New UN treaty aims to facilitate paperless cross-border trade in Asia

Out-Law Analysis | 09 Dec 2016 | 10:09 am | 2 min. read

FOCUS: A new United Nations (UN) treaty has been established with the aim of facilitating paperless cross-border trade in Asia.

The Framework Agreement on Facilitation of Cross-border Paperless Trade in Asia and the Pacific is designed to support the development of cross-border e-commerce among the 53 member states that make up the UN Economic and Social Commission for Asia and the Pacific (ESCAP).

The Framework Agreement envisages the exchange of 'trade-related data' and 'trade-related documents' in electronic form, over existing systems or new 'single-window systems'.

In just one example of the paperless cross-border trade, the agreement allows for the exchange of banking documents over digital platforms, reducing the time and cost involved in making transactions and, potentially, enabling the authentication of the identity of payers via wholly-digital processes.

The treaty highlights the importance of trade and supply chain security, and the need to facilitate the paperless transfer of data between actors within these trade and supply chain eco-systems. There will be new platforms developed to share data, or existing platforms will be developed for further use in this respect.

According to the treaty, new platforms would allow those involved in trade transactions "to electronically lodge data and documents with a single entry point to fulfil all import, export and transit-related regulatory requirements".

This initiative follows similar developments such as that of the R3 consortium, which is developing a blockchain-based platform with common services, currently known as Corda, where complex financial transactions can be handled.

The origins of the new Framework Agreement can be traced to a May 2012 resolution introduced by the UN ESCAP. The resolution was entitled 'Enabling paperless trade and the cross-border recognition of electronic data and documents for inclusive and sustainable intraregional trade facilitation'.

The new treaty is the result of four years of discussions and negotiations between ESCAP member states since the introduction of the previous resolution. The treaty has been published in English, Chinese and Russian.

The Framework Agreement was opened for ratification to all ESCAP member states on 1 October 2016, and is open to signature until 30 September 2017. The treaty will come into force 90 days after ratification by at least 5 ESCAP member states, after which those countries that have ratified the treaty will have to begin implementing the measures as stated in the Framework Agreement. This may require treaty signatories to pass enabling national legislation.

Ratification is open to ESCAP member states regardless of their involvement in the negotiation of treaty or their stage of development. This ensures that no nation will be at a disadvantage when it comes to cross-border paperless trade after the ratification of the Framework Agreement. In this manner, both developing and developed countries stand to benefit from the treaty, which is anticipated to promote efficiency, transparency and the building of trust between the treaty member states.

As opposed to agreements which promote free trade by reducing tariffs and agreeing quotas between countries, for example, such as the Trans-Pacific Partnership, the Framework Agreement focuses on trade facilitation. It pushes for methods of increasing efficiency, speeding up trade and reducing costs in the process. Once fully implemented, the Framework Agreement could represent the future of trade, bringing about tremendous levels of growth.

The Framework Agreement is similar to existing initiatives such as the Association of Southeast Asian Nations (ASEAN) Single Window (ASW), which aims to expedite cargo customs clearance between member states of the ASEAN, as well as the Eurasian Economic Community's single window. Yet, this agreement is more ambitious in scope and structure.

Compared to the ASW which involves the 10 ASEAN countries, or the Eurasian Economic Union's five members, the Framework Agreement targets all 53 ESCAP countries, including the US, UK and France which are among the few countries not based in the Asia Pacific region that are members of ESCAP.

The implementation of the Framework Agreement, therefore, would provide further opportunities of collaboration for regional groupings with the treaty member states.

Bryan Tan is a technology law expert at Pinsent Masons MPillay, the Singapore joint venture partner of Pinsent Masons, the law firm behind Out-Law.com.