Small firms were set to be the biggest winners from Britain’s transition to paperless trading. Three years on, a government-commissioned study found them “unaffected” by the changes, while major companies and shipping carriers quietly pocketed the savings.
The Electronic Trade Documents Act 2023 makes the UK the first G7 country to give digital trade documents full legal status, promising small exporters lower postage fees, less administration and better access to trade finance.
The scale of the potential prize is hard to overstate. The World Trade Organization estimates that a typical cross-border transaction requires the exchange of 36 documents and 240 copies of paper. The government suggested the changes could generate £1.4 billion in net benefits for importers and exporters over ten years, with bilateral trade with the US rising by 6.8 per cent in non-agricultural goods.
But evidence gathered by the Department of Business and Trade’s Ipsos, drawn from 23 interviews with traders and industry experts in March, tells a different story. Awareness of change among small business owners is “low”, and many simply follow whatever their representatives ask rather than drive change themselves.
The researchers concluded that widespread adoption of electronic trade documents will only occur “once customs authorities, carriers, and ports have stopped issuing physical paper.” The general opinion among experts was that “the voluntary acceptance of small businesses will not increase, and that progress depends on the action coordinated by the government and the main actors of the supply chain.”
Big players don’t wait. The use of electronic bills of lading, a legally binding document that acts as a receipt, contract and proof of ownership in one place, has doubled since 2023, but mainly due to large traders and shipping lines. The nine largest carriers, representing 75 percent of the world’s volume, have committed to 100 percent digital coverage by 2030.
For an SME owner, the reality is worse than the awareness gap. Even when digital documents are legally accepted, Customs, health authorities, banks and couriers “still require original documents in certain steps”, so that receivers quickly end up using expensive hybrid paper and digital processes. International banks and trading partners may reject UK digital documents simply because they do not have the software to validate them.
And Whitehall’s sales never reached the world. The government’s messages about “improved access to trade finance” did not resonate with owners, who were more interested in saving on postage fees and less red tape, a common rejection of firms already frustrated by post-Brexit border checks and paperwork.
The findings have prompted the British Chambers of Commerce, which has repeatedly warned that small traders are being left behind while big firms are ahead, to call for an end to paperwork and closer links with the UK’s leading trading partners.
William Bain, head of trade policy at the BCC, said: “This research paints a clear picture: that governments, around the world, need to work better together to promote digital trade.
“It is unfortunate that very few SMEs take advantage of the time and savings that a switch to online documentation can bring.
“This is not just that the authorities enact laws to digitize documents, it also requires them to participate in increasing the rate of adoption, but this must include the time to eliminate paper documents.
“More resources also need to be invested in the government to implement it. Our network of chambers is ready to work in partnership with them to raise awareness and fully embed digitalization in our commercial culture.”
With Britain nursing a £74 billion drop in exports since Brexit, the stakes for small firms doing well are huge.
A government spokesman said: “Making trade paperless saves businesses a lot of time and money, which is why the UK became the first G7 country to give electronic documents full legal status.
“We want more businesses across the country to benefit from these changes, and we are working hard to address the remaining barriers to make digital commerce easier, faster and more efficient.”
