International Approaches to TradeTech Policymaking

Trade policymakers around the world are facing a key challenge when it comes to TradeTech. They must ensure regulation warrants protection of goods and services, and facilitates competition and market access while developing inter-digital systems integration, and interoperability of technical standards, requirements, and design of systems within APIs, and blockchain.

Following the WTO’s Analysis Paper[1] covering international considerations for effective implementation of TradeTech, policymakers are faced with an immense challenge to adopt key applications including AI/ML, and blockchain technologies which facilitate safe business transactions, while ensuring SME’s/MSME’s obtain support and operational capacity to also adopt these digitalisation efforts.

This paper outlines TradeTech’s definition, whilst developing key technical and regulatory issues that international policymakers are facing when it comes to the adoption of TradeTech. Encouraging regulatory flexibility within states’ policy frameworks, and interoperability of technical standards, data architectural design, and Digital ID systems, decision-makers can facilitate digitalising of trade processes.

• What is TradeTech?

Digitalising trade documentation processes; ‘TradeTech’, exists as attempts to transfer paper-based trading documentation processes onto digital formats. This can include standards procedures in environmental, and consumer regulations, customs, and border-control verifications; companies require extensive paperwork to trade goods internationally. As such, with the application of technological innovation within AI, blockchain, to cloud-based portals – companies can transfer the work of producing, processing and sharing documentation to faster, cheaper, and more sustainable digital platforms and formats.

• Regulatory Flexibility

All forms of tech policy in general must remain agile, ready to change and adapt with innovation, nevertheless, TradeTech regulation must coordinate and take into account;

- Convergence between strategies and principles; Institutions, mechanisms, and instruments, including FTAs, Digital Economy Agreements, and their respective MoUs (Memorandums of Understanding) should work to adopt aligned principles such as within technical frameworks including telecommunication infrastructure permits’ covering submarine cable system installations, from identifications between data controllers and processors within blockchain-based ledger systems. Top-level alignment also remains critical due to the cross-sectoral nature of trade, with manufacturing goods being moved across multiple sectors within healthcare, academia, to military services – which hold sectoral-specific standards, requirements, and trading practices. For example, trading quantum computing systems to be used in research hospitals internationally could receive specific trade documentation standards including both the International Electrotechnical Commission and British Standards Institution (BSI).

As digitalising efforts become more complex, international policymakers are looking to produce relevant regulatory and market-competition policy frameworks including within Digital ID, market access, legal documentation formatting standards, and Internet of Things (IoT) End-to-end data-system processing.

Converging these strategies and mechanisms through principles of open competition and flexibility can align international and cross-sectoral tech policy frameworks, removing blockages including data localisation and diverse technical and documentation standards.

This should also include a focus towards states’ regulatory and market-facing institutions, including the UK’s cross-sectoral Digital Regulatory Cooperation Forum, and Department for Environment Food and Rural Affairs’ technical bodies including Target Operating Model’s (TOM) oversight of trading authorisation processes, oversight and decision-making should occur within sectoral regimes which can quickly adapt and change to evolving business environments.

Regulatory convergence can also include facilitating capacity-building mechanisms within skills, cross public-private expertise, running and implementing hackathons, tech sprints, competitions, and workshops within stakeholders’ obligations within highly complex procurement programmes such as blockchain[2].

- Coherence and cross public-private coordination; Policy regimes and frameworks that are flexible to change must also foster environments of open dialogue and input via industry groupings. This must include key international bodies such as the UN’s Centre for Trade Facilitation and Electronic Business (UN/CEFACT), which should consult with digital technology industry leaders to represent them effectively.

Given the complexity of TradeTech, international policymakers are looking to create clear guidance around ensuring companies design their data architecture to facilitate sharing of information across organisations, including through technical development procedures in precise system-API (Application Programming Interfaces) integration processing. As digital technology companies operate in this line of work, the views of key sector players including micro, small, and medium-sized enterprises (MSMEs) must be included and referenced when states contribute to international policy frameworks.

• Technical Interoperability

To ensure the technical operations of digitalisation processes result in cross-border business and personal data-transfers, international institutions must ensure trading companies are designing their digital systems to incorporate new processes of digital trade documentation.

​​​​​​​- Application Programming Interfaces (API); A core technical function of interoperability remains the ability to transfer data across systems via the development of API models.

To ease this procedure, international policymakers can help technical specialists produce data architectural models which match developments of APIs internationally. Regulation, support, and guidance can include organising consultation forums between technical users’, business leaders, and policymakers, which can feed into creating data/API Standards Dictionaries, and E-Business inspection reports, certifications, and certifications through the CEFACT’s standards framework.

​​​​​​​- Digital ID; End-to-end digitalisation of trade processes involves the implementation of digital identification systems, as the ability to seamlessly authenticate a natural person's legalised national status remains critical to receiving/signing trade documents.

While FTAs and Digital Economy Agreements have focused on interoperability of product classification systems, international policymakers are thinking of growing Industry-to-Government mechanisms, and engagement facilitation through the global certification framework, UNCITRAL Electronic Commerce, and Digital Identity and Trust Services Working Groups.

Decision-makers are seeking to develop a globally recognised digital identity verification framework which enables the free flow of identification authentication between global jurisdictions. Conversely, there has been increasing focus from national and international policymakers to develop differing frameworks including the European Digital Identity’s (eID) Digital Wallet instrument, and the UK’s Digital Identity and Attributes Trust framework.

Given states’ eagerness to foster thriving digital ID markets, international policymakers must ensure these frameworks align, and Third-Party Providers can develop solutions for relevant financial institutions and firms.

​​​​​​​- Blockchain; The technology’s technical standards require the merging of multiple areas within tokenisation, value representation, asset-referenced specifications, inter-chain connectivity, and chain-to-chain communication.

International policymakers can support national authorities’ develop guidelines and market oversight towards companies’ adopting and implementing blockchain innovation within specific trading sectors including financial services, which incur specific capability requirements, market-strategic policy frameworks, and API systems. It could also include the production of legal blueprints, and template designs – reducing the required bandwidth and operational scope of national institutions.
 

• National-International Regulatory Cooperation

As this Paper outlines, TradeTech’s policymaking considerations are extremely complex and will require input and support across international and national civil societies, business leaders, and public institutions. If executed effectively, TradeTech offers substantial societal, economic, and environmental benefits which have the potential to transform the way businesses trade internationally.

The question of digitalising cross-border trade exists as an immensely complex challenge for state administrations, yet a critical one for companies across the UK economy seeking to simplify and reduce operational costs. Work requires consideration of multiple strategic, operational and policy workstreams including frameworks in cybersecurity, interoperability, border authentication documentation, data transfers, and Digital ID. International policymakers should work to collaborate with business leaders and technical specialists to simplify and converge thinking around this critical area of trade policy.