The digitalisation of trade documents and processes

2. What does going paperless entail and why does it matter?

Going paperless refers to the transition from paper-based, analogue, trade to trade that relies on digitised information and processes. In this context, going paperless takes a broader, more holistic approach than the concept of “paperless trade”, which typically focuses on at-the-border procedures. It encompasses the full range of actors and trade-related documents and processes across the entire supply chain, ensuring that digitalisation efforts extend beyond border formalities to all stages of trade transactions.

Going paperless involves five key steps (Figure 1).

1. The digitisation of trade-related documents (see Table 1 for a comprehensive list). This involves supporting B2B transactions by enabling the use of e-invoicing or electronic Bills of Lading. It also involves supporting B2G transactions, including the use of digital customs declarations, certificates of origin, licensing certificates, certificates related to regulatory requirements or standards (environmental sustainability requirements or labour compliance).

2. The digitalisation of trade-related processes. This involves leveraging technology to streamline, automate, and enhance the efficiency of customs and other border agencies processes, ultimately impacting the release of goods at the border. It can include, for instance, pre-arrival processing (procedures that allow for the submission and processing of trade-related documentation and information before the arrival of goods at the border); risk management systems; electronic payment of duties, fees and charges; and Single Windows systems (platforms allowing traders to submit all necessary documentation and data required for import, export, and transit procedures through a single entry point).

3. The adoption of digital technologies. This includes Electronic Data Interchange (EDI) or Application Programming Interfaces (API) to automate document completion and sharing processes, reducing paper duplication and streamlining workflows. The use of new technologies, such as Optical Character Recognition (OCR), Distributed Ledger Technologies (including blockchain), Artificial Intelligence, or the Internet of Things, also contribute to going paperless efforts.

4. The standardisation of data elements being reported. For documents to be machine-readable by digital technologies, data elements need to be standardised. This has been enabled, for instance, by work such as that of the United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT), with outputs including the UN Trade Data Element Directory (UNTED/ISO 7372), the “buy-ship-pay” data model (BSP-RDM), the Supply Chain Reference Data Model (SCRDM), the Multi-Modal Transport Reference Data Model (MMT-RDM), and document representation standards for electronic invoicing (e-invoice) and electronic sanitary and phytosanitary (SPS) certificates (E-cert) (Atkinson, 2023[6]).

5. The adoption of enabling regulation. The process of going paperless also requires appropriate regulation both domestically and internationally. This includes: i) the legal frameworks for conducting transactions electronically (e.g. recognition of e-signatures, e-contracts and e-transferable records); ii) the policies supporting digitalisation of border processes; and iii) the ability to exchange data across international borders.

Together, these are the building blocks of going paperless initiatives. Importantly, all need to advance in parallel. Advancing on one without another can create bottlenecks that reduce effectiveness. For example, private and public sector adoption of digital documents and processes will only be effective if appropriate technologies are being used to share data, including with customs and border authorities, and if regulatory frameworks are adapted to the use of digital certificates.

Figure 1. The building blocks for going paperless: A conceptual framework

Source: Authors’ elaboration.

Table 1. Key trade documents in the context of the UN/CEFACT Buy-Ship-Pay Model

BUY	A - Commercial Processes	Purchase Order Commercial Invoice
SHIP	B - Transport Processes	Shipper’s Letter of Instructions Packing List Bill of Lading Sea Waybill Ship’s Delivery Order Air Waybill Sea Cargo Manifest Air Cargo Manifest Rail Consignment (CIM) Note Road Consignment (CMR) Note Cargo Insurance Document Warehouse Receipt Dangerous Goods Declaration Consignment Security Declaration
	C - Border and Regulatory Processes	Export/import licence for agricultural products Non-preferential Certificate of Origin Preferential Certificate of Origin Customs Declaration CODEX Generic Model Official Certificate Phytosanitary certificate International Veterinary Certificate CITES permit/certificate Certificate of Inspection for Organic Products Customs Bond ATA Carnet TIR Carnet Transit Accompanying Document Advance Ruling Application Excise Guarantee Administrative Documents used in the Excise Movement Control System Documents of conformity Certificates related to environmental sustainability requirements or labour compliance
PAY	D - Financial Processes	Letter of Credit Payment Confirmation Bill of Exchange Promissory Note

Source: Adapted from ICC DSI (2024[7]).

Getting it right matters not only because going paperless contributes to reductions in trade costs, leading to increased competitiveness and more trade, but also because it contributes to other important policy objectives, such as:

• Increasing supply chain resilience and visibility: The COVID-19 pandemic, prolonged geopolitical tensions, and natural disasters or accidents (e.g. Suez Canal,1 Port of Baltimore2) have brought to the forefront the issue of supply chain resilience and the ability to respond to increasingly frequent shocks. Mitigating risks, adapting to new realities, rebounding, and recovering with agility requires gaining better visibility of activities across global supply chains. However, since most trade transactions remain paper-based, it is difficult to register, track, and exchange information on movements of goods in real-time.

• Risk management: Going paperless also provides the foundations for using diversification as a risk management strategy by creating opportunities for businesses of all sizes to better identify potential bottlenecks in their supply chains and to devise ways to minimise possible disruptions (Wirjo and Calizo, 2022[8]).

• Meeting new sustainability regulatory requirements: Environmental and social sustainability is increasingly important for consumers. At the same time, there are growing demands on firms for transparency and accountability (Deconinck, Jansen and Barisone, 2023[9]). Emerging voluntary initiatives and mandatory requirements require firms to track and provide information on their environmental and social sustainability performance, including across the entirety of their supply chain. Digital solutions can help businesses comply with such regulations and meet standards more effectively. For border and regulatory agencies, automated processing of information, checks and validation, enabled by the digitalisation of documents and processes, can expedite clearance of trade documents, facilitate the implementation of new requirements and reduce risks of delays and penalties (i.e. imposed by a customs administration or relevant border agency for a breach of the customs laws, regulations, or procedural requirements).

• Levelling the playing field: Through its cost-reducing impacts, which particularly benefit smaller actors, paperless trade can contribute to making trade more inclusive. This includes providing more opportunities for MSMEs and women traders to participate in and benefit from international trade.

Notes

← 1.  See https://www.bbc.com/news/world-middle-east-56505413.

← 2.  See https://www.cnbc.com/2024/03/27/cnbc-daily-open-baltimore-port-shutdown-a-major-disruption-.html.