Digital Economy Agreements and the Future of Digital Trade Rulemaking (DiploFoundation)

Arguments

Tension exists in the digital trade agenda because necessary regulations for trust may be hampered by complex digital trade rules

Supporting facts:

• Cross-border data flows can be problematic for privacy regulation

• Consumer protection agencies are struggling to verify the effectiveness and non-discriminatory nature of AI applications because of protection for source codes and algorithms

Topics: Digital Trade, Regulations, Cross-border data flows, Consumer Protection

TISA and TPP texts were developed based on big text wish list, negotiated in secret, and trade negotiators didn’t understand their implications

Supporting facts:

• Negotiations took place in secret

• Trade negotiators have confessed their lack of understanding

Topics: TISA, TPP, Trade Negotiations

Revising TPP text, CPTPP text is problematic especially for developed countries and those without proper regulatory frameworks

Supporting facts:

• Regulatory changes are constantly needed

• Developing countries lack necessary regulatory frameworks

Topics: TPP, CPTPP, Trade Policy

Indigenous Maori claimed that CPTPP breaches their rights; New Zealand is struggling to revise the treaties to comply with constitutional obligations

Supporting facts:

• Indigenous Maori brought a challenge against CPTPP

• New Zealand government is finding it difficult to revise the treaties

Topics: CPTPP, Indigenous Rights, New Zealand’s Trade Policy

The JI may not be ambitious enough to support businesses all over the world.

Supporting facts:

• Concerns over the impact of the JI on global businesses

Topics: JI, Business Support, Global Trade

The potential of having a permanent moratorium is optimistic.

Supporting facts:

• Optimism about the potential extension of a moratorium

Topics: Moratorium, Economic Policy

The US announcement on data flows may not provide enough legal certainty for developing countries.

Supporting facts:

• Concerns about lack of legal certainty from the US data flow announcement

Topics: Data Flows, Legal Certainty, Developing Countries

The speaker is curious about why certain major agreements like the declaration of Montreal or the law about the Union European or Malabo are not discussed

Supporting facts:

• The speaker is a digital strategist and CEO of Fondation Pensez Demain

Topics: Declaration of Montreal, Union European, Malabo

The audience calls for a deeper look into the common characteristics of digital trade and FTAs and the aspect of negotiations around them

Topics: Digital Trade, FTAs, Negotiations

The speaker calls for an extension from e-invoicing, e-payments to digital gateways and a broadened view on consumer protection rights

Topics: e-invoicing, e-payments, Digital Gateways, Consumer protection rights

The speaker highlights their problem with online providers being in a favorable position than physical dealers who have to adhere to requirements, rules and regulations.

Topics: Online Trade, Physical Dealers, Rules and Regulations

Report

The digital trade agenda is facing tension due to the challenges posed by complex regulations that may hinder the necessary trust. There is a need for careful consideration when developing digital trade rules to avoid extremes in data flow regulations, as seen with the General Data Protection Regulation (GDPR) that had to be saved from extreme versions of data flow regulations.

This careful consideration is important to ensure that regulations strike a balance between protecting privacy and facilitating cross-border data flows. Trade negotiations, such as the Trade in Services Agreement (TISA) and the Trans-Pacific Partnership (TPP), have been developed in secret, leading to a lack of understanding by trade negotiators.

This lack of understanding raises concerns about the implications of these agreements and the potential negative impact on consumer protection. Additionally, the revision of TPP and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) texts is challenging, particularly for developed countries and those without proper regulatory frameworks, further complicating the digital trade agenda.

Furthermore, the development of digital rules has been largely influenced by big players, resulting in a lack of focus on development and disproportionate benefits favoring inequality. This raises concerns about the fairness and inclusivity of the digital trade agenda. Additionally, the Indigenous Maori have raised claims that the CPTPP breaches their rights, putting pressure on New Zealand to revise the treaties and comply with constitutional obligations.

The Joint Initiative (JI), a trade policy initiative, has raised concerns about its impact on global businesses and skepticism about its positive outcomes and the feasibility of a permanent moratorium. These concerns highlight the need to carefully evaluate the potential impacts and feasibility of trade initiatives before implementation.

There is also a lack of discussion surrounding major agreements like the Declaration of Montreal or Union European, and questions about why these agreements are not being considered in the context of the digital scene. This lack of discussion raises concerns about the comprehensiveness and effectiveness of the digital trade agenda.

The audience has called for a deeper analysis of the common characteristics of digital trade and Free Trade Agreements (FTAs), as well as the negotiation processes involved. This aligns with the need for more transparency and understanding in the development of digital trade rules.

The speaker has highlighted the challenges faced by physical dealers compared to online providers who have to adhere to requirements, rules, and regulations. This imbalance puts physical dealers at a disadvantage and raises questions about the fairness of the digital trade landscape.

In the Gulf Cooperation Council (GCC) region, the public sector has taken the lead in digital transformation, particularly in countries like UAE, Saudi Arabia, and Qatar. This highlights the importance of government support and public services in driving digital transformation in the region.

In conclusion, there is an urgent need for careful consideration in developing digital trade regulations to ensure trust, privacy, and inclusivity. The lack of understanding and transparency in trade negotiations and the disproportionate influence of big players raise concerns about the fairness and effectiveness of the digital trade agenda.

Moreover, the challenges faced in revising agreements, addressing Indigenous rights, and maintaining a balance between physical and online dealers further complicate the digital trade landscape. It is essential to foster a development-focused approach and ensure that digital trade rules are comprehensive, transparent, and inclusive for all stakeholders involved.

Arguments

African countries are negotiating issues similar to those at the international level in their digital economy agreements

Supporting facts:

• 33 African countries have got data protection regulation

• 8 African countries are involved in the JSI

Topics: Digital Economy Agreements, African Continental Free Trade Area, Negotiations

Customs duty moratorium on electronic transmissions is of high stakes

Supporting facts:

• The moratorium has been maintained since the MC2 in 1998

• South Africa and India are raising questions about the moratorium, arguing it is skewed against developing countries

Topics: Digital Economy, Customs duties, Moratorium

Focusing on domestic taxation like social services tax could be a better revenue realization strategy

Supporting facts:

• Studies show that taxes on social services or VAT could realize more revenues

• Capacitating African countries to impose internal taxes is a potential solution

Topics: Domestic Taxation, Revenue Realization, Digital Economy

Flexibility built in trade treaties

Supporting facts:

• Provisions in the treaty allow for regulation in the public interest

• The treaties have consideration for privacy

Topics: trade treaties, regulation

Countries like the EU have already built in those three yearly reviews.

Topics: Digital Rulemaking, Policy Making

Tools can be built into treaties that give governments as much policy space as they need.

Supporting facts:

• In terms of dispute settlement, there’s a five year review.

Topics: Policy Making

Countries are starting to act on public policy considerations

Supporting facts:

• The U.S. is turning away from its original positions

Topics: Public Policy, International Trade

Agrees with the idea of phasing and timeline on JSI agreements.

Topics: JSI, Digital Trade, Negotiation

Believes some agreement is better than no agreement.

Topics: JSI, Negotiation

Acknowledges that businesses trading online are usually in a better position.

Topics: Digital Trade, Online Businesses

Supports the customs duty moratorium believes it to be beneficial, especially in the African context.

Supporting facts:

• The customs duty moratorium could help digital giants in Africa like Jumia

Topics: Customs Duty Moratorium, Digital Trade, Africa

Report

The analysis covers a range of topics related to the digital economy and trade negotiations. African countries are actively engaged in negotiating digital economy agreements that address issues similar to those at the international level. This demonstrates their commitment to aligning their policies with global standards and promoting cooperation in the digital sphere.

It is worth noting that 33 African countries already have data protection regulations in place, highlighting the importance they place on safeguarding digital rights and privacy. One significant issue being discussed is the customs duty moratorium on electronic transmissions. This moratorium has been in place since the 1998 Ministerial Conference and ensures that electronic transmissions are not subjected to customs duties.

However, concerns have been raised, particularly by South Africa and India, who argue that the moratorium disproportionately benefits developed countries and places developing countries at a disadvantage. This highlights the high stakes involved in this matter and the need for a fair and equitable resolution.

The analysis suggests that focusing on domestic taxation, such as implementing taxes on social services or value-added tax (VAT), could be a more effective strategy for revenue realization. Studies indicate that implementing these forms of taxation could lead to increased revenue generation.

Furthermore, enabling African countries to impose internal taxes would provide them with a potential solution to address their revenue needs. Trade treaties are designed to provide flexibility and safeguard public interests. Provisions within these treaties allow for regulation in the public interest and consideration for privacy.

This demonstrates a commitment to ensuring that trade agreements strike a balance between promoting economic growth and protecting the welfare of citizens. One noteworthy observation is the support for Wei Guo Tang’s perspective on the balance between liberation and preservation of policy space.

It is argued that countries should have the freedom to formulate and implement policies that serve their national interests while also recognizing the importance of international cooperation and harmonization. Another notable finding is the incorporation of regular reviews into treaties.

These reviews, which occur either annually or every five years, provide an opportunity for governments to reassess and adjust their policies as needed. This ensures that policy space is granted to governments while also allowing for evolving circumstances and changing priorities to be taken into account.

The analysis also suggests that public policy considerations are becoming increasingly important in international trade negotiations. This is exemplified by the shifting positions of the United States on certain public policy issues. As countries become more cognizant of the potential impact of trade agreements on their domestic policies, they are beginning to take actions that align with their national interests.

However, there are concerns about regional disagreements impacting the possibility of a customs duty moratorium. If problems arise at the regional level, they are likely to have implications for international negotiations as well. This highlights the need for open dialogue and cooperation to address regional differences and reach consensus on this important issue.

Regarding digital trade agreements, there is a consensus on the necessity of phasing and timeline. This pragmatic approach allows for incremental progress to be made, ensuring that the interests of all stakeholders are taken into consideration. There is a prevailing belief that some form of agreement is better than no agreement.

Acknowledging the complexities and challenges involved in trade negotiations, finding common ground and reaching compromises is seen as crucial for promoting digital trade and reaping its benefits. The analysis also recognizes the advantages that online businesses have in the digital economy.

These businesses tend to be better positioned to leverage digital technologies and reach wider markets, highlighting the need for policies that support their growth and competitiveness. In the African context, the customs duty moratorium is seen as beneficial, particularly for digital giants like Jumia.

This exemption from customs duties may help promote their expansion and contribute to economic growth in the region. Finally, the analysis highlights the importance of providing assistance to least developed countries (LDCs) in understanding and implementing internal taxes without discrimination.

This support is crucial for empowering these countries to effectively navigate the complexities of taxation in the digital economy. In conclusion, the analysis emphasizes the ongoing discussions and negotiations surrounding digital economy agreements, customs duty moratoriums, domestic taxation strategies, and the importance of flexibility and policy space in trade treaties.

It underscores the need for collaboration, dialogue, and pragmatic approaches to address regional disagreements and promote inclusive and sustainable digital trade.

Arguments

Digital economy agreements provide valuable support to the shift of trade to the digital domain.

Supporting facts:

• Digital economy agreements help tackle policy issues raised by digital trade.

• These agreements have been useful especially on emerging issues, aiding countries to collaborate and find common ground.

Topics: Digital economy agreements, Trade, Digital domain

Appreciation for successful and interactive session

Supporting facts:

• This was a brilliant session

• Speakers took all the questions

• Participants actively asked questions

• Digital topic was passionately discussed

Topics: UN summit, Digital topics

Report

Digital economy agreements play a crucial role in addressing policy issues raised by digital trade, contributing to the development of effective policies in the digital domain. These agreements have been commended for their valuable support in tackling emerging challenges and facilitating collaboration among countries, helping them find common ground on digital trade.

Moreover, digital economy agreements are seen as complementary to the existing network of free trade agreements. In the past, countries struggled to include digital trade provisions in free trade agreements. However, with the advent of digital economy agreements, the relevant provisions are extracted and consolidated in one place, enabling a focused and comprehensive approach to addressing digital trade issues within a separate agreement.

During a session on digital topics, the speakers expressed their appreciation for the interactive and successful discussion. Participants engaged passionately with the subject matter, actively posing questions and exchanging ideas. This session highlighted the importance of digital topics in today’s world and served as a platform for knowledge sharing.

Additionally, it was emphasized that these discussions should be connected with the United Nations and the upcoming summit. The UN has been actively engaged in discussions on various digital topics, and the outcomes of the session can contribute to and benefit from the ongoing UN discussions.

This integration ensures a holistic and comprehensive approach towards addressing digital challenges, taking into account the global perspective provided by the United Nations. Overall, digital economy agreements have proven to be instrumental in addressing policy issues arising from digital trade, fostering collaboration and allowing countries to find common ground.

They complement existing free trade agreements by consolidating digital trade provisions. The successful and interactive session on digital topics showcased the significance of these discussions and the need to connect them with the United Nations’ initiatives. By doing so, a cohesive and comprehensive approach towards addressing digital challenges can be achieved.

Arguments

Digital economy agreements facilitate end-to-end digital trade, open up digital environment and build trust

Supporting facts:

• Digital economy agreements build on the e-commerce chapters

• Evolving digital regulations and flexibility is necessary due to rapidly evolving technologies

• Digital economy agreements facilitate moving businesses from paper to electronic, contributing to reducing costs

• Enabling cross-border data flows enhances innovation and protects consumer welfare

Topics: Digital economy agreements, Digital trade, Digital environment, Creating trust

Digital trade rules are not a blanket rule for data flow.

Supporting facts:

• CPTPP approach includes exceptions for legitimate public policy objectives

• Digital trade rules allow for government regulation

• Not all data should flow at all costs

Topics: Digital Trade, Data Flow, Government Policy

Protection of privacy and prohibition of transfer of source code, except for enforcement situations, are important in digital trade rules.

Supporting facts:

• Policy objectives of different countries are similar in protecting privacy

• Source code can be checked for discrimination in enforcement situations

Topics: Digital Trade, Privacy, Source Code

There are ongoing discussions about the political considerations in the review processes, indicating that reviews are possible.

Supporting facts:

• New Zealand is trying to feature some of their recent political considerations in the review.

• Reviews are possible and are being discussed.

Topics: Policy Review, Political Considerations

The GSI agreement has to strike a balance in order to be commercially meaningful and inclusive.

Supporting facts:

• GSI set out to be commercially meaningful and inclusive.

• The de-attribution of data and source code provisions by the US has made this a tricky balance.

Topics: GSI Agreement, Commercial Meaning, Inclusivity

The package under the GSI agreement is useful for traders and for consumer trust.

Supporting facts:

• The package, along with digital trade elements, will be beneficial for traders.

• The consumer trust elements are important not only for businesses but also for people.

Topics: GSI Agreement, Consumer Trust, Traders

The GSI agreement includes strong developmental provisions to help LDC and developing members.

Supporting facts:

• There are provisions within JSI to help LDC and developing members.

• The idea is to harmonize rules across 90 members.

Topics: GSI Agreement, Development, LDC and Developing members

Singapore has an agreement with the GCC partners, including an e-commerce chapter for ensuring an open digital environment

Supporting facts:

• There is a custom duties article agreed to not impose custom duties on electronic transmission

Topics: e-commerce, GCC, open digital environment

The JSI has no modular approach

Supporting facts:

• JSI covers three sections that members should adhere to

• There is potential support for members in terms of implementation

Topics: JSI, Digital Economy Agreements, DIPA

Support of the moratorium on internal taxation due to its potential benefits for developing and LDC countries

Supporting facts:

• Singapore has contributed a case study on how it has implemented internal taxation to collect revenue on e-commerce

• A report by UNTAD, which will be out next year, is aimed at helping developing countries understand how they can benefit from internal taxation

Topics: Taxation, E-commerce, Developing countries

Report

Digital economy agreements are crucial in transforming the digital landscape and enhancing businesses. These agreements facilitate end-to-end digital trade, open up the digital environment, and build trust. They enable businesses to transition from paper to electronic formats, reducing costs. Cross-border data flow is supported, promoting innovation and protecting consumer welfare.

Flexibility is essential in digital trade rules as they are not a one-size-fits-all solution for data flow. Governments have the right to regulate and privacy protections are important, including the prohibition of source code transfer, except in enforcement situations. Protecting privacy and preventing discrimination in enforcement situations are key aspects of digital trade rules.

Discussions and ongoing reviews demonstrate the possibility of making changes and improvements to digital trade regulations based on feedback and emerging challenges. The Global Services Innovation (GSI) agreement aims to strike a balance between commercial meaningfulness and inclusivity. It recognizes the challenge of balancing data and source code provisions, particularly with the US.

Consumer trust is also important, making the GSI agreement valuable for both traders and consumer trust. The GSI agreement includes strong developmental provisions to assist least developed and developing countries, harmonizing rules across member countries. Engaging in digital payments and digital invoicing is crucial for development.

The GSI agreement provides room to discuss collaborations and encourages the interoperability of payment systems. Balancing the interests of stakeholders is necessary for creating value and ensuring that policies and agreements benefit all parties. Singapore has an agreement with GCC partners, including an e-commerce chapter that ensures an open digital environment.

However, individual GCC partners retain the right to impose internal taxation, allowing for flexible taxation regulations. The Joint Statement Initiative (JSI), Digital Economy Agreements (DEAs), and Digital Trade and Innovative Policies Agreement (DIPA) are comprehensive agreements that should not be approached in a modular manner.

They provide holistic frameworks to address various digital trade issues. However, individual Memorandums of Understanding (MOUs) can be established for specific topics. Support for the moratorium on internal taxation is crucial, bringing significant benefits to developing and least developed countries.

Singapore has implemented internal taxation for e-commerce revenue collection. A UNCTAD report aims to help developing countries understand the benefits of internal taxation. Advocacy for a phased approach in introducing issues in digital space negotiations is necessary due to the complexity and rapid evolution of digital issues.

The co-conveners of the JSI negotiations aim to balance the inclusion of data flows. A phased approach accommodates other digital issues, such as AI rules, while aiming for timely conclusions. In summary, digital economy agreements play a crucial role in transforming the digital landscape and supporting business growth.

They facilitate end-to-end digital trade, foster an open digital environment, and build trust. Flexibility, privacy protection, and stakeholder engagement are vital in digital trade rules. The GSI agreement strikes a balance between commercial meaningfulness and inclusivity while supporting development. Engaging in digital payments and digital invoicing is crucial for development.

The JSI, DEAs, and DIPA are comprehensive agreements that provide holistic frameworks. Support for the moratorium on internal taxation benefits developing and least developed countries. A phased approach is advocated for addressing complex digital issues. Ongoing discussions and reviews demonstrate a willingness to adapt and improve digital trade regulation.

Arguments

Less developed countries (LDCs) need to be more involved in digital rulemaking for their successful integration into the global and regional digital economy

Supporting facts:

• LDCs have made considerable progress, with their exports of digitally delivered services growing at a rate exceeding the worldwide average.

• The Doha program mentions the word ‘digital’ 82 times, illustrating their increasing interest in the digital sphere.

Topics: Digital Rulemaking, Economy, Digital Economy, Regional Integration

A phased, modular approach in digital trade rule-making could benefit LDCs, allowing them to steadily integrate their interests and constraints

Supporting facts:

• LDCs have differing interests based on their speed of development.

• The trust and facilitation modules of digital economy agreements may be particularly beneficial for LDCs.

Topics: Digital Trade, Least Developed Countries, Modular approach

We deal with digital rulemaking now as if we’re gonna put it set in stone

Topics: Digital rulemaking, AI Regulation

We still don’t know to what extent these digital challenges will evolve

Topics: Digital Challenges, AI Regulation

We need to look back at our rules with a with a closer intervals

Topics: Digital rulemaking, Policy Review

Trade rules need to adapt to the changing nature of trade.

Supporting facts:

• Trade rulemaking is changing in nature, it should not be treated as set in stone.

Topics: Trade, Rulemaking

Seeks a positive approach to bring developing countries and LDCs into trade discussions.

Supporting facts:

• There is an opportunity to bring developing countries into the discussion with the AFCFCA.

Topics: Developing Countries, Trade, Discussion

Disappointed that the ambition of the GSI is getting lowered.

Topics: GSI, Data Flows

Wants to see progress on data flow regulations.

Supporting facts:

• Believes that the current situation is not serving everyone, including US, China, and their development partners.

Topics: Data Flows, Regulation

Interest in phased approach to negotiations.

Supporting facts:

• Suggests the JSI can move into a phased approach.

Topics: Negotiations, Phased Approach

Report

Less developed countries (LDCs) are urged to actively participate in digital rulemaking in order to successfully integrate into the global and regional digital economy. LDCs have shown significant progress in exporting digitally delivered services, surpassing the global average growth rate.

However, not all LDCs have adopted key e-commerce regulations, hindering their ability to fully capitalize on the opportunities provided by the digital economy. Additionally, only a small number of LDCs are actively involved in digital trade agreements. To address these challenges, a phased and modular approach to digital trade rulemaking is recommended.

This approach recognizes that different LDCs are advancing at varying speeds and require tailored strategies. The trust and facilitation modules of digital economy agreements are particularly beneficial for LDCs. Establishing a supportive e-commerce ecosystem in LDCs requires conducting regulatory gap analysis and engaging with stakeholders.

By identifying gaps between existing digital trade agreements and the needs of LDCs, a more conducive regulatory environment can be established. Moreover, legislation that fosters trust is crucial for the development of a thriving e-commerce ecosystem. Adaptability in trade rules is crucial to align with the evolving nature of trade.

Inclusion of developing countries and LDCs in trade discussions is important to ensure their perspectives and interests are considered. The AFCFCA presents an opportunity to bring developing countries into the dialogue. Progress in data flow regulations is also emphasized as important.

The current situation does not serve everyone, including countries like the US, China, and their development partners. Moving forward on data flow regulations would benefit all stakeholders. Finally, governments should support the opportunities and capacity to regulate. This includes engaging with the public, considering their concerns, and adjusting the pace of regulation accordingly.

Collaboration between governments and citizens is essential to ensure a balanced approach to digital rulemaking. In conclusion, LDCs have made strides in the digital sphere, but their active involvement in digital rulemaking is still needed. A phased and modular approach, regulatory gap analysis, stakeholder engagement, and adaptability in trade rules are crucial for the successful integration of LDCs into the global and regional digital economy.

Governments play a key role in supporting and regulating the digital arena by engaging with citizens and adjusting regulatory pace to meet their needs.