Regulation for digital trade integration in Africa, Asia, and Latin America (UN ECLAC)
6 Dec 2023 15:00h - 16:30h UTC
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Devi Ariyani
The analysis explores several key aspects related to the growing digital economy, the impact of regulations, and their consequences for small and medium-sized enterprises (SMEs) and startups. It emphasises the critical role played by SMEs and startups in driving the digitally-enabled economy. Notably, SMEs represent approximately 97% of SEON businesses, highlighting their significant contribution to the digital economy.
The analysis also examines the growth of digital startups in Asia, indicating that the region is becoming a thriving hub for innovative ventures. This growth in digital startups creates new opportunities and job prospects in the economy. This positive sentiment supports the argument that the digitally-enabled economy extends beyond technology companies, encompassing SMEs and startups.
On the other hand, the presence of regulations presents a complex challenge for private sectors operating in the digital ecosystem. Regulations affect all entities within the digital ecosystem, regardless of their size or business nature. Regulations cover various aspects such as data governance, content moderation, customer protection, and taxation. This negative sentiment suggests that the current regulatory landscape brings difficulties for private sectors in navigating and complying with the rules.
The analysis highlights the need for streamlining policies and regulations across different economies to promote the growth of the digital economy. It reveals that complex policies and procedures impose disproportionate costs and time implications for businesses. Furthermore, inconsistent regulations between different economies hinder the growth and potential of the digital economy. These findings emphasize the significance of regional harmonisation and international cooperation to create a conducive environment for businesses operating in the digital ecosystem.
Additionally, the analysis provides specific insights into the Indonesian digital landscape. It reveals that approximately 65 million SMEs in Indonesia are undergoing digital transformation, with 90% of them benefiting from the development of digital platforms. Furthermore, Indonesia has around 15 unicorns operating in various Asian markets and 2,400 startups in the same digital ecosystem. However, the high cost of compliance for businesses operating in different markets presents a barrier to growth and expansion.
In conclusion, the analysis underscores the importance of SMEs and startups in driving the digitally-enabled economy. It highlights the challenges posed by regulations and the need for streamlined policies across different economies. The analysis argues for regulations to consider SMEs’ ability to comply without hindering their growth. Overall, this comprehensive examination provides insights into the current digital landscape and presents a holistic view of the opportunities and challenges faced by businesses in the digital economy.
Moderator – Martina Ferracane
The Digital Trade Integration project aims to enhance understanding and facilitate digital trade integration by creating a comprehensive network, dataset, and index. This initiative is a collaborative effort involving universities, think tanks, and three regional commissions. The dataset covers a wide range of 130 economies, providing extensive coverage for analysis and evaluation.
An analysis of digital trade policies reveals significant variation in restrictive and enabling practices across different regions. South Asia, Central Asia, and the MENA region have higher restrictions on digital trade, while Latin America, North America, and Sub-Saharan Africa have fewer restrictions. Interestingly, the study also highlights that low-income economies generally impose fewer restrictions on digital trade.
Empirical research based on the Digital Trade Integration project data unveils a negative correlation between digital trade restrictions and its overall performance. Additionally, the study identifies a negative impact resulting from regulatory heterogeneity across countries. This finding emphasizes the potential benefits of liberalizing and harmonizing digital trade policies, with African economies standing to gain significantly from adopting more open digital trade practices.
Latin America emerges as one of the most open regions for developing digital trade. Despite variations among countries, the average score of digital restrictions in Latin America is relatively lower. The data covers a total of 24 countries in the region, highlighting their commitment to digital trade development and integration.
Chile specifically stands out for its notable efforts in negotiating agreements that encompass digital trade. This proactive approach demonstrates Chile’s commitment to leveraging the opportunities presented by digital trade. Furthermore, sub-regional integration schemes such as the Pacific Alliance show notable heterogeneity in terms of digital trade policies. Countries within this alliance, including Chile, Colombia, and Mexico, exhibit varying levels of openness towards digital trade.
Noteworthy observations from the analysis include a slight drop in restrictiveness towards digital trade in Latin America between the years 2014 and 2021. This positive trend indicates a growing recognition among Latin American economies of the importance of fostering a conducive environment for digital trade.
In conclusion, the Digital Trade Integration project presents a detailed understanding of digital trade integration, showcasing variations in policies across regions. The empirical findings highlight the negative impact of restrictive policies on digital trade performance and the potential benefits of liberalizing and harmonizing practices. Latin America emerges as one of the most open regions for digital trade development, with Chile playing an active role in negotiation efforts. The analysis also reveals heterogeneity within sub-regional integration schemes and a positive trend towards reducing restrictiveness in Latin America. These insights provide valuable knowledge for policymakers and stakeholders seeking to promote inclusive and sustainable digital trade integration.
Nanno Mulder
Latin America and the Caribbean have been identified as relatively open regions for digital trade among developing countries. However, it is important to note that within this sub-regional context, there is heterogeneity in terms of digital trade. Some countries, like Chile and Colombia, score above the regional average in terms of digital trade openness, while Mexico is considered to be more open in this regard.
Despite the overall openness, there is a significant lack of proper regulations for e-commerce marketplaces in many Latin American and Caribbean countries. This poses challenges and risks for businesses operating in this sector. Notably, many countries lack a safe harbor for intermediary platforms in e-commerce, and seven countries do not have comprehensive data protection laws. This suggests a need for stronger regulations and legislation that address the specific challenges of the e-commerce marketplace.
Similarly, there are restrictions in place regarding telecommunications and domestic data policies. For instance, Cuba has a very restrictive environment for telecommunications, and over half of the countries in the region have implemented data retention requirements. These restrictions can hinder the growth and development of digital trade in the region, as well as limit access to reliable and efficient telecommunications services.
Notwithstanding the challenges, there has been a slight reduction in the level of digital trade restrictiveness in Latin America from 2014 to 2021. This indicates some progress in creating a more conducive environment for digital trade within the region.
The absence of regulations in consumer protection is also a negative factor affecting digital trade. The methodology used in the analysis penalizes countries that lack consumer protection measures, as it creates uncertainty for businesses. Therefore, the implementation of strong consumer protection regulations is essential for fostering a secure and reliable digital trade environment.
To address the issues and promote further growth, there is a call for trade harmonization among the trading partners in Latin America and the Caribbean. The aim is to create a more homogeneous trade environment, particularly for small and medium businesses, enabling them to navigate the digital trade landscape more effectively. This would require collaboration and partnerships among stakeholders to establish common standards and regulations.
Additionally, it is emphasized that the success in digital trade and business requires a multifaceted approach. This includes promoting entrepreneurship, developing skills, and improving connectivity. Creating ecosystems that support digital trade and businesses emerges as a crucial aspect of this approach. By providing the necessary infrastructure, resources, and support, these ecosystems can enhance the growth and development of digital businesses in the region.
In conclusion, Latin America and the Caribbean exhibit openness to digital trade, although there are variations within the sub-regional context. However, the lack of proper regulations for e-commerce marketplaces, restrictions on telecommunications and data policies, and the absence of consumer protection measures pose significant challenges. Nonetheless, there have been slight improvements in reducing the level of digital trade restrictiveness over time. The call for trade harmonization, the development of supportive ecosystems, and the multifaceted approach to fostering digital trade and businesses are key strategies to unlock further growth and potential in this region.
Witada Anukoonwattaka
The Asia-Pacific region has adopted a two-pronged approach to digital trade, combining liberalisation with complex digital governance measures. However, this strategy has resulted in a high compliance cost for cross-border digital businesses, especially for small businesses. North and Central Asia, as well as South Asia, face higher levels of policy enforcement stringency, further exacerbating the compliance cost.
One of the main challenges faced by cross-border digital businesses in the Asia-Pacific region is regulatory divergence. Different countries in the region have significant variations in their regulations, particularly in areas such as content, platform, data, and e-commerce. This lack of harmonisation leads to increased compliance costs for businesses operating across borders.
Furthermore, the lack of standardisation and mutual recognition in regulations adds to the compliance burden for SMEs. For example, a small tourism company in Thailand highlighted the complexities of e-signatures, which contribute to difficulties in cross-border contract execution.
Despite these challenges, the Asia-Pacific region is actively implementing digital trade provisions in preferential trade agreements. Governments in the region have taken a proactive approach in including digital trade provisions in these agreements, signalling their recognition of the importance of digital trade.
To address the high compliance costs and create a more favourable environment for cross-border digital business, it is argued that alignment with universally accepted principles, such as those of the World Trade Organization (WTO), is necessary. Enhanced participation in international rule-setting processes would also ensure that the interests of the Asia-Pacific region are well-represented. Moreover, expedited policies specifically targeting the reduction of compliance costs for small businesses are needed.
It is suggested that coordinated cooperation among member states can help mitigate compliance costs. By working together, these states can create operable frameworks that facilitate cross-border business transactions. Additionally, it is important to recognise that smaller firms benefit the most from this arrangement, as they are able to compete more effectively in the global market.
In conclusion, the Asia-Pacific region’s strategy of combining liberalisation and complex digital governance measures has led to a high compliance cost for cross-border digital business, particularly for small businesses. Regulatory divergence and the lack of standardisation further add to the compliance burden. However, active implementation of digital trade provisions in preferential trade agreements highlights a recognition of the importance of digital trade in the region. To address the challenges, alignment with universally accepted principles, enhanced international participation, and expedited policies targeting cost reduction for small businesses are necessary. Coordinated cooperation among member states and a focus on supporting smaller firms can help effectively address compliance costs.
Yasmin Ismail
During the meeting, the focus was on a database that proved to be of immense value due to its consolidation of laws and comprehensive analysis of digital trade regulations. The database was regarded as a vital resource for negotiators from developing countries and Least Developed Countries (LDCs). Yasmin, in particular, shared her own experience regarding the practical application of the database in supporting negotiators from these countries.
One of the key advantages of the database was its ability to provide country-specific regulatory information with ease. Yasmin emphasized how valuable this feature is, as it alleviates the burden of searching for regulatory information across multiple sources. The consolidated nature of the database makes it convenient for users to access relevant information efficiently.
Moreover, the database was commended for its capability to quickly provide a desk research analysis of regulatory gaps or differences. Yasmin highlighted a specific example of regulatory gap analysis conducted for Laos, underscoring how the database would facilitate such research. This feature of the database saves time and effort that would otherwise be expended on conducting extensive literature reviews or comparative analyses.
Another significant benefit of the database is its ability to reduce the time and costs associated with language translation. Yasmin shared a case involving Laos and the complexities of translating their laws. With the database, these language barriers can be circumvented, ensuring a more efficient analysis of digital trade regulations across different countries.
The overall sentiment towards the database was positive. Its practical application in supporting negotiators and facilitating research was highly valued. It was seen as a valuable tool for understanding digital trade regulations comprehensively and efficiently. The ability to access country-specific regulatory information, conduct regulatory gap analyses, and overcome language barriers were regarded as powerful features that contribute to the usefulness and effectiveness of the database.
In conclusion, the meeting highlighted the significance of the database in the realm of digital trade regulations. The consolidation of laws and in-depth analysis provided by the database simplifies the process for negotiators, researchers, and policymakers. Its positive reception among attendees further underscores the database’s importance in supporting the goals of economic growth, industry innovation, and infrastructure development.
Audience
The conference on digital trade and regulation explored various perspectives on the topic. One speaker criticised the conference for having a simplistic viewpoint and lacking nuance in their understanding of digital trade and regulation. They believed that more consultation with experts and intellectual centres is needed for a comprehensive understanding. Another speaker, who coordinates a global civil society network named Our World Is Not For Sale, expressed dismay over the lack of nuance at the conference and highlighted the importance of considering the specific circumstances of developing countries.
The balance between openness and restrictions in digital trade was a key point of discussion. The audience suggested a change in the narrative, stating that it should not simply suggest that openness is good and closeness is bad. They recommended considering each country’s individual policy objectives when determining the level of openness. The need for a nuanced approach was emphasised, as restrictions are not placed arbitrarily but are aimed at addressing the negative effects of digitalisation. The relationship between openness and restrictions was deemed complex and not straightforward.
The analysis also drew attention to the potential negative impact of harmonisation on small businesses. It was argued that harmonisation might be harmful to small businesses, as they cannot compete with larger businesses. This highlights the need to consider the impact on different stakeholders when formulating policies related to digital trade and regulation.
Furthermore, the discussion emphasised the significance of job quality and industry growth when analysing the effects of digitalisation. The audience suggested considering these factors along with other economic indicators to gain a comprehensive understanding of the impact.
In conclusion, the conference on digital trade and regulation explored multiple perspectives and raised important points regarding the need for a nuanced understanding. The speakers highlighted the importance of consulting experts, considering individual policy objectives, and analysing the impact on different stakeholders. The analysis emphasised the complex relationship between openness and restrictions in digital trade, as well as the potential negative impact of harmonisation on small businesses. Additionally, the significance of job quality and industry growth was emphasised in the context of digitalisation.
Jason McCormack
The Digital Trade Initiative, a collaborative effort between the European University Institute (EUI) and the Organization for Economic Cooperation and Development (OECD), aims to gain a comprehensive understanding of the digital trade policy environment across three regions. Since its inception in 2020, the initiative has collected data on 82 countries, reflecting a substantial data collection effort.
To facilitate access to this wealth of data, a dedicated webpage has been created, consolidating information for each of the three regions. This webpage provides access to datasets and features publications related to the project. Notably, the datasets available include the Digital STRI (Digital Services Trade Restrictiveness Index) and the RDTI (Regional Digital Trade Integration Index), which provide valuable insights on digital trade for researchers and policymakers.
Additionally, country profiles have been developed for each nation in the dataset. These profiles summarize findings, challenges, opportunities, barriers, and recommendations, making them reliable resources for policymakers and stakeholders seeking specific information on individual countries’ digital trade landscapes.
In terms of the African region, its internet penetration rate is lower compared to other regions, with only 37.1% of the population currently using the internet. However, research by the Economic Commission for Africa (ECA) indicates a strong desire among African firms and individuals to engage with the internet, suggesting significant potential for digital growth in the region.
The Regional Digital Trade Integration Index (RDTI) serves as a tool to assess Africa’s digital trade environment. With a score of 0.34, it suggests a moderately conducive environment for digital trade. It is important to note the disparities among African countries, with Egypt scoring highest at 0.56 and Mali scoring lowest at 0.22. Tailored policy approaches that promote digital trade in specific African nations are needed to address these differences.
Policy recommendations, based on modelling exercises, include liberalizing telecom licensing and easing cross-border data transfers to improve Africa’s digital trade situation. These measures reduce restrictions on data transfer, which is associated with lower exports and imports of digitally enabled services. By implementing such policies, Africa’s digital trade sector can grow, creating more economic opportunities.
In conclusion, the Digital Trade Initiative, led by the EUI and OECD, provides a valuable platform for understanding the digital trade policy landscape across three regions. With a robust dataset accessible through a dedicated webpage, policymakers and researchers gain insights into specific countries’ digital trade environments. While Africa faces challenges in terms of internet penetration, there is a strong desire to engage with the internet, laying the groundwork for digital growth. By implementing appropriate policy measures that address country-specific needs, barriers to digital trade can be reduced, fostering increased economic opportunities in this domain.
Alejandro Buvenic
Chile is actively taking part in negotiations to reduce digital trade barriers not only within Latin America but also globally. The country has already signed digital trade agreements with Singapore, New Zealand, and Korea. Recently, more countries have shown interest in joining this agreement, including China, Canada, Costa Rica, Uruguay, Peru, and the United Arab Emirates. These agreements showcase Chile’s commitment to promoting seamless and efficient digital trade practices.
An important goal for Chile is to involve small and medium-sized enterprises (SMEs) in international trade through digital channels. Recognising the potential of digitalisation for SMEs, Chile is working towards increasing their access to digital tools and platforms. By simplifying e-commerce and digital processes, Chile aims to facilitate the entry of SMEs into international markets, allowing them to participate in global trade on an equal footing with larger businesses. This initiative supports Chile’s efforts to achieve the Sustainable Development Goals related to decent work and economic growth, industry, innovation, and infrastructure, as well as reduced inequalities.
Chile’s participation in the Pacific Alliance also contributes to the harmonisation of digital trade practices among member countries. The Pacific Alliance, which aims to promote economic integration and development in the region, shares objectives with Chile in terms of promoting seamless digital trade. Together, they seek to enhance digital infrastructure, regulate and uphold standards, and ensure inclusivity and development in digital trade. By aligning their efforts, Chile and the Pacific Alliance can create a more cohesive and forward-thinking digital trade environment in the region.
In conclusion, Chile is actively working towards reducing digital trade barriers within Latin America and globally. The country has signed agreements with various nations and is making efforts to expand its digital trade network. Chile’s focus on involving SMEs in international trade and its engagement in the Pacific Alliance highlight its commitment to fostering an inclusive and efficient digital trade landscape. By implementing measures to simplify digital processes and improve digital infrastructure, Chile is paving the way for increased participation and growth in the digital economy.
Janos Ferencz
Digital trade is experiencing rapid growth, with over a quarter of all trade now being conducted digitally. The pace of digital trade has far outpaced that of non-digital trade. This is primarily due to the ease of trading services through digital networks, which has become a pillar of digital trade.
However, there has been a concerning trend towards more restrictive global regulations in recent years. Approximately two-thirds of these regulations are related to barriers that affect the interconnection between communication networks and data connectivity. These restrictions hinder the smooth flow of digital trade and limit its potential for further growth and innovation.
Furthermore, the implementation of data localisation measures has been on the rise. The Organisation for Economic Co-operation and Development (OECD) has identified over 100 data localisation measures across about 40 countries, with about half of these measures being adopted since 2015. Additionally, about two-thirds of these measures are considered restrictive. This dynamic evolution of data localisation measures poses challenges to digital trade, as it restricts the free flow of data across borders and limits the ability of digital businesses to operate globally.
Despite the challenges, there is progress being made on an international level to harmonise digital trade regulations and principles. There is a growing number of regional trade agreements that include provisions for digital trade, aiming to harmonise thinking around certain disciplines. Furthermore, the World Trade Organisation (WTO) is engaged in ongoing discussions on e-commerce. These efforts indicate a positive shift towards achieving greater consistency and coherence in digital trade regulations globally.
The adoption of digital trade reforms has the potential to bring substantial economic benefits. Implementing reforms that align with a 0.1 reduction in the digital Services Trade Restrictiveness Index (STRI) could lead to a significant increase in exports of trade overall, with a possible doubling of exports in digitally deliverable services. These reforms have the potential to boost economic growth and create more job opportunities.
Regulations are of paramount importance in digital trade, particularly in ensuring quality, safety and security. For instance, regulations provide consumer protection by guaranteeing the quality and safety of products and services. People rely on regulations to maintain trust and confidence in digital trade activities. However, it is crucial to strike a balance between regulations and the benefits of trade to avoid impeding economic growth and innovation.
Open markets play a vital role in scaling up and supporting young industries. These industries often benefit from inputs and knowledge exchange from abroad. Open markets create opportunities for innovative ideas, technologies and investments to flow across borders, contributing to the growth and development of industries.
In conclusion, governments retain full discretion in deciding which policies to adopt or not to adopt, including protectionist measures. It is essential to recognise the potential benefits of digital trade and strike a balance between regulations and facilitating trade. Efforts must continue to be made at the global level to harmonise digital trade regulations and promote an open and fair digital trading environment, allowing for sustainable economic growth and innovation.
Keywords: digital trade, global trade, digital economy, digital trade regulations, data localisation, regional trade agreements, World Trade Organisation, digital trade reforms, consumer protection, open markets, economic growth, innovation, harmonisation of regulations, digital networks, Services Trade Restrictiveness Index, job opportunities.
Speakers
AB
Alejandro Buvenic
Speech speed
152 words per minute
Speech length
1506 words
Speech time
593 secs
A
Audience
Speech speed
190 words per minute
Speech length
1530 words
Speech time
482 secs
DA
Devi Ariyani
Speech speed
156 words per minute
Speech length
1546 words
Speech time
595 secs
JF
Janos Ferencz
Speech speed
180 words per minute
Speech length
2264 words
Speech time
754 secs
JM
Jason McCormack
Speech speed
180 words per minute
Speech length
2362 words
Speech time
789 secs
M-
Moderator – Martina Ferracane
Speech speed
188 words per minute
Speech length
2830 words
Speech time
901 secs
NM
Nanno Mulder
Speech speed
147 words per minute
Speech length
1464 words
Speech time
596 secs
WA
Witada Anukoonwattaka
Speech speed
125 words per minute
Speech length
1284 words
Speech time
616 secs
YI
Yasmin Ismail
Speech speed
157 words per minute
Speech length
433 words
Speech time
166 secs
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