Mapping policies affecting digital trade



Simon J. Evenett | Johannes Fritz | Global Trade Alert

Digital technologies are transforming economies, social discourse, and political dynamics around the world. Commercial activity can be coordinated over much greater distances, allowing for much more fine-grained specialisation of tasks and spurring the development of cross-border supply chains. Opportunities to source from a wider range of suppliers have enhanced choice and created opportunities for entrepreneurs at home and abroad, widening the base of those gaining from international trade.

The social consequences of the spread of digital technologies have been profound too, a fact that has also influenced trade policy deliberation. Individuals and families can maintain ties much more easily than before, but some would argue at the cost of their privacy. New avenues for influencing and disrupting political campaigns have raised hard questions about the robustness of democratic processes. In many respects, these developments have been accelerated by the reactions to the COVID-19 pandemic, where digital technologies have fostered human interaction at a time when physical proximity has been strongly discouraged.

That the success of business models based on digital technologies is so uneven has inevitably linked the governance of digital technologies – at home, regionally, and globally – to national rivalries. Cross-border commerce facilitated by digital technologies has taken off while traditional trade and investment flows remains in the doldrums, further reinforcing the sense that some nations are winners and others losers from the spread of these general-purpose technologies. That a small number of large, high-profile firms are associated with these technologies combined with the perception that they operate in winner-takes-all markets motivates calls for a new round of regulation.

Unsurprisingly, then, these developments have not escaped the notice of policymakers, who seek to shape both the outcomes of such sustained and pervasive technological change as well as the organisations – both private and public sector – that are taking these developments forward (WTO 2020). With so many areas of law and regulation capable of influencing different aspects of digital technologies, government ministries and national and sub-national regulatory agencies often move at different speeds to enact and implement initiatives. It is far from evident that these initiatives have been coordinated, that much thinking beyond silos has occurred, and that policy is being grounded in the best available information.

A major problem in this respect is the lack of comprehensive accounts of the range of policies that affect the digital economy which can be meaningfully compared across jurisdictions. There are no accepted measures of digital trade policy stance, as there are in monetary policy for instance. Nor are there widely accepted outcome measures upon which to judge policy. It would be incorrect to assert that all policy towards the digital economy is being made ‘on the hoof’, or that policy deliberation is taking place in an empirical vacuum. However, when compared to the important task of macroeconomic management, policymakers seeking to shape the future course of the digital economy have little by way of qualitative and quantitative evidence to go on.

The past decade has seen industry associations,2 international organisations,3 research institutions and think tanks,4 analysts,5 and indeed some governments6 assemble pertinent information on policies affecting the digital economy and, in a few cases, analyse their consequences. However, little by way of structured comparison of policy stance can be found to inform policymaking, and this largely reflects the large upfront and recurring costs of collecting information on the many different types of what are often referred to collectively as digital trade policies.

Officials often bemoan the lack of empirical evidence to guide and prioritise decision making but they rarely reflect on why this unsatisfactory situation has come to pass. That digital trade policies implicate many areas of economic law raises the entry barrier to data collection, in particular for individual scholars. In an era when datasets can be readily downloaded, unless there is the prospect of a massive academic breakthrough, few – if any – researchers have an incentive to devote the time to collecting large datasets. The opportunity cost is simply too great.

The career incentives of officials at international organisations tend to value quick wins over undertaking multi-year investments in forensic data collection. Many governments also withhold cooperation from the few information collection initiatives that public sector international organisations try to pull off. That many governments fail to back their fine words about the importance of policy transparency with resources to assemble information on digital trade policy choice also contributes to the dearth of reliable data. There are very good reasons for the under-supply of the global public good of transparency in digital trade policy.

The Digital Trade Estimates (DTE) project of the European Centre for International Political Economy (ECIPE) and the OECD’s Digital Services Trade Restrictive Index (D-STRI) are notable exceptions although, as we argue later, their focus should be expanded to better meet the needs articulated by policymakers, civil society, and the business community. Indeed, in our view, some existing approaches to evidence collection on digital trade policies may have rushed too quickly to quantification before reflecting sufficiently on the very purpose of such information collection.

As is so often the case, the absence of a weak empirical base has not deterred trade negotiators from including provisions on electronic commerce in regional trading agreements. The Comprehensive Economic Partnership Agreement (CEPA) recently negotiated between Japan and the United Kingdom is a case in point.7 Moreover, one of the so-called Joint Statement Initiatives being negotiated among a subset of the WTO membership relates to certain aspects of public policy that implicate electronic commerce.8 Whether the provisions negotiated address the most important obstacles to digital trade is not a question that appears to faze trade negotiators.

The growing number of inter-governmental disputes over digital taxes and the like do not appear to be grounded in comprehensive assessments of what is at stake. In this respect, digital trade policymaking is probably no worse than other areas of trade policy – admittedly a weak test. Still, it is a far-cry from the gold standard of evidence-based policymaking, especially for commercial activities upon which many persons’ livelihoods increasingly depend.

The premise of this chapter is that policymaking towards the digital economy, and towards digital trade in particular, would be improved if it were better grounded in evidence. Given many governments around the world are devising and revising policies towards the digital economy, an important part of that evidence base involves structured and meaningful comparisons of relevant public policies across jurisdictions. To that end, a cross-country mapping of pertinent laws, regulations, and their implementation needs to be developed and implemented in a rigorous and sustained manner. The central purpose of this chapter is to outline what such a mapping could involve, drawing upon the strengths and weaknesses of three high-profile attempts to track relevant policies that were, by and large, devised for other purposes.  

The remainder of the chapter is organised as follows. The next section discusses why bother at all mapping policies affecting the digital economy. We argue that there are ten distinct compelling reasons, each of which can inform different aspects of policymaking. Then, in the third section, we discuss three high-profile initiatives to assemble information on policies affecting digital trade. We argue in the fourth section that attribute-based mappings will generate more policy-relevant information than the form-based mappings assembled to date. The fifth section of the chapter explains how such an attribute-based mapping could be implemented. Concluding remarks are presented in the final section of the chapter.

Mapping Policies Affecting Digital Trade

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