1. What exactly is eTrade? Is it something about shopping on the Internet… ?
eTrade is cross-border paperless trade. It is an overarching topic that covers the import-export cycle for goods and services between countries, addressing areas like:
- Online buying or selling of goods or services from any part of the world;
- Transferring goods or services across borders, including the exchange of paperless documents between businesses and government, and delivering these goods or services to the buyer.
The EU is a single market that allows the free exchange of goods, services and relevant information supported by standardised technology and frameworks between its member states. Among the Eastern partner countries, however, there is lack of harmonisation in paperless trade procedures, both among the countries and with the EU. For example, electronic invoices and contracts are not equally recognised from one country to another.
Through its EU4Digital initiative, the European Union supports trade harmonisation between the EU and the Eastern partner countries – Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine. It also supports trade harmonisation among the Eastern partner countries themselves.
2. So what does EU4Digital do to promote eTrade in the Eastern Partnership region?
As part of EU4Digital, several activities and pilots support cross-border collaboration. The focus is to harmonise the following areas of eTrade:
- Cross-border eTrade: exchange of paperless documents between trade partners (e.g. businesses and government) from different countries.
- eCustoms: systematic and automatic exchange of customs information (e.g. pre-arrival information exchange, risk assessment, data matching, results of customs controls) between logistics business and customs authorities.
- Digital Transport Corridor: data-related services across physical transport corridors for end-to-end information exchange at all stages of transportation – air, road, rail and sea.
- eCommerce: sale of goods through electronic transactions carried out on computer networks.
- Networking: involvement of stakeholders from Eastern partner countries to build connections and to share information about trends, actions and state of play in eTrade with EU counterparts.
3. What is the cross-border eTrade pilot? Which countries are involved and what exactly does it do? Can we expect its benefits to be replicated across all countries in the coming years?
The aim of the pilot activity is to test cross-border data exchange between several public and private entities using the eDelivery solution, a secure electronic data and document exchange channel. The goal is to see whether such data exchange can be fully functioning from the following perspectives:
- Technical. Test if interoperability can be reached and if there are technical barriers preventing the solution from being used on cross-border level.
- Legal. Perform a primary legal environment review to identify the required changes in national legislation to fully enable the use of the solution from the legal perspective.
- Organisational. Identify responsible institutions and required organisational/institutional changes in order to ensure that the solution is fully functional on a national as well as cross-border level.
After completion of the pilot project, the EU4Digital Facility provided the recommendations for required changes in the above-mentioned areas to implement the full-scale solution and make it fully functioning, as well as legally binding.
Two eDelivery pilots were carried out, one between an Eastern partner and an EU country – Ukraine and Poland – and the other between two Eastern partner countries – Armenia and Ukraine. Find out how the eDelivery solution was tested in Ukraine: Cutting through the paper chain: EU opens the digital path to trade in Ukraine
Virtual site visits were also organised for partner country representatives to observe piloted solutions to support them in making informed decisions regarding the implementation of specific solutions in their country.
4. What is eCustoms and what are the benefits?
eCustoms refer to the systematic and automatic exchange of customs information (e.g. information exchange on empty trucks, risk assessment, data matching, results of customs controls) between economic operators and customs authorities.
When economic operators move goods across borders and interact with customs offices, they experience delays caused by the lack of automation and absence of timely communication between customs offices. As a result, end buyers also experience delays in getting their goods. This happens because:
- Customs information is not received on time, creating ineffective safety and security risk management for customs and businesses;
- Automatic data matching is not set (e.g. to match if declaration info in the departing country is the same as in the arrival country);
- Pre-arrival information is not exchanged (e.g. when cargo comes to the border crossing point, the carrier must wait until the risk assessment is completed before crossing the border).
The eCustoms activity helps to facilitate these issues by providing businesses and governments with necessary cooperation models (e.g. cooperation processes, communication systems), allowing efficient information sharing and exchange. It optimises interaction with customs offices to decrease trade costs for businesses and deliver goods and services faster.
The EU4Digital Facility analysed existing solutions, and their applicability in the region, selecting the SEED (Systematic Exchange of Electronic Data) solution for the eCustoms pilot as the best fit. SEED has been implemented by Customs Administrations of the Western Balkan countries, financed by the EU, and offers:
- Proven security
- Data standards
- Easy adaptation to national systems
- Flexibility in terms of functionalities and data sets exchange requirements.
In the Western Balkans, SEED has successfully tackled the following problems:
- Undervaluation through swapping of invoices and decrease of customs value at entrance
- Fake confirmation of exits of loaded trucks (violations related to VAT refunds)
- Irregularities related to the (mis)use of transport documents (e.g. ATA carnets)
- Detection of serious customs offences like smuggling of tobacco and drugs.
The goal of the pilot is to enable the exchange of electronic customs data between the customs authorities of Eastern partner countries and EU member states. This is the starting point when initial (limited) functionalities and data sets are piloted.
The eCustoms pilot was already successfully tested between customs administrations of Belarus and Lithuania. Find out more: Pilot for export dataset exchange goes live between Belarus and Lithuania.
The piloting facilitates the improvement of process of customs data exchange between customs offices, shows the potential progress in customs clearance, risk assessment, and cooperation between cross-border customs administrations. As a result, recommendations for full scale solution implementation are prepared to enable and replicate the solution across the region.
5. A Digital Transport Corridor from the Baltic to the Black Sea: it sounds ambitious but what exactly does it mean and how will it help trade?
A Digital Transport Corridor (DTC) is a set of data-related services across physical cross-country transport corridors for end-to-end information exchange at all stages of transportation – air, road, rail and sea. This includes services and applications for supply chain stakeholders like information submission for authorities, visibility services, marketplace services, booking and ordering services, and chain composition services.
When logistics businesses move goods and services across borders, they interact with different logistics systems in different Eastern partner countries and the EU. This creates technical barriers hampering the instant exchange of logistics information between countries. In addition, legal frameworks for logistics processes and information systems being developed are not the same in these countries, making logistics processes even longer and more complicated. This translates into higher logistics costs, and delays in the delivery of goods and services.
The Digital Transport Corridor between the Baltic and the Black Sea should help to organise logistics processes and electronic transport data flow so that information is exchanged instantly between logistics chain participants (traders, freight forwarders, customs, other government agencies and consumers), optimising the flow of goods and services and saving time and money.
To facilitate and harmonise logistic information exchange, the EU has adopted the Regulation on electronic freight transport information (eFTI) and is developing supporting acts/specifications to be followed by EU Member States, moving towards a decentralised federated network of platforms, enabling public authorities to acknowledge electronic data as legal.
EU4Digital developed preparatory actions by adopting EU developments in the Eastern partner countries to test the technological approach for information exchange, regulatory environment and organisational arrangements within and between Eastern partner countries. In this context, experts designed a three-year programme, and defined preparatory actions to establish a DTC between the Baltic and the Black Seas. The implemented programme aims to establish a seamless end-to-end logistics information exchange across the transport corridor between the Baltic and the Black Seas or other parts of the region.
6. What are the obstacles hindering eCommerce, and what is EU4Digital doing to help?
Electronic commerce – or eCommerce – refers to the sale of goods through electronic transactions carried out on computer networks. While the EU is a single market that allows the free exchange of goods and services between member states, goods and services cannot easily be exchanged between the EU and Eastern partner countries, due to differences in eCommerce legislation, standards and ecosystem.
For example, EU businesses trading with any part of the world want to trust that goods follow general safety requirements, but face obstacles from the fact that standards and legislation in the EU and Eastern partner countries are not harmonised.
In addition, the EU introduced a new eCommerce VAT package in 2021. This wide-ranging reform affects eCommerce processes across Europe and beyond, and businesses and governments have limited awareness of its impact. In this new reality, the Eastern partner countries need support to move and adapt to electronic commerce.
EU4Digital’s eCommerce activity provides recommendations for Eastern partner countries to achieve smooth electronic trade with the EU, by focusing on harmonisation of three areas, namely:
- eCommerce ecosystem
The goal of these recommendations is to:
- Eliminate the barriers for cross-border eCommerce;
- Boost cross-border eCommerce volume;
- Increase awareness and prepare partner countries for the EU 2021 eCommerce changes.
To bring the highest value to the EU and Eastern partner countries, the analysis has been used to identify specific challenges, and to design and launch a pilot solution to address these challenges. As a result, EU4Digital launched an eCommerce pilot, establishing national virtual warehouses in three pilot countries – Armenia, Azerbaijan and Georgia - to support retailers, marketplaces, delivery operators and customs to place the products for sale abroad and facilitate cross-border delivery.
The virtual warehouse logs data about products for eCommerce sale, in a format that follows EU and international requirements. Once logged into the warehouse, products can be marketed on any number of international online marketplaces such as eBay or Etsy, while the standardised data allows postal services to launch delivery and ensures seamless cross-border customs procedures.
Find out more about the eCommerce pilot:
Selling Armenian socks to Germany: EU4Digital bringing EU markets closer through eCommerce support
Just one click for the European market – how the EU supports eCommerce in Georgia
Click for trade: EU4Digital helping Azerbaijan to set up for eCommerce
7. What is the networking activity all about? How does it contribute to eTrade?
Networking is about building connections and sharing information about trends and actions in eTrade. EU4Digital has many activities and pilot projects in eTrade that require cross-country collaboration. The sharing of information is therefore vital to raise awareness of eTrade issues, stimulate the implementation of reforms and align activities among international stakeholders.
International networking activities include study visits to observe, examine and discuss piloted solutions, study visits to examine existing solutions and best practices outside Eastern partner countries, and events to exchange contacts and share information about trends in eTrade. These events target policy makers, investors, digital vendors, service providers, R&D centres, academia, banks, insurances, public administration, agencies and other eTrade stakeholders. Events recently promoted by the Networking activity include Digital transport days (DTD), SEED site visit, virtual eDelivery site visit to Europe, and others.
8. What might eTrade in the region look like in the future? How will EU4Digital have helped?
The aim of EU4Digital is to support the harmonisation of eTrade to help it become paperless, automatic and unified between businesses and authorities of different countries (in terms of trade processes, communication, legislation and standards). To move closer to this scenario, EU4Digital is facilitating analysis and problem identification, connecting counterparties, testing solutions and providing recommendations.
We can envisage the following best-case scenario in the future of trade:
A business in Stockholm, Sweden has just agreed on a trade with a business in Odesa, Ukraine. Representatives from the two businesses were connected at an eTrade event organised by EU4Digital. Goods were selected through the eCommerce online marketplace, and documents exchanged and signed through computer networks. Without any paper involved, contracts were signed and invoices paid. It was fast and easy to manage these documents, as legislation and technical standards are aligned. This meant there were no additional documents that businesses were not aware of or were not used to dealing with.
The businesses agreed to load the purchased goods in Sweden (country of departure), to be carried by sea all the way through the Baltic Sea where the goods would be loaded onto a truck in Klaipeda port, Lithuania (transit country). The truck would then deliver the purchased goods to Odesa, Ukraine (country of destination).
When loading the goods in Sweden, the business submitted customs documents electronically. This was done before the goods reached the border. The customs authority was able to review the documents beforehand and perform risk assessment. It was easy for customs authorities in Sweden and other transit and destination countries to cooperate, because the processes (e.g. required documents, formats) and communication systems are aligned. This makes the customs operations fast and secure. Nothing illegal can get inside the transport performing operations without customs noticing it.
The goods started the journey in Sweden using sea transport. But it was easy and fast to switch to a vehicle on arrival in the Lithuanian port. The reason for this is the Digital Transport Corridor from the Baltic to the Black Sea. For trading parties, it meant that documents were exchanged instantly so the check and alignment processes happened fast.
Whenever the truck arrived at a border, there was no delay to proceed with the journey. As customs deals were set at the beginning of the journey, authorities only checked that the goods were sealed. The truck moved along.
Eventually, the truck arrived in Odesa, Ukraine. The goods were unsealed and checked. Successful delivery was confirmed electronically so the Swedish business could easily track the delivery.
The two companies look forward to future business.