Unblocking the Bottlenecks and Making the Global Supply Chain Transparent: How Blockchain Technology Can Update Global Trade
The School of Public Policy Publications, Volume 12:9 March 2019
25 Pages Posted: 9 Apr 2019
Date Written: March 13, 2019
Blockchain technology is still in its infancy, but already it has begun to revolutionize global trade. Its lure is irresistible because of the simplicity with which it can replace the standard methods of documentation, smooth out logistics, increase transparency, speed up transactions, and ameliorate the planning and tracking of trade.
Blockchain essentially provides the supply chain with an unalterable ledger of verified transactions, and thus enables trust every step of the way through the trade process. Every stakeholder involved in that process – from producer to warehouse worker to shipper to financial institution to recipient at the final destination – can trust that the information contained in that indelible ledger is accurate. Fraud will no longer be an issue, middlemen can be eliminated, shipments tracked, quality control maintained to highest standards and consumers can make decisions based on more than the price. Blockchain dramatically reduces the amount of paperwork involved, along with the myriad of agents typically involved in the process, all of this resulting in soaring efficiencies. Making the most of this new technology, however, requires solid policy. Most people have only a vague idea of what blockchain is. There needs to be a basic understanding of what blockchain can and can’t do, and how it works in the economy and in trade. Once they become familiar with the technology, policy-makers must move on to thinking about what technological issues could be mitigated, solved or improved.
Governments need to explore blockchain’s potential through its use in public-sector projects that demonstrate its workings, its potential and its inevitable limitations. Although blockchain is not nearly as evolved now as the internet was in 2005, co-operation among all stakeholders on issues like taxonomy or policy guides on basic principles is crucial. Those stakeholders include government, industry, academia and civil society. All this must be done while keeping in mind the global nature of blockchain and that blockchain regulations need to be made in synch with regulations on other issues are adjacent to the technology, such as electronic signatures. However, work can be done in the global arena through international initiatives and organizations such as the ISO.
Canada has an important role to play in developing international blockchain policy and furthering use of the technology. Estimates are that Canada will be among the top investors in blockchain, with a projected annual growth rate of nearly 90 per cent in just the next three years alone. Canadian policy-makers can take on a significant role in these early days by providing a hub for stakeholders and resources.
Already, industry has begun experimenting on a wide scale with Blockchain. Walmart, for example, has created a blockchain food safety alliance that tracks, traces and monitors product safety from farm to grocery aisle.
Blockchain has tremendous potential for relieving the pressure points and bottlenecks in trade supply chains. Its low investment costs are another asset that will help contribute to its widespread use in the next decade. Trade isn’t the only place for blockchain; health care, data protection and voting security are all areas where blockchain can prove useful. With proper cooperation, governance and policies in place to regulate it, blockchain will soon become an accepted (unnoticed) part of many aspects of everyday life.
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