2 minute read
1.1 Trade Finance Global | Editor’s Note
ZIYANG FAN
Head of Digital Trade World Economic Forum
1.2
The world is in crisis. Over 12 million people worldwide are confirmed to have the Coronavirus at the time of this writing, and more than half million have died. The global economy is facing its biggest challenges in decades. Global trade has been hit hard: the WTO estimates a drop of 18.5% of merchandise trade in the second quarter of 2020, and predicts a fall of as much as 32% in 2020.
There is one silver lining amid this crisis– the digital technologies in the Fourth Industrial Revolution have emerged to be the heroes to help fight and treat Coronavirus, keep our societies functioning, and speed up economic and trade recovery. At the same time, how to close the digital divide and deploy these technologies in a human-centred approach are just as important and challenging.
When it comes to global trade, the COVID-19 pandemic has made one thing clear – the future of trade is digital. As the physical movement of goods and people is restricted, digital trade has played a crucial role in keeping trade flowing. From replacing physical documents with electronic records, to crossborder e-commerce and digital payments, to teleconferencing with business partners around the world, the adoption of digitally enabled transactions in goods and services have accelerated dramatically.
Trade finance is no exception. A process notoriously reliant on paper, trade finance has been forced to digitise as the lockdown traps physical documents in different places, and the staff of banks and ports work remotely. As a result, according to a recent Economist report, cargo companies are issuing more electronic bills of lading, 60 chambers of commerce have adopted electronic certificates of origin, and some countries have finally recognized e-signatures and e-documents.
However many challenges remain: for example, rules on digital trade are outdated and inadequate, digital protectionism is on the rise in certain regions, the lack of interoperability of digital standards, platform, and technologies slows down the progress gained from physical to digital, and digital transformation is a process that requires mindset change and leadership. Moreover, we must address the digital divide between developing and developed countries, and among different social and racial groups within any countries, which the current crisis may exacerbate.
The Fourth Industrial Revolution not only gives us the digital tools to fight the Coronavirus, it also offers us the rare opportunity to reset and shape the world we live in. Ready or not, the world has been slingshot into a more digitallyenabled future. We, the trade community, need to capture this moment to modernize trade processes and rules, create interoperable systems, close the digital divide, and build an equitable and inclusive global trading system for all.
