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- The agreement eliminates customs duties on digital content, lowering costs for UK businesses
- It mandates the adoption of digital customs systems and e-documents, potentially increasing UK GDP by up to £24.2 billion
- The initiative also introduces legal safeguards against online fraud, enhancing consumer protection.
The UK has joined a groundbreaking global digital trade agreement, the first of its kind negotiated under the World Trade Organization (WTO).
The agreement, known as the E-Commerce Joint Initiative, was finalised on July 26, 2024, after five years of negotiations involving 90 countries.
This initiative aims to modernise international trade by promoting the digitalisation of customs documents and processes, and is expected to significantly benefit the UK economy.
Digitalisation of customs documents and processes
The E-Commerce Joint Initiative focuses on creating a more efficient and secure global trade environment.
By committing to the digitalisation of customs documents and processes, the agreement seeks to replace outdated paper-based systems.
This transition is expected to save time and reduce costs for businesses by eliminating the need for physical signatures and the physical exchange of documents.
The Organisation for Economic Co-operation and Development (OECD) estimates the value of global digital trade at around £4 trillion and growing.
The UK’s involvement in this agreement could see a significant economic boost.
According to the UK government’s analysis, adopting advanced digital trading systems could increase the UK’s GDP by up to £24.2 billion, based on 2023 GDP figures.
Even partial adoption of these digital systems is projected to provide a considerable uplift to the economy.
The agreement also aims to protect consumers from online fraud and misleading product claims.
By establishing a common set of rules, it helps create a safer environment for digital transactions.
For UK businesses, particularly those in financial services, the adoption of e-documents and e-signatures will simplify international transactions, reducing reliance on paper contracts and manual processes.
Business and Trade Secretary Jonathan Reynolds highlighted the importance of this agreement for the UK’s economic growth. He said, “We are proud to play our part in securing the first-ever global digital trade agreement, cutting costs for business and delivering on this government’s ambition to deliver economic growth.”
Science Secretary Peter Kyle said, “This global agreement aims to help people use technology safely by protecting them from fraud, while driving economic growth through the digitalisation of trade so it’s faster and more secure.”
Industry Reactions
Chris Southworth, Secretary General of the ICC United Kingdom said, “It creates the environment we need to drive innovation as we transition away from archaic paper-based processes and into the modern world of data and technology.”
The next phase involves working with WTO partners to integrate the E-Commerce Joint Initiative into the WTO legal framework, followed by the UK’s ratification of the agreement.
This initiative is part of the UK government’s broader effort to strengthen global partnerships and uphold the rules-based international order.
Matt Hammerstein, Head of Barclays UK Corporate Bank said: “As co-chair of the Trade Digitisation Taskforce with ICC United Kingdom, we have worked closely with the Government to support efforts to secure the competitiveness of UK exports, champion the digitalisation of trade at scale and continue to work on streamlining processes related to fraud and financial crime risk.”
“We welcome this announcement, which will help make the trade process easier for small, medium and large-sized businesses in the UK by removing paper-based barriers to trade. Barclays stands ready to play its part in supporting the success of British exports.”
