Transforming Global Trade: The Power of Digital Standards to future proof the trade ecosystem

Standardization in digital trade is essential for several reasons:

• Interoperability:  Ensures that different systems and platforms can communicate and work together seamlessly.
• Efficiency:  Reduces the time and cost associated with trade by streamlining processes.
• Accuracy: Minimizes errors and discrepancies in trade data, leading to more reliable transactions.
• Compliance: Helps businesses adhere to international trade regulations and standards.

However, Standardization in Digital Trade faces Several Challenges:

• Diverse Regulations: Different countries have varying regulations and standards, making it difficult to create a unified system. The MLETR passed by the UK government is a right step addressing these regulatory and legal challenges.
• Technological Disparities:  Not all countries or businesses have access to the same level of technology, leading to inconsistencies in implementation.
• Data Privacy Concerns: Ensuring data privacy and security while sharing information across borders is a significant challenge.
• Complexity of Trade Processes:  The intricate nature of global trade, with numerous stakeholders and processes, adds to the difficulty of standardization.

Addressing these challenges requires international cooperation, investment in technology, and a commitment to creating a more efficient and transparent trade ecosystem.

Overcoming Challenges

Overcoming the challenges of standardization in digital trade requires a multifaceted approach:

• International Collaboration: Countries need to work together to harmonize regulations and standards. Global organizations like the World Trade Organization (WTO) and the ICC can facilitate this process.
• Investment in Technology:  Significant investment in modern technologies such as AI/ML is necessary to enhance the efficiency improvement. Cloudification and API-based connectivity are no longer optional but essential.
• Data Privacy Frameworks:  Establishing robust data privacy frameworks that comply with international standards can help address privacy concerns. The General Data Protection Regulation (GDPR) in the EU is an example of such a framework.
• Simplifying Trade Processes: Streamlining and simplifying trade processes can make it easier to adopt standardized practices. This involves reducing bureaucratic red tape and leveraging technology to automate processes.
  

Key Trade Documents & Data Elements 

The DSI has identified several key trade documents and their corresponding data elements. The most common documents used in typical trade processes include:

• Commercial Processes: Purchase Order (PO), Commercial Invoice (INV).
• Transport Processes: Bill of Lading (BOL), Air Waybill (AW), Packing List (PL), Sea Cargo Manifest (SCM), Rail Consignment Note (CIM)
• Border and Regulatory Processes: Customs Declaration (CD), Certificate of Origin (CoO), Phytosanitary Certificate (ePhyto), Export/Import License (EIL)
• Financial Processes: Letter of Credit (LC), Payment Confirmation (PC), Bill of Exchange (BoE).

Key trade data elements are the building blocks of a standardized digital trade ecosystem. Studies indicate that an average trade transaction requires at least 20+ documents with 2000 to 3000 data elements from various touchpoints of the trade ecosystem, depending on country practices. Standardizing these data elements is critical to ensure seamless integration across multiple trade touchpoints.

Examples of key data elements include:

• HS Codes: Standardized codes for classifying goods.
• Goods Descriptions: Detailed descriptions of the goods.
• Value and Quantity:  Accurate reporting of the value and quantity of goods.
• Origin and Destination: Information about where the goods are coming from and going to.
• Parties Involved: Details of the entities involved in the transaction.
• Reference Numbers: For tracking and traceability.
  

These documents and data elements are essential for ensuring interoperability, accuracy, and compliance in global trade, facilitating seamless integration between all trade ecosystem parties such as banks, corporates, shippers, middlemen, and counterparties.

How PelicanSecure Trade Can Help

PelicanSecure Trade digitization system currently supports all key trade documents and extracts over 3000 key data elements typically required for trade processing. These key data elements are converted into a structured form during the digitization process and then used for automating trade operations and various compliance checks. The extraction and structuring of data closely follow the Digital Standards Initiative, ensuring alignment with global standards and enhancing the efficiency and accuracy of trade processes.

Conclusion

The Digital Standards Initiative, which encourages the adoption of key trade data elements, is crucial for creating a globally interconnected digital trade ecosystem. By leveraging advanced technologies like AI, GenAI, and ML, businesses can enhance the accuracy, efficiency, and compliance of their trade processes. However, the success of these advanced technologies largely depends on the quality of the data passing through the system. As we move towards a more digital future, the importance of standardization and technological innovation cannot be overstated. Embracing these changes will not only streamline global trade but also foster a more transparent and secure trading environment for the entire ecosystem.

About PelicanAI

Pelican AI is a leading provider of innovative financial technology solutions. With a focus on security, compliance, and customer experience, Pelican is committed to helping financial institutions navigate the complexities of the real-time digital age.

For further information please contact:

Pelican Marketing
Tel: +44 208 947 7200
Email: marketing@pelican.ai