As with all GTM contracts, verification of a specific contract’s conditions are performed in the childchain responsible for the contract. When all conditions of a contract are met, payment authorizations are distributed to all relevant parties. Either off-chain payment in fiat or on-chain payment in tokens of a pre-defined currency can be exchanged. Off-chain payment in fiat must be confirmed within the appropriate childchain. All relevant milestones during the life-cycle of a process are posted into the Global Visibility part of the GTM sidechain.
GTM smart contracts are divided into five distinct categories:
Movement of Goods (MG)
These contracts represent the physical movement of goods.
If solely nominated vendors are allowed to participate in the contracts, only events that verify fulfillment of the contracts’ conditions are propagated over the blockchain.
If a vendor shall be selected from a pool, an auction to award the contract to the vendor is conducted on the particular childchain. Rules of the auctions are programmed during the setup of a childchain with certain rules programmed to be selected depending on parameters of the movement, e.g., mode of transportation, in-bond requirements, etc.
Agent Services (AG)
These contracts mostly refer to Freight Forwarding and Customs Clearance agents. The Agent services are the most complicated and sophisticated contracts in the GTM blockchain.
The contracts are subject to ever-changing government regulations and always require considerable amount of software and hardware resources and maintenance. All calculations, verifications, communications with multiple government agencies, and accesses to databases must be executed off-chain with final results and documents populating the childchain and GTCV part of the GTM sidechain.
The childchain responsible for agent services must have open duplex interactions with the Import/Export Compliance childchain.
Since agents, especially Customhouse Brokers, provide frequent and comprehensive services require specialized expertise, the trusted agents have already gone through a selection process and would be subject to verification of contract fulfillment events.
For occasional shipments, the selection can be conducted using programmed online auctions in the corresponding childchain.
Import and Export Compliance (IEC*)
Compliance contracts almost always perform auxiliary functions. They are essential parts or crucial milestones of a larger contract. These functions, however big or small, shall be treated as smart contracts. Upon execution of a function, the payment must be authorized by a requesting node, regardless of the final performance of the whole contract. Some functions shall be executed before a contract can commence. Sourcing assignments, letters of credit authorizations, international deliveries- all need to know that mandatory documentation is available and what information is mandatory for cross-border operations.
First and foremost, compliance contracts ensure adherence to numerous governmental rules and regulations to reduce and eliminate fines and penalties.[1]
Most compliance contracts are, in fact, compliance ratifications and verifications of compliance checkpoints that ascertain the validity of the more encompassing contracts on a blockchain. This is similar to how a letter of credit needs multiple compliance endorsements before it can be issued.
As is the case with service contracts, the compliance contracts are also subject to ever-changing government regulations and always require considerable amount of software and hardware resources and maintenance. All calculations, verifications, communications with multiple government agencies, and accesses to databases must be executed off-chain with final results populating the childchain and Global Visibility component of the GTM sidechain. As an additional level of complication, in many instances, compliance software suggests several possible solutions and mandates human intervention to select the optimal one.
*) IEC – Import and Export Compliance
IC – Import Compliance
EC – Export Compliance
Duty Management (DM)
These contracts rely heavily on the Global Content maintained in an external database connected to all GTM applications. Due to huge volume of information and frequent extensive maintenance, it cannot be replicated on multiple blockchain nodes.
Duty management contracts determine and/or confirm adherence to the rules of origin, select applicable Free Trade Agreements, and calculate optimal duties and taxes that should be paid to national customs and revenue collecting authorities.
Few contracts, such as landed costs calculations to assist in global sourcing, can be executed as standalone contracts, internal to the childchain.
[1] E.g., supply chain participants must be screened against national and international lists of restricted / denied parties at multiple points during the shipment process, certain goods can be prohibited at certain destinations, proper documents must accompany the shipment, proper information must be reported to participating government agencies, etc.
