The digitalisation of trade documents and processes

Key messages

Why is going paperless important?

• Despite the rapid pace of digitalisation, international trade in goods remains heavily reliant on paper-based processes. While the potential benefits of paperless trade are widely acknowledged, a comprehensive, whole-of-supply-chain approach to the policies required to enable the transition from paper-based, analogue, trade to trade that relies on digitised information and processes – a process herein defined as going paperless – is still missing.

• Going paperless not only promises to reduce trade costs, but is also a critical enabler of broader policy objectives, including greater visibility and resilience across supply chains, and improved compliance with international trade regulations and standards. In the context of evolving environmental and social sustainability requirements, digital solutions can help businesses meet new obligations more effectively.

What does going paperless entail?

• Going paperless involves five key steps: i) digitisation of trade documents (transitioning from physical to electronic trade documentation); ii) digitalisation of trade processes (streamlining and automating the procedural steps involved in international trade); iii) adoption of digital technologies (connecting documents and processes and enhancing efficiency and security); iv) standardisation of data elements (ensuring interoperability and consistency across systems); and v) implementation of enabling regulatory frameworks (establishing the necessary legal and institutional structures for paperless trade).

What progress is being made in implementing regulatory frameworks?

• Frameworks for enabling electronic transactions. The OECD Digital Services Trade Restrictiveness Index (DSTRI) and the OECD Index of Digital Trade Integration and Openness (INDIGO) show increasing adoption, with countries moving quickly to adapt their regulations to enable going paperless. That said, more progress is needed on electronic transferable records and domestic frameworks for e-payments.

• Digital tools for trade facilitation at the border. The OECD Trade Facilitation Indicators (TFIs) show significant improvements, especially in automated pre-arrival processing, automated risk management, electronic payment of duties and charges, and digital Single Windows. However, many of the digital tools required for border agency co-operation – such as shared risk management systems and interconnected computer systems – remain amongst those with the lowest levels of implementation.

• Mechanisms for cross-border data exchange. The regulatory environment for cross-border data flows is becoming increasingly complex, whether for personal or non-personal data, with potentially negative consequences for going paperless.

• Implementing the right regulatory frameworks can generate important benefits. A 10% improvement in the bilateral TFIs score for automating border processes, when accompanied by streamlining of documents and processes and increased co-operation among border agencies, delivers an increase of up to 18% in global goods exports. But the domestic and international regulatory landscape also matters: a 0.1-point reduction in the DSTRI for electronic transaction frameworks, e-payments and connectivity is associated with an increase in global exports of 37%.

What are the short-term challenges for going paperless?

• Going paperless will play an important role in helping companies meet new sustainability requirements. Under both voluntary and mandatory initiatives, firms are increasingly asked to provide information on their environmental and social sustainability footprint across the entirety of their supply chain. This is raising new challenges about ‘what’ information is required and ‘how’ to prove compliance at the border.

• Technical interoperability will be key to reduce transaction costs and operational inefficiencies in sharing and verifying data across actors and borders. However, for this to be effective, it must be underpinned by the robust policy environment that supports the transition to a paperless ecosystem.

• Analysis of selected sustainability regulations reveals that there is still an important gap in clarifying what compliance entails for border processes and for integration in the going paperless ecosystem. While two-thirds of surveyed regulations specify border processes, only half define documentary requirements (e.g. conformity, supply chain audits) and around one-quarter specify the requirements for platforms underpinning the exchange of information. Mechanisms for border agency co-operation are rarely covered.