International trade workers have been waiting for a long time for a change to major English laws. The difficulty of getting trade documents from point A to point B has frustrated many people. English law prohibits electronic trade documents, which has hampered digital trade advocates. On 12 October 2022, The Electronic Trade Documents Bill was introduced into Parliament. In my opinion, the Bill will digitize trade documents, which will have a significant impact considering the number of businesses in the UK. It is shocking that the UK still relies on paper documents in an industry worth around £1.266 trillion. Despite its size, this change could demonstrate how the UK is at the forefront of technology and make laws easier to pass. In this article, let us discuss the impact of digitizing trade documents.
Trade Using Paper Documents: The Problems
This is a significant issue which raises post-Brexit trade challenges or opportunities. The COVID-19 pandemic has painfully exposed the global supply chains for food and goods. We need to make it easier to get goods and food all over borders and into our businesses, education institutions, hospitals, and residences. This means making it faster, cheaper, safer, more reliable, and able to last longer.
The ubiquity of the internet has led many people to think that everything can now be done online. However, there are still many tasks that require a physical presence. This includes things like paper, bureaucracy, and environmental costs. The problem is that you need trade documents like bills of exchange and lading to exercise your rights and demand performance. This isn’t easy with electronic trade documents, as the English law does not allow people to own electronic versions of these documents. Even though there have been several attempts to create electronic versions of these trade documents under a contractual framework rather than English legislation, this has made it more challenging.
Impact on Passing the Electronic Trade Documents Bill
The UK is continuing its efforts to lead the world in boosting global trade with a new digital-first plan that will make it easier for businesses to buy and sell products and services. This will reduce paperwork and carbon emissions and increase productivity. Michelle Donelan, the digital secretary, commented that the UK was a pioneer in establishing international trade system back in the 19th century, and they are still leaders, boosting global trade even today.
In my analysis, businesses can trade however they want, whether through paper or digital documents. However, to create an electronic trade document, a “reliable system” must be in place that replicates the same rules as paper documents. The purpose of a document control label is to identify the document and distinguish it from other copies, to prevent unauthorized changes, and to ensure that only one person can handle the document. The label should also include information on demonstrating control of the document. When transferring a document, the transferor should remove control from themselves.
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The new Bill, which the House of Lords has just passed, is an elegant and concise piece of legislation that will make it possible to digitize trade documents. This is important because electronic documents will have the same legal status as paper documents. When I researched, I understood that this is a crucial step towards a digital economy, and I am sure businesses across the country will welcome it.
The digital documents will still be subject to certain criteria designed to replicate the features of paper documents. Among the relevant conditions, the Bill requires that, in order to have an electronic trade document, there must be a “reliable system” that is used to:
- Identify the document so that it can be distinguished from any copies.
- Protect the document against unauthorized alteration.
- Ensure that more than one person can’t exercise control of the document at any point in time.
- Allow any person who can exercise control of the document to demonstrate that the person can do so
- Secure that a transfer of the document has the effect of depriving the transferor of control of the document upon the transfer of the document
House of the Lords member, Lord Holmes, noted in a related LinkedIn post that to ensure that new legislation allots the same status legally to digital documents would need to define the terms ‘intangible’ and ‘possess-able’.
How Will the Bill Publication Be a Game Changer
I am very sure that the release of the Bill is a “game changer” for trade, as digitizing systems and eliminating paper can make trade much more efficient. Real-time transactional data will provide more detailed and valuable information to track and monitor sustainable goods and money through the system. Paper data prevents this.
Chris Southworth, secretary general of the ICC UK, said the publication of the Bill is a game changer with enormous economic benefits for trade if companies go paperless. He noted that digitization is critical to set up a system that is sustainable, given that trade is vital to global economy. Data based on real time transactions, he felt, would provide the much needed information to keep track of the flow of goods. With paper documents in hand, this is difficult.
The passage of the Bill is a significant step toward ensuring that electronic trade documents are widely accepted and enforced. Paper trade documents will still be used until electronic trade documents are more widely accepted and enforced. This will require private, public, and trade participant support.
The government has a lot of leeway in implementing the “tech-neutral” Bill. This means that they can choose whichever technology they feel is best to meet the needs of the situation. Even though the Bill has just become English law, it is expected to pass without much trouble. However, the new rules will require the documents in the electronic form to meet specific criteria designed to replicate the key features of paper trade documents.
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