Related News

Hopes for interoperability as DSI finalises digital trade document standards

“Wake-up call”: LEIs could cut trade costs by US$100bn, industry argues

Trade Leaders Interview: Marie-Laure Gastellu, Société Générale

Swiss lender loses bid to recoup oil trade loss from ship owner

ICC issues call for action on Trade Register as regulatory pressures bite

The International Chamber of Commerce (ICC) Digital Standards Initiative (DSI) has taken what it calls a major step forward in aligning industry behind a common vision for trade digitalisation, with the release of new guidance aimed at enabling digital trade at scale.

Launched today at the ICC Future Trade Forum in Singapore, two reports: Key Trade Documents and Data Elements and Trust in Trade, outline a path to take efforts beyond the mere digitisation of paper documents to the full digitalisation of the entire trade ecosystem, making the benefits of digitally enabled trade accessible to small and medium-sized enterprises (SMEs) and emerging markets.

Produced by the DSI’s Industry Advisory Board, which brings together the key private and public sector bodies associated with the advancement of digital trade across all regions, sectors and supply chain functions, the first report promotes the data compatibility and interoperability of the digital representations of seven key trade documents – certificates of origin, commercial invoices, warehouse receipts, packing lists, bills of lading, customs declaration forms and insurance certificates.

“One of the complexities of digital trade is the huge increase in the amount of data required to complete each stage of a supply chain transaction, and the amount of data that is passed between parties along the supply chain,” the working group behind the Key Trade Documents and Data Elements report says.

The recommendations from the report go beyond simply eliminating manually issued documents, and instead seek to achieve clean, standardised datasets to allow data to be automatically processed at every stage of a trade transaction – removing the need for the repeated re-entry of common data elements and paving the way for end-to-end digital interactions.

“Trade transactions involve sometimes dozens of participants and roles along international supply chains. These parties undertake many interactions which frequently are documented in separate and security-encapsulated systems, resulting in digital islands, which often do not align to available data standards,” the report says. “Data transition between these ‘islands’ is mostly provided by using paper documentation or electronic paper substitutes. This makes the end-to-end digitalisation of all interactions between the participants in the execution of a trade transaction particularly challenging.”

The second report on trust in trade covers the creation of a foundational digital layer to underpin the flow of all of this data, in a verifiable, accountable and auditable way.

“All legally meaningful information conveyed along the information supply chain must be relied upon as all this information can potentially become subject to later reference, scrutiny, and also litigation,” the report says, calling for the creation of a “trust supply chain” that leverages the cryptographically produced verifiability of digital identities to prove that the data points created along the supply chain can be relied upon.

To understand how this work will bring down the barriers to digital trade and how it will be executed, GTR speaks to Pamela Mar, managing director of the ICC DSI.

GTR: What led the DSI to embark on its analysis of key trade documents and data elements?

Mar: Across supply chains, the navigation and transacting of goods and services takes place using over 40 key trade documents which contain key data and information about the transaction taking place. Much of this data is duplicated, cut and pasted, and passed on from party to party. When we talk about digitalisation, this means collapsing documents and PDFs into data sets to allow that data to be shared by parties along the supply chain in its original form. Today we have launched consensus data sets for seven of the most commonly used trade documents. Within these seven documents, around 25% of the data points are actually duplicates, which create the potential to share and streamline the data management process.

By this, we mean that we can identify the originator of a datapoint, the party who is authorised to create that data, and if you can secure it as it moves along so that nobody can change it, then you have a single source of truth: it’s verifiable and trusted, and because the process of ascertaining trust doesn’t have to be repeated, you can execute data sharing and reduce greatly the time and cost compared to how we do things today.

We’ve now created a foundational guide towards creating that immutable single source of truth and single source of data sharing.

GTR: How does this tie in to the second report on trust in trade?

Mar: We are promoting the creation of a digital trust supply chain. This is needed because it isn’t enough to simply say ‘I’m the supplier, I created this data point, trust me.’ If I don’t know you and you don’t know me, I can still trust your data because I know your digital identity, your credentials are proven, and I know you created this data point, because it has been verified using RFID sensors, for example. Zero-trust architecture allows you to have this, and it means that you can have zero trust with your counterparty because the architecture where you receive that information is 100% trusted.

But making this work in practice means that systems have to be able to talk to one another. Today, we’ve got numerous different models for digitisation along the supply chain, but most of them don’t interconnect. We think that if you’re going to construct your architecture, you need to do it to a universal standard, so that everything can join together. That’s where you get to systemic change. Right now, for SMEs the default choice is you adhere to your buyer’s standard. And then if you have 20 buyers, well, then you’re creating 20 duplicative work processes. There’s got to be a better way. We’ve done a lot of the work as a global community, the standards are defined, the routes are defined, the way to manifest it is defined, and the technology can help us interconnect.

GTR: The principles set out in the two reports are elegant in their simplicity, but if it were that easy, trade would be digitalised by now. What needs to happen to drive progress?

Mar: What we need is for everyone to agree and align on the core data set and then begin aligning their systems to common standards and allow us to get on with taking the paper out of the supply chain.

However, this change requires a lot of commitment, plus an understanding that we are not all starting from the same point in terms of digital capability and resources. We need to support organisations to bridge the gap. Legal and policy changes are also essential to facilitate the transition to digitalisation: passing the Model Law on Electronic Transferable Records would be a great start.

We have to be courageous and step out of business as usual because there is a much bigger opportunity here. We have systems and standards that work, that are interoperable, that are functional across territories, that are supported by the authorities, and that have an existing infrastructure. We should be using them, and the policy direction needs to be supporting them. And they also need to be accessible to everyone.

The supply chain only moves as fast as its weakest link, and so we need to support the private and public sector in emerging markets to begin that digitalisation journey.

Work is already underway on this. For example, we are working with the Asian Development Bank on a capacity building programme for mid to senior-level civil servants in four countries. For the private sector, we have launched the online certificate in digital trade strategy through the ICC Academy.

GTR: What is next for the DSI, and where do your priorities lie?

Mar: We’re going to iterate on the technology vision to make it something that is implementable and certifiable. I really want to make trade relevant to finance, technology and sustainability, because these are the areas where supply chains intersect. These are the areas where if we all have the same alignment, we can really change how the world works.

Another priority is to allow for innovation. We want to provide the architecture for everyone to align, but we want to do so in a way that allows hundreds of visions to bloom, because that’s the power of fintechs and that’s the power of SMEs. We want to give people the freedom to go and create the best way of doing things.

Finally, our focus is really on lowering the barriers – to SMEs, to emerging markets, and to those who don’t already have the language. There’s often a tendency to use words like ‘interoperability’ as if everybody knows what that is, but not everybody does – certainly not in the very ordinary world of supply chains. We should popularise and drive inclusion in both the language we use and the practices that we encourage. Digital trade needs to be something that the ordinary businessperson cares about as his or her ticket to growth, because that’s the reality, and we can make it happen if we put our minds to it.