Selling goods overseas? A barely-noticed new law will have you putting the champagne on ice

Amid the news stories about Russell Brand, Rishi Sunak’s U-turn on climate crisis measures and King Charles’s state visit to France, a vital, positive development for the UK’s myriad businesses this week slipped by unnoticed.

If you’re a small- to medium-sized enterprise and you buy and sell abroad, you should uncork the champagne. Suddenly, your life has been made a whole lot easier.

The Electronic Trade Documents Act has been passed into law. It’s quite a mouthful, but please don’t look away, because the statute has been heralded in some quarters as the most important piece of business legislation the UK has passed in years.

They’re not joking. What’s more, for once, it represents tangible progress by this government in responding to the wishes of the country’s legion of entrepreneurs. At last, they’ve listened and they’ve responded. How rarely have we been able to say that?

The act allows all companies using English law to scrap paper and move fully to digital. Previously they were always required to keep a hard copy, old-fashioned record of every import-export transaction. Not anymore.

Go into any trading office and there would always be piles of paper and filing cabinets – this, despite the presence on desks of super-slick terminals. It was weird, like being required to keep one foot in the past while the other was planted firmly in the future.

Indeed, a report from the International Chamber of Commerce two years ago argued that UK firms were trapped in the “bureaucracies of the 16th century” and must be brought up to date for the current age. It highlighted the need to simplify and speed up trade by digitising documents such as bills of lading, the receipts that accompany shipped goods and date back, would you believe, to 1564.

Research by Coriolis Technologies suggests that digitising business and removing paper documents would boost small British businesses’ overseas trade by £25bn over the next four years. Banks, including Lloyds and Barclays, told the researchers the move would increase access to trade by 15 per cent.

In practice, the antique requirement translated into the amassing of a paper mountain totalling 4 billion documents a year to service international trade. On average, each transaction generated 20 to 30 pieces of paper. That was one impact; the other was the sheer manpower required to service it all. It was burdensome and suffocating. Moving completely to digital should reduce the time it takes to complete a deal by as much as three-quarters.

The act is the most significant milestone to date in the drive to make doing business easier and simpler. Trading has suddenly become cheaper and faster.

Currently, 80 per cent of bills of lading, as well as 60 per cent of global trade finance, marine insurance, shipping and commodity deals all operate under English law. The Commonwealth countries also follow the same legal system. Internationally, quaint (until now) English law is often the law of choice for trading companies.

For years, the smaller firms who feel the obligation the most – and happen to be the engine room of the UK economy – have been badgering to be permitted to take full advantage of modern technology. A recent Santander Barometer survey found that 35 per cent of SMEs said that paper and bureaucracy were a barrier to trading, while 45 per cent said they were ready to go digital, with a further 65 per cent aspiring to go digital.

Not for nothing does Chris Southworth, UK secretary-general for the International Chamber of Commerce, say: “This is a once-in-a-generation opportunity to unlock £25bn in UK SME trade growth, £1bn in additional trade finance, reduce trade transaction costs by 80 per cent and deliver £224bn in efficiency savings. If we want economic growth, this must be top of the list of trade priorities for government and industry.”

The new law will also play a significant role in mobilising other countries to also remove their legal barriers. Thanks to the UK lead, the G7 countries and China, representing 50 per cent of world trade, are all removing legal barriers to trade digitalisation, and the G20 are also committed. A whopping 90 per cent of world trade is expected to be on a path to digitalisation once the WTO ecommerce agreement is signed.

For someone who can remember all those promises going but then watched them do precisely nothing – worse, they even added to the minefield of rules and regulations heaped on small businesses – this is a welcome change. It’s taken a long time coming, but finally, progress has been secured.

Let us hope it is a start. I hesitate to quote Winston Churchill because his words are so well used, but please can this be a turning point for British business in its battle to just be allowed to do, well, business: “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”