Following digitisation of commercial documents, the digitalisation of trade implies functional use of data to improve the automation potential of cross-border processes.
By taking a human-centred approach to policy design in conformity with global semantic standards, trade rules in a ‘data driven’ format can address inequalities in access to information and modes of compliance. Such reforms also make digital solutions for trade facilitation, including national customs systems, easier for governments to deliver and maintain.
New trade networks are presently feasible. Extending the internet, a ubiquitous system for authoring, publishing and distributing executable rules, could enable businesses of all sizes to utilise data to better participate in international commerce.
Imagine you own a small manufacturing business in Colombia. Although your product is selling well in the domestic market, you have export sales orders from across South America, Europe and Asia. But, even fulfilling orders from neighbouring Brazil involves numerous rules, rates and a language barrier. You’ve also recently become aware of opportunities to import key components from international suppliers. Imported parts could yield lower total costs, yet they will complicate procurement processes and compliance with rules of origin when exporting final products. How would you conduct these cross-border transactions in the most efficient way for your business?
Trade is complex, time consuming and costly, as enterprises need to be aware of and comply with rules under different international agreements and legal systems. It has been estimated that an average customs transaction involves 30 parties, 40 documents and 200 data elements that form a ‘data supply chain’ along the value chain of any product. For micro-, small- and medium-sized enterprises (MSMEs), sourcing from or selling into international markets can be daunting and seem infeasible. Challenges are further amplified when small businesses are located in developing and least developed countries (LDCs).
The World Trade Organisation (WTO) has shown that data flows facilitate information sharing among entities in the trade logistics chain and lower the coordination costs of moving goods from conception to production to consumption. Improved access to data reduces information asymmetries and decreases transaction costs. Facing high costs of doing business and barriers to international markets, small enterprises in LDCs have the most to gain from better use of data for trade facilitation.
Computational forms of rules, through tabular programming methods, have the potential to accomplish the goals of trade facilitation: to simplify, modernise and harmonise import and export processes. As standards that facilitate coherent exchange of data across systems and jurisdictions are growing in adoption, an ‘Internet of Rules’ (IoR) could enable policy automation with separation of data, network and application control. In times of global and regional crises, the responsiveness of trade policy is critical for small business survival.