It also cited a World Economic Forum study – entitled Enabling Trade – stated in 2016 that reducing supply chain barriers could increase global gross domestic product (GDP) by 5 percent, and global trade by 15 percent.
The report argued that digitising trade finance via blockchain could help to both speed up trade finance and make it more accessible to smaller firms. It said that there was currently a "$1.5 trillion trade finance gap" preventing more trade being facilitated, as banks typically reject about 50 percent of applications made by SMEs requesting trade credit for export or import deals.
Letters of credit from banks and other financiers currently provide about 40 percent of all trade finance.
Speaking at a studio debate in London discussing the report's launch, which was live-streamed over the internet, DMCC's chief executive, Gautam Sashittal, said: "To give you some numbers, banks today spend about $60 million on compliance, and what that means is that a lot of SMEs don't have access because the cost of compliance is too much."
Citing International Chamber of Commerce survey data from last year, the report said that the most popular reason banks cite for rejecting credit applications was concern over "Know Your Customer" data required to meet anti-money laundering rules.
"If you look at transactions, and let's say that blockchain is deployed in a particular supply chain, then you could find that what would take between 7-10 days today, could be done in a matter of hours," Sashittal said. "And that cost would be substantially reduced."
Already, some progress has been made in this area. HSBC said on Monday that it and Dutch bank ING had used blockchain for a trade finance transaction involving a shipment of soybeans from Argentina to Malaysia for agricultural giant Cargill.
Shipping giant Maersk's trade finance arm also recently agreed a joint venture with IBM to use blockchain to develop a more efficient and secure method of providing trading finance.
Sinan Ozcan, a senior executive officer at Maersk's trade finance arm, said during the same DMCC panel debate that blockchain allowed for "real-time data transfer between various stakeholders like customs, port authorities, shippers, consignees, freight forwarders and carriers".
The ‘Future of Trade’ report also looked at global trade flows, which improved slightly last year after two years of decline. It argued that trade flows between regions have diverged since the financial crisis, and over the past five years global output growth has been quicker than trade growth, suggesting more barriers to cross-border trade. It said the failure of various global trade talk rounds may have contributed to this, and said that geopolitics could play an increasingly important role in trade, especially given the imposition of more trade barriers by the United States at a time when China is looking to facilitate trade growth through its Belt & Road Initiative.
Sashittal said that Belt and Road was "fundamentally going to change" trade flows, stating that about $1 trillion of infrastructure projects were planned along routes that would improve links between 70 countries.
"It touches about two-thirds of the world's GDP. It touches about 4.8 billion of the world's population," he said.
He also argued that the benefits would flow both ways, stating that Chinese imports from countries along the Belt and Road grew at a faster pace last year (20 percent, according to the report) than exports to them (8.5 percent) - although in absolute terms the value of Chinese imports from Belt and Road countries was lower ($666 billion) than its exports to them ($774 billion).
VIDEO: Tech to bridge $1.5 trillion trade finance gap and accelerate SME growth over next decade, predicts DMCC in new research
(Writing by Michael Fahy; Editing by Shane McGinley)
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