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2021/SOM2/CTI/TPD/002Session: 1Digital Trade and Cross-Border Data FlowsSubmitted by: IBMDigital Trade Policy Dialogue18 May 2021
Digital Trade & CrossBorder Data FlowsAPEC Digital Trade Policy DialogueMay 17, 2021 IBM Confidential 2020
What is digital trade?“Digitally enabled transactions oftrade in goods and services thatcan either be digitally or physicallydelivered”- OECD IBM Confidential 20202
Data is the lifeblood of the globaleconomyExamples of Digital TradeE-commerce for goodsordered online anddelivered physicallyDigital products and services ordered and delivered via theinternet: Downloads: software, music, audio, video, games, and text Streaming: music, videos, and video games Other internet content: news, social media, searches, ads,email, etc. Software as a service Cloud computing Digitized services: financial, business, ICT, subscriptions,entertainment Emerging technologies including AI, Blockchain and Quantumcomputing (e.g. IBM Q Network)Manage global business operations viadata flows All sectors of the economy rely oncross-border data flows – not justICT sector Global supply chains and internalmanagement (e.g., R&D,manufacturing) Marketing and customer support IBM Confidential 20203
Explosive growth of crossborder data flows Cross-border data flows alreadymake a bigger contribution to globalGDP than trade in manufacturedgoods. Every day, 2.5 billion gigabytes ofdata are generated, the equivalentof 250,000 Libraries of Congresses. 59% of the world is now online, upfrom just 20% a decade ago. From 2005 to 2017, the amount ofcross-border bandwidth in use grewby 148 times.Source: Telegeography; McKinsey Global Institute analysis IBM Confidential 20204
Since 1990, trade indata-driven services hasgrown exponentially IBM Confidential 20205
and the explosion in internetusers globally.Source: Internet World Stats - https://www.internetworldstats.com/stats.htm IBM Confidential 20206
who benefit from the unprecedented commoditizationof computing powerSource: HumanProgress.org https://www.humanprogress.org/statline?p 1228&yf 1957&yl 2019 IBM Confidential 20207
COVID has accelerated thistrend Growth in broadband use has acceleratedduring COVID, with some networkoperators reporting a 60% increase inInternet traffic compared to before thecrisis.Source: OpenVault and the Wall Street JournalNote: Based on more than one million U.S. households. Calculated on a rolling seven-day average IBM Confidential 20208
Benefits of cross-border data flows &digital tradeGreater InnovationAccess to AdvancedServicesLower PricesEfficient GlobalManagementExpanded Access to GlobalMarketsEnhanced CompetitiveIntegration into GlobalValue ChainsIncreased Competition IBM Confidential 20209
But digital trade barriers aregrowing globallySource: European Centre for International Political Economy IBM Confidential 202010
Potential barriers to digitaltrade Data localizationCross-border data flow restrictionsHigh ICT tariffsForced disclosure of source code or algorithmsCustoms duties on e-commerce and data flowsDiscriminatory, unique standards or burdensometestingContent filtering or blockingRestrictions on electronic payments or the use ofencryptionCybertheft of trade secrets and other intellectualpropertyForced technology transferDigitalTrade IBM Confidential 202011
Data localization does NOTensure securityProtecting data depends on how it is stored, not where it is stored.Securing data requires:Advanced cybersecuritytechnology, including AIAccess authorizationEncryptionSecurity procedures anduser educationMonitoring and intrusiondetection IBM Confidential 202012
Modernizing trade agreements forthe post-COVID APEC economy There is an urgent need for APEC members to ensurethe right policies are in place to build trust andconfidence in the data economy. Digital trade must be a core policy priority if membereconomies, businesses and individuals are to meet thechallenges and opportunities of the post-COVID globaleconomy. APEC members can build upon existing bilateral andmultilateral negotiations and agreements designed tostrengthen digital trade, including: WTO e-Commerce Negotiations (Joint StatementInitiative) Digital Economy Partnership Agreements (Chile,Singapore, New Zealand) Australia-Singapore Digital Economy Agreement U.S.-Japan Digital Trade Agreement U.S.-Mexico-Canada Agreement (USMCA) Data Free Flows with Trust initiative (G-20, WEF) ASEAN Framework on Digital Governance APEC Cross Border Privacy Rules"We are all richer if we are able to share the data, useit, analyse it and produce new products and services.But we are all poorer if we set up digital firewalls,fragment the digital space and can't optimise at theglobal level ”Former Singapore Minister for Trade & IndustryChan Chun Sing“We must, on one hand, be able to put our personal data anddata embodying intellectual property, national securityintelligence, and so on, under careful protection, while on theother hand, we must enable the free flow of medical, industrial,traffic and other most useful, non-personal, anonymous data tosee no borders, repeat, no borders.”Former Japanese Prime MinisterShinzo Abe IBM Confidential 202013
Key elements to include in APEC digital tradeagreements1. ENABLE THE FREE FLOW OF DATA2. PROTECT SOURCE CODE AND ALGORITHMS & PROHIBIT FORCED TECHNOLOGY TRANSFERS3. ENSURE TECHNOLOGY CHOICE AND ENCOURAGE OPEN DIGITAL ARCHITECTURES4. FOSTER INNOVATIVE ENCRYPTION PRODUCTS5. PROHIBIT DIGITAL CUSTOMS DUTIES6. PROMOTE A “REASONABLE CARE” APPROACH TO PROMOTE SAFETY, SECURITY AND WELFARE ONLINE7. PROMOTE TRUST IN ARTIFICIAL INTELLIGENCE AND EMERGING TECHNOLOGY8. PROMOTE OPEN ACCESS TO GOVERNMENT-GENERATED PUBLIC DATA9. ENGENDER GREATER CONSUMER TRUST IN THE DIGITAL ECONOMY BY ENHANCING PRIVACY ANDCYBERSECURITY IBM Confidential 202014
Thank YouMichael DiPaula-CoyleMdipaula-coyle@us.ibm.com IBM Confidential 2020
"We must, on one hand, be able to put our personal data and data embodying intellectual property, national security intelligence, and so on, under careful protection, while on the other hand, we must enable the free flow of medical, industrial, traffic and other most useful, non -personal, anonymous data to see no borders, repeat, no borders."
