A new publication launched by the World Trade Organization (WTO) calls for multi-stakeholder dialogue to assess the practical and legal implications of blockchain to analyse its capacity to transform world trade.
Offering a secure and transparent way of sharing information – as opposed to the current network of proprietary systems – a blockchain is essentially a digital ledger. Anyone with permission to access the ledger can make changes and add information. These changes are called ‘blocks’ and they are added to the ‘chain’.
Published this week, ‘Can Blockchain revolutionize international trade?’ explores how the technology could enhance areas related to WTO work and examines challenges that will have to be tackled to unlock the technology’s potential.
The publication introduces the technology with a basic explanation of how, as a tamper-proof, decentralised record of transactions, it allows participants to collaborate and build trust with each other. It describes different classifications of blockchains and their current and possible applications in the various areas covered by WTO rules.
In doing so, it provides an insight into the extent to which the technology could help with trade facilitation, including how it can hasten the transition to paperless trade transactions. It considers blockchain’s potential and limits in transforming services by looking at payment systems, insurance and the automation of contracts. The publication also discusses how blockchain could help ease the administration of intellectual property rights and enhance government procurement processes.
Other potential benefits identified by the publication include cross-cutting opportunities to reduce trade costs, enhancing supply chain transparency and opening up new trading opportunities for micro, small and medium-sized enterprises.
In addition, it reviews various challenges that must be addressed before the technology can be used on a wide scale and have a significant impact on international trade. These include issues such as whether the technology can be scaled up for large or complex applications, how immune it is to security threats, to what extent various blockchain platforms can be used in an integrated manner, and which legal issues need to be ironed out to increase mainstream use of the technology.
Finally, it calls for a multi-stakeholder dialogue to assess the practical and legal implications of the technology and to develop collective solutions to existing challenges while providing the flexibility for the technology to thrive.
“While this technology opens interesting opportunities, clearly it also raises legal, regulatory and policy issues that deserve our attention. We need to consider how to spread the opportunities and overcome the challenges. We can only do this if we are in full possession of the facts. We need to fully understand the technology – what it can do and what it can’t do. And most importantly for us, we need to understand what it means for international trade,” says WTO director-general Roberto Azevêdo.
“This requires an informed debate. And it needs to go beyond trade experts. Blockchain is a technology that has the potential to break silos, so we should not create silos in this discussion. We need a debate among all stakeholders – the business community, blockchain experts, government authorities, representatives from other international organizations, and many others as well. With our new publication, and with today’s event, we are seeking to inform the debate and bring together this wider community.”