28 October 2020
WEF Report Describes Digital Trade Trends, Challenges in Asia
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The World Economic Forum’s Global Future Council on International Trade and Investment has identified seven trends on digital trade in Asia.

These trends are often picked up by or accounted for in trade agreements – including the Comprehensive and Progressive Trans-Pacific Partnership, the Digital Economy Partnership Agreement and the Digital Economy Agreement – which the paper compares across 23 digital trade provisions.

Despite trade agreements, challenges remain around data transfer mechanisms, consumer protection, digital trade facilitation, emerging technologies, and digital taxation policies.

The Global Future Council on International Trade and Investment has identified seven digital trade trends in Asia, and highlighted challenge areas for digital trade policy, in a community paper published by the World Economic Forum (WEF).

The paper titled, ‘Advancing Digital Trade in Asia,’ considers how officials across Asia have responded to the explosive growth of digital trade in the region. Noting that digital trade is not new – the World Trade Organization (WTO) created a work programme on the matter in 1998 – the paper emphasizes the importance of the digital economy, which has been reinforced by COVID-19 and associated lockdowns.

However, the authors emphasize that multiple and changing definitions of ‘digital trade’ do not always align with existing trade agreements, which can fail to capture four key dimensions of the term: 1) digital goods and services (e.g. software); 2) tangible goods and services delivered digitally (e.g. apparel); 3) digital enablers of trade in tangible goods (e.g. logistics tracking); and 4) emerging transformative digital technologies (e.g. blockchain, artificial intelligence (AI)). Accordingly, the paper examines new trends, and considers how digital trade deals and other regulatory responses, like the application of digital taxation policies, may affect the growth of digital trade in Asia.

The paper identifies seven overarching trends in digital trade:

  1. the rise of digital ecosystems and increasing connectivity in the region;
  2. linkages by regional platforms, or “unicorns” that may be less familiar outside the region;
  3. Asian firms’ leading position in providing digital/physical interfaces, powered by 5G;
  4. the increasing role of Asia as a hub for cloud services, including data collection and analytics;
  5. consumers’ increasing preference for subscription services, including livestreaming;
  6. growing numbers of applications that solve digital financial services and payments gaps; and
  7. the growing potential for misuse or harm that could flow from digitally connected devices and users.

Noting that these trends are often picked up by or accounted for in trade agreements – including the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), the Digital Economy Partnership Agreement (DEPA), and the Digital Economy Agreement (DEA) – the paper flags that agreements from the region have been at the forefront of rule making on digital trade issues. These agreements generally aim to reduce trade barriers to the digital economy, the paper summarizes, and build compatible standards to facilitate interoperability and cross-border consumer trust. The paper compares the DEA, DEPA, and CPTPP across 23 digital trade provisions, highlighting whether the provisions are identical across the agreements, whether a provision in one agreement is more or less comprehensive than the others, and if a similar provision is lacking in the agreement.

The report identifies five challenge areas for digital trade policies that have emerged as key points for debate, where governments are struggling to reach consensus despite having made progress via the above agreements. Challenges remain on data transfer mechanisms, consumer protection, digital trade facilitation, emerging technologies, and digital taxation policies.

The WEF’s Global Future Council on International Trade and Investment is a multi-stakeholder and interdisciplinary knowledge network dedicated to promoting innovative thinking to shape a more resilient, inclusive, and sustainable future. The Council aims to help stakeholders make sense of the new global economic landscape and signal developments on the horizon. [Publication: Advancing Digital Trade in Asia] [Publication Landing Page]

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