Estimated reading time: 5 minutes
Yesterday, the World Trade Organization (WTO) and the World Economic Forum (WEF) formally launched their latest joint publication The Promise of TradeTech: Policy approaches to harness trade digitalization.
Tradetech is the set of technologies that enable global trade to become more efficient, inclusive and sustainable.
The publication emphasises that the technological innovation needed for a Tradetech evolution already exists but that the major challenge for global adoption is building international policy coordination.
The joint publication specifically examines the potential of artificial intelligence (AI), blockchain and distributed ledger technology (DLT) and the internet of things (IoT) to shape the global trade ecosystem.
At the report launch, Mr. Børge Brende, President of the WEF, said, “New technologies have always been important for driving trade – historically we can look back at the steam engine or the shipping container. Today, the technology is available but the legal framework is not there”
“Technology is only a tool,” Dr Ngozi Okonjo-Iweala, Director General of the WTO added.
“Putting in place the right ecosystem and policy environment to support the use of cutting edge technology to advance trade digitalisation is critical. Governments have a key role to play in this regard.”
“The publication is an excellent example of public-private collaboration. It identifies the five key building blocks of trade digitalisation and discusses how trade agreements can be further leveraged to advance them.”
The 5 Gs of Tradetech
The report centres around these 5 building blocks, which the authors refer to as the 5 Gs of Tradetech. It discusses how they can change the trade ecosystem and how multilateral, plurilateral, and regional trade agreements can help facilitate their adoption:
- Global data transmission and liability frameworks.
A truly global digital trade ecosystem requires stakeholders from all around the world to have reliable and affordable connectivity. This requires closing the digital divide and establishing internationally recognized standards and frameworks.
Trade agreements have been helping to combat these challenges by contributing to the drastic advancements and availability of telecommunications software, equipment, and markets. They can further assist by fostering regulatory convergence and interoperability among members, the report highlights.
- Global legal recognition of electronic transactions and documents
The current international trade system makes use of a large number of documents placing a particularly heavy burden on the smaller businesses participating in the space. If they become legally recognised, digital documents will help alleviate this burden.
Governments can leverage trade agreements to support the official legal recognition of digital documents using international standards and guidelines, like the UNCITRAL MLETR, as a useful common basis they can work towards.
- Global digital identity of persons and objects
When dealing with any entity in a digital environment, it is even more critical to establish a robust and trustworthy method for identifying that they are who they claim to be. Tradetech offers solutions for establishing digital identities across operational siloes.
Governments can use trade agreements to avoid establishing divergent digital identity systems that are incapable of communicating with each other. They can also use trade agreements to link these new standards to existing product classification systems like the Harmonized System (HS) Codes maintained by the World Customs Organization.
- Global interoperability of data models for trade documents and platforms
A global digital trade ecosystem not only requires communication to cross international borders, but it requires the shared information to be understandable by all parties involved. This means that the information needs to be clearly defined and unambiguous.
Governments can leverage trade agreements to promote the use of consistent data standards to ensure that systems are interoperable and coherent information is able to flow from country to country.
- Global trade rules access and computational law
The rules that apply in a cross border context are becoming increasingly more difficult to understand and implement, particularly for small businesses. By using computational law, governments can help bridge the gap between legal and governance structures to help users better understand how to comply with regulations.
Trade agreements can encourage governments to publish official machine-executable packages of trade policies alongside human-readable text to explain the processes to users.
Industry Collaboration
In addition to discussing these core building blocks, the report highlights many of the prominent organisations and projects working in the Tradetech space, shedding some light on the specific approaches being used to tackle these issues in practice.
By pulling together both private and public sector stakeholders, the report both highlights and exemplifies the need for key members of all spheres of global trade to work together to usher in the latest era of technological advancement in the global trade industry.
WTO Director-General Dr Ngozi Okonjo-Iweala says of the new report, “One of the key takeaways is the need to accelerate trade digitalisation to gain greater visibility into supply chain operations and reduce paperwork. Through this, we will facilitate trade, reduce trade costs, and make supply chains more resilient. This will benefit companies – especially small businesses – and consumers.”
Read our latest issue of Trade Finance Talks, May 2022
