The quest to reduce the estimated 28.5 billion paper trade documents printed and flown around the world daily is well underway in the UK, after the government introduced the Electronic Trade Documents Bill in parliament last week.
The development has been lauded by banks, industry associations and solution providers as a “game-changer” for trade, while the UK government says the legal reform is expected to provide a £1.14bn boost to British businesses over a 10-year period.
However, the response from exporters has been somewhat more muted, with several telling GTR that they were “unaware” of the legislative changes being made.
“We haven’t heard about this,” says Grainne Kelly, CEO of BubbleBum, a British designer and manufacturer of innovative travel solutions for families that exports to major retailers in almost 30 countries worldwide.
Under the current law of England and Wales, being the holder or having possession of a trade document has special significance, and as such does not allow an intangible electronic document to be possessed. As a result, many of the documents used in international trade are still in paper form.
Work on changing this began in earnest in May last year when the Law Commission of England and Wales began a wide-ranging consultation in the wake of a commitment made by G7 digital and technology ministers to adopt electronic transferable records.
The bill will now go through the House of Lords before going to the House of Commons, and if passed, will “undoubtedly facilitate cross-border commerce by cutting unnecessary costs and reducing processing times and delays,” says Andrew Tettenborn, professor of law at Swansea University and the Institute of International Shipping and Trade Law.
But translating that exuberance into real-world benefits for exporters today will require some work, as Chris Southworth, secretary general of the International Chamber of Commerce (ICC) UK, explains.
“Red tape is a real pain point for exporters, and this bill goes a long way to solving this. However, we recognise that we are not going to be able to change the system in one day. You can’t just flick a switch and make trade digital; you need to get the right frameworks in place to enable change to happen,” he tells GTR.
“Awareness of the bill is understandably low, but we have to prepare the market and help companies understand the opportunity here, which is an 80% reduction in trade costs. This is real world, positive change,” he adds.
For UK exporters that have found themselves mired in additional paperwork since Brexit, this point is an important one.
“A lot of this extra administrative work has been created since Brexit,” says Paul Schaffer, managing director of Lincolnshire-based Plum Products, which exports children’s play equipment to more than 40 countries. “Less red tape and a more enabling environment would be a far greater benefit for businesses.”
“Anything that improves the efficiency of shipping would be well received, particularly after the last few years of Brexit complexities compounded by Covid,” adds BubbleBum’s Kelly.
But without greater knowledge on how to go about entering the new digital world of trade, many exporters risk missing out on the benefits of the legal reform.
“We’ve been very focused on the macro issues and changing the law, and now it’s time to focus on ensuring businesses understand what trade digitisation means to them,” says Southworth.
What this will require, say industry participants, is outreach by the government as well as industry associations to help companies access digital trade documents, as well as bring their own systems into the digital age.
“What businesses need now is an understanding of how to implement digital documentation into their businesses and reap the benefits of this technology,” Marco Forgione, director general of the Institute of Export & International Trade (IOE&IT) tells GTR.
“We support the Electronic Trade Documents Bill,” says Martin McTague, chair of the Federation of Small Businesses, a UK business organisation representing small and medium-sized firms. “Document overload is a real problem for our members when trading internationally, and the moment it is particularly critical to reduce unnecessary burdens facing business. Although this bill is not an entire solution, it is an important first step. It is vital that the government provides support to help small businesses digitise their operations, in order for them to capitalise most effectively on electronic trade.”
Through the Centre for Digital Trade and Innovation, based in the UK’s Teesside region, the ICC and other stakeholders – including the IOE&IT, which will be running training courses for businesses – now plan to scale up initiatives to digitalise trade. Pilots and research projects are being carried out to explore how best exporters can benefit not only from the new law, but also from the modern digital trade corridors being created with the inclusion of digital chapters in the UK’s free trade agreements.