The rapid growth of digitalization has fundamentally altered commerce, impacting production and facilitating the movement of goods. The 2023 Asia-Pacific Trade and Investment Report (APTIR), has pointed out that although digital trade revenues of Asia and the Pacific account for a significant share of global trade, this growth is uneven, with trade concentrated in a few areas, leading to disparities across the region.
Studies show a positive relationship between digital trade and progress on the Sustainable Development Goals (SDGs). These linkages among digital trade policy and the social and economic pillars of the SDGs may appear more indirect, but they do manifest through economic channels.
Various facets of the relationship between sustainable development and digital trade are evident, such as the impact of digital trade on wealth inequality in the region, the role of the Internet in export expansion, how e-commerce facilitates small and medium-sized enterprises (SMEs), and how digital trade can help achieve the ambitious agenda behind the SDGs.
However, better digital infrastructure does not necessarily engender competition and instead requires active measures from the government to promote linkages between export superstars and domestic suppliers.
Additionally, robust regulatory frameworks on digital trade can help eliminate “monopolistic and restrictive” trade policies, contributing significantly to a more equitable distribution of wealth.
Examples of good practices
Different policy measures to establish an inclusive digital trade and e-commerce landscape have been used across the region. For example, research on internet courts in China showed how such public and digitized judicial systems benefit smaller and medium-sized firms compared to private dispute resolution mechanisms, which are highly costly. Similarly, research on the Pacific Alliance’s trade policies, particularly its binding agreements and work instruments, provided a framework to incorporate net neutrality in the promotion of equitable digital development.
Indonesia’s introduction of single submission for freight transport applications and its impact on sustainability in supply chains was another case study. This policy instrument has had significant impacts across multiple domains, such as increasing time effectiveness, reducing costs, and increasing transparency in shipping and port clearances.
Lessons learned and the way forward
There is a need to understand the specific digital trade policy instruments that promote sustainable development. It is critical to acknowledge key differences and similarities between trade and digital trade policy to strategically leverage their interlinkage to achieve the SDGs. Social development works in tandem with economic progress.
A key concern is the lack of data on cross-border e-commerce in the Asia-Pacific and Latin America regions, which hinders the implementation and evaluation of programs designed to promote the participation and productivity of small and medium enterprises (SMEs).
More concerted efforts to improve data measurement through private-public partnerships could be a possible policy intervention to address this issue. States should establish effective monitoring systems by improving the availability of economic statistics and third-party evaluations for measuring the progress and impact of SME support programs. However, given the diversity in operations of SMEs across sectors, it is essential to devise and tailor policies that cater to their specific needs and realities.
There is also a need for sharing real-world examples of successful government initiatives and SME support programs so neighboring countries can draw lessons from them. There are doubts about the long-term usefulness of stand-alone Digital Economy Agreements (DEAs) due to the lack of stringent legal provisions for possible breaches, unlike market-access free trade agreements (FTAs).
Lastly, the United States, which has played a pivotal role in advocating for an open global trade environment, gradually step back from its position, it is time to rethink the leadership that would guide the establishment of digital trade provisions in the future. This involves showcasing how digital trade rules will be established and enforced moving forward. Who will provide such public goods for digital trade is a major question facing the global economy.
Given its rapid digital-economy growth, significant market size, and increasing influence in global digital trade, should that leadership come from the Asia-Pacific region?
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Authors:
Witada Anukoonwattaka, Economic Affairs Officer, Trade Investment and Innovation Division, ESCAP
Preety Bhogal, Consultant, Trade Investment and Innovation Division, ESCAP
