A French law paving the way for trade finance digitalisation has cleared its first legislative hurdle and will be followed by a decree defining the criteria for what constitutes a “reliable” digital trade platform.

Part of a package of measures aimed at enhancing France’s appeal as an investment destination and making it easier for firms to raise financing, the bill has the backing of Renaissance, the party of President Emmanuel Macron.

The bill was passed by the lower house of the French parliament on April 10 and has now been sent to the Senate, where it is set to be debated in mid-May, according to the parliament’s website.

France is the latest European country to change the law to allow digital versions of paper documents, following a years-long advocacy campaign by the trade industry. Lawmakers in the UK passed a similar law last year, while German law already allows most digital trade documents.

Alexandre Holroyd, the Renaissance lawmaker tasked with sheparding the bill through parliament, tells GTR the reforms are “crucial for trade exchanges with our partners” and will “increase our companies’ opportunities for export, as well as simplify trade finance”.

“All these factors were very early on identified by the government and myself, and this is why we were so keen to ensure that France would be a pioneer of digital trade finance, and lead our EU partners on this path.”

The draft bill, which was approved by the National Assembly’s finance committee on April 3, is based both on the Model Law on Electronic Transferable Records (MLETR), as well as a comprehensive report compiled last year by two banking experts and co-ordinated by Paris Europlace, an association which lobbies for the competitiveness of the French financial services sector.

The report included a recommended draft law for trade digitalisation, drawn up following extensive consultation with the trade sector.

According to Holroyd, the bill includes articles defining a trade record and detailing how they can be used, as well as articles defining an electronic transferable record and stating that they can be used interchangeably with paper equivalents.

A further section is dedicated to the changes to other aspects of French law needed to accommodate the reforms, although no further new legislation will be required.

Holroyd says the bill “will significantly simplify and speed up the processes: when a trading company asks a bank to finance its export projects, the enormous number of documents that are needed are still processed in a way that is quite time-consuming and backwards… not only in France, but in trade finance internationally”.

“Therefore, we expect projects to be more easily and more quickly financed. Digitalising these trade records also means speeding up and simplifying the numerous exchanges along the export chain.”


What is reliable?

While the articles concerning trade digitalisation in the bill are brief, the law will be followed by a decree to provide more detail to the many digital trade platforms which provide services to importers, exporters, financial institutions and shipping companies.

The decree will include “the criteria that any technology should comply with, in order to be deemed ‘reliable’”, a spokesperson from Holroyd’s office says. The decree will specify how platforms can “reliably” identify holders of electronic transferable records, as well as establish and preserve exclusive control over them.

Such questions are central to the digital trade ecosystem because some trade documents, such as the bill of lading, act as documents of title for cargoes which can be of significant value.

The French approach differs from the UK’s Electronic Trade Documents Act, which did not include standards on what constitutes a reliable system , theoretically leaving the criteria for reliability up to a court to decide and triggering industry efforts to develop standards for digital trade platforms, which are being led by the International Chamber of Commerce.

The French decree will also define how to “interchangeably convert electronic and paper transferable records”, the spokesperson says. The decree must be published within nine months of the bill’s formal adoption, which is likely to happen in the middle of the year.

Holroyd says there has been no opposition to the trade digitalisation components of the bill, but the broader legislation has attracted controversy over initial plans to make it easier for French banks to dismiss high-earning employees.