Chile’s Contribution to an ‘Internet of Rules’ for Trade - Observatory of Public Sector Innovation

The Internet's potential to enable micro, small and medium-sized enterprises (MSMEs) to conduct international commercial transactions has yet to be fully realised. With an emphasis on computational approaches to trade policy design and delivery, SUBREI has launched a pilot programme to contribute to an open repository of rules in a digital form: an 'Internet of Rules' (IoR).
The IoR will expand access to cross-border transactions and improve use by people and machines alike.

Innovation Summary

Innovation Overview

Small enterprises, especially micro, small and medium-sized enterprises (MSMEs) based in developing countries, continue to face substantial obstacles to their participation in trade.

In response, SUBREI and the Xalgorithms Foundation have begun collaborating in an initiative to digitalise Chile's commercial policies and those of its trading partners. Through a pilot programme, Chilean stakeholders have started to provide technical know-how and conceptual design inputs toward the publication of the first rules to a digital rule repository that will, in effect, establish an Internet of Rules. Under the model, SUBREI, on behalf of the Government of Chile, will also assist Chilean academic institutions in joining the collaboration.

Innovation Description

What Makes Your Project Innovative?

While International Economic Law has evolved amidst rapid globalisation and technological change, developing country MSMEs are frequently unable to achieve the benefits associated with trade liberalisation.

As ‘new generation’ agreements introduce further legal complexity in both the number and scope of trade rules, the programme focuses on the application of information and communications technology (ICT) to improve the accessibility and functionality of commercial policies. With an emphasis on computational approaches to trade policy design and delivery, the programme seeks to contribute to an open repository of rules in a digital form: an 'Internet of Rules' (IoR).

An IoR is an online repository of rules, in this case trade rules, that allows interested parties to find and use rules that provide advantages for their participation in trade. The programme’s outcome would also serve trade negotiators with more and better information about current commitments and opportunities.

What is the current status of your innovation?

Chile is currently working along with other trading partners to involve them to the programme. In parallel, SUBREI and the Xalgorithms Foundation are working on setting up the needed computing infrastructure, so the programme can, firstly, populate the repository with data and, secondly, use the repository in order to evaluate results about trade transactions.

Innovation Development

Collaborations & Partnerships

The programme has been developed by SUBREI and the Xalgorithms Foundation. SUBREI has provided technical guidance on trade issues, infrastructure, and political momentum. Xalgorithms Foundation has provided technical leadership, know-how, methodological guidance, software resources and strategic guidance.

The Catholic University of Chile will provide skilled work force, technical help, and an academic platform to analyse the results and promote the methodology and lessons learned.

Users, Stakeholders & Beneficiaries

Citizens and enterprises benefit by having access to more and better information about trade advantages and opportunities. More specifically, enterprises benefit through reduced costs and frictions due to the automation possibilities that the programme provides for trade operations. Government officials benefit from more accurate information on trade rules currently in place (and those that are being negotiated).

Innovation Reflections

Results, Outcomes & Impacts

To date, an important outcome has been the identification of information asymmetries that affect small enterprises interested in taking advantage of a variety of preferential opportunities presented by Free Trade Agreements (FTAs). Because MSMEs do not have the capacity for legal and economic analysis, they are not achieving negotiated advantages. In Chile, there are a total of 206,773 MSMEs, of which 3,674 were exporters in 2019. This demonstrates the growth potential for MSMEs to engage in trade.

The programme is expected to allow more MSMEs to participate in international trade (at least a 10% increase in the first 2 years).

Challenges and Failures

Not having the ability to “translate” all the relevant rules contained in FTAs; lack of budget to keep the system in operation; unwillingness of other public sector participants to collaborate in the process are issues that the initiative has and will continue to deal with. To address these challenges the programme and its partners have responded with flexibility, creativity, and willpower.

Conditions for Success

In terms of infrastructure, a crucial condition for success is access to adequate computing capacity, with sufficient allocated resources and capable people to handle the computer system. Since the project requires inter-ministerial coordination, political willingness and flexible governance are also of essence. Lastly, willing and capable human resources are key for the success of the programme.

Replication

The general-purpose method employed in the programme is applicable to other organizations that deal with rules in the public or private sector, so the idea of the project is to also create capacity to spread the methodology to other organizations.

Lessons Learned

Creating strong relationships among stakeholders is crucial. Developing a project in an open and transparent way is essential for success. Overcoming obstacles is easier when people trust and care for each other.

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