How to Use Blockchain Technology to Boost Global Trade

Published
01 Jul 2019
2019
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Oliver Cann, Public Engagement, Tel.: +41 (0)79 799 3405; oca@weforum.org
Muzi Li, Public Engagement, Tel.: +86 (0)139 1046 6369; muzi.li@weforum.org

  • Blockchain technology could grow new global trade volumes by $1.1 trillion
  • The World Economic Forum launches a roadmap for using blockchain to lower trade barriers at the Annual Meeting of the New Champions 2019
  • The Inter-American Development Bank will apply this framework to pilot projects
  • Read the full report here

Dalian, People’s Republic of China, 1 July 2019 – Blockchain technology can lower barriers to trade, according to a new World Economic Forum report, in cooperation with the Inter-American Development Bank, Windows of Opportunity: Facilitating Trade with Blockchain Technology. The report presents a framework for using blockchain technology to facilitate trade in single windows – or one-stop electronic platforms – where registered users submit import and export documents.

Electronic trade windows have helped halve document processing times at border agencies and have cut trade compliance times to a third. Single windows increase exports and gross domestic products and improve transparency and user experience. As of 2017, 27 countries had full electronic single windows and 36 had a partial single window. Yet challenges remain to improve effectiveness and implementation.

With blockchain technology’s potential to lower trade time and costs it is poised to facilitate $1.1 trillion new trade volumes globally. The technology offers benefits such as:

  • Interoperability: with improved visibility to manage risks, recognize patterns, conduct pre-arrival processing, share data and improve user experience
  • Traceability: enabling more complete data on shipments, supply chains and audit trails by bringing together single windows and/or private sector trade intermediaries on a common blockchain
  • Automated processes: automated payments and reconciliation to accelerate revenue collection
  • Reliability of data: ensuring that data is fixed and providing single-window users with unique identities so that they allocate relevant parts of their identities to third-party service providers

“To take full advantage of blockchain’s potential for trade, we need forward-looking policies that integrate emerging technologies with international trade practices and rules,” said Ziyang Fan, Head of Digital Trade, World Economic Forum. “This framework closes the governance gap, separates hype from reality, and enables policy-makers to make informed decisions on leveraging blockchain to facilitate international trade.”

The report presents detailed guidelines for using blockchain in single windows, including:

  • Evaluate different technologies (blockchain and non-blockchain) to best address problems
  • Create a vision and make a business case
  • Create a governance structure that includes data and implementation
  • Build technology architecture and integrate technology
  • Manage user identities and data
  • Measure and report impact
  • Iterate

The creation of a global system to govern blockchain will help countries and businesses maximize its benefits while mitigating risks. The report outlines key questions to ask while developing governance structures and suggests what actions to consider. Countries require an understanding of how data is shared, which technologies are used and where the blockchain application will be managed. Since most decisions flow from the governance structure, this first step will ensure interoperability across borders.

The Inter-American Development Bank (IDB) will use this framework to pilot blockchain projects that improve border clearance, and will share lessons and best practices.

“Applying blockchain technology to improve efficiencies in trade and transparency for border clearance can be of critical importance for governments in Latin America and the Caribbean, and beyond,” said Fabrizio Opertti, Manager of the Integration and Trade Sector of the IDB. “We hope this policy framework developed jointly by the Forum and the IDB becomes the starting point for governments to use blockchain to facilitate trade.”

The Forum’s 13th Annual Meeting of the New Champions 2019 takes place from 1-3 July in Dalian, People’s Republic of China. Under the theme, Leadership 4.0: Succeeding in a New Era of Globalization, more than 1,800 business leaders, policy-makers and experts from over 120 countries will participate and explore more than 200 sessions.

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