data protection

Digital Trade in the Asia-Pacific: 8 Issues for 2021 and Beyond

Digital Trade in the Asia-Pacific: 8 Issues for 2021 and Beyond

In the earliest days, the digital economy flourished with extremely limited regulatory oversight. While this might sound like an ideal environment for companies, most prefer to operate within a set of clearly defined basic rules. The alternative can be sudden and unanticipated regulatory and legal changes that can upend business models overnight. As the portions of the economy driven by digital technology have continued to expand and as digital connectivity has increased, governments have increasingly been grappling with the appropriate ways to allow digital trade to grow while restraining harms that might flow to consumers and businesses. Effective management of the regulatory and policy environment to facilitate digital trade will become one of the most important aspects of trade policy in 2021 and beyond. The Covid-19 pandemic and associated lockdowns and trade disruption have up-ended many longstanding business models. Firms are rapidly shifting to develop or expand digital capabilities to manage highly altered supply and demand pressures. The adjustment to digital tools applies to both large and small firms and has increasingly filtered to include citizens around the globe. An online presence can make the difference for companies between survival and extinction. Despite the growing importance of digital trade, the ability of governments to tackle a range of issues of relevance to managing the online environment still lags behind the speed of innovation for firms. Domestic-level regulatory and legal adjustments to better accommodate digital trade can be complicated. Negotiations between governments to ensure greater consistency in policy frameworks are often time-consuming to complete. By the time policy settings adjust, the commercial environment could appear quite different. Headed into 2021 and beyond, there are at least eight topics that are likely to be on the radar for government officials working on digital trade. The Asian Trade Centre, with generous support from the Hinrich Foundation, has launched a series of papers, Asia in the Digital Economy, to more carefully examine new and emerging issues in digital trade in 2021.

Taking Data Seriously

These individual pressures have to be balanced with the needs of companies.  To effectively scale, firms are increasingly interested in building infrastructure that does not always match geographic boundaries of countries.  Citizen data and information of all sorts can be moved across borders and firms generally desire more movement rather than less.  Businesses have strong reputational reasons for wanting to protect customer information.  Governments, of course, are deeply concerned about protecting the rights of their own citizens and the security of their countries.  Officials have to balance the sometimes competing demands of business and consumer privacy or business and national security issues.  Toss into this volatile mix rapidly changing technology and a legal structure that moves on a much slower timescale and it becomes clear why rules on managing data flows in Asia has started to fragment. 

Digital Trade and E-Commerce Policies in Northeast Asia

Overall, the review of policy at the domestic level shows that governments have not yet figured out the best approach for creating supportive and enabling frameworks for digital trade and e-commerce.  To date, much of the official response has been fragmented between ministries and agencies, with little coordination. Digital trade is unlike many other sectors—it cuts across an increasingly wide swath of the economy and regulatory policies in one area often has knock-on or unintended consequences in other areas. It is also rapidly evolving, which is making it difficult for government officials to address.  If governments are too far out in front, too prescriptive or too forward leaning, they risk cutting off new sources of innovation and growth.  They may unintentionally box in specific technologies or platforms. Yet it can be very difficult to think about regulating for outcomes, since it requires bureaucrats to have a visionary sense of the future that few individuals are likely to have.  Creating digital economy policies at the domestic level, in any case, is probably not the best or most effective way to create sensible regulations.  The digital economy does not recognize national boundaries.  It does not logically stop at a customs border. Hence, the more efficient and effective way to manage digital policies is at the regional or international level.