Overview Paper

A New Digital Trade Agenda

August 2015

The globalization of the Internet and the ability to move data across borders underpins an increasing amount of international trade. What constitutes digital trade is potentially very broad. It can include the use of the Internet to search for products, purchase them, and in the case of digital goods, deliver them online. In an international economy where global supply chains are an important feature of international trade, the Internet is also allowing business to participate in supply chains, such as by providing discrete tasks or services. In addition, the Internet has become an important tool for businesses to communicate with consumers and suppliers, for accessing IT in the cloud, raising finance from crowdfunding websites, transferring data globally to manage production schedules, or collaborating in research and development (R&D) with globally located researchers. All this activity can increase the productivity of businesses, and their levels of innovation and competitiveness, leading to increased opportunities for international trade. The scope of the impact of the Internet on trade also extends to creating opportunities for people and businesses that have traditionally been marginalised from international levels of innovation and competitiveness, leading to more opportunities for them since the costs of international trade are reduced. Other more traditional barriers to trade in developing countries such as poor infrastructure, inefficient logistics, and distance to market are also being overcome as the Internet allows for products to be searched for and delivered online.

To maximise the opportunities that the Internet presents for international trade requires a life-cycle approach. This starts with issues around Internet access, including access to mobile phones, the cost of access, and the challenge for those whose language is not English or one of the other main languages used online. It also means that Internet access, in particular the ability to move data across borders, needs to remain free from unnecessary and restrictive rules. For digital trade to continue to grow, especially to ensure that consumers in the developed world are prepared to purchase digital products from businesses in the developing world, will require trust.

All these challenges to the opportunity that the Internet presents for growing international trade are amenable to being addressed by trade rules. Some of them only require a re-emphasis of existing commitments. For instance, World Trade Organization (WTO) General Agreement on Trade in Services (GATS) rules already include a number of disciplines that support digital trade. There are, however, new challenges that require new rules. Some of these arise from an increasing range of laws that are curtailing the ability to move data across borders such as data localisation requirements. Other restrictions on the Internet and cross-border data flows might be for legitimate reasons such as protecting privacy. Addressing such restrictions on digital trade do not necessarily present fundamentally new challenges for trade law, which has a long history of balancing commitments to non-discrimination and the right of Members to pursue legitimate policy goals in ways that do not constitute unnecessary or unjustifiable discrimination or a disguised restriction on international trade. Given that digital trade will require clarifying existing WTO rules as well as developing new trade rules. In this regard, the WTO and ongoing bilateral and regional FTA negotiations provide important pathways for developing a digital trade agenda. In terms of the WTO, the Secretariat was given a mandate at the 2013 WTO Ministerial to study digital trade issues, and part of this work should focus on how to update or clarify existing commitments, including in the GATS, the TRIPS, and TBT agreements. In the more immediate term, the large FTA negotiations, in particular the Tran-Pacific Partnership, the Trade in Services Agreement and the EU-U.S. Transatlantic Trade and Investment Partnership negotiations present the best opportunities for agreeing on new rules. The Regional Comprehensive Economic Partnership (RECP) is another large regional FTA. It is not clear what the ambition of this FTA on digital trade is, but the inclusion of large developing countries such as China, India, and Indonesia in it make this another potentially important pathway for agreeing to new rules on digital trade.

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