The OECD digital trade inventory: A focus on G7 economies

trade policy brief

The OECD digital trade inventory: A focus on G7 economies

October 2021

he Digital Trade Inventory provides an overview of the rules, standards and principles across a T range of international fora that underpin digital trade, with a view to helping countries navigate the complex and evolving digital trade landscape. eyond a repository and searchable database, the work highlights that many jurisdictions have B already made commitments on issues that matter for digital trade discussions, including in their RTAs. The Inventory shows that there is a solid basis of international instruments across a broad number of fora, upon which WTO e-commerce discussions can build, many of which are common across G7 countries.

The high participation rate of G7 countries in similar international instruments suggests a strong basis upon which to build common principles to shape the future of digital trade.

What’s the issue?

Digitalisation provides new opportunities for countries to benefit from trade, including tackling some of the consequences of COVID-19. However, the benefits of digitalisation for trade - and of trade for digitalisation are not automatic. They require a regulatory environment that enables cross-border digital transactions while allowing governments to respond to new challenges raised by digitalisation.

Important aspects of the regulatory environment that underpin digital trade in goods and services are already covered by existing multilateral rules and agreements under the World Trade Organisation (WTO). However, there is an emerging view that these rules need to be updated to fully account for issues arising in the digital era. This has begun under the Joint Statement Initiative (JSI) on e-commerce which touches on a diverse set of issues, including e-signatures and e-e-authentication, information flows, privacy, consumer protection, cybersecurity and market access.

At the same time, rules affecting digital trade are also found in a range of other fora. Regional trade agreements (RTAs), such as the United States-Mexico-Canada Trade Agreement (USMCA) and the Comprehensive and Progressive Agreement for Trans-Pacific Trade (CPTPP), increasingly include provisions related to trade in the digital era. Moreover, rules, principles and standards (hereinafter collectively called “rules”) related to digital trade are also the subject of deliberation in other

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international organisations such as the United Nations and its regional agencies, the World Customs Organisation (WCO), the OECD and other regional institutions and international standard setting bodies.

Against this backdrop, the aim of the Digital Trade Inventory is to help countries navigate the evolving environment by providing an overview of existing rules, principles and standards of importance for digital trade.

It is hoped that this transparency exercise can contribute to enabling more informed discussions on digital trade, whether at the WTO, or other international organisations, or in developing relevant domestic policies.

What does the Inventory tell us?

The topics covered in the Inventory are based on the issues that are currently being discussed in the WTO JSI. This means that the Inventory contains items that reflect a broad consensus on the areas that might be of importance for rule-making for digital trade (without prejudice to other issues also being important).

The Inventory identifies 52 instruments that have been developed across 24 different fora. These touch upon different issues, in accordance with the remit and membership of the institutions in which they are discussed. Beyond the WTO, the OECD, the International Organization for Standardisation/International

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The OECD digital trade inventory: A focus on G7 economies Figure 1. Adherence to international instruments varies widely (number of jurisdictions) JSI participants

Non-JSI participants

Paperless trading - WTO - TFA Telecommunications reference paper - WTO Telecoms Reference Paper Electronic transaction frameworks - UNCITRAL Goods market access - WTO ITA Electronic transaction frameworks - UNCITRAL MLEC Cybersecurity - Council of Europe Budapest Convention Privacy /data flows - Council of Europe Convention 108 Goods market access - Expanded WTO ITA Online platforms/competition - OECD Rec on Competition Cybersecurity - OECD Rec on Digital Security Online consumer protection - OECD Rec on Consumer Protection Open government data - OECD Rec on Public Sector Information Cybersecurity - OECD Rec on Digital Security Cryptography - OECD Guidelines for Cryptography Privacy /data flows - OECD Privacy Guidelines E-authentication and e-signatures - UNCITRAL MLES E-transactions - UN Electronic Communications Convention Privacy - APEC Privacy Framework E-transactions - ESCWA Cyber Legislation Directives Privacy /data flows - AU Malabo Convention E-transactions/consumer protection - SADC Model Law Cybersecurity - ECOWAS Directive on Fighting Cyber Crime Privacy /data flows - ECOWAS Act on Personal Data Protection E-authentication and e-signatures - ECOWAS Act on electronic transactions Privacy/data flows - Ibero-American States Data Protection Standards Privacy /data flows - ASEAN PDP Framework Privacy /data flows - APEC CBPR systems Open government data - G8 Open Data Charter Paperless trading - UN ESCAP Framework Agreement Customs procedures - ASEAN Agreement on Customs transferrable records -(2021).

UNCITRAL MLETRThe Figure shows the number of jurisdictions that have participated in the listed instruments. WTO agreements applying to Source: Nemoto Electronic and Lopez-Gonzalez Note: all WTO members, such as GATT, GATS and the TBT0 agreement,20 are excluded40from the figure. refer to Members which 60 JSI participants 80 100the 86 WTO 120 140 are currently 160 taking part 180 in the WTO JSI discussions on e-commerce. Non-JSI participants refers to other WTO Members that are not participating in these discussions.

In terms of international rules, the strongest consensus currently exists in relation to trade facilitation, telecommunications, and goods market access for ICT products, through progress made at the WTO. However, there is also wide consensus on issues related to electronic transactions, where UNCITRAL instruments have had substantial influence across a broader set of jurisdictions, both JSI and non-JSI participants (Figure 1).

Electrotechnical Commission (ISO/IEC), the United Nations Economic Commission for Europe’s Centre for Trade Facilitation and Electronic Business (UNECE/ UNCEFACT) and the United Nations Commission on International Trade Law (UNCITRAL) each provide at least 4 relevant instruments.

Figure 2. RTAs have wide-ranging coverage (number of jurisdictions) JSI participants Privacy - data protection

non-JSI participants

Category I: provisions that more than 75% of JSI pariticants have included in the RTAs

Consumer protection Spam - unsolicited commercial electronic messages Non imposition of Customs duties on electronic transmissions Paperless trading E-authentication and e-signatures E-transaction frameworks - avoiding unnecessary barriers Cybersecurity

Category II: provisions that more than or about 50% of JSI pariticants have included in the RTAs

Privacy - reference to international standards Cross-border transfer of information - cross-border data flow E-transaction - tech neutrality Access to the internet Source code

Category III: provisions that more than or about 20% of JSI pariticants have included in the RTAs

Digital products - national treatment or MFN treatment E-transaction frameworks - reference to UNCITRAL MLEC Location of computing facilities -

Category IV: provisions that are nascent (fewer than 20% of JSI pariticants have included in the RTAs)

E-transaction frameworks - UN Electronic Communications Convention Open government data Cryptography Interactive computer services 0

20

40

60

80

100

120

Source: Nemoto and Lopez-Gonzalez (2021). Note: The Figure shows the number of jurisdictions that have the listed provisions in their trade agreements ranked by descending order of JSI participants. Data on RTA provisions identified using the TAPED dataset (www.unilu.ch/taped).

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The Inventory also reveals that there is a high degree of complementarity between different international instruments which often cross-reference each other.

For example, the UN Guidelines for Consumer Protection in E-commerce cite the OECD Recommendations on Consumer Protection and trade agreements often reference tools developed by UNCITRAL, the Asia Pacific Economic Community (APEC) Cross-border privacy rules (CBPR), or the OECD Privacy Guidelines.

instruments upon which the JSI discussions can build, including in the context of facilitating participation for non-JSI members.

What does the Inventory show for G7 economies?

The Inventory highlights a significant degree of overlap in international instruments adhered to by G7 economies.

G7 members are parties to similar issues relating to trade facilitation, consumer protection, open government data, telecommunications, goods market access, cybersecurity, competition, cryptography and privacy/data flows (Figure 3). These mainly rest on instruments provided by the OECD, WTO, UNCITRAL and APEC.

RTAs have also played an important role in developing rules for digital trade. Facilitating electronic transactions - which includes specific provisions on e-transaction frameworks, e-authentication and e-signatures - is the area that most jurisdictions have included in their RTAs. That said, in terms of specific provisions, protection of personal information, consumer protection, unsolicited electronic messages (spam) and customs duties on electronic transactions are the most frequently included in RTAs, albeit with different levels of binding commitments (Figure 3).

G7 economies have also committed to many of these rules through the RTAs to which they are parties (Figure 4). More specifically, all G7 economies have included provisions in their RTAs on 14 issues, including e-authentication and e-signatures, paperless trading, cross-border transfer of information, privacy, source code and location of computer facilities.

Overall, the Inventory reveals that there is already substantial uptake of instruments on issues related to digital trade among JSI participants. At the same time, many non-JSI participants are also already in the process of undertaking reforms in some of these areas. This Inventory shows that there is a solid basis of international

Figure 3. G7 economies share common principles on many issues (number of G7 members)

Paperless trading - WTO - TFA Open government data - OECD Rec on Public Sector Information Telecommunications reference paper - WTO Telecoms Reference Paper Goods market access - WTO ITA Cybersecurity - Council of Europe Budapest Convention Goods market access - Expanded WTO ITA Online platforms/competition - OECD Rec on Competition Cybersecurity - OECD Rec on Digital Security Online consumer protection - OECD Rec on Consumer Protection Cybersecurity - OECD Rec on Digital Security Cryptography - OECD Guidelines for Cryptography Privacy /data flows - OECD Privacy Guidelines Open government data - G8 Open Data Charter Electronic transaction frameworks - UNCITRAL MLEC Privacy /data flows - Council of Europe Convention 108 Privacy - APEC Privacy Framework Privacy /data flows - APEC CBPR systems 0

1

2

Source: Based on Nemoto and Lopez-Gonzalez (2021).

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3

4

5

6

7

The OECD digital trade inventory: A focus on G7 economies Figure 4. G7 Members have committed to many principles through their RTAs Privacy - data protection Consumer protection Spam - unsolicited commercial electronic messages Non imposition of Customs duties on electronic transmissions Paperless trading E-authentication and e-signatures E-transaction frameworks - avoiding unnecessary barriers Cybersecurity Privacy - reference to international standards Cross-border transfer of information - cross-border data flow Access to the internet Source code Location of computing facilities Open government data E-transaction - tech neutrality Digital products - national treatment or MFN treatment E-transaction frameworks - reference to UNCITRAL MLEC E-transaction frameworks - UN Electronic Communications Convention Cryptography Interactive computer services 0

1

2

3

4

5

6

7

Source: Based on Nemoto and Lopez-Gonzalez (2021).

This above suggests some areas in which G7 countries already share a range of similarities in their approach to digital trade on the basis of which common principles could be identified to help shape the future of digital trade.

Further reading • Nemoto, T. and J. López González (2021), “Digital trade inventory: Rules, standards and principles”, OECD Trade Policy Papers, No. 251, OECD Publishing, Paris, https://doi.org/10.1787/9a9821e0-en.

• Database #1: Digital Trade Inventory International Instruments https://www.compareyourcountry.org/digitaltrade-inventory-international-instruments • Database #2: Digital Trade Inventory Regional Trade Agreements https://www.compareyourcountry.org/digitaltrade-inventory-regional-trade-agreements

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