Case gives clarity on the incorporation of standard terms. Credit: 3D Animation Production Company, Pixabay

Is global trade finally ready to go digital?

 

In an age defined by ultra-fast digital transformation, the global trade landscape remains anchored in a bygone era of paper. Despite the acknowledged benefits of going digital, international trade continues to depend heavily on paper-based documents and processes. 

A new OECD policy paper advocates that it's time to abandon the archaic "paper chase" and embrace a future where digital solutions are not just an option, but an enabler of more efficient, resilient, and sustainable trade.

The rationale for this shift extends beyond simple convenience.

Going paperless promises to significantly reduce trade costs, which, in turn, can boost competitiveness and foster more trade.

The OECD report quantifies these benefits with data, calculating that a 10% improvement in bilateral performance in automating border procedures, coupled with streamlined documentation and increased co-operation among border agencies, could lead to a 18% surge in global goods exports. A further reduction of 0.1 points in the Digital Services Trade Restrictiveness Index (DSTRI) for electronic transaction frameworks, e-payments, and connectivity—an indicator of important domestic regulatory reforms—is associated with a 37% increase in global exports.

Beyond the direct economic gains, the report argues that digitalisation is a crucial tool for achieving broader policy objectives. It can support greater supply chain visibility and resilience, a need underscored by recent global shocks such as the Covid-19 pandemic and geopolitical tensions. By transitioning from analogue to digitised information, businesses can track goods in real time, making it easier to mitigate risks and respond with agility to disruptions.

 

ESG aid

The report also highlights digitalisation's role in meeting the world's rapidly evolving environmental and social sustainability requirements.

As firms face increasing demands for transparency regarding their environmental and social footprint across the supply chain, digital solutions can help them more effectively comply with new regulations and standards.

This is particularly relevant as two-thirds of surveyed sustainability regulations specify border processes, but many fall short on defining clear documentary requirements or the platforms needed for information exchange.

The path to a paperless trade ecosystem involves five key steps, according to the OECD report:

  1. Digitisation of documents: Converting physical trade documentation, from invoices to customs declarations and certificates of origin, into electronic formats.

  1. Digitalisation of processes: Leveraging technology to streamline and automate customs and border agency procedures, including pre-arrival processing, risk management systems, and electronic payments. 

  1. Adoption of digital technologies: Implementing tools like APIs, blockchain, and AI to automate document sharing and enhance efficiency.

  1. Standardisation of data elements: Ensuring that data is machine-readable and interoperable across systems.

  1. Implementation of enabling regulatory frameworks: Establishing the necessary legal and institutional structures, such as the recognition of e-signatures and e-transferable records.

“Together, these are the building blocks of going paperless initiatives. Importantly, all need to advance in parallel,” said the OCED. Advancing on one without another could create bottlenecks that reduce effectiveness. The OECD gives the example of private and public sector adoption of digital documents and processes which will only be effective if appropriate technologies are being used to share data, including with customs and border authorities, and if regulatory frameworks are adapted to the use of digital certificates.   

 

Policy problems

Progress is being made, but significant policy gaps remain. While countries are moving quickly to adapt regulations to enable electronic transactions, more progress is needed on electronic transferable records and domestic e-payment frameworks. Similarly, despite improvements in automating border processes through digital Single Windows and electronic payments, a challenge remains in implementing digital tools for co-operation among border agencies. The report notes that mechanisms for border agency co-operation, such as shared risk management systems, have some of the lowest levels of implementation.

The regulatory environment for cross-border data flows is also becoming increasingly complex, which could have negative consequences for going paperless.

This complexity is exacerbated by a lack of clarification on how new sustainability regulations will integrate with border processes. The OECD emphasises the critical need for technical interoperability, which must be underpinned by a robust policy environment.

To advance the paperless agenda, the report offers several recommendations for policymakers. It underscores that domestic regulatory reforms are a powerful engine for boosting export competitiveness. Furthermore, it stresses the importance of engagement in international regulatory co-operation on digital trade issues to reduce frictions from regulatory differences and overcome growing domestic barriers. 

International fora like the WTO's Joint Statement Initiative on E-commerce are already making progress by addressing paperless trading, Single Windows, and electronic transaction frameworks in their "stabilised text". Additionally, regional trade agreements and emerging digital economy agreements are increasingly incorporating provisions for customs automation, e-signatures, and cross-border data flows.