Electronic Trade Documents Bill [HL]

Lord Holmes of Richmond Excerpts

Second reading committee
Monday 7th November 2022 Grand Committee

[Lord Holmes of Richmond (Con)]

My Lords, it is a pleasure to take part in this Second Reading consideration and to follow my noble friend Lord Lansley. I congratulate my noble friend the Minister on his return to the Front Bench. He is back in physical form and was not in digital form for very long, but it is great to have him back on the Front Bench. I also congratulate him on the way in which introduced this small but incredibly significant piece of legislation.

I would like to set out the problem, the solution and the potential benefits. Before I do that, it is worth also giving thanks to all those who have got us to this stage, not least Professor Sarah Green at the Law Commission, those at the International Chamber of Commerce, not least Chris Southworth, and many others who have worked to get the Bill into condition for our consideration this afternoon. The problem is pretty simple: to have possession of goods—if they are under a bill of lading, for example—you must be able to possess that document. It is much more than a contract merely setting out terms; it is a possessive document. Possess the paper and you possess the goods. How is it possible to take this ownership into a digital and intangible, and as yet in so many ways so contested, world?

Fortunately, because of new and emerging technologies —the technologies of the fourth industrial revolution—we now have such an opportunity. I agree entirely with my noble friend Lord Lansley that although distributed ledger technology, or blockchain, currently offers great possibilities in this space, in no sense should the Bill be anything other than neutral about technologies. What we can be absolutely certain of is that a plurality of technologies will be coming through, which potentially—not inevitably—can do great service for us in this and other areas.

The solution is the legislation before us. It is the digital standards initiative, worked upon by the ICC and the WTO. That technology, not least because of its ability to enable immutability and interoperability, is why I undertook research to report on distributed ledger technology in 2017. I wanted to highlight the potential public and private good for the nation from that technology. Had I not done that, the fear, which is as clear and present a danger today as it was back in 2017, is that all too often blockchain is seen as bitcoin, which is seen by many as suboptimal. Thus all the potential public and private benefits—potential, not inevitable—of distributed ledger technology could be lost even before we got beyond proof of concept. Those three elements—legislation, standards and technology —give us the opportunities which we are discussing today.

I turn to the benefits. The economic benefits were well set out by my noble friend the Minister. There is £1.4 trillion of business in international trade in the UK currently; if just 50% of bills of lading were put in this format, there would be a £3.6 billion annual benefit for the UK. Respondents to the Law Commission’s consultation asserted a potential 5% saving in transaction cost as a result of this.

Perhaps even more important than the economic benefit, and certainly pertinent today, are the environmental benefits. The World Economic Forum calculates a 10% to 12% reduction in carbon from the logistics business if these measures are fully implemented. At the moment, if a cargo comes into Singapore, for example, without the paperwork as it is in London, someone has to board a plane to go to Singapore to deliver the document because, remember, “possess the document, possess the goods”. There is the economic waste and an environmental impact of those actions. As result of this Bill those seven to 10 days are potentially reduced to a 20-second process with no travel requirement. This could give us the transparency and accountability that we require in our supply chains. Recent history has shown us in painful ways that we do not have the supply chains we currently need or transparency, accountability and sustainability in our supply chains. This legislation could combine origin, ownership and payment liabilities in the same data ecosystem, with all actors being able to access broadly the same data for economic, social and environmental benefits.

The Electronic Trade Documents Bill is in many ways one of the most important Bills, yet currently so few people know about it. It is one of the most important Bills heard of by so few. It has the potential to eliminate over time the 4 billion-plus pieces of paper currently circulating around the world. Crucially, the Bill as drafted is rightly facilitative and permissive. It is not mandatory, and that is quite right. Does my noble friend the Minister agree that even after the passage of the Bill that means a continuing need for industry-led, government-supported efforts to ensure that we continue to provide that combination of legislation, standards and technologies to enable all in this ecosystem to avail themselves of the potential benefits which it enables?

Other issues have already been touched upon which are incredibly significant in this space. What is my noble friend the Minister’s view on where the current work is in terms of the 2025 border strategy and the technologies being deployed there, not least in the potential for atomic settlement at the border and how that could transform the experience for our traders, and on how the current work on digital ID in the UK can lead and interact internationally and ensure that there is that work on standards and that there is interoperability? It is fruitless for any nation to have tip-top digital ID if there is no interoperability. What other work is currently going on in my noble friend’s department and across Whitehall on the deployment and potential use of distributed ledger technology and all the technologies of the fourth industrial revolution? What potential problems is his department currently looking at putting such technologies to?

The Electronic Trade Documents Bill is one of the most significant pieces of legislation which most people have not heard of. It is trade-transforming, tech-enabling, economic growth-generating, carbon-cutting legislation. The UK has such an opportunity when tied to common law to lead, connect and collaborate in this space, not least across the G7, for the benefit of all nations right around the globe. I wish this legislation a safe Second Reading and swift passage into statute.