This is a disappointing result, as many RCEP members had already agreed on stricter rules on digital trade in other agreements. RCEP`s rules for e-commerce largely reflect China`s approach to digital commerce, with its data localization demands, restrictions on cross-border data flow, and policies favoring national digital champions. Indeed, the Asian Pact underscores that in the absence of US leadership, there is a real risk of further reducing ambitions in trade agreements, with potential negative spillovers in e-commerce discussions at the WTO and APEC. The recently signed Regional and Comprehensive Economic Partnership Agreement (RCEP) also includes a chapter on e-commerce with provisions on the free flow of data and the avoidance of data localisation requirements. However, the general ”public policy” self-condemnation exception in this chapter reduces much of the value of these obligations. Nor does it contain an obligation to treat digital products in a non-discriminatory manner, as in other free trade agreements. In fact, the time has come to strike a regional agreement on digital trade with U.S. leaders. COVID-19 has highlighted the importance of digital tools in all areas of life, including work, education and health, but international rules on their use have lagged behind. A regional agreement would bring together a group of countries to support common norms and standards, including the principles of openness, inclusion, fairness, transparency and ”data-free flow with confidence”. This could be a major shock to the corresponding slow negotiations in the World Trade Organization (WTO). And it can bring the U.S. back into the trade game in Asia while considering the merits of reinstating the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), albeit with some revisions and updates.
The Biden administration has made an impressive start in rebuilding alliances and partnerships in the Indo-Pacific region. But to show that the U.S. is ”back,” this retositive commitment must include a strong trade component if it is to be taken seriously. Developing a digital trade agreement for the Indo-Pacific region would have the advantage of building on the CPTPP`s high-quality digital commitments, building on the more recent U.S.-Japan Digital Trade Agreement, singapore-Australia Digital Trade Agreement, and Singapore-New Zealand-Chile Partnership Agreement (DEPA). These agreements go beyond the CPTPP in important ways, including strengthening obligations on transborder data flows, expanding cooperation on the interoperability of data protection rules, and developing new cybersecurity standards. Broadening trade and economic integration is what our Asian partners are striving to achieve, as shown in the CPTPP and RCEP. While they appear to accept that the U.S. cannot currently enter into major trade negotiations, they are looking for market-opening initiatives that demonstrate a lasting U.S. commitment to the region`s economic prosperity. Digital commerce could be the first of these initiatives and perhaps serve as a cornerstone for something bigger. Secondly, a regional agreement must ensure that the benefits of digital trade benefit workers and SMEs and contribute to bridging the digital divide.
DEPA provides a useful example of how this could happen, starting with the commitment to expand digital inclusion. It also focuses on SMEs and seeks to improve the information and tools at their disposal. In addition, the provisions of the DEPA on electronic invoicing, direct mail and interoperability of electronic payments should also facilitate the participation of SMEs. These aspects are closely aligned with the objectives of the new US worker-centred trade policy. Third, the adoption of a ”modular” approach, as in the case of DEPA, should help broaden participation beyond the list of usual suspects, including Japan, South Korea, Singapore, Australia and New Zealand. This approach opens the door for new entrants to sign parts of the agreement in the first place, while moving the most difficult areas until they are ready. If the United States and its close partners are serious about promoting a digital economy model based on the values of openness and inclusion, this is an innovative way to encourage countries to be attracted to this model over time by allowing countries to join certain parties without delay. until they are ready to engage in anything.
U.S. Trade Representative Katherine Tai began her new role with a wave of appeals to her counterparts around the world. It should be noted that in his previous discussions with Asian partners, he has addressed digital trade as an area of potential future cooperation. This is a critical area where the United States can quickly engage in the Indo-Pacific region by proposing an agreement that links existing pacts, addresses issues related to new technologies, while bringing benefits to the American middle class. As the United States develops an Indo-Pacific agreement on digital trade, it should listen to the priorities, experiences, and concerns of potential partners, building on other existing models and approaches. In particular, three important elements would make a new regional digital agreement more dynamic, inclusive and beneficial for workers and citizens. First, a regional agreement on digital trade could strengthen cooperation on artificial intelligence (AI) and other emerging technologies. For example, there is a lot of work to develop ethical principles and standards for AI. Here, the recent digital trade agreement between Singapore and Australia is an example of how a trade agreement can support AI innovation and trade in line with democratic standards and human rights. .