A ripe digital trade deal for the Indo-Pacific

U.S. Trade Representative Katherine Tai got off to a heavy start in her new role with a wave of appeals to her counterparts around the world. It is noteworthy that in her conversations so far with Asian partners, she has raised digital trade as an area of ​​potential future cooperation. It is a critical space where the United States can quickly engage in the Indo-Pacific region by proposing an agreement that weaves existing pacts, addresses issues related to emerging technologies, while bringing benefits to the American middle class.

Indeed, now is the time to strike a regional digital trade deal with US leaders. COVID-19 has highlighted the importance of digital tools in all areas of life, including work, education and health, but international rules governing their use are lagging behind. A regional agreement would unite a group of countries to endorse common rules and standards, including the principles of openness, inclusion, fairness, transparency and “free flow of data with confidence.” This could constitute a major shock for the corresponding slow negotiations within the World Trade Organization (WTO). And, it can put the United States back in the trade game in Asia, while examining the merits of joining the Comprehensive and Progressive Agreement on Trans-Pacific Partnership (CPTPP), albeit with some revisions and updates.

The development of a digital trade agreement for the Indo-Pacific region would have the advantage of building on the high-level digital commitments of the CPTPP, drawing on the most recent United States-Japan digital trade agreement, the Singapore-Australia and Singapore digital trade agreement. -New Zealand-Chile Digital Economy Partnership Agreement (DEPA). These agreements go beyond the CPTPP in important ways, including strengthening commitments on cross-border data flows, expanding cooperation on the interoperability of privacy regimes and developing new cybersecurity standards.

The recently signed Regional and Comprehensive Economic Partnership Agreement (RCEP) also includes a chapter on electronic commerce with provisions relating to the free flow of data and avoiding data localization requirements. However, the general self-assessment exception of “public policies” in this chapter reduces much of the value of these commitments. It also does not include a commitment to non-discriminatory treatment of digital products as found in other FTAs.

This is a disappointing result given that many RCEP members had already agreed to stricter rules on digital trade in other agreements. RCEP’s e-commerce rules largely mirror China’s approach to digital commerce, with its demands for localization of data, restrictions on cross-border data flows, and policies that favor domestic digital champions. Indeed, this Asian pact shows that in the absence of American leadership, there is a real risk of further decline in ambition in trade agreements, with potential negative spillover effects in discussions on electronic commerce at the WTO. and APEC.

As the United States develops an Indo-Pacific digital trade agreement, it should listen to the priorities, experiences and concerns of potential partners and draw inspiration from other existing models and approaches. In particular, three important elements would make a new regional digital agreement more dynamic, inclusive and beneficial for workers and citizens.

First, a regional digital trade deal could strengthen cooperation on artificial intelligence (AI) and other emerging technologies. For example, a lot of work is underway to develop ethical principles and standards in AI. Here, the recent Singapore-Australia digital trade deal provides an example of how a trade deal can support AI innovation and commerce in line with democratic standards and human rights.

Second, a regional agreement must ensure that the benefits of digital trade flow to workers and SMEs and help bridge the digital divide. DEPA provides a useful example of how this could be done, starting with a commitment to develop digital inclusion. It also sheds light on SMEs and seeks to improve the information and tools available to them. In addition, DEPA’s provisions on electronic invoicing, express shipments and interoperability of electronic payments should also facilitate the participation of SMEs. These aspects correspond closely to the goals of America’s new worker-centered trade policy.

Third, adopting a “building block” approach as in DEPA should help broaden participation beyond the list of usual suspects, including Japan, South Korea, Singapore, Australia and New Zealand. -Zeeland. This approach opens the door for new entrants to sign up to parts of the deal first, while postponing the most difficult areas until they are ready. If the United States and its close partners seriously consider promoting a model of the digital economy based on the values ​​of openness and inclusion, allow countries to join certain parties without waiting for them to be ready to do everything. is an innovative way to encourage countries to revolve around this model over time.

The Biden administration has made an impressive start in rebuilding alliances and partnerships in the Indo-Pacific region. But to demonstrate that the United States is “back”, this re-engagement will need to include a strong trade component to be taken seriously.

Greater trade and economic integration is what our Asian partners are looking for, as evidenced by the CPTPP and RCEP. Although they seem to admit that the United States cannot adopt a major trade negotiation at this time, they are looking for market opening initiatives that demonstrate a lasting commitment by the United States to the economic prosperity of the region. . Digital commerce could be the first of these initiatives, perhaps serve as a cornerstone for something bigger.

About Robert Wright

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