Revolutionizing Global Supply Chains One Block at a Time: Growing International Trade with Blockchain Are International Rules Up to the Task?

Abstract

Global supply chains are critical to the efficient functioning of the international trading system. Yet many supply chains suffer from inefficiencies and vulnerabilities. Blockchain is being heralded as a potential game-changing technology that could address these problems to make supply chains more robust and enable trade barriers to be overcome. However, the potential benefits of blockchain in global supply chains can only be realized if countries’ laws and regulations facilitate the technology’s implementation. To be truly revolutionary, the technology must be implemented globally, and this requires a supportive legal framework across jurisdictions. National requirements such as those that require data localization, or that restrict the cross-border flow of data, may be problematic in this regard. This paper explores potential regulatory barriers to the use of blockchain in supply chains with a view to identifying (i) what these barriers might be; and (ii) whether they could be addressed through international trade rules. By way of background, we explain what blockchain is and its potential benefits in supply chains. We then consider possible regulatory barriers to development of blockchain in a manner that will truly transform supply chains. This is followed by an examination of the extent to which these potential regulatory barriers are addressed in existing trade agreements, including the WTO’s General Agreement on Trade in Services (GATS) and the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) Agreement. The latter Agreement has one of the most comprehensive E-Commerce chapters of any trade agreement to date. Finally, we consider the need for future work in the WTO or other fora to develop international rules that are supportive of the technology’s development.