In today's global economy, international trade plays a massive role in helping countries and businesses grow and succeed. With trade expanding worldwide, companies must keep up with the changes and use digital technologies to make their trade processes smoother. However, recent developments, such as the efforts by G7 ministers, have highlighted the importance of adopting electronic transferable records and electronic bills of lading (eBL) to drive efficiency, economic savings, and resilience in the global economic system.
In this blog, we'll discuss the importance of adopting MLETR (Model Law on Electronic Transferable Records) and eBL (electronic Bill of Lading) in international trade. We'll look at how these digital tools are changing, how businesses trade across borders, and explore how these innovations could shape the future of global trade.
Understanding MLETR and eBL
MLETR, or the Model Law on Electronic Transferable Records, was adopted by the United Nations Commission on International Trade Law (UNCITRAL) in 2017. It comprises of 19 articles and an explanatory note providing guidance on its enactment. MLETR is designed to bridge the gap between traditional paper-based negotiable instruments and electronic documents, ensuring compatibility with various technologies and models.
On the other hand, electronic bills of lading, or eBLs, offer a digital alternative to traditional paper bills of lading. The adoption of eBLs enables businesses to streamline the movement of goods, reduce costs, and enhance the security and efficiency of trade transactions.
Advantages of MLETR and eBL
The COVID-19 pandemic has accelerated the adoption of MLETR and eBLs. Initiatives under the governance of organisations like the International Chamber of Commerce (ICC) have further supported this. As more countries and businesses recognise the benefits, the trade finance industry is all set for a significant transformation.
- Streamlined Transactions: MLETR and eBL adoption streamlines transactions by replacing paper documents with electronic records, reducing bureaucracy and simplifying the process.
- Cost Savings: This digital transformation significantly reduces costs and delays, enhancing overall profitability in international trade.
- Eliminating Document Transportation Costs: eBLs eliminate the need for document transportation, reducing costs associated with courier services.
- Rapid Transfers: Digital transfers facilitated through cloud-based systems or blockchain technology drastically reduce transfer times from weeks to minutes.
- Resistant to Forgery: MLETR ensures secure digital channels for the exchange of original documents, making them highly resistant to forgery, manipulation, and theft.
- Secure Storage: eBLs are securely stored in the cloud or on blockchain networks, often featuring digital signatures, encryption, and 2-factor authentication for added security.
- Reliability in Logistics: eBLs improve reliability in logistics by ensuring shipments are released on time, reducing the need for constant tracking and international calls, and preventing costly delays in the supply chain.
The adoption of MLETR and eBLs represents a step toward the digitisation of international trade. While paper-based transactions will not disappear entirely, their level of adoption is expected to decrease significantly, leading to a more efficient and cost-effective trade finance ecosystem in the near future. The pace of change in the international trade ecosystem is accelerating, creating momentum for a digital revolution.