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Curbing policy fragmentation in the digital economy

Published 19 July 2022

The perils of unilateral governance action in the digital domain are becoming clear. Watch this recording of our webinar on policy fragmentation in the digital realm to learn the risks of regulatory overdrive and siloed policymaking in the digital space.

Watch the webinar:

What can policymakers do to address policy fragmentation? The webinar examines the policy constraints and offers suggestions to address this challenge.

  • Simon Evenett, Founder, Global Trade Alert, and Professor of International Trade and Economic Development, University of St Gallen presented the findings of his report, co-authored with Johannes Fritz. His presentation highlighted the need for research and discussion on the rising digital divide due to its disproportionate impact on small and medium-sized firms. He emphasized that the report does not contend with the right to regulate but warns against sacrificing the benefits of digital trade for national regulatory autonomy. Regulatory overdrive by the EU and G20, Simon warned, has deepened the policy fragmentation and subsidy race that is further exacerbating siloed policymaking. The way forward could lie in broadening our understanding of the digital economy and taking cues from past negotiations such as the World Trade Organization’s Technical Barriers to Trade agreement.
  • Stephanie Honey, Director of Honey Consulting, summarized the various templates guiding and regulating digital trade policy in the region. These templates include reduced barriers in the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) to the regulations in the Regional Comprehensive Economic Partnership, the Digital Economy Partnership Agreement, and the Indo-Pacific Economic Framework. She highlighted the deep fragmentation in the digital policy space arising from this heterogeneity.
  • Javier Lopez Gonzales, Senior Trade Policy Analyst at the Organization for Economic Cooperation and Development (OECD) acknowledged the challenge of policy fragmentation but focused on identifying the commonalities of efforts across agreements and policy frameworks, to find anchoring points for policy coherence. He also stressed the need for tracking policy actions through databases such as the Digital Policy Alert and the OECD’s Services Trade Restrictiveness Index (STRI).
  • Peter Lovelock, Principal of Fair Tech Institute at Access Partnership, reiterated that fragmentation leads to increased compliance costs, lobbying, and a disproportionate impact on small and medium enterprises. These result in compromised innovation and rising protectionism. The way forward, Lovelock argued, lies in recognizing the information asymmetry that arises from fragmentation and initiating public-private partnership to address the gaps.

The session, moderated by Stephen Olson, Senior Research Fellow, Hinrich Foundation, concluded with a Q&A for the panel of experts. The panel focused on the challenges inherent in reaching an agreement on the regulations and policies governing the digital domain, be it the lack of consensus over the language and terminology or contentious issues like national security and intellectual property rights, and the differences caused by value systems underpinning regulations in the digital domain.

The discussion is based on a recent report by Simon Evenett and Johannes Fritz – Emergent digital fragmentation: The perils of unilateralism.

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