Key nations and goals

The activities and goals of three key nations/regions are discussed

United States

For the US, where many advanced firms are based, national digital policy and barriers to expansion are seen as problematic. It will have economic impacts on the US and will potentially limit US global technological leadership in this area in the future.

Given this position, the US has driven agendas around digital trade. Domestically, the powerful US Trade representative (USTR) has brought digital trade into the trade agenda.

The US is also an advocate for digital trade chapters within international trade agreements. This started with the digital trade chapters in the TPP and has expanded from there.

The international focus on digital trade declined during the early Trump presidency, but has begun to grow again, for example with the signing of the USMCA which included a digital trade chapter.

With attention turning towards more direct interventions as part of the trade war, China is increasingly seen as the ultimate target of US activity in digital trade.


China has often implemented interventionist approach to national digital policy in the digital economy including internet filtering and data localization.

Political and security factors were important in such policies, especially in politically sensitive areas. But the economic objectives were also important – to develop comprehensive domestic digital sectors and use localized technologies.

China often pushes policy with strict requirements on international digital firms in exchange for market access, licences or to provide public services. These policies may include the threat of removal of access to the Chinese market, principally through the so-called “great firewall of China”

When foreign digital firms have tried to enter China, they often found these conditions for market access too stringent, or were eventually blocked in China (e.g., Google and Twitter). In other cases, firms found that policies made it difficult to use established business models and eventually withdrew (e.g. Uber and eBay)

The Chinese state has played an active role in supporting and picking winners at key points during the history of the Chinese digital sector. The impact of these policies has led to the rapid rise of Chinese digital giants such as Alibaba and Tencent.

Following their dominance in the Chinese market, Chinese digital firms are formulating plans around expansion. Large Chinese firms have also continuing to integrate across a wider range of sectors, moving into innovation such as internet of things, cloud computing, artificial intelligence, robotics, and autonomous vehicles.

Leading Chinese firm act as preferred firms and have become important architects in digital policy.

The European Union

While the politics of China enables the government to directly drive the development of digital. Similar efforts in the EU are more challenging, reflecting the more complex landscape.

In the European market, there is concerns about Europe lagging behind in digital innovation, with the growing dominance of US tech firms. To respond, the EU has become more active in formulating policy to support digital industries.

The first steps of this policy have largely been internal market liberalization efforts, to remove obstacles for digital trade between different EU member states. This is the flagship Digital Single Market (DSM) agenda, launched in 2014.

In policies such as the DSM, rules have begun to have a more strategic focus over time. This has particularly occurred with the growing power of the German-French bloc within Europe, who favour more interventionist policies.

A number of recent policies, some of which are part of the DSM, highlight this more interventionist direction. Examples include the broadly scoped General Data Protection Regulation (GDPR), pan-European Venture Capital Funds, a European public cloud, investments in high-performance computing, and policies to support the scaling-up of European start-ups.

With the trade war currently occurring, recent announcements suggest a growing scrutiny of acquisitions by US and Chinese firms of European digital start-ups.

Image credit: Opening plenary session, WTO MC11 – 11 December 2017 – WTO – CC Attibution ShareAlike