LONDON, June 15, 2023 /PRNewswire/ -- an international consortium of industry and technical experts, supported by government, business and other organisations have completed the world's first quantum-secure cross-border electronic trade document transaction, delivering a verifiable, secure, and legally recognisable solution for future digital trade transactions. This significant step forward in the journey to fully digital international trade will make international trade cheaper, simpler, faster and more sustainable.
The successful pilot, orchestrated by the International Chamber of Commerce UK and Centre for Digital Trade and Innovation (C4DTI) on behalf of the UK Government, and supported by the Singapore Government agency the Infocomm Media Development Authority (IMDA), saw sample building products transported from the United Kingdom to Singapore using traditional paper documentation, but also electronic trade documents, including an electronic bill of lading (eBL) and a digital promissory note, simultaneously reconciled using a Distributed Ledger (DLT) in both jurisdictions.
IMDA's TradeTrust framework, which is fully compliant with the UN's Model Law on Electronic Transferable Records (MLETR) and allows end users to transfer, indorse, and verify documents and effect title transfer across different digital platforms seamlessly, was utilised in the eBL flow of the transaction.
A quantum-secure 'seal' was placed around the electronic trade documents using Arqit's symmetric key agreement and quantum notary technology, ensuring that the documents were protected from current and future cyber threats including the risk posed by quantum computers.
The shipment was live tracked, and the condition of its contents was monitored throughout the journey using low-cost, secure IoT (Internet of Things) technology developed at the AESE Laboratory, Imperial College London, led by Professor Julie McCann and supported by the PETRAS National Centre of Excellence for IoT Systems Cyber Security and the UKRI Impact Initiative Account (UKRI-IAA). A tamper resistant digital record of the location and state of the physical goods was minted onto an NFT by Database of Native Assets Ltd (DNA), using the IoT sensors and Kadena blockchain technology to provide additional security for the shipment in transit.
The pre-existing shipment, used as a basis for the pilot, was dispatched by water management systems component manufacturer Permavoid Limited (part of the Genuit Group) to Singapore. Specialist consultancy AG Midgley Ltd established and chaired the consortium from inception to completion, with legal guidance and advice being provided by energy and transport law firm Watson Farley & Williams LLP ("WFW") in London and Singapore in association with Wong Tan & Molly Lim LLC ("WTL").
As part of the project, the use of the electronic trade documents is the subject of legal review by WFW who has advised that the eBL and digital promissory note used in the project satisfy the requirements of the UK's Electronic Trade Documents Bill as regards possession and transfer of possession. WFW Singapore in association with WTL will advise on the application of Singapore's Electronic Trade Act. Both pieces of legislation are based on the UN's MLETR being enacted globally.
Nick Davies, Director of the Centre for Digital Trade and Innovation, said:
"C4DTI, part of the International Chamber of Commerce UK, was very pleased to be part of this ground-breaking pilot and is grateful to all the consortium members who volunteered to be part of it and base it on a real-world international transaction. It provides a great example of how digitalisation can remove friction from trade between the UK and Singapore and is a practical demonstration of the improvements that are achievable under the terms of MLETR-type legislation and the negotiation of good, effective Digital Economy Agreements, such as that agreed between the UK and Singapore."
Loh Sin Yong, Director of TradeTrust, IMDA, said:
"As part of Singapore's partnership with the UK to promote adoption of cross-border paperless trade, we are excited to support this industry-driven pilot. We believe the pilot has helped to demonstrate how the TradeTrust framework is able to aid solutions to be compliant with MLETR requirements for Electronic Transferable Records such as electronic Bills of Lading. IMDA will continue to work with public and private sector to help push for the digitalisation of global trade."
Dr Barry Childe, Arqit CIO and Co-Founder, said:
"Distributed ledger technology enables organisations to create unique, referenceable and transferable digital finance instruments, which offer significant advantages over paper-based alternatives. Arqit was proud to be the lead partner in this important project and to use our first-of-its-kind quantum-safe encryption technology to secure the transaction. The MLETR being enacted internationally ushers in an era of digital transformation in financial services, but you cannot invest in long term transformation that is not secure against quantum attack. We believe that Arqit alone can deliver that."
Douglas Jakobi, DNA Co-Founder, said:
"DNA is proud to collaborate with Arqit and Imperial College London on the ICC UK and C4DTI pilot program, and to have built a cutting edge end-to-end solution that will revolutionise international trade. At DNA, we make the power & security of the blockchain accessible to mainstream use cases with a simple to use tokenisation platform that bridges the physical and digital worlds."
Notes to Editors
ICC UK commenced the pilot to test the hypothesis that paper-based documents can be replaced by electronic trade documents, with a focus on their transferability, verifiability and legal recognition.
Market research estimates the average charge to issue a paper Bill of Lading per transaction is in the order of $50 plus courier and administrative costs, which can be multiples of the issuance cost, depending on the underlying transaction. The cost of issuing and administering an Electronic Bill of Lading is estimated to be in the region of 75% cheaper than paper equivalents, in addition to which digital instruments deliver an associated time saving averaging 10-12 days per transaction.
This digital trade transaction comes ahead of the UK Government enacting legislation, through the Electronic Trade Documents Bill (ETDB), that will recognise electronic transferable documents (link).
This landmark transaction was made possible following the signing of a Digital Economy Agreement (DEA) between the UK and Singapore in 2022 (link), with the ambition to facilitate cheaper trade through the adoption of digital trading systems between two of the most advanced digital trading nations, which followed on from the 2021 Memorandum of Understanding on Digital Trade Facilitation (link).
WFW has been tasked with advising on the English law legal requirements for the use of electronic trade documents in the Project. In a sperate advice WFW, in association with WTL will advise as to Singapore law requirements. Specifically, WFW and WTL have been instructed to advise whether the eB/L and digital promissory note that Arqit used to (i) substantiate the goods that are being traded; (ii) transfer the possession of the trade documents (and thereby the right to demand obligations); and (iii) pay the price for the goods; satisfy the requirements of the ETDB and the ETA.
Arqit TradeSecure™ generates and distributes digital trade finance instruments, protecting finance supply chains against disruption and fraud and improving their cash flow at the same time. TradeSecure™ uses QuantumCloud™, Arqit's unique symmetric key agreement software, which is a unique quantum-safe encryption Platform-as-a-Service which makes the communications links or data at rest of any networked device or cloud machine secure against current and future forms of attack – even from a quantum computer. QuantumCloud™ enables any device to download a lightweight software agent, which can create encryption keys in partnership with any number of other devices. The keys are computationally secure and optionally for one-time use. QuantumCloud™ can create limitless volumes of keys in limitless group sizes and can regulate the secure entrance and exit of a device in a group.
Arqit believes that the UN MLETR (link) requirement that a digital record gives "integrity" and are secure from "unauthorised access" is problematic in the quantum age. In the White House National Security Memorandum of 4 May 2022 (link), it was made clear that national security systems should not use post-quantum algorithms, only symmetric key protections which are the only method know to be safe from attack by quantum computers. Arqit believes that its Symmetric Key Agreement Platform is the only known method to create quantum-safe encryption at any end point from cloud systems. Therefore, any organisation seeking strict compliance with the MLETR to protect the trillions of dollars which may soon flow through Digital Asset systems must carefully consider their encryption strategy.
ICC United Kingdom is the UK representative office of the International Chamber of Commerce, the largest world business organisation representing 45 million companies in 100 countries. ICC's mission is to promote inclusive, sustainable and green trade. Its rules underpin $25 trillion of global trade. www.iccwbo.uk
C4DTI is an ICC United Kingdom-led public, private partnership that enables government and industry to coordinate and accelerate the digitalisation of UK trade. Launched in April 2022 as a public, private partnership, the Teesside-based C4DTI mission is to accelerate the digitalisation of UK trade and promote the adoption of interoperable legal, standards and rules frameworks. www.c4dti.co.uk
IMDA leads Singapore's digital transformation by developing a vibrant digital economy and an inclusive digital society. As Architects of Singapore's Digital Future, we foster growth in Infocomm Technology and Media sectors in concert with progressive regulations, harnessing frontier technologies, and developing local talent and digital infrastructure ecosystems to establish Singapore as a digital metropolis. For more news and information, visit www.imda.gov.sg or follow IMDA on Facebook (IMDAsg) and Twitter (@IMDAsg).