unctad.org | Intelligent trade and technologies: Preparing for the trade facilitation of the future
Intelligent trade and technologies: Preparing for the trade facilitation of the future
12 December 2017
Blog
Written by Jan Hoffmann, Trade Logistics Branch, UNCTAD
[Article No. 12, 2017]


 
The mindset
 

When the negotiations on trade facilitation started at the WTO in 2004, negotiators from many developing countries were reluctant to commit their countries to "publish information on the internet". Developing countries lacked the capacity, they said, and such publication implied the need to invest in costly IT solutions.

One decade later, when the negotiations were concluded, this was much less of an issue. In fact, it can today be argued that making "Information Available Through Internet" as envisaged under the WTO Trade Facilitation Agreement that entered into force in 2017, is of particular interest to smaller traders from poorer countries as this may be the only way for them to obtain access to relevant information for their import and export activities.

Ship

Larger companies from richer countries are more likely to have the option to obtain the relevant information through their own offices or their countries' diplomatic representations in foreign markets.

Currently, the International Maritime Organization (IMO) manual for the Convention on Facilitation of International Maritime Traffic (FAL) is being revised. References to the electronic submission of data are being deleted - not because data should not be transmitted electronically, but rather because alternative transmissions are not even considered any longer.

Trade-related regulations and international agreements need to keep pace with technological developments. The negotiations, ratification and implementation of relevant conventions take time, and in view of today's fast paced technological change, the aim should be to commit to the use of whatever technological solution that is deemed feasible, adequate and fit for purpose.

 
Solutions to today's requirements
 

The application of the following Articles of the WTO Trade Facilitation Agreement is probably the more likely to be further enabled by technological improvements and progress:

  • Article 1 - "Publication and Availability of Information": Access to information has to be complete and immediate, be it through the internet or any other future technologies that allow for information sharing and acquisition.

  • Article 2 - "Opportunity to Comment, Information before entry into force, and consultations": access to information and technologies that allow relevant stakeholders to communicate and to provide views and comments on proposed legislation can support effective implementation of this provision. By the same token, Articles 5, 7 and 8 of the TFA include the need for communication and publication which can benefit from information and communication technologies.

  • Most provisions related to licences, declarations and clearance can be better enforced by making greater use of information and communication technologies that provide solutions to data transmissions, automation, payments, classification, and the transfer of access rights. These include above all the provisions within Article 7 on the "Release and Clearance of Goods" and Article 10 on "Formalities Connected with Importation, Exportation and Transit".

  • Finally, Articles 7 and 10 contain provisions, which implementation can be supported by making use of data analysis, and as such also from Artificial Intelligence (AI). Specific measures where AI could be applied are risk management, separation of release from clearance, audits, authorized operators, and the analysis of release times beyond the simple "average" that needs to be published.

 
Solutions to tomorrow's requirements
 

One-hundred years from now - and probably much earlier already -, the concept of "copies" versus "originals" as per Article 10.2 will become obsolete as processes focus on data rather than on documents. The same will apply to "information technology to support the single window" as per Article 10.4, as focus shifts to data and information on a distributed ledger.

In the long term, I believe that WTO TFA Article 10.1 will gain in importance, as it does not prescribe any specific technological solution, but rather provides for a dynamic dimension of the TFA. Progressively, various provisions will have become antiquated or obsolete and we will just want to minimize "the incidence and complexity of import, export, and transit formalities"; continuously "review" requirements; keep "reducing the time and cost of compliance for traders and operators"; and always choose "the least trade restrictive measure". For these endeavours, AI and blockchain solutions will be highly relevant.

In the current environment, I see three areas of activities that could help today's trade and its transport.

  • E-Commerce: Beyond the TFA, already at the WTO Ministerial Conference MC11, the multilateral negotiating agenda may be moving toward electronic commerce. The eTrade for All initiative is an important practical step to support developing countries to engage in and benefit from E-Commerce. Its modules include issues such as trade logistics and ICT infrastructure and services.

  • Networks: The focus of trade and trade logistics will be more and more on the analysis of networks. What matters is a country's or trader's connectivity, i.e. the position and role within a network. The Internet of Things and AI can help reduce waiting and dwell times with trucks and ships at borders and ports arriving and leaving "Just In Time" An important initiative in this context is the Global Infrastructure Connectivity Alliance (GICA).

  • Energy: There are concerns that distributed ledgers used for blockchains require far more electricity than more basic, traditional IT solutions. At the same time, alternative blockchain processes requiring less computing power and electricity are under development. In addition, blockchain solutions can also be applied to the energy sector itself, where the technology can help save energy by increasing the efficiency of electrical grids and allowing local energy sharing.

 
Science Fiction?
 

Decisions pertaining to the above-mentioned technologies will be considered and possibly even taken by AI. AI systems will learn and adapt faster to new challenges and technologies than humans, as newly acquired knowledge can immediately be passed on to fellow AI-endowed units - no need for schools, seminars and teaching here.

It will become increasingly important that AI systems also be taught a set of values upon which to base their learning and decisions. By way of example, already today, self-driving cars need to be taught to base decisions on pre-defined criteria - that so far are still set by their human creators.

 
Back to basics
 

Many challenges remain. The use of the Internet is still not universal, especially in many Least Developed Countries (LDCs) and remote and rural areas. In LDCs only 1 in 6 people use the Internet, and small businesses use the Internet far less than larger enterprises. UNCTAD member states attach a high priority to ICT connectivity as critical infrastructure, as well as to capacity building for the smaller and weaker economies.

UNCTAD works with developing countries and other international organizations on solutions that help facilitate trade and its transportation, encourage E-Commerce, and provide support to customs administration, port authorities, national trade facilitation committees and transport corridors. We provide technical assistance and capacity development for those who may otherwise be left out.

As the world economy and society is increasingly moving towards ever more integration through intelligent trade and information networks, we must, a) seize the opportunities of new technologies for improved trade efficiency, and, at the same, b) ensure that nobody is left behind.

For further information, please contact Jan Hoffmann (Jan.Hoffmann@UNCTAD.org)


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