Shedding new light on the evolving regulatory framework for digital trade

Event report

Digital services have transformed trade and commerce. Anyhow, barriers and regulations are becoming more complex. This joint session by the OECD and three United Nations regional commissions presented the findings of the OECD Digital Services Trade Restrictiveness Index research conducted in countries on the African continent, Latin America, the Caribbean and the Asia-Pacific regions. Evidence-based research is covering results from 100 countries and 300 laws and regulations. Infrastructure and connectivity issues, limitations on cross border data flows, and limitations of computer services professionals to move, are recognised as the main barrier in all three regions. The major tendency is for barriers to remain and grow in these four regions.  

Mr Joe Drummond (OECD, Head of the Trade in Services Division, Trade and Agriculture Directorate) opened the session by reminding that barriers to digital trades should be discussed at regional and international levels in order to harmonise regulations and reach common goals in digital trade. To achieve this, we need evidence-based policies, and a clear vision of best practices.

The Organization for Economic Co-operation and Development (OECD)’s Services Trade Restrictiveness Index (STRI) framework is an evidence-based tool that identifies and catalogues barriers to trade in services. The purpose of the STRI framework is to provide up-to-date evidence on services, trade policies, and inform policy discussions and trade negotiations.

In the words of Ms Irene Oliván, (OECD), who presented the findings of the 2021 report, Digital STRI is the main tool for analysing digital trade and it looks at issues of infrastructure and connectivity, electronic transactions, payment systems, Intellectual property rights, and other barriers. Computer Services STRI looks at the restrictions on foreign entry, restrictions on the movement of people, barriers to competition, regulatory transparency, and other barriers such as restrictions on access to the public procurement market. The findings of the 2021 report include 100 countries covered by research and take into consideration more than 300 laws and regulations. The main barrier identified by the results from 2021 is the limitation to data flows, data localisation provisions, local presence requirements, limitations on download and streaming. In computer services STRI, the main barrier identified is restrictions on the movement of the computer services professionals, and restrictions on access to public procurement. Barriers are growing at the highest tempo in the African region. She mentioned that the OECD will continue its efforts to update data regularly and involve more countries in the overview, hoping to best inform policy discussions. 

Presenting the findings from the Asia-Pacific region, Ms Witada Anukoonwattaka (United Nations Economic and Social Commission for Asia and the Pacific, ESCAP) pointed to the great difference between some of the large countries in Asia and other less developed countries in the region. Only five countries in this region combine for almost 90% of the market. The IT-enabled services export share is highest in India, Japan, Pakistan, Philippines, and China (in that order), and lowest in Turkey, Kazakhstan, and Vanuatu. She also mentioned that more and more trade agreements in the region include digital chapters, and out of 200 agreements in 2021, 76 of them had a chapter on digital trade. Lowering down digital trade barriers could be the way to equalise opportunities between economies. The newcomers and less developed economies are looking for best practices to follow regarding digital trade and e-commerce. Same as in other regions, infrastructure and connectivity have been recognised as the main barrier, with data protection and data flow regulations catching up. This region has a diverse policy environment, but the overall trend is the increase of trade barriers, she added. 

Digital STRI from the African region included results from 29 countries and it is the biggest sample covered so far. By the words of Mr Simon Mevel (United Nations Economic Commission for Africa (UNECA)), UNECA is working on training data professionals on the continent to collect and compile e-commerce and digital trade data on African countries. Data is collected in two datasets; first assessing digital service trade restrictions and second on the integration of countries’ economies. The objective is to assess the readiness of African countries to effectively engage in digital trade and e-commerce, particularly in the AfCTA context. The findings suggest the main barriers in Digital STRI to be infrastructure and connectivity issues (52%), and barriers in electronic transactions (16%), mostly regarding the access to streaming of online content. He pointed out that some of the countries are still not signatures of the international agreements on intellectual property rights, so improvements are needed in that field as well. One point to focus on is the need to harmonise regulations at the regional level, having in mind the wide range of policy interpretations. Any kind of regulation provides a clearer picture than non-existing policies, Mevel added. 

The findings on the digital and computer services STRI in Latin America and the Caribbean region is covering 13 countries. The findings are presented by Mr Nanno Mulder (United Nations Economic Commission for Latin America and the Caribbean (ECLAC)). He pointed out that the overall share in the global IT exports is lowering constantly in the region, declining from 2.8 % in 2010 to only 1.7 % in 2020. This is a growing concern for this region, and ECLAC is looking for ways to somehow lower the barriers to digital trade. As in all other regions, the findings suggest infrastructure and connectivity issues as key considerations, alongside the unclear and non-existing regulatory framework in countries. One of the distinctions of this region is also the lack of anti-monopoly regulations, which emphasise the role of dominant players in telecom markets. The recently adopted regulatory frameworks for data flow and data protection in Argentina and Columbia impose high levels of data protection requirements and other 

countries might go with similar solutions. 

All actions also need to be taken into account at the regional level, mostly through the trade block of the Pacific Alliance (Alianza del Pacífico) of four Latin American countries with a share of the Pacific coast (Chile, Columbia, Mexico, and Peru), Mulder added.

Ms Jane Drake-Brockman (Australian Services Roundtable), the moderator of the session, asked how to use this new tool to assist in the negotiating process, regional integration, and interregional flows. A clear way to start is with capacity development and regulatory dialogue she added, but what more can be done?  

The STRI can help in identifying common points, commonalities that can be the starting points for trade negotiations. Once we know the commonalities, she added, that can provide a common ground for discussing how to implement solutions to be more inclusive. Additionally, it is a tool to monitor the implementation of certain commitments.

There is a high potential for regional and cross-regional cooperation. More evidence and more clarity are better than no evidence and no clarity. 

By Arvin Kamberi