The Strategist

OECD: Trade barriers impede digital trade

10/09/2018 - 15:31

Digitalization has added to volume, scope and speed of international trade, significantly reduced cost of participation in it, simplified coordination of global value chains, promoted dissemination of ideas and technologies and establishment of connections between business and consumers around the world, according to the Organization of Economic Cooperation and Development (OECD) report. The authors believe that digital trade is not only services provided in the digital space, but also the entire trade in goods and services (including within the production chains), provided by digital communication channels regardless of the delivery method (physical or virtual). Share of companies involved in cross-border trade using digital tools is growing every year, but traditional statistics do not allow estimating the actual scale of such trade, the OECD notes.

CBP Photography via flickr
CBP Photography via flickr
Existing multilateral rules and agreements within the framework of the WTO (the General Agreement on Trade in Services and the General Agreement on Tariffs and Trade) touch upon some aspects of digital commerce. These issues (including, for example, electronic authentication, data protection and electronic document management) are spelled out in more detail in regional trade agreements. However, introduction of new business models resulted in emergence of more complex transactions, and put regulators in front of the need to solve new problems, the OECD says. First of all, we are talking about erasing the border between goods and services and the resulting uncertainty in application of trade rules. In the production process itself, the share of services — design, engineering, research, often electronically coordinated — is growing, and services are becoming an integral part of smart products.

Thus, effective regulation of digital commerce and market openness not only require removal of barriers to the final electronic transaction, but also affect the entire value chain, including logistics and the basic means of digital production and distribution - hardware, telecommunications, software. Regulators in different countries will also have to interact more actively with each other for consistency of actions and approaches, the OECD concludes.