Digital trade is an emergent domain of international rule-making. Accelerating digital trade rule-making allows countries to tap into the global digital economy. A study by ACI compares the digital trade provisions in trade agreements and identifies the challenges of building a robust architecture for digital trade governance.

The study compares the digital trade provisions in 379 trade agreements since 2000 when provisions related to digital trade first emerged. The analysis reveals that the scope of digital trade provisions has expanded significantly in the last decade, with commitments going beyond digital trade facilitation to include provisions on data regulation, AI and cryptography.

The most prevalent provisions in preferential trade agreements (PTAs) are related to intellectual property, data protection, and general provisions in e-commerce, such as technological neutrality and transparency. The 316 references in PTAs about agreements relevant to intellectual property indicate that it is the most concerning issue in digital trade governance. 

On the other hand, commitments regarding digital inclusion, new data issues, such as Lawtech and Fintech and more in-depth provisions related to e-commerce, such as algorithms, are limited. One of the reasons is that such provisions may belong to contentious policy domain and need coordination on domestic laws and regulations across countries, which is challenging.

Singapore is a global front-runner in digital trade rules-making. It is a signatory to 12 FTAs with 47 novel digital trade provisions in total, the highest in the world. It is also a signatory of the first digital economy agreement (DEA), the DEPA, and the country with the greatest number of DEAs ever signed. Additionally, Singapore is an active player in WTO’s digital trade-related initiatives. For example, it is a co-convenor of the WTO Joint Statement Initiative (JSI) on E-Commerce.

Yet, fostering a more coherent digital trade regime with clear, consistent, and common rules remains challenging for Singapore and other countries embracing new rules on digital trade. These challenges arise from two main factors. Firstly, countries have variations in digital trade provisions’ specificity, depth, and breadth. Secondly, obligations laid out in digital trade provisions are often onerous undertakings for countries as they need to zharmonize domestic laws and regulations, which is a difficult process.

Given the rising digital protectionism and coordination challenges among countries, developing a coherent governance framework for digital trade to keep pace with technological developments and the changing nature of global trade is challenging but urgent. DEAs might be a way forward to bridge the gap.

DEAs deepen existing commitments and further specify the provisions or expand the coverage of digital trade issues. For example, the provisions on paperless trade introduced in 2000 in the New Zealand-Singapore Closer Economic Partnership Agreement, have been furthered in DEAs to include provisions on customs procedures zautomatization and electronic transferrable records in 2020. Additionally, the modular structure of the DEAs offers flexibility for signatories. Compared to PTAs, which require countries to consider provisions and join in totality, countries can join a DEA entirely, incorporating some modules into their existing and future trade agreements or co-opt them into other trade negotiations. This helps generate broader consensus among negotiating parties and accelerate negotiations when they disagree on specific issues.

The digital trade governance regime needs to be clear, consistent and common across countries to facilitate digital trade. Although Singapore’s commitment to digital trade governance is evident from its trade agreements, it faces a similar challenge faced by other countries in terms of the use of exceptions and a lack of broad-based non-discriminatoryprovisions.  Such gaps leads to legal opaqueness and instability, resulting in significant costs for stakeholders. Exceptions and exclusions may be subject to different interpretations, potentially creating legal loopholes or uncertainty that increase the risk of disputes between parties.

To address the issues, Singapore needs to continue to refine and update its agreements to ensure a facilitating and safe environment for its businesses and consumers to operate and participate in the global digital economy. This includes considering broad-based commitments to openness and interoperability. Singapore requires concerted efforts to develop solutions that navigate the safeguarding of domestic concerns in ways that do not undermine the cross-border flow of digital goods and services to take advantage of the continued, rapid digitalization of the global economy.

By HUANG, Yijia

Researchers: LEE, Jesslene, BANH, Thi Hang, TAN, Kway Guan