Transforming Trade in the 4th Industrial Revolution - UK Leadership, Technology and Common Law | #techUKDigitalTrade
International trade is a £1.4 trillion industry, subject – currently - to significant friction. The Electronic Trade Documents Bill is a simple, enabling piece of legislation. Drafted by the Law Commission it will allow digital documents to have the “same legal treatment, effects and functionality” as paper documents as long as they satisfy various criteria.
Until this law comes into effect, trade documents, such as Bills of Lading and Bills of Exchange, must be hard copy – paper documents. This can mean someone boarding a plane at Heathrow with a document wallet so that a container ship in Singapore can have the right paperwork and be able to continue moving. Millions and millions of pieces of paper, endless hours of burdensome bureaucracy, delays, inefficiencies, and significant environmental costs.
The Bill, intentionally and rightly, does not mention any particular technology but clearly states the criteria any electronic trade documents must possess. These three criteria are that it must not be possible for more than one person to exercise control of the document at any one time. That when the document is transferred, any person who was able to exercise control of the document before the transfer loses the ability to do so and finally, that a reliable system must be used to allow any person who is able to exercise control of the document to “demonstrate that fact, to protect the document from unauthorised interference, and to ensure the document can be distinguished from any copies”.
I have been writing about distributed ledger technology (DLT) since 2017 highlighting that this technology can enhance accountability, security, and accessibility. It can meet the criteria listed above. The technology is proven and although a few years ago, there were just a few players and not much choice, the market of solution providers has matured, and I hope will develop further in response to this change in law. Evidence suggests that the use of this technology is far safer in terms of fraud and cyber security.
The Electronic Trade Documents Bill also provides the UK with a unique opportunity to demonstrate leadership internationally. English law governs 80% of trade documents worldwide and that fundamental relationship between English law and the international trading system combined with our early adoption of this law - based on a 2017 UN model law – means all eyes are on us. The business case for digitalising commercial trade documents across the Commonwealth is worth £1.2 trillion and this Bill could form the template for the 52 countries that do not have legislation already in place.
I was a member of the Special Public Bill Committee tasked with scrutinizing the Bill in the House of Lords and am proud to have been involved. When the Bill becomes an Act, we will have achieved something significant, but in many ways, it will be just the starting gun. The most important work still needs to be done, incorporating the standards, systems, and raising awareness across businesses and the entire ecosystem. If we get it right, we will all benefit – increased efficiency, lower costs, increased security and compliance and huge environmental benefits. We can do this. We must do this.
Authors
Chris Holmes, Baron Holmes of Richmond
Lord (Chris) Holmes is a Life Peer of the House of Lords, with extensive experience in tech legislation, including; AI, Blockchain, Fintech, Govtech, RegTech, Assistive Tech, EdTech, Inclusion, Social Mobility, Culture, Media and Sports.