LEGAL ASPECTS OF DIGITALIZATION OF INTERNATIONAL TRADE THROUGH IMPLEMENTATION OF BLOCKCHAIN TECHNOLOGY (EXPERIENCE FOR UKRAINE)

Section "Law": Тheoretical and Practical Issues of Development of the Law System of Ukraine

Abstract

The article is devoted to the study of the peculiarities of digitalization of international trade through the introduction of blockchain technology and the identification of issues that require legal regulation for the implementation of the relevant process in Ukraine. It is emphasized that digitalization of international trade through the introduction of blockchain technology opens up opportunities for optimization of administrative trade procedures and stimulation of foreign trade activity, in particular, it allows modernizing and optimizing the work of “single windows” (including certification and customs clearance); cross-border data exchange between government agencies or authorities and economic entities; payment transfer system, etc. In turn, the use of smart contracts, built on the appropriate technology, can automate the compliance of stakeholders with various contractual obligations; and data (in the blockchain) — is a stream of reliable information about past transactions, as they remain unchanged after entry. This provides greater transparency and the ability to trace the movement of a product or document throughout the supply chain with a high level of security and immutability, as well as eliminates double spending (in particular, by using the same digital documents as collateral for financing, which is a common source of fraud in international trade. At the same time, blockchain technology is only a tool on the way to optimizing administrative trade procedures and stimulating foreign economic activity and can be used only if there is appropriate legislation. In particular, the issues of determining the legal status of the blockchain (in particular, the terminology — “blockchain”, “smart contracts”) and blockchain-based applications need to be settled. Analysis of international experience proves the lack of unified approaches in this area. This actualizes the need to intensify work at the global international level to address the above issues. It is also advisable for Ukraine to join this process. For the sake of end-to-end digitalization of trade and limiting the possibility of potentially conflicting individual approaches that could lead to further disconnection and barriers to trade, harmonization of domestic legislation in accordance with existing international documents (in particular, UNCITRAL model laws) is becoming important. Digital trade agreements (e.g., the upcoming Digital Trade Agreement between Ukraine and the United Kingdom) are one of the tools that will help to intensify actions in this direction. In addition, among the issues that require regulation prior to the introduction of blockchain technology in international trade are the following: (1) the procedure for entering data (in particular, ensuring their accuracy and completeness) to be transmitted and exchanged on the blockchain; (2) protection of the transmitted data, (3) responsibility for data entry and processing, as well as the legal algorithm for their correction in case of errors (in particular, it should be clearly defined whether it is possible to make changes to the code underlying the blockchain to correct errors and, if so, who has the right to do it), (4) dispute resolution procedure; (5) mutual recognition of documents/certificates issued (this will ensure that the algorithms used work accurately with the data entered and comply with specific (international and national) rules), etc., as well as recognition of electronic signatures and electronic documents (in particular, transfer documents, bills of lading, promissory notes, warehouse receipts, etc. On this basis, it is considered expedient not to adopt a separate legal act like the Illinois State Law “On the Implementation of Blockchain Technology”, but to modernize the existing laws of Ukraine: the Law of Ukraine “On Electronic Commerce”, the Law of Ukraine “On Electronic Documents and Electronic Document Management”, etc. These are the directions of further research. It is considered appropriate at the legislative level to allow the use of smart contracts, records and signatures protected by blockchain in the field of trade and to use the method of analogy of the law in order to extend the legal regime of electronic contracts and signatures to them, which is reflected in the law-making of certain foreign countries (in particular, the United States (New York State). It is proposed to develop and adopt legislation on the digitalization of economic policy in general and foreign economic policy in particular, taking into account the principles of functional equivalence and technological neutrality. This will protect domestic legislation from the need for constant amendments to take into account the emergence of new technologies.

Keywords

digitalization of international trade, blockchain technology, optimizing administrative trade procedures, stimulating foreign economic activity, Digital Trade Agreement, UNCITRAL model laws, legal regulation

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2022-12-08