Electronic Trade Documents Bill [ Lords ]
(11 months, 1 week ago)
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The Chair
I will start by outlining the procedure in Second Reading Committees, given that they are an uncommon type of Committee, as colleagues will know. The debate in this Committee replaces a Second Reading debate in the House. After the Committee has made its recommendation, the Question on Second Reading in the House will be decided without further debate. The rules governing a Second Reading debate in the House apply in Second Reading Committees. In particular, Members may speak more than once only with the leave of the Committee, or through interventions. The Minister, however, has the right to reply at the end of the debate.
The Parliamentary Under-Secretary of State for Science, Innovation and Technology (Paul Scully)
I beg to move,
That the Committee recommends that the Electronic Trade Documents Bill ought to be read a Second time.
It is a pleasure to serve under your chairmanship, Mr Pritchard. The Bill allows for the use in electronic form of certain trade documents, such as bills of lading and bills of exchange, which currently have to be on paper and physically possessed. It implements recommendations made by the Law Commission of England and Wales in its report on electronic trade documents published last year. It is a permissive and facilitative piece of legislation, allowing businesses to choose the form of document or technology that best suits them. It is only seven clauses long, but its impact will be huge. It will help boost the UK’s international trade—already worth more than £1.4 trillion—by providing benefits worth £1.1 billion to UK businesses over the next 10 years. It will allow businesses to use electronic trade documents when buying and selling internationally, making it easier, cheaper, faster and more secure for them to trade. It is fully supported by businesses and industry. We are just trying to remove a legal obstacle.
Business-to-business documents, such as bills of lading, which are a contract between parties involved in shipping goods, and bills of exchange, which are used to help importers and exporters complete transactions, currently have to be paper-based, but the Bill will allow digital trade documents to be put on the same legal footing. The Law Commission’s recommendations were for the law of England and Wales, but we have worked with the territorial offices and devolved Administrations, including the Scottish Government, on extending the Bill to Scotland and Northern Ireland, so that all businesses across the United Kingdom can benefit from this important development. I am pleased to confirm that in Committee, the Government will table amendments to the delegated powers section of the Bill to fulfil our ambition for the Bill to be UK-wide. It has the wholehearted support of the Scottish Government, and we will continue to work with them to make this happen.
The impact of the Bill cannot be overstated. The benefits include: lower transaction costs associated with trade, through reduced resourcing and operational costs; increased productivity; increased efficiency; encouragement for business growth through the development of digital products and services; and environmental benefits through a reduction in paper documents, and less emissions from couriering paper documents. Critically, it will increase transactional data, as well as the security, transparency and traceability of the flows of goods and finance. It will reduce trade contract processing times from between seven to 10 days to as little as 20 seconds, according to the industry publication, Trade Finance Global. The Digital Container Shipping Association estimates that if 50% of the container shipping industry adopted electronic bills of lading, the collective global savings would be around £3.6 billion a year. Small and medium-sized businesses could see a 13% increase in international business if trade is digitised, and the World Economic Forum found that digitisation could reduce global carbon dioxide emissions from logistics by as much as 12%.
In conclusion, the Bill will lay the foundations for future digitalisation of our global trade approach and ambitions. We will be the first G7 country to provide for electronic trade documents and to support the aims of the model law on electronic transferable records. We will continue to promote the use of digital trade documents through our trade negotiations, and our participation in the Commonwealth and other international institutions. The Bill has gone through the other place. It has received a lot of scrutiny there and has been well supported there, as it has been by business. I hope that it will receive strong support from this House, and I look forward to hearing the contributions in this debate.
Alex Davies-Jones (Pontypridd) (Lab)
I will keep my comments brief. As colleagues in the other place noted, this is a modest but incredibly important Bill. Its simple objective is to afford electronic trade and trade finance documents the same legal status as paper ones. This Bill, which has been drafted and crafted by the Law Commission, provides for the possessability of electronic documents that fall within its scope; they will have the same legal recognition and functionality as their paper counterparts. It also sets out provisions relating to the use of electronic trade documents, including provisions on indorsement and change of medium between electronic and paper documents.
The Bill’s terminology—“bill of lading”, “bill of exchange” and “mate’s receipt”—shows that we are talking about very out-of-date practices. Practices governing the exchange of goods date back centuries, and the language involved would not be alien to a merchant from the middle ages, so the Bill is very welcome indeed. Indeed, we all know the barriers to trade across borders; the Minister mentioned them. Research shows that a single trade finance transaction can involve 20 entities and between 10 and 20 paper documents. That all adds up.
In 2019 there were roughly 160,000 exporting businesses in the UK, exporting £367 billion-worth of goods and employing 10.2 million people. By the mid-2030s, that number could hopefully rise to 190,000 businesses. Paper trading involves not only volumes of paper, but time-consuming processes. A study in Singapore found that it took between four hours and seven days to process one paper trade document. Digitisation can reduce that to as little as 10 minutes.
In total, it is estimated that 25 billion paper documents are generated and couriered around the world annually just to facilitate container shipping. The Minister does not need me to remind him of the significant environmental costs, but they are colossal. That is why we support the Bill in its entirety. We see it as a long overdue reform that allows for the legal recognition of certain types of documents used in trade and trade finance in electronic form. It means that parties can finally use laws that apply to paper trade documents when transacting with electronic trade documents.
The Law Commission does important work in advising on the reform of long-outdated legislation, and I am grateful for its work on the Bill. Colleagues in the other place have raised concerns about how the law will be implemented, so I hope to hear from the Minister which Department will be responsible for overseeing and enabling the provisions, once they are on the statute book. The Bill is a valuable tool for ensuring that the world of trade and commerce operates smoothly and efficiently, and that UK businesses are not disadvantaged in any way.
Paul Scully
I thank the hon. Lady for her speech, which was brief and to the point. The fact that this has been a brief debate does not diminish from its importance; it just shows that we all agree on the need for the Bill. We will have detailed discussions in Committee, and I look forward to that. The Bill is much anticipated by businesses and industry. I hope that this Second Reading Committee will support the Bill.
Question put and agreed to.