Taking a closer took: the impact of tech on trade: Applied effectively, blockchain and artificial intelligence are among tools that can benefit buyers and sellers alike.

• Author: Fan, Ziyang
• Position: SPECIAL REPORT

Digital technologies are rapidly changing every aspect of our societies, and especially international trade where all these technologies are converging. From artificial intelligence (AI) and distributed ledger technology (DLT) (*) to 3D printing and 5G networks, emerging technologies are no longer abstract ideas but daily realities of international trade.

An article published by the World Economic Forum (WEF) in 2018 explored the potential impact of various technologies on international trade. As technology moves fast, it is time to zoom in on some of the concrete applications of digital technologies starting to gain traction, particularly trade in goods (**): digital finance, digital shipping, and digital compliance. We see growing interest among tech and trade experts in exploring the role of digital technologies for each section of the value chain, the pain points they could address, and their potential challenges.

This article introduces a visual aide to clarify how digital technologies relate to the three basic components of international trade in goods (***). For each of these digital layers we see a variety of new applications.

DIGITAL FINANCE

The financing and payment of international trade transactions have traditionally been a hurdle for many stakeholders, often resulting in complex structures, costly intermediaries, and lengthy processes. AI, blockchain, and digital payment systems could help build trust and speed transactions while lowering costs and barriers to entry, especially for small and medium-sized enterprises (SMEs).

On trade financing in 2017, there was a trade financing gap of $1.5 trillion, the Asian Development Bank estimates, representing 10% of global merchandise volume. This gap means many businesses didn't have access to sufficient credit to participate in international trade, and some 75% of the affected businesses were SMEs.

With potential advantages in disintermediation, real-time review, trust-building, and transparency, blockchain has been a popular technology to deploy among international trade stakeholders, from banks to shipping companies to tech-solution providers. For example, we.trade, a platform backed by IBM and 14 major European banks, offers to provide more companies with easier access to trade financing with increased trust and transparency enabled by blockchain. Another example can be found in Malawi, where a blockchain-based system creates a verifiable and transparent audit trail to offer...