OECD: AI and Green Trade Rules Are Reshaping Global Supply Chains Worldwide

The OECD finds that artificial intelligence and rising environmental regulations are fundamentally reshaping global supply chains, making digitalisation, paperless trade systems, and interoperable data infrastructure essential for competitiveness, resilience, and sustainability. The report urges governments, development partners, and businesses to invest in AI-ready trade facilitation, digital infrastructure, and international interoperability standards to reduce trade costs, strengthen supply chain resilience, and meet growing environmental compliance requirements.

Global supply chains are entering a new era shaped by two powerful and rapidly converging forces: the rise of artificial intelligence (AI) and the expansion of environmental regulations tied to market access. According to a new report by the Organisation for Economic Co-operation and Development (OECD), countries that fail to modernize trade systems and digital infrastructure risk falling behind as global commerce becomes increasingly data-driven, automated, and sustainability-focused.

The report argues that AI-powered trade facilitation and digitally integrated environmental compliance systems are no longer optional enhancements but critical foundations for maintaining competitiveness, resilience, and sustainable growth.

Supply Chains Face Growing Pressure from Disruptions and Compliance Demands

The OECD notes that global supply chains have faced repeated shocks in recent years, from the COVID-19 pandemic to geopolitical tensions and rising economic fragmentation. At the same time, supply chains have become increasingly concentrated, with the share of import-concentrated goods rising by approximately 50 percent between the late 1990s and the early 2020s, making economies more vulnerable to disruptions.

Against this backdrop, governments and businesses are under pressure to strengthen resilience while responding to increasingly complex environmental regulations and technological changes.

The report identifies AI adoption and environmental requirements as the two most significant structural trends influencing global trade. Both trends are driving an unprecedented demand for high-quality, interoperable, and machine-readable data across supply chains.

AI Is Becoming a Strategic Trade Infrastructure

The OECD argues that AI is rapidly transforming trade by improving logistics, inventory management, demand forecasting, customs operations, and risk management.

AI-enabled customs systems can automate document verification, identify high-risk shipments, detect fraud, predict customs classifications, and improve inspection accuracy through advanced analytics and machine learning. These capabilities can significantly reduce border delays while enhancing compliance and security.

For businesses, AI-powered supply chain solutions are already delivering measurable benefits. Studies cited in the report show substantial reductions in logistics costs and improved visibility across global supply networks through predictive analytics and real-time monitoring systems.

However, the OECD warns that AI cannot function effectively without digital trade foundations. Border agencies must first establish paperless systems, digitized documentation, interoperable databases, and secure electronic transactions before AI can be deployed at scale.

Digital Readiness Remains Uneven

The report highlights several structural barriers slowing AI adoption globally.

Restrictions affecting computer and telecommunications services remain significant across many economies. According to OECD data, average restrictiveness in computer services increased by 4.1 percent between 2014 and 2025, while restrictions in telecommunications services increased by 1.2 percent over the same period.

Cross-border data restrictions continue to pose challenges for AI deployment. Since AI models rely on large and diverse datasets, barriers to international data flows can reduce the effectiveness of AI applications and increase costs for businesses and governments.

The OECD also finds that while regulations supporting electronic transactions have generally improved worldwide, barriers affecting electronic payments and digital connectivity have increased, creating new bottlenecks for digital trade ecosystems.

For policymakers, the message is clear: investments in digital infrastructure, electronic transaction frameworks, data governance systems, and digital skills are essential prerequisites for leveraging AI in trade and supply chain management.

Environmental Requirements Are Creating New Trade Challenges

Alongside AI, environmental compliance is becoming a major determinant of market access.

The OECD's Inclusive Forum on Carbon Mitigation Approaches currently tracks approximately 1,600 climate-related policy instruments across 38 economies, reflecting a rapidly expanding regulatory landscape.

At the same time, notifications of environment-related technical regulations to the World Trade Organization have increased significantly over the past decade. These measures include carbon reporting requirements, sustainability certifications, eco-design regulations, deforestation-free supply chain obligations, emissions disclosure frameworks, and traceability requirements.

The report notes that many of these regulations now require businesses to provide highly granular information on product-level emissions, production methods, supplier activities, geographic origins, and environmental impacts throughout the value chain.

This creates major compliance challenges, particularly for small and medium-sized enterprises (SMEs), which often lack the technical capacity, digital infrastructure, and financial resources needed to collect and verify such data.

Sectoral Impacts Will Vary Widely

The OECD finds that compliance burdens will differ significantly across sectors.

Energy-intensive industries such as steel, cement, petroleum, and non-metallic minerals face particularly demanding reporting requirements because of their high direct emissions profiles. Manufacturing sectors, including chemicals, electronics, and machinery, must increasingly account for indirect emissions generated across extensive supplier networks.

Agriculture, forestry, fisheries, and food sectors face growing demands for geolocation tracking, land-use verification, deforestation monitoring, and sustainability certification.

Even relatively low-emission sectors such as pharmaceuticals and service industries are increasingly affected by due diligence obligations and supplier screening requirements.

For multinational corporations, environmental compliance is evolving into a sophisticated data-management challenge that extends far beyond traditional customs documentation.

Korea Demonstrates What Digital Transformation Can Achieve

The report highlights South Korea as one of the world's leading examples of AI-enabled trade facilitation.

Faced with a dramatic rise in e-commerce, Korea's cross-border e-commerce trade grew from approximately US$908 million in 2015 to US$3.2 billion in 2025, representing a 3.5-fold increase and an average annual growth rate of 9.7 percent.

To manage this growth, the Korea Customs Service invested heavily in digital infrastructure and AI applications. Today, AI systems are used for customs risk profiling, automated X-ray screening, tariff classification, document verification, fraud detection, and supply chain intelligence.

These systems operate within a broader ecosystem that includes electronic trade platforms, Single Window systems, standardized data models, blockchain-enabled certification processes, and legal frameworks supporting electronic transactions.

The OECD presents Korea as evidence that sustained investments in digital trade infrastructure can create the conditions necessary for AI-driven efficiency and resilience across entire supply chains.

Why Development Partners Should Pay Attention

For international development institutions, the report offers important insights into future priorities for trade and economic development assistance.

Developing countries face the risk of exclusion from emerging supply chains if they cannot meet increasingly sophisticated digital and environmental requirements. Limited digital infrastructure, fragmented customs systems, weak regulatory frameworks, and insufficient technical capacity may create significant barriers to participation in global markets.

Development partners can play a crucial role by supporting investments in customs modernization, digital connectivity, interoperability standards, electronic certification systems, and institutional capacity building.

Such investments could help lower trade costs, improve market access, strengthen resilience to shocks, and facilitate compliance with emerging environmental requirements.

Policy Priorities for the Next Decade

The OECD concludes that governments, development partners, and businesses must treat AI readiness and environmental compliance as interconnected challenges requiring coordinated action.

Key recommendations include expanding digital infrastructure, strengthening legal frameworks for electronic transactions, promoting secure cross-border data flows, harmonizing environmental reporting requirements, developing interoperable registries and certification systems, and enhancing cooperation among customs authorities, environmental agencies, and trade regulators.

The report also calls for stronger international cooperation through multilateral organizations, regional agreements, and digital trade partnerships to reduce regulatory fragmentation and promote interoperability.

As global trade becomes increasingly dependent on data, automation, and sustainability metrics, countries that invest early in paperless trade systems, trusted digital infrastructure, and AI-enabled governance will be best positioned to capture new economic opportunities while building more resilient and environmentally sustainable supply chains.