Should International Trade be More Digital?

Should International Trade be More Digital?

Many companies are proceeding at their own pace when it comes to digitalising their operations and cutting down on the physical paperwork. But is the pace of change fast enough, and what might be preventing exporters from digitalising their international trade documents?

Since GDPR regulations came into force in May 2018, for many exporters, the obstacles were more administrative rather than technical.

Security and Trust

Clearly, just as digital business has expanded, so cybercrime has itself grown to meet it. This means that, when it comes to international trade, there may be legitimate security concerns when it comes to documentation and transactions.

But today’s cloud-based communications systems are designed to be secure, while all digital trade platforms should comply with know your customer (KYC) regulations.

People must know the identities of every party with whom they are dealing, while being legally bound by the rules governing their involvement.

Providing diligent communication controls are put in place, so that messages must have responses before being acted on for example, and that every piece of communication has a clear audit trail, then digitalisation should enhance and improve communications without exposing exporters to risk

Similarly, companies hesitant to convert to digital transactions may have concerns about how legally binding they are, in place of traditional paper contracts. And again, digital transactions should always have a solid legal basis, ensuring that contracts are both multi-lateral and cover all relevant jurisdictions.

The correct legal framework ensures that companies can rely on digital communications just as they have traditionally done so with paperwork – ensuring that electronic communications bearing the correct authority are treated as valid and legally binding.

The Impact of GDPR

The EU’s data privacy regime, the General Data Protection Regulation (GDPR) regulates how companies access and transfer the data of individuals in the EU.

Data is the lifeblood of businesses, including exporters, and for exporters it helps reduce supply chain risks and drives efficiency. Data and analytics can lead to savings and new processes.

For those companies slow to convert to digital, GDPR may seem like another barrier

It limits how they can deal with data, including where and for how long they can store it.

Compliance is unavoidable for any business doing business in or with EU member countries, and penalties for non-compliance must be a consideration.

Integration and Support

There are, however, certain advantages for exporters looking to go digital, regardless of the pressures of regulation and compliance.

As specialised digital trade platforms have developed they have become easier to integrate with existing digital business applications; and this gives companies the flexibility to adapt digital platforms for their own requirements, either fully or partly integrating them.

With digitalised documentation being a fraction of the cost of processing paperwork, there are significant savings to be made, and the potential to fight fraud more effectively with access controls and clear audit trails

Digital adoption can be transitional. It does not have to involve a wholesale changeover as different parties may still rely on paper documents. What is vital is that digital complies with the same rigorous, regulatory requirements.

The pace of change for international trade is accelerating rapidly. Some companies and other organisations such as port authorities are slower to adapt than others, but the underlying momentum is clear. The future of trade is digital.