Digital Trade and Market Openness

Abstract

This paper is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and the arguments employed herein do not necessarily reflect the official views of OECD countries. The publication of this paper has been authorised by Ken Ash, Director of the Trade and Agriculture Directorate. The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. This document has been declassified on the responsibility of the Working Party of the Trade Committee under the OECD reference number TAD/TC/WP(2018)3/FINAL.

The OECD Digital Services Trade Restrictiveness Index

“…The rise of services in international cross-border trade is closely linked to rapid technological developments (Freund and Weinhold, 2002;2004;López-González and Ferencz, 2018;OECD, 2018). Services that traditionally required close proximity to customers can now be traded at a distance, allowing firms to reach global markets at lower costs.…”

“…Trade in digitally enabled services is affected by a complex system of rules and regulations, both international and domestic. International trade rules are anchored in World Trade Organization (WTO) rules and agreements that cover digital trade issues as well as regional trade agreements that are increasingly covering a broader range of digital measures (López González and Ferencz, 2018).…”

Approaches to market openness in the digital age

“…Firms, especially SMEs, can now more easily bring new products and services to a larger number of digitally connected customers across the globe. They can use new digital tools to overcome barriers to trade, facilitate international payments, enable global collaboration and draw on a larger pool of funding (see WTO, 2018, ITC, 2018, and Lopez-Gonzalez and Ferencz, 2018, for recent reviews of these changes).…”

“…Increasingly, one important challenge is to enable key policy objectives to be met, including those related to privacy, consumer protection and security, and to preserve and promote the significant benefits from data-enabled trade. In today's more complex trading environment, where the completion of a simple digital trade transaction rests on a series of factors that enable or support the transaction, new approaches to market openness are needed (Lopez-Gonzalez and Ferencz, 2018).…”

International agreements on cross-border data flows and international trade

“…2 As policy analysts and the business community have repeatedly pointed out, these restrictions potentially undermine the viability of international business models, complicate the coordination of international supply chains and create trade barriers for foreign service providers (e.g. Kommerskollegium 2014, López González and Ferencz 2018, Casalini and López González (2019, Ferencz (2019). On the other hand, regulatory frameworks to protect personal data, in particular those that increase international interoperability, will at the same time foster effects on cross-border transactions, enhancing consumer trust, for example in e-commerce, and providing legal clarity for firms operating with personal data in distinct jurisdictions (e.g.…”