What is the new UK Electronic Trade Documents Act?

The UK’s Electronic Trade Documents Act will come into effect in September but what does it mean for procurement teams?

The new law is a significant legal change to UK trade regulations as it sets out a basis of which trade documentation can be exchanged in electronic form, and has the same value as a paper trade document.  

A key aspect of the change also states that the electronic document must be identifiable from copies and must be safe from unauthorised alterations and there has to be a reliable system in place to enforce that. 

It is estimated the act could generate a net benefit of £1.14 billion for the British economy over the next decade for UK businesses trading across the world.

The new law allows shipping containers to be traded using digital documents, not paper ones, and will come into operation from Thursday 20 September.

Outdated trade laws

Existing laws dating back to the 1800s previously meant that exporters and importers have to use paper documents to transfer ownership of the goods they are shipping.  With less chance of sensitive paper documents being lost, and stronger safeguards through the use of technology, digitalising trade documents is also set to give businesses that trade internationally greater security and peace of mind.

“This new act will make it easier for businesses to trade efficiently with each other, cutting costs and growing the UK economy by billions over time,” said UK Minister for International Trade, Nigel Huddleston. “It’s exciting to see the power of technology being harnessed to benefit all industries, reduce paper waste and modernise our trading laws.”

UK Minister for International Trade, Nigel Huddleston (Credit: Gov.uk)

“The global container shipping industry generates billions of paper documents a year – and in reality there’s no need for the immense costs UK businesses have to face in producing them, and the detrimental environmental impact that this has,” added Paul Scully, Minister for Tech and the Digital Economy.   “What may look to many of us as a small change to the law is something that will have a massive impact on the way UK firms trade, and in turn, is going to boost our economy by over £1 billion over the next decade.”

Paul Scully, Minister for Tech and the Digital Economy (Credit: Gov.uk)

Analysis from Charlie Bromley-Griffiths, Corporate Counsel at Conga

"The Electronic Trade Documents Bill will provide more efficient and cost-effective outcomes for the shipping industry, removing complex and often burdensome processes. It will also significantly reduce the environmental damage from the widespread use of paper documents associated with everyday trade. However, for this directive to work, all businesses will have to review their operations to ensure data transfers are lawful and compliant. After all, risk comes with every trade document and contractual agreement. It is important that any suppliers or traders mitigate risk where possible and are mindful of this when rolling out any digital change programmes in response to new legislation.

Charlie Bromley-Griffiths, Corporate Counsel at Conga (Credit: Supplied)

“Of course, The Electronic Trade Documents Bill will make international trade more efficient, but leaders will need to get their houses in order and consider how their data is currently being processed. Integrating systems and streamlining processes should be a top priority, but organisations also need to ensure that all data is accounted for throughout the document lifecycle − this will be key, especially as they continue to adopt more technology, as we saw with the Schrems II legislation. Indeed, with Schrems II, organisations have had to adopt entirely new processes, digital tools and cross-border data flows to comply with the new export jurisdictions.

"Digital transformation is the future of business, so leaders need to embrace these changes with an open mind, as it presents an opportunity to reassess and streamline their revenue processes. In time, organisations will be able to consider how contracts and trade documents can be drafted more comprehensively and collaboratively across different business functions.”

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