3 innovative digital trends bolster safer, fairer trade

The pandemic has unveiled the power of digital technology to make global trade smoother and safer, and three emerging digital systems and tools are seen to help importers and exporters unlock the huge opportunities offered by digital trade.

The World Economic Forum (WEF) in a report said one of these innovative digital trends making global trade fairer and more productive is the digital ID. Instead of using paper documents like passports and driving licenses, digital IDs are a way of verifying identities remotely over digital channels. They can authenticate not just users electronically, but physical and digital objects as well so products can be tracked all the way from raw material to shelf.

The WEF said digital IDs, which can apply to people, organizations or things, are now critical to a wide range of international trade transactions and processes, including drawing up contracts, exchanging data, bringing new suppliers or partners on board, and complying with regulations related to the environment, counterterrorism, finance and other areas.

“Digital ID systems are typically used by government agencies like customs and business registration. But as trade becomes more digital, so does the need for a digital ID system that works globally across borders and not just in specific sectors,” the report said.

In the Philippines, there have been repeated calls to update the Electronic Commerce (E-Commerce) Act in order to ease the requirements for the recognition of electronic and digital signatures and facilitate cross-border paperless trade.

The “Readiness Assessment for Cross-Border Paperless Trade: Philippines” report jointly launched online by the United Nations and the Bureau of Customs last month recommends amending the E-Commerce Act to make it easier to prove the validity of an electronic signature and facilitate electronic notarization.

Updating the Act can also serve to provide expressed recognition of smart and automated contracts, it said.

The second emerging digital trend globally is the rise of digital trade agreements, a package of measures between governments designed to make trade easier in the digital age. Digital trade agreements can help countries sync their regulatory frameworks and improve data sharing and cybersecurity, said WEF.

In February this year, the United Kingdom signed a digital trade deal with Singapore that includes shared digital systems for e-invoicing, e-payments and other electronic documents, the Forum said.

The UK government said the deal would “end outdated rules” for exporters of goods and services, cut costs and “pave the way for [a] new era of modern trade.”

Singapore has also signed a digital trade agreement with Chile and New Zealand. The deal is designed to help trade flow between different regimes, with benefits including enhanced security, quicker cargo clearance, and faster payment processing.

For the Philippines the UN-BOC readiness assessment report recommends that to boost cross-border digital trade, the country should accede to the UN Convention on the Use of Electronic Communications. Accession will allow for uniform rules to be established on the recognition of electronic contracts and communications in cross-border transactions. The Philippines signed the UN Convention way back in 2007 but still needs to formally accede to the treaty.

Finally, another digital trade enabler is non-fungible tokens (NFTs), which give any kind of information a unique digital signature that can’t be altered or faked, providing a form of secure digital ownership, WEF said. NFTs are unique digital tokens that can be used to buy, own and sell digital or physical items online including real estate, art, music, video clips, and more.

The benefits of NFTs range from protecting sensitive information, such as that on the invoice or bill of lading, to enabling transparent, seamless automated trade. NFTs essentially streamline international trade by removing document fraud and the need for multiple regulations and human interventions along supply chains.

In 2021, more than US$17 billion of NFTs were reportedly traded globally, up 21,000% from $82 million in 2020, WEF said.

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