The rapid acceleration of digital transformation has a profound impact on trade in services, making it easier for traditional services to be traded across borders, as well as enabling the emergence of new services that create value from data. However, existing and emerging trade barriers may hinder innovation and create obstacles to the movement of digitally enabled services across borders.
The OECD Digital Services Trade Restrictiveness Index (Digital STRI) is a new tool that identifies, catalogues and quantifies cross-cutting barriers that affect trade in digitally enabled services across 44 countries, covering OECD members and key partner countries (Ferencz, 2019). Its objective is to help policy makers identify regulatory bottlenecks and design policies that foster more diversified and competitive markets for digital trade. The Digital STRI indices for 2018 range between 0.04 and 0.48, (1.0 indicates full restriction), with an average of 0.18 across all countries. There are 29 countries below and 15 countries above the average.
Breaking down the Digital STRIs for 2018 into five policy areas reveals a diverse and complex regulatory environment for digital trade across countries. The results show that challenges remain, especially in relation to access to communications infrastructure and movement of information across networks. Additional challenges relate to measures that affect all types of electronic transactions such as differing standards for electronic contracts and payments. Other impediments such as the obligation to establish a local presence before engaging in digital trade are also common across countries.
Comparing the index over time shows how the global regulatory environment governing digital trade has developed in recent years. While the regulatory environment has remained stable in a majority of countries, those with changes have generally tightened the regulatory environment for digital trade. Compared to 2014, the first data point in the Digital STRI, ten countries have higher index values in 2018, and only three countries have lower values.
Indeed, in this period, close to 80% of the changes captured in the digital STRI over this period were trade restrictive. Looked at across the years, the number of restrictive policy changes has been relatively stable, whereas the extent of liberalisation has gradually decreased. Policy changes involving tightening are diverse in nature, but tend to concentrate around measures related to infrastructure and connectivity, such as a lack of pro-competitive regulation on interconnection measures and increased limitations on cross-border data flows and data localisation. Liberalisation and pro-competitive reforms in key services sectors underpinning the digital transformation (e.g. telecommunications) also help to substantially reduce trade costs for business services (OECD, 2017).
