Who is steering international trade?

This guest post by Tim McGrath,  Co-chair of the OASIS Universal Language Technical Committee (UBL), explains where common governance and standards are missing along the supply chain. 

International trade requires a set of collaborative business processes based on common agreements. This has been true from the Roman Empire to the Hanseatic League and today’s global environment.

The legacy and lessons of these historic agreements are seen in the standards they introduced for trade laws, currencies, movement of goods, measurement systems, etc.

The Romans knew that to enable proper expansion and protection of the empire, their road infrastructure had to allow for the transport of supplies, war chariots, armies, and other goods. Even after the demise of the empire, humans continued to build streets that had standard Roman dimensions, which has impacted the size of carriages and, later on, cars and trains.

Many trade standards and processes derive from the Hanseatic League. The legacy of the Hansa, as it’s also known, lives on in the principles of free trade as well as in the idea of nations that cooperate in matters of trade and economics, such as within the European Union.

Today, the World Trade Organization (WTO) provides a forum for negotiating agreements aimed at reducing obstacles to international trade and ensuring a level playing field for all, thus contributing to economic growth and development. One of the instruments to support these agreements is the use of common standards.

But what is “common” about international trade? “Trade” itself not only covers goods and services, but also intangible products such as intellectual property. Clearly, there are a wide variety of processes to support the supply chains for these different types of products. This variety makes common agreements and standardization challenging.

As there are different dimensions of different trades there are also different dimensions related to the domain of the players involved. Based on the different functions, we can view any supply chain (especially international ones) following four parallel processes:

1. Commercial processes relating to contracts, catalogues, and procurement. These processes cover the contractual agreements between the buyer and seller of the product.
2. Logistical processes defining the booking, scheduling and movement of cargoes and transportation equipment. These processes are directed at the transport and logistics providers who will deliver the products.
3. Regulatory processes such as permits, approvals, declarations and certificates.  These processes are required by government agencies for security, safety and taxation.
4. Financial processes defining the insurances, guarantees and monetary exchanges. These processes engage financial institutions and control the transfer of funds.

The processes executed within each of these domains need to operate effectively and in unison for an efficient supply chain. Information not only flows along each domain, but also between domains. Product information created in the commercial domain is needed by logistical and regulatory processes. Regulatory clearances are need by the logistical domain, and transportation details are used in commercial documents. Coordinating this is generally a complex, and, at times, fragile process that may involve manual validation of paper documents and/or the use of a variety of coded identification schemes and/or frequent data conversions to suit internal systems.

The European Union, and more especially the European Commission, has been acting for many years as an agent for electronic invoice dynamization. In fact, within the European Digital Agenda they have positioned the e-invoice as a tractor and facilitator of the internal relations in the common market and of the competitiveness of companies in the area.

For this reason, from 18 April 2019 all the countries of the region will have a The European Union should adopt a common format for B2G e-invoicing.

In 2014, the EU has adopted Directive 2014/55/EU of the European Parliament and of the Council of 16 April 2014 on electronic invoicing in public procurement, which requires the definition of a common European standard in e-invoicing at the semantic and syntax level for all European countries.

The objective is to achieve unification and simplification of the activity of companies and institutions when invoicing and exchanging invoices between different countries.

Thus, the work on the standardisation of a common format has led to the creation of an European invoice standardization Group CEN-TC/434, which will be essentialto he creation of standard EN 16931, which will be mandatory throughout the European Union by April 2019. The idea is that, initially, the common format will be associated with the B2G invoicing which will be mandatory, but in the future this standard can be also used in any B2B relationship.