The foundational rules of the global trading system, overseen by the WTO, predate the rise in popularity and importance of the internet and subsequent digital technologies that have made full use of it (e.g., smart phones and their applications).1 To ensure coverage of new technologies and services and, more importantly, policies that enable cross-border flows of those technologies and services, a number of countries have signed bilateral or regional digital trade agreements that complement existing rules in recent years.
The earliest and most prominent of such agreements is the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The CPTPP has a number of commitments on digital trade (“Electronic commerce” in the text), including prohibitions on data localization and protections for data movement, mandated disclosure of source code, and tariffs on digital goods and services. While the CPTPP covers a wide range of digital services, it falls short of being a model agreement as its digital trade commitments do not extend to digital financial services. The CPTPP does, however, provide some market access commitments for financial services, and includes protections on the “transfer of information in electronic or other form,”2 though there are some limitations on the applicability on this (Gallaher et al., 2020).
The United States-Mexico-Canada Agreement (USMCA) builds upon the CPTPP and goes further in expanding commitments for digital financial services. While the United States is not a signatory to the CPTPP, it has incorporated similar digital trade provisions into the USMCA’s financial services and digital trade chapters, but with some important distinctions. For instance, the USMCA includes financial services in its commitments on data flows.3 Further, it guarantees market access and prevents discrimination against international providers for a range of digital services, including a number of digital financial services (including electronic payment services), across all parties to the agreement.4
The United States has used the USMCA’s digital trade chapter as a template for other recent negotiations as well, including the recently signed U.S.-Japan Digital Trade Agreement, which similarly includes broader commitments on digital financial services.
The Digital Economy Partnership Agreement (DEPA) between Chile, New Zealand, and Singapore takes an even further step toward addressing gaps in digital trade agreements with commitments to actively cooperate on policies related to emerging technology issues (e.g., artificial intelligence, digital identity). The DEPA also makes strides in broadening the scope of digital trade commitments but, unfortunately, like the CPTPP still does not extend commitments to digital financial services. The DEPA’s section on digital payments, however, does include some innovative commitments to support the development of “safe and secure cross-border electronic payments” by adopting internationally accepted standards, promoting interoperability, and encouraging innovation.5 Importantly, the DEPA is the first trade agreement to promote open banking6 through the voluntary use of open Application Programming Interfaces (APIs). The DEPA also looks to expand access to digital financial services by encouraging cooperation and development among the fintech industry.7
Finally, the Australia–Singapore Digital Economy Agreement (DEA) incorporates some of the most comprehensive commitments on digital trade to date, including commitments on data flows, inclusion of digital financial services, and a broad range of considerations for emerging technologies. The agreement also expands the focus areas of cooperation to include standards development and conformity assessment, and encourages vehicles for regular dialogue between governments and industry stakeholders on emerging technologies such as artificial intelligence, data privacy, and small business participation in trade.
Other recent trade agreements also contain digital trade commitments, though many less ambitious in scope than the agreements mentioned above. For instance, the recently signed Regional Comprehensive Economic Partnership (RCEP) agreement between 15 countries in the Asia-Pacific region also includes some commitments on data flows. However, the RCEP includes more exemptions to digital trade commitments than the CPTPP (including for digital financial services), and the digital trade chapter (“electronic commerce”) is itself exempt from the RCEP’s dispute settlement chapter, raising doubts about the enforceability of commitments.8