By Jim Holbein, Of Counsel, Braumiller Law Group
This article describes how digitization of information and development of new tools and equipment is expanding to improve efficiency, productivity, safety and almost every aspect of the movement of goods. The focus is on how international organizations, national governments and upgraded trade agreements are improving the ability to adopt innovative technologies.
U.N. Suggestions for Adapting Global Value Chains to Digitization:
The United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT) proposed the establishment of an Advisory Group on Advanced Technologies in Trade and Logistics (AGAT), in order to advise and support the UNECE secretariat and UN/CEFACT on advanced technologies in trade facilitation and electronic business. The technologies in question include:
- Distributed Ledger Technologies (DLT) includingblockchain
- Internet of Things(IoT)
- Artificial Intelligence(AI)
- Autonomous devices
- New computational models – Cloud/Fog/Edge computing
- Quantum computing
- Connectivity of new generations (5G)
Recognition of Digitization in Agreements:
The WTO legal framework lacks specific provisions in some areas, particularly on customs procedures and documentation, and on transparency. The spectacular increase in the amount of goods traded worldwide in the last few years and the advances in technology and the computerization of business transactions added a sense of urgency to the need to make the rules more uniform, user-friendly and efficient.
Since at least 2016, the World Customs Organization is actively promoting the adoption of digital tools. The WCO vision for the future includes: paperless customs clearance as the norm, supporting single window approaches to customs processing and working with countries to develop advanced approaches in areas such as improved compliance with sanitary and phytosanitary requirements.
The US-Mexico-Canada Agreement (USMCA) includes provisions on digital trade that cover digital information and cross-border transfers, but there is little in the agreement that fosters a commitment to innovative digital tools.
Some of the issues with digital trade are addressed in other new regional agreements such as the Pacific Regional Comprehensive Economic Partnership (RCEP), the CPTPP and the African Continental Free Trade Agreement (AfCFTA), for example., However, these agreements also lack commitments to innovation and use of digital tools to upgrade the supply chain infrastructure.
Single Window Initiatives:
A single window is defined as a facility that allows parties involved in trade and transport to lodge standardized information and documents with a single-entry point to fulfill all import, export, and transit related-related regulatory requirements. Requirements vary by country for single window filing, bank transaction documents, commercial docs, tracking ships and containers and specific products, traceability, moving through multiple customs environments (FTZ, bonded warehouse, enter and re-export, drawback, rulings in multiple jurisdictions) and other important transactional steps.
The process of building out single window infrastructure is not widely adopted in many countries and there is little movement to integrate them globally. They are basically compatible at the 6-digit level in the Harmonized System, but the movement to add compatibility across more information and regulations will take years, if not decades, as each country decides for itself how to approach this fundamental customs process and what is included.
ITC Digital Trade Studies:
Technologies such as cloud computing—the delivery of software and other computer services via the internet—are transforming the provision of information and communications technology (ICT) services. Internet technologies transformed how most goods and services in the economy are produced by helping firms lower their costs and operate more efficiently while giving consumers improved access to a wider range of products and services. Digital trade enabled SMEs to overcome many of the impediments associated with exporting that traditionally only larger firms could manage.
In addition, operating online allows worldwide consumer demand to fuel demand for SME exports of products and services. The internet enables firms to improve logistics management, manage supply chains more efficiently, introduce more efficient business practices, increase market intelligence, gain greater access to more markets and customers and develop additional channels for service delivery.
Food Safety & Technology Trends In 2021:
- Today, food manufacturers realize the need to integrate their existing ERP systems with a single comprehensive tech-solution that presents a dashboard of complex issues like safety, security, transparency, compliance across the siloes of field, factory, suppliers, payments to farmers, distributor network and retail to eventually provide field-to-fork data view of each and every product in their supply chain.
- Farm automation will continue to grow steadily in the Agri-Food Supply Chains with the industry considering lesser dependence on manual labor.
- The food chain is also in dire need of cobiotics, a technology that uses computer-controlled robots to communicate physically with humans and numerous other automation systems.
- The use of drones in farm surveillance, seeding and various farming purposes, requires Blockchain technology that bars any alteration of data after recording. Big Data Analytics, Artificial Intelligence (AI) and countless other technologies are already implemented across the world.
- Monitoring, evaluation and ROI are being deduced considering the ‘scale’ of farming plays a critical role; smaller lands versus the huge acres is where technology intervention needs to be normalized.
- One of the chief motives of implementing cutting-edge technologies is to enhance food safety and reduce any risk of spoilage, wastage, or contamination.
- The FDA requires full transparency around a food or beverage product’s manufacturing practices and whereabouts in the supply chain, under the FSMA (Food Safety Modernization Act), passed in 2011.
Summary and Conclusion:
The movement to improve international trade mechanisms and systems with digital tools has clearly become a powerful force for innovation. International organizations need to work to develop coherence and compatibility among the various tools and bring nations together to truly use the power of these new approaches. There are many benefits to be derived from digitization, including enhanced traceability, improved records, and many others that are being built by innovative companies globally.
Join Jim Holbein for an NCBFAA webinar presentation on this very topic:
Trade in a New Digital World. March 11th.