Quick Win No. 1

A holistic, responsive, and agile approach to realize the full potential of digital trade

The global digital trade landscape is complex and fragmented. While nearly two-thirds of Regional Trade Agreements include e-commerce or digital trade provisions, these are far from consistent and are typically limited to rules on data, privacy, and a handful of other topics. A new approach has emerged recently, however: ‘digital economy agreements’ (DEAs), negotiated by small economies in the Asia-Pacific, which seek to write a far broader set of rules, not merely for “digital trade,” but rather “trade in the digital economy,” as the Digital Economy Partnership Agreement (DEPA) notes.

Why this holistic approach? Distinctions between what is “digital” and not, are fast disappearing. A rising tide of impediments – from rules about where data is processed, to restrictions on digital services, censorship, chokepoints for digitally-enabled goods trade, or even systems that can’t “talk” to each other – make doing business digitally a real headache, especially for small firms and those from developing countries. Friction is common, whether by design or arising from a simple failure of policy to keep pace with rapid digital transformation.  

As in the analogue world, trade policy in the digital realm must look at the value chain end-to-end and in its broader context. Seamless digital trade requires:

  • The data – digital trade’s lifeblood – to flow in a safe, secure way, through rules on localization, personal information protection and cybersecurity; 

  • Trust, through online consumer protection, digital identity, and a safe online environment; 

  • Payments to work easily, through rules on e-payments and fintech; 

  • Straightforward “paperwork,” through e-documents, e-invoicing and e-signatures; 

  • Coherent underpinning standards;

  • A fair market (competition policy) where innovative ideas are protected (intellectual property) and the huge promise of the digital economy can be realized for all (SMEs, inclusion). 

These new DEAs include all of these elements, and even bake in dialogue on the frontier technologies that will shape the future, such as artificial intelligence and data innovation, and enabling infrastructure like submarine cables and logistics. These agreements, and especially DEPA, favor a collaborative and agile approach, where robust trade rules are effectively co-designed by the Parties over time. This inclination to soft norms rather than hard law should be seen as a feature, not a bug: it is simply premature to write binding rules in some areas. The DEPA is intended to serve as a building block towards more coherent multilateral outcomes, open to all who can meet its high standards or would like to make use of its creative ideas in their own agreements – thereby helping to untangle the “digital noodle bowl.” This model can inject important momentum into the discussions under the WTO JSI on E-commerce.

A holistic, responsive, and agile approach is needed to realize the full potential of digital trade. Countries should work collaboratively across a broad agenda of digital trade policy issues to enable seamless, trusted, interoperable, safe, and secure transactions end-to-end, and to support inclusion and innovation.

Trade Experettes