Cumbersome and time-consuming customs processes will soon become a thing of the past, after a group of 91 World Trade Organization (WTO) members agreed a new set of rules on digital trade.
Thrashed out over five years of talks, the E-Commerce Joint Initiative (JI), finalised on 26 July, removes paper-based barriers to trade by committing all participants to the digitalisation of customs documents and the recognition of electronic documents and e-signatures.
The new paperless trading system, once fully implemented, will slash trade costs for businesses, doing away with the need to print off multiple forms to comply with customs procedures, as well as enabling invoices and contracts to be signed and delivered electronically rather than being posted around the world.
While the adoption of digital customs systems under the JI would not be universal, the UK’s Department for Business and Trade says improvement in trade facilitation can “increase the probability of a small business starting to export by up to 3% and increase the value of small business exports”. It adds that global adoption of digital customs systems, processes and documents would increase UK GDP by as much as £24.2bn in 2023 terms.
“Global digital trade is already estimated by the OECD to be worth around £4tn and counting, but no common set of global rules exist,” says Jonathan Reynolds, the UK’s business and trade secretary. “This is a huge step forward in correcting that and ensuring British businesses feel the benefit.”
“The e-commerce agreement… is an opportunity to accelerate efforts to digitalise our borders and global supply chains and help to remove unnecessary friction and costs that prevent SMEs from trading,” adds Chris Southworth, secretary general of International Chambers of Commerce UK. “This is good news for business, consumers and the economy.”
The pact also includes provisions to permanently ban customs duties on digitally-delivered services and content – such as software downloads, music and online films – sales of which currently make up over three-quarters of total UK services exports.
“As chair of the UK’s E-Commerce Trade Commission, created to encourage and support businesses to trade and export online, we know the power that digital trade has to transform the global trade landscape, saving time, money and reducing friction at the border,” says Marco Forgione, director general of the Chartered Institute of Export & International Trade.
“The UK has already been taking great strides forward on digitalising our trading processes and is well placed to hit the ground running with this new agreement, particularly with the Electronic Trade Documents Act and the Border Target Operating Model already in place.”
In a statement, the UK government says it is now working alongside WTO partners to incorporate the agreement into the WTO legal framework, with ratification into UK law to take place once this is complete.