The introduction of digital trade initiatives as developed by providers such as TradeWindow will have major benefits for New Zealand supply chains. “The NZIER show that the benefits are between $9 and $18 billion over 10 years for those involved in New Zealand export supply chains if all APEC nations participated fully,” said Chris Nixon, Principal Economist and lead author of the report, which was commissioned by TradeWindow to quantify the possible economic gains from increased adoption of digital trade.
“To put this into perspective, New Zealand’s export trade is approximately $61.3 billion per annum”. “However, there are challenges to be overcome”, commented Mr Nixon. “There is institutional foot-dragging by many of our trading partners, and regulations will have to change,” Nixon said.
Despite this, Singapore, New Zealand, and Chile are leading the way with initiatives such as the Digital Economy Partnership Agreement (DEPA) that sets up the high-level architecture necessary to operationalise digital trade. Mr Nixon said, “ the significance of DEPA should not be understated since other countries: South Korea, Canada, and China are lining up to join.”
The efficiency and effectiveness of trade are critical factors that will influence New Zealand’s economic and social development and performance. Initiatives that improve supply chain management can have one-off and ongoing impacts that add to New Zealand’s competitive performance. We also know that “trade begets trade”, so improvements in all countries’ trading positions will benefit New Zealand: the more you export, the more you import.
New Zealand is always looking for ways to overcome the challenges of distance and size. One way of doing this is to reduce the time taken by exporters in dealing with the ‘nuts and bolts’ of export trade: having the paperwork completed in the right way, ensuring no mistakes, and ensuring that those parties who need to see the documentation can.
Digital trade will help this process immensely. Digital trade consists of digitally enabled or ordered domestic or cross-border transactions in goods and services that can be digitally or physically delivered. It removes the need for paper documentation to accompany goods or services as they move through the supply chain.
“Moving from traditional paper-based methods with wet signatures and wet stamps to online approvals will cut time dealing with the export trade, eliminate mistakes, increase speed to market with few hold ups and reduce misunderstandings.”
There are other benefits too. “Digital trade is likely to improve the predictability of trade since you have access to low-cost data that details how trade moves through the supply chain.” Over time skilled staff in firms will move away from the continual grind of these activities and focus on what will grow the business,” Mr Nixon said.
“Importantly, New Zealand has a large number of smaller businesses that find the paperwork to engage in trade costly and difficult to manage: exporting is a challenge. Firms such as TradeWindow do have tailor-made solutions with coaching that enable firms to more easily enter this trade,” Mr Nixon said. This dovetails nicely with the Government’s ‘Trade for All’ trade agenda.