Measuring Digital Trade

Report

Efforts to measure digital trade have been ongoing since the late 1990s. The World Trade Organization (WTO) launched a work programme on e-commerce in 1998 to address the growing prominence of digital trade. Additionally, the Organisation for Economic Co-operation and Development (OECD) developed a definition for e-commerce in the early 2000s.

These initiatives reflect the recognition of the need to understand and quantify the impact of digital trade on the global economy.

However, despite these efforts, there is still a lack of official statistics on digital trade. Unlike merchandise trade and services trade, there are no comprehensive and standardised measurements for digital trade.

This poses a challenge for policymakers as they require accurate and reliable data to formulate effective policies in all economies and at all levels of development.

One of the key arguments is the need for a clear distinction between the concepts of e-commerce and digital trade.

E-commerce refers to the ordering of goods and services, both domestically and internationally. On the other hand, digital trade includes not only the ordering but also the delivery of goods and services, specifically at an international level. It is important to understand this distinction to accurately measure and monitor digital trade.

Monitoring and measurement of digital trade is crucial as it allows for the identification of barriers and problems that may hinder its growth and development.

By monitoring its evolution, policymakers can take appropriate actions to address any issues that arise. Additionally, measuring digital trade can help countries access new markets, increase opportunities for businesses, and contribute to overall economic growth.

The broad conceptual framework for digital trade is fairly stable and established.

However, there is still ongoing work in interpreting and measuring certain aspects, especially in relation to platforms and other emerging areas. The framework is designed to be future-proof, capable of accommodating changes in the production boundaries and incorporating new macroeconomic standards that will be introduced in the coming years.

Valuation of digitally ordered goods can be challenging due to the use of different pricing methods.

Conventional accounting rules are often applied, such as SIF (supplied, installed, and fully paid for) or FOB (free on board) pricing. Translating invoice values into these valuation methods can be complex and require careful consideration.

It is important to note that while financial flows associated with trade, such as payments, are typically present, they are not counted as part of digital trade.

The focus is primarily on the ordering and delivery of goods and services themselves. This distinction clarifies the scope of digital trade and provides a more accurate picture of its impact on the economy.

In conclusion, while efforts to measure digital trade have been ongoing, there is still a need for official statistics similar to those available for merchandise trade and services trade.

The defined framework for digital trade is firmly in place, but further work is required to collect official statistics, monitor its evolution, and address challenges related to valuation. It is crucial to continue measuring and monitoring digital trade to foster its growth and reap the benefits it offers in terms of access to new markets and economic development.

Report

During the presentation, various topics were discussed, including digital trade, data collection, and statistics. One audience member questioned the value of gathering information on digitally ordered goods and services. Despite this doubt, it was highlighted that there is a growing interest in having better data on actual services trade, digital trade, and the flow of money involved in paying for a service or a good.

The joint efforts of prominent international organisations were also recognised as contributing to the establishment of the report.

A team of four people who handled the complex tasks in a collegial manner worked on the report, which received positive sentiment.

The importance of capacity building to support National Statistical Agencies in monitoring progress towards the Sustainable Development Goals (SDGs) was emphasised.

It was noted that a major push is being made to improve the abilities of national statistical agencies to monitor progress towards the SDGs. This alignment with collecting data about the digital economy is crucial.

Investigating two World Customs Organization categories, namely low-value dutiable and low-value non-dutiable, could provide valuable insights into business-to-consumer (B2C) trade.

These categories are significant as most B2C operations fall within them.

Concerns were raised regarding the accuracy of transactional data for digitally ordered goods. The tension between CIF (Cost, Insurance, and Freight) and FOB (Free on Board) values makes it difficult to capture the exact trade values.

It was observed that the backend transactions are not fully capturing the CIF values.

Queries were raised about the inclusion of digital payments in reported statistics, specifically whether digital payments are counted as ‘trade in service’ or fall into a different category.

However, no specific evidence or argument was provided in relation to this query.

Additionally, some attendees sought clarification on the use of definitions for the publication. Mario Postolov, the Regional Advisor in the Trade Division of UNECE, is responsible for publishing and continuously updating a glossary on trade facilitation terms.

This glossary is part of the effort to provide clarity in the publication.

Furthermore, the inclusion of postal data in future reports was discussed. Hossam Garbi, responsible for the Trade Program in the Universal Postal Union (UPU), highlighted that the majority of international shipments transit through the postal network.

The UPU expressed a positive interest in cooperating for the inclusion of postal data in future reports, demonstrating their global vision on all e-commerce transactions and their efficiency.

In conclusion, the presentation covered various topics related to digital trade, data collection, and statistics.

While some doubts and concerns were raised, there was also recognition of the joint efforts of international organisations and the importance of capacity building for National Statistical Agencies. The inclusion of postal data in future reports and the need for better data on digitally ordered goods and services were discussed.

Report

The analysis highlights several key points regarding digitally delivered trade and the challenges of measuring it. Digitally delivered trade is defined as all international trade transactions that are delivered remotely over computer networks. It primarily involves the delivery of services, but there are certain services, such as accommodation and passenger transport services, which require physical presence and cannot be digitally delivered.

One important finding is that digitally deliverable services, which include services delivered remotely through various means such as phone, fax, video calls, emails, apps, and digital intermediation platforms, have a higher value than the services that are actually digitally delivered.

In fact, it has been estimated that digital deliverable services were valued at $3.82 trillion in 2022, and they have been growing more rapidly than goods exports and other services that are not digitally delivered. This highlights the significant economic impact and potential of digitally deliverable services.

Efforts are being made to capture and measure the remote delivery of services through surveys and administrative sources.

For example, the development of International Trading Services Surveys, as successfully implemented by the USA and Costa Rica, aims to capture exports of digitally delivered services. Additionally, the use of administrative sources, such as VAT data and public expenditure sources, has been advocated to estimate digital service inputs.

Argentina has leveraged VAT tax legislation on non-resident providers of digital services, while Ireland has combined multiple publicly available sources to estimate household expenditure on digital services.

However, the measurement of digital trade presents complex challenges, especially for developing economies.

Measuring digital trade requires multiple sources and methods, and implementing the recommendations outlined in the handbook can be challenging. To address this, a coordinated statistical building program has been introduced by four institutions to aid developing countries in improving their statistical capacity.

The analysis also emphasizes the importance of tracking digital trade and ordering, as well as the necessity of comprehensive reporting of statistics in this area.

Policymakers play a crucial role in the production of statistics for trade, as they can allocate funds for statistical development and ensure that stakeholder consultations are conducted prior to implementing statistical strategies.

Furthermore, the integration of least developed countries into the global trading system is prioritized, and efforts are being made to develop data that allows monitoring opportunities for growth in these countries.

A coordinated statistical program has been launched to build up the statistical capacity of least developed countries.

It is noteworthy that digital trade is not solely a business of developed economies, as some developing economies are already fully engaged in digital trade.

Particularly, tourism-driven small economies have a significant number of orders made digitally. However, capacity building is required in small economies to accurately measure the scale and value of digital trade, as sometimes they may not be fully aware of the extent of their digital trading activities.

In conclusion, the analysis brings attention to the concept of digitally delivered trade and highlights both the potential and challenges associated with measuring it.

The growth and economic impact of digitally deliverable services are significant, and efforts are being made to capture and measure the remote delivery of services. The measurement of digital trade presents complex challenges, particularly for developing economies, but a coordinated statistical-building program aims to address these challenges.

The role of policymakers and the development of national strategies are crucial in producing trade statistics and informing policy decisions. It is important to prioritize the integration of least developed countries into the global trading system and provide capacity-building support in small economies to accurately measure and benefit from digital trade.

Report

The analysis explores the significance of digitally ordered trade and the methods used to measure it. Digitally ordered trade refers to the international sale or purchase of goods or services carried out over computer networks. It closely aligns with the definition of e-commerce established by the OECD in the early 2000s.

One notable point emphasized in the analysis is that digitally ordered trade encompasses both goods and services and is applicable to all sectors of the economy.

To measure digitally ordered trade, the analysis recommends using business ICT surveys and merchandise trade customs reporting procedures.

Business ICT surveys are valuable tools for assessing the uptake of e-commerce in businesses and can provide insights into the value of digitally ordered transactions. Notably, some countries, including China, have modified their merchandise trade customs reporting procedures to identify shipments that are digitally ordered.

In addition to these methods, the analysis highlights the importance of other sources for gaining a comprehensive understanding of digitally ordered trade.

This includes household surveys, which can examine areas such as ICT usage and expenditure, providing valuable data on consumer behavior. VAT returns data and card payments data are also mentioned as additional sources that can provide insights into digitally ordered trade.

Moreover, multinational enterprise surveys are highlighted as particularly useful for understanding digital trade due to the significant role of multinational enterprises in the trading system.

The analysis discusses the role of digital intermediation platforms (DIPs) in the digital trade ecosystem.

DIPs are online interfaces that facilitate direct interaction between buyers and sellers, without the platform taking economic ownership of the goods or services being sold. They offer advantages such as access to a wider global market, particularly beneficial for smaller businesses.

The analysis points out that transactions on DIPs have significantly increased during the pandemic. DIPs are seen as key drivers in the digital transformation of trade due to their ability to enable new business models, such as resource sharing, and to facilitate sales through online platforms.

An important insight provided in the analysis is the distinction between real-life transactions and economic transactions involving DIPs.

In real life, a buyer pays the DIP, which deducts its fees and pays the remainder to the seller. However, for accurate trade statistics, it is recommended to separate these two transactions: the payment for the actual good or service and the payment for the intermediation service.

To achieve this, enterprise surveys, ICT usage surveys, and potentially card payment data can be utilized to collect the necessary information.

The analysis also highlights the potential of DIPs in the digital trade landscape and their role in increasing the share of least developed countries (LDCs) in global trade.

It notes that digital ordering and delivery can enable practitioners in remote areas to supply services to businesses and homes worldwide, thus benefiting LDCs. However, the analysis also mentions that the target of doubling the share of LDCs in global trade by 2020, as part of the Sustainable Development Goals (SDGs), was not met.

Implementing the handbook’s framework is seen as crucial for achieving a clearer digital trade landscape.

Measurement of digital trade in LDCs is deemed essential to monitor its contribution to achieving the revised SDGs target. The analysis suggests including customs data and estimations for non-dutyable trade to obtain a comprehensive picture when measuring digital trade.

It also proposes using postal data to estimate the volume of low-value, digitally ordered goods trade, as there is a correlation between the volume of postal packages crossing borders and digital trade.

In conclusion, the analysis underscores the significance of digitally ordered trade and the need for accurate measurement methods.

It suggests that a more comprehensive understanding can be achieved through surveys, customs reporting procedures, and the utilization of various data sources. Additionally, the analysis highlights the role of DIPs in the digital transformation of trade, particularly in facilitating access to a wider market.

Furthermore, it emphasizes the importance of separating real-life and economic transactions involving DIPs for more accurate trade statistics. Finally, it addresses the potential of digital trade for LDCs and the importance of measuring its impact to achieve the SDGs target.

Overall, the analysis provides valuable insights into the definition, measurement, and impact of digitally ordered trade, as well as the role of digital intermediation platforms and the need for comprehensive measurement methods in the digital trade landscape.

It underscores the potential of digital trade in driving economic growth and its implications for achieving sustainable development goals.

Report

The discussion highlighted several key points regarding digital trade and its measurement. Firstly, it was noted that there is a lack of official statistics on digital trade, which poses challenges for policymakers in making informed decisions. Without reliable and comprehensive statistics, policymakers have to rely on anecdotal information, hindering effective policymaking for all economies and at all levels of development.

The emergence of new business models, such as online platforms, was also discussed.

These platforms are becoming important players in economies, but their role, functioning, and contributions are subjects of intense debate. The debate around these new business models highlights the need for a better understanding of their impact on the economy.

The role of the International Monetary Fund (IMF), Organisation for Economic Co-operation and Development (OECD), and United Nations Conference on Trade and Development (UNCTAD) Durito Handbook in improving the measurement and understanding of digital trade was acknowledged.

The handbook, which resulted from the cooperation between these institutions, provides clarification on definitions, compilation guidance for statisticians, and country examples. Its endorsement by countries globally after extensive consultation is a testament to its importance in improving digital trade statistics.

Furthermore, it was highlighted that digitalisation is transforming how goods and services are produced, purchased, and delivered.

This digital transformation of the economy and services is reshaping the way businesses operate and creating new opportunities.

Measuring digital trade was recognised as a complex task, requiring multiple sources and methods. Statisticians need to measure not only digitally ordered goods and services but also digitally deliverable services.

Customs reporting requirements and trading services surveys need to be modified to include questions specific to digital trade. These modifications are crucial to capture the full extent of digital trade.

Implementing the recommendations of the handbook poses challenges, particularly for developing economies.

Considering the complexities in measuring digital trade, the implementation of the handbook’s recommendations may be more difficult for these economies. To address this, a coordinated statistical building programme is introduced by the four institutions to assist developing countries in adopting the recommendations and improving their statistical capacities.

The presentation provided extensive information on digital trade statistics and its complexities, shedding light on the importance of collecting data and understanding the landscape of digital trade.

It was emphasised that data on digitally deliverable services and digitally ordered trade are significant indicators of the opportunities and challenges in the digital trade arena.

The moderator emphasised the importance of understanding the future of digital trade for economic growth.

With digitalisation continuously shaping the global economy, it is crucial to stay abreast of the latest trends and developments.

It was also noted that policymakers play a pivotal role in the production of statistics and have the power to allocate funds for the development of new statistics.

Policymakers should consult with relevant stakeholders, including ministries, National Statistics Offices, and central banks, in the development of national strategies for statistics. Considering the specific trade interests and growth opportunities of each country, these strategies should reflect a holistic approach.

Finally, Barbara’s contributions were acknowledged as a major achievement in improving knowledge on digital trade.

Her input was commended, underscoring the importance of collaborative efforts in advancing research and understanding in this field.

Overall, the discussion highlighted the need for reliable statistics on digital trade, the emergence of new business models, the role of the Durito Handbook, the digital transformation of the economy, the complexities in measuring digital trade, the challenges in implementing the handbook’s recommendations, and the importance of understanding the future of digital trade.

Policymakers are encouraged to consult with relevant stakeholders and allocate funds for the development of new statistics to drive informed decision-making.