Impact assessment

Impact assessment of the Electronic Trade Documents Bill

Published 8 December 2022

This was published under the 2022 to 2024 Sunak Conservative government

This de minimis assessment has 2 sections:

• overview (this section)

• full de minimis assessment (PDF, 507KB)

• Title of regulatory proposal: Electronic Trade Documents Bill

• RPC Reference No: RPC-DCMS-5203(1)

• Lead department/agency: Department for Digital, Culture, Media and Sport

• Other departments or agencies: N/A

• Date: 18/07/2022

• Source of intervention: Domestic

• Type of measure: Primary Legislation

• Contact for enquiries: iat-publication@dcms.gov.uk

• RPC Opinion: Fit for purpose

Summary: intervention and options

Cost of preferred (or more likely) option

(2019 prices, 2020 present value)

Item	Cost
Total Net Present Social Value	£1,137 million
Business Net Present Value	£1,137 million
Net cost to business per year	£0 million
Business Impact Target Status	Non-qualifying provision

What is the problem under consideration? Why is government action or intervention necessary?

• The operation of many documents important to international trade, including bills of lading and bills of exchange, is premised on their possession. The person in possession of the relevant document can claim performance of the obligation recorded in the document, and can transfer the right to claim performance of that obligation by transferring (physical) possession of the document.

• There are deficiencies in the current legal position which prevent the move to electronic versions of these documents. English law — like many other trade jurisdictions around the world — does not currently recognise intangible things as being amenable to possession. This means that electronic forms of trade documentation, which are considered to be intangible, cannot be possessed and cannot therefore be used in the same way as their paper equivalents.

• This was not an issue when technology did not exist to make electronic documents with the same relevant properties. However, technology has now developed which can provide an electronic equivalent of a paper trade document. The legal system has not kept pace with this technological development.

• The proposed legislation will correct this problem, allowing electronic trade documents to have the same legal effects as their paper equivalents.

• Without legislative change, trade will continue to be paper-based and therefore more costly, complex, and time-consuming than it otherwise could be.

What policy options have been considered, including any alternatives to regulation?

Option 0: do nothing.

• Doing nothing would yield no additional benefits. Businesses would have to continue to deal with unnecessary costs, complexity and time delays (all of which have been exacerbated by the pandemic). Inaction could also diminish the primacy of English and Welsh Law as the governing law for international trade transactions, as traders may instead switch to using US or Singaporean laws to underpin their transactions.

Option 1: introduce primary legislation to recognise electronic trade documents on an equal footing to physical trade documents (preferred option).

• The chosen approach is to introduce primary legislation to recognise electronic trade documents on an equal legal footing to physical trade documents. This allows for take-up according to the preference of firms and technology coordination across industries. Benefits include increased growth through improved trade efficiency. Only those businesses that see benefits as outweighing the costs will switch to using electronic trade documents. It is expected that once larger businesses and organisations make the switch, then smaller firms will soon follow.

• There is no associated secondary legislation. A robust assessment of the impacts of the whole policy have been provided at the primary legislation stage (in line with scenario 1a of the RPC’s primary legislation guidance).^{[footnote 1]}

Is this measure likely to impact international trade and investment?

Yes

Are any of these organisations in scope?

• Micro: Yes

• Small: Yes

• Medium: Yes

• Large: Yes

Summary: analysis and evidence – policy option 1

Price base year	PV base year	Time period	Net benefit (present value (PV)) (£m)	Net benefit (present value (PV)) (£m)	Net benefit (present value (PV)) (£m)
2019	2020	10 years	Low: 249.8	High: 2,049.7	Best: 1,137.0

Description and scale of key monetised net benefits by ‘main affected groups’

The monetised net benefits are those faced by businesses that shift from paper-based to electronic trade document systems.

The monetised net benefits include the total costs saved by businesses that shift to electronic trade document systems. These will occur because the businesses will no longer have to incur the costs and time associated with producing and handling these documents, or experience issues such as paper documents being lost or information being re-keyed incorrectly — which have until now been a significant cost to business.

The monetised net benefits also include the costs incurred by businesses because of their transition to electronic trade document systems. This includes initial transition costs, for example developing new internal processes, purchasing the required technological capabilities and training staff to use the new system. It also includes familiarisation costs incurred by businesses, whether they ultimately adopt electronic systems or not. There are ongoing costs associated with operating the electronic trade document systems, including continuous staff training and technology maintenance/upgrades.

The monetised net benefits are dependent on the adoption rate of electronic documents by businesses.

Policy rationale

Policy background/problem under consideration

It is estimated that 25 billion paper documents are generated and couriered around the world each year to facilitate international container shipping alone.^{[footnote 2]} This generates costs and delays which impede trade. For example, in 2014 AP Moller-Maersk, a container logistics company, undertook research into the length of delays associated with paper documentation.^{[footnote 3]} By tracking a shipment of goods from Kenya to the Netherlands, it concluded it involved 30 different parties, 100 people and 200 exchanges of information. There was a 10-day waiting period for documents to be processed in a shipment period of 34 days.

Digitalisation of trade documentation is expected to lower transaction costs and promote greater efficiency, transparency and security in international trade. Accordingly, there is a strong desire in industry to transition towards digitised ways of doing business.^{[footnote 4]}

Currently, laws governing key business-to-business trade documents such as bills of lading are contingent on physical possession of paper documents. Both UK law, alongside the law of almost all of our trading partners, does not regard electronic documents as being capable of possession. This view of possession made sense when technology did not exist to make electronic documents with the same relevant properties as their paper equivalents. However, technologies have now developed which can provide an electronic equivalent that is cheaper, simpler, faster, and more secure than paper.

Some electronic trade document solution providers have emerged who bypass the legal barrier by establishing a ‘walled garden’ in which all parties to the trade transaction enter into a contract recognising the validity of the electronic trade document. However, the restrictiveness, complexity, and legal uncertainty of this approach means electronic trade documents are used in fewer than 1% of international trade transactions.

Given the cross-jurisdictional nature of international trade, global legal reform is required to facilitate the use of electronic trade documents. In recognition of this international coordination problem, the UN proposed a Model Law on Electronic Transferable Records (UNMLETR).^{[footnote 5]} Whilst some smaller jurisdictions, such as Singapore and Bahrain, have enacted legislation consistent with the model law, no major economy is yet fully compliant.

Given the extent to which international trade transactions (even those not involving the UK) are based on the Law of England and Wales, it is widely accepted that UK legal reform in line with UNMLETR would act as a significant catalyst towards global legal reform and the development of an electronic trade document ecosystem. As such, under its 2021 G7 Presidency, the UK secured agreement amongst G7 countries to work together to progress coordinated legal reforms in line with UNMLETR.^{[footnote 6]}

DCMS commissioned the Law Commission of England and Wales to examine the UNMLETR and make recommendations on how to bring UK law into conformity. Their final report provided draft legislation which is now being implemented through the Law Commission Special Procedure.^{[footnote 7]} This legislation is permissive and stipulates that business-to-business electronic trade documents which satisfy certain criteria should be treated as functional equivalents of their paper counterparts.

The proposed reforms cannot be made in any other way than through primary legislation. There are no existing legislative powers which could be used to implement this measure. Whilst there are powers under s.8 of the Electronic Communications Act 2000 and s.1(5) of the Carriage of Goods by Sea Act 1992 respectively to facilitate electronic communications and storage and the use of electronic means, neither of these provisions is sufficiently broad to cover the range of trade documents covered by the Bill.

Rationale for intervention

The primary reason for intervention is because of deficiencies in current law. The legislation is permissive and will remove a constraint to the use of electronic trade documents under UK law, thereby supporting the global development of an electronic trade documents ecosystem. This will reduce costs for UK firms engaging in international trade.

Policy objective

The objective of the legislation is to put electronic trade documents on the same legal footing as paper trade documents. This will support the development of a global ecosystem for electronic trade documents, which are cheaper, simpler, faster, and more secure than their paper equivalents.

The legislation is expected to reduce trade costs, accelerate trade transaction times, increase administrative efficiency, reduce documentation errors and increase access to trade finance. A combination of these factors will result in greater international trade.

Options considered

Option 0: ‘do nothing’

In this scenario, the expected benefits of the legislation would not be realised. Businesses would have to continue to deal with unnecessary costs, complexity and time delay (all of which have been exacerbated by the pandemic). It could also diminish the primacy of English and Welsh Law as the governing law for international trade transactions, as traders may instead switch to using Singaporean laws to underpin their transactions. Singapore passed the Electronic Transactions Act in 2021, providing legal recognition of electronic trade documents such as bills of lading and exchange.^{[footnote 8]}

Option 1: introduce primary legislation to recognise electronic trade documents on an equal legal footing to physical trade documents (preferred option)

This allows for a gradual transition to increased take up of electronic trade documents. Benefits include increased growth through improved trade efficiency. Only those businesses that see benefits as outweighing adoption costs will switch to using electronic trade documents.

The proposed reforms cannot be made in any other way than through primary legislation. The existing law that applies to these documents includes both statute (such as the Bills of Exchange Act 1882) and the common law, and existing powers to allow for electronic documentation are not sufficiently broad to cover the range of electronic trade documents covered by the Bill.

Summary and preferred option with description of implementation plan

Option 1: Introduce primary legislation to recognise electronic trade documents on an equal legal footing to physical trade documents (preferred option)

The proposed reforms cannot be made in any other way than through primary legislation. The existing law that applies to these documents includes both statute (such as the Bills of Exchange Act 1882) and the common law, and does not allow for electronic documents.

The draft Bill provides that certain trade documents can be in electronic form if certain criteria are met. By implementing these changes, the objectives of improved efficiency, reduced trade costs, increased security and environmental sustainability will be achieved.

The Bill is being managed by the Department for Digital, Culture, Media and Sport with support from the Law Commission of England and Wales. The bill was included in the 2022 Queen’s Speech announcement.^{[footnote 9]} If parliamentary time allows, it is expected to come into force no later than 2023.

The Bill simply enables businesses to choose electronic trade document systems in transacting international trade, so there is no role for the government in enforcing these arrangements.  The trade transaction is agreed by all parties involved with contracts established in the same way they are now, therefore the government’s role in regulating the system is unchanged. This approach also provides businesses with the flexibility to choose the approach which suits them best (paper-based or electronic systems).

Costs and benefits

Rationale and evidence to justify the level of analysis used in the IA (proportionality approach)

The evidence and data used in the net benefits analysis comes from a range of trade industry sources. This includes HMRC data on the value of goods trade, alongside the International Chamber of Commerce and United Nations on the impact of a shift to electronic trade document systems.

The analysis relies upon evidenced assumptions to estimate the net benefits of this proposal. The evidence and research used comes from industry sources, which in some cases was commissioned specifically to understand the possible impacts of this proposed legislation.

Option 0: do nothing

It is not possible to precisely estimate the costs and benefits if the proposed legislation is not implemented due to a lack of evidence, however this subsection outlines the current situation and what impacts are expected to occur without intervention.

In 2019, there were 160,000 exporting businesses in the UK, exporting £367bn worth of goods and employing 10.2m. If the annual increase between 2013 and 2019 of 1.59% continues, there will be almost 190,000 exporting businesses in the UK by the end of the 10-year appraisal period.

Under the ‘do nothing’ scenario, these exporting businesses will continue to face the sizable trade costs associated with paper trade documentation, as well as the administrative complexity and time delays that the paper-based process brings. The Digital Container Shipping Association has suggested that the costs associated with paper trade documents are three times greater than those associated with digital trade documents.^{[footnote 10]}

Time spent processing trade documents is significantly greater for paper than electronic documents, with one study from Singapore finding the processing of a paper trade document was between 4 hours and 7 days, with this reduced to 10 minutes when digitised.^{[footnote 11]} Trade transactions typically involve several interconnected phases (including sales, transportation, insurance, payment and finance, customs), each of which requires paperwork to be issued and exchanged in a physical format between several parties.

These businesses would also be prevented from realising cost savings, as well as gaining increased access to trade finance.

This ‘do nothing’ scenario also risks diminishing the primacy of English and Welsh Law as the governing law for international trade transactions. This would in turn reduce demand for UK legal services related to international trade.

There is also a reputational risk. The UK championed these reforms during its G7 Presidency, and stakeholders in banking, insurance, logistics and trade see this proposed legislation as a simple and costless reform. To not take this legislation forward could therefore result in considerable reputational damage.

Option 1: introduce primary legislation to recognise electronic trade documents on an equal legal footing to physical trade documents (preferred option)

Summary of benefits and costs

The net benefits analysis uses a 10-year appraisal period, from 2023 to 2032. The analysis follows HM Treasury Green Book principles, including a social discount rate of 3.5% and a price base year of 2019.

The main type of businesses in scope of this proposal are UK firms that are currently engaging in international trade. The net benefits analysis focuses on these businesses, both in terms of costs they will save, and the transition and ongoing costs incurred when adopting electronic trade document systems.

The table below outlines the benefits and costs of this option, including whether they are direct or indirect, monetised or non-monetised, and whether they are included in the net benefits analysis. The majority of impacts are considered to be indirect because additional steps in the logic chain are required for impacts to be felt (including international standardisation, interoperability of electronic trade document platforms, and global legal consistency). This is explained in full in this section. Decisions on monetisation have been taken using a proportional approach, focusing on those expected to be of greatest size, as well as those with the most reliable evidence to use in analysis.

Benefits	Direct or indirect	Monetised or non-monetised
Costs saved by UK firms moving to electronic trade document systems	Indirect	Monetised
Entrance of additional UK firms into the international trade sector (due to lower entry costs to trade)	Indirect	Non-monetised
Increased security and reduced fraud	Indirect	Non-monetised
Increased access to trade finance for UK companies, particularly small to medium enterprises	Indirect	Non-monetised
Environmental benefits (due to reduced use of paper, printing and courier services)	Indirect	Non-monetised

Costs	Direct or indirect	Monetised or non-monetised
Transition costs incurred by UK businesses choosing moving to electronic trade document systems	Indirect	Monetised
Ongoing, annual costs incurred by UK businesses choosing to use electronic trade document systems	Indirect	Monetised
Environmental costs (due to the energy consumption of some blockchain platforms)	Indirect	Non-monetised
Familiarisation costs (faced by firms to understand the legislation, whether they ultimately transition to electronic systems or not)	Indirect	Non-monetised
Some loss in revenue of firms that produce, process and courier paper trade documents.	Indirect	Non-monetised

Overview of net benefits monetisation methodology

The approach to monetising the net benefits of this option is to estimate the expected net reduction in total costs saved by firms that shift from paper-based trade document systems and instead adopt electronic trade document systems. This includes both the expected reduction in costs faced by businesses due to the reduction in time and costs involved with paper documents, as well as the expected increase in costs incurred when transitioning to and maintaining the electronic systems, as well the familiarisation costs involved.

The Digital Container Shipping Association has identified this reduction in costs as the key benefit of adopting electronic trade documents.^{[footnote 10]}

The analysis is of the net benefits of the legislation. The evidence available focuses on the net impact of this proposal, rather than the benefits and costs as separate components. This is because the main positive and negative impacts of this legislation relate to the costs faced by business: a reduction in trade costs due to electronic systems reducing time and costs to process and handle documents, and the costs businesses will incur in transitioning to these systems. It has therefore not been possible to conduct analysis of the benefits and costs separately.

The analysis assumes that there is technical interoperability between different electronic trade document system providers.

Adoption rates

The percentage of UK exporting firms expected to adopt electronic trade document systems by each year is the ‘adoption rate’. The adoption rate varied between the different scenarios. The best-estimate scenario (medium adoption rate) ranged from 5% in year 1 to 45% in year 10. The low adoption rate ranged from 1% in year 1 to 10% in year 10, and the high adoption rate ranged from 10% in year 1 to 80% in year 10.

Results of net benefit monetisation, including sensitivity analysis

Sensitivity analysis has been conducted on the adoption rate of electronic trade documents by UK businesses.

The values in the bar chart below are the nominal values for the net benefit, these have not been adjusted for inflation or discounted. The present value has been adjusted for inflation and discounted.

Best-estimate scenario

Present value: £1,137.0m

Y1	£27.6m
Y2	£52.2m
Y3	£76.9m
Y4	£102.1m
Y5	£126.9m
Y6	£151.5m
Y7	£176.3m
Y8	£201.1m
Y9	£225.9m
Y10	£250.7m

Low scenario

Present value: £249.8m

High scenario

Present value: £2,049.7m

Nominal values over the ten year period

Year	Low scenario	Best-estimate scenario	High scenario
Y1	£5.5m	£27.6m	£55.2m
Y2	£11.1m	£52.2m	£98.3m
Y3	£16.6m	£76.9m	£141.4m
Y4	£22.3m	£102.1m	£185.6m
Y5	£27.9m	£126.9m	£229.0m
Y6	£33.4m	£151.5m	£272.2m
Y7	£39.0m	£176.3m	£315.5m
Y8	£44.6m	£201.1m	£358.9m
Y9	£50.1m	£225.9m	£402.3m
Y10	£55.7m	£250.7m	£445.7m

Risks and assumptions

Risks and assumptions of the analysis

Assumption	Evidence	Risk	Description of sensitivity analysis undertaken
Adoption rate of electronic trade documents amongst UK exporting businesses.	Evidence used is industry response to Law Commission’s consultation on the subject: Low adoption rate: Phillips 66 Ltd. High adoption rate: Enigio Time AB. Medium adoption rate: mid point between low/high.	Medium risk. This assumption relies on firms’ decisions, as well as the introduction of equivalent measures in other jurisdictions. These steps are uncertain.	Sensitivity analysis undertaken for this variable in both benefits and costs monetisation. It is considered the key variable influencing the scale of positive impact of the legislation, hence the decision for sensitivity analysis.
Proportion of total UK goods trade that is container cargo: 28%.	HMRC Port Freight Statistics 2019 (the most recent publication). Based on deadweight tonnage (a measure of cargo carrying capacity).	Medium risk. This data is based on weight. This is used as a best-estimate in the absence of data on value.	None undertaken.
Proportion of total trade transaction values that are associated with paper document. processes: 5%.	Uses mid-point of UN Electronic Trade Documents Project of ‘5 to 15%’ [footnote 7]	Low risk. Not a wide range of estimates provided by industry stakeholders. Analysis uses the lower-bound figure of 5% to take a conservative approach.	None undertaken.
Percentage of costs associated with paper documents expected to be saved by adopting electronic documents: 50%.	Uses UN Electronic Trade Documents Project estimation that ‘over half’ of costs associated with paper documents might be saved by electronic trade documents.[footnote 7]	Medium risk. Lack of certainty due to electronic trade documents being novel, so there aren’t case studies to use. Analysis uses the lower-bound figure of 50% to take a conservative approach.	None undertaken.
Projected annual growth rate of exports and imports value in future years.	The Office for Budget Responsibility forecast is used for the next 5 years. The following 5 years assume no growth (based on the OBR’s general forecast of little growth).	Low risk.	None undertaken.

Wider impacts

Small and micro business assessment (SaMBA)

In 2018, small and medium enterprise (SMEs) exports accounted for around 32% of UK exports, totalling £200bn of goods and services.^{[footnote 12]} For context, SMEs account for three fifths of the employment and around half of turnover in the UK private sector.^{[footnote 13]} It has been estimated that 12% of UK small and micro businesses export.^{[footnote 14]}

This measure is expected to have a significant positive impact on small, medium and micro businesses. It could increase their involvement in international trade so that their proportion of total UK exports increases towards the proportion of their total UK private sector turnover.

The proposed legislation will achieve this in the following ways:

• Increased access to trade finance for UK SMEs: Access to finance is often cited as a key barrier to exporting.^{[footnote 12]} The World Trade Organisation estimates up to 80% of trade is supported by some sort of financing or credit insurance.^{[footnote 15]} Electronic trade documents will increase the trust, transparency and visibility of supply chain cash flow between SMEs and banks, therefore fostering the extension of trade finance to SMEs.^{[footnote 16]} The transparency provided by electronic document systems is also expected to accelerate access to trade finance, with an International Chamber of Commerce survey of banks finding that 92% of respondents felt digitisation would speed up trade finance processes.^{[footnote 16]}

• Reduced barriers to trade for UK SMEs: Due to the reduction in costs and administration associated with paper documents, the ability to use electronic trade documents might make international trade more feasible for UK SMEs.

Small and micro businesses are not exempt from this legislation. As the legislation is permissive and does not force firms to use electronic trade documents (paper documents will still have equal legal footing), smaller UK businesses that already operate internationally but might not be able to afford the initial costs to adopt electronic trade document systems will not face any compulsory burden. If they choose to, they could continue to use paper documentation. However, the cost and time saving of electronic trade documents mean it is expected that many of these firms will make the change.

Overall, the legislation is expected to have a significant positive impact on the UK’s micro and small enterprises.

Greenhouse gases impact test/wider environmental impacts

The United Nations Conference on Trade and Development estimates that the average customs transaction involves 40 documents.^{[footnote 17]} An estimated 28.5 billion paper trade documents are currently used across the world each year.^{[footnote 7]}

In 2018, the UK emitted 2.5m tonnes of carbon dioxide from paper and printing in international trade.^{[footnote 18]} This data has not been updated. However, the UK trade transaction value decreased by 5.25% between 2018 and 2021.^{[footnote 19]} If these emissions decreased proportionally, UK emissions of carbon dioxide from paper and printing in international trade would be 2.37m tonnes. This figure does not include the emissions associated with transporting paper documents.

By digitalising trade documentation, it would reduce the use of paper and printing, and therefore lower the carbon emissions from these processes. Electronic trade documents also have the benefit of reducing the need for courier vehicles to transport paper documents, further reducing carbon dioxide emissions.

While there are environmental benefits to digitised documentation, there are also some detriments. The energy consumption of some blockchain platforms (the technology likely to be used to support some electronic trade documentation systems) are a source of carbon dioxide emissions. This is due to the power required by the network users employing computational capacity to verify the transactions added to the blockchain.

The amount of carbon dioxide emissions from the blockchain platforms is dependent on whether the platform is based on a proof of work (i.e. public blockchain) or a proof of stake (i.e. a private blockchain) system. The former requires large amounts of carbon-emitting cryptographic work, whilst the latter authenticates the blockchain with a much smaller energy footprint. For example, Ethereum (a blockchain-based software platform) estimates that its move from a proof of work to a proof of stake system will reduce its energy usage by 99.95%.^{[footnote 20]} Many established electronic trade document system providers are using or developing proof of stake blockchain solutions because of their lower carbon footprint.

There are also other types of technology (such as registry-based systems) which can support electronic trade documents and which are not blockchain-based, and therefore do not use energy to the same order of magnitude.

Overall, some of the carbon emission reductions will be off-set by emissions produced by blockchain platforms. The degree of this off-setting will depend on the type of technology used (blockchain or otherwise), and the type of blockchain system used.

It has not been possible to undertake analysis to quantify the net impact of this legislation in terms of carbon emissions. There are uncertainties as to which technologies will predominantly be used to support electronic trade documentation systems, with the different types of technology varying considerably in terms of carbon emissions. It has therefore not been possible to provide well-evidenced and reasonable figures on the potential net environmental impact of this legislation.

Competition

This legislation could result in various impacts in terms of the degree of competitiveness in the UK economy.

The transition to electronic trade documents may initially be more common among larger businesses, as they could be better able to afford the transition costs involved. If this is the case, then the legislation could distort market competition in favour of larger businesses who will benefit from the cost saving that the shift to electronic trade documents is expected to bring (whilst smaller businesses which haven’t transitioned will not be benefiting).

However, smaller businesses are also expected to transition to electronic trade documents, even if this is initially at a slower pace than larger businesses. Smaller businesses are expected to particularly benefit from improved access to trade finance, as electronic systems will increase the visibility of supply chain cash flow.^{[footnote 7]} This may increase the ability for smaller businesses to export, and therefore increase competitiveness in the UK international trade sector.

Equalities

This legislation is unlikely to have a disproportionate impact on any groups of people sharing a protected characteristic.

Trade and investment

There are considerable trade impacts expected from this legislation, including a reduction in costs associated with trade, an acceleration in trade transaction times and an increase in trade volumes.

By reducing trade costs, the legislation may also increase the international competitiveness of UK businesses.^{[footnote 7]} This could make the UK a more attractive place for investment (both in terms of attracting inward investment, and incentivising UK investors to invest domestically rather than abroad).

The World Trade Organisation does not require notification of this legislation.

Innovation

This legislation is expected to have positive impacts in terms of innovation. Due to a reduction in trade costs, businesses may have greater funds to develop innovative new practices and products.

In addition, the legislation is expected to increase participation of UK firms in international trade. International trade has been found to have a positive effect on innovation due to it promoting competition, increasing market size and allowing knowledge spillovers.^{[footnote 21]}

Post-implementation review/monitoring and evaluation

Monitoring and evaluation

The impact and success of the proposed legislation will be monitored by tracking key indicators, including:

• Value of exports per year

• Number of total exporting businesses

• Number of micro, small and medium exporting businesses

• Number of new exporting businesses since legislation

• Value of trade finance provided to UK micro, small and medium businesses

• UK carbon emissions associated with paper and printing processes in international trade per year, using the OECD’s database.^{[footnote 18]}

• Adoption of electronic trade documents by UK exporting businesses (including absolute number and proportion of total exporting businesses, and how adoption rates compare with countries implementing similar measures)

Many of these metrics are already recorded and published by organisations including HM Revenue and Customs, the Organisation for Economic Co-operation and Development, the International Chamber of Commerce, the Digital Shipping Container Association and the World Trade Organisation. These metrics are typically recorded annually (if not more frequently), therefore regular monitoring of the impacts of the proposed legislation will be possible.

In addition, as many of these metrics are already collected currently, it will be possible to compare their trajectory with the period of time when electronic trade documents were not in use. The metrics will be used to track the impact of the legislation in terms of the number and types of businesses trading, the value of UK trade and the take-up of electronic trade documents. By monitoring the take-up rate in particular, policy decisions can be taken to encourage adoption if required.

Post-implementation review

A post-implementation review (PIR) will not be conducted.

The Bill is uncontroversial and the digitisation of trade documents has been called for by industry.^{[footnote 8]} It is also permissive legislation, meaning that no business will be forced to use electronic trade documents if they do not wish to do so, and paper documents can continue to be used instead. As a result, it is very unlikely that this legislation will need to be reversed. A PIR is therefore not considered proportional or necessary.

The monitoring and evaluation approach outlined in the previous section, which includes key performance indicators and the stakeholders involved in collecting these, will ensure that the level of success and impact of the proposed legislation can be monitored without a PIR.

1. RPC (2019), RPC case histories: assessment and scoring of primary legislation measures (page 3) ↩

2. Based on evidence from the World Trade Organisation (WTO): (2013) Briefing note: Trade facilitation – Cutting “red tape” at the border, and (2020) UNCTAD, Review of Maritime Transport 2020 ↩

3. Known as the Trail of Roses project. Bloomberg (2018), Blockchain Is About to Revolutionize the Shipping Industry ↩

4. ICC (2020), ICC Memo to Governments and Central Banks on Essential Steps to Safeguard Trade Finance Operations ↩

5. UNCITRAL (2018), UNCITRAL Model Law on Electronic Transferable Records ↩

6. Gov.uk (2021), Carbis Bay G7 Summit Communique ↩

7. Law Commission (2022), Electronic trade documents: Report and Bill ↩ ↩² ↩³ ↩⁴ ↩⁵ ↩⁶

8. Law Commission (2021), Digital assets: electronic trade documents. A consultation paper ↩ ↩²

9. Gov.uk (2022), The Queen’s Speech 2022 ↩

10. Digital Container Shipping Association (DCSA) (2020), DCSA takes on eBL standardisation, calls for collaboration ↩ ↩²

11. UNESCAP (2014), Estimating the Benefits of CrossBorder Paperless Trade ↩

12. British Business Bank (2020), UK SME exporting trends: finance and trade ↩ ↩²

13. Federation of Small Businesses (2021), UK Small Business Statistics: Business Population Estimates for the UK and Regions in 2021 ↩

14. Department for Business Innovation and Skills (2016), BIS Estimate of the proportion of UK SMEs in the supply chain of exporters ↩

15. World Trade Organisation (2016), Trade Finance and SMEs: Bridging the gaps in provision ↩

16. Trade Finance Global (2022), Can SMEs benefit from digital solutions in trade finance? ↩ ↩²

17. World Trade Organisation, (2013) Briefing note: Trade facilitation – Cutting “red tape” at the border ↩

18. OECD (2021), Carbon dioxide emissions embodied in international trade (2021 ed.) (Select D17T18: Paper products and printing for the ‘Industry’ selection) ↩ ↩²

19. ONS (2022), Dataset: UK trade: goods and services publication tables ↩

20. Ethereum Foundation Blog (2021), Ethereum’s energy usage will soon decrease by ~99.95% ↩

21. Marc J. Melitz (Harvard) and Stephen J. Redding (Princeton) (2021), Trade and Innovation ↩