Surfing the digital wave: Developing enabling rules for digital trade

by | May 21, 2019 | Trade Working Blog

Remove

Surfing the digital wave

Digital technology is transforming everything about the way that we live, work and do business.  Trade is no exception.  But how to “surf the digital wave” successfully, rather than getting swept up in a digital tsunami, is challenging.   New Zealand is involved in two important new negotiations trying to develop trade-friendly digital rules to benefit Kiwi businesses and consumers.

We’re all digital now

“Digital trade” is about far more than simply exports of software or videogames: it takes in goods trade – think exports of milk to China – exported via large e-commerce platforms like Amazon and Alibaba, streaming services like Netflix, internet-based services like logistics or accounting, and even cloud computing.   Data flows – which underpin all digital trade – are now as crucial to the global economy as electricity or labour. 

New rules are needed to realise the promise of inclusive growth

Digital trade holds huge promise, including for groups that have struggled to succeed in traditional trade – it gives instant, low-cost, global reach to small businesses (which make up the bulk of the New Zealand business community), women entrepreneurs, Maori and regional communities which are otherwise confronted with challenges of distance, scale and cost.

However, technology and disruptive business models are outstripping regulation.   Existing global trade rules were agreed when the internet was in its infancy.  Many of those rules are not a comfortable fit for the digital age, especially for frontier technologies such as artificial intelligence, cloud computing and blockchain; e-commerce is straining existing infrastructure; and new technologies raise questions around governance, including how to safeguard privacy, consumer protection and cybersecurity in a trade-friendly way.  Countries are increasingly imposing restrictions on data flows, sometimes with legitimate objectives, but not always in a way that minimises negative impacts on trade – and sometimes for outright protectionist reasons.

“The new global economic reality is digital.  We need to move beyond being merely a cork on the ocean, and instead try to shape the optimal trade environment for Kiwi businesses.” 

Governments have turned to a patchwork of trade agreements to regulate aspects of digital trade.   The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), of which New Zealand is a founder, represents the high-water mark for trade-friendly rules, at least for the 11 participating countries.  But there is also a strong case for coordinated global policymaking in this area – particularly in this modern world of global value chains  Fragmented and overly-restrictive approaches risk creating a complex new regulatory “digital noodle bowl” for business.

Catching the wave: new negotiations towards international rules underway

It is accordingly very positive that New Zealand is taking part in two negotiations just getting underway to try to develop optimal cross-cutting digital trade rules.  

First, New Zealand and 76 other WTO members, representing a sizeable majority of the world’s digital economy players, have launched negotiations this year on the trade-related aspects of e-commerce.  A first round of talks took place in March and the second was held last week.   There are some very big issues that need to be resolved – notably around cross-border data flows, where some of the largest actors in the digital space, including the US, the EU and China, have pretty divergent approaches, and another (India) has yet to join the negotiations.   The process is likely to be a lengthy and challenging one.

More immediately, reflecting New Zealand’s long tradition of nimble, creative and visionary trade policy approaches, Minister of Trade and Economic Growth David Parker, along with his Singaporean and Chilean counterparts over the past weekend announced the launch of three-way negotiations on a new “Digital Economy Partnership Agreement”.    The DEPA process will seek to deepen and strengthen cooperation in digital areas, establish new trade rules and identify best practices for the digital age.   The outcome could eventually serve as a pathfinder to broader regional or global rules.

The new global economic reality is digital.   We need to move beyond being merely a cork on the ocean, and instead try to shape the optimal trade environment for Kiwi businesses.  Leveraging the full benefits of the digital age is fundamental to our sustained prosperity.  These two new negotiations are accordingly to be warmly welcomed. 

NZIBF Associate Director Stephanie Honey shares on digital trade.

This post was prepared by NZIBF Associate Director Stephanie Honey.

REGISTER WITH TRADE WORKS

Register to stay up to date with latest news, as well as saving and discussing articles you’re interested in.

 

Remove

 

Latest News

NZIBF 2022 Chair Report

ANNUAL GENERAL MEETING 2022 CHAIR’S REPORT I am pleased to present my second report on the activities and achievements of the NZ International Business Forum (NZIBF) for 2022-23, our fifteenth year of operations.  At the outset I would like to thank Members for...

NZ BUSINESS LEADERS AT APEC 2022

New Zealand business will be represented at the APEC Leaders’ Week in Bangkok, commencing 13 November, by members of the APEC Business Advisory Council (ABAC). New Zealand’s three members – Rachel Taulelei, Malcolm Johns and Anna Curzon – supported by Stephen Jacobi...

Submission to MFAT for CPTPP Review

30 September 2022 Phil Mellor Economic Division, Ministry of Foreign Affairs and Trade, Wellington (By email) Dear Phil, Thank you for your email of 1 September, seeking our comments on the three year review of the Comprehensive and Progressive Agreement for Trans...

WHAT’S IN A NAME?

The now widespread use of the term “Indo Pacific” to describe the region to which New Zealand belongs brings a risk of geographical confusion. When did the “Asia Pacific” become the Indo Pacific?   For thirty years or more New Zealand has sought to enhance...

NZ Herald: Turbulence in global trade

Amidst the political topsy turvy of recent weeks came the news that the Government has refreshed its Trade Recovery Strategy.  That’s good news because, for exporters and the global economy as a whole, it’s tough out there. The pandemic is by no means over, there...

Address to World Affairs Forum, 22 August 2022

ADDRESS TO THE WORLD AFFAIRS FORUM AUCKLAND, 22 AUGUST 2022 STEPHEN JACOBI EXECUTIVE DIRECTOR NZ INTERNATIONAL BUSINESS FORUM TURBULENCE IN GLOBAL TRADE Thanks to Greg Thwaite for inviting me to speak to you this evening. It’s good to be back in the habit of meeting...

Trade and Climate Change: State of Play

TRADE AND CLIMATE CHANGE: STATE OF PLAY. A discussion paper prepared for the NZIBF by Adrian Macey, June 2022. Download here. Update: NZ-EU FTA The NZ-EU FTA has been finalised.  Article X.6 of the  trade and sustainable development chapter is on trade and...