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Digital Trade

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Digital Trade

Uploaded by

Ramy Ahmed
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© © All Rights Reserved
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Digital Trade [ A report by the OECD]

What is digital trade?

While there is no single recognized and accepted definition of digital trade, there is a growing
consensus that it encompasses digitally-enabled transactions of trade in goods and services that
can either be digitally or physically delivered, and that involve consumers, firms, and
governments. That is, while all forms of digital trade are enabled by digital technologies, not
all digital trade is digitally delivered. For instance, digital trade also involves digitally enabled
but physically delivered trade in goods and services such as the purchase of a book through an
on-line marketplace, or booking a stay in an apartment through a matching application.

Underpinning digital trade is the movement of data. Data is not only a means of production, it
is also an asset that can itself be traded, and a means through which GVCs are organised and
services delivered. It also underpins physical trade less directly by enabling implementation of
trade facilitation. Data is also at the core of new and rapidly growing service supply models
such as cloud computing, the Internet of Things (IoT), and additive manufacturing.

How is digitalization changing trade [digital exports and imports]?

Digitalisation increases the scale, scope and speed of trade. It allows firms to bring new
products and services to a larger number of digitally-connected customers across the globe. It
also enables firms, notably smaller ones, to use new and innovative digital tools to overcome
barriers to growth, helping facilitate payments, enabling collaboration, avoiding investment in
fixed assets through the use of cloud-based services, and using alternative funding mechanisms
such as crowdfunding.

Digitalisation is also changing how we trade goods. For example, the growth of online
platforms has led to a rising number of small packages being sold across international borders.
This is giving rise to a range of issues for policy-makers, ranging from the the physical
management of parcel trade, through to the implications for risk management (such as in
relation to counterfeit goods or biosecurity standards), and revenue implications in relation to
collection of taxes and tariffs.

At the same time, new technologies and business models are changing how services are
produced and supplied, blurring already grey distinctions between goods and services and

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modes of delivery and introducing new combinations of goods and services. A smart fridge
requires market access not only for the good, but also for the embedded service. And an article
produced by 3D printing, for example, may cross a border as a design service, but becomes a
good at the noment of its consumption. Together, these issues pose new challenges for the way
international trade and investment policy is made.

Rapid technological developments also facilitate the rise of services in international cross-
border trade. Information and communication technology services form the backbone of digital
trade, providing the necessary network infrastructure and underpinning the digitisation of other
types of services. New technologies have also facilitated the rise of digitally enabled services
that are supported by a range of new services building on data-driven innovative solutions such
as cloud computing.

In the world of digitalisation, old trade issues may have new consequences – such as the
impacts of cumbersome border procedures on parcel trade, or restrictions on newly tradable
services – and new issues for trade policy are emerging, such as differing regulations among
nations in relation to data flows. Further understanding of the nature and extent of these
changes is needed to help policy makers create an environment that nurtures innovation and
promotes digital trade in goods and services.

What can policymakers do to help businesses operate globally in a digital world?

These changes are taking place at unprecedented speed. With growing interconnectedness and
greater demand for just-in-time delivery, trade needs to be faster and more reliable than ever
before.

For services, this means being able to deliver more rapidly and 'on demand', often 24/7, so that
consumers can have instant access to the services they need when they need them. For goods,
this means using digital solutions for trade facilitation, helping goods move faster across
borders.

However, there is also a growing discussion about whether there is a need to update or clarify
existing trade rules and commitments. Trade rules are traditionally predicated on identifying
whether products are goods or services and the borders they cross. But, in the digital era, these
distinctions may not always be clear cut. Firms are now increasingly able to flexibly operate

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from different locations and to bundle goods with services, making it difficult to identify the
particular trade rules that apply to specific transactions.

The OECD’s work on digital trade aims to contribute to ongoing debates by helping
policymakers better identify and respond to emerging challenges arising from digitalisation.
This includes analysis on issues from defining and measuring digital trade, through what
market openness means in the digital era, including in relation to services restrictiveness, to
the implications of specific issues – such as data flow regulation, or new technologies such as
3D printing – for trade policy. The organisation’s Going Digital Initiative in turn seeks to
develop knowledge on digital transformation across topics to build a coherent and
comprehensive policy approach to digital transformation

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