Frontiers of Trade: The information economy of trade 

This is the third piece in our Frontiers of Trade Policy series, which examines the places where international commerce is running ahead of the law meant to govern it. The first asked which country owns a resource mined in space, where rules of origin have no territory to point to. The second asked who is liable when an autonomous AI agent, rather than a person, executes a trade. This piece turns to a quieter challenge, one already forming at every border: as governments acquire the power to verify what a product is and where it came from, we ask the question – who decides whose verification counts? 

A shipment of steel arrives at the border. Its digital product passport shows that the product's embedded carbon falls below the threshold for a border adjustment mechanism. The accompanying supply chain record demonstrates sufficient domestic value creation to satisfy a local-content requirement and qualify for a government procurement contract. Those two pieces of information are worth more than the steel itself. The steel is governed by a century of trade law. The information that determines its market access remains governed by a far less developed set of rules. 

Trade policy has always been shaped by the limits of information. For much of modern trade, governments simply have not had the ability to verify where products came from, how they were produced or how value was created across increasingly complex global supply chains. Trade law evolved around those constraints, regulating what could realistically be observed while everything else relied on company declarations, periodic audits and voluntary standards to create a legal version of origin. 

These constraints are rapidly disappearing. Digital product passports, AI-enabled supply chain analytics, molecular authentication, blockchain platforms and other traceability technologies are making it increasingly feasible to verify more characteristics of a product.  

Increasingly, the ability to demonstrate provenance, domestic value creation, sustainability credentials or trusted sourcing determines access to markets, subsidies, procurement opportunities and industrial incentives – with implications for the economic value of that information. As governments gain the ability to verify more characteristics of a product, they also gain the ability to regulate them.  

The consequence is an emerging information economy of trade, where what businesses can prove may become just as important as what they produce. But proof only creates value if someone with authority accepts it. Trade policy has dedicated huge resources to certify where goods come from, and almost nothing to govern who validates the information that increasingly decides where they can be sold.  

From a sustainability tool to a market access instrument 

Verification and traceability have become strategically important not because of any single regulation or policy trend, but because three of the defining forces shaping international trade are beginning to converge. 

The first is sustainability. Governments increasingly expect companies to demonstrate that products are not linked to deforestation, report and verify their embedded carbon emissions and recycled materials content and comply with broader environmental and human rights standards. Businesses are being asked to demonstrate far greater visibility over their supply chains. Whether that’s through the EU Deforestation Regulation's geolocation requirements, the Carbon Border Adjustment Mechanism's reporting of embedded emissions, the Battery Regulation's due diligence or recycled content provisions or the Digital Product Passport. 

The second is industrial policy. Around the world, governments are using subsidies, procurement rules, and local-content requirements to encourage investment in domestic manufacturing, particularly in strategic industries.  

The third is economic security. Governments increasingly want visibility over critical supply chains, trusted suppliers and strategic dependencies with implications for export controls, investment screening, resilience strategies and technology sovereignty initiatives. 

These agendas are becoming increasingly interconnected. A government introducing local-content requirements for batteries also wants to know whether the underlying minerals were responsibly sourced. A procurement authority favouring domestic manufacturers may also require products to meet sustainability criteria. A resilience strategy designed to reduce dependence on foreign suppliers depends on the same supply chain visibility needed to comply with due diligence legislation. 

Yet, verification infrastructure is expensive to build and maintain. Large multinational firms may be able to invest in digital product passports, sophisticated audit systems, and end-to-end supply chain mapping. Smaller suppliers and producers in developing economies often cannot. Measures introduced to support sustainability or supply-chain resilience may therefore also function as non-tariff barriers, raising the cost of market access and shifting competitive advantage towards firms and jurisdictions with the resources to generate trusted information. 

As governments seek greater certainty over what enters their markets, the ability to provide verified information risks becoming as significant a determinant of market access as tariffs once were.

Technology is changing what governments can ask 

Historically, governments relied on legal approximations because detailed information simply did not exist. An earlier instalment in this series, on rules of origin for space-derived resources, traced how quickly these territorial proxies buckle once the assumptions beneath them no longer hold. Regulators often relied on company declarations supported by a certificate from a local chamber of commerce or periodic audits rather than continuous verification. Technology is changing those assumptions. 

Rather than identifying the country where final assembly took place, businesses may increasingly be able to demonstrate the origin of individual materials and manufacturing processes. 

If governments can increasingly verify the origin of individual materials, quantify domestic value creation, measure embedded carbon emissions or authenticate recycled content, they may no longer need to rely exclusively on those broad legal proxies. Origin becomes only one element of a much richer regulatory framework built around verifiable information.

The new competition  

For most businesses, traceability has traditionally been viewed as a cost centre. It satisfies regulatory requirements, supports audits and helps manage operational risks. Investments have typically been justified in terms of compliance rather than commercial value. As governments tie market access, public procurement, subsidies and industrial incentives to where and how products are made, traceability begins to generate economic value in its own right. 

Consider two manufacturers producing an identical product. One can demonstrate exactly where every input originated, quantify its domestic value-added, verify recycled content, identify the carbon footprint of production and rapidly assess exposure to geopolitical disruption. The other cannot. Increasingly, these companies will not compete on equal terms. 

The first may qualify for industrial subsidies, gain preferential access to public procurement, respond more quickly to changing regulations and reassure customers concerned about supply chain resilience. The second may ultimately produce an identical product, but lack the evidence needed to unlock those opportunities. 

Traceability is no longer simply about proving compliance. It is becoming a source of commercial advantage alongside capital, technology and skilled labour, businesses are increasingly competing on the quality, credibility and usability of the information that accompanies their products. 

Yet that competitive advantage may prove temporary. When this information becomes a basic condition of participating in a market. Electronic customs declarations, quality management systems and financial reporting standards all initially distinguished leading firms before becoming expected business practice. Traceability is likely to follow a similar trajectory. 

For now, companies that invest early in trusted supply chain information may enjoy a competitive advantage. Over time, however, verification is likely to become a prerequisite for market access rather than a differentiator. The frontier will shift again, from collecting information to demonstrating that it can be trusted, shared and used across jurisdictions. 

What is next? 

If better information expands what governments can regulate, the next frontier is not traceability itself but the institutions that govern trusted information. 

As verified information becomes more valuable, governments will increasingly need mechanisms for determining which information can be relied upon and under what circumstances. Future trade policy is likely to require a much broader ecosystem of accredited auditors, digital verification platforms and internationally recognised assurance mechanisms capable of validating increasingly complex supply chain information. 

The governance of those systems will matter because technology cannot eliminate the problem of inaccurate information at its source. Blockchain can preserve a record once it has been entered, and molecular authentication can strengthen the integrity of physical products, but neither guarantees that the underlying data is complete or truthful. As information acquires commercial value, incentives to manipulate that information also increase. The challenge therefore shifts from recording information to establishing trusted institutions capable of verifying its credibility. 

Increasingly, private verification platforms are becoming a core part of the information infrastructure underpinning international trade. While trade policy already has mechanisms for one state to recognise another's certifications through mutual recognition agreements, there is no equivalent framework for the verification layer. As digital product passports and other traceability systems become conditions for market access, governments will need common approaches to recognising verification systems, ensuring interoperability and allocating liability when information proves inaccurate. The comforting assumption that existing recognition agreements can simply be extended understates the challenge: those agreements have taken decades to negotiate, remain relatively narrow in scope, and the information at stake here is far more contested. 

Whether those systems emerge through internationally recognised standards or fragmented national approaches will have significant implications for businesses operating across global value chains. 

What should businesses do? 

• Treat traceability as a core part of the commercial strategy, not compliance. Businesses that pull ahead will be those that stop treating verification as a reporting cost and start treating trusted information as a competitive asset in its own right, alongside capital, technology and skilled labour. 

• Map where verification is becoming a condition of access. Assess and track how traceability obligations are being embedded across industrial policy, procurement, sustainability rules and economic-security regimes. Anticipate where businesses will need credible verification and trusted information to retain access to funding, subsidies, procurement, a contract or an entire market. 

• Shape the rules of the market before they are fixed. Engage now and influence the standards, accreditation schemes and interoperability efforts that will underpin future markets, ensuring products, supply chains and data are recognised. Firms that shape those frameworks will set the terms of access; those that wait will inherit them. 

The next competitive advantage 

Return to the cargo at the port. Whether its passport is accepted, and who is held accountable if it is wrong, is today determined by fragmented and inconsistent verification systems. That is beginning to change. 

Trade policy has always evolved alongside technology. Containerisation transformed customs procedures. Digitalisation transformed trade documentation. Artificial intelligence is now transforming border management. The next shift will be verification.  

As governments acquire the ability to verify what products are, where they came from and how they were made, verification will become a commercial capability. Businesses that can demonstrate trusted, interoperable evidence will find it easier to access markets, public procurement and investment. Those that cannot, risk seeing verification become a barrier to growth. 

Emilie Kerstens is an Associate Director specialising in EU and international trade and security issues, Virginia Sentance is a Partner advising clients on energy, climate and sustainability issues and George Riddell is a Senior Advisor supporting clients in international trade, sustainable supply chains and geopolitical fragmentation.