The B20 Saudi Arabia and its network partner, Business at OECD launched in early September 2020 a conceptual policy proposal that focuses on reducing barriers that firms encounter in their quest to participate in GVCs. The policy paper, ,GVC Passport on financial compliance, a pragmatic concept to strengthen inclusive and sustainable growth, has called on G20 to work towards a system envisioning a significant reduction in bureaucracy, while increasing transparency and traceability, as well as facilitate firms’ access to wider markets.
The paper stresses the need for policies and regulations that support investments towards sustainable growth. The “GVC Passport” allows firms incorporated in one participating country as a business entity to operate legitimately in other participating countries. It would provide an authenticated, authoritative, verifiable financial fingerprint of a given entity, enabling it to operate within GVCs without the need to reproduce the same documentation on multiple occasions.
The paper adds that The “GVC Passport” has the potential to benefit the entire global business community. By using technologies such as blockchain and artificial intelligence, the “GVC Passport” would offer companies the ability to operate seamlessly across borders. It can increase access to service and goods, improve transparency, reduce tax evasion, expand data gathering and enable faster adoption of digital tools and technology.
In the white paper Blockchain technology would provide the GVC Passport a distributed, trusted, real-time source for global regulators to verify business’ accreditation claims.
The B20 and OECD would like to utilize that GVC Passport to help support SMEs (Small Medium Sized Businesses) which represent 90 percent of businesses and 50 percent of employment worldwide (2), and have been hugely impacted by the events of the past nine months. The pandemic has put an extra burden on these companies that already face a proportionately higher cumulative regulatory and administrative burden relative to their resources. This policy initiative will help SMEs reduce operational costs and improve transparency and access to wider markets.
In the white paper the B20 Saudi Arabia and Business OECD proposed, Yousef Abdullah Al Benyan Chairman of B20 Saudi Arabia and Phil O’reilly Chairman of Business at OECD stated, “ As part of G20 Saudi Arabia, we propose to investigate the conceptual feasibility of a Passport that allows firms to be accredited throughout the relevant Global Value Chain (GVC) as a credible partner and proves compliance to relevant financial regulations and requirements, thereby avoiding the burden of having to re-apply multiple times across borders – a GVC Passport.”
The paper builds-up on a Business-at-OECD paper published earlier this year [Business at OECD, 2020] in contribution to the 2020 G20, which focused on Trade Finance as an allround example of the inclusive sustainable growth agenda and the need to find a balance between the necessary rules and regulations, and the cumulative costs faced by firms. It, therefore, focuses on financial aspects, highlighting examples such as Trade Finance, Know Your Client (KYC) compliance rules, and verification of credit requirements. More specifically, this paper proposes to envision a “GVC Passport”, which could, via mutual recognition formally sanctioned by dedicated authorities or appointed delegates, provide accreditation across the value chain of the relevant financial requirements; indeed, in the paper “GVC Passport” is intended on Financial compliance purposes.
The paper specifically discusses digital technology and states, Digital tech such as data verification and Blockchain may greatly facilitate trusted cross-border recognition required for such a Passport to work. In today’s world, the use of data analytics is no longer just an opportunity, but a “requirement for business success”. The GVC Passport concept is envisioned as a set of Finance related verifiable credentials to be cryptographically verified between peers at the edges of the GVC network; hence, it represents such an opportunity by maximizing the use of existing data, its transparency and traceability, while protecting customer data and avoiding unauthorized sharing of underlying data and confidential information.