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  • Home
  • About
  • Podcast
    • Summaries
    • Articles
  • Invoice Finance
    • Basics
      • What is Invoice Finance?
      • What is Reverse Factoring?
      • What are Trade Receivables?
      • What is the Cash Conversion Cycle?
      • What is Days Inventory Outstanding?
      • What is Days Sales Outstanding?
      • What is Days Payable Outstanding?
    • Advanced
      • Invoice Validation and Fraud Detection
      • Reasons Why Invoice Finance is Better than a Bank Loan
      • How to Choose the Right Factoring Firm for Your Business
      • A Closer Look at Factoring Agreements
      • What is Trade Receivables Securitisation?
      • Breakdown of the Costs for Factoring
    • Factoring
      • Why Companies Use Invoice Factoring
      • What Companies are Suitable for Invoice Factoring?
      • Factoring and Invoice Discounting
      • How Factoring Works
      • Asset Based Lending
      • Is Factoring Right for Your Company?
      • Accounting for Factoring
      • How a Company Enters into a Factoring Agreement
      • The Costs Involved in Factoring
      • Changing Factoring Company
      • The Relationship Between the Factoring Company and the Debtor
      • Legal Aspects of a Factoring Company Pursuing Payment Through the Courts
      • Factoring in the Construction Industry
    • Fraud
      • Types of Invoice Fraud
      • How to Combat Invoice Fraud
    • E-Invoicing
      • Legal Status of Electronic Invoicing
      • The Benefits of E-Invoicing
      • Implementing an E-Invoice System
      • E-Invoicing Adoption in Mexico and The Rest of the World
  • Brokers
    • UK Brokerage Firms
  • Factoring Firms
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      • Transforming Trade Finance: The Role of AI
      • The Different Programming Languages Used in Fintech Companies and Financial Institutions
      • UK and US Authorities Intervene in AI Sector
      • Web3 Applications and the Future of Trade Finance
      • What is Web 3?
      • What Can Fintech do for You?
      • What is Fintech?
      • Tokenisation of Finance
      • Payment Services in the Invoice Finance Sector
      • What is ChatGPT and Why the Fuss?
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    • Deal Arrangers
    • Book Runners
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      • The Roles of Deal Arrangers and Book Runners in Securitization
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      • Risk Mitigation for Trade Receivables Securitisation
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      • How are UK Factoring Firms Regulated?
      • What is ISO20022 and Why is it Important?
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      • Credit Suisse Bailout
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Home Fintech Hi-Tech

Summary of G7 – Creating Modern Digital Trade Ecosystem

John Goodden by John Goodden
May 10, 2023
in Hi-Tech
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digital trade
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Summary of G7 - Creating Modern Digital Trade Ecosystem
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Download file | Play in new window | Duration: 5:39 | Recorded on May 8, 2023

“Paper-based transactions, which still dominate international trade are a source of cost, delay, inefficiency, fraud, error and environmental impact. It is our shared view that by enabling businesses to use electronic transferable records we will generate efficiencies and economic savings. This will strengthen the resilience of our global economic system and play a crucial role in trade recovery across the G7.”

G7 Digital and Technology Ministers, 28 April 2021

The ICC (International Chamber of Commerce) report on modernizing the digital trade ecosystem has far-reaching implications for the global economy. As the world becomes increasingly connected, it is essential that we have the tools to facilitate trade across borders. The report highlights that the current digital trading system operates on outdated systems and laws, creating inefficiencies that slow trade down and hamper growth and innovation. By reforming national laws and aligning them with the UNCITRAL Model Law on Electronic Transferrable Records (MLETR), a modernized trading ecosystem can be created that is simple, efficient, and interoperable.

The report argues that the optimal way to achieve this is to reform national laws and align them with the UNCITRAL MLETR. The MLETR provides an international framework to align national laws and enable the legal use of electronic transferable records both domestically and across borders. It builds on the principles of non-discrimination against the use of electronic means, functional equivalence, and technology neutrality underpinning all UNCITRAL texts on electronic commerce. It enables the use of modern technologies, including registries, tokens, and distributed ledgers.

In order to create a modern digital trade ecosystem, national laws must recognize all trade documents in digital form, and legal systems must be aligned to enable digital information to move seamlessly across borders and between stakeholders. The report notes that while great progress has been made to digitize trade facilitation and customs documents, most jurisdictions around the world still require documents that transfer the possession of goods (transferable records) to be presented in paper form. Examples of such documents in international trade include bills of exchange, bills of lading, promissory notes, and warehouse receipts.

Harmonizing legal frameworks worldwide will remove a key barrier to the growth of digital trade and contribute to economic recovery. The report suggests that digitizing trade will generate £25 billion in new economic growth, reduce processing times by up to 75%, free up £224 billion in efficiency savings, and generate £1 billion to tackle the trade finance gap. Harmonizing systems will help SMEs scale their businesses into international markets at a lower cost and better access supply chain opportunities.

Legal reform and harmonization are fundamental building blocks to a successful modern digital trade ecosystem. Without reform, the cost of trade will remain high, and solutions will be unable to scale across borders. It is also a prerequisite to implementing international digital standards, another key building block that removes the fragmentation that currently exists in the trading systems and enables systems and processes to talk to each other and information to flow in digital form.

The report also notes that harmonizing legal frameworks will make countries more attractive to digital foreign direct investment and, with faster connectivity, will improve the digital competitiveness and capacity of firms to trade internationally. Furthermore, digitalizing trade will enable more SMEs to participate in global trade, as it will dramatically reduce the cost and complexity of trade. This will help to ensure that no one gets left behind, particularly in emerging economies.

In addition to supporting the G7 Framework for Collaboration on Electronic Transferable Records, the report also supports the work of UNCITRAL in promoting MLETR, the Framework Agreement on Facilitation of Cross-border Paperless Trade in Asia and the Pacific of the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP), and the ambition of The Commonwealth Connectivity Agenda to increase intra-Commonwealth trade to $2 trillion by 2030.

Overall, the report calls for urgent action to modernize the digital trade ecosystem. The opportunity now exists to rapidly scale up legal reforms to harmonize legal frameworks worldwide and remove a key barrier to the growth of digital trade. In the context of the economic recovery, this exercise presents itself as a low-cost, high-return activity for all governments seeking to reduce the cost and complexity of trade and increase SME participation to drive economic growth.

Tags: digital tradeG7 Framework for Collaboration on Electronic Transferable Recordsinternational tradeMLETRUnited Nations Economic and Social Commission
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  • Home
  • About
  • Podcast
    • Summaries
    • Articles
  • Invoice Finance
    • Basics
      • What is Invoice Finance?
      • What is Reverse Factoring?
      • What are Trade Receivables?
      • What is the Cash Conversion Cycle?
      • What is Days Inventory Outstanding?
      • What is Days Sales Outstanding?
      • What is Days Payable Outstanding?
    • Advanced
      • Invoice Validation and Fraud Detection
      • Reasons Why Invoice Finance is Better than a Bank Loan
      • How to Choose the Right Factoring Firm for Your Business
      • A Closer Look at Factoring Agreements
      • What is Trade Receivables Securitisation?
      • Breakdown of the Costs for Factoring
    • Factoring
      • Why Companies Use Invoice Factoring
      • What Companies are Suitable for Invoice Factoring?
      • Factoring and Invoice Discounting
      • How Factoring Works
      • Asset Based Lending
      • Is Factoring Right for Your Company?
      • Accounting for Factoring
      • How a Company Enters into a Factoring Agreement
      • The Costs Involved in Factoring
      • Changing Factoring Company
      • The Relationship Between the Factoring Company and the Debtor
      • Legal Aspects of a Factoring Company Pursuing Payment Through the Courts
      • Factoring in the Construction Industry
    • Fraud
      • Types of Invoice Fraud
      • How to Combat Invoice Fraud
    • E-Invoicing
      • Legal Status of Electronic Invoicing
      • The Benefits of E-Invoicing
      • Implementing an E-Invoice System
      • E-Invoicing Adoption in Mexico and The Rest of the World
  • Brokers
    • UK Brokerage Firms
  • Factoring Firms
    • Europe
      • UK
      • France
      • Germany
      • Italy
      • Spain
      • Holland
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  • Hi-Tech
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    • UK Fintech
    • Articles
      • Enhancing Fintech Interoperability: Digitalizing Trade Documents for Efficiency and Security
      • The 7 Types of AI and Their Implications for the Future
      • Transforming Trade Finance: The Role of AI
      • The Different Programming Languages Used in Fintech Companies and Financial Institutions
      • UK and US Authorities Intervene in AI Sector
      • Web3 Applications and the Future of Trade Finance
      • What is Web 3?
      • What Can Fintech do for You?
      • What is Fintech?
      • Tokenisation of Finance
      • Payment Services in the Invoice Finance Sector
      • What is ChatGPT and Why the Fuss?
  • Rating Agencies
  • Securitisation
    • Deal Arrangers
    • Book Runners
    • Articles
      • The Roles of Deal Arrangers and Book Runners in Securitization
      • What is Trade Receivables Securitisation?
      • The Appeal of Trade Receivables Securitisation
      • Risk Mitigation for Trade Receivables Securitisation
  • Legal
    • Law Firms
    • Articles
      • A Guide to Accounts Receivable Purchase Agreements and Invoice Discounting Agreements
      • The Challenges of KYC and AML Checks
      • What is The Model Law on Electronic Transferable Records (MLETR)?
      • Snapshot of Factoring Legal Schemes in England and Wales
      • How are UK Factoring Firms Regulated?
      • What is ISO20022 and Why is it Important?
  • Rates
  • Economy
    • Economic Indicators
    • Articles
      • The Collapse of the Russian Rouble: An Historical Analysis and Current Implications
      • The Current State of the UK Economy
      • Economic Forecast for the UK in 2023
      • Economic News for 2022
      • Financial Crisis or Not?
      • Credit Suisse Bailout
  • Credit Insurers
    • Credit Insurers
    • Articles
      • Credit Insurance Legal Aspects
      • Credit Insurance in Trade Receivables Financing
      • The Benefits of Credit Insurance in Invoice Finance
      • Eligibility Requirements for Capital Relief by Using Credit Insurance
      • What are Export Credits and Country Risk Classifications?
      • How the War in Ukraine Affects the Price of Credit Insurance for Trade Finance
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    • UK Passes Financial Services and Markets Act 2023
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    • Taxonomy of Crypto Assets
    • Crypto Currencies
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    • Interview with Crossflow
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