Electronic Trade Documents Act Explainer
The Electronic Trade Documents Act was granted royal assent on 20 July 2023, giving electronic trade documents the same legal status as physical trade documents.
The government estimated in their impact assessment that 25 million paper documents are generated and couriered around the world each year. They have projected that digitalising all trade documents would generate a net benefit of £1 billion for the British economy.
The last few years has seen a significant drive towards the digitalisation of customs red tape. And since trade is cross-jurisdictional, global reform is going to be required for this act to reach its full potential. But, English and Welsh law underpins many international trade transactions, meaning that legal reform in the UK can act as a catalyst towards this global reform. According to the International Chambers of Commerce, 80% of trade documents around the world are based off English and Welsh law.
Replacing physical paperwork has numerous benefits:
- There is less chance of sensitive paper documents being lost
- Digitalising can achieve greater security and a reduction of fraudulent trade documentation
- Facilitation of cross-border trade would be much easier
- More businesses will be incentivised to participate in international trade if they don’t have to grapple with complex paperwork
- Great transparency of supply chain information and cash flow will make it easier for small businesses to work with banks to better access trade finance
- Removing the requirement for physical paperwork will have positive impact on the environment
- UK movement in this area will help to kickstart global reform by setting a precedent the rest of the world should follow