Page 18 - THE SOUTH CHINA BUSINESS JOURNAL
P. 18
C. TODAY
The Challenge: to a low-productivity path of slower growth. The
Rising Digital ITIF study found that “a 1 point increase in a
Protectionism nation’s data restrictiveness cuts its gross trade
output 7 percent, slows its productivity 2.9 percent,
However, amid these significant opportunities for and hikes downstream prices 1.5 percent over five
American workers and companies, the outlook for years.” The result is that the economic prospects of
their ability to continue to tap overseas markets is major emerging markets will be dampened even in
uncertain. Unfortunately, many countries around areas not directly touched by digital trade.
the globe have erected barriers to digital trade, and
these barriers are proliferating. Mercantilist policies The Solution: A Digital Trade
designed to limit data flows, compel localization of Agreement
data, impede foreign firms from taking advantage
of market opportunities, and in some cases target While these challenges are formidable, the
American firms are threatening to raise new Chamber and its members are convinced that the
barriers to U.S. exporters. Left unchecked, this best defense against this trend is a good offense:
trend threatens to deprive American workers and The United States must act swiftly to strengthen
companies of the potential benefits of digital trade. international rules for digital trade. This should
include rules to guarantee the ability to move
To illustrate the extent of digital trade barriers, data across international borders, prohibit forced
the European Centre for International Political localization of data, and bar customs duties on
Economy published several years ago its Digital electronic transmissions, among other objectives.
Trade Restrictiveness Index (DTRI), which
“measures how 64 countries in the world restrict The WTO Joint Statement Initiative on
digital trade.” The index “reveals that many E-commerce is a multilateral effort to lay the
leading economies put significant restrictions on foundation for trade rules to safeguard digital trade
digital trade. These restrictions drive up costs for flows. Some 80 countries are now engaged in this
businesses as well as for consumers.” negotiation. However, this agreement is unlikely
to be completed in the near term, notably due to
This index indicates that China maintains the most the participation in the negotiations of several
restrictive digital trade policies, followed by Russia, countries that do not share the goals cited above.
India, Indonesia, Vietnam, Brazil, and Turkey. The
appearance on this list of large emerging markets While the United States must remain a leader within
of significant commercial interest to American these WTO negotiations, the Chamber believes it
business underscores the significant scope of the is important to advance a digital trade agreement
harm digital protectionism can inflict. with a coalition of like-minded countries that share
U.S. ambitions. Building on the model set out in the
Unfortunately, these digital trade barriers are digital trade chapter of the United States-Mexico-
proliferating. A recent study by the Information Canada Agreement (USMCA) and the U.S.-Japan
Technology & Innovation Foundation, How Digital Trade Agreement, the United States should
Barriers to Cross-Border Data Flows Are Spreading launch negotiations for a high-standard plurilateral
Globally, What They Cost, and How to Address digital trade agreement other economies that share
Them, found that “the number of data-localization this vision.
measures in force around the world has more than
doubled in four years. In 2017, 35 countries had The Asia-Pacific region is home to a number of
implemented 67 such barriers. Now, 62 countries economies that are already showing interest in
have imposed 144 restrictions—and dozens more such an initiative. In addition to Canada, Mexico,
are under consideration.” The experience of and Japan, the members of the CPTPP have
Chamber member companies affirms this trend already agreed to relatively strong disciplines in
and its widespread nature. this area. Several regional economies have inked a
“Digital Economy Partnership Agreement,” though
Not only does the proliferation of digital trade
barriers threaten to block the opportunities
described above, it threatens to consign economies
15 AMCHAM SOUTH CHINA
The Challenge: to a low-productivity path of slower growth. The
Rising Digital ITIF study found that “a 1 point increase in a
Protectionism nation’s data restrictiveness cuts its gross trade
output 7 percent, slows its productivity 2.9 percent,
However, amid these significant opportunities for and hikes downstream prices 1.5 percent over five
American workers and companies, the outlook for years.” The result is that the economic prospects of
their ability to continue to tap overseas markets is major emerging markets will be dampened even in
uncertain. Unfortunately, many countries around areas not directly touched by digital trade.
the globe have erected barriers to digital trade, and
these barriers are proliferating. Mercantilist policies The Solution: A Digital Trade
designed to limit data flows, compel localization of Agreement
data, impede foreign firms from taking advantage
of market opportunities, and in some cases target While these challenges are formidable, the
American firms are threatening to raise new Chamber and its members are convinced that the
barriers to U.S. exporters. Left unchecked, this best defense against this trend is a good offense:
trend threatens to deprive American workers and The United States must act swiftly to strengthen
companies of the potential benefits of digital trade. international rules for digital trade. This should
include rules to guarantee the ability to move
To illustrate the extent of digital trade barriers, data across international borders, prohibit forced
the European Centre for International Political localization of data, and bar customs duties on
Economy published several years ago its Digital electronic transmissions, among other objectives.
Trade Restrictiveness Index (DTRI), which
“measures how 64 countries in the world restrict The WTO Joint Statement Initiative on
digital trade.” The index “reveals that many E-commerce is a multilateral effort to lay the
leading economies put significant restrictions on foundation for trade rules to safeguard digital trade
digital trade. These restrictions drive up costs for flows. Some 80 countries are now engaged in this
businesses as well as for consumers.” negotiation. However, this agreement is unlikely
to be completed in the near term, notably due to
This index indicates that China maintains the most the participation in the negotiations of several
restrictive digital trade policies, followed by Russia, countries that do not share the goals cited above.
India, Indonesia, Vietnam, Brazil, and Turkey. The
appearance on this list of large emerging markets While the United States must remain a leader within
of significant commercial interest to American these WTO negotiations, the Chamber believes it
business underscores the significant scope of the is important to advance a digital trade agreement
harm digital protectionism can inflict. with a coalition of like-minded countries that share
U.S. ambitions. Building on the model set out in the
Unfortunately, these digital trade barriers are digital trade chapter of the United States-Mexico-
proliferating. A recent study by the Information Canada Agreement (USMCA) and the U.S.-Japan
Technology & Innovation Foundation, How Digital Trade Agreement, the United States should
Barriers to Cross-Border Data Flows Are Spreading launch negotiations for a high-standard plurilateral
Globally, What They Cost, and How to Address digital trade agreement other economies that share
Them, found that “the number of data-localization this vision.
measures in force around the world has more than
doubled in four years. In 2017, 35 countries had The Asia-Pacific region is home to a number of
implemented 67 such barriers. Now, 62 countries economies that are already showing interest in
have imposed 144 restrictions—and dozens more such an initiative. In addition to Canada, Mexico,
are under consideration.” The experience of and Japan, the members of the CPTPP have
Chamber member companies affirms this trend already agreed to relatively strong disciplines in
and its widespread nature. this area. Several regional economies have inked a
“Digital Economy Partnership Agreement,” though
Not only does the proliferation of digital trade
barriers threaten to block the opportunities
described above, it threatens to consign economies
15 AMCHAM SOUTH CHINA
