Ensuring compliance with MLETR and ETDA to enhance digital trust in global trade

Welcome to the future of global trade! As the world races towards or through digital transformation, staying compliant with key international legislation frameworks and models, such as the Model Law on Electronic Transferable Records (MLETR) and the UK’s Electronic Trade Documents Act (ETDA 2023), is not just about following the rules. It is about leading the charge!

Both MLETR and ETDA are setting the stage for a new era of trade where transparency, efficiency, and security are paramount. They are transforming how business is conducted by steering towards frictionless global trade, facilitated by electronic trade documents.

Adherence to them is essential for the future growth of any electronic system in global trade, and the CargoX Platform for Blockchain Document Transfer (BDT) was built to be in line with both.

The digital evolution of global trade: MLETR, ETDA, and the blockchain

The global electronic trade document processing landscape is undergoing a significant transformation with the growing adoption of the Model Law on Electronic Transferable Records (MLETR) in countries across the globe and the United Kingdom’s modern Electronic Trade Documents Act (ETDA), which gives e-docs the same power as paper documents. These legal instruments are setting new benchmarks for the digitalisation of trade documentation and boosting digitalisation efforts worldwide.

The CargoX Platform fully aligns with both MLETR and ETDA. Given that English law governs the creation, interpretation, and enforcement of bills of lading and other trade documents in international commerce, CargoX is already ahead of the curve. Namely, English law is the governing framework for CargoX's Special Terms and Conditions, serving as the default rule book for issuing, exclusive control, possession, and transfer of electronic records, including documents of title.

MLETR: A global standard by UNCITRAL

Developed by the United Nations Commission on International Trade Law (UNCITRAL), MLETR provides a universal legal standard that allows for the electronic counterpart of paper-based documents, such as bills of lading, bills of exchange, promissory notes, warehouse receipts, bank guarantees, and letters of credit, to be used across international borders.

It ensures that these electronic records, governed by functional equivalence rules, are as legally binding as their physical counterparts, fostering a seamless and efficient digital trading environment globally.

So far, legislation based on MLETR has been adopted by Bahrain, Belize, Kiribati, Papua New Guinea, Paraguay, Singapore, the United Arab Emirates, the UK, and most recently, France. The French National Assembly adopted the uniform law initiative, the Model Law on Electronic Transferable Records (MLETR), on June 5, 2024.

ETDA: Advancing the UK's digital trade front

While the UK's ETDA is specific to the United Kingdom, it has a broad global reach because of the status of English law in international trade, especially maritime shipping, and commerce.

ETDA grants electronic trade documents the same legal status as traditional paper documents. This Act serves as a national complement to the global vision of MLETR, ensuring that the UK aligns with international standards and practices for digital trade and reinforcing the significance of English law in the maritime sector.

Blockchain: A technological ally for trade security, digital trust, and sustainability

Blockchain can play a crucial role in implementing and enhancing the functionality of both MLETR and ETDA.

Blockchain itself is a specific type of distributed digital ledger, providing immutability, transparency, and the unequivocal transfer of signed digital assets, such as documents and data.

Furthermore, it is ideal with its features for deploying smart contracts, which provide hard-coded functional equivalence and rules that mirror the features of paper documents.

What is most important — it provides security and integrity, and foremost, it prevents double spending — which is critical for electronic transferable records in global trade. This allows it to underpin the objectives of MLETR and ETDA, providing a resilient framework for managing and safeguarding electronic trade documents. It ensures the integrity, control, and singularity of records. Above all, it facilitates the prevention of unauthorised alterations.

In that way, the blockchain-based CargoX Platform satisfies the ETDA requirements to:

identify a specific document so that it can be distinguished from any copies,
protect the document against unauthorised alteration,
secure that it is not possible for more than one person to exercise possession (exclusive control) of the document at any one time,
allow any person who is able to exercise possession (exclusive control) of the document to demonstrate that the person is able to do so, and
ensure that a transfer of the document has the effect of depriving any person who was able to exercise control of the document immediately before the transfer of the ability to do so.

While both MLETR and ETDA adopt an inherently technologically neutral approach, blockchain technology has proven to be secure, fast, efficient, scalable, and the best solution to building trust in a digital era.

CargoX, a pioneer in using public blockchain for electronic trade documents, has demonstrated this with the CargoX Platform. It is already used by more than 125,000 companies and organisations, who have transferred more than 7 million electronic trade documents in their daily operations.

Interoperability: Scaling the closed gardens

With digitalisation on the rise, many digital trading platforms have emerged on the market based on various technologies. In the current state of technology, the market and the established rules often act as walled gardens, meaning that all stakeholders, e.g., shippers, consignees, and customs administrations, have to use the same platform.

In order to supercharge the adoption of electronic trade documents, interoperability must be established. This should operate similar to telephone networks and email, where you can connect regardless of the technology your provider uses. Achieving interoperability between platforms will future-proof the trade documentation process, ensuring both competition and reliability, thereby fostering an environment of trust.

CargoX is a trailblazer in this area, as it is already working with various organisations, such as SWIFT, in proof-of-concept trials, helping establish and set future standards. CargoX is completely prepared for the future, with support for diverse types of electronic trade documents, including several types of bills of lading, and extending its operations through collaboration with banks beyond trade and into decentralised finance (DeFi).

Sustainable trade practices: A forward-thinking approach

Sustainable trade practices are at the forefront of this legal and technological revolution. By reducing paper usage, MLETR and ETDA contribute to eco-friendly initiatives, supporting a reduced carbon footprint for international trade activities. As the global economy advances, these practices ensure that trade efficiency does not compromise environmental responsibility.

CargoX has taken this a step further. Not only has the CargoX Platform for BDT to date processed and transferred 6 million documents that would otherwise have been printed out and copied several times, but it has also partnered with GROW MY TREE by Impact HERO to plant 10,000 trees as part of its global reforestation project. This way, CargoX is not only saving the trees that would be cut down for paper trade documents but also helping restore the planet.

Embracing a global digital trade environment

The introduction of MLETR by UNCITRAL in 2017 and the arising legislatures, such as ETDA by the UK government in 2023, mark a new era where trade transcends traditional boundaries. They enhance efficiency, security, and connectivity, as well as embody a commitment to environmental stewardship in global commerce.

As we move forward, this will lead the way into a future where trade is more dynamic, accessible, and sustainable. These developments foster an ecosystem where businesses, regardless of size or location, can participate in international trade with confidence and responsibility, driving economic growth in harmony with the planet's well-being.

The journey towards a fully digital trade infrastructure is setting a new paradigm — a future-proof trade ecosystem that is secure, efficient, and environmentally conscious.

CargoX is championing this mode, while strictly following the provisions of MLETR, ETDA, and other legal frameworks, as well as technological standards.