Blog News Events Publications Directory Community Industry Voices Media

France sets sights on electronic trade document reforms

France is set to become one of the first major economies to afford legal recognition to electronic trade documents, with the government commissioning a short but wide-ranging review to examine what regulatory changes are needed.

The widespread uptake of digital versions of trade finance documents such as bills of lading, warehouse receipts and bills of exchange has been hampered by laws in many countries still requiring those documents to be on paper.

Earlier this month the French finance minister said that moving to digitised international trade would make French exporters and the French financial services sector more internationally competitive.

AdvertisingFendahl CTRM Technology
AdvertisingION Commodities

“The digitisation of international trade finance procedures could be a major driver of simplification, which would benefit the competitiveness of our businesses,” Bruno Le Maire said in a November 8 statement announcing the review. “It will also make the Paris marketplace a global trade finance hub.”

The finance, justice and foreign affairs ministries have tasked a working group led by Béatrice Collot of La Banque Postale and Philippe Henry, a consultant and ex-HSBC Emea head of global banking, with engaging broadly across the trade sector and report their findings in March.

The G7 last year threw its weight behind a global push towards electronic trade utilising the UNCITRAL model law on electronic transferable records (MLETR), which offers a template for giving electronic trade documents legal footing although laws in each country are unique.

But of the G7, so far only the UK has made substantial progress towards adoption, with its Electronic Trade Documents Bill introduced to the House of Lords in October. The US is also working on changes to its legal framework, although it is already broadly aligned with the MLETR. Singapore, Bahrain, Belize and Paraguay have also implemented versions of the model law.

France is the world’s fifth-largest exporter and sixth-largest importer, according to a white paper on the topic drawn up by the International Chamber of Commerce’s (ICC’s) local chapter.

In addition to giving French traders and trade finance providers a competitive edge, the government hopes digitising the financing process will smooth access to trade finance for SMEs, because the current cumbersome paper-based processes make low-value transactions typical of small businesses unprofitable for banks.

The working group assigned with recommending a way forward is run under the aegis of Paris Europlace, an association which lobbies for the competitiveness of the French financial services sector. The working group was formed at the beginning of the year to urge the French government to follow the UK’s lead on digitising documentary trade.

Those efforts, in partnership with the ICC, culminated in a September meeting with Le Maire and the justice ministry, who ultimately backed the digitisation push but asked the group to undertake a much broader review beyond just financial institutions and traders.

“They have also asked to really look at the larger ecosystem of trade finance, meaning trade finance, customs, freight forwarders and discuss with them and their market associations to really assess whether they would go for such digitised trade finance,” Collot tells GTR.

“I think [the government] were a bit worried that we would be changing the regulations and that nobody would adopt it,” adds Collot, who is director general of La Banque Postale Leasing and Factoring. “So they want to really understand all the parts of the ecosystem.”

She contrasts the approach with that of the UK, which she says did not consult as widely among corporates or with the members of transport sector.

The Paris Europlace working group includes representatives from shipping sector businesses such as CMA CGM, essDocs and Buyco alongside representatives of lenders such as Crédit Agricole, Natixis and Société Générale and platforms Bolero, Surecomp and TradeLens.

The working group is already in discussions with the justice ministry about how the legal changes would be implemented, with the private sector preferring an approach where a layer of new legislation enabling use of digital trade documents supersedes previous laws, instead of combing through and individually altering every relevant law.

France’s Minister of Justice Éric Dupond-Morett said in the November statement that “the programme assigned to the Paris Europlace working group will be significant in evaluating the opportunity to modify the legal texts governing international trade activities, consistent with the recommendations made by the UN Model Law”.

Collot says that in addition to the expected benefits of faster processes and cheaper trade financing for SMEs, France’s adoption of electronic trade documents could help trigger similar moves by other countries.

In Francophone Africa there are several countries that have a similar regulatory framework to France and are major trading partners with the country, so may follow suit when France implements the reforms. The ICC is already having discussions with the government in France on the issue, Collot says.

France and the UK’s adoption of electronic trade reforms, once joined by Germany – which is the world’s third-biggest exporter and already technically MLETR-compliant – will mean the continent’s three biggest economies are aligned and may spur other countries to pursue their own reforms.

“If we manage to digitise and simplify the exchange of documents, we will achieve a real democratisation of international trade,” Collot says. “Combining the efficiency of open account and the security of traditional trade is the best of both worlds.”

Because making use of electronic trade documents also requires legal recognition to be granted by the other country or countries in an international trade transaction, take-up may initially be low.

Collot says the working group has been careful to manage the expectations of the French authorities and told them “not to be disappointed” if there’s only a 5-10% adoption rate in the first year following the reforms.

The post France sets sights on electronic trade document reforms appeared first on Global Trade Review (GTR).

Go to the Source – France sets sights on electronic trade document reforms