In the last 5 years, Costa Rica has made significant efforts to understand, develop, encourage, and implement the use of blockchain in different areas. In 2018, the Blockchain Costa Rica Association was created to foster strategic collaborations nationally and internationally within the dynamic blockchain space, also aiming at driving innovation and implement best practices that positively impact our community[1]. In 2023, the Association engaged in/organized two global events: The Blockchain Jungle, which focused on blockchain technology, web 3.0, and sustainable and responsible implementation models; and the Tico Blockchain Event 2023, a platform for discussing cybersecurity, regulatory frameworks, and personal data protection trends.
At an educational level, the Tecnológico de Costa Rica (TEC)[2] created the Blockchain Specialization course that examines the environment in which digital trading and Blockchain technology is developed, their organization and relevant processes, as well as the best practices in the industry. This structure equips students to be effective agents of transformation within their organizations.
Costa Rica has been participating in the CADENA project since 2018. Undertaken by the IDB and Microsoft, CADENA uses blockchain technology to enhance security and efficiency of the country customs-related mutual recognition agreements (MRA) and authorized economic operator (AEO) programs. CADENA has allowed Costa Rica and all participants to become familiar with the workings of blockchain, and to encourage them to consider implementing other possible use cases, such as automatization of the entire AEO certification process, and foster improved risk management within customs administrations.[3]
In the same way, in 2022, the Costa Rican Customs Authority was the first in Latin America to have joined the now discontinued TradeLens platform. During its activity, TradeLens was a global supply chain digitization blockchain platform, whose expertise will enable Costa Rican Customs to record important information in specific data fields on shipping documents to be used in risk assessment testing. So, these digital processes facilitate trade for compliant companies doing business in the country and help identify fraudulent activities[4].
With what has been developed, it is evident that the country at both public and private sector levels has undertaken initiatives for the proper implementation and efficient use of blockchain technology in the country. However, there is still a long way to go for the proper and correct long-term implementation of this type of technology to advance trade facilitation further.
In my opinion, the 3 areas needing improvement and strengthening are:
1. Digital infrastructure: In 2005, Costa Rica inaugurated the Information Technology for Customs Control computer system (TIC@) that implemented a new operational model across all customs offices. This system leverages information technology to expedite import and export procedures, fortify regulatory oversight, enhance transparency, and eliminate paperwork. By shifting operations online, the system enables streamlined processes through mechanisms like electronic payment, digital transmission of export permits, and customs declarations.[5]
Although the system has undergone several upgrades, currently TIC@ does not have the capacity to regulate all trade operations with the required agility, much less to serve as the foundational infrastructure for implementing a blockchain system. In this regard, it is important to mention that the CADENA project and Tradelens had to be carried out using external systems. Thus, if Costa Rica wishes to implement blockchain in different areas for the proper facilitation of trade, it may consider improving the governmental IT system or using external platforms.
In this context, the Ministry of Finance has been managing the Hacienda Digital Project since 2020, which aims to improve the efficiency, effectiveness and customer orientation of tax and customs administration and public expenditure management, through the modernization and digitalization of the Ministry of Finance[6]. So, it may be a great opportunity to take advantage of the digital modernization that the Ministry of Finance is carrying out for both its tax and customs operations, to implement a robust and reliable system, which can serve as a basis for the implementation of blockchain technology in the future.
2. Talent and expertise: Although there is a TEC specialty in blockchain, the country does not have sufficient expertise at the public level to achieve a proper implementation of [blockchain] technology, much less on specific issues such as international trade and trade facilitation.
Public-private partnerships are vital for instructing the public sector on technology, its potential uses, and the correct methods for its proper implementation. In addition, high-level courses with international institutions, such as the one we are conducting, are key for both the private and public sectors to understand the importance of this technology and how we can apply it to the specific characteristics and needs of our country.
3. Legal framework: Costa Rica currently has Law No. 8969, namely the Law on the Protection of individuals with respect to the processing of their personal data, which entered into force in 2011. This applies to personal data contained in automated or manual databases of public and private bodies, as well as to any subsequent use of such data. However, I believe it is crucial to update this law to include provisions for protecting data within blockchain platforms and, more broadly, to modernize legislation that is over 12 years, aligning it with current technologies.
In addition, it is important that, at the international trade and trade facilitation levels, the Customs Authority establishes specific regulatory bodies for the implementation and use of blockchain in foreign trade operations. These regulations should cover aspects such as the use of personal data on dedicated platforms, access protocols, cybersecurity, and associated responsibilities.
Shermine Elizondo
