British Chambers of Commerce
“Digitalising trade holds the key to simplifying the global system, reducing barriers, and bringing markets and businesses closer together”
Digitalising trade holds the key to simplifying the global system, reducing barriers, and bringing markets and businesses closer together. Done properly, it can share the benefits of trade more equitably in the developing world and also among micro, small and medium-sized enterprises.
Although digital trade is often talked about as a single concept, in reality it involves several distinct policies and governmental agendas. It can relate to the growing movement towards trade document digitalisation, which includes initiatives such as the UK’s Electronic Trade Document Act 2023.
This enabled usage of electronic forms of bills of lading and bills of exchange and other associated commercial documents in international trade. If similarly adopted around the world this could bring traders much closer together and realise huge efficiency gains in export trade.
Even if countries do not wish to implement exact legislative replicas of the UK legislation, the United Nation’s Model Law on Electronic Transferable Record is an effective alternative, and wider enactment and implementation of its terms would significantly boost digital trade on a global scale.
Digitalisation also relates to the creation of digital border interfaces by governments around the world. The UK, EU and US are all developing Single Trade Window interfaces – to reduce levels of manual data entry and make goods movement processes across international borders quicker and less burdensome.
By the end of 2024, the UK will have rolled out the first phase of its Single Trade Window, covering safety and security declarations on goods imports. The EU will also be taking further steps towards a Single Customs Window, by rewriting and reapplying its customs rulebook over the next few years and establishing a European Customs Authority.
Data flows are the life blood of international trade, and this is increasingly true for companies providing services overseas. According to the International Monetary Fund, digitally delivered services accounted for 54% of total global services trade in 2022.
Over four-fifths of the UK’s services exports are transmitted by digital means, ensuring lawyers’ contracts, architects’ drawings and auditors’ accounts reach their customers with ease.
This is now being reflected in numerous trade agreements across the globe, but also in the multilateral policy agenda being pursued at the World Trade Organisation in Geneva. It recognises the urgency in securing a deep and facilitative treaty on e-commerce and digital trade.
It is seen as vital to help the developing world realise the potential of trade in poverty reduction, economic growth, and gender participation and equality.
But from some nations there is pushback, and in the absence of balanced arrangements on digital trade this could spell disaster. There is currently a ban on customs duties on the electronic transmission of goods and services, but this is facing abolition in less than two years’ time. If charges were to start being made on every email sent abroad to provide services, the repercussions would be immense.
Data localisation requirements also inhibit the development of infrastructure and confidence necessary for digital trade to grow.
The UK is among the world’s best performers on facilitating trade by digital means, with nearly half of all trade being aided or done in this way. The BCC would like to see the UK government’s Export Strategy refreshed and an aim of making 60% of UK trade digital by 2030 achieved.
Shopify estimates the global e-commerce market will be $6.3trn in size this year, displaying year on year growth of more than 9%. It is expected to surpass $8trn in value by 2027.
Further digitalisation of trade is essential to maintain momentum in e-commerce growth through providing effective mobile and digital infrastructure, safe online payments, cybersecurity and consumer protection measures. The recent WTO Ministerial Conference (13) in Abu Dhabi recommitted trading nations to reach solutions on a comprehensive e-commerce agreement, attempting to secure a deal by early 2026.
There is a considerable agenda of regulatory reforms, infrastructure investment and trade policy measures required to be adopted and implemented in the coming years. Alongside this there must also be a concerted effort to avoid actions harmful to digital trade.
Let us hope the voices of the developing world, micro, small and medium-sized businesses and women are heard in ensuring digital trade is expanded across the world in fair, just and empowering ways.
