The Electronic Trade Documents Act (ETDA) received royal yesterday (20 July), marking the start of the “UK’s new digital trade future” as electronic documents will now have the same legal status as paper ones.
The law allows the trade community to take advantage of paperless trade and could see a move towards wider digitisation in importing and exporting.
The government’s aim is to make international trade cheaper, more sustainable and more efficient by removing reliance on old-fashioned paper, with the hope that this could boost the UK economy by £1bn over the next decade.
The ETDA lists bills of exchange, bills of lading and warehouse receipts as commonly-used documents that could be digitised.
‘Digital future’
Marco Forgione, Institute of Export & International Trade (IOE&IT) director general, said this was the “first day of the UK’s new digital trade future.”
“The act places electronic trading documents on the same legal footing as paper documents and enables businesses to move from paper-based to digital-based transactions.
“This will have a hugely positive impact on costs, as well as the duration and environmental impact of customs and border processes. It will lead to an overall improvement in the efficiency of trade and lower administration costs.
“IOE&IT is already helping our members to understand the importance of this act and how it can help them trade more effectively with the world.
Kevin Shakespeare, director of strategic projects and international development at IOE&IT, said:
“The new law provides the opportunity for the UK to become a leader in digital trade and trade facilitation, by engaging with industry and ensuring implementation in a manner which business can buy into.
“Around 80% of trade documents around the world are based off English law, and the ETDA is an important first step in digitising international trade.”
The act could also have an impact on the sustainability of shipping, with the World Economic Forum finding that digitisation could “reduce global carbon dioxide emissions from logistics by as much as 12%”.
Influence
Any changes to UK law are likely to have a knock-on effect throughout the world in nations that are using a legal system based on the English common law.
English & Welsh courts retain a great deal of influence in resolving shipping and insurance disputes, with the Law Society estimating that the law of England governs insurance contracts worth £80bn.
Bi-partisan support
During parliamentary debate, the bill received praise from both government and opposition politicians.
Minster for digital economy, Paul Scully, highlighted some estimates showing that the collective global savings would be around £3.6bn a year, if 50% of the container shipping industry adopted electronic bills of lading.
Valuable tool
Shadow minister for the digital economy, Alex Davies-Jones, said the bill as was “a valuable tool in ensuring that the world of trade and commerce operates as smoothly and efficiently as possible.”
Responding to the news of the ETDA’s passage, Scully said: “What may look to many of us as a small change to the law is something that will have a massive impact on the way UK firms trade.”
The ETDA is expected to come into force around 21 September of this year.