Mr John Denton,
Secretary General of the International Chamber of Commerce,
Distinguished guests,
Ladies and Gentlemen,
1. Good morning. I am pleased to join you at this inaugural ICC Future Trade Forum – the first global forum focused on trade digitalisation and standardisation. I am glad to see many members of the trade community here today, in support of the development of a globally harmonised and digitalised trade environment.
2. The Covid-19 pandemic wrought unprecedented challenges but we have emerged stronger and more resilient. The global economic recovery, however, must contend with an environment fraught with risks. Geopolitical tensions are rising; the longstanding consensus on free trade and its benefits is fraying; inflation remains persistently high; more recently, we have seen turbulence in financial markets. And, the existential threat of climate change looms large in the longer term.
3. One valuable lesson we have learnt from the pandemic is the critical importance of global trade linkages and connectivity. Hence, now more than ever, it is important that like-minded partners work together to strengthen the international rules-based trading order at all levels – by leveraging bilateral, regional, plurilateral, and multilateral agreements. It is also essential that we take full advantage of new opportunities afforded by technology. Through digitalisation, for example, trade can become faster, more secure, and lower in cost. And the harmonisation of standards across jurisdictions will promote interoperability and boost efficiency. Let me elaborate.
Strengthening trade through digitalisation
4. International trade has underpinned global economic growth and raised the living standards of hundreds of millions over the past three decades. The UN projects that global trade hit a record level of US$32 trillion in 2022. However, global trade volumes are expected to fall this year due to significant headwinds[1].
5. We must, therefore, do our utmost to strengthen global trade linkages and enhance economic resilience. Trade digitalisation is key to this effort.
a. Digitalisation reduces cost and friction by minimising, if not eliminating, time-consuming, complex and error-prone paper processes, and allowing trade to function more smoothly, securely and at scale. Wider adoption of digital standards and processes enables firms, especially our SMEs, to reach more markets and sell more products.
b. Digitalisation is changing the way we trade. For instance, the rise of e-commerce platforms has led to greater numbers of small packages being shipped across borders. McKinsey estimates that cross-border e-commerce in goods will grow from US$300 billion in 2020 to US$1 trillion by 2030.[2] This has unlocked new opportunities in the trade and logistics sectors.
c. Digitalisation also improves trading firms’ access to financing. A 2021 survey by the Asian Development Bank found that only one percent of firms which sought alternative financing used digital financing sources. Over half of firms reported using their own funds or informal financing sources, and around a fifth were unable to find appropriate financing alternatives.[3] Digital finance solutions can not only help firms secure the financing needed for their trading activities; they can also improve transparency and traceability in supply chains, and strengthen financial institutions’ confidence when extending trade financing. These developments are especially beneficial to smaller trading firms, which tend to face higher rejection rates.
6. In sum, digitalisation has much to offer for the future of trade. However, there is still a long way to go. Today, each cross-border transaction still involves the exchange of 36 documents and 240 copies on average, across multiple actors. Less than one percent of trade documents are fully digitised.[4] A key impediment is the lack of common standards to promote interoperability.
Harmonising digital trade standards to promote interoperability
7. Establishing common standards is critical to enabling data to flow seamlessly along the supply chain and promoting interoperability across trade networks. However, the lack of such common standards has been a longstanding obstacle in international trade.
a. Take the electronic Bill of Lading, or eBL, which was first introduced in 1998. The original system spawned more than a dozen separate systems, each operating independently with different technical requirements. Moreover, many jurisdictions did not recognise these eBLs, requiring the documents to be converted back to hardcopy. This ultimately led to the eBL having a very low adoption rate of 0.01% even as late as 2019.[5]
8. This is where the ICC-DSI can have a profound impact. ICC-DSI was established in 2020 to advance digital trade by promoting cross-industry collaboration, and the adoption of appropriate legislative frameworks. It has made significant progress since its founding:
a. DSI has established a Legal Reform Advisory Board to promote an enabling legal environment for digital trade, through the adoption of the Model Law on Electronic Transferable Records, or MLETR, under the UN Commission on International Trade Law. MLETR enables the use of electronic documents and signatures by recognising the legal validity of electronic equivalents of paper-based records. Singapore was the second country to adopt it.
b. The Industry Advisory Board, also set up by DSI, works with the private sector on initiatives to promote common standards across the international supply chain. DSI has developed a certification course to equip industry professionals to operate in the digital trade environment.
c. DSI, supported by Enterprise Singapore, has also developed a “Standards Toolkit for Cross-Border Paperless Trade,” to assist all supply chain participants in adopting standards to facilitate digital trade.
9. DSI’s efforts have contributed to the growth of the digital trade ecosystem in the public and private sectors, and across international borders while driving convergence towards a common set of solutions. I am heartened that these are complemented by other initiatives, such as the formation of the Future International Trade (FIT) Alliance by the ICC, the Digital Container Shipping Association and other partners, to facilitate adoption of an eBL.
10. Singapore has strongly supported these efforts, with agencies such as Enterprise Singapore and the Infocomm and Media Development Authority (IMDA) working closely with DSI. I would like to thank DSI for its close partnership and support in our digital trade journey.
Singapore’s digital trade strategy
11. Trade is the lifeblood of Singapore, and we remain steadfast in our commitment to free trade. We are also keenly aware of the importance of digitalisation in shaping the future of trade. As articulated in our Trade 2030 strategy, digitalisation is integral to Singapore’s plans to strengthen our value proposition as an international trading hub. There are several thrusts to our digital trade strategy. We have concluded Digital Economy Agreements (DEAs) with five like-minded countries to facilitate cross-border data flows and build confidence in digital trade. Our DEAs enable interoperable rules, standards and policies so that companies can engage in seamless cross-border digital trade.
12. Singapore is also working to establish baseline rules on digital trade at the multilateral level through the Joint Statement Initiative (JSI) on E-Commerce at the World Trade Organisation. Singapore is a co-convenor of this initiative along with Australia and Japan. The JSI involves 88 members accounting for over 90% of global trade, and represents all major geographical regions and levels of development.
13. Various Government agencies in Singapore have also embarked on initiatives to develop a comprehensive digital trade ecosystem:
a. IMDA has developed the TradeTrust framework, which uses blockchain technology to verify the authenticity and provenance of documents, and facilitate legally valid performance obligation transfers between parties. The framework is being used to pilot eBL transactions with China, the Netherlands and the United Kingdom.
b. The Ministry of Communications and Information has launched the Digital Trust Centre (DTC), which will lead Singapore's research and development efforts for trust technologies and support talent development in this space.
c. IMDA, the Monetary Authority of Singapore and the Financial Services Regulatory Authority of Abu Dhabi Global Market have together conducted the world’s first cross-border digital trade financing pilot based on MLETR, in collaboration with DBS Bank, Emirates NBD and Standard Chartered.
14. Singapore also supports regional efforts to promote digital trade. For instance, the ASEAN Business Advisory Council drives efforts to integrate the digital trade platforms of ASEAN Member States to facilitate seamless trade flows. We are also working with the Directors-General of Customs across ASEAN Member States to enhance connectivity cooperation in the digital era, under the ASEAN Economic Community Blueprint 2025.
Conclusion
15. These and other similar initiatives across the world exemplify a common purpose, borne of the recognition that trade digitalisation can create significant value and economic opportunities. However, to reap the full benefits, these various efforts must come together in a coherent manner – we must evolve a global system founded on harmonised standards that allow for seamless cross-border digital trade. We can certainly attain this goal if governments and industry partners come together to raise understanding of the digital frameworks that are already in operation, and implement solutions collaboratively. ICC-DSI can play a valuable role in this respect, working with partners to chart their digital trade journeys. We in Singapore stand ready to do our part, partnering countries and interested stakeholders to create a digital, more efficient and resilient global trade ecosystem.
16. I wish everyone a productive Forum and rich discussions in the days ahead. Thank you.