TradeTech is revolutionizing global trade

Technology is playing a pivotal role in reducing trade friction. During COVID-19, technological advances – such as e-commerce, digital payments, cloud computing, the Internet of Things (IoT) and 5G – significantly disrupted international commerce. Artificial intelligence (AI) is already being integrated into various trade-related processes, while robotics, virtual reality and 3D printing are expected to become more integral to trade in the medium term.

Recognizing the potential of these technologies to enhance the efficiency and inclusivity of international trade, the World Economic Forum, with the Ministry of Economy of the United Arab Emirates (UAE) and the Abu Dhabi Department of Economic Development, launched the TradeTech Initiative.

Over 400 global trade and technology leaders convened in Abu Dhabi at the TradeTech Forum in February 2024 on the sidelines of the World Trade Organization’s ministerial conference MC13. The agenda featured topics such as forging the future of trade finance, green trade, logistics, supply chains and trade facilitation, with an overall focus on accelerating the deployment of technologically driven solutions into global supply chains.

Leaders contributing to the discussion included Pamela Coke-Hamilton, Executive Director of the International Trade Centre (TC); José Viñals, Group Chairman of Standard Chartered; Sonsoles Garcia, Minister of Production, Foreign Trade, Investments and Fisheries of Ecuador; Mahmood Al Bastaki, Chief Operating Officer of Digital Technologies of DP World; and Tarek Sultan, Vice-Chairman of the Board at Agility.

During the TradeTech Forum the UAE-based IOTA Ecosystem DLT Foundation committed $10 million to support early-stage startups and ventures focusing on TradeTech, trade finance, and tokenization solutions. This funding aims to bolster a digital TradeTech ecosystem in the UAE, Africa and other places around the world by advancing the roll-out of digital trade and finance solutions. The initiative builds on a recent collaboration agreement for the establishment of the Trade Logistics Information Pipeline (TLIP) organization.

In a world facing multiple crises, trade is essential for enhancing economic growth in developing countries. Some of the most severe risks impacting the next decade include rapid technological change, economic uncertainty, a warming planet and conflict.

Much of international trade continues to rely heavily on paper-based transactions. The manual processes involved with verifying paperwork increase the time and cost of doing business.

Data from the Asian Development Bank shows that the global trade finance gap reached an estimated $2.5 trillion in 2022, affecting mostly small and medium-sized enterprises. Rejected trade finance is often due to a lack of business relationships with financial institutions, documentation issues and compliance issues.

These challenges especially impact perishable goods such as food and medical supplies from reaching markets.

By bringing leading stakeholders together, the TradeTech initiative encourages trade facilitation by improving transparency, fostering inter-agency cooperation and enabling data sharing for more effective risk management.

Technology can facilitate the implementation of electronic certifications in a more efficient, secure and trusted manner. Greater visibility into supply chains can support the design and administration of trade rules, which could help avoid the discretionary application of trade rules, ignited by geopolitical tensions. For example, AI can be used to revolutionize HS Code classification of goods for customs declaration, risk management systems, non-intrusive inspection processes and audits.

By removing obstacles in the supply chain, trade can become an engine for growth in countries that need it most. Digitalization plays a pivotal role by establishing risk management solutions to reduce physical inspections, computerizing the process of managing customs advance rulings, converting paper-based cross-border certificates into electronic documents transiting through electronic data interchange platforms and establishing electronic payment protocols.

Corporate partners in emerging markets who are well-placed to bring a solutions-oriented approach to driving the future of trade are invited to get involved with the TradeTech initiative.

The initiative is part of the Forum’s Centre for Regions, Trade and Geopolitics, which brings over 130 leading global companies together with policy-makers for action-oriented exchange on building resilient, sustainable and inclusive trade and investment.