12th October 2022 was historic in the annals of the UK’s trade history for one reason the government of the UK introduced the Electronic Trade Documents Bill in the parliament, confronting the Bills of Exchange Act 1882 and the Carriage of Goods by Sea Act 1992. While the farmer is over a century old, the latter was three decades old. The electronic trade bill once passed as an act attains significance because of the tremendous impact on the British economy apart from international trade.
What Was the Need of Electronic Trade Document Bill of the UK?
Looming Economic Crisis
UK’s economy is deteriorating, showing signs of a long recession by the third quarter of 2022. There was a 0.2% depreciation and the services, production, and construction industries are slowing down gradually. The statement the Bank of England released stating it was the “longest-ever recession since its inception” reflects the gravity of the situation.
The new government that took charge of affairs has already warned of the tough decisions in the form of more taxes to cut spending. The government of the UK has already started measures to reduce redundancy and cost cuts and the Electronic Trade Document Bill is a major step forward in sealing the punctures that drain away the economic resources.
Historical Trade Policies of the British Government
For centuries, B2B business transactions such as bills of lading, a contract between parties while shipping goods, and bills of exchange, a practice in exports and imports were paper-intensive practices. The British laws mandated such practices making British international trade an expensive affair.
Although trade contracts and extensive business agreements remain intact, digitization eases the pains of extensive manual work of typing and data entry, apart from reducing the cost of doing the same work multi-folds. The electronic trade document bill is expected to modernize British trade and commerce, turning it agile and flexible, which the customers looking for in this digital era. The electronic signature for manufacturers and trade is expected to add further security layers when the bill comes into force.
Sea Change in British International trade policies
Traditionally, stringent business laws and policies are lagging British international trade, making it rigid to penetrate the ever-changing global business scenario. This electronic trade document bill intends to promote flexibility in British Trade laws turning it cheaper and more competitive to fare in the international business arena. The bill will reduce the unusual paperwork and bureaucracy, a major roadblock on the UK’s way to promote trade.
Economic Significance of the Electronic Trade document Bill
The UK enjoys over £1.4 trillion in international trade and an estimated 28.5 billion out of which is vanishing on the paper-based trade-related document printing and circulating globally, regularly. Electronic trade document bill is a marked departure from the centuries-old legacy practices of mandating paper-based documentation and manual signing of contracts.
Major Economic Gains of the Bill
When becomes an act, the electronic trade document bill will fetch the below-mentioned economic, business, and environmental benefits to the UK.
- Digital documentation and Electronic Signature become legalized.
- Reduces administrative costs
- Promotes ease of doing business for British firms internationally
- Electronic document processing reduces the time involved by 20 seconds per document.
- Reduces carbon emissions by 10%
- Reforms and modernizes the Bills of Exchange Act 1882 and the Carriage of Goods by Sea Act 1992.
Digital-First Trade Policies and Their Implications on the UK Economy
At present, the centuries-old trade laws do not provide any legal sanctity to the Electronic Signature and digital form of signing agreements. This bill will liberalize trade policies to the extent of allowing companies and firms to enact all kinds of trans-border business transactions online, in digital form.
While the existing bills are consuming one week up to ten days for creating, printing, manually signing the agreements, and reaching the potential customer in person, digital-first Electronic Signature practices can accomplish the above-mentioned tasks in a span of 20 seconds.
Boosts the Economy
In Digital Secretary Michelle Donelan’s words, the bill reduces administrative costs considerably, saving £1.14 billion to boost the economy in crisis. According to the Digital Container Shipping Association, the UK would be savings roughly £3.6 billion if 50% of the shipping industry in the country turns to electronic documentation.
Addresses Climate Concerns
It is an eco-friendly act that reduces carbon emissions from shipping containers of logistic industries by 12%. The Electronic Signature Platforms for Logistics offer innovative document management features to speed up business practices in the UK.
Safety, Security, and Compliance
Electronic trade documents are increasingly secure and comply with global laws. Digital audit trials turn electronic documents easier to trace, using blockchain and distributed ledger technology. Tracking electronic documents is very easy for companies that would otherwise wait for the shiploads to reach them, keeping their fingers crossed due to the information gap.
Trade Documents that may turn exclusively digital once the bill will come into force include,
- Bill of exchange
- Promissory notes
- Bill of lading
- Delivery order for Ships
- Warehouse receipt
- Mate’s receipt
- Marine insurance policy
- Cargo insurance certificate
Geopolitical, Trade, and Economic Background of the Bill
The UK is one of the global leaders in digital trade. Yet, its centuries-old trade laws are preventing companies within the country to take full advantage of the changing global economic and trade scenario. This bill can also be seen as the G7 nation’s commitment to reforms under the DCMS Secretary of State’s Digital Track of the UK G7 Presidency. The UK enjoys a robust digital industry worth £138 billion, creating 1,822,000 jobs. In 2020, the digital sector contributed £56 billion as exports, which is a fifth of the UK’s total exports.
The Electronic Document Bill as a Global Economic Force
The electronic trade document bill in the UK will bring several changes in global trade policies and practices as nations within the Commonwealth and the major global economies that were once British colonies are still following the UK’s economic models. They may also change their international trade laws to compete in the digital era.
When countries across the globe are under digital transformation, electronic documentation and Electronic Signature enhance safety, compliance, and authenticity. It is heartening to see the British Parliament taking up this act, opt under the current global economic scenario. Amidst the post-pandemic economic crisis and volatile geopolitical challenges, the Electronic Trade Document Bill Act 2022 will add immense value to boost the UK’s economy and its international trade. This bill is also expected to bring reforms in the trade policies of the nations that follow the UK’s economic models.