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The government has introduced the Electronic Trade Documents Bill in Parliament, aiming to reduce the amount of paper trade documents that are printed daily.
Previously, all trade documents had to be paper-based to be legally recognised, in line with old legislation such as the Bills of the Exchange Act 1882 and the Carriage of Goods by Sea Act 1992.
However, the processing time for documents can be long, and often in international trade, paper documents have to be physically handed from one person to another. By introducing digital documentation, the processing time will be reduced to 20 seconds, according to the government.
“Our digital-first plans will make it easier for the country’s firms to buy and sell around the world – driving growth, supercharging our economy, cutting carbon and boosting productivity,” said digital secretary Michelle Donelan. “We want to support businesses by cutting red tape and allowing them to sell their goods and products globally without burdensome bureaucracy.
“The UK was central to establishing the international trade system in the 19th century, and we are once again leading the world to boost global trade in the 21st century,” she said.
Businesses will not be forced to use digital documentation, and paper documents will still be available for those who choose not to go digital, giving businesses the flexibility to decide how they trade.
The UK is already a world leader in digital trade, according to the government, however, the law does not recognise the possibility to process electronic documents, which prevents businesses from going paperless.
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- Described as the world’s most comprehensive digital agreement between two countries, the UK-Signapore deal supports the UK’s bid to join Trans-Pacific Partnership to build trade connections with 11 Indo-Pacific markets.
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The digital documents will still be subject to certain criteria, designed to replicate the features of paper documents, such as only one person or a joint party being able to exercise exclusive control over the document at any time, meaning that once the document has been transferred on, the previous owner does not have the ability to control it.
In a LinkedIn post, House of Lords member Lord Holmes said the Bill is “an elegant and succinct piece of legislation that will enable trade documents to be digitised”.
“Ensuring this new legislation recreates the same legal status for digital documents as the current paper documents required careful consideration of – amongst other things – the definitions of ‘intangible’ and ‘posess-able’,” he said. “Thus the new rules will require the documents in electronic form to meet certain criteria designed to replicate the key features of paper trade documents.”
The UK’s international trade is worth more than £1.4tn annually, with 28.5 billion paper trade documents printed daily.
The Bill has been developed by the Department for Digital, Culture, Media and Sport, and is part of a G7 commitment to reform trade documents.
Chris Southworth, secretary general of the ICC UK, said the publication of the Bill is a “game changer with huge economic gains to be made for trade if companies digitalise systems and remove paper”.
“Trade plays a huge role in the global economy so digitalisation is vital to establishing a more sustainable system”. “Real time transactional data will enable us to gather far richer, more insightful information to help us track and monitor the flow of sustainable goods and finance across the system. This is simply not possible if information is held on paper documents.”
In September 2021, the UK signed a digital trade deal with Signapore, expected to encourage more digital businesses to set up shop in the country and include cooperation in areas such as cyber security.