architecture. The technology normally requires multiple entities to coordinate in keeping them resilient, secure and sustainable. Thus, in the design of any blockchain environment for the purpose of trade facilitation, stakeholder considerations should be at the centre of the policy and technical design. While blockchain is considered to hold potential for trade facilitation purposes, the areas of stakeholder interest, support and ownership, as well as the key policy area that largely determines the success and sustainability of trade infrastructure, have been given limited attention. The present section outlines the process and importance of having all relevant trade agencies involved in the implementation process as well as the need for appropriate individuals within the agencies who possess the required knowledge and authority to support and sustain the implementation process. Both inter-agency and intra-agency stakeholder coordination is critical in designing the blockchain policy environment. Effective engagement of key stakeholders in this regard is not only critical to the success of the blockchain implementation, but also presents the ultimate path to a sustainable digital infrastructure over the long term.

The steps to create an engaged stakeholder environment in the implementation process of blockchain for trade facilitation range from identifying and defining stakeholder roles to building their strength and knowledge in the implementation process. The success and sustainability of the blockchain implementation process will largely depend on how empowered and prepared the stakeholders are, both at the inter-agency level as well as at the intra-agency level. The process of getting stakeholder engagement right is laid out in the proceeding steps.

The first step to set up the policy environment for a successful blockchain implementation is to identify the stakeholders who are critical to the implementation process and define their roles from start to finish. The identification and definition of stakeholder roles should take place within four key dimensions: Figure 10. Levels of stakeholder engagement for the implementation process

All these four dimensions must include industry and private sector actors for the success of the stakeholder process. The various levels of stakeholder engagement are demonstrated in figure 10. After the broad categorization and key stakeholders are identified, the definition of individual stakeholder roles that incorporate authority, domain and knowledge is important, especially when it comes to the constitution of the core implementing body. This process should be domain-dependent and reflect hierarchy. It would also necessarily vary from country to country. For example, while in some countries, customs will naturally form the core implementing body with a selected set of people from other agencies, in other countries the port authorities may constitute the core technical implementing body that undertake or oversee the actual implementation of the technology with the support of customs and other key agencies.

Once stakeholders and their key roles have been identified and well defined, it is important to understand the trade facilitation needs, concerns and expectations of the stakeholders that can be addressed by the blockchain solutions. It is crucial to then tailor the stakeholder engagement towards addressing specific concerns and expectations by communicating to the stakeholders about the benefits of the technology and how it will help address those needs. For example, if private sector actors such as traders struggle with lack of transparency of Government processes, informing them about the unparalleled transparency, immutability and security of blockchain, as well as the empowerment of the private sector to independently verify and validate information using the blockchain solutions, could elicit their interest. Furthermore, certain Government agencies such as customs may struggle with the issue of quality assurance of declarations, under or over invoicing and revenue leakages due to inter-agency inefficiencies. Communicating to these stakeholders about the immutability, data integrity and security of blockchain and the technology’s ability to prevent data tampering as well as drive inter-agency coordination efficiencies could secure their buy-in, interest and support in the implementation process. At this stage, undertaking a broad sectoral needs assessment for the technology will be appropriate.

Understanding the multi-user needs of the various key stakeholders also means considering the technical implementation processes of the blockchain for addressing these specific trade facilitation needs. While fully outlining and designing this would necessarily require the input of many agencies, it will be one of the most critical steps in the design process of the technical solutions. Understanding these user needs and outlining them ahead of the technical implementation process will be the key approach to ensuring that the blockchain solution meets the actual needs of the users and non-user stakeholders. Table 6 demonstrates some of the primary stakeholder user needs that may be incorporated into the design of the technical functionalities of a blockchain-supported user-facing application. It includes the user logic that would support key cross-border trade stakeholders adopted from the Global Report on Blockchain and its implications for trade facilitation performance.

Once the stakeholder needs are understood and addressed with clear communication of the benefits of the technology and how it will address their needs, it is necessary to further assess the stakeholders’ level of readiness and preparedness for the new technology. This involves understanding the concerns of the stakeholders regarding the implementation of blockchain technology in general, such as cost, complexity, user protection and security risks. Addressing these concerns is important to build trust and support for the implementation process. It also includes analysing the stakeholder's interests, expectations and level of influence on the overall implementation. Feedback mechanisms such as surveys and questionnaires that allow stakeholders to communicate their expectations and level of readiness for the new solutions will be particularly important for success. This will also inform the direction of focus of some of the subsequent steps to be taken in the implementation process such as nature of stakeholder training and education programmes, workshops and seminars. Furthermore, evaluating the stakeholder preparedness and contrasting that with the level of stakeholder interest in the technology will go a long way to support the implementation success and sustainability of the solutions. At this stage, undertaking a blockchain readiness assessment with the stakeholder inputs could help present a more complete picture of the level of preparedness of the various stakeholders.

Once the stakeholder needs and readiness are ascertained, it is important to put together a framework for stakeholder engagement. Developing a clear implementation plan that outlines the objectives, timelines, resources and expected outcomes for all stakeholder engagements will ensure success, efficiency and sustainability of the engagement efforts from the beginning to the end of the implementation process. The engagement plan must be reviewed on an ongoing basis to reflect the state of progress and emerging needs of the team and stakeholder groups that are engaged in the implementation process. This could also include a governance plan both for the application/use case and for the infrastructure. Furthermore, the plan should be continuously shared with all key stakeholders for input, feedback and to ensure that everyone is aligned and supportive of the implementation process. This engagement plan is best designed by an all-inclusive body like an NTFC. A basic template for the key components of the stakeholder engagement plan is presented in table 7. This can be adjusted according to each country’s needs and based on the prevailing conditions of the implementing body.

Once the stakeholder engagement plan is complete, key stakeholder involvement ahead of commencement of implementation is critical. Stakeholder coordination meetings, workshops and multi-agency engagement forums that bring every key agency and stakeholder group onboard will be crucial to the successful implementation and sustainability of blockchain infrastructure and solutions. This will lay the foundation for future engagement processes and will ensure the long-term health and use of the solutions. This process of organizing the stakeholders will also ensure that initial roles of the key stakeholders are well understood and that any needed adjustments will be executed ahead of the actual implementation of the project. This will further ensure that any initial conflations, gaps or overlaps of stakeholder roles are eliminated to establish clear lines of responsibility, duty and roles.

Providing training and support to the stakeholders to ensure they are comfortable with the new technology and can use it effectively is one key component of the stakeholder organization process. This training can be geared towards multiple goals, such as helping stakeholders understand the key benefits and utility of the technology and helping increase their preparedness, ability and interest in the technology, and encouraging the maximum utilization of the solutions. Furthermore, undertaking periodic research towards improving the extent to which the technology meets stakeholder needs will be crucial. For example, if some stakeholders have high expected value of the technology based on their trade facilitation needs but have low knowledge of the technology and are thus less prepared, training efforts that are tailored towards empowering these stakeholders will be very useful. On the contrary, if certain stakeholders with high authority to support the implementation rather have low expectations on the technology’s utility for their trade facilitation needs, education should be tailored towards the benefits, value proposition and efficiency gains of the technology for these concerned stakeholders and agencies. Empowering stakeholders through training, research and support is a key aspect of ensuring that the technology is well implemented and optimally used in a sustainable manner.

Continuous review of the stakeholder dynamics gives the overall implementation and utilization of the solutions an up-to-date perspective of stakeholder needs as well as expectations. It is important to constantly monitor and evaluate the implementation to identify areas for improvement and address any issues that arise. This will also help to ensure the success of the implementation and maintain stakeholder support. Also, evaluating the stakeholder engagement process to determine its effectiveness will allow for necessary adjustments in a timely fashion and will determine the sustainability of the project in a long term. Lastly, keeping stakeholders informed about the progress of the blockchain implementation process and its expected impact on existing trade facilitation infrastructure as well as the value of the new blockchain solutions is key.

In summary, getting the inter-agency vis-a-vis intra-agency coordination right is key for the overall implementation process. To get the above processes and steps right, some recommendations on the process of establishing the stakeholder ecosystem to support the implementation process are elaborated in table 8.

Establishing PPP is a standard approach for most physical and digital infrastructure development projects aimed at Government use. The approach holds many advantages that can support the success and sustainability of the infrastructure in question. PPPs not only leverage the strengths of both sectors but also bring optimal use of resources and expertise. Furthermore, given the crucial role of the private sector within the trade environment of most countries, the involvement of the private sector at the technical, policy and regulatory levels of the implementation process is the best way to guarantee an inclusive approach and ensure that the technology meets the needs of all key stakeholders. A PPP approach to the implementation process can thus bring many benefits to the implementing body, some of which are elaborated below:

Establishing a PPP process for implementation involves multiple steps and a series of considerations to ensure successful collaboration, efficient performance and deep commitment from both sectors in the development, deployment and adoption of the blockchain infrastructure. While the technical development process can be easily undertaken with a simple partnership agreement, the stakeholder engagement processes can be complex and requires a significant level of process planning to be inclusive enough. Below are some of the key steps in establishing the PPP process for the implementation process. These can vary from one context to another, depending on the number of partners, governance system or the implementing body’s mandate.

Resource planning is a key component of the entire implementation process and is especially important when preparing a PPP approach, not just for determining these resources but also for apportioning them according to workload and responsibilities of the implementing partners in a way that will ensure success. The allocation of the components of work is thus accompanied by the allocation of resources. Determining the financial, human and technical resources required for the overall implementation, identifying the sources of the resources and allocating these resources according to the components of the work commitments required from both the public and the private implementing partners is key.

Identifying the appropriate implementing partners will depend on key indicators defined by the implementing body. These indicators can include performance history, talent and expertise, resource capabilities and attestations of other relevant stakeholders. These will form the basis of selection of the public and private sector partners who are qualified to contribute to the partnership. Any institution that meets these requirements, such as Government agencies, software development firms, industry experts, research consultancy firms or academic institutions, can then be considered for the initial pool of potential partners for the implementation process.

Developing the technical and legal frameworks that will govern the partnership will give clarity to potential partners on what to expect from the partnerships as well as what is expected of them in the partnership. For example, a technical/legal document that spells out the deliverables, and objectives of the solution as well as the timelines and resource commitments of the implementation process will give potential implementing partners a clear understanding of their eligibility by establishing the minimum requirements for expressing interest in joining the implementing process as a partner. The framework may take the form of a draft agreement, memorandum or draft contract that outlines the commitments, deliverables, responsibilities and expectations from potential partners.

This is the stage where potential partners are requested to express interest in being implementing partners, usually through a request for proposals (RFP), where potential partners can apply either as individual implementing partner or as consortia. It is important to clearly define the project scope, obligations, evaluation criteria and timelines at the time of publishing the RFP. This ensures transparency, accountability and encourages broad-based participation by all qualified potential implementing partners.

Received proposals are evaluated based on the predefined criteria set out at the technical frameworks stage and a selection is made based on the suitability and eligibility of the potential implementing partner or set of partners. Factors such as technical expertise, track record, financial viability and alignment with project objectives are key to consider.

After selection of a partner or set of partners, there is need to design and negotiate a partnership agreement that outlines the roles, responsibilities, rights and obligations of each partner in the implementation process. This stage is crucial for the overall success and sustainability of the blockchain project and its level of utility for the trade facilitation stakeholders. Most terms and conditions as well as technical and legal aspects in the partnership agreement will have direct consequences on the technical considerations of the infrastructure. The agreement should therefore address, among other things, the details of technical considerations, consensus mechanisms, architectural design, data governance, confidentiality, dispute resolution mechanisms and user-friendliness. As shown in figure 11, key areas to be considered within the partnership agreement include:

Development, deployment and maintenance: The partnership agreement should primarily consider architectural designs and other technical details of the development, deployment and maintenance process of the blockchain and its accompanying applications. It should clearly communicate technical design details on performance, security and sovereignty of the infrastructure and indicate key performance indicators to be met when the work is complete. The agreement should also establish mechanisms for ongoing maintenance, updates and support to ensure that the infrastructure and its accompanying solutions remain fully functional, meet user needs and perform optimally;

User evaluation and feedback mechanisms: The partnership, among other things, must include clear mechanisms for periodic evaluation, user feedback and regular inputs from key stakeholders to ensure that the solutions meet performance requirements, lead to user satisfaction and are improved in a timely manner whenever there are technical issues. The partnership must involve channels of feedback from end-users, stakeholders and Government agencies to identify areas for

Knowledge sharing and capacity-building: The agreement should include mechanisms for knowledge sharing between the public and private sectors, facilitate skills transfer and promote capacity-building, especially for the public sector partner(s). This would help build expertise within the public sector and foster long-term sustainability of the blockchain and its usability. The agreement should specifically indicate channels for knowledge transfer and the legal means to address any failure to comply by this condition. It should also indicate which key public sector stakeholders the knowledge transfer process should be aimed at, ensuring that the knowledge benefits the Government the most;

Quality assurance, testing and audits: Another key component of the partnership agreement should be to ensure that the developed blockchain infrastructure, solutions and applications meet required quality standards, and that it is thoroughly tested for functionality, usability and security, with all codes audited through rigorous code reviews to identify and rectify any issues or bugs and ensure safety.

Blockchain technology is relatively new, but its reach has already become global. Governments have already attempted in several ways to build legal, regulatory and compliance systems aimed at ensuring that the technology works for the good of society. However, many Governments have not yet established robust legal systems within which the technology could function and thrive. Furthermore, blockchain for trade facilitation purposes has not yet reached mass use, and while many Governments are looking into this potential, many still struggle with the regulation and compliance components of the implementation process.

The present section outlines the foundational steps for building the regulatory environment and implementing blockchain technology in a compliant manner that incorporates such legal and compliance processes into the core design process of the technology. The implementation of blockchain solutions must consider compliance as an integral part of the development and adoption process. Hence, the present section focuses on processes that meet international legal frameworks and standards as well as the approach Governments should take to incorporate these standards into the blockchain implementation process. This section also considers the necessary steps to help stakeholders and user groups understand the nature, procedures and requirements of compliance mechanisms that can ensure safe use of the technology in cross-border trade.

The technical features of blockchain make compliance, quality assurance and controls particularly enforceable. For example, the use of digital signatures, which is a default feature of the technology, can easily guarantee the safety of the user, security of the systems and auditability of the user activities. This, together with other digital and technical features, can help assure the smooth implementation of compliance mechanisms, improved risk management and regulatory oversight. While blockchain solutions could help Governments meet trade compliance needs in risk management and the prevention of fraud, the technology also needs critical compliance measures for its proper use by stakeholders. Below are the key steps for ensuring a holistic regulatory environment and a compliant implementation process for blockchain for trade facilitation.

Before implementing any digital technology, blockchain included, it is imperative to define areas of regulatory weakness, legal gaps and compliance needs. This allows for the proper setting up of compliance systems to fill the regulatory gaps. As a relatively new technology, blockchain can usually work within existing compliance systems that regulate the broader digital economy, but it sometimes requires more than the existing regulations, especially for certain use-cases. For example, as a decentralized digital infrastructure, blockchain data is usually hosted in multiple systems with servers that are constantly synchronizing in real-time. This introduces new complexities on issues around data governance, privacy and user protection. This could sometimes require new legal structures that are different from the existing centralized data hosting systems. Furthermore, it could also require a new definition of data protection, data liability, user privacy and broader data governance issues around smart contracts and digital signatures before implementing the actual infrastructure.

Once the broader regulatory gaps have been identified, the next step is to determine sector-specific regulatory and compliance needs. While blockchain can be general-purpose technology, the use-case largely determines the compliance processes needed for the technology to function as intended. Thus, while a Government may have broader regulatory gaps for a new technology like blockchain, there can also be sector-specific regulatory ambiguities and discrepancies. Within trade facilitation, there are several trade-facilitation-specific regulatory and compliance processes to respect. Important trade regulations that would have to be considered at this stage could range from the data requirements of trade declarations to quality concerns about the declared goods. Defining sector-specific regulatory gaps would thus determine the specific regulatory processes that will be implemented at the technical level. Compliance with these sector-specific regulatory components can usually be implemented and achieved at the application level of the blockchain infrastructure. Furthermore, international standards on the specific sector could support the regulatory design process. For example, in trade facilitation, technical and legal standards such as the WCO SAFE Framework of Standards to Secure and Facilitate Global Trade, the International Convention on the Simplification and Harmonization of Customs Procedures, and the WCO Data Model are key guidance instruments that could assist the process. At this stage, it is important to involve industry stakeholders and private sector experts to undertake a broad review of existing regulations within the specific expected use-case area(s) and ascertain legal and compliance gaps, discrepancies and risks that could be mitigated by ensuring compliance.

Once the regulatory gaps have been established at the national, sectorial and use-case levels, the next step is to build a relevant regulatory framework that fits the use-case, while adhering to the broader regulatory system. The regulatory framework must outline the compliance procedures and processes for both users and non-user stakeholders who engage with the blockchain system for all trade procedures. The rules and guidelines of engagement may include standards for data privacy, data governance, security and transparency, as well as guidelines for applications and smart contract development, as well as other aspects of the blockchain application layer. This level of the regulatory design is more specific and will necessarily involve the implementing stakeholder groups. The design of regulatory frameworks would take place at more than one level:

This broad legal framework on use of the technology in the country can focus on a sector such as trade and commerce, or it can be a broad legal document on the use of the technology in general within the country. This framework will usually lack implementation precision but will convey strategic policy and regulatory directions that may take into consideration regional and international contexts of the use of the technology;

These focus on exacting reforms on cross-border commerce, trade measures and driving trade facilitation efforts. Sector-specific frameworks focus on broader implementation guidelines that prescribe sector-wide reform strategies and will usually involve multiple stakeholders within the trade ecosystem;

These regulatory frameworks give more targeted and precise legal and regulatory prescriptions on improving efficiency and driving value in relation to the precise trade facilitation needs of the Government. Such frameworks focus on the use-case of the blockchain solutions, such as in trade auditing, trade risk management, payment of duties, track and trace or fraud detection. The three levels of regulatory framework design are demonstrated in figure 12.

Building a regulatory framework is important but establishing a compliance protocol is particularly relevant for important technologies like blockchain and for critical sectors like trade. Once a framework is in place, the next step will be to develop compliance procedures that help stakeholders meet regulatory requirements in the use of the blockchain solutions. Stakeholders need compliance mechanisms to ensure they successfully use the tools of the new technology and for general proper digital hygiene that reduces risks to users. Compliance procedures must also support system-wide digital health through regular inspections, audits and quality assurance of the systems. These compliance mechanisms should limit the regulatory burden on the user while ensuring that necessary standards are met. Preparing and documenting a protocol on compliance as a simple and understandable user guide can help stakeholders significantly.

Educating stakeholder groups such as customs, clearing agents, revenue authorities, traders and ministries about the regulatory framework and compliance mechanisms is a key component of building the regulatory environment for any new technology. Once regulatory frameworks and the technical infrastructure are in place, stakeholder engagement that results in full familiarity with the technical and regulatory procedures is key to ensuring a successful and sustainable use of the blockchain environment. This can be done through stakeholder training, education and information and can take the form of training workshops, seminars, outreaches, flyers and booklets as well as user guides that communicate the user benefits, obligations and key dimensions of compliance.

While regulatory frameworks may give a particularly useful setting for the successful implementation of blockchain for trade facilitation, compliance is not guaranteed without proper systems of enforcement. Once training and education of the stakeholders is complete, the next step is enforcement that ensures compliance. Enforcement of the regulatory frameworks could take place through appropriate mechanisms such as fines or penalties for non-compliance, or revocation of licenses or certifications for breach of authority or abuse. Enforcement must be conducted fairly and transparently, with appropriate due process of protections for other stakeholders while deterring future non-compliance.

The legal, regulatory and compliance mechanisms should undergo continuous improvement. User feedback must be incorporated into further adjusting and refining the legal frameworks to meet emerging trade facilitation needs of stakeholders. The implementing agency must therefore continuously monitor and collect user feedback and improve the legal frameworks that govern the use of the technology. This allows for out-of-date laws to be changed or replaced as the technology evolves and helps ensure that the regulatory framework remains effective and relevant over time. The process may involve conducting regular legal reviews and assessments of the regulatory frameworks, regular legal updates that reflect changes in the technology, as well as other emerging trade facilitation issues that may impact or be impacted by the regulatory landscape over time.

A WBS is useful for breaking down complex legal and compliance processes into smaller, more manageable tasks. Table 13 shows a WBS for the regulatory, legal and compliance process when designing a blockchain ecosystem for trade facilitation purposes.

In the use of blockchain tools, most regulation and compliance issues need a technical component to be reliably enforceable. Thus, Governments may have to establish various technical standards as well as comply with existing standards that will support the implementation of effective blockchain compliance systems. These standards help ensure that the technology is used in a manner that complies with regulations and reduces the risks of fraudulent or illegal activities. Some key compliance areas that will have to be ensured through technical implementation techniques and processes include the following:

User privacy and security standards are essential for ensuring that personal data is protected from unauthorized access and misuse. Governments that build digital solutions with blockchain for trade facilitation purposes have a legal imperative to design the protocols and processes that appropriately handle the types of user data collected, where that user data is stored, and which users have the rights and authority to access such sensitive data. This may include alignments with already existing data management protocols and processes that are not specific to blockchain. Also, key compliance disclosures around user data handling including credentials such as usernames, contact details and IP addresses, must be clearly communicated. Technical standards around data encryption, secure storage and access control that ensure the protection of sensitive personal data must therefore be implemented both at the user portal level and on the database. Trade data can be sensitive or even proprietary and these kinds of data must be protected, encrypted and guarded by modern data management practices. From declarations to invoices, licences and certificates, data handling through the blockchain that are aimed at ensuring ease of information flow must also meet protection standards for purposes of regulation and compliance. For example, the blockchain-enabled advance cargo information system for the Egyptian Government was designed to be compliant with the provisions of the WCO SAFE Framework as well as the WCO Data Model and many other WCO instruments and items of guidance (Kotb and Igor, 2022).

For compliance, interoperability standards that ensure that critical information can be passed between one blockchain network and another or between a blockchain system and a legacy system must be properly designed, implemented and enforced. Ensuring safety and compliance in data storage is as important as ensuring compliance with the transfer and exchange of that data. Thus, interoperability standards should not only be aimed at the seamless transfer of data, but also the safety of the data while in transit. Governments implementing blockchain for trade facilitation purposes must establish technical standards that specify the protocols, formats and security requirements for data exchange between different digital domains. Technical standards around the encryption of data in transit, secure transfer and access controls must thus be implemented at the user-facing level as well as the back-end when possible.

Smart contract standards specify the technical requirements for developing and deploying smart contracts on blockchain networks. As tools for business logic between the blockchain and the user-facing portals, smart contracts play key roles such as defining user credentials, rights and privileges, as well as being used for automation purposes. Compliance standards on smart contracts should focus on data protection, safety, privacy and security. As digital vehicles that allow users to interact with the blockchain based on the use-case, smart contracts must meet minimum standards around data transfer, automation and communication. This compliance can be achieved by extensive design testing and auditing of the smart contracts.

Consensus mechanism standards specify the rules and procedures for validating records and adding new information to the blockchain. This aspect of the technical design process forms the core of the blockchain infrastructure. Standards of regulation and compliance can be ensured by the technical specifications that are baked into the core of the consensus mechanism. Data requirements around the security, speed and resilience of the network influence the user experience and the compliance thereof. Specifications around the type of consensus, block size—the amount of data that can be stored in a single block of records— as well as the adopted cryptographic primitives, all influence performance and user experience. But they also impact compliance. For example, a proof of authority consensus blockchain will naturally require that a hierarchy of authority be allocated to the network participants, which will grant some network participants higher compliance privileges compared to others. Governments must therefore establish technical standards that specify the requirements for consensus mechanisms, including performance, security, the degree of decentralization of the blockchain network and the dynamics of authority to ensure compliance.

Digital identities and user identifiers are default features of blockchain. The use of blockchain for a multi-user, multi-agency ecosystem like trade facilitation requires a distinct set of policy, regulatory and technical standards on user identity management and user identifiers. This will influence many aspects of the use of the blockchain solution, including the auditability of user activities, risk management, access controls and quality assurance. The standards and protocols on user identity management will also determine the level of user protection, user accountability and user privileges. Digital identity standards thus specify the technical requirements for verifying and managing digital identities on the blockchain network. To ensure compliance, bodies implementing blockchain for trade facilitation must create technical standards for digital identity verification, authentication and authorization that are in line with the established regulatory and policy environment.

While ensuring compliance is an ongoing activity, the implementation procedures that ensure continuous compliance must be designed at the beginning. Auditability of user activities, data processes and security protocols must be at the centre of the design process. Audits and reporting standards specify the requirements for quality assurance of activities on the blockchain to ensure compliance with regulations. Technical standards that specify data elements, frequency and format for reporting blockchain records and activities will be necessary for ensuring compliance for most trade facilitation use-cases and for efficient and safe use of the technology in general.

The present section of the guide outlines the common challenges usually faced by implementing bodies both in industry and in Government and sets out a number of use-cases for the technology for trade facilitation purposes, as well as implementation considerations for each of those use-cases.

Implementing blockchain technology can be difficult and challenging. The technology’s complexity and emergent nature makes it difficult to implement without running into talent shortages, resource constraints, as well as technical and regulatory limitations. Overcoming these challenges around talent and expertise, regulatory discrepancies, infrastructure incompatibilities as well as data governance issues is thus a necessary component of the implementation process. Some of the challenges that are commonly encountered by both Government and industry in the implementation process of the technology are outlined in figure 13. These range from regulatory frameworks to data protection, as well as resource constraints and a lack of talent and expertise.

Addressing these challenges requires a strategic approach, a collaboration between Government agencies and industry, an engaged stakeholder community and the country’s willingness to adapt new technologies together with an ever-evolving regulatory environment. Partnerships with the private sector, academic institutions and industry can be particularly crucial in the implementation of the solutions. The challenges discussed in this section are summarized in table 15.

Blockchain is known to possess several features suitable for trade processing that could cut cost and time to trade, improve the trader’s experience and expand the Government’s revenue by helping solve issues of transparency, quality, fraud, risks and standards. However, when designing a blockchain-enabled environment for trade facilitation purposes, Governments need to consider a number of factors around use-case scoping, implementation modules and stakeholder preparedness. The present section of the guide describes a number of use-cases where the technology may be suitable and sets out the potential efficiency gains in these areas.

Revenue generation has long been an important aspect of the trade landscape of Governments especially in developing countries. Most developing country Governments derive a significant portion of their national revenue from duties, tariffs and fees. Hence, revenue leakages have been a policy hurdle for Governments around the world. Blockchain’s technical superiority in terms of traceability, auditability and accountability can streamline, simplify and dematerialize stakeholder relations while building a resilient trade ecosystem that increases revenue to support needed development. For both agency-to-trader relations as well as agency-to-agency relations, disintermediating person-to-person contact can significantly reduce underhand dealings and corruption, a key channel for revenue leakage in most countries. Blockchain therefore presents a significant opportunity for Governments to increase their revenue and can bring other efficiency gains, such as:

b. Quality assurance. Trade facilitation bottlenecks – which are generally caused by under or over invoicing, quality assurance issues with declarations, a lack of auditable trails of declarations, unreliable tools for audits and unreliable systems for enforcing compliance around permits and special trade arrangements – are an issue at most countries’ borders. These can cause difficulties with valuation, charges and billing, causing Governments various forms of revenue leakages. This situation is often exacerbated by the lack of an underlying system to trace the activities of the authorizing bodies or stakeholders for key trade activities in a way that could ensure accountability. As a reliable digital database where information that passes through is unalterable, blockchain technology, offers significant quality gains;

c. Key documentation processes. Allowing secure handling and transmission of declarations, documents and trader information to and from relevant agencies, offices and traders without a face-to-face encounters can significantly reduce the incentive for corruption and could be a critical step in the elimination of revenue leakages through informal and undocumented channels as well as underhand dealings;

d. Authorized economic operators and post-clearance audits. Generally considered key actors in most cross-border trade processes, AEOs help ease the trading experience for most traders, but there can be quality assurance issues with their certification, activities and document trails. Creating an AEO database and having certification processes locked on a blockchain will ensure auditability, accountability and compliance for numerous trade facilitation purposes. Furthermore, the use of the blockchain’s unalterable database can enhance Government trade audits and risk management by making it impossible to falsify trade data, certifications and declarations. This includes the cross border data exchange between customs as specified in Mutual Recognition Arrangement of AEO programs in a blockchain which will also facilitate and secure trade.

Crucial trade documents need to be certified and verified at several stages of the trade flow to avoid trade risks and prevent fraud. Certificates of origin for preferential trade regimes; validation of proofs of payments for fees, tariffs and duties; certification and validation of deeds; proofs of identity and validity of qualification for a preferential trade arrangement; proofs of integrity for products based on standard requirements (for example, for pharmaceutical products), are some of the documentation and standards requirements that need continuous verification to keep the trade ecosystem safe and devoid of fraud. A blockchain database that helps create, secures and stores these data can ensure both the auditability and validity of these data, prevent counterfeits of the documentations and products, and make this information instantly available to all concerned stakeholders in real time, without relying on human attestations. Furthermore, smart contracts could be useful for automating many verification processes to reduce the administrative burden on border officers, reduce time and improve the trader experience.

The detection and prevention of fraud, tampering and alterations of trade documents such as trade certificates, declarations, payment invoices and receipts, or any other documents that ensure a safe and reliable trade environment, can be supported using features of blockchain technology such as cryptography. These features make trade fraud very difficult and help eliminate various trade risks associated with trade fraud. In 2020, the Moroccan customs authority launched a blockchain-based project in cooperation with DHL and the German International Cooperation Agency (GIZ Morocco) with aim of developing an ecosystem for the data of parties to all international transactions (traders, express mail service, customs and other agencies) to mitigate trade risks and improve the valuation of cargo (Moroccan Customs, 2020).

The transfer, entry and re-entry of data in trade processes in many countries accounts for a significant amount of time at the border and causes overall high cost and time to trade in these countries. Any digital tools that can ensure the secure and safe movement of critical electronic information and documents among key stakeholders without the risk of unauthorized changes are important for the simplification of trade processes in the country. As secure environments, blockchain networks can secure the exchange of mission-critical data and valuable documents both in storage and in transit. With the support of the Inter-American Development Bank, CADENA—a blockchain solution implemented by a group of Latin American customs authorities, including the Plurinational State of Bolivia, Chile, Colombia, Costa Rica, Ecuador, Guatemala, Mexico and Peru – has accelerated the processing of goods among beneficiary countries, streamlined information flow and improved the quality assurance of records and declarations, thus improving transparency (World Trade Organization (WTO) and World Customs Organization (WCO), 2022).

The emergence and use of blockchain technology in several domains today have triggered policy, regulatory and technical debates among Government stakeholders around the actual usefulness of the technology. Ongoing debate around the value of the technology has pushed certain Governments to ask important questions on whether and how the technology could help in areas such as trade facilitation in their countries. The present guide offers a succinct outline of key areas for consideration in the implementation process, including technical, policy and regulatory considerations. While the implementation of blockchain can be a daunting task for Governments, the potential efficiency gains from the technology within trade facilitation could be extensive.

Trade facilitation measures that may require a blockchain should be ascertained through a needs assessment, while a country’s level of preparedness to adopt and use the technology should be established through a technical, regulatory and policy readiness assessment. This prepares countries to address gaps and discrepancies – whether legal, infrastructural, attitudinal or regulatory – in order to support a smooth and successful implementation of the technology.

While blockchain is suitable for most Government trade facilitation needs, the feasibility of implementing the technology in certain environments, especially in the context of developing countries can vary. Thus, it is necessary to ascertain whether prerequisite infrastructure such as electricity and internet connectivity are readily available to support the real-time data engines that come with blockchain networks. In the event that this prerequisite infrastructure is not well-established in the country, specific design choices may be required to overcome this challenge, such as the development of applications on a public blockchain network instead of a private blockchain, or the designation of special zones specifically designed to support Government critical infrastructure.

Blockchain may not be suitable for all Government trade facilitation needs. Some trade facilitation needs such as information availability for transparency could best be provided for through trade portals on a conventional web application or mobile application. Wherever possible, a conventional web application should be used because operating a fully functional private blockchain can be prohibitively costly and may not be efficient for some trade facilitation purposes.

The use of a multi-stakeholder approach in the implementation process is a key policy consideration. Blockchain is by default a multi-party digital infrastructure and trade facilitation measures usually require a multi-agency approach. Thus, taking a multi-stakeholder approach in both the implementation and utilization of the technology is the most crucial policy dimension of the process. This will ensure both the success of the implementation and the sustainability of the use for trade facilitation purposes. Furthermore, the use of public private partnerships (PPPs) in the implementation process can bring Governments a number of benefits such as cost savings, innovation, capacity-building benefits and risk management. Governments and private sector actors still face numerous challenges today in implementing blockchain networks. These challenges can relate to cost, the availability of talent and expertise, stakeholder unpreparedness or regulatory and policy gaps. For the technology to work within the adopted environment, these challenges must be identified and resolved in time it to avoid implementation hurdles and suboptimal use of the technology.