WTO Report: Blockchain to Fuel $3 Trillion In International Trade by 2030
The World Trade Organisation (WTO) released a report on Tuesday, Nov. 27, that talks about the merits and challenges of using blockchain technology in International Trade and how it can bring a transformational change going ahead.
The WTO report titled “Blockchain and International Trade: Opportunities, Challenges, and Implications for International Trade Cooperation”, estimates that the blockchain technology can fuel $3 Trillion in global trade by 2030. The report goes to mention the role that blockchain can play in streamlining industries like customs clearance, logistics, trade finance, and transportation.
Blockchain, as we all know, is the underpinning technology powering the working of crypto assets. The blockchain technology became popular post the arrival of Bitcoin after the 2008 financial crisis. In the coming years, the blockchain technology is perceived to replace the existing traditional banking systems. The major USP of blockchain is its ability to perform low-cost and instant cross-border trades. Furthermore, the distributed ledger makes sure that the technology remains tamper-proof and secure.
Apart from FinTech, global trade and supply chain is an important application of the blockchain. The WTO report notes that blockchain can help to cut trade costs considerably while enhancing transparency within the supply chain. It can also facilitate better coordination, process automation, financial intermediation, besides many other things.
Furthermore, the report notes that blockchain can enhance government procurement process while easing up the administration of intellectual property rights. All-in-all it can generate huge “trading opportunities for micro, small and medium-sized enterprises.”
“International trade transactions often involve dozens of actors along the supply chain and remain highly paper intensive,” said WTO Director-General Roberto Azevêdo. “Blockchain could enhance the transparency and traceability of supply chains, accelerate the digitalization of trade transactions and automate processes. It could give rise to a new generation of services, particularly in areas like transportation and logistics, financial services and insurance.”
Overcoming Important Challenges Ahead
However, before deploying blockchain to actual use, there are some important challenges to address considering its impact on international trade. As on date, ‘scalability’ remains as one of the biggest roadblocks with the pre-determined block size of the networks.
Furthermore, the report says that blockchain doesn’t address all the traditional security concerns. The WTO says that even though “blockchains are highly resilient compared to traditional databases due to their decentralized and distributed nature and the use of cryptographic techniques, they are not completely immune from traditional security challenges”.
Azevêdo said: “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.”
The report emphasizes on employing a multi-staler approach to find legitimate use-case for cross-border trade. WTO says that proper frameworks need to be developed to ensure seamless interoperability between networks.
It says: “Blockchain could make international trade smarter, but smart trade requires smart standardization — and smart standardization can only happen through cooperation. If we succeed in creating an ecosystem conducive to the wider development of blockchain, international trade could well look radically different in ten to 15 years.”