Digitization holds as much promise for businesses as it does for financial institutions and other parties involved in trade flows, promising greater efficiency, reliability, sustainability and integration into international trade and supply chains.
So far, so good. But it’s complicated. Global trade consists of intersecting flows: the physical flow of goods, the document flows that allow goods to move and pass various controls to reach their destination, and the financial flows that form the basis of transactions between buyers and sellers and form other parties. persons involved in the transactions, including carriers. , insurers, logisticians and of course banks. This exposes the whole process to delays and other risks such as fraud.
Part of the problem is that sourcing goods still requires the physical transmission of paper documents, which is costly and time-consuming. Currently, a delay in the original paper bill of lading can prevent the buyer from taking possession of the goods once the ship carrying them has docked.
Paper bills of lading became widespread in the 16th century and still account for almost 99% of the commercial bills of lading issued today. In about 40% of all container trade transactions, up to 20 documents can be exchanged in a single shipment between different actors in the chain.
For example, if you look at the degree of digitization in the private customer business, it is noticeable that less than 1% of international business transactions are processed in electronic business documents.With the global trade finance gap calculated at a record $1.7 trillion as of 2020, according to the Asian Development Bank, creating a digital ecosystem is seen as an important step in unlocking future growth. Consultant McKinsey predicts an electronic bill of lading could save $6.5 billion in direct costs and enable an additional $40 billion in global trade while speeding up the exchange of trade-related data, documents and electronic authorizations between relevant parties in the supply chain.
A Model Law on Electronic Transferable Records (MLETR) was adopted in 2017 by the United Nation Commission on International Trade Law (UNCITRAL).It enables the legal use of electronic versions of documents such as bills of lading, promissory notes, promissory notes, warehouse receipts, international guarantees and letters of credit both in Poland and abroad. So far, only six states – Bahrain, Belize, Kiribati, Papua New Guinea, Paraguay and Singapore, as well as the financial hub Abu Dhabi Global Market – have adopted the MLETR into their national legislation.
However, the momentum may increase. The Electronic Business Documents Act is currently under consideration in the UK Parliament and if passed will come into force next month, said Chris Southworth, general secretary of the UK’s International Chamber of Commerce (ICC) and co-chair of the Legal Reform Advisory. Advise. ICC initiative for digital standards. The ICC projects that similar regulations will cover 60-80% of world trade by 2026.G7+ China and the Netherlands are drafting legislation, Thailand has prepared a draft law and 86 countries are preparing to commit to reforming and aligning their laws within the framework of the World Trade Organization in 2024, including across the country. EU.