With blockchain tipped to hit mainstream adoption, experts seem to wonder how the technology can uplift the international trade spectrum. It’s believed that blockchain-backed international practices can ensure better management of global supply chain channels.
According to a report by World Trade Organisation (WTO), an intergovernmental platform, blockchain’s addition could add three trillion dollars worth of economic value to international trade by 2030. The report further mentioned that blockchain’s influence in removing hindrances could ensure over one trillion dollars of new trade in upcoming decade. “I think blockchain has impacted international trade by improving supply chain efficiency. Blockchain is considered unique in its ability to provide immutable, decentralised records that can provide an audit trail, recorded in a ledger, open and available to all,” Pratik Gauri, founder and CEO, 5ire, a blockchain-based platform, told FE Blockchain.
Market research projects that smart contracts’ utilisation can aid trade finance through automatic payments and removal of middlemen. Insights from United Nations Conference on Trade and Development, an intergovernmental organisation, highlighted that blockchain can assure data transmission in international business using Mutual Recognition Agreements. From what is understood, governments and organisations can help stakeholders connect and reduce cost of moving goods across continents.
“Smart contracts could improve coordination between exporters and importers by automating agreements, conditional payments, and other manually intensive processes. Tokenisation of documents, blockchain-based letter of credit, Central Bank Digital Currencies (CBDCs) can make international trade quicker than currently available options,” Ravi Chamria, co-founder and COO, Zeeve, a Web3.0 infrastructure provider, said.
Reportedly, countries such as China, United Arab Emirates, Singapore, among others, have entered the blockchain-based international trade landscape. For example, companies such as IBM and Maersk co-created TradeLens for providing global blockchain-based shipping solutions.
Moreover, blockchain’s future in international settlements can be advantageous for aspects such as cross-border cooperation, standardisation, and business arrangements. Asian Development Bank, a regional bank, mentioned that global trade finance market has capability for development by pinpointing a $1.6 trillion gap between demand and supply of trade finance.
“As countries and companies adopt blockchain for international trade, we can expect to see efficiency, transparency, and security in cross-border transactions. This could lead to an interconnected global economy that is less reliant on traditional financial intermediaries,” Shrikant Bhalerao, founder, Seracle, a blockchain-as-a-service platform, concluded.