Free trade agreements
APEC 2023: A useful and realistic digital agenda for the United States' host year
Published 06 June 2023
There are signs that the US is heading in the right direction on digital issues for its APEC host year. Despite the geopolitical and domestic constraints it faces, the US should think not only about outcomes that can realistically be achieved but also about what digital policy workstreams and initiatives it can set in motion for the future.
This article was originally published by the National Bureau of Asian Research, with support from the Hinrich Foundation.
The US State Department has highlighted three broad policy priorities—interconnection, innovation, and inclusion—to guide the United States during its year as host and chair of the Asia-Pacific Economic Cooperation (APEC). The Biden administration, however, has not provided high-level direction for exactly what it hopes to achieve. Thankfully, this has not stopped the United States’ highly capable economic policy officials from laying the groundwork to make its APEC host year a success. The first APEC Senior Officials’ Meeting (SOM) in Palm Springs included productive digital policy discussions. The United States should build on this momentum at SOM 2 and 3, the trade ministers meeting, and other meetings to push for a pragmatic, yet realistic, digital agenda that includes electronic invoices (e-invoices); electronic labels (e-labels); an Asia-Pacific regional data commons via data-sharing models, especially for health data; action on improving digital skills for the workforce; and cybersecurity for critical infrastructure and government services, among other measures.
In looking ahead, the United States should be guided by a look back at APEC’s history on digital policies and the policy context of past US host years in 1993 and 2011. In 1993, the global Internet, as we know it, was in its infancy. The 1993 Leaders’ Declaration is a snapshot—it mentions advances in telecommunications and economic interdependence, but not digital or data. In 2011, digital policies were front and central to both APEC and broader US trade policy in the Asia-Pacific with the launch of the APEC Cross-Border Privacy Rules (CBPR) System and the Trans-Pacific Partnership’s chapter on e-commerce. Meanwhile, APEC’s digital policy agenda has evolved over time, with the last major change being the adoption of the APEC Internet and Digital Economy Roadmap. The question is whether the Biden administration can seize the opportunity as host to leave its mark on the APEC digital agenda for the next several years.
Understanding what can be achieved in APEC
No one is expecting the United States to launch a major new digital economy initiative at APEC. The geopolitical battle between the United States and China over technology means that intra-APEC politics and the organization’s consensus-based approach would not allow it. Furthermore, the Biden administration is reluctant to do anything ambitious internationally, given its deferential regard to congressional debates over domestic data privacy, artificial intelligence (AI), and other digital issues. The administration is also tentatively defining its own approach to international digital and tech engagement, such as the Australia-India-Japan-US Quadrilateral Security Dialogue (commonly known as the Quad), quantum-computing agreements (e.g., the Tokyo Statement on Quantum Cooperation), the US-EU Trade and Technology Council, and the Indo-Pacific Economic Framework. But it remains unclear what substance will come from these initiatives and whether they will survive in the long term.
However, these factors—geopolitics, domestic debates, and a new approach to international trade and technology issues—do not mean that the United States cannot pursue a productive and valuable APEC digital agenda. Such an agenda is still workable as long as US plans are based on a realistic understanding of APEC.
The forum plays a useful—and understated—role in identifying digital and economic issues that hold potential promise for progress in the long term. Success at APEC requires officials to look past the sometimes frustratingly slow pace of progress and the inevitable impact of geopolitics with China and Russia. However, by working slowly and steadily, officials can use discussions to build consensus among members that eventually could become the foundation for important outcomes inside and outside of APEC. As Kurt Tong lays out, APEC has served as a policy sandbox that generates globally significant outcomes, including the World Trade Organization (WTO) Information Technology Agreement and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
With this in mind, the United States should think not only about outcomes that can realistically be achieved this year, but also about what digital policy workstreams and initiatives it can set in motion for the future. Given the policy and political conflict between China/Russia and key APEC members (namely Australia, Japan, and the United States, among others), the priority is identifying issues that can walk the tightrope in terms of getting consensus approval from APEC members. Below is a set of policy ideas that the United States could promote in meetings held in parallel to APEC. The options vary along a spectrum—from lower ambition but more achievable to higher ambition but more challenging to find consensus.
Options for advancing digital policy objectives in APEC
Electronic invoicing and labeling. E-invoices and e-labels (replacing the small, barely legible physical labels on computers and other electrical goods) stand out as APEC-ready initiatives because they are foundational to the digital economy and already used in key member economies. Use of e-labels exploded during the Covid-19 pandemic with the broader adoption of QR codes. Meanwhile, 90% of the 550 billion invoices produced globally each year are still processed manually (instead of digitally), which is both inefficient and costly. Two APEC events on e-labels in which I participated, as well as accompanying reports, show how e-labels support regulators, trade, and innovation in information technology, medical, and other devices. Likewise, reports from both myself and APEC detail the use and benefits of e-invoices. However, as more countries consider e-labels and e-invoices, there is the risk that they could adopt overly complicated and conflicting approaches. APEC members need to develop common standards and best practices for both issues, which is exactly the type of work that APEC is good at.
Health data sharing. The United States should also push for greater health data sharing in APEC. Health data and research remain a priority in the aftermath of the Covid-19 pandemic. However, many countries focus disproportionately on enacting protections and restrictions and not enough on providing legal pathways for reasonable, responsible, and ethical health data sharing across countries. Restricting the transfer of health and genomic data inhibits international medical research. Global clinical trials and the sharing of data are critical to driving health research, and international researchers are calling for policymakers to develop a code of conduct. The United States should convene a multistakeholder event to discuss best practices and case studies on how to create and support international frameworks for sharing health data. Even progress among a subgroup of APEC members on this issue would be a major accomplishment.
A regional data commons. Beyond health, the United States should work to build an Asia-Pacific regional data commons via data-sharing models, such as data consortiums, sector-specific data portability policies, and data trusts. Data-sharing models use formalized agreements to break down silos and aggregate data to create more data available for use while protecting sensitive or confidential information. However, both public and private actors face legal, social, and technical barriers to data sharing. Overly restrictive privacy laws and the lack of technical standards hinder sector-specific data sharing in fields like education, eroding trust and creating data silos. This workstream could discuss the costs and benefits of different data-sharing models and ways to create and support them, such as via legislation that permits data sharing for socially beneficial purposes, the establishment of national data foundations to facilitate data sharing, and expanded opportunities for data altruism.
Digital skills. The United States should build on APEC’s workstream to improve the digital skills of workforces in APEC countries. More needs to be done to build a pipeline of digitally skilled workers to meet ever-growing demand. APEC’s 2021 report analyzing and measuring gaps in digital skills, along with the development of a digital-readiness checklist, provides a solid foundation to achieve the APEC Roadmap to Closing the Digital Skills Gap by 2030. However, to reach these goals, the United States needs to shift the focus from analysis to action in terms of identifying and sharing best practices to close the digital skills gap. For example, from a US perspective, the Information Technology and Innovation Foundation’s report “Assessing the State of Digital Skills in the U.S. Economy” includes several specific recommendations that cover policies at the high school, charter school, and university levels, as well as federal investment in workforce training and reskilling.
Cybersecurity. The United States should hold discussions on best practices and policies to improve cybersecurity for critical infrastructure and government services. All countries are concerned about the impact of cyberattacks against these two critical targets, but some have responded by enacting policies that unnecessarily undermine digital trade and cybersecurity, such as in China, Europe, and South Korea. There is no one way to fully ensure cybersecurity. Given this reality, US government agencies such as the National Institute for Standards and Technology (NIST) and the Cybersecurity and Infrastructure Security Agency should engage their counterparts on best practices and existing and new policies, including through the NIST Cybersecurity Framework and the Biden administration’s steps to increase cybersecurity for critical infrastructure. Even though China is a source for many cyberattacks, the United States will stand a better chance of building consensus if this issue is pragmatically focused (such as on public-private information sharing and the use of technical standards) and framed at a broad level rather than being focused on attribution.
Specifically, the United States should leverage its public-private expertise on developing and setting technical standards to hold discussions with standards-making bodies and related government agencies on the development and implementation of international standards (and certifications) for data, cybersecurity, AI, cloud services, and other new and emerging technologies. APEC’s Sub-Committee on Standards and Conformance has toiled away for years, touching on pressing issues like standards for e-vehicles, low-carbon hydrogen, and climate change, but it needs clearer direction and engagement on other emerging technologies. Technical standards are another tool, alongside laws and regulations, to manage new and emerging technologies. Yet many Asia-Pacific countries do not use them as much as they could. Greater use of international standards (as opposed to country-specific ones) would support trade, innovation, and regulatory outcomes. The United States could leverage NIST’s Cybersecurity Framework and AI Risk Management Framework as exemplars of the kinds of standards it hopes to advance through APEC.
Pathfinder initiatives. At the harder end of the spectrum of ideas, the United States should keep pushing for more APEC members to join digital trade–related pathfinder initiatives. Pathfinder initiatives are a tool for subgroups of members to work together to develop and build support for new initiatives and can lead to major outcomes. For example, the APEC Cross Border Privacy Rules (CBPR) started as a pathfinder initiative. The United States should again push for more members to join the pathfinder on a permanent customs duty moratorium on electronic transmission (i.e., digital duties), which is currently supported by thirteen member economies. This initiative is particularly important because the WTO’s global moratorium on digital duties faces it toughest path to renewal at the organization’s next ministerial meeting. Likewise, the United States needs to increase support for the pathfinder on building blocks for facilitating digital trade, which is currently supported by 11 member economies.
Cross-border privacy rules. Finally, the United States should continue to host meetings on the Global CBPR initiative on the margins of the APEC meetings. Many members are part of (or interested in joining) the Global CBPR, and APEC meetings bring many of these officials together. The United States took CBPR out of APEC to make it a global initiative in part due to China’s and Russia’s efforts to block the reform and growth of privacy rules. As China is still doing everything it can within APEC to undermine the initiative, the United States needs to continue to actively build global momentum.
There are signs that the United States is heading in the right direction on digital issues for its host year. Useful discussions on these issues occurred at SOM 1 in Palm Springs, such as on digital trade, e-labeling, and principles for cloud computing. The United States is planning a “Digital Month” for SOM 3 in Seattle, including discussions at the ministerial level. However, the United States does not have much time to propose a detailed and realistic agenda, arrange meetings between relevant government and other stakeholders, and sow and harvest ideas before APEC leaders meet in November. US officials will need to navigate the perils and pitfalls of geopolitics and domestic politics to advance an APEC digital agenda that takes a few more steps toward building an integrated and prosperous digital economy in the Asia-Pacific.
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