A new law that accords digital trade documents the same legal status as physical ones, hopefully making foreign trade more efficient, cleaner and cheaper, has received royal assent from the King and passed into law.
The Electronic Trade Documents Act was first introduced in autumn 2022, and replaces legislation dating back 141 years that stated all trade documents – used to transfer ownership of goods when importing or exporting them – had to be paper-based to be legally valid. It is thought that over 28 billion paper trade documents are printed every day in the UK alone.
By changing this law, the government believes it can not only boost the UK’s sustainability efforts by saving paper, but also cut processing time for trade documents down to mere seconds in some cases. It said this could add over £1bn to the economy between now and 2033.
“The global container shipping industry generates billions of paper documents a year – and, in reality, there’s no need for the immense costs UK businesses have to face in producing them and the detrimental environmental impact that this has,” said Paul Scully, minister for technology and the digital economy.
“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.”
Minister for international trade Nigel Huddleston added: “This new act will make it easier for businesses to trade efficiently with each other, cutting costs and growing the UK economy by billions over time.
“It’s exciting to see the power of technology being harnessed to benefit all industries, reduce paper waste and modernise our trading laws.”
The changes have also received the backing of the International Chamber of Commerce (ICC). Chris Southworth, who acts as secretary general for the organisation in the UK, described it as game-changing not just for the UK, but for global trade.
“The act will enable companies to finally remove all the paper and inefficiency that exists in trade today and ensure that future trade is far cheaper, faster, simpler and more sustainable. This presents a once-in-a-generation opportunity to transform the trading system and help us drive much-needed economic growth,” he said.
The government said the act put the UK “ahead and in the lead” of not only the G7 group – comprising Canada, France, Germany, Italy, Japan, the UK and the US – but “almost all other countries in the world”, setting out an approach that others will seek to follow.
Given the UK’s long commercial history and pivotal role in the development of global capitalist systems during the era of colonialism, the ICC estimates that 80% of trade documents around the world are now based on English law to some extent.
No obligation to go digital
There will be no obligation put on UK businesses to use digital trade documentation, with paper-based documents remaining perfectly acceptable for those who choose not to make the change.
They will also be subject to certain criteria that replicates some of the “features’ of paper. For example, only one person or joint party will be able to exercise exclusive control over a digital trade document at any point, which means that once it has been passed on, the previous owner cannot amend or control it.
Westminster also hopes to realise some operational security benefits for UK businesses, as switching to digital documents will mean there is less chance of sensitive paper documents being damaged or lost, and potentially stronger cyber safeguards through the use of technology.