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Imagine a world where trade is conducted in pixels instead of paper, where risk is reduced, trade finance is more accessible, SMEs can participate in trade, systems and processes connect seamlessly, and information flows in common, standardised formats across jurisdictions and supply chains.
This is the vision of the Centre for Digital Trade and Innovation (C4DTI), an industry-led and government-supported initiative by the International Chamber of Commerce (ICC) United Kingdom that aims to transform the world of trade through digitalisation.
Its ultimate goal is to create a modern, digital trading system that is cheaper, faster, and simpler for all companies and allows a more inclusive, sustainable, and greener trading system that benefits all entities across the supply chain.
At the ICC United Kingdom and C4DTI, Trade Finance Global’s (TFG) Deepesh Patel spoke with Nick Davies, Director of the ICC’s United Kingdom C4DTI, to learn more about their role in accelerating the adoption of digital trade.
C4DTI empowering digital trade – From challenges to actions
International trade is a complex global network that relies mostly on paper-intensive processes. Today, trade involves much more than just a transaction between a buyer and a seller. Rather, it encompasses a vast network of multiple independent parties spread across the supply chains and spanning various geographical regions.
Digitising such an intricate ecosystem, given the myriad entities and cross-border regulations involved, is, in all respects, a substantial challenge. That’s where the C4DTI plays a pivotal role, managing several fundamental areas that are necessary to enable an effective transformation to digital trade.
The first key area is providing an impartial environment where various supply chain participants can convene to exchange ideas without the constraints of antitrust and anti-competition laws.
Davies said, “We’re a neutral, convening entity trying to bring people together and allow them that pre-competitive space where they can discuss things and test things out without that antitrust and competitive pressure that they might find in other areas.”
Another focus area for C4DTI is driving interoperability. Cross-border digital trade platforms need to be interoperable to ensure harmonisation and standardisation of digital information exchange. The C4DTI is adopting a multifaceted approach that includes regulatory reforms and intergovernmental coordination, thereby underpinning the unification of standards and interoperability for international technical and legislative standards.
Davies explained, “Interoperability is very easy to say, but it’s sometimes more difficult to define. I think there are a number of aspects to interoperability legal, so that what has legal effect in the UK also has legal effect in other jurisdictions.”
To accelerate the deployment of digital solutions in the global trade landscape, C4DTI has conducted a pilot programme in Singapore, with expansion plans to Thailand and the Netherlands. It also aims to leverage trade agreements such as the PCTPP and other FTAs, while demonstrating the benefits of digital trade technologies on a transactional level.
Overcoming pilot exhaustion: The C4DTI approach
To embrace digital trade technologies, corporations and governments must collaborate to test technology solutions that can effectively operate in the digital environment, both domestically and across borders. C4DTI supports companies in achieving this goal through strategy-focused digitalisation pilots.
These pilots test the use case of technology solutions and ensure stakeholders operate effectively in a real-world, cross-border digital environment with similar international legal standards and frameworks.
However, pilot exhaustion can be a major obstacle to the successful implementation of digital trade solutions. To address this challenge, C4DTI takes a two-pronged approach.
First, the pilot is designed to align with a company’s strategy and goals. This ensures that each pilot contributes to the company’s overall objectives and becomes an integral part of the company’s operations.
Davies said, “It’s no good just doing a pilot, saying, wasn’t that good, and then moving on to another one. It’s saying, here is a pilot which worked, or indeed didn’t. We can always learn from pilots that go wrong.”
Secondly, C4DTI recognises the importance of inclusion in the pilot process, such as customs officials, and government agencies. By engaging with these parties, C4DTI can identify potential legal and regulatory barriers and address them through advocating for policy changes or leveraging existing regulations. By doing so, pilots become technically feasible, legally, and commercially viable, laying the groundwork for successful digital trade implementation at scale.
Davies highlighted, “The second thing C4DTI must do is feed that out into the policy design world.”
While a total shift towards universal trade digitalisation is unlikely in the immediate future, inclusive pilot programs are the cornerstone of the transition process. Prioritising the inclusion of diverse stakeholders, alongside technological and legislative innovations, is essential to a sustainable digital trade transformation.
The UK and global digital trade: Full steam ahead
Large corporations and multinationals can remarkably speed up the adoption of digital trade solutions by extending their application into their supply chains and customers. This would create a snowball effect and encourage more companies to follow suit.
Although transitioning from traditional paper-based practices to digital trade solutions may seem daunting, it can yield significant benefits, such as faster movement of goods, increased opportunities for SMEs to participate in cross-border trade, and timely availability of shipping documents.
Davies urged, “It sounds a bit scary, particularly when quite often they’ll be used to just paying somebody else to deal with their export issues. But let’s persuade them that it’s worth them getting involved. Give it a go.”
The C4DTI commitment to promoting the widespread adoption of digital trade solutions enforces the UK’s leadership in global digital trade. With 80% of international trade governed by English law, the introduction of the Electronic Trade Documents Bill (ETDB), and the Digital Standards Initiative (DSI), the UK is indisputably a prominent player shaping the future of digital trade worldwide.