Insight & Analysis

Connecting the digital trade islands

Published: Jun 2022

It is widely accepted that the absence of international standards is a major barrier to digital trade finance.

Digital globe and trade graphs

The Digital Container Shipping Association’s Henk Jan Gerzee told Treasury Today earlier this month that digital standards for end-to-end shipping documentation were a necessary first step to enable full digitisation of shipping documentation.

The Tees Valley-based Centre for Digital Trade and Innovation is the latest phase of a digitisation project that started in 2018 with legal reform. Almost 100 countries have now committed to update their national laws to recognise commercial trade documents in digital form and align their legal systems with the UNCITRAL Model Law on Electronic Transferable Records explains Chris Southworth, Secretary General of the ICC United Kingdom.

The UK will be the first major economy to achieve this objective through the Electronic Trade Documents Bill which we reported on last month.

The ICC has also been working on what it describes as the definitive guide for interoperable standards. It sees the new centre as a neutral forum that can co-ordinate the efforts of governments and trade sectors to adopt the legal and standards frameworks.

“It has the capability to pilot and test cross-border systems across borders, the first priority of which is to open up the east-west corridor starting with electronic bills of lading and working across all the commercial trade documents to make sure information is flowing from platform to platform and system to system,” says Southworth.

The ICC is looking to set up a virtual test centre within the facility and is currently running technology agnostic live pilots testing end-to-end supply chain transactions with stakeholders in the UK. Similar programmes are planned in Singapore and Thailand, and Belgium is due to commence pilot projects next year.

“Many of the technologies coming onto the market are untested in an interoperable environment – that is the crucial piece that is missing and the piece we are focusing on,” says Southworth. “The question is, can we connect the platforms and systems and are these systems capable and ready to deliver?”

From September the centre will offer training for small businesses to help them understand what solutions are available in the market to handle digital trade documents and what standards they need to adopt to operate across borders.

Another priority is to drive up the adoption of digital identities.

“We know from analysis conducted last year that only 4% of UK trading companies are using digital identities and that these are financial services companies that have to use them for regulatory reasons,” says Southworth.

The centre (which officially opened in April) will also commission and produce thought leadership content with road maps to outline the opportunities presented by digital trade finance as well as gather evidence from companies on the challenges they face.

The UK facility will be the first of its kind, but there are working groups planning similar facilities in France, Germany, the Netherlands, Belgium and Thailand and the ICC expects other countries to follow suit. These facilities will be connected to ensure a consistent approach to the adoption of standards and legal frameworks.

Southworth says the ICC has met with the various digital trade finance platform providers to get their buy-in. “We have asked everyone to work with us and we will be working to help them become interoperable and move away from the closed system approach, which will reduce trade costs and complexity, particularly for corporates.”

In addition to the ‘hub’ in the Tees Valley, there will be ‘spokes’ working with the City of London and innovation clusters such as the UK freeports.

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