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Digital trade

Emergent digital fragmentation: The perils of unilateralism


Published 28 June 2022

The perils of unilateral governance action are becoming clearer. Policymakers must intensify efforts to develop shared understandings on sound principles to nurture their economies’ digital sectors. Regional trade agreements and digital economy agreements can offer hope in preventing fragmentation of the digital domain.

Policymakers are flying blind as they shape and nurture the digital domain. No official institution has a global mandate to track policy intervention in the digital sphere. This information gap is a recipe for poor public decision-making as policy incoherence at home co-exists with international regulatory divergence. Heavy handed regulations stifle commercial initiative, hamper deployment of digital technologies, and limit the contributions to national employment and economic growth. A fragmented internet and global digital economy denies users' choice, diminishes the incentives for innovation, and exacerbates trade tensions between governments.

This 29th report by Global Trade Alert adopts a comprehensive view of the policies affecting the digital domain and their cross-border repercussions. Drawing upon two extensive inventories of public policy intervention, the Digital Policy Alert and Global Trade Alert, this report delineates the global policy landscape towards the digital domain with a focus on G20 nations and members of the European Union.

To avert the negative consequences of regulatory interventions, worthwhile efforts to negotiate a plurilateral accord on e-commerce need to be wrapped up and a more ambitious work programme must be launched at the WTO. Bilateral and regional initiatives to align policy and regulation (such as the Indo-Pacific Economic Framework), as well as the negotiation of more digital trade chapters in trade agreements, are useful stepping stones to counter emergent digital fragmentation.

Learn the insights of the 29th Global Trade Alert report from Johannes Fritz, CEO of the St Gallen Endowment for Prosperity through Trade, in this interview:

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Simon J. Evenett is the Professor of International Trade and Economic Development, University of St Gallen, and Founder, Global Trade Alert.

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Johannes Fritz is the CEO of the St Gallen Endowment for Prosperity through Trade, a Swiss non-profit and the institutional home of the Global Trade Alert and the Digital Policy Alert initiatives.

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