International trade is on the cusp of technological transformation. The global pandemic and concurrent geopolitical and supply chain disruptions have highlighted the importance and transformative nature of digital technologies.
Today, the Institute of Export & International Trade and EY have launched a new report entitled ‘TradeTech: A pathway for businesses to seize trade opportunities’. We have written this report with accessibility in mind and made practical recommendations for businesses to follow when adopting digital trade technology.
That doesn’t just mean more efficient processes for the scanning and emailing of trade documents in PDF form. Rather, the digitalisation of international trade pertains to the wholesale integration of trade and customs data. This means the speed at which goods are transported and processed will increase and there will be fewer delays at borders.
Currently, however, the flows of documentation involved in the transportation of goods and services haven’t yet been noticeably impacted by the digital revolution – perhaps because the very idea of digitising trade still strikes businesses and policymakers as a somewhat nebulous concept. However, its benefits are undeniable, and have the potential to help businesses grow their international operations, make supply chains more transparent and traceable, and manage risk more efficiently and effectively. All other areas of business life and activity have been transformed by digitalisation – now, finally, trade has the chance to catch up.
UK trade and the Target Operating Model
Digital trading technology is set to become ever more prevalent in the UK with the government’s launch of its Target Operating Model (TOM) later this year, as part of its much wider Border 2025 strategy. In building such frameworks, maintaining interoperability between the software used by the public and private sector is key. It’s a message that the IOE&IT have consistently broadcast to businesses and the UK government, and one which we believe should be reflected in the data-sharing provisions included in the latter’s Free Trade Agreements (FTAs) with countries around the world.
The increasing interconnectivity and complexity of trade has not gone unnoticed by national regulators. Every day, governments are developing and implementing policies to expose and tackle modern slavery and forced labour, meet environmental, social governance and sustainability targets, as well as strengthen export controls of critical technology and information.
Businesses should also adopt a mindset that trade technology will bring significant business benefits not just in compliance with these new standards, but also in the provision of greater visibility into their supply chain and business practices. This insight will help business leaders face challenges head-on, respond quickly to shifting demands, boost efficiency, and reduce the costs of finance and insurance.
The process of digitising trade is long overdue, and we are helping to educate businesses to build capacity and implement the systems they need to take full advantage of the technology being developed. It is also integral that governments and policymakers fully understand not just the economic benefits that a fully digitised trading operation can deliver, but how these processes can reduce barriers to doing business and make international trade more inclusive and widespread.
The UK has a unique opportunity to become the global leader in adopting digital trade solutions. As new digital solutions emerge, now is the time to think about how to adjust and leverage the benefits of fully digitized trading practices to future-proof your business.