Introduction

Small and mid-sized economies are increasingly shaping global digital trade rulemaking by developing flexible and high-standard digital agreements that address emerging technological and regulatory issues faster than traditional multilateral negotiations. Initiatives such as the Digital Economy Partnership Agreement (DEPA) demonstrate how economies including Singapore, New Zealand, and Chile have used coalition-building, regulatory innovation, and open accession mechanisms to influence international norms on cross-border data flows, digital identities, artificial intelligence (AI), and electronic transactions.¹

Contextual background

Digital trade governance has expanded more rapidly than the ability of the multilateral trading system to establish comprehensive binding rules. While the World Trade Organization (WTO) continues negotiations through the Joint Statement Initiative on E-Commerce, progress has been constrained by divergent national approaches to data governance, cybersecurity, privacy, and digital sovereignty.²

As a result, small and mid-sized economies have increasingly pursued digital economy agreements that allow more flexible and faster rulemaking. DEPA, signed initially by Singapore, Chile, and New Zealand in 2020, has emerged as one of the most influential examples of this approach.¹

How small and mid-sized economies are shaping digital trade rulemaking

1. Small and mid-sized economies as digital rule innovators

Small and mid-sized economies have been able to move more quickly than larger powers because they are often highly trade-dependent, digitally integrated, and less constrained by geopolitical rivalry. Through DEPA, these economies introduced standalone digital trade governance mechanisms that extend beyond conventional e-commerce chapters in free trade agreements.¹

DEPA includes rules and cooperative frameworks covering cross-border data flows, digital identities, electronic invoicing, paperless trade, fintech cooperation, consumer trust, and emerging technologies such as AI.³ The agreement’s modular structure allows commitments to evolve over time and provides a testing ground for regulatory approaches that may later influence broader global digital trade frameworks.¹

2. Promoting interoperable and open digital governance

Rather than promoting a single regulatory model, small and mid-sized economies are encouraging interoperability between different digital governance systems. This approach is particularly important in an increasingly fragmented global environment where major economies maintain competing approaches to data governance and digital regulation.¹

DEPA’s open accession mechanism allows additional economies to join if they meet agreed standards. South Korea became the first new member in 2024, while several other economies — including Canada, Costa Rica, Peru, Thailand, the United Arab Emirates, and China — have pursued accession discussions or expressed interest in participation.¹

By designing the original institutional architecture and accession standards, small economies have gained disproportionate influence over emerging digital trade governance norms. This demonstrates how coalition-based rulemaking can amplify the international influence of economies that may have limited geopolitical weight individually.⁴

3. Influencing multilateral digital trade governance

Digital economy agreements increasingly complement and shape broader multilateral discussions. Economies such as Singapore, Australia, and Japan have also played important roles in advancing negotiations under the WTO Joint Statement Initiative on E-Commerce, which seeks to establish global baseline rules for digital trade.²

Many provisions first advanced in agreements such as DEPA — including electronic authentication, paperless trading, and digital transaction facilitation — are gradually informing wider international negotiations and regional trade agreements.³ This reflects a broader shift toward plurilateral rulemaking, where smaller coalitions develop advanced rules that may later diffuse into multilateral frameworks.

4. Strengthening economic resilience and strategic positioning

Digital trade agreements also strengthen the strategic position of small and mid-sized economies within the global economy. By establishing trusted frameworks for digital trade, these economies attract investment, expand digital services exports, and increase their importance within regional and global supply chains.⁵

For economies such as Singapore, digital rulemaking has become an important component of economic diplomacy and long-term competitiveness. Agreements such as DEPA help smaller economies position themselves as neutral and trusted regulatory hubs between larger competing technological and geopolitical blocs.⁵

Conclusion

Small and mid-sized economies are increasingly influencing global digital trade governance by acting as agile rule innovators, coalition builders, and advocates of interoperable regulatory systems. Through initiatives such as DEPA, they have demonstrated that smaller economies can shape international digital trade standards despite limited geopolitical scale. Their flexible and modular approach to digital rulemaking is becoming an increasingly important model for managing digital trade governance in a fragmented global economy.¹