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The Electronic Trade Documents Bill paves the way for paperless trade

On 12 October, the Electronic Trade Documents Bill entered the UK Parliament and began its journey through the legislative process. In times of the rising cost of living and inflation, this this great news for the trade community as we need to make it as easy as possible for small businesses to trade across borders.

The Bill will have a disproportionately positive impact on small companies for which the cost of trade can be higher than the value of trade.

What is the Electronic Tarde Documents (ETD) Bill?

The Bill will put digital trade documents on the same legal footing as their paper-based equivalents to give UK business more choice and flexibility in how they trade. The Bill will modernise old legislation such as the Bills of Exchange Act 1882 and the Carriage of Goods by Sea Act 1992. In practice, this means businesses will not be required to use physical paper, saving them time and money, and will be able to get accurate, real-time data on trade flows which is vital to tackling illicit trade, raising the security and compliance of trade, and making the global economy more sustainable.

The Bill will not mandate the use of digital documents but will make it possible for businesses to use paperless documents if they wish to. The Bill is expected to come into force in the first half of 2023.

You can read more about the benefits of the ETD Bill here.

Why does the ETD Bill matter for the UK as a leader in digital trade?

Much of world trade is underpinned by English law - a legacy of the UK's historic role in trade. Not just across The Commonwealth, but for every buyer, seller, insurer, financier and intermediary using English law as a basis for contract law or handling trade documents. It's an area where the UK can realise its ambition to become a leader in digital trade and lead by an example for other countries.

Under the UK’s G7 presidency last year, digitisation of trade-related documents was made one of the G7 digital trade principles. Where governments use digital systems for processing imports, exports, and goods in transit, these should facilitate the flow of goods along the entirety of the supply chain.

With this Bill, the UK could be the first G7 country to pass this legislation and enable digitisation of trade related documents. In July 2022, the Uniform Law Commission (ULC) in the US  also passed several amendments to the Uniform Commercial Code (UCC) addressing digital assets, terminology to account for digital records but the measures still need to be taken up by state legislatures.

The ETD Bill also complements the digital chapters in the free trade agreements we have concluded to date. The absence of the bill is holding up the implementation of new digital trade corridors and taking full advantage of the  FTAs with Japan, Australia, New Zealand and Singapore which contain provisions on e-invoicing, e-contracts, and new forms of e-signatures, and open avenues to work towards interoperability of digital trade systems.

It is however important to note that there needs to be a reciprocating paperless system in the country being traded with for this to work. There still might be a long way to go to scale digitalisation of trade across the world but it is encouraging to see the UK’s leadership in this area.

What does it mean for the tech sector?

It means we can use digital technology solutions of which there are many in the market to make it easier for businesses to trade. Similarly to how the world of payment transactions was transformed through fintech solutions, we can transform trade through distributed ledger technology (DLT) to make international trade more efficient and sustainable.

For example, blockchain technologies can create a digital asset that cannot be duplicated, and hence reducing the risk of forfeiture. They also render supply chain more transparent, making it easier to trace products and their province.

We have already seen examples of how digital tech can make it easier for businesses to move goods across borders and navigate complex administrative processes in trade administration processes. The Single Trade Window - a key component of its Border 2025 strategy- will be designed to allow traders to input key data in one centralised repository. Digital technologies such as AI, blockchain/distributed ledger technology (DLT), IoT, smart contracts will be crucial to bringing this project to life.

You can learn more about the potential of digital solutions to transform trade and supply chains here.

During techUK’s Digital Tarde campaign week, we explored the role of digital solutions in digitisation of trade. Check out our podcast!

Channel website: http://www.techuk.org/

Original article link: https://www.techuk.org/resource/the-etd-paves-the-way-for-paperless.html

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