2019 Intensive Trade Seminar Digital Trade Opportunities and - - PowerPoint PPT Presentation

2019 Intensive Trade Seminar Digital Trade – Opportunities and Challenges for Trade Policy Makers

Joshua P. Meltzer Senior Fellow, Brookings Institution Washington D.C.

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Global Digital Trends

• 3.7 billion people have access to the internet

– but over 50% of the world does not have internet access

• Internet access is mobile
• Entire economies are becoming digital
• Transformation in international trade

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Digital Economy and Trade Opportunities

• Global data flows raised GDP by 3.5%, or ~$2.8 trillion

in 2014 and up to $11 trillion by 2025 (McKinsey 2016)

• A 10 percent increase in internet penetration in the

exporting country leads to a 1.9% increase in export (World Bank)

• Ecommerce sales was over $25 trillion in

2015 (UNCTAD 2017) ➢ 90% B2B, 10% B2C ➢ Cross-border B2C was $189bn in 2015

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Digital Transformation of International Trade

• Platforms
• Digital Services
• Increased services value-add in

manufacturing

• Global Value Chains

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2 2 22 16 10 3 20 48 4 88 99 100 96 95 100 100 100 97 10 20 30 40 50 60 70 80 90 100 Australia Canada China Germany India Indonesia South Korea Thailand United States Offline Businesses Businesses on eBay

Trade over Digital Platforms

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Digitally-deliverable services

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Trade and Agriculture Directorate | Organisation for Economic Co-operation and Development (OECD) | www.oecd.org/tad | tad.contact@oecd.org

Data Localization Requirements

10 20 30 40 50 60 70 80 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 Nubmer of measures Prohibition Conditions - Combination Conditional - One of

Personal 60 Financial 6 Telecommunications 3 Health 3 Public 2 All data 1

• Growing in number and in complexity…
• Mainly but also

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Reasons for data localization

• Privacy
• Law Enforcement
• Cybersecurity
• Censorship
• Protectionism

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What is needed: Governing Digital Trade

• 1. A commitment to allow international data flows

and no data localization.

• 2. Appropriate Exceptions for legitimate policy
• 3. Some convergence globally on appropriate

regulatory standards » Privacy, cybersecurity, consumer protection

• 4. Interoperability mechanisms

» e.g. Privacy Shield, APEC CBPR

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• 1. Commitment to Global Data Flows

CPTPP and USMCA

• Financial services included in USMCA

WTO

• GATS

» Technologically neutral as to delivery » But need a scheduled commitment

• Annex on Telecommunications
• Understanding on Commitments in Financial

Services

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• 2. Appropriate Exceptions

CPTPP & USMCA

• Data flow commitment subject to GATS Article XIV

style exception

• CPTPP exception for financial services information

WTO

• GATS Article XIV

» Necessity test – less trade restrictive alternative?

• Prudential exception for financial services

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• 3. Convergence on global standards

Privacy

• OECD 2013
• APEC Privacy Framework

Cybersecurity

• ISO/IEC 27000 cyber and information security standards

USMCA » Must have privacy protection, and » take into account “the principles and guidelines of relevant international bodies, including the APEC Privacy Framework and the OECD Privacy Guidelines

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• 4. Interoperability Mechanisms
• Unilateral action

» e.g. GDPR ‘adequacy” EU sets standards and determines equivalence

• Data source country determines privacy

standards but conformity assessment in data destination countries » MRA e.g. Privacy Shield

• Global privacy standards but conformity

assessment in data source country » APEC CBPR