- Global trade has been disrupted by the war in Ukraine, COVID-19 and other supply chain blockages.
- In the digital age, new tools and systems can help streamline global trade.
- These include non-fungible tokens, digital IDs and digital trade agreements.
- A single digital identity that could allow any organization to trade globally is the ideal, says the World Economic Forum.
Global trade is under pressure.
But the pandemic also showed us the power of digital technology to keep the world going. For international importers and exporters, digital trade systems and tools offer huge opportunities.
Here are three developments helping to make global trade smoother and safer.
Non-fungible tokens – NFTs for short – are a form of secure digital ownership. They are unique digital tokens that can be used to buy, own and sell digital or physical items online, according to business news website Business Insider. This might include real estate, art or music.
It might be an image, 3D model, document, or anything else, says FinTech Magazine. These digital signatures can’t be altered or faked in any way, meaning new possibilities for handling sensitive data.
NFTs can also streamline international trade by removing document fraud and the need for multiple regulations and human interventions along supply chains, FinTech adds.
In 2021, more than $17 billion of NFTs were traded globally, up 21,000% from $82 million in 2020, reports payments news site PYMNTS.com.0 seconds of 1 minute, 41 secondsVolume 90%
Before trade can happen, businesses need to verify each other’s identity. Instead of using paper documents like passports and driving licences, digital IDs are a way of verifying identities remotely over digital channels, explains research specialist, McKinsey Global Institute.
The World Trade Organization (WTO) says digital IDs can apply to people, organizations or things. They’re now critical to a wide range of international trade transactions and processes. For example, drawing up contracts, exchanging data, bringing new suppliers or partners on board and complying with regulations related to the environment, counterterrorism, finance and other areas.
Digital ID systems are typically used by government agencies like customs and business registration.
But as trade becomes more digital, so does the need for a digital ID system that works globally across borders and not just in specific sectors, the WTO says. In its work on Global Trade Identity, the World Economic Forum explores the use of a single digital ID that could allow any organization to trade globally.
Digital trade agreements
Digital trade agreements are a package of measures between governments designed to make trade easier in the digital age.
In February this year, the United Kingdom signed a digital trade deal with Singapore that includes shared digital systems for e-invoicing, e-payments and other electronic documents, according to law firm Pinsent Masons.
The UK government said the deal would “end outdated rules” for exporters of goods and services, cut costs and “pave the way for [a] new era of modern trade”.
Singapore has also signed a digital trade agreement with Chile and New Zealand. The deal is designed to help trade flow between different regimes, with benefits including enhanced security, quicker cargo clearance and faster payment processing.
The World Economic Forum is working with partners to develop a unified set of global rules for digital trade. In a blog, Ziyang Fan and Mike Gallaher of the Forum’s digital trade team say: “Existing digital trade rules are outdated, complex and fragmented, if they exist at all.”
They argue that modernizing digital trade rules would advance digital trade, create more jobs, lower costs and reduce inefficiencies.