The global economy is going through unprecedented times. The Covid-19 pandemic has shaken the world, threatening the lives and livelihoods of millions of people in both developed and developing economies, with a particularly devastating impact on small businesses. World trade plummeted in the first half the year, and despite signs of trade bouncing back, WTO estimates in October 2020 still forecast a 9.2% decline in the volume of world merchandise trade for 2020.
But in every crisis lies opportunity. The current pandemic has accelerated digitalization in all sectors, including international trade, which remains plagued by labour and paper-intensive processes that are the source of many frictions and inefficiencies. Of particular interest for trade digitalization are projects leveraging distributed ledger technology (DLT) – commonly referred to as Blockchain. The tamper-proof, decentralized and distributed nature of DLT makes it an attractive tool to break the silos that hinder international trade. Many projects that were still at an exploratory stage when the first “Blockchain and DLT in Trade” periodic table was launched a year ago have matured and reached the production stage. This is good news!
But technology is only a tool. The promising potential of DLT to facilitate international trade, from customs procedures to trade finance, will only be realized if regulation evolves to support the large-scale deployment of the technology and if a globally harmonised, digitized trade environment is put in place. This will require a global dialogue; a dialogue that involves all stakeholders, public and private. The ICC Digital Standards Initiative, which was recently launched with the support of Enterprise Singapore and the Asian Development Bank and the participation of the World Trade Organization, will work towards this ambitious aim – directly addressing disruptions experienced during the COVID-19 crisis as a result of the reliance of trade flows on paper documentation. We invite all interested stakeholders from the private sector, but also governments and other international organizations to join us in this endeavour.
Let us seize the opportunity presented by the pandemic to accelerate trade digitalization efforts to reduce frictions from international trade for the benefit of all, in particular the smallest players. The present study offers a useful snapshot of the various DLT projects that aim at making trade more efficient and sheds light on this fast-changing landscape. Keeping track of such developments is key to help inform discussions and action to make trade digitalization a reality.