The adoption of digital technologies in trade and commerce has taken another step forward with the signing of a landmark agreement yesterday.
The International Chamber of Commerce (ICC) and 17 major companies from key industries have agreed to develop TradeTrust - a framework to shift world trade from a paper-based system to a digitally enabled one.
Pioneered by Singapore, the framework establishes the fundamentals to foster trust in the digitalisation of trade while making sure new rules work in conjunction with the multilateral trading system.
The initiative aims to cut back on the reams of paper needed when goods are transported from one part of the world to another. The paper trail invariably makes logistics a slow, inefficient and complex process.
"We believe we must forge new ways to enable trade in the digital era," Minister for Communications and Information S. Iswaran said at the Taking Trade Digital session in Davos, Switzerland. Yesterday's event occurred on the sidelines of the 50th annual meeting of the World Economic Forum.
Mr Iswaran said the TradeTrust initiative is part of Singapore's broader efforts to digitalise trade while establishing clear and harmonised international rules that allow data to flow freely between countries with appropriate safeguards. Those efforts include the substantial conclusion of the first Digital Economy Agreement with Chile and New Zealand announced on Tuesday and ongoing talks with Australia and other countries on similar pacts, he said.
Singapore is also the co-convener of the World Trade Organisation initiative to develop baseline digital trade rules.
The TradeTrust framework will provide a range of features, including ways to validate digital trade documents, an accreditation structure to certify technical solutions and open source codes that can easily integrate back-end solutions to the TradeTrust network.
One of the first platforms built on the TradeTrust framework is the ICC TradeFlow - co-developed by the ICC with trade technology firm Perlin, and in collaboration with Singapore's Infocomm Media Development Authority, commodities trader Trafigura and DBS Bank.
The ICC's 45 million members worldwide could be among the first to conduct trade more efficiently while still managing risks and having legal certainty and confidence in the trading process, Mr Iswaran said. He noted that a pilot TradeTrust transaction involving an iron ore shipment reduced documentation time from 45 to 20 days.
ICC secretary-general John Denton said: "Digital platforms will lower existing barriers to inter-national trade in the coming years and enable many more businesses to participate in the new global economy."
DBS chief executive Piyush Gupta said trade and trade finance continue to be the most onerous of business processes. "Digital technologies, especially distributed ledger, are well geared to solve this, but this requires coordination from key players on a global scale," he noted. "DBS is excited to be part of this fresh effort to leverage digital technologies to create efficiency for our clients and for the global trading system."