What is TradeTech and why do we need it?

Global trade is at an inflection point, amid mounting geopolitical tensions and protectionism.

At the end of 2023, the UN Conference on Trade and Development (UNCTAD) predicted a drop of 5% (or $1.5 trillion) in global trade, while the outlook for 2024 was “highly uncertain and generally pessimistic”.

Houthi attacks on shipping vessels in the Red Sea, which began in November, have added to this instability.

Against this backdrop, the World Trade Organization (WTO) met in Abu-Dhabi, United Arab Emirates (UAE), for its 13th Ministerial Conference (MC13), with the express purpose of reviewing the “functioning of the multilateral trading system”.

Key topics of discussion included WTO reform, fisheries subsidies, e-commerce, investment and agriculture.

“It will not be easy in these uncertain times. But we’re looking forward to deliveries that will strengthen the WTO and the multilateral trading system,” the WTO’s Director-General Ngozi Okonjo-Iweala told the World Economic Forum at the Annual Meeting in Davos in January.

In 2021, the International Chamber of Commerce (ICC) suggested a way to boost trade across the G7 by $9 trillion by 2026 — by digitalizing the trade ecosystem.

To help bring this to fruition the Forum has partnered with the UAE on a three-year TradeTech project that aims to “revolutionize global trade by leveraging cutting-edge technologies, streamlining trade processes, and fostering a more efficient, inclusive, and equitable trading ecosystem”.

The UAE’s Minister of State for Foreign Trade, and the MC13 Chair, His Excellency Dr. Thani bin Ahmed Al Zeyoudi, hosted a TradeTech Forum on 27 February, on the sidelines of the WTO’s MC13.

In January, the TradeTech Global initiative published an insight report on Catalysing Innovation, which set out pathways for achieving complete digital integration.

Before the TradeTech Forum, H.E. Dr. Al Zeyoudi spoke to Radio Davos to explain what exactly TradeTech is and what needs to happen to make the trillion-dollar promise a reality.

It’s a partnership between the governments of the UAE and the World Economic Forum, to accelerate digitalization, as well as adopting technology so we can ensure that international trade is smooth, improved and moving forward.

It’s a set of technologies and innovations that will enable global trade to be more efficient, inclusive and equitable. We’re talking about very diverse technologies: the Internet of Things, artificial intelligence, blockchain and any other technology that could have the potential to revolutionize the way trade is done.

It’s going to impact many of the areas, from customs and finance to the supply chain, as well as warehousing solutions.

The initiative will focus on many elements and it’s going to be having an incubator. We are going to enable promising startups in this space with capital resources to grow their ideas into a very friendly ecosystem. We have a Forum, which is bringing the main players and movers and shakers in the sector together, as well as reports that bring in the best practices and highlight the way forward and many of the challenges the world is facing.

In the UAE, we have always acted as a sandbox, where companies and start-ups can experiment – try some of their innovations at the edge or outside of the existing framework. Trade has always been an integral part of our economic growth. We’ve been a leader of many global commodities movements. And we’re going to be one of the main supporters of the innovators and tech providers in this sector as well.

Let’s look at the process of the chain of movements of commodities from one place to another. It moves out from the manufacturing to the distribution warehouses in those countries, to the ports or the airports where it has to be cleared and gets ready to be transported globally.

It has to go through customs, then the shipment companies, until the other ports point. Sometimes those commodities get stuck for a few days because of the process, the availability of human resources and the documentation availability. Then it goes to the warehouses and the consumer.

The whole journey of those commodities is time-consuming. There are a lot of intermediates in this process. Let’s imagine if we can systemize those movements of commodities and how fast it’s going to go from point A to point Z throughout those processes.

Pick up only in one chain of the whole thing: customs. The minimum number of steps and or requirements in customs is 16. So let’s imagine if that is going to be automated. That’s going to shorten a huge process within customs. Let’s imagine if we can digitalize as much as we can throughout this journey. That’s a game-changer for all the business people, to the traders as well as to the consumers to get their products and services in a speedy manner.

The TradeTech initiative will build a global ecosystem by bringing key stakeholders together. Here we’re talking about industry leaders, technology providers, startups, government officials in a very cohesive network.

And the policymakers and government should create and implement the regulatory frameworks, ensure the adoption of the technology to their regulations and systems, and these regulations should be put in place to pave the way to further enhance and adopt those solutions as well to move forward.

We as governments usually lay down the regulatory frameworks. The industry leaders have to step up to address the challenges they face when adopting such technology to ensure the solution is really implementable.

So adoption of those technologies will provide opportunities, and we have to ensure there will be a trial so we can reach a level where it’s acceptable by everyone.

Then we go to the other parties, the global investors and venture capitalists, where we have the significant opportunity of investing in a trillions-of-dollars sector, where they can encourage more innovations and for more technology aspects to be adopted and expanded, and scale up the sector.

We’re not coming up with something new. We’re ensuring the ecosystem and the synergies are happening between different players.

We’re aiming to bring back trust among the member states, where we are looking at the bigger picture, looking at the growth of global trade. At the end of the day, we’re linking the trade to the development of people.

The whole value chain of trade, industry investments is connected to trade and, at the end of the day, we’re impacting and affecting humans, who are a key part of this, the journey of the trade and commodities or services.

For digital trade as a whole, there are some obstacles when it comes to such technology. It is disruptive to how things have been run.

There are a few things we’re seeing as key challenges to trade technologies when it comes to taxes and tariffs, which is a significant challenge not only to trade technology but also to the movements of commodities in general.

So we have to look at the bigger picture, and we have to think: what are the incentives, what’s the facilitation, what are the enablers as governments that we have to put in the system?

Trade rules in the digital era are another pressing challenge. Again, it’s a new thing that countries have to adopt themselves. New changes and the speed that is moving with the rules is not coping with the speed of the technological advancements in the sector.

No matter how strong we are internally, if we don’t work with our counterparts, with our international stakeholders, and ensure the synergies and connectivity between us, nothing will happen.

We cannot stick to normal practices. We have to ensure things are moving and we are upgrading and reskilling ourselves in a way to accept the near future where technology is going to be one of the main factors in shaping up policies, shaping up movements, and the growth of the economy.