This chapter situates trade facilitation within an evolving global trade environment characterised by increasingly information-intensive supply chains and expanding traceability requirements. It identifies five key shifts reshaping trade processes and bringing trade facilitation and traceability into closer interaction. It also introduces the report’s conceptual framework and highlights why greater integration between these agendas is growing in importance.
Better Borders for Trade, Traceability and Enforcement
Abstract
This chapter addresses the growing policy challenge of facilitating trade in a global environment characterised by recurrent supply chain disruptions and more complex regulatory requirements. Supply chain trade requires real-time co-ordination between highly specialised businesses located in different parts of the world, increasing the sensitivity of production networks to disruptions affecting transport, logistics or key suppliers (WTO, 2021[1]; UNCTAD, 2024[2]). These challenges are further intensified by concerns around security of supply in key sectors, prompting governments and firms to pursue diversification strategies to manage supply chain risks and reduce what might be considered overconcentration (Baldwin and Freeman, 2021[3]; Ahn and Tan, 2025[4]; OECD, 2025[5]). Against this backdrop, traceability is evolving from a largely voluntary firm-level tool into an important mechanism for generating, verifying and exchanging information about products, production processes, supply chain movements and conformity assessment. This information is becoming crucial for meeting regulatory requirements related not only to product characteristics, but also to how goods are produced, sourced and move through global supply chains (UNECE, 2022[6]; UNCTAD, 2024[2]; OECD/IEA, 2025[7]).
The chapter explains how these developments are bringing trade facilitation and traceability into close interaction and introduces the analytical framework that underpins the report. In doing so, it draws together analytical insights from OECD work on trade facilitation, environmental lifecycle requirements, digitalisation, trusted compliance mechanisms and conformity assessment to highlight how these strands contribute to understanding the growing operational integration between trade facilitation and traceability. The following chapters examine each of these areas in greater detail.
Trade facilitation has evolved from a primarily technical customs agenda into a central pillar of trade policy in an ever more complex global economy. As supply chains become more exposed to disruptions and subject to more demanding regulatory requirements, the efficiency and governance of border processes play more than ever a critical role in shaping trade outcomes. While long recognised as a driver of cost reduction (WTO, 2015[8]; OECD, 2018[9]), trade facilitation is now drawing nearer to broader policy objectives, including resilience, social and environmental performance, and economic security (OECD, 2025[1]). Recent global shocks have further reinforced its importance, accelerating reforms and expanding scope beyond traditional border procedures towards a more integrated approach to managing cross-border flows of goods (OECD, 2025[10]; WCO/WTO, 2022[11]). In this evolving context, trade facilitation is not only about reducing frictions for businesses, but also about enabling greater transparency, adaptability, enforcement and the effective functioning of interconnected supply chains.
1.1.1. The WTO Trade Facilitation Agreement provides a global baseline for modern border management
The entry into force of the World Trade Organization’s (WTO) Trade Facilitation Agreement (TFA) in 2017 established a global baseline for modernising and harmonising border procedures. By setting commitments on transparency of trade-related information, advance rulings, risk management, and border agency co-operation, the TFA has provided a common framework for reform across countries at different levels of development (WTO, 2015[8]; IMF, OECD, UNCTAD, World Bank, WTO, 2023[12]). In addition, the TFA introduced a specific implementation structure through its categorisation system (Categories A, B, and C)1, allowing developing and least developed countries to align commitments with their capacities. This has supported gradual but steady progress in implementation worldwide while fostering international co-operation and technical assistance (OECD/WTO, 2024[13]).
In this sense, the TFA has been functioning both as a foundational reference point and a catalyst: a minimum standard for efficient border management and a platform upon which all countries can build more advanced, digitally enabled trade facilitation systems. The OECD Trade Facilitation Indicators (TFIs)2 show that border bottlenecks and red tape have been reduced on average by 3%-7% across regions since 2022: Asia – Pacific (4.4%), Europe and Central Asia (3.1%), The Americas (4.4%), Middle East and North Africa (4.7%), and Sub-Saharan Africa (6.5%) (OECD, 2025[14]). Important progress has been achieved in areas such as inter-agency co-operation, transparency, and automation (Figure 1.1). Over the same period, 23% of the economies covered by the TFIs database improved elements of border automation, while 68% and 21% improved domestic and cross-border agency co-operation, respectively, reflecting a shift towards more integrated and data-driven facilitation frameworks (OECD, 2025[14]).
Two is the maximum performance that can be achieved for each policy area
Notes: “Transparency and predictability” policy area is the average of TFIs (A) Information availability, (B) Involvement of the trade community, (C) Advance rulings, (D) Appeal procedures, (E) Fees and charges. “Automating and streamlining processes” policy area is the average of TFIs (F) Documents, (G) Automation, and (H) Procedures. “Border agency co-operation” policy area is the average of TFIs (I) Domestic border agency co-operation and (J) External border agency co-operation. The Americas region includes economies in North America, Central America, and South America. Regional groups based on World Bank regional classifications.
Source: OECD (2025[15]).
Analysis using the OECD TFIs also points to tangible impacts on the ground. More efficient border processes are estimated to have reduced trade costs by up to 5% over the last decade, while ambitious reforms could deliver additional reductions of up to 12 percentage points in some regions (Figure 1.2). And potential impacts from reductions in border bottlenecks and red tape are strongest for developing countries, particularly low-income and lower-middle income economies for which trade costs remain the highest, and for manufacturing sectors as chemicals, electrical equipment, machinery, paper and wood products, and textiles (OECD, 2025[14]). However, sustaining these gains may become more challenging as border processes are expected to accommodate more complex information and compliance requirements while continuing to facilitate efficient trade (Pauwelyn, 2024[16]; OECD, 2025[5]).
Notes: The figure presents the cost reduction implications of fully implementing trade facilitation reforms as measured by the TFIs, as well as the cost reductions already achieved. Analysis using trade costs (for manufacturing and agriculture sectors) from the UNESCAP – World Bank database for the period 2012‑22.
Source: OECD (2025[14]).
1.1.2. Supply chain disruptions have given rise to a new resilience agenda
In response to recent supply chain disruptions, the urgency of trade facilitation has markedly gained momentum. Since 2020, shocks such as the COVID‑19 pandemic, extreme weather events, and rising geopolitical tensions have exposed structural vulnerabilities in global supply chains, particularly the fragility of highly optimised, just‑in‑time production systems. These episodes have highlighted how disruptions can rapidly affect across border processes and different sectors, drawing attention to the critical role that border bottlenecks play in the transmission of shocks. Whether arising through administrative delays, limited digitalisation, or infrastructure constraints, weaknesses in the border governance can amplify supply chain stresses well beyond their immediate point of origin (OECD, 2025[5]).
These recent disruptions have also demonstrated the value of effective trade facilitation reforms in mitigating disruptions and supporting adjustment. Where border processes are streamlined, digitally enabled, and supported by co‑ordination among authorities, countries have been better able to prioritise the movement of essential goods, adapt procedures in real time, and maintain continuity in trade flows (WTO, 2021[1]; OECD, 2022[17]). Advances in areas such as electronic documentation, pre‑arrival processing, risk‑based controls, and inter‑agency co‑operation have helped reduce delays, improve transparency, and provide firms with greater predictability in periods of heightened uncertainty. In this context, trade facilitation has evolved beyond a cost‑reduction tool towards a core component of supply chain resilience: efficient and predictable border processes enable firms to re‑route shipments, adjust more rapidly to shocks, and maintain continuity in production networks, while inefficiencies risk exacerbating disruptions precisely when systems are under greatest pressure (OECD, 2025[5]).
Diversification strategies also rely on the development of alternative trade routes and logistics corridors. However, the effectiveness of these corridors depends not only on transport infrastructure but also on the ability of border agencies to transmit information, co-ordinate controls and ensure the alignment of procedures across jurisdictions. As supply chain information requirements grow, weaknesses in cross-border co-operation can become an additional source of delay and uncertainty, limiting the resilience benefits that alternative corridors are expected to provide (Rey-Bellet, 2024[18]).
1.1.3. Trade facilitation can offer a competitive edge
If recent crises have shown that effective trade facilitation helps economies absorb shocks, they have also revealed its value as a competitive edge in a more volatile global economy where regulatory measures are increasingly being enforced at the border. For firms, fast, predictable, and digitally enabled border processes can reduce time‑to‑market, supporting expedited supplier diversification and improving reliability across dispersed value chains. For governments, effective trade facilitation can ensure the good functioning of key supply chains, strengthening economic security objectives and enhancing the attractiveness of the country as a trading and investment partner. These advantages can be particularly pronounced in strategic sectors such as critical minerals, semiconductors, and essential goods, where delays and uncertainty can have economy‑wide consequences (OECD, 2024[19]; OECD/IEA, 2025[7]).
Trade facilitation is also particularly relevant where trade patterns appear highly concentrated. Across OECD economies, a significant number of products (measured at the 6-digit level of the Harmonized System, HS6) show high import or export concentration, pointing to areas where firms and governments may have fewer readily available alternatives if supply routes are disrupted or demand changes unexpectedly (OECD, 2025[5]) (Figure 1.3). Trade facilitation cannot by itself diversify supply chains, but it can make diversification strategies more operational by reducing processing time, uncertainty and administrative costs involved in shifting towards alternative suppliers and markets.3
Trade facilitation reforms can support supply chain diversification: on average, a 10% improvement in trade facilitation policies is associated with more than a 6% increase in the number of export markets and, in some regions, an almost 15% increase in the number of sectors reached, while also strengthening existing trade relationships (OECD, 2025[5]). Trade facilitation can also help economies make fuller use of their regional trade agreements and economic partnerships as instruments for supply chain diversification (Lee, Rocha and Ruta, 2021[20]). Preferential access to a wider range of markets and suppliers creates valuable sourcing options, but these opportunities are only commercially meaningful if firms can use them rapidly and with confidence. For critical inputs in particular, such measures can increase the value of trade agreements by improving access to alternative suppliers when established supply routes are disrupted or when demand shifts unexpectedly.
As policy objectives expand, such a competitive edge depends more on the ability to manage complexity efficiently. This places a premium on border systems that can facilitate compliant trade at scale while targeting controls where they are most needed. Trade facilitation is therefore emerging as a strategic asset – one that would be able to support resilience, diversification and competitiveness simultaneously in a more demanding global trade landscape.
Number of imported and exported HS6 products with significant import concentration (average of the periods 2017‑19 and 2020‑22)
Notes: Significant import (or export) concentration is designated for cases of bilateral trade links at the product level where the value of the country-level Herfindahl-Hirschman Index (HHI) (a measure of market concentration) for imports (or exports) is more than double the value of the corresponding HHI for global exports (or imports). To further constrain the spectrum of cases of significant concentration, an additional minimum cut-off value of the HHI calculated for global product-level exports (or imports) was set at 0.2. This means that only products with a global export HHI (or import HHI) of at least 0.2 and products with country-level imports HHI (country-level exports HHI) of at least 0.4 were considered. The concentration indices are calculated across all trading partners, including intra-EU trade for EU Members.
Source: OECD (2025[5]).
In parallel to the developments described above, traceability is becoming tightly embedded within global supply chains. Long used by businesses as a supply chain management tool to monitor the origin, movement and transformation of products, traceability has also supported customs administration by helping establish the origin of goods for tariff treatment and compliance with rules of origin. As regulatory and market expectations evolve, its role is expanding beyond these traditional functions to generate, verify and share information not only on the origin and content of goods, but also on how they are produced across supply chains, and whether they comply with relevant safety, social and environment-related requirements (UNCTAD, 2022[21]; UNECE, 2022[6]; Jaax and van Lieshout, 2025[22]; OECD/IEA, 2025[7]; OECD, 2025[5]; OECD, 2025[23]).
Reflecting this evolution, definitions of traceability have also broadened. The International Organization for Standardization (ISO) defines traceability as the ability to trace the history, application or location of an object, including the origin of materials, processing history and distribution (ISO, 2011[24]). More recent work, particularly in sectors such as critical minerals, extends this concept to encompass information on geographical path, chain of custody, physical transformation, and, where relevant, environmental, social and governance characteristics of products and their supply chains (OECD/IEA, 2025[7]).
Systematic statistics on the growth of traceability-related requirements remain scarce, partly because many of these measures are recent and are not consistently classified as traceability obligations (OECD/IEA, 2025[7]). Available datasets also rarely indicate clearly whether compliance is checked at the border, through post-entry market surveillance, or elsewhere along the supply chain, making it difficult to assess their direct implications for border processes. The available indicators nevertheless point to a substantial increase from a very low base, as many such requirements did not exist in comparable form a decade ago. For instance, notifications of environment-related technical requirements have grown by more than 60% over the last decade, while around 86% of social and environmental due diligence measures have been adopted since 2015. Although these indicators extend beyond traceability and measures enforced at the border alone, many of the measures appear to require firms to identify origins, map supply chains and provide verifiable information on products and production processes (UNCTAD, 2024[2]; OECD, 2026[25]; OECD, 2026[26]).
Traceability is therefore progressively associated with practical arrangements that connect a broad range of policy considerations – including resilience, social and environmental performance, responsible sourcing, circularity and economic security – to inputs and final goods crossing borders. This is reflected in several developments in the landscape of trade-related processes (UNCTAD, 2024[2]; OECD, 2026[25]; OECD, 2026[26]):
The range of policy considerations associated with traded goods is extending beyond those traditionally addressed through border measures.
The volume, granularity and types of information associated with trade-related measures are changing.
Authorities are increasingly drawing on such information to support implementation of regulations as relevant, assess compliance and address risks of circumvention.
Regulations and enforcement may also involve a wider range of public and private actors, particularly as some traceability-related requirements move from voluntary approaches towards mandatory requirements.
Some key sectors can face more complex conformity assessment needs.
While these developments offer important opportunities to enhance the transparency and the environmental and social performance of supply chains, they can also introduce new complexities and potential risks for trade facilitation systems. In particular, the need to generate, verify, and transmit detailed product-level information is reshaping the way goods move across borders and how compliance is assessed, placing greater emphasis on the effective integration of data, processes, and regulatory frameworks (UNCTAD, 2024[2]; OECD, 2026[25]; OECD, 2026[26]).
1.2.1. Policy considerations are expanding beyond traditional objectives of border control
As governments pursue a broader range of economic, social and environmental objectives, trade-related measures progressively interact with policy priorities that extend beyond traditional goals such as revenue collection, market access and border control. Such priorities can include responsible sourcing, deforestation, forced labour, carbon intensity, circular economy, product safety and supply chain resilience. While they differ in scope and design, they point to a common trend: trade-related measures are becoming linked to a growing extent to a wider set of strategic objectives (WTO, 2023[27]; OECD, 2025[5]).4
This expansion is changing the context in which trade facilitation operates. Border agencies and firms are navigating new requirements that originate outside traditional customs policy, yet directly affect the conditions under which goods enter, circulate or leave markets. The result is a more complex policy landscape, intertwining customs procedures, regulatory compliance, social and environmental objectives and supply chain due diligence (WCO, n.d.[28]).
1.2.2. Information requirements for trade-related measures are changing
Expanding policy objectives are making border crossing more information intensive. Beyond traditional metrics showing what products are being traded and where they come from, compliance now equally depends on information generated across the supply chain. This can include data ranging from production methods, input sourcing, processing stages and facilities, to emissions, labour conditions, recycled content, certification status and chain-of-custody arrangements.5 In many cases, the relevant information is not contained in the customs declaration itself, nor can it be inferred from the physical characteristics of the product at the border. It must be gathered from firms, suppliers, auditors, certification bodies or other competent authorities along the value chain (Pauwelyn, 2024[16]).
As a result, the central implementation challenge is no longer only whether such information is relevant for trade policy, but how it can be generated, collected, verified, shared and reused efficiently without creating unnecessary trade frictions (Pauwelyn, 2024[16]). This places traceability at the centre of policy implementation, providing the mechanisms through which information can accompany products across supply chains.
1.2.3. Information is increasingly supporting implementation and compliance
An important reason why trade-related policies depend to a larger extent on supply chain information is that, without it, they may not operate as intended and may be vulnerable to circumvention. This could be particularly the case where market access, regulatory obligations or preferential treatment depend on how or where a product was produced, which inputs were used, or whether goods have passed through particular firms, facilities or jurisdictions. Measures related to responsible sourcing, strategic supply policies or emerging approaches to critical minerals (OECD, forthcoming[29]) can no longer rely on substantive requirements, but must have the ability to distinguish genuine compliance from incomplete disclosure, misclassification or deliberate circumvention.
The risk of circumvention can be particularly important where compliance affects market access, tariff treatment, pricing or other regulatory obligations (Box 1.1). Firms may have incentives to reroute goods through third countries, alter documentation, split consignments or rely on complex intermediary structures to mask production history or origin. In these circumstances, authorities need to look beyond the immediate exporter or country of shipment and assess whether declared origin, production history, input sourcing, ownership links, routing, supplier networks and supporting documentation are mutually consistent (WCO, 2025[30]; WCO, 2026[31]).
Traceability can strengthen this process by providing a more robust evidence base for customs risk management and regulatory enforcement, when meaningfully implemented. By connecting information generated across supply chains, it can help authorities identify inconsistencies indicative of circumvention while enabling legitimate trade to move with fewer unnecessary interventions.
When part of legitimate global logistics and supply chains, transshipment implies transferring goods from one vessel, truck, or aircraft to another during transport (often at an intermediate port or hub). This type of transit through logistics hubs has a potential to reduce trade costs, improve connectivity and support access to intermediate inputs. Recent work on transit hubs finds that the use of transshipment networks is highly concentrated. For instance, drawing on available data for bills of lading in the United States during 2008-17, Do et al. (2025[32]) find that around 70% of US containerised imports transit through an intermediate jurisdiction and that the top five hub countries account for more than half of all transit through an intermediate jurisdiction.
Transshipment risks arise when large differences in tariff treatment, trade remedies or rules of origin create incentives to misstate the economic origin of goods. Analysis of tariff measures introduced by the United States on imports from the People’s Republic of China (hereafter China) in 2018‑19 suggests that third countries increased their exports in products affected by those measures. Fajgelbaum et al. (2023[33]) estimate an average export increase of 6.5% among countries not directly subject to the bilateral tariff measures, with substantial cross-country variation, 80.5% of which is explained by country-specific responses rather than initial specialisation alone. Using detailed US 10-digit import data, Freund et al. (2023[34]) highlight that countries replacing China as the origin in US imports tended to be more integrated into Chinese supply chains; a move from the 25th to the 75th percentile of intra-industry trade with China is found to be associated with around three percentage points higher export growth to the United States for tariffed products and 4.5 percentage points for goods considered strategic.
Transaction-level analysis illustrates the importance of granular data to analyse transshipment risks and by extension, the role of traceability. For instance, Iyoha et al. (2025[35]) estimated that, depending on the level of geographic aggregation at which rerouting was measured (country, province or firm), between 1.7% and 16.5% of Viet Nam’s exports to the United States in 2021 (or approximately between USD 1.6 billion and USD 15.9 billion) could potentially be rerouted from China.
At a sectoral level, drawing on import data from the United States, Freund (2025[36]) estimates that the largest concentrations of tariff evasion through transshipment lie potentially in categories such as machinery and equipment, metals, plastics and rubber.
For border agencies, one key challenge lies in determining whether goods have undergone sufficient transformation to acquire a new origin. Rules of origin are the criteria used to determine the national source of a product, and they matter for duties, quotas, trade remedies and other origin-based measures. In practice, origin determination depends on product-specific rules and usually interacts with classification, valuation, production records, supplier declarations and transport documentation. This makes enforcement information-intensive, especially where firms use multi-country supply chains, imported intermediates, subcontracting or processing operations in third countries (WCO, 2025[37]).
This requires overall enforcement to be risk-based, proportionate and supported by better information-sharing. Higher-risk cases are likely to arise where there are large tariff differentials, rapid shifts in trade flows, limited local production capacity, high import content from targeted economies, or product categories where origin rules are complex. At the same time, overly broad controls can impose costs on legitimate trade, particularly where transit is simply part of efficient logistics or where third-country production involves genuine domestic value added. The evidence therefore points to the importance of making better use of pre-arrival data, targeted risk management, post-clearance audit systems, inter-agency co-operation, and firm-level documentation.
1.2.4. Implementation and enforcement are involving a wider range of actors
Traceability requirements and tools began to develop as voluntary corporate sustainability schemes, private standards or sectoral initiatives. The OECD’s Responsible Business Conduct (RBC) standards provide a useful reference point for this transition, as they highlight how supply chain due diligence has developed through risk-based, sector-specific and multi-actor approaches before being gradually reflected in regulatory requirements (Box 1.2) (OECD, 2018[38]; OECD, 2023[39]; OECD/ITC, 2024[40]; UNECE, 2026[41]). Traceability is now embedded in mandatory regulatory frameworks (Jaax and van Lieshout, 2025[22]). This raises the stakes for enforcement, legal certainty and proportionality, particularly where non-compliance can affect market access, customs clearance or post-market surveillance.
Responsible Business Conduct (RBC) standards, notably the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct, set out expectations for businesses to conduct due diligence to assess and address any adverse impacts on people, the environment and society associated with their operations, their products and services, including across their supply chains. While traceability is not an objective in itself, it can support companies in this process. Risk-based use of information provided by traceability systems, applied where conditions warrant it (for instance, in higher-risk supply chains or where regulatory or strategic access considerations apply), together with transparency tools such as traditional chain-of-custody records, can support companies in uncovering and responding to harms occurring upstream of their direct suppliers (OECD, 2026[42]).
Companies in different sectors will be associated with different risks and impacts and may therefore need to prioritise different sets of RBC issues, as well as traceability-related requirements, when conducting due diligence. This is reflected in OECD sectoral due diligence guidance, for example in the minerals, agriculture, and garment supply chains.
These approaches provide two helpful lessons for the design of traceability-related requirements. First, traceability-related requirements are potentially more effective when they are risk-based rather than designed as a uniform requirement across all products and firms. Second, implementation depends on a broader ecosystem of actors: producers, suppliers, buyers, auditors, certification schemes, financial institutions, civil society, competent authorities and, where relevant, customs and market surveillance bodies. Third, digital tools become a key element underpinning these actors’ co‑ordination. As traceability moves from voluntary schemes to binding requirements, aligning these actors around common expectations, clear responsibilities, reliable information and credible assurance mechanisms becomes essential to avoid duplication and manage compliance costs.
Source: OECD (2018[38]); OECD (2018[43]); OECD (2023[39]); OECD (2023[44]); OECD-FAO (2023[45]); OECD (2026[42]).
This shift also changes the range of actors that need to be involved. First, it requires customs to play a stronger role than before. Second, it requires closer co-ordination between border agencies, environmental authorities, labour inspectors, market surveillance bodies, conformity assessment bodies, licensing agencies, logistics operators, and auditors. Effective implementation depends not only on collecting information through tighter traceability, but also on ensuring that these actors can transmit data, recognise supporting documentation, and rely on the systems through which compliance is demonstrated.
1.2.5. Conformity assessment needs are becoming more complex in key sectors
Many sectors that are central to resilience, diversification and economic security are facing growing regulatory scrutiny. These include critical minerals and batteries, medical goods, pharmaceuticals, machinery, electrical and electronics equipment and advanced tech goods, and agri-food. Demonstrating conformity in these sectors progressively requires more evidence from multiple points across the supply chain, including product composition, origin of inputs, production processes, testing results, certification status, and social and environmental footprint (World Bank, 2025[46]).
This links back to the fact that regulatory expectations are no longer limited to the final product. This is also reinforced by the transition towards a more circular economy, where used products, components and materials, and sometimes waste may move across borders several times during their life cycle (WCO, 2023[47]; WEF, 2026[48]).
The discussion above points to two related shifts. On the one hand, trade facilitation seeks to reduce trade costs of regulations that are central to resilience, diversification and the ability of firms and governments to manage supply chain disruptions, while supporting more socially or environmentally performing supply chains. On the other hand, traceability is no longer only a sectoral or firm-level tool for documenting product origin or characteristics in the context of supply chain management; it is now equally essential for demonstrating compliance, managing risks and supporting broader policy considerations.
Trade facilitation and traceability therefore serve distinct but increasingly interconnected purposes. Trade facilitation aims to make cross-border trade more efficient, predictable and transparent, while traceability seeks to generate, verify and communicate information about products and supply chains. The relationship between them thus reflects a growing need to integrate traceability requirements into the operational systems that support and facilitate international trade.
Traditionally, these areas evolved along separate tracks: trade facilitation focused on the simplification, harmonisation and digitalisation of border procedures, while traceability developed primarily through sectoral and firm-level systems designed to document product and supply chain information. Today, however, a growing number of policy objectives depend on reliable information about how goods are produced, sourced, moved and verified across complex supply chains. As a result, traceability is becoming more closely integrated into the processes through which goods are documented, assessed and controlled in cross-border trade.
1.3.1. Operational integration matters for co-ordination, compliance cost reduction and flexibility
The expansion of data and compliance requirements is driving operational integration between trade facilitation and traceability objectives, underscoring the importance of a more co-ordinated approach to their design and implementation (Figure 1.4). This integration is occurring across several complementary dimensions of traceability. Physical traceability can support customs risk management and targeted border controls by linking goods to their movement, location or production history through identifiers, tracking technologies or chain-of-custody mechanisms. Documentary traceability progressively benefits from paperless trade initiatives, electronic certificates and Single Windows that facilitate the submission, transmission and recognition of compliance information. Digital traceability relies on trustworthy data systems that enable information generated by firms, conformity assessment bodies and competent authorities to be shared, verified and reused throughout customs clearance, risk management and post-clearance processes.
Without co-ordination, new requirements can create duplicative reporting obligations, inconsistent data requests and additional administrative burdens for firms. Governments may also find it more difficult to use supply chain information effectively where data are fragmented, not interoperable or not easily connected to operational procedures (ICC Digital Standards Initiative, 2024[49]; OECD, 2025[10]).
A more co-ordinated approach can help address these risks by making information generated across supply chains usable, where appropriate, within clearance, risk management and post-clearance processes (Figure 1.4). This does not imply that all traceability-related checks should take place at the border. Rather, it means connecting information generated by producers, suppliers, logistics operators, certification bodies, auditors, laboratories, competent authorities and digital platforms with the procedures through which customs and other border agencies assess compliance and manage risk. Such integration can help authorities access the more granular information needed to address risks such as origin fraud, misclassification, undervaluation, circumvention through transhipment, manipulation of de minimis thresholds and abuse of preferential regimes, without unnecessarily complicating or duplicating data collection or verification.
Notes: The actors, processes, risks and enforcement applications presented are illustrative and non-exhaustive. The figure does not imply that all traceability-related checks should take place at the border; rather, it illustrates how relevant supply chain information can be connected to clearance, risk management and post-clearance processes. At the same time, greater use of supply chain information depends on appropriate safeguards for information security, confidentiality and the protection of commercially sensitive business information.
Ensuring that the relevant actors can participate at reasonable cost also becomes central to effective operational integration. For governments, trustworthy information flows can support more effective enforcement while reducing administrative complexity and resource demands. For firms, especially smaller traders and suppliers in developing economies, reducing multiple data requests, overlapping documentation requirements and non-interoperable systems can lower compliance costs and support broader participation in international markets (OECD, BIAC, WEF, 2023[50]).
Building confidence among relevant actors in how information is handled is equally important for effective operational integration. The benefits of data sharing and reuse depend to a great extent on firms' willingness to provide information, which may be affected by concerns about unauthorised disclosure of commercially sensitive data and its potential implications for competitiveness. Appropriate safeguards for confidentiality, information security and data governance can therefore help build trust, encourage participation and support the more effective use of traceability systems.
The border is increasingly the point of enforcing traceability-related requirements
Recent policy developments demonstrate that borders are becoming a key point for the enforcement of traceability-related requirements (Box 1.3). This reflects a broader shift in which customs administrations are viewed not only as authorities responsible for revenue collection and the clearance of goods, but also as important actors in economic security, responsible for identifying supply chain risks and supporting resilience, regulatory enforcement and the integrity of domestic markets. For example:
In the European Union (EU), the new Steel Regulation introduces a “melt and pour” requirement under which importers must provide documentary evidence of the country where steel was originally melted and poured (European Commission, 2026[51]). In June 2026, the European Commission launched a consultation on the practical and reliable documentation needed to verify this information at importation. More broadly, the EU Customs Reform agreed by the European Parliament and the Council in March 2026 embeds supply chain visibility and resilience within customs modernisation: the upcoming EU Customs Data Hub,6 together with the EU Customs Authority, is intended to give authorities a real-time overview of trade flows and supply chains, strengthen common risk management and support economic security while facilitating legitimate trade.
In the United States, reporting requirements for steel imports were expanded in 2025 to require importers to declare the country where steel was originally melted and poured.7 In a June 2026 Executive Order, customs enforcement was further identified as essential to national security and the economy and calls for heightened importer disclosure and certification requirements, including detailed information on supply chains, production methods, product identifiers and key specifications, alongside stronger action against misclassification, undervaluation and illegal transshipment.8
In the United Kingdom, a June 2026 call for evidence on customs modernisation similarly examines whether customs processes should make greater use of data already generated in commercial and supply chain systems to support risk assessment and compliance and potentially lessen reliance on traditional customs declarations (HM Revenue & Customs/HM Treasury, 2026[52]).
In Japan, the SMART Customs Initiative explicitly links customs modernisation with digital transformation, supply chain visibility and economic security. The initiative seeks to make greater use of data, advanced technologies and integrated customs systems to improve risk management, facilitate legitimate trade and respond to emerging economic security challenges (Japan Customs, 2020[53]).
In Singapore, initiatives such as TradeTrust and SGTraDex are helping to embed traceability information intro cross-border trade processes. TradeTrust provides a framework for the secure exchange and verification of electronic trade documents across jurisdictions and digital platforms, while supporting the authentication, provenance and transfer of information accompanying traded goods. The SGTraDex initiative seeks to strengthen supply chain visibility through trusted data sharing across logistics, trade and financing networks (PWC, 2025[54]; GovTech Singapore, 2026[55]).
The growing use of traceability requirements does not necessarily imply more inspections or slower border procedures. In practice, the objective is often to allow authorities to make better use of information that has already been generated along the supply chain.
Consider a shipment of electric vehicle batteries entering a country. The importer may need to demonstrate where key minerals originated, whether specific environmental-related requirements have been met, and whether the battery complies with applicable product regulations.
Without integrated traceability systems, multiple authorities may need to rely on multiple paper documents, request additional information from traders, or perform manual checks. This can increase clearance times and compliance costs for businesses.
With traceability integrated into more efficient trade facilitation systems, information collected upstream can be linked to the shipment before it reaches the border. For example:
Production and sourcing information is collected along the supply chain, including information on mineral origin, processing facilities, emissions data or conformity assessment certificates.
The importer submits this information electronically through existing customs or Single Window systems before the goods arrive.
Border agencies automatically verify key elements by connecting customs systems with relevant registries, certification databases or competent authorities.
Risk management systems use the information to identify higher-risk shipments that may require additional checks, while compliant shipments can be cleared more quickly.
The same information can be reused by customs, environmental authorities and market surveillance bodies, avoiding duplicate reporting requirements.
In this example, traceability does not replace trade facilitation. Rather, trade facilitation tools such as digital documentation, Single Windows and risk management make traceability operational at the border. Well-designed systems can therefore support compliance with ever more complex requirements while helping to limit unnecessary delays and costs for businesses.
Note: This example is meant to be illustrative and does not correspond to any specific legislation, regulatory framework or policy proposal. It is intended solely to demonstrate how traceability information might be collected, transmitted and used within trade facilitation processes.
Source: Based on OECD (forthcoming[56]) and Moisé and Rubinova (2023[57]).
Operational integration can make compliance workable
The growing need to integrate traceability information into trade facilitation systems is also driven by changing compliance risks. Customs and other border authorities require more granular information to address the risks related to origin fraud, misclassification, undervaluation and circumvention through transshipment (Box 1.1), manipulation of de minimis thresholds and abuse of preferential regimes. These risks cannot always be assessed from the immediate transaction alone.
Addressing them requires visibility across upstream production stages, transformation processes, ownership links, supplier relationships and logistics pathways. Traceability can strengthen the evidence base for risk analysis by helping authorities assess whether declared origin, commercial documents, transport routes and supporting regulatory documentation are coherent and consistent. For traders, this increases the importance of internal data governance and the ability to substantiate origin, value and compliance claims across jurisdictions.
This illustrates how trade facilitation and traceability rely more and more on shared operational foundations, including information sharing, risk management, digital systems and trusted compliance mechanisms. Integrating traceability-related information into these systems can help authorities manage compliance risks more effectively while supporting efficient border procedures and reducing unnecessary burdens on low-risk traders.
Lessons from existing compliance systems are also relevant. The implementation of long-standing product-related requirements, such as technical regulations, conformity assessment, product safety and sanitary and phytosanitary measures, has generated practical experience in managing information-intensive compliance obligations at the border. These systems rely on many of the same operational foundations progressively required for traceability-related requirements, including risk-based controls, co-ordination between customs and specialised agencies, reuse of trader data, and reliance on trusted conformity assessment. Regulatory co-operation tools can provide further insights into how trust in foreign testing and certification could impact compliance costs while preserving regulatory objectives.
Operational integration can balance de-risking and compliance for flexible supply chains
Traceability also has a strategic role in supporting more resilient and diversified supply chains. Firms that need to switch suppliers, reroute shipments or access alternative markets at short notice must still be able to demonstrate that goods comply with relevant requirements related to origin, safety, social or environmental performance, and customs.
Well-designed traceability systems could therefore support both compliance and resilience. They can help firms identify compliant suppliers, maintain confidence in goods moving through alternative routes, and reduce the risk of delays or refusals at the border. Resilience also depends on the ability to shift rapidly towards qualified suppliers, production locations and transport routes during shortages, disruptions or other emergencies while continuing to meet applicable regulatory requirements. Traceability-related requirements would need to remain both proportionate and flexible, so that they do not make supplier switching, market diversification or emergency sourcing unnecessarily difficult (WEF, 2021[58]).
1.3.2. Digital readiness and data protection are shared foundations of trade facilitation and traceability
Digital readiness and data protection become the backbone that makes the operational integration between trade facilitation and traceability workable in practice. Traceability only generates value if information can move securely, reliably and efficiently through the systems used by firms, border agencies and other competent authorities. Trade Single Windows, electronic documentation, interoperable data models and secure information-sharing arrangements provide the connective infrastructure for this process. They allow traceability information to be transmitted, verified and reused securely across agencies and borders, rather than collected repeatedly through fragmented or vulnerable processes.
Digital readiness can also make more targeted enforcement possible. By integrating more supply chain information into risk management systems, authorities can better identify high-risk consignments, firms or routes, while allowing compliant trade to move with fewer unnecessary checks. In this sense, digital tools do not matter only for efficiency; they are essential for reconciling facilitation and control in a more data-intensive trade environment (WCO/WTO, 2022[11]).
In turn, fragmented systems, limited digitalisation and weak data protection can amplify administrative burdens and undermine both facilitation and traceability objectives. The challenge is therefore to ensure that emerging traceability-related requirements are designed with trade facilitation principles in mind: transparency, efficiency, digitalisation and risk management. This points to the importance of greater clarity on data access, confidentiality, reuse and cross-border transmission, so that supply chain information can support compliance and risk management without creating unnecessary burdens or exposing commercially sensitive information (López González, Del Giovane and Ferencz, 2025[59]; OECD, 2025[10]).
1.3.3. Critical minerals and other strategic sectors illustrate the growing integration of trade facilitation and traceability
The shared operational foundations of trade facilitation and traceability are particularly visible in strategic sectors such as critical minerals (Box 1.4). As traceability-related expectations evolve from voluntary frameworks and policy guidance into binding regulatory requirements, this requires customs authorities to access and verify additional datasets – often sourced from upstream actors or third-party systems – at the point of import or transshipment. These procedures also extend to trade in scrap and secondary raw materials, which are now more important for security of supply strategies and circular economy objectives. Here, traceability requirements related to material composition, waste status, and conformity with environmental and shipment rules interact directly with border procedures governing classification, licensing and risk controls (WEF, 2026[48]).
The International Energy Agency (IEA) and the OECD recently conducted a joint survey of traceability involving more than 80 respondent companies active in critical mineral supply chains. The survey shows that while traceability systems are being implemented across mineral supply chains, uptake remains uneven. Around two-thirds of companies surveyed report having some form of traceability, although only about 30% have full coverage of their operations. Adoption is highest among upstream actors and is most advanced in cobalt supply chains, with more limited progress in lithium, nickel and rare earths.
Despite relatively widespread adoption, most companies collect just basic country-of-origin data, and only a minority of firms gather detailed provenance, environmental or corporate transparency information. End-to-end traceability is limited, with coverage typically dropping beyond direct suppliers.
Drivers of adoption vary across the value chain. Companies are primarily motivated by reputational concerns, customer demand and regulatory compliance, with downstream firms responding more to market pressures and upstream firms to regulatory requirements. Traceability is also progressively used to manage geopolitical risks and attract investment.
However, market incentives appear to remain weak. Only a minority of companies covered by the IEA-OECD survey report receiving price premiums for traceable or responsibly produced materials, limiting the role of traceability in driving sourcing decisions. Significant barriers are reported at the same time, including high implementation costs, lack of interoperability between systems, confidentiality concerns and weak incentives for data sharing, particularly among midstream actors. These challenges are compounded by fragmented regulatory requirements across jurisdictions.
Specific survey results for lithium and nickel further highlight that critical minerals traceability should be understood as a spectrum rather than a single model. Full end-to-end traceability remains uncommon in practice. Instead, companies typically rely on a combination of supply chain mapping, chain-of-custody systems, due diligence processes and mass balance approaches. Mass balance – the most widely used traceability model across all supply chain segments surveyed – reconciles the volume of material entering and leaving a facility while allowing blending of materials from different sources. This provides greater visibility than simple documentation-based systems while avoiding the costs associated with identity-preservation systems that require physical segregation of material throughout the supply chain. Survey results highlight such hybrid approaches as a means of strengthening transparency where full traceability is technically difficult or economically prohibitive.
Lithium supply chains are generally more conducive to traceability because production is concentrated among a relatively small number of large operators and supply chains are largely formalised. However, uptake remains at an early stage, with major challenges stemming from the concentration of refining in China and limited visibility in downstream manufacturing, battery production and recycling. By contrast, nickel supply chains are significantly more difficult to trace due to ore blending, multiple processing pathways and complex ownership structures.
The analysis emphasises that policy efforts should focus on strengthening incentives for the collection and sharing of verified traceability data, supported by a combination of regulatory and market-based measures. It also highlights the importance of providing targeted financial support to reduce implementation costs, particularly for upstream and smaller actors. In addition, the analysis underscores the need to promote international harmonisation of standards to improve interoperability, comparability and trust across jurisdictions, alongside enhanced co-operation between upstream and downstream countries through technical assistance and shared platforms. The survey draws particular attention to strengthening the traceability of mineral flows through key transit points, including ports, consolidation centres and processing hubs. Improved co‑ordination between customs, mining and trade authorities, combined with stronger logistics tracking, could help address existing gaps in visibility over the geographic movement of minerals across supply chains. A phased and pragmatic approach is recommended based on the survey results, starting with simpler supply chains and a limited set of core data elements, and gradually expanding to more complex systems and broader data requirements.
These findings suggest that, where such measures are embedded in regulatory frameworks, they would have direct implications for border processes and trade facilitation systems. More specifically, they could shape data requirements at the border and influence risk assessment, verification procedures and clearance processes.
For a discussion of recent international initiatives seeking to strengthen critical minerals traceability through standards and international co-operation, see Box 5.2.
Notes: The survey in (IEA, 2026[60]) includes responses from 80 companies between October and December 2025. The survey in (OECD, 2026[61]) draws on 10 additional responses provided by early 2026. The critical minerals covered include copper, nickel, lithium, cobalt, gold, aluminium, tin, tantalum, tungsten, silver, graphite, and rare earth elements.
Source: IEA (2026[60]); OECD (2026[61]).
Similar dynamics can arise for essential goods such as pharmaceuticals and medical products, where traceability becomes indispensable for ensuring product safety, quality, and authenticity. Requirements to identify products at the level of batch or serial number, verify manufacturing and distribution authorisations, and enable targeted recalls interact directly with border procedures, particularly for time‑ and temperature‑sensitive goods (OECD, 2024[19]).
For technology‑intensive goods, such as semiconductors and other advanced electronic products, the operational integration of trade facilitation and traceability is shaped by highly globally integrated supply chains, frequent cross‑border movements and widespread export and import measures affecting their movement. Border authorities depend more and more on detailed product descriptions, end‑use and end‑user information, and licensing data to enforce specific regulations, often across transit routes that can mask origin, destination or production stages. Trade facilitation also plays a growing role in addressing challenges related to electronic waste, repair and reuse, where border procedures must distinguish between waste shipments subject to strict controls and legitimate movements of used, repaired or refurbished goods intended for further use (WCO, 2023[62]; WEF, 2026[48]).
The discussion above has shown that trade facilitation and traceability serve distinct purposes but rely to a growing extent on common operational foundations, including digitalisation, information sharing, risk management and trusted compliance mechanisms. As regulatory requirements become more information-intensive, the challenge is no longer simply whether border procedures exist, but whether they can effectively accommodate, verify and use complex supply-chain information while preserving efficient trade.
Against this backdrop, this report examines how trade facilitation systems can support evolving traceability-related requirements and explores the conditions under which the two can be integrated in a mutually reinforcing manner. The analysis seeks to address three questions:
1. How can trade facilitation policies and systems accommodate more granular, dynamic and supply chain-based information necessary for enhanced traceability?
2. How can border processes support compliance with expanding regulatory requirements without creating unnecessary frictions for legitimate trade?
3. Where do gaps remain between objectives and operational reality – in particular, between the information that trade-related measures increasingly require and the capacity of border systems to collect, transmit, verify and use that information in practice?
To answer these questions, the report combines evidence from the OECD Trade Facilitation Indicators (TFIs), environment-related TFIs, OECD work on the digitalisation of trade processes and analysis of trusted compliance mechanisms and regulatory co-operation tools.
Chapter 2 examines how evolving traceability-related requirements translate into concrete border processes and implementation challenges. Chapter 3 assesses the preparedness of OECD economies to manage environmental lifecycle- and supply chain-related information through existing trade facilitation systems. Chapter 4 explores the role of digitalisation. Chapter 5 examines mechanisms that can address conformity assessment challenges and strengthen trust in compliance information across jurisdictions. Chapter 6 then concludes with key findings and potential considerations.
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← 1. The TFA implementation categories provide flexibility by allowing developing and least developed countries to schedule implementation according to their capacities: Category A commitments are implemented upon entry into force (or accession), Category B commitments after a transitional period, and Category C commitments after a transitional period and upon receipt of the capacity-building support required for implementation.
← 2. The 11 TFIs take values between 0 and 2, with two indicating the best trade facilitation policy environment which can be achieved. TFIs cover four main policy areas: (1) transparency and predictability (information availability, involvement of the trade community – consultations, advance rulings, appeal procedures, fees and charges); (2) streamlining and automation of trade-related documents and processes (formalities – documents, automation, procedures); (3) border agency co-operation (domestic and cross-border); and (4) governance and impartiality.
← 3. OECD (forthcoming[63]) suggests that trade facilitation matters for diversification, particularly when combining the TFIs of the exporter and importer.
← 4. Similar developments can also be observed in certain fiscal and regulatory compliance systems (e.g., tax marks, fiscal markings), which increasingly rely on digital product identification and information management tools.
← 5. This shift is particularly evident for measures linked to non-product-related processes and production methods (NPR-PPMs), where compliance depends on how a product was produced rather than solely on its physical characteristics.
← 6. More information is available at: https://taxation-customs.ec.europa.eu/customs/eu-customs-reform_en.
← 7. More information is available at: https://www.whitehouse.gov/presidential-actions/2025/02/adjusting-imports-of-steel-into-the-united-states/.
← 8. More information is available at: https://www.whitehouse.gov/presidential-actions/2026/06/ strengthening-customs-enforcement/.