Digital trade is a concept that captures how the internet increasingly plays an important role in cross-border trade.
A common definition of digital trade is “digitally-enabled trade in goods or services, whether digitally or physically delivered” (OECD definition).
This means that digital trade might cover a broad range of cross-border trade and data flows including:
E-commerce – where transactions and activities such as search, payment, and logistics are handled by a digital platform.
Shifts from physical to digital – Occurring across a number of goods and services (such as books, software and music)
Digital innovation – New business models operating across borders (such as cloud computing and the app economy).
Products that integrate digital technologies – Such as cars, consumer appliances, and industrial machinery.
Why is it important?
This growth of digital technologies is having important impacts on international trade.
The shift from physical to digital challenges some of the basic ideas of international trade and this is leading to debates on how digital trade aligns with existing trade rules. As more and more services are delivered online, there are debates on what this means for previous ‘market access commitments’ made by countries in trade agreements.
Digital trade is also leading to the use of new strategies that have implications for international trade. Goods have been subject to predictable trade rules, but data is not. This is leading to growth of national digital policies that are shaping trade.
Digital trade and international trade
These challenges have resulted in a push for stronger rules on digital within international trade agreements.
The US was a key initiator in bringing digital issues into international trade, pushed by demands from the US tech sector calling for a more favourable global playing field for digital.
Digital trade rules are now being promoted at a number of levels of trade, including the WTO, and in regional and bilateral forums.