Digital provisions play a key role in Asia Pacific agreements

This mapping covers all free trade agreements (FTAs) with chapters on e-commerce or digital trade since 2000 by the main players in the region — China, South Korea, Japan, India, Australia, New Zealand, Singapore, Vietnam and Malaysia.

It also covers the mega-FTAs in the region — the Regional Comprehensive Economic Partnership, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the United States–Mexico–Canada Agreement, and the EU–Canada Comprehensive Economic and Trade Agreement (CETA) — as well as two standalone digital trade agreements, the Digital Economy Partnership Agreement (DEPA), bringing together Singapore, New Zealand and Chile and the Digital Economy Agreement (SADEA). Using the CPTPP as the baseline, digital trade provisions in these trade agreements can be grouped into four categories.

Third, three provisions protect the interests of consumers, including online consumer protection, privacy and personal information protection and protection against unsolicited commercial electronic messages. By addressing the main concerns of consumers, these provisions enhance the trust of consumers in digital services trade and boost the take-up rate of digital services.

The last category includes four provisions that preserve the regulatory autonomy of governments, such as those on cybersecurity, exceptions and cooperation. These help governments to reserve the space necessary to address various social policy objectives and ensure national security and safety requirements.

At the same time, despite these provisions helping developing countries to foster their digital services trade, implementation problems are likely. Implementing these provisions may require additional investment into hardware and software, a challenge for some developing countries. Having sufficient facilities could also be an issue. Instead, the statutory requirements on documentary formalities may need to be modified to consider new ways of contracting and approval.

The second type of provisions facilitate digital services trade by removing or attempting to minimize regulatory barriers that block or impede digital trade flow. As with earlier generations of trade agreements, it is often perceived that the primary beneficiaries of such measures will tend to be overseas services suppliers coming from the larger more developed economies.

The third type of provisions do not directly contribute to the development of digital services trade. They make indirect contributions to digital trade by fostering a trustworthy environment that eases concern among consumers. But developing countries often lack the domestic laws and regulations that would enable them to deal with many of the issues in this category.

The fourth type of provisions boost the power of governments vis-à-vis digital firms and so do not appear to be facilitative in nature. Yet, such provisions provide governments the maneuvering space necessary to keep digital services in check. This is crucial for many developing countries as the bulk of digital services trade is provided by foreign suppliers. This also explains the popularity of these provisions, with more than 70 per cent of the surveyed FTAs including at least one provision in this category.

It is partially in response to these challenges that the more recent standalone SADEA and DEPA agreements have emerged. The former introduces innovative memorandum of understanding applications as an appendix chapter to directly bring private sector proof points into the agreement, while the latter focuses almost exclusively on digital trade facilitation with a series of modular frameworks that are intended to be recrafted as digital trade channels flourish.

While both agreements challenge whether the existing multilateral trade agreement structure and process is fit-for-purpose in the emerging digital trade era, they also retain the overall traditional structure bridge to existing frameworks and processes. Both agreements also introduce a far more interesting focus on soft initiatives such as the use of regulatory sandboxes, digital identities and the enablement of artificial intelligence. As such, they raise interesting, if confronting, questions about both the viability and direction of the multilateral trade agreement process going forward.