Breaking news: Electronic Trade Documents Bill received Royal Assent
On 20th July 2023, the UK Electronic Trade Documents Bill received Royal Assent. The newly enacted Electronic Trade Documents Act (ETDA) is set to transform international trade by allowing businesses to exchange trade documents such as bills of lading and insurance certificates electronically.
The Electronic Trade Documents Act (ETDA) has been officially enacted in the UK marking one of the major transformations in international trade to date. Originally introduced as the Electronic Trade Documents Bill in October 2022, the Act paves the way for UK businesses to use electronic trade documents instead of traditional paper ones. Applying to both large and SME organisations, the new law covers documents like bills of lading, waybills, and insurance certificates.
Referred by Lord Holmes who’s been heading the initiative as the “Blockchain Bill” due to its distributed security nature, the ETDA promises to simplify and speed up the processing time for all trade parties whilst delivering significant economic and environmental benefits. According to the government’s latest projections, switching to digital documents can reduce processing time from 7 days to just 10 minutes.
“I have also called it the “Blockchain Bill” because the criteria set out in the Bill – ensuring that an electronic document is capable of being subject to exclusive control and that once transferred the previous holder should no longer be able to exercise control over the document – can be delivered through distributed ledger (or blockchain) technologies although it is quite right that no particular technology is set out on the face of the bill.”
The International Chamber of Commerce estimates that digitalising trade documents could generate £25 billion in new economic growth by 2024 and free up £224 billion in efficiency savings. From an environmental perspective, the move away from paper documentation can significantly reduce waste and contribute to global sustainability efforts. The UK government further estimates that the trade industry currently uses 28.5 billion paper documents a year, translating to roughly 2.5 million tonnes of carbon dioxide emissions just from paper and printing in international trade.
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However, the passage of the ETDA is only the beginning of the journey towards digital international trade as the shift is expected to bring multiple additional challenges to businesses, including cybersecurity, data privacy, and technical compatibility issues. The British government will therefore need to create a robust legal and regulatory framework to accommodate these electronic changes while protecting stakeholders' interests.
Despite these challenges, the UK's move is seen as a catalyst for a global shift towards digital trade, potentially prompting a domino effect in other countries, particularly among the Commonwealth nations, many of which share the same legal framework. The Electronic Trade Documents Act symbolises the dawn of a more efficient, inclusive, and greener era of trade that better reflects our digital age.