Digital trade is a broad term and should not be conceived merely as the online sale of goods and services. Digital trade should be understood as enabling innovation and the free flow of information in the digital environment.
With the increased value of data and the associated risks, governments have sought new ways to assert control over it by prescribing diverse measures that localize the data.
This kind of erecting barriers to data flows impinges directly on trade and may endanger the realization of an innovative data economy.
The World Trade Organization is a multilateral forum regulating all trade. It has embedded resilience in its norms and institutional mechanisms, and in this sense, it can play an important function in regulating digital trade. Unfortunately, the existing rules in the World Trade Organization are still in a pre-internet state. They urgently need an update.
In this context, it would be critical, amongst other things, to find working mechanisms that reconcile privacy and national security protection and the free flow of data.
We have valuable experience gathered in recent free trade agreements, especially in the new digital trade chapters of the CPTPP and the USMCA, but also in a new generation of treaties solely devoted to the digital economy, such as the Digital Economy Partnership Agreement between Chile, Singapore and New Zealand. Many of these rules can be multilateralized. While the contestation on some issues, such as privacy protection, is there, there is a lot of agreement on the norms that seek to support facilitation of electronic commerce, through a reduction of unnecessary barriers, and cater for the needs of micro-, small and medium enterprises.
What we have now is a profoundly fragmented governance framework, as most free trade agreements are either bilateral or regional. However, it is in the nature of digital trade, and in the nature of the contemporary data-driven economy, to be global. That is why the World Trade Organization can play a decisive role in this new governance landscape.
