AI is changing the global trade and customs landscape as leading customs authorities, customs brokers, importers, exporters, and service providers have been engaged in its use. AI has been able to modernize customs clearance processes, reduce customs transaction costs and delays, provide insights into trade flows, and enhance regulatory efficiencies.
AI has a steeper initial adoption curve than other technologies, driving industry-wide changes, new opportunities, and challenges. It can empower businesses to obtain a competitive edge by increasing operational efficiencies and enhancing compliance. Successful leaders will need to identify systems and processes that benefit from AI-driven technologies, integrate and scale them.
The Canada Border Services Agency (“CBSA”) has taken steps to benefit from AI in its Assessment and Revenue Management (“CARM”) project. CARM marks a pivotal shift towards modernizing customs procedures through an online portal. CARM leverages AI to streamline the historically paper-intensive process of trade and customs documentation. The role of AI in CARM extends beyond simplifying document preparation, including waybills, commercial invoices, customs declarations, and tariff classifications. It also enhances accuracy and efficiency in trade operations, significantly reducing manual errors associated with data entry by customs brokers.
Several customs brokers have adopted AI and machine learning (“ML”) to modernize clearance operations. The benefits include reduce labour costs associated with data entry, enhanced precision and accuracy, and increased capacity. AI and ML platforms use data from importers, suppliers, and service providers as well as data from bills of lading, commercial invoices, permits, and certificates of origin, to complete draft customs reporting and accounting documents. AI also allows shipments and customs activities to be traced and the condition of shipments to be identified.
The area of global trade and customs goes well beyond accounting for duties and taxes. It includes economic sanctions regimes which support the resolution of conflicts. AI’s potential to automate compliance checks against international sanctions presents an invaluable tool for businesses to ensure their trade practices align with global regulations. Companies can swiftly identify and mitigate risks associated with sanctioned entities and individuals by utilizing AI to review public databases and internet resources. Integrating AI into trade and customs presents challenges similar to other industries, particularly concerning regulatory compliance and privacy concerns. As the technology relies on the processing of personal data, privacy-conscious practices in AI’s development and application is required. Formal assessments, such as data protection impact assessments, are crucial in identifying and mitigating potential risks, including biases and inaccuracies or the compromise of privacy or compliance standards.
Customs transactions involve the use of sensitive information such as the identities and consumption activities of consumers. As AI revolutionizes trade and customs, the emphasis on data privacy, security, and the protection against malicious cyberattacks and unauthorized data access has become increasingly important. These factors highlight the need for establishing and maintaining adequate data privacy protection measures that do not unnecessarily restrict the ability to use data for trade and customs compliance purposes.
If you have any questions about how you can modernize your business operations with AI, please reach out to a member of Miller Thomson’s Global Trade and Customs Group.
