Emerging technologies like the Internet of Things and artificial intelligence have the power to transform international trade. Another option that deserves to be in that conversation is blockchain.
Deltec Bank said, “Blockchain’s distributed record-keeping system uses encryption. This design allows for auditable transactions that can take place anywhere in the world. That means parties of two or more can engage in a reliable transaction without having a trusted relationship.”
This process can eliminate the need to rely on a central authority or intermediaries to complete the transaction. Not only can it save time when conducting trades across borders, but it can also make each effort simpler and cheaper.
Best International Trade Uses for Blockchain
Some governments are already exploring what the benefits of using blockchain for international trade could be. Several uses have already come under consideration.
1. Logistics and Supply Chain Management
A closed blockchain could manage the supply chains for the import-export market. Individual blockchains could manage suppliers, vendors, and communication with permissions set to specific roles. That would mean you’d gain the benefits of workflow efficiency and visibility without disrupting security.
2. International Financial Applications
Blockchain allows a government to make a payment to someone else without the use of an intermediary. It would provide for the settlement of cross-border transactions in seconds instead of days because there would be fewer steps involved in the world. Smart contracts could execute a specific set of rules so that there are fewer trade disputes that occur over time.
3. Customs and Border Control
If the information about imports and exports is kept in a blockchain, then governments would find it easier to track containers. The work of regulatory compliance and tracking would become simpler because tags would apply to each one. There is even the potential of this technology facilitating trade flows because companies could send, and regulators would receive the necessary documentation before anything needed to cross a border.
4. Regulatory Oversight
Governments could hold hearings or conduct oversight over the information included in the blockchain because the transaction register would be entirely transparent. This process would reduce potential threats to national security while allowing for trustless entities to still engage in the processes of trade. Complete traceability would be part of the system.
5. Compliance with International Standards
One of the best ways to eliminate trade barriers is to promote the use of international standards. The World Trade Organization and the United States have consistently supported this structure. Blockchain would make it easier to see if specific goods or containers met the outlined expectations. It wouldn’t eliminate a visual inspection, but the data could point out the red flags that exist when smuggling or other illegal activities are present.
International trade would benefit from the presence of fewer barriers. Blockchain can make that outcome a reality when all parties decide to use this technology. When there are fewer obstacles in the way, then goods become cheaper. That means we can all do more with the money we can currently access.
Disclaimer: The author of this text, Robin Trehan, has an Undergraduate degree in economics, Masters in international business and finance and MBA in electronic business. Trehan is Senior VP at Deltec International www.deltecbank.com. The views, thoughts, and opinions expressed in this text are solely the views of the author, and not necessarily reflecting the views of Deltec International Group, its subsidiaries and/or employees.
About Deltec Bank
Headquartered in The Bahamas, Deltec is an independent financial services group that delivers bespoke solutions to meet clients’ unique needs. The Deltec group of companies includes Deltec Bank & Trust Limited, Deltec Fund Services Limited, and Deltec Investment Advisers Limited, Deltec Securities Ltd. and Long Cay Captive Management.