Trade Tech is the application of innovative technologies in the trade industry to enhance efficiency, transparency, and sustainability. It involves the integration of technologies such as blockchain, artificial intelligence, and IoT to transform traditional, paper-based processes into an interconnected web of information that connects all stakeholders across the supply chain network.
Trade Tech promises to revolutionize supply chains by providing end-to-end visibility and facilitating trade through transparent and trustworthy cross-border logistics. It reduces costs and creates new business models and services that promote efficiency and sustainability. Adopting innovative technologies ensures better risk management, forecasting, inventory control, faster replenishment, bottleneck identification, and predictive maintenance. It also mitigates the risk of financial crimes.
A global approach known as the 5Gs in Trade Tech is required to benefit from these technological innovations fully. The 5Gs policy addresses governance, international standards, and global cooperation to support widespread digitization in global trade. The approach ensures that Trade Tech’s full potential is realized, creating a global standard for digital commerce and promoting trust and collaboration among all stakeholders.
The 5 Gs are Global data transmission, Global digital Identity, Global trade rules access and computational power, Global legal recognition and electronic transactions and documents, and Global interoperability of data models from trade documents and platforms.
Global data transmission
This refers to the ability to transmit data across borders and between different technology platforms and systems securely and reliably. Global data transmission is essential for enabling the efficient flow of information in international trade, allowing for real-time tracking of goods, payments, and other trade-related data.
Global data transmission is essential for realizing trade activities such as the international provision of services and tracking international cargo across borders. It also allows for the coordination of operations across global value chains, including the management of human resources and the optimization of internal processes. Additionally, it facilitates the exchange of trade-related information among supply chain stakeholders, promoting transparency and trust.
To ensure efficient global data transmission, Trade Tech solutions must possess interoperability, which refers to their ability to integrate seamlessly with other systems and platforms. This requires the development and adoption of global standards for data transmission, such as the adoption of standardized data formats and protocols.
The benefits of global data transmission are vast, including increased efficiency, reduced costs, improved supply chain visibility, and enhanced coordination among stakeholders. It also supports the development of new business models and services, creating opportunities for growth and innovation in the trade industry.
Global legal recognition of electronic transactions and documents
This refers to the need for consistent and reliable legal frameworks supporting electronic transactions and documents in global trade. This includes adopting electronic signature laws and other legal frameworks that provide a clear and consistent basis for using electronic records in international trade.
End-to-end trade digitization requires a legal framework recognizing the validity of electronic transactions and documents across borders. Many records involved in global trade burden small businesses, as it can take days to transfer and process them. Trade Tech presents an opportunity to automate trade transactions and increase efficiency while enhancing information security and integrity. Governments can also benefit from digitization through better revenue collection. However, the cross-border use of electronic commerce and documents is currently limited due to some countries’ need for legal recognition. Even in countries that have recognized them, there may be differences in the criteria for the award, which creates silos of limited geographical validity.
A harmonized legal framework that recognizes the legal validity and enforceability of electronic transactions and documents is crucial for countries to facilitate cross-border trade. The United Nations Commission on International Trade Law (UNCITRAL) has developed a model law on electronic commerce, which has been adopted by several countries, providing a basis for harmonizing legal frameworks globally. The Model Law recognizes the legal validity of electronic transactions and provides a legal framework for electronic signatures, contracts, and other related aspects of electronic commerce.
In addition to the Model Law, other international instruments, such as the United Nations Convention on the Use of Electronic Communications in International Contracts, have also been developed to promote electronic transactions and documents in cross-border trade. Governments and international organizations should work together to ensure the adoption and implementation of these instruments globally to facilitate exchange and increase efficiency while enhancing information security and integrity.
Global digital identity
This refers to the need for reliable and secure digital identity systems that enable individuals and organizations to conduct transactions and access trade-related services online.
To achieve complete digitization of trade, it is crucial to have a universal approach towards digital identities for both natural and legal persons and physical and digital objects. This will help avoid the creation of digital identity silos and enable effective trade transactions and document sharing. Verifying a person’s identity is essential for carrying out trade transactions and sharing documents. Similarly, identifying a product, container, consignment, or shipment is crucial to tracing its history and location and gaining essential knowledge about the products being transported.
Digital identity systems for companies and objects can increase supply chain transparency, predictability, and trust. However, the proliferation of incompatible digital identifiers creates silos and high frictional costs, just like different documentation requirements and forms in the physical world hinder trade. Ensuring greater consistency among identification systems and mutual recognition is essential to avoid digital fragmentation.
A global digital identity system would help to streamline the trade process, reduce fraud, and improve security.
A global approach to digital identities of natural and legal persons and physical and digital objects that send or receive electronic information is required to achieve end-to-end trade digitization. This approach aims to prevent the creation of digital identity silos by enabling the seamless transmission of digital identities across different systems and platforms.
Verifying the identity of legal or natural persons is crucial to conduct trade transactions and sharing documents with them. Similarly, identifying a product, container, consignment, or shipment is essential to trace its history and location and obtain helpful knowledge about the products being transported.
Global trade access rules and computational laws
This refers to the need for clear and consistent rules and regulations that govern the use of technology in global trade. This includes laws related to data privacy, cybersecurity, and other issues essential for protecting the integrity of trade-related data and systems.
Adopting computationally expressed trade rules would significantly enhance efficiency and inclusivity in end-to-end trade digitization. In the context of increasing economic integration, cross-border rules are becoming more complex, technical, and challenging to understand and implement. As a result, many small businesses need help identifying and complying with market access rules, tariffs, non-tariff measures, or preferences intended to improve their competitiveness in international trade.
Legal innovations are being developed to streamline trade compliance through automation. However, these initiatives are often set in silos, making them unavailable to other systems, including those within the same government or external entities that could benefit from access. The lack of international cooperation in this area could limit the future of computationally expressed trade rules.
Global interoperability of data models for trade documents and platforms
This refers to the need for standardized data models that enable different trade systems and platforms to exchange data in a seamless and standardized manner. Standardized data models can simplify international trade, enabling more efficient communication and data exchange between different platforms and systems.
Understanding the information exchanged across borders is necessary for end-to-end trade digitization. Digitizing trade documents is just the first step, and the real revolution is to move from records to data. However, to exchange data, trading partners need to understand the information similarly. The United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT) and the World Customs Organization (WCO) have developed semantic libraries to help establish standard definitions and structures of data. But to ensure interoperability between platforms, there needs to be a broader promotion of these semantic libraries to reach a critical mass of users and globally agreed to methods for communicating and sharing data. Many initiatives are underway, but they often operate in isolation, undermining standardization efforts and exchanging electronic trade information.
In conclusion, Trade Tech is a transformative force in the trade industry, with the potential to increase efficiency, transparency, and sustainability. Integrating technologies such as blockchain, artificial intelligence, and IoT promises to revolutionize supply chains, reduce costs, and create new business models and services. However, a global approach known as the 5Gs of Trade Tech is required to realize these benefits fully. This approach emphasizes governance, international standards, and global cooperation to support widespread digitization in global trade. The 5Gs include global data transmission, global digital identity, global trade rules access, computational power, global legal recognition of electronic transactions and documents, and global interoperability of data models from trade documents and platforms. By adopting these principles, Trade Tech can reach its full potential, creating an international standard for digital trade that promotes trust and collaboration among all stakeholders.