Facilitating trade in the Digital Age

Increasingly, anyone with an Internet connection can tap into global markets, though access is often uneven across countries thanks to tariffs and differing policies across everything from customs procedures to the availability of digital information and services. 
 
Two recent policy initiatives highlight how government policies can further facilitate access to the global marketplace and keep pace with technology: 
 

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First, in a long-overdue breakthrough for the World Trade Organization (WTO) trade ministers made a significant commitment  earlier this month in Indonesia to simplify customs procedures and facilitate the movement of goods. This trade facilitation agreement is a welcome signal that the WTO is alive and kicking and, more importantly, drives countries to embrace the digital age by publishing trade and transit information online and otherwise simplifying forms, providing transparency in rule-making, and establishing trusted shipper programs and other procedures that should smooth the physical side of the global marketplace. The deal could reduce total trade costs for shipping goods by around 15 percent in low income countries and 13 percent for upper middle income countries according to an analysis by the Organization for Economic Cooperation and Development, and will make it easier for small businesses and entrepreneurs to make sure their goods get to and from their customers and suppliers. 
 
The second is an effort by Sens. John Thune (R-S.D.) and Ron Wyden (D-Ore.) to set out negotiating principles to advance U.S. interests in an open global Internet and improved digital trade policies. The Digital Trade Act, introduced last week, emphasizes the importance of global access to digital information and Internet-enabled services to entrepreneurs and businesses of all sizes across a range of industries, noting that "more than three-quarters of the value added by the Internet is in traditional industries," according to a study by McKinsey and Company. The bill spells out a series of recommendations to curb a rise in digital protectionism around the world, including measures that enjoy strong business community support, such as "preventing barriers to the movement of electronic information across borders" and "prohibiting measures that condition market access or other commercial benefits on localization of data, infrastructure, or investment." Improving access to the global digital economy – as the Act urges U.S. negotiators to do – is critical to enabling even greater participation in trade by small businesses and entrepreneurs, who use Internet commerce and social media platforms, online financial and logistics services and other tools to bolster their reach.
 
More broadly, spreading access to the global marketplace requires appropriate tariff reductions and commitments on financial, retail, communications and shipping services while facilitating the physical movement of goods and persons. Several active forums, from the Trans-Pacific Partnership negotiations to the Trade in Services Agreement being discussed in Geneva, are grappling with how to facilitate both the digital and physical sides of trade. Success in these efforts would further bolster prospects for a more seamless global economy.
 
Promoting open, reliable and secure flows of information and Internet-enabled services will be a challenge, and there is no one-size-fits-all approach. Several of the provisions in the Digital Trade Act – for example to promote a multi-stakeholder model of Internet governance – are not, and should not be, negotiated in traditional trade agreements. Enhancing access to the digital and physical economies necessarily involves a multi-pronged approach that stretches across governments and that leads to the pursuit of appropriate objectives in appropriate forums. Importantly, such efforts should first do no harm, and U.S. businesses and negotiators must ensure that future rules further improve the kind of open digital landscape that has, until now, worked fairly well.
 
Still, these kinds of carefully-calibrated efforts have a role to play in promoting open markets in the digital age. Ultimately, the relevance of these initiatives to real life will be in the details, and will depend on how countries implement the WTO Trade Facilitation pact and operationalize the kinds of commitments contemplated by the Digital Trade Act in new trade agreements. 

Colvin is vice president for Global Trade Issues at the National Foreign Trade Council.