The Digital Transformation and the Transformation of International Trade

The digital transformation has facilitated old modes of trade and business models and enabled the creation of entirely new ones. Digital disruption is being felt across all modes of trades: digital versions of products or services compete with physically embodied versions; and digital distribution/facilitation business models compete with traditional distribution business models. Net neutrality, digital market access, data localization and freedom of cross-border data flows, privacy, and conditions of competition are just a few of the regulatory issues raised as the digital transformation changes the way international trade is conducted. To facilitate the analysis of the role that trade agreements play or might play, this note suggests a classification of the modes in which trade is conducted as it progressively shifts into the digital or digitally-facilitated realm. We also identify the areas where resistance has been encountered, categorize the nature of the measures that have been introduced, and review the approaches taken by the major digital economy players in framing regulations for digital and digitally-enabled trade in the regional trade agreements in which they are engaged. Against this background, we draw conclusions for the prospects of a multilateral agreement to set out the rules of the road to enable inclusive growth in the knowledge-based and data-driven economy that the digital transformation is bringing into being.