Paper Trail Holds Back Digital Trade Processes as APEC, ABAC Push Practical Fixes
APEC economies and businesses are advancing a joint initiative to make electronic trade documents work across borders, tackling legal, technical and capacity barriers that continue to keep much of global trade reliant on paper.
Around four billion paper documents still circulate through global trade each year, with less than one percent fully digitalized. Even where trade documents have gone electronic, different legal frameworks, technical standards and digital systems can prevent them from being recognized or exchanged across borders.
This challenge was discussed at a dialogue held in Dalian last week by the APEC Centre of Excellence for Paperless Trade (ACCEPT). Endorsed last year, ACCEPT, is a collaborative initiative between APEC economies and the APEC Business Advisory Council (ABAC) to help close these gaps and accelerate the practical adoption of paperless trade.
“We want to reduce the cost and friction of moving goods across borders, yet for many businesses, trade unfortunately remains far more paper based,” said Kok Ping Soon, ABAC Singapore member and Chief Executive Officer of the Singapore Business Federation (SBF).
“Legal frameworks differ across jurisdictions and systems do not always connect seamlessly with one another,” Kok added. “As a result, the result is familiar to many of us: delays, duplicated processes, higher compliance costs and uncertainty.”
SBF, through its Centre for the Future of Trade and Investment, hosts the ACCEPT Secretariat and provides administrative, logistical and program support for its work. Its initial work focuses on four documents at the heart of many trade transactions, such as electronic bills of lading, certificates of origin, invoices and customs bonds.
The scale of the opportunity is significant. Ocean carriers issue around 45 million bills of lading each year, with about 95 percent still not electronic, while hundreds of billions of business-to-business invoices continue to be processed in non-electronic form globally. Research presented at the dialogue shows that the bigger challenge increasingly emerges when documents have to move between economies.
“Paperless trade will only deliver its full benefits when electronic documents can move across borders as reliably as the goods they support,” said Julio Chan, Chair of the APEC Committee on Trade and Investment.
“ACCEPT gives APEC economies and businesses a practical way to address the gaps that still stand in the way, from legal recognition and common standards to interoperability, and ultimately make cross-border trade easier, faster and more efficient.”
A key part of ACCEPT’s work is to move from policy into practice through pilot programs that test electronic trade documents in real-world transactions and identify where legal, technical and operational barriers remain. Progress on paperless trade will require the involvement of a vast number of stakeholders across the supply chain and ACCEPT brings governments and businesses together in this regard.
The dialogue brought together over 40 participants from 14 APEC economies, businesses and international organizations to discuss the practical next steps needed to advance cross-border paperless trade.
In her closing remarks at the dialogue, Denise Pereira, Director of the International Trade Division at Singapore’s Ministry of Trade and Industry, said pilot programs can help test what works in actual cross-border transactions and identify where processes break down.
“The vision should be for successful pilots to provide a pathway towards regular commercial use,” Pereira said. “Businesses and governments will need to build on initial adoption to embed electronic trade documents into day-to-day trade processes and allow the scaling of solutions for mass adoption by businesses.”
For businesses, particularly smaller firms with fewer resources to navigate different systems and requirements, making electronic trade documents work across borders could mean less paperwork, lower compliance costs and fewer delays moving goods.
ACCEPT welcomes participation from both public and private stakeholders for a meaningful collective endeavour and valuable objectives. ACCEPT’s progress will be reported annually to APEC economies and ABAC.