In a rapidly digitising world, getting digital trade right will be essential. The global e-commerce market is already worth US$27.7 trillion. The technologies of the 4th Industrial Revolution, such as additive manufacturing, artificial intelligence and the Internet of Things (IoT), among others, will further turn existing forms of trade on their head and open up new opportunities for tech businesses.

Despite the growth of digital trade, many countries are taking a protectionist stance that threatens this growth and will increase costs for consumers and businesses. Free trade is in dire need of champions, and techUK believes the EU and the UK should be a strong defenders of the importance of reducing barriers to trade, rather than splintering the digital ecosystem.

Their report identifies 12 key digital trade principles in five areas that should be adopted in any future trade agreement.

I. Data

  1. Enable the cross-border flow of data without compromising data protection standards
  2. Prevent the forced localisation of data
  3. Facilitate regulatory access to data
  4. Prevent separate treatment for cross-border flows of financial data

Data is an essential foundation to the entire global economy. Enabling the cross-border flow of data must be a part of future trade agreements, as should preventing the forced localisation of data. The definitions of data should include financial data, which should not be treated differently to other categories of data. Concerns around regulatory and law enforcement access can be mitigated both in domestic law and through international agreements.

II. Tariffs

  1. Secure the expansion of the Information Technology Agreement in both geographic and product coverage
  2. Make the moratorium on customs duties on electronic transmissions permanent

The re-emergence of tariffs as an offensive weapon in economic disputes is a troubling development. A sound Digital Trade policy should seek to extend the protections offered by the WTO’s Information Technology Agreement and entrench those in bilateral deals. It should also protect the moratorium on digital tariffs at the WTO level. To allow the imposition of customs duties on electronic transmissions would undermine a key enabler of the digital economy.

III. Intellectual Property

  1. Prevent the mandatory transfer of source codes, algorithms, or encryption keys as a condition of market access
  2. Support the development of AI through enabling open government data and text and data mining

Intellectual property rights are an enabler of innovation. Yet some states have sought to demand intellectual property as a condition of market access. The EU and the UK should work through trade agreements to prevent the mandatory transfer of source codes, algorithms, and encryption keys. In other areas, new technology is transforming traditional notions of intellectual property. A good trade policy can enable the development of innovative AI by supporting the use of open government data and text and data mining.

IV. Regulatory Cooperation

  1. Establish cooperation on the regulation of AI, fintech and other emerging technologies
  2. Establish cooperation on cybersecurity issues with an emphasis on a risk-based approach

While tariffs are an important issue for digital trade, the reality is that the primary barriers are those behind the border. Non-tariff barriers, like differing approaches to regulation, will be the main block to digital trade and the export of innovative technologies such as AI or fintech products. A good digital trade policy should look to establish cooperation between regulatory bodies.

V. Trade Facilitation

  1. Standardise minimum de minimis thresholds to facilitate e-commerce
  2. Secure recognition of e-signatures and expansion of paperless trading

Digital trade policy can also play a role in facilitating the flow of other goods and services. E-commerce platforms have opened global markets in goods for SMEs. The EU and the UK should seek to standardise de minimis thresholds to help the cross-border trade of small packages. Working with international bodies and other partners, they should secure the recognition of e-signatures and expand paperless trading, helping to bring all aspects of trade into the 21st Century.

The full report can be downloaded here: Download Report