A Path to Paperless Trade: Analysing the Legal Gaps and Economic Benefit of Adopting or Maintaining a Legal Framework that Takes into Account the UNCITRAL Model Law on Electronic Transferable Records (MLETR)

APECCommittee on Trade and Investment February 2025 A Path to Paperless Trade:Analysing theLegalGaps andEconomicBenefit ofAdopting orMaintaining aLegalFramework thatTakesintoAccount the UNCITRALModel Law on ElectronicTransferable Records (MLETR) APECCommittee on Trade and Investment February 2025 APEC Project:CTI022024S Produced byThe Australian APEC Study Centre, RMIT UniversityDr Alan Davidson, University of QueenslandStephanie Honey,Honey ConsultingCentre of Policy Studies, Victoria University With support of:Department of Foreign Affairs and Trade,RG Casey Building, John McEwen Crescent,Barton ACT 0221 Australia.Website:https://www.dfat.gov.au/ ForAsia-Pacific Economic Cooperation Secretariat35 Heng Mui Keng TerraceSingapore 119616Tel: (65) 68919 600Fax: (65) 68919 690Email:info@apec.orgWebsite:www.apec.org ©2025APECSecretariat APEC#225-CT-01.2 Contents Executive Summary2 Acronyms and Abbreviations5 Introduction6 I.MLETR and paperless trade–role and benefits for APEC7 I. MLETR and paperless trade............................................................................................................7ii. The economic benefits of MLETR and paperless trade..................................................................9 II. Adoption of MLETR across APEC–Legal issues and constraints18 i. Adoption of MLETR across APEC.................................................................................................18ii. Legal issues and constraints to adoption.....................................................................................24 III. Realising the benefits of paperless trade across APEC–Pathways forward29 i. Legal pathways..............................................................................................................................29ii. Practical steps..............................................................................................................................30iii. Forward pathways for APEC........................................................................................................33 Annex 1. Legal framework and MLETR adoption across APEC economies37 Annex 2. Economic Modelling Results and Methodology55 Annex 3. Areas of convergence and divergence in selected agreements onelectronic transactions frameworks, paperless trade and MLETR Annex 4. Workstreams and support in international fora91 Executive Summary The paperless trade opportunity for APEC APEC has an opportunity to realise thesignificant benefits arising from paperless trade in theregion. APEC wide adoption of the UNCITRAL Model Law on Electronic Transferable Records(MLETR), or equivalent arrangements, can help to achieve this. The benefits of moving along thispath to paperless trade are significant–estimated to be as high as USD2.0 trillion across theAPEC region. SomeAPEC economies are already leading the way,adopting MLETR or equivalentarrangements. For those yet to do so, several legal and practical constraints will need to beovercome. There are various legal approaches, combined with coordinated and cooperative actionacross APEC, that can be taken. This report explores the benefits of MLETR adoption across APEC, assesses the legal constraintsto doing so, and maps out a recommended path forward for APEC to advance paperless trade. The role of MLETR and paperless trade International trade operates with vast volumes of paper. The International Chamber of Commerce(ICC) estimates that four billion documents move through the global trade system daily. Despiteadvancements in the digitalisation of the trade ecosystem, most jurisdictions globally still requirethat transferable records, that is, documents transferring the ownership of goods, be presented inphysical paper form. These documents could be digitised, dramatically reducing the need for suchlarge volumes of paper,and its associated costs, in international trade. MLETRprovides a legislative template for electronic (‘paperless’)versions of transferabledocuments or instruments. These include bills of lading, bills of exchange, promissory notes, andwarehouse receipts which are crucial documents for the conduct ofinternational trade, oftenregarded as documents of title. Legislative reform moving the international trading ecosystem away from outdated paper-basedsystems and their legal frameworks towards more reliance on paperless systems and a legalenvironment supportive of electronic transferable records will significantly enhance efficiencies ininternational trade facilitation. Aligning domestic laws with MLETR, or equivalent arrangements, isa way to do this.1MLETR’s uniform adoption, or of equivalent arrangements, by APEC economieswould facilitate the use of paperless trade in international commerce across the region. The economic benefits of MLETR and paperless trade Paperless trade can increase efficiency, reduce costs and enhance trade. Adoption of MLETR orequivalent arrangements across APEC provides