ICC and WTO issue guidelines on Standards for digitalisation of cross-border trade

Trading across borders is a notoriously complex process and highly dependent on paper documents, in spite of decades long efforts to digitalise. A cross-border transaction involves multiple actors and on average requires the exchange of 36 documents and 240 copies. However, currently, less than one percent of trade documents are fully digitised. Although the Covid-19 pandemic has accelerated digitalisation, the lack of adoption of data standards and of a common format for data exchange significantly hinders the seamless data flow from one end of the supply chain to the other. Standards adoption also remains limited in large part due to the complexity and fragmentation of the standards landscape.

The Standards Toolkit for Cross-border Paperless Trade is a joint publication of the International Chamber of Commerce (ICC) and the World Trade Organisation (WTO) that provides an overview of some of the standards which are most notable and widely used in cross-border trade, whose aim is to facilitate IT systems interoperability and data exchange among supply chain actors.

A chapter of the toolkit is dedicated to the WCO data model, a set of harmonised data on cross-border transactions, regularly updated in order to meet the procedural and legal requirements of all the main government agencies involved in the management of foreign trade activities (not only Customs, but all cross-border regulatory agencies that are responsible for border management). Based on the revised Kyoto Convention, that requires Customs to avoid requesting excessive amounts of data from operators that can hamper or overburden international trade operations, the WCO data model allows the use of a common language for the exchange of business messages, thus making it possible to share information between different administrations.

The WCO proposes the WCO Data Model as an indispensable tool in the modernisation projects of customs and other agencies involved in the exchange of trade messages with foreign countries, especially within the framework of single window systems, since the adoption of a common standard between several different agencies facilitates the reusability of the same information or data to cover the various regulatory requirements related to the fulfilment of customs and trade formalities.

In fact, each of these administrations usually adopts IT systems that are adapted to their specific competences and operational needs, and that in most cases do not share information with the systems used by other cross-border regulatory agencies. Every time Customs or another cross-border agency receives information from a trader, such information needs to be structured (i.e. converted) into a language that can be understood by the software that will process it. The problem arises when this same information has to be shared or made available to another administration. If not structured in a format that is readable by such administration, it will be necessary to develop conversion applications so that the latter administration can read and process it. If this does not happen, the economic operator is obliged to make a new documentary transmission (concerning the same information) under a different format, to the other administration. The problem becomes more complicated when there is more than one administration involved.

The adoption of a common standard for the structure of the messages processed by these systems is therefore a solution which aims at overcoming these problems, allowing interoperability between different systems. If the format used by these messages is based on international standards, dialogue becomes possible with telematic systems of administrations and agencies in other countries. This is a fundamental aspect for those bodies which, like Customs, continuously need to interact with other administrations, even abroad, to carry out certain types of controls or checks (e.g., for the purposes of customs cooperation or mutual assistance).