Regulatory barriers make it more cumbersome and costly for firms to engage in digital trade. Evidence from the OECD Services Trade Restrictiveness Index (STRI) and the OECD Digital Services Trade Restrictiveness Index (DSTRI) demonstrate that barriers to digital trade remain high, especially in key areas that affect communications infrastructure and data connectivity across networks. Estimates suggest that a 0.05 point decrease in the DSTRI, which would reflect a significant regulatory reform, could lead to a 72.5% increase in total trade.
Regulatory environment for digital trade
The domestic regulatory environment underpinning digital trade has become increasingly restrictive, complex and fragmented, making it more difficult for consumers and businesses to seize new opportunities that digitalisation provides for international trade. However, and partly in response to this growing fragmentation, efforts towards greater international co-operation are increasing.
Key messages
Against the backdrop of growing domestic barriers to digital trade, countries are increasingly engaging in international regulatory co-operation on digital trade related issues. This includes ongoing discussions between many WTO members under the Joint Initiative on e-commerce; expanded digital trade provisions in regional trade agreements (RTAs); new Digital Economy Agreements (DEAs) that touch on new and more diverse policy issues; and growing adoption of digital trade-related instruments across different fora, including APEC, OECD and UNCITRAL. The OECD Digital Trade Inventory provides an overview of the progress being made in these discussions.
Countries are increasingly concluding broader Digital Economy Agreements (DEAs), such as that between Australia and Singapore, or the Digital Economy Partnership Agreement (DEPA) between New Zealand, Singapore, Chile, and Korea. In addition to disciplines covered in regional trade agreements, DEAs incorporate provisions on new disciplines such as artificial intelligence, digital identity, and open government data, among others. Interest in these agreements is rising, by end of 2023, there were nine such agreements, as well as ongoing discussions to expand membership in existing agreements (e.g. the DEPA).
Context
There is strong heterogeneity in domestic approaches to digital trade across regions
The OECD DSTRI covers over a hundred countries across all regions and is updated annually. It shows that African countries tend to exhibit higher levels of restrictions compared to other regions but are also some of the top reformers. In the Asia-Pacific region, barriers are also high, on average, and have been increasing in recent years. Barriers in OECD countries are the lowest, but the recent trend has been towards more tightening. In the Latin America and Caribbean region, the regulatory environment has been relatively stable over time, with signs of moderate liberalisation.
Since 2000, nearly half of all regional trade agreements contain a digital trade provision
Digital trade provisions in regional trade agreements (RTAs) capture a wide array of issues important for digital trade in goods and services. These include issues such as digital trade facilitation (e.g. paperless trading, electronic authentification), privacy and data protection, consumer protection, source code, customs duties on electronic transmissions, and cybersecurity.
