Introduction: What is paperless trading?
When goods and services cross borders in international trade, information needs to be passed between relevant parties, whether private companies or public bodies, including suppliers, logistics providers, customs, regulatory agencies, sellers and buyers. Paperless trade refers to the digitization of these information flows, including making available and enabling the exchange of trade-related data and documents electronically. Less formally, one can think of this as cross-border trade transactions using electronic data in lieu of paper-based documents. Transforming what was traditionally a paper-based documentation system into an electronic format can speed up trade and ease the cost of doing business in today’s interconnected world.
Bottlenecks in supply chain management and regulatory documentation can be particularly tricky for smaller businesses or e-traders with less experience and resources. Paperless trading, therefore, serves as a promising means to deal with the logistical challenges of e-commerce and, in particular, small shipments across borders. Overall, it is quickly becoming an essential component of governmental efforts to improve the efficiency of customs controls and trade administration processes, and of ensuring trade competitiveness in a rapidly digitizing world.
How exactly is a trade transaction rendered paperless?
Digitized exchange can be done in several ways. One way is simply to take a visual snapshot of a paper document – either a scanned or a PDF version. Another possibility is an internet web portal where individual data elements can be keyed in – this is known as data-trader interface (DTI). Paperless transactions can also be conducted using fully electronic messages – known as electronic data interchange (EDI), with formats including UN/EDIFACT, XML, JSON and other web services. Typically, these systems would provide an application-programming interface (API) to facilitate interaction with the database. At first glance, the task of moving from paper-based to paperless administration of trade may seem relatively straightforward. However, because of the need to coordinate electronically across borders, the impetus for international cooperation rises once trade is rendered paperless. Governments use a variety of arrangements, including United Nations (UN) agencies and standardssetting organizations, as well as trade agreements, to establish the governance structures necessary for paperless trading. This white paper provides an overview of these efforts, which take place across a wide variety of disparate institutions, some of which lie outside the traditional institutions associated with trade governance. The paper is written especially with trade policy-makers in mind to assist their considerations on how best to align trade rules with current and expected future trends in paperless trading. The paper is also intended to provide other stakeholders with a better understanding of existing efforts and possible future developments at the intersection of paperless trading and international trade administration to guide their inputs for trade policy. Because of the wide variety of issues associated with paperless trading, it is important to establish boundaries in the scope of what is considered in this paper. Though scanned/PDF files can present benefits, this white paper concentrates primarily on transactions conducted through electronic messages. Electronic messages afford even greater opportunities for tapping into the benefits of paperless trading thanks to the potential reuse of data, the elimination of the need to re-key data into a computer at each supply chain checkpoint, and the reduction in potential human error. Note that aspects of this paper may apply to DTI and APIs as well. The paper is also specifically focused on paperless trade as defined by the technical international trade community. This encompasses electronic forms of trade administration documents that are business-to-government (B2G) as well as business-to-business (B2B) electronic exchange of information within international trade context. The term “paperless trade”, however, can be used by other communities in a broader sense to refer to the electronic exchange of data in a purely national commercial and regulatory context. For example, banks may refer to paperless trade as applied to trade finance processes – which may also have an international component. Further, different stakeholders may diverge on where the line may be drawn on what is considered paperless trade as applied to trade administration documents versus the broader digital commercial universe. The potential for different starting points on paperless trade should be kept in mind when engaging in dialogue on the topic. The paper is a part of a series run by the World Economic Forum and the World Trade Organization (WTO) focused on e-commerce policy best practices. The inclusion of paperless trade in the series is from both the perspective of the digitalization of trade processes as well as the specific benefits this may have for small businesses using electronic platforms to engage in global trade.