While comprehensive, all-encompassing trade deals like TPP and TTIP are of particular note in recent years, we ought not to sideline regional agreements of narrower scope which, even proportionally, propose sweeping economic effects. On the first day of this month, the UN Economic and Social Commission for Asia and the Pacific (ESCAP) opened for signature one such agreement: the Framework Agreement on Facilitation of Cross-Border Paperless Trade in Asia and the Pacific (1).
As the name suggests, this agreement will work toward facilitating paperless trade among signing parties, and is the first regional agreement encompassing solely this space. Thus this deal can be seen as an exciting indicator of global trends in trade communications and paperless transacting, and governments’ recognition of these trends.
The agreement defines “cross border paperless trade” as “trade in goods, including their import, export, transit and related services, taking place on the basis of electronic communications” (2). Though this may sound rather broad, the latter clause is of note since most trade in the region today is carried out using physical paper documents.
International trade can require a complex constellation of documents and data, and in many cases the exchange of these materials is carried out with physical paper, costing billions of dollars to the private and public sectors. Lawmakers and businesspeople alike have seized the opportunity to build paperless trade systems, which in many advanced economies have already been hugely successful; Hong Kong, for example, sees estimated annual savings of 1.3 billion USD due to its automated information transaction system (4). That is equivalent to about half a percent of Hong Kong’s GDP.
How much export value is lost in the Asia Pacific economy due to the inefficiency of paper-based trade? ESCAP places the figure at $257 billion annually. The wheels are very much in motion on correcting this inefficiency, and in a sense it is a low-hanging fruit as compared to more controversial areas of trade (such as offshoring of manufacturing). To see this, one can look at the progress of agreements touching on the issue. In 2013, as part of a larger WTO Trade Facilitation Agreement, negotiators concluded that member states would need to work toward paperless trade solutions. This agreement has already been ratified by 94 states since then, although two-thirds of the 164 WTO members need to ratify before it goes into force (3). Several higher-income Asian nations have already implemented paperless trade systems with a “single window” framework, wherein all documents of a cross-border transaction may be submitted to one platform which distributes them to the necessary parties (4).
In short, the pace of paperless trade is formidable and this agreement will be a big step, although individual implementation for certain less developed states remains to be seen. If properly implemented, paperless trade will bolster the Asia Pacific economy by smoothing out bureaucratic inefficiencies.
(1) "ESCAP Economic and Social Commission for Asia an : First Regional Agreement to Enable Cross-border Electronic Trade in Asia-Pacific Opens for Signature at UN Headquarters." ESCAP Economic and Social Commission for Asia an : First Regional Agreement to Enable Cross-border Electronic Trade in Asia-Pacific Opens for Signature at UN Headquarters. ESCAP, 30 Sept. 2016. Web. 9 Oct. 2016. <http://www.4-traders.com/news/ESCAP-Economic-and-Social-Commission-for-Asia-an-First-regional-agreement-to-enable-cross-border-e--23149895/>.
(2) United Nations. ESCAP. Bangkok, Thailand. Framework Agreement on Facilitation of Cross-border Paperless Trade in Asia and the Pacific. N.p.: n.p., n.d. Print.
(3) "Ratifications List." World Trade Organization – Trade Facilitation Agreement Facility. WTO, n.d. Web. 11 Oct. 2016. <http://www.tfafacility.org/ratifications>.
(4) Ha, Sung Heun, and Sang Won Lim. The Progress of Paperless Trade in Asia and the Pacific: Enabling International Supply Chain Integration. Publication. Asian Development Bank, Oct. 2014. Web. <https://www.adb.org/sites/default/files/publication/152775/reiwp-137.pdf>.
Image: © Tianyi Wang | Dreamstime.com - United Nations Social and Economcis Commission for Asia and Pacific (US ESCAP)