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World Trade Report 2018

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World Trade Report 2018 D How do we prepare for the technology-induced reshaping of trade? This section examines how international trade cooperation can help governments all over the world harness digital technologies and seize the new trading opportunities they will create for firms both large and small. Section D.1 summarizes the main opportunities and challenges that arise with the expansion of digital trade. Section D.2 provides examples of the policies that governments put in place to exploit these opportunities and to address these challenges. Section D.3 then considers whether and how international cooperation can help governments exploit the gains from digital trade, cope with the challenges and at the same time achieve their public policy objectives, now and in the future. Contents 1. Main opportunities and challenges 132 2. How do governments respond? 132 3. Digital trade and international cooperation 148 4. Conclusions 193 Some key facts and findings • Digital technologies give rise to opportunities and challenges that may require the consideration of governments and the international community in areas as diverse as investment in digital infrastructure and human capital, trade policy measures and regulation. • Provisions referring explicitly to digital technologies have been included in an increasing number of regional trade agreements. The most common provisions refer to e-government, co-operation and the moratorium on customs duties on electronic transmissions. • While the WTO framework, and in particular the General Agreement on Trade in Services, is relevant for digital trade and WTO members have already taken certain steps to promote digital trade within the existing framework, members will have to consider how they want to respond to continued changes in the economy and the way we do business. WORLD TRADE REPORT 2018 1. Main opportunities and challenges need to develop a domestic regulatory framework to achieve a number of legitimate public policy objectives The discussion of domestic policies and of such as consumer protection, cybersecurity and data existing international regulation and other forms privacy in ways that are not more trade-distorting of cooperation in this section refers back to the than necessary. challenges and opportunities raised by digital trade in general (as covered in Section C) rather than Section C examined how digital technologies by specific technologies (the Internet of Things may modify comparative advantage, for instance (IoT), artificial intelligence (AI), etc.). It is organized by making it possible for firms in remote least- along the broad categories of trade regulation (i.e. developed countries (LDCs) to sell and supply by goods, services, intellectual property), as existing digital means products around the whole world trade regulation typically does not refer to specific or by making it profitable for firms in high-income innovations or technologies. countries to reshore certain activities. This raises new development opportunities and challenges. An Sections B and C discussed how digital technologies important dimension of this issue is the digital divide create new markets, modify forms of trade and between richer and poorer economies, raising the encourage the emergence of new products, and how question of how smaller, poorer countries may seize they lower trade costs and change trade patterns. the new trading opportunities. These changes and in particular the lowering of trade costs offer new opportunities to trade and to gain Section B examined how digital trade may involve from trade, and governments have a role to play in a winner-takes-all environment and raise market ensuring that firms can seize these opportunities. dominance issues (product competition becoming fiercer, the rise of platforms creating monopoly First of all, the impact of digital innovation and of positions) while section C explained how digital digital technologies on trade depends on access technologies create new opportunities for small to digital infrastructure and a workforce with firms to participate in trade. For governments, appropriate digital skills as well as on the availability important questions that arise are whether the new of efficient and low-cost digital infrastructure competition dynamics raise policy questions that they services. Governments can invest or encourage must address and whether there is a role for them in investment in digital infrastructure and digital skills, helping small firms seize the new opportunities. and can contribute to the development of digital infrastructure services. Second, governments can 2. How do governments respond? also take measures to allow digital technologies to lower trade costs, for instance by enabling the This subsection examines how governments respond faster and more reliable management of data across to the opportunities and challenges raised by digital borders through the interoperability of data exchange innovation and discusses some of the issues that may systems and harmonization of e-certificates. They can arise if they fail to coordinate their responses and use digital technologies to facilitate trade operations instead act non-cooperatively. and customs cooperation. They can also choose to take measures (such as de minimis provisions, i.e. In order to realise fully the potential benefits of the value under which shipments and parcels can digital trade, most governments have adopted digital be imported duty-free through simplified customs development strategies which involve cross-cutting procedures) when digital trade raises challenges for policy measures aimed at improving infrastructure, customs administrations, such as those related to the establishing an adequate regulatory framework, increase in the number of small parcels being sent by reducing the cost of doing business and facilitating post or courier as a result of the growing number of relevant skills development. Such measures consist purchases made online. At the same time, however, of interventions such as investing in relevant the reduction of trade costs will, in principle, lower infrastructure or improving the business environment the price of imported products relative to that of to encourage private investment in information and domestic products, possibly generating protectionist communications technology (ICT) infrastructure; pressure from domestic producers subject to import establishing a regulatory environment which is competition. favourable to digital development but which also ensures adequate levels of cybersecurity, consumer Digital technologies raise concerns relating to loss protection or data privacy; using both merchandise of privacy, consumer protection or security threats as and services trade policies to promote the digital was discussed in Section B. This chapter discusses economy and to improve their competitiveness; and how, in the context of digital trade, governments using competition and micro, small and medium-sized 132 THE FUTURE OF WORLD TRADE: HOW DIGITAL TECHNOLOGIES ARE TRANSFORMING GLOBAL COMMERCE enterprise (MSME) policies to level the playing field digital standards, and clusters and incubators for for firms and to address the new “winner takes all” digital business development. Governments also dynamics described in Section B. invest in other infrastructure areas (such as electricity supply, trade logistics, delivery, tracking and payment Governments may choose different priorities among systems) which complement the digital infrastructure. these policy measures, depending on their level of development and the extent of digitalization within In addition to the provision of reliable internet services their economies, with developing economies typically and widespread mobile phone penetration, the focusing on facilitating connectivity and adopting availability of affordable payment solutions is crucial digital technologies, while developed economies for businesses as well as for consumers to engage in pay relatively greater attention to regulatory issues commercial transactions online. To enable the growth related to competition, data protection and consumer of e-commerce, many developing countries, such as protection. Skills development and the promotion Bangladesh, India, Kenya and Tanzania, are promoting of MSMEs’ involvement in digital trade seem to be the shift towards electronic payments by investing in common concerns for both developing and developed mobile phone-based payment solutions to facilitate economies. In a number of areas, the unilateral money transfers and microfinancing services. In responses of governments to changes in trade Thailand, in order to fuel e-commerce, a government- induced by digital technologies seem to generate sponsored e-payment system called PromptPay, that negative spillovers for their trading partners, or simply creates a peer-to-peer payments system and involves higher trading costs than if they were coordinated. In all major Thai banks, has been launched. However, those areas, there may be scope for more international the availability of electronic payment systems cooperation than is already in place. alone is not enough to encourage digital trade. It is also important for governments to put in place an (a) Investment in infrastructure and human adequate regulatory framework to enhance the level capital of trust in online transactions among both businesses and consumers. Some examples of the government As highlighted in Section C, one of the key policies undertaken in this direction are discussed prerequisites
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