Digital Trade Booming but Barriers Pose Problems, ITC Finds
There has been huge growth in global digital trade in recent years but some countries are adopting measures that slow or halt the adoption of digital technologies, according to a recent report from the International Trade Commission. This report, the first of three on digital trade that the ITC will issue between now and 2019, provides information on markets for digital products and services, examines the global adoption of digital technologies and the importance of data flows, and describes regulatory and policy measures in key foreign markets that may impede digital trade.
According to the report, global e-commerce grew from $19.3 trillion in 2012 to $27.7 trillion in 2016. Business-to-business transactions accounted for more than 86 percent of that total, and the global B2B industry is undergoing rapid transformation as businesses replace their legacy supply chain and distribution systems with modern cloud-based platforms. At the same time, business-to-consumer e-commerce is transforming the global retail sector, with new technologies such as digital payments, blockchain, and digital signatures helping to make such transactions safer and more practical. Top B2C markets in 2015 were China ($767 billion) and the U.S. ($595 billion).
However, U.S. industry representatives report that many types of regulatory and policy measures potentially impede digital trade, including the following.
- restrictions on foreign direct investment (e.g., limitations on foreign ownership, discriminatory licensing and taxation policies, and local content requirements) and other means of market access (e.g., measures affecting customs de minimis rules, electronic payment systems, technical standards, and government procurement)
- limitations on cross-border data flows such as data localization requirements, Internet blocking, censorship, cultural regulation of digital content, and data privacy protections
- cybersecurity restrictions, particularly source code disclosure requirements and restrictions on cryptography
- regulations on Internet service providers, including those intended to protect intellectual property rights
- rules determining liability for third-party content
- legal framework for, and enforcement of, intellectual property rights
Overall, the most cited policy measure impeding digital trade was data localization, particularly given the importance of free-flowing data for digital trade. Content industry representatives reported that ineffective IPR enforcement affected them the most.