Salzburg Global Fellow and mentor explain how emerging technologies "hold the potential to dramatically enhance trade facilitation and inclusion"
This article was written by Harun Abubakar Siddique and Deepali Fernandes. Harun participated as a Salzburg Global Fellow in the third cohort of Public Policy New Voices Europe and worked closely with Deepali as his mentor.
Trade facilitation is the simplification, modernization, and harmonization of international trade procedures, which reduces trade costs and time. Since the adoption of the WTO's Trade Facilitation Agreement (TFA) in 2017, countries have made significant progress boosting global trade by over $230 billion.
However, emerging technologies—particularly Artificial Intelligence (AI) and blockchain—hold the potential to dramatically enhance trade facilitation and inclusion, especially for developing countries and Micro, Small, and Medium-sized Enterprises (MSMEs). This article explores how AI can support simpler, faster, and more secure trade, with real opportunities for inclusive growth.
Why AI Matters for Trade
With AI, the world of trade in general is experiencing a profound transformation; PwC forecasts that AI could contribute $15.7 trillion to global GDP by 2030.
Broadly, AI’s application to trade facilitation measures can be leveraged by both private and public sector in three broad areas:
- Simplification of processes, leading to greater efficiency
- Transparency measures e.g., access to information, which leads to greater accountability
- Risk management and boosting supply chain security
Smarter and Faster Trade Processes
On average, a single trade transaction involves as many as 36 original documents and 240 copies. This administrative burden increases transport costs and discourages MSMEs from participating in global trade.
1. Simplify formalities and documentation: AI-powered customs tools, like algorithms and document automation, streamline the preparation, standardization, and submission of import, export, and transit forms, cutting red tape and reducing delays.
2. Freedom of goods transit through third countries: Landlocked countries often face double transport costs. AI-driven route optimization can reduce bottlenecks and transit restrictions, while blockchain integration ensures goods remain secure and unaltered during transit.
3. Advance rulings and pre-clearance: AI tools such as machine learning and predictive analytics enable pre-import classification, cost forecasting, and preliminary checks on trader identity and declarations, enhancing predictability and efficiency. Examples include Machine Learning Models (algorithms identifying patterns for predictions) that classify goods using historical data, and Predictive Analytics (AI forecasting outcomes using historical trends) which can forecast costs. To cite a real-world example, FedEx Trade Network, China’s AI-driven customs system ("Tianyu") cut clearance times by 70%.
More Transparent and Inclusive Trade
4. Access to trade information: AI enhances predictability and accessibility by using predictive pricing models (algorithms forecasting fees based on historical data), automated fee calculators, and natural language processing (NLP) to simplify and translate complex trade regulations. Chatbots and virtual assistants provide 24/7 support to traders.
5. Prior comment and inclusive consultations: AI tools like sentiment analysis (NLP assessing opinions in text data) and text summarization help gather, condense, and analyze stakeholder feedback, highlighting key concerns to inform more inclusive and responsive policymaking.
6. Appeal and review procedures: AI streamlines customs appeals through automated case management, precedent suggestion, and document analysis, enabling faster and more consistent resolutions.Automated Document Analysis can review submitted documents and identify relevant information. An example is Singapore’s TradeTrust, which uses blockchain to reduce fraud and speed up document exchanges between businesses and government.
Stronger Security and Risk Detection
7. Release and clearance of goods: AI-driven risk assessments and inspection algorithms target high-risk shipments, while computer vision aids automated container checks. AI and blockchain enhance traceability, authenticity, and prevent counterfeiting and tax evasion.
8. Customs and border agency cooperation: AI-powered data platforms enable real-time information sharing between customs agencies. Fraud detection algorithms and predictive analytics enhance coordination, security, and efficiency in customs operations. One example includes the EU Customs Risk System, which uses AI to identify fraud patterns and strengthen border security.
Examples of AI and Trade Facilitation in Action
Unlocking AI for Trade: What to Watch Out For
While AI holds immense potential to revolutionize trade facilitation, especially for developing countries and small businesses, it also raises critical issues that need to be considered.
Empowering Developing Countries and MSMEs
AI can be a powerful equalizer. Traditionally, MSMEs and developing economies have faced high trade costs, complex regulations, and long delays at borders. AI can help turn the tide.
By enhancing efficiency, transparency, and risk assessment/security, AI and trade facilitation can lower trade costs, shorten delays, and streamline procedures. These technologies enable MSMEs and least developed countries (LDCs) to participate in international markets with greater ease and affordability. Blockchain further enhances traceability and compliance, giving MSMEs the tools to meet regulatory requirements and grow their customer base.
Bridging the AI and Digital Divide
But there’s a risk: the benefits of AI could remain concentrated in high-income countries. A third of the world’s population still lacks internet access, and nearly 800 million people—mostly in developing regions—lack electricity. Replicating AI solutions in low- and middle-income contexts remains a major challenge. Unless digital inclusion is prioritized, the “AI divide” will widen the existing North-South gap in trade capabilities.
The Need for Global Partnerships
Trade is inherently global. So is AI. Advancing "Trade Facilitation 2.0" will require international cooperation to harmonize digital trade standards, regulations, and protocols. Governments must work with each other, and with private sector innovators, to develop interoperable systems and shared governance frameworks. Without such partnerships, fragmented systems could undermine the efficiency gains AI promises to deliver.
Managing AI Risks
AI isn’t risk-free. Several concerns must be addressed head-on:
- Interoperability and Transparency: AI systems must work seamlessly across borders, while traders and customs authorities need to understand how decisions are made. Further, AI models will require frequent updates - technological and information/regulation - in order to stay compliant.
- Bias and Human Oversight: Without careful design and oversight, AI models can reflect or amplify biases, create hallucinations, etc.—leading to unfair outcomes in security, inspections, or compliance checks.
- Data Privacy and Cybersecurity: The vast amounts of sensitive data flowing through digital trade platforms create vulnerabilities that malicious actors may exploit. This includes cybersecurity threats (eg. hacking, scams, data breaches). Data consistency and standardization as well as data protection is important. Data sharing, privacy, and security concerns require trusted policies and technology safeguards. The legal framework for AI interoperability and data governance needs to be put in place.
Jobs and Skills
To reap the benefits of AI application for trade facilitation, there will be an urgent need to train employees in the private and public sector. Legal and ethical issues include the fact that AI raises broader regulatory questions - from misinformation and job displacement to copyright, privacy, and ethics. These must be factored into national and international governance strategies.
Final Thoughts
AI in trade facilitation is more than just a tool for efficiency. With the right combination of policies, partnerships, and protections, AI can drive economic growth, empower MSMEs, and create more accessible and resilient trade systems globally.
Harun Abubakar is a master's student pursuing a degree in international development studies with a specialization in sustainable trade and finance, at the Graduate Institute, Geneva, Switzerland. He serves as an Applied Research Project (ARP) researcher with the International Trade Center (ITC) in Switzerland, contributing to the toolkit by ITC for negotiations of the Digital Trade Protocol for the African Continental Free Trade Area (AfCFTA).
Deepali Fernandes is a trade, finance and labour migration expert, with work experience in both the private and public sector (United Nations). She is currently senior consultant to the Africa Free Trade Agreement Secretariat on financial and construction and engineering services and works with the UN Capital Development Fund on labour migration and remittances.
Authors' Note: This piece is an indicative think piece by the authors. It is meant to provide a perspective, and is not exhaustive. Any errors are solely the responsibility of the authors. Measures picked out are indicative and meant to provide examples, they do not cover the full gamut of trade facilitation measures or AI technologies that are and can be used.
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