White Paper Trade Rules and the Digital Economy Key Points and Findings

October 2017
Trade Rules and the
Digital Economy
A White Paper
Key Points and Findings

Huawei | Trade and the Digital Economy
ABSTRACT
Our White Paper on Trade Rules and the Digital Economy examines trends and needs in the global digital
economy, and the emerging set of international trade agreement rules currently under negotiation to
govern world trade in the digital economy. It seeks to define the needs of the global economy, the
requirements to service those needs by the global ICT industry, and the position of Huawei as a leading ICT
company operating in over 170 countries and providing goods and services along almost the entire length
of the global digital value chain. It recommends that non‐discrimination, open markets, and fair
competition should be the fundamental rules for the global digital economy, whereas any exception to
these rules should be adopted subject to the principles of transparency, proportionality, necessity, and
multi‐stakeholder consultation. This short summary of the key findings and conclusions is provided for
those seeking a more succinct breakdown of our positions on these issues. For a more in‐depth analysis,
please see the full White Paper.
ACKNOWLEDGEMENTS
Huawei’s White Paper on Trade Rules and the Digital Economy is the result of a major project by the Trade
Facilitation and Market Access (TFMA) team within Huawei Technologies, inspired by the vision of James
K. Lockett, Vice President of Trade Facilitation and Market Access (TFMA) at Huawei Technologies to stake
out Huawei’s views on the pivotal issue of the trade rules for the digital economy. With contributions from
numerous colleagues, its principal author is Simon Lacey, also at TFMA Huawei Technologies, who
researched and prepared an initial and comprehensive draft and has also edited the manuscript through
its various stages. Simon’s tireless commitment to this complex and evolving topic is reflected from
beginning to end in the White Paper. It has been written under the overall supervision and direction of
Madame Chen Lifang, President of PACD at Huawei Technologies and Mr. Zhang Jiangang (Victor) as well
as his predecessor Pang Jimin, President of Government Affairs, also at Huawei Technologies. Other
members of the TFMA team have also contributed extensive comments and edits, and thanks must go to
Alessandro Marongiu, Zhang Shige (Aviva), Hu Zhengguo (Neo) and Professor Sheng Jianming (Jamie) for
their input and feedback while preparing the initial manuscript and on many procedural and technical
issues in the process of bringing the White Paper to fruition. The TFMA team would also like to thank a
number of individuals within Huawei who took time out of their busy schedules to sit and share of their
valuable insights and experience, including in particular Paul Scanlan, Colin Giles, Tommi Laine‐Ylijoki, Joe
Kelly, Walter Jennings, Han Feung, Ting Ka Lun (Allen), Sameer Malik, Zou Wenyu (Kitty) and Allan Yap. The
White Paper has also benefitted enormously from the many valuable insights and inputs received from
Hosuk Lee‐Makiyama, Martina Francesca Ferracane, and Erik van der Marel, with whom the TFMA team
worked at the end of the process to supplement our research and add some value in terms of economic
analysis, case studies as well as with graphical inserts. Hosuk’s far‐reaching and highly insightful expertise
on the subject matter proved extremely valuable. James Lockett and Simon Lacey “field tested” some of
the preliminary findings at a number of international symposia throughout the months the White Paper
was being prepared and in this context we would like to thank Harsha Singh and Michitaka Nakatomi for
comments on an earlier paper for the E‐15 initiative which helped our thinking, and we must thank Usman
Ahmed from Paypal, Marcos Vaena of the International Trade Center in Geneva and Pierre Sauvé of the
World Bank for their valuable contributions as part of our panel session at the 2016 WTO Public Forum
which helped our thinking to evolve further on these issues. We would also like to thank the team of
Huawei translators who worked on the Chinese version of the White Paper and provided invaluable
assistance in also making the English version a much better document. In this regard, it was in particular
the skills of Miss Gong Jing that proved invaluable to the whole project. Finally we would like to thank Joy
Tan, President of the Corporate Communications Department for her invaluable guidance. As always any
shortcomings, errors or omissions in this White Paper are solely those of the lead author.
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Huawei | Trade and the Digital Economy
EXECUTIVE SUMMARY
Our White Paper on Trade Rules for the Digital
Economy represents a first attempt by Huawei to
exercise thought leadership in a relatively new
area of international rule‐making. The current set
of international trade rules largely predates the
internet era of the last two decades. An update
of the “analogue rules” to bring them into the
digital age is long overdue but has run into some
unexpected headwinds as of late. Our White
Paper is an attempt to express our views on how
we see the current debates surrounding new
trade rules, with the hope of making a modest
contribution to producing outcomes that would
guarantee future decades of the breathtaking
growth we have seen in the digital economy and
the unleashing of pent‐up innovation, as well as
the seizing of manifold opportunities as millions
have become empowered in the developing
world to set themselves free from poverty.
The first Chapter of our White Paper defines the
digital economy as the range of goods, products,
services and solutions that have emerged and
continue to emerge in direct relation to online
connectivity. This definition admittedly covers a
broad value chain ranging from the hardware
and equipment constituting the backbone
infrastructure of telecommunications networks,
to the devices, particularly smart phones, tablets,
wearables, computers and other terminals used
in order to get and stay online. This definition
also comprises the various services, solutions
and applications that have emerged to meet the
many needs that users place on the internet and
the whole online ecosystem, including digital
products and services such as software and e‐
books. In laying out this definition, we will look
beyond the narrow confines of focusing simply
on e‐commerce, but rather examine how
digitalization has transformed international
trade across borders: Chapter 1 looks to define
and elucidate the emergence of modern day
digitalized global value chains that are having a
disruptive and transformative effect on both the
way businesses operate as well as how
consumers acquire and use products, services
and information.
Chapter 2 of our White Paper examines Huawei’s
place in the digital economy. Across all of our
three business groups, we occupy a unique place
in the digital economy in terms of product
coverage, but also in terms of our geographical
footprint, since we operate in both very
underdeveloped as well as very technologically
advanced markets. With regard to our core
carrier business, we are responsible for building
the underlying network infrastructure (pipe) that
allows the digital economy to function in the first
place. When it comes to our enterprise business,
we provide a range of new services and solutions
that leverage the power of cloud computing and
remotely serviced platforms, such as in the area
of digital customs, or our many Smart City
solutions. Finally in our devices business, where
we are contesting global smartphone, tablet and
wearables markets, we operate as a seller of the
terminals with which users interface with the
digital economy in order to purchase and/or
consume the services, solutions, products and
information that the digital economy offers. As
such, we are potentially vulnerable to changes in
the underlying legal, regulatory and policy
regimes that govern the many stages of the
digital value chain. Chapter 2 discusses several
ways in which new and existing trade and
investment rules affect different aspects of our
business.
Chapter 3 focuses on the underlying legal and
regulatory environment in which companies like
Huawei operate. As in many other fields of the
law, the current rules are struggling to keep pace
with technological developments and the quick
pace of innovation that characterizes the
technology sector in particular. Many countries
are enacting rules and setting up regulatory
regimes that have a direct impact on the digital
economy. Whether it be with the objective of
better protecting the data privacy of their
citizens, beefing up national law enforcement
2

Executive Summary
capabilities in the face of increasing cybersecurity
threats, or in the hope of kick‐starting
their own domestic ICT industries, governments
in many countries, both developed and
developing are becoming increasingly
interventionist in this sector. Chapter 3 analyzes
a number of these policy and regulatory trends
and discusses how they fit into the broader
international consensus that has emerged over
the last two decades with respect to global
internet governance and rules on the digital
economy.
Chapter 4 of our White Paper focuses on the
existing and emerging set of multilateral and
preferential trade rules that currently or may
soon govern the digital economy. International
rules for digital trade currently exist in a legal
framework put in place before the advent of the
internet era so that we currently live in a world
of “analog rules” for a digital age. As in most
policy areas, international rule‐making tends to
lag behind domestic legislative and regulatory
responses to the needs of the digital economy.
This disconnect is something that had begun to
be addressed in a series of free trade agreement
negotiations, particularly the Trans‐Pacific
Partnership (TPP) Agreement and the Trans‐
Atlantic Trade and Investment Partnership (TTIP)
‐ both of which face an uncertain future at the
time of writing. International trade agreement
texts that relate directly to the digital economy
are also emerging in the context of the Trade in
Services Agreement (TiSA) negotiations
proceeding on the sidelines of the WTO, as well
as in the context of the ASEAN+6 Regional
Economic Partnership (RCEP) negotiations. In
addition to these initiatives, work has been
completed at the WTO to update the 1997
Information Technology Agreement (ITA) to
bring a whole range of new products within its
scope and the ITA Committee at the WTO is now
seen as a key way of advancing liberalization of a
whole range of non‐tariff barriers (NTBs) that
effect trade in IT products. Finally, other
initiatives on the protection of data and on
privacy that are taking place between the United
States and the European Union, as well as earlier
work in the OECD and APEC, promise to set new
standards that will affect the cross‐border
transfer of personal information and as such
have important ramifications for the digital
economy. Chapter 4 of our White Paper explains
the current rules framework, and addresses
some of these processes and the substantive
rules that are emerging in this context, while also
looking forward to the next WTO Ministerial
Conference in Buenos Aires in December 2017
and what a reinvigorated WTO Work Program on
E‐commerce may look like.
Chapter 5, the final chapter in our White Paper,
outlines what an optimal framework for the
digital economy could look like, namely one that
is characterized by a level playing field and nondiscriminatory
access to commercial
opportunities in a spirit of fair and open
competition. It also addresses the importance of
global investment rules and trade in achieving
the goal of bridging the digital divide. It then
discusses how the domestic policy frameworks
and corresponding international trade
agreement rules can be formulated and
implemented in such a way that both meets
reasonable regulatory objectives and does not
act as a disguised restriction on international
trade, or in a manner which unfairly favors one
set of (domestic) industry players at the expense
of another. This Chapter discusses the potential
benefits of rules that enable innovation, that
encourage deployment of ICT solutions in order
to bridge existing digital divides, that promote
technology neutrality, an open internet, as well
as flexible and compliant approaches to
increasing domestic value‐add requirements.
Finally this Chapter makes a set of compelling
policy and economic arguments in favor of the
positions taken.
We hope our White Paper will make a
constructive and welcome contribution to the
debate at a time when the openness of the digital
economy that we have all become accustomed to
could be under threat and at a time when the
positive welfare enhancing effects of trade and
investment liberalization we have all benefitted
from under the post WWII economic order has
started to be challenged in much of the
developed world.
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Huawei | Trade and the Digital Economy | White Paper Key Points and Findings
CHAPTER ONE | DEFINING THE DIGITAL ECONOMY AND DIGITAL TRADE
In the White Paper we define the digital economy as the range of goods, products, services and
solutions that have emerged and continue to emerge in direct relation to online connectivity. This
definition admittedly covers a broadly conceived value chain ranging from the hardware and
equipment constituting the backbone infrastructure of the internet, to the devices, particularly smart
phones, tablets, wearables, computers and other terminals that users avail themselves of in order to
get and stay online. This definition also comprises the various services, solutions and applications that
have emerged to meet the multitude of needs that users place on the internet and the whole online
ecosystem, including digital products and services such as software and e‐books. In laying out this
definition, we look beyond the narrow confines of focusing simply on e‐commerce, and how
digitalization has changed international trade across borders to define and elucidate the emergence
of modern day digitalized global value chains that are having a disruptive and transformative effect on
both the way businesses operate as well as how consumers acquire and use products, services and
information.
Key Points Summarized
4

Chapter One | Defining the Digital Economy
Key Points Explained
01
When we think of the digital economy, most of us tend to think about e‐commerce, since
this is the most visible and certainly one of the most dynamic areas of the digital economy.
However the digital economy is much more than simply the act of providing or consuming
a service online or buying or selling something over the internet. In our White Paper we have defined the
digital economy as “The ecosystem comprising goods, products, services, platforms and solutions that are
either instrumental to or avail themselves of online connectivity”.
By the same token digital trade is a lot more than international e‐commerce, but comprises – for the sake
of this White Paper – the “cross‐border supply of goods, products, services and solutions that are
instrumental to or avail themselves of online connectivity”.
In light of these definitions, the digital economy and digital trade encompass a whole range of goods and
services, including the underlying backbone infrastructure, the services provided on top of this
infrastructure, the platforms and eco‐systems designed to provide a range of goods and services using the
connectivity this infrastructure provides, and finally the devices or terminals with which the user interfaces
with all of this functionality. Accordingly, international trade negotiations that seek to provide new rules
for how governments may regulate trade in the digital economy will go beyond the narrow issue of e‐
commerce. Instead, they will also embrace disciplines on technical barriers to trade, on the cross‐border
supply of services, on trade‐related intellectual property rights, on regulatory cooperation, privacy,
cybersecurity, online payments and a whole range of other related issues, including national security, which
are beyond the purview of a single national regulator or ministry.
The digital economy is becoming so ubiquitous and all‐encompassing that soon it will be
02 very hard to draw the line between the digital and the non‐digital or conventional economy.
The digital economy is quickly simply becoming “the economy” This is because digitization
as a trend is quickly taking hold across all sectors of the economy and permeating all areas of economic
activity. There is an increasing degree of complementarity between off‐line and online activities, which is
another factor driving this trend. This “convergence” as it is known, must also be reflected in the next
generation of international trade rules, so that disciplines are not crafted in silos but rather take into
account their potential impact on other areas of the digital and offline economies.
The digital economy and the technological breakthroughs that heralded it have proven to
03 be a watershed for productivity, innovation and economic growth, with hitherto
inconceivable new products and services being offered creating unparalleled welfare gains
for millions of internet users. These very positive effects from the growth of the online economy are things
that many policymakers can and should foster by carefully considered policy interventions. There are many
things regulators can do to ensure that their economies share in the substantial new growth opportunities
that the digital economy offers, many of which start in how they regulate and promote the availability of
offline factors such as skills, transport and connectivity infrastructure, logistics and the ease of doing
business.
Connectivity infrastructure is a basic precondition for participation in the digital economy
04 although it is not the only one. Nevertheless, without the backbone infrastructure to carry
the data produced from the interaction between providers and consumers, sellers and
buyers, suppliers and users in the digital economy, there would be no digital economy to start with. Here
also, there are different policy interventions governments and regulators can contemplate and enact in
order to boost the attractiveness of their own markets for those that invest in, build and operate the
network infrastructure required to power the digital economy, particularly operators.
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Huawei | Trade and the Digital Economy | White Paper Key Points and Findings
Defining the Digital Economy and Digital Trade
As part of our analysis we performed a mapping exercise of the various aspects of the digital economy as
well as the economic actors who populate and compete against one another across the different parts of
the digital value chain. See the full‐length White Paper for more in‐depth analysis. Below (figure 1.1) we
show a schematic synopsis of our analysis. Below we have also laid out the definitions of both the digital
economy and digital trade that we have been guided by when writing our White Paper.
Figure 1:2: The digital economy: Infrastructure, services, platforms/ecosystems and devices
1 Infrastructure 2 Services
3 Platforms & 4 Devices
Ecosystems
What?
> Telecommunications networks
and connectivity infrastructure;
> Optical fiber, cables, switches,
signal amplifiers, servers, data
centers, satellites, wireless
base stations, mobile
telephone towers, antennas,
routers, modems, range
extenders and other equipment
that brings connectivity to our
homes, offices and devices.
> Information, communications
and computing services;
> Comprises everything from
banking to retail to booking and
paying for travel and
accommodation, to finding and
booking someone to clean your
apartment and someone else to
take you to your next
appointment.
> The result of multi-device
connectivity, meaning we now
connect to the internet with two
or more devices and expect
seamless operability;
> Results in a winner-take-all
competitive dynamic where the
economics of network effects
plays a very important role.
> Traditionally desktops or laptops
> Mobile telephones are portable
super-computers capable of almost
any functionality;
> Wearables (watches headphones)
becoming more prominent,
> Trend moving towards connected
homes, connected cars, connected
factories , IoT and the Internet of
Everything (ubiquitous and
comprehensive connectivity).
Who?
> Few large equipment vendors
working with carriers;
> 1000s of smaller players
manufacturing and selling
individual components.
> Telcos who invest in build,
operate and lease access to
their networks;
> Millions of other providers from
Citibank to Uber and across
many other sectors.
> Google and Android versus
Apple and iOS;
> WeChat and Alibaba in China;
> Amazon, Microsoft.
> The future belongs to those
who can make all of the
devices users want;
> And connect them seamlessly
with ecosystems that they
either own or control.
Source: Huawei
The Digital
Economy
Defined
The ecosystem comprising
goods, products, services,
platforms and solutions that
are either instrumental to or
avail themselves of online
connectivity.
The cross‐border supply of
goods, products, services
and solutions that are
instrumental to or avail
themselves of online
connectivity.
Digital Trade
Defined
6

Chapter One | Defining the Digital Economy
CHAPTER TWO | HUAWEI’S PLACE IN THE DIGITAL ECONOMY
Across all of our three business groups, we occupy a unique place in the digital economy in terms of
product coverage, but also in terms of our geographical footprint, since we operate in both very
underdeveloped as well as highly technologically advanced markets. With regard to our core carrier
network business, we are responsible for building the underlying network infrastructure (pipe) that
allows the digital economy to function in the first place. When it comes to our enterprise business, we
provide a range of new services and solutions that leverage the many advantages of the digital
economy to overcome the physical constraints of the real world by harnessing the power of cloud
computing and remotely serviced platforms, such as in the area of digital customs, or our many Smart
City solutions. Finally in our devices business, where we are contesting global smartphone, tablet and
wearables markets, we operate as a manufacturer and seller of the terminals with which users
interface with the digital economy, availing themselves of the services, solutions, products and
information that the digital economy provides. As such, we are potentially vulnerable to changes in
the underlying legal, regulatory and policy regimes that govern the many stages of the digital value
chain. This section will discuss the many ways new and existing trade and investment rules affect
different aspects of our business across the three business units.
Key Points Summarized
7

Huawei | Trade and the Digital Economy | White Paper Key Points and Findings
Key Points Explained
01
At Huawei we are uniquely placed across a very broad swathe of the digital economy, selling
equipment and network management services to operators, providing cloud computing
services to both operators and a range of other services providers across different industry
verticals, as well as selling devices and wearables to consumers. As such, we can claim to be playing from
a position of some strength as we attempt to define and articulate our interests, particularly in those
product segments like network equipment and devices where we have recently emerged as an industry
leader. Nevertheless, our broad engagement across such a wide range of industry segments also means
there is some potential for misalignments between different customers and stakeholders. Because of our
size and the breadth of our engagement, the rule of thumb for us at Huawei will be that what is good for
the global ICT industry as a whole will be good for us as a company. This is likewise bound to be true in
areas of international rule making that target trade and investment in the digital economy.
02
Opinions tend to differ on how profound the changes are that have been wrought by the
digital economy and whether or not we are at the end or just the very beginning of an age
of new digital innovation. Regardless of where one stands on this particular question, the
productivity gains and the welfare‐enhancing innovation we have seen in the last 20 years are all too readily
apparent even to casual observers. The powerful capabilities of digitization and the internet to instantly
reproduce and disseminate knowledge at almost zero cost has ushered in far‐reaching and often disruptive
changes to a range of industries, especially those whose goods and services can be rendered into a series
of ones and zeros. This is yet another important and distinctly unique characteristic of the digital economy
that must be taken into account when trying to negotiate new rules to govern international trade in this
space.
03
The digital divide is a very real phenomenon and recent research has shown that it is getting
deeper, meaning that the disparities in access and capabilities (and ultimately access to
opportunities in the digital economy) between the connected and the unconnected are
widening even as more and more people come online in one way or another. This is something that many
in the international community, including private sector players like Huawei, are working hard to address.
And here also, there may be a role for trade rules, since negotiating outcomes can be harnessed to help
mitigate shortfalls in developing countries on both the demand and the supply side, through instruments
like technical assistance, aid for trade, or concessional loans tied to the realization of carefully conceived
and articulated targets in trade agreements.
04
At Huawei, like at almost every other player in the digital economy, we are forced to
confront inconsistencies and uncertainties in terms of market access and the treatment we
encounter once we have entered a market. This is unfortunately a reality of doing business
today although internationally negotiated rules and recognized best practices can be useful tools in both
fostering predictability and creating a level playing field on which Huawei and our industry partners can
compete. We see our role here as cooperating with, and where called for, advising and educating
policymakers on the best possible choices for them in terms of achieving their policy objectives and
refraining from imposing measures that unnecessarily distort trade or unfairly favor one set of industry
actors to the detriment of another.
8

Chapter Three | Emerging Policy and Regulatory Trends
Huawei’s Place in the Digital Economy
What many people don’t realize is that Huawei is a truly international player, meaning we have operations
and business interests that span the globe. Although we originated in China, today we operate in some 170
countries and count employees from some 170 nationalities among our ranks. That’s from the perspective
of geography. From the perspective of product markets, we also span a very wide spectrum of the digital
economy, having started out as a reseller of switches to our current position as industry leader in network
equipment, number two globally in consumer devices, and fast‐growing challenger in the cloud computing
space. Figure 2.1 (below) depicts Huawei’s presence both geographically and on different product markets.
To read more, check out chapter two of the full White Paper.
Figure 2.1: Huawei’s place in the digital economy
Source: Huawei
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Huawei | Trade and the Digital Economy | White Paper Key Points and Findings
CHAPTER THREE | EMERGING POLICY AND REGULATORY TRENDS
The underlying legal and regulatory environment in which companies like Huawei operate is struggling
to keep pace with technological developments and the quick pace of innovation that characterizes this
sector. Many countries are enacting rules and setting up regulatory regimes that have a direct impact
on the digital economy. Whether it be with the objective of better protecting the data privacy of their
citizens, beefing up national law enforcement capabilities in the face of increasing cyber‐security
threats, or in the hope of kick‐starting their own domestic ICT industries, governments in many
countries, both developed and developing are becoming increasingly interventionist in this sector.
Chapter Three of our White Paper analyzes a number of these policy and regulatory trends and discuss
how they fit into the broader international consensus that has emerged over the last two decades with
respect to global internet governance and emerging trade rules on the digital economy.
Key Points Summarized
10

Chapter Four| International Trade Rule‐Making for the Digital Economy
Key Points Explained
01
For the first few years as the internet was just starting to gain widespread adoption and
uptake among users in both developed and developing countries, governments were often
slow or hesitant to intervene for fear of overplaying their hands in trying to regulate
something about which they still lacked a detailed understanding of both its workings and its vulnerabilities.
Those days are almost certainly behind us as governments all over the world have become cognizant of the
very real benefits but also of some of the latent risks the digital economy entails. We find governments of
all ideological bents actively opting to intervene in the digital economy in order to achieve a whole range
of policy and regulatory outcomes. Because of the complementarity effects and the general
interconnectedness of both the online and offline economies, these interventions can have unforeseen
consequences far beyond the narrow scope in which they were enacted. Governments need to beware of
and refrain from regulatory overreach but they must likewise be careful not to allow a policy or legal
vacuum to arise which engenders real risks to the future growth of the digital economy.
02
In order to avoid any potentially harmful repercussions that may constitute the unforeseen
consequences of such policy and regulatory interventions, governments should take into
consideration any internationally agreed principles or pre‐existing best practices before
they act. They should also consult widely with a broad array of stakeholders comprising businesses,
consumer groups, and public interest groups, and make sure any measures they enact are the least invasive,
least trade restrictive, but also an effective way to meet the intended policy objective. We also advocate
in favor of non‐discriminatory and transparent legislative and regulatory processes that result in equal and
fair market access terms for both foreign and domestic economic actors.
03
We recognize the important role the digital economy has to play in helping governments
foster economic development and achieve industrial policy goals, as well as in empowering
users to pursue productive and satisfying economic livelihoods. When designing policies
that seek to achieve such outcomes, we advocate strongly in favor of flexible regimes that afford
companies as much freedom of action as possible in deciding how they wish to meet any targets or
objectives set. We also favor governments enacting such targets only following a transparent and multistakeholder
consultation that allows all affected parties to have their views heard.
04
We at Huawei have for many years emphasized the importance of investment in the
essential network infrastructure that enables the digital economy and unleashes all of its
productivity gains and welfare‐enhancing effects. This is a prerequisite to tackling the
digital divide which continues to plague many, particularly the poor in developing countries. Although
connectivity infrastructure is only one of several important elements that need to be tackled to resolve this
problem, we contend that it is both the starting point and the conditio sine qua non for effectively and
finally bringing the billions of unconnected online and allowing them to participate in this modern day
economic miracle.
11

Huawei | Trade and the Digital Economy | White Paper Key Points and Findings
Emerging Policy and Regulatory Trends
As the internet economy emerged in the second half of the 1990s, it was a place largely free of government
intervention, with some commentators pointing to this as one of the reasons why it has grown so quickly
and was able to become such a powerful economic force. For better or for worse those days are now well
and truly behind us, with many governments having long recognized both the massive potential but also
the risks that the digital economy brings with it. Today governments intervene in the digital economy in a
number of ways, both directly and indirectly, in order to achieve a very wide range of – for the most part –
perfectly legitimate and commendable policy objectives. The graphic below (Figure 3.1) is an attempt to
map some of the different regulatory objectives governments have for intervening in the digital economy
as well as some of the different regulatory approaches they take. To find out more, see chapter three of
the full White Paper.
Figure 3.1: Different regulatory objectives and approaches
Stimulate
competition
Protect existing
jobs
Promote
economic
development
Increase the size
of the formal
economy
Bridge the
digital divide
Objectives
Foster
Innovation
Stimulate
economic
growth
Diversify the
economy
Promote
market
contestability
Create new jobs
Promote digital
Inclusiveness
Enable inclusive
trade
Kick-start
domestic ICT
industry
Prevent base
erosion and
profit shifting
Attract
investment
Approaches
Light touch
approaches
Generally favored
by advanced
industrial countries
where the digital
economy is already
very ubiquitous.
Interventionist
approaches
Generally chosen
by developing
countries with
prominent national
security concerns or
development
agendas.
Industrial
Policy
Generally chosen
by middle-income
developing
countries with their
own ambitious
plans for the digital
economy.
Executive
agency activism
This can be in the
form of lawsuits to
reign in tax
privileges,
competition
investigations or
other actions.
Tax breaks/
incentives
These can be used
to either attract
investment or
encourage local
content, but often
also lead to market
distortions.
Source: Huawei
12

Chapter Four| International Trade Rule‐Making for the Digital Economy
CHAPTER FOUR | INTERNATIONAL TRADE RULE‐MAKING FOR THE DIGITAL ECONOMY
As in most policy areas, international rule‐making tends to lag behind domestic legislative and
regulatory responses to the needs of the digital economy. This disconnect is something that had begun
to be addressed in a series of free trade agreement negotiations, particularly the Trans‐Pacific
Partnership (TPP) Agreement and the Trans‐Atlantic Trade and Investment Partnership (TTIP), both of
which face an uncertain future at the time of writing. International treaty texts that relate directly to
the digital economy were also emerging in the context of the Trade in Services Agreement (TiSA)
negotiations proceeding on the sidelines of the WTO, and currently feature in the ASEAN+6 Regional
Economic Partnership (RCEP) negotiations. In addition to these initiatives, work has been completed
at the WTO to update the 1997 Information Technology Agreement (ITA) to bring a whole range of
new products within its scope and the ITA Committee at the WTO is now seen as a key way of advancing
liberalization of a whole range of non‐tariff barriers that effect trade in IT products. Finally, other
initiatives on the protection of data and on privacy that are taking place between the United States
and the European Union, as well as earlier work in the OECD and APEC, promise to set new standards
that will affect the cross‐border transfer of personal information and as such have important
ramifications for the digital economy.
Key Points Summarized
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Huawei | Trade and the Digital Economy | White Paper Key Points and Findings
Key Points Explained
01
The WTO Work Program on Electronic Commerce in 1998 initiated a program of reflection
by WTO members on how best to address the trade‐related aspects of the then nascent
internet economy, and focused predominantly on the need to negotiate new rules on e‐
commerce. Likewise, the recently completed TPP negotiations, the outcome of which is uncertain at the
time of writing, and the recently stalled TiSA negotiations have also included dedicated provisions intended
to liberalize cross‐border trade in services and establish disciplines on e‐commerce. However there are
other areas and rules that affect the digital economy that also need to be addressed both at the WTO as
well as in free trade agreements. Also at the WTO we had some progress very early (in 1997) on an
Information Technology Agreement (ITA, recently updated in 2015) which saw tariffs eliminated on a large
number of IT products among participating WTO members. In the TPP we saw a range of new provisions
addressing different aspects of the digital economy beyond e‐commerce, such as in the chapter on
technical barriers to trade (rules on conformity assessment procedures, encryption and electromagnetic
compatibility), as well as a new chapter on regulatory coherence, and new disciplines on the cross‐border
supply of services. The more holistic approach taken in the TPP, although not perfect, is much more suited
to addressing the plethora of trade‐related regulatory issues that different actors across the very broadranging
value chain that represents the digital economy are increasingly encountering. We hope for and
advocate a similarly broad approach in other negotiating fora such as the WTO and RCEP.
02
We view TiSA and RCEP as two negotiating fora that could, if we are lucky, see the
emergence of new rules that would be of enormous benefit to the digital economy,
particularly on issues such as cross‐border trade in services and e‐commerce for TiSA and a
whole range of issues in RCEP including those mentioned above in Point 1. We also would like to express
our support for an ambitious new negotiating agenda at the WTO in the context of the now very mature
Work Program on Electronic Commerce. Also at the WTO we would welcome new negotiations, building
on the work of the ITA, on non‐tariff barriers in the IT and ITC sectors, especially with respect to technical
regulations that rely on international standards and the adoption of an MFN obligation for conformity
assessment procedures (so that if an IT or ITC product is certified in one WTO member it can be exported
to any other member without further testing). Like we have seen for the ITA, new rules on non‐tariff
barriers could first be agreed on a plurilateral basis with an open membership clause.
03
We at Huawei have come from very humble beginnings and fought many existential battles
to become the global industry leader that we are today. Along the way we have benefitted
from the openness that has characterized much of the global economy and many of the
markets in which we have been privileged to serve our customers and build relationships with our
stakeholders. This journey has also contributed in no small way to the formation and strengthening of our
core values and guiding principles, which include support for free trade, open and fair competition on a
level playing field and the protection of intellectual property rights. These principles will continue to guide
us and we will advocate for them in all the markets we do business in, both at home and abroad.
04
We also recognize that trade rules can be about more than just trade and investment
liberalization or imposing disciplines to curb protectionism. Rather, we see trade rules and
the market opening that they foster, as also acting to support development outcomes and
greater inclusion into regional and global value chains of small and medium sized enterprises, as well as
micro businesses. We favor leveraging existing and future trade rules to not only bridge the digital divide
but also expand the reach of the digital economy, to create a more equitable and fairer world economic
order where anyone who chooses to participate can. The digital economy has been the harbinger of many
benefits and all the world’s people should be able to partake in these new and exciting technologies.
14

Huawei | Trade and the Digital Economy | White Paper Key Points and Findings
International Trade Rule‐Making for the Digital Economy
As governments have started to intervene more actively in the digital economy, different industry players
have sought to lobby their governments in order to establish international treaty commitments that set
limits on such intervention and establish both a level playing field as well as predictable terms of market
access for foreign and domestic actors. Governments have also seized the opportunity presented by
various new trade negotiating forums to adopt rules and enact disciplines that promote international
cooperation and a degree of harmonization or at least coherence in this sphere. However, it should not be
overlooked that the WTO already governs a large degree of the international trade that takes place in the
digital economy as defined in the White Paper. There remains some contention among WTO members as
to whether new rules and disciplines are even needed. Nevertheless, the trend is pointing towards, and
many industry actors in different parts of the digital economy continue to advocate in favor of new rules
to clarify their freedom of action and their rights in the face of increasingly interventionist governments.
See Chapter Four of the full White Paper to learn more.
Figure 4.1: Trade Rules Old and New
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Chapter Five | A Vision for an Optimal Trade Regime for the Digital Economy
CHAPTER FIVE | A VISION FOR AN OPTIMAL TRADE REGIME FOR THE DIGITAL ECONOMY
This chapter of the White Paper outlines what an optimal framework for the digital economy could
look like, namely one that is characterized by a level playing field and non‐discriminatory access to
commercial opportunities in a spirit of fair and open competition. It also addresses the importance of
global investment rules and trade in achieving the goal of bridging the digital divide. It then discusses
how the domestic policy frameworks and corresponding international trade agreement rules can be
formulated and implemented in such a way that both meet reasonable regulatory objectives and do
not act as a disguised restriction on international trade, or in a manner which unfairly favors one set
of industry players to the detriment of others. Chapter Five also discusses the potential benefits of
rules that enable innovation, that encourage deployment of ICT solutions in order to bridge existing
digital divides, that promote technology neutrality, an open internet, flexible and compliant
approaches to increasing domestic value‐add requirements among others. Finally Chapter Five makes
a set of compelling policy and economic arguments in favor of the positions taken.
Key Points Summarized
16

Huawei | Trade and the Digital Economy | White Paper Key Points and Findings
Key Points Explained
01
As new disciplines start to emerge to govern the digital economy across a broad variety of
rule‐making fora, we at Huawei favor enforceable treaty commitments that establish a level
playing field for both domestic and foreign firms on the one hand, but also legacy players
and new market entrants on the other. When we enter a new market or as we continue to serve customers
in our existing markets, we need to be able to count on non‐discriminatory treatment across a whole range
of policy and regulatory areas, as well as transparency of local laws, regulations, administrative practices
and market conditions. Where regulatory intervention is required, we at Huawei favor such intervention
being commensurate to the desired policy outcomes and in line with international best practices. We also
favor regulators and market actors working together in a spirit of mutual cooperation to achieve outcomes
that are optimal for both business and consumers.
02
We at Huawei recognize the need for governments to intervene in markets, including the
digital economy, for a whole range of perfectly legitimate policy reasons. We support
governments in their role as the ultimate arbiters of the public interest and in their
inalienable responsibility to safeguard the interests of the State and its citizens. When governments do see
themselves as required to act, we favor interventions that conform to global best practices and that respect
international treaty obligations, including those in trade and investment agreements. These interventions
should be minimally trade distorting and should not restrict the rights of foreign and domestic firms beyond
that which is absolutely required. We advocate in favor of business and investment governance regimes
which grants all affected parties a chance to share their views on how best to achieve the intended policy
objectives.
03
At Huawei we believe that we must work together with our customers, industry partners
and government stakeholders to achieve win‐win outcomes that favor the continued
robust and healthy growth of the digital economy, so that more of the world’s people can
enjoy its many benefits. This includes increasing investment in the underlying network infrastructure,
increasing expenditure on research and development to make better use of the resources at our disposal,
as well as promoting and disseminating the knowledge and skills people need in order to become more
actively engaged in the digital economy. As a newly emerging industry leader, we recognize that what is
good for the global ICT industry and for the digital economy is also good for Huawei, so that we have a very
real interest in doing everything in our power to support the continued growth of the industry and to
expand the digital economy.
04
At Huawei we will continue to advocate in favor of greater openness and nondiscrimination
between all market actors in all of the markets in which we do business. We
recognize the responsibility we bear in this respect, both due to our position as an emerging
industry leader but also as a direct consequence of the openness we have ourselves benefitted from and
which we continues to enjoy in the many markets in which we have been privileged to serve our customers.
We will continue to advocate, both domestically and globally, in favor of business and investment climates
that are conducive to the continued growth of the digital economy, and that are characterized by nondiscrimination,
a level playing field for all actors, and regulatory interventions that are limited to that which
is strictly necessary and which do not favor one set of economic actors to the detriment of others. We
believe in working with all of our partners and stakeholders to achieve these outcomes.
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Chapter Five | A Vision for an Optimal Trade Regime for the Digital Economy
A Vision for an Optimal Trade Regime for the Digital Economy
In Chapter Five of our White Paper we discuss some of the international treaty commitments and
disciplines that could and should ideally form part of an optimal trade regime for the digital economy.
Figure 5.1 (below) highlights some of these rules, particularly those that would best be suited to bridging
the digital divide, which must remain at the very top of policymakers’ list of priorities as they embark upon
international collaborative efforts to draft new and binding trade rules to govern the digital economy.
Another important aspect of any such regime is non‐discrimination, which for over six decades now has
served as perhaps the single most important governing principle for the multilateral trading system. We
would also advocate in favor of a trade regime that is characterized by the highest possible degree of
transparency and predictability, and where governments cooperate with other interested stakeholders to
make and enforce the rules in a fair and equitable manner. To find out more, read Chapter Five of the full
White Paper.
Figure 5.1: Trade Rules in the Service of Development
Source: Huawei
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Huawei | Trade and the Digital Economy | White Paper Key Points and Findings
CHAPTER SIX | FINDINGS AND CONCLUSIONS
This section of the White Paper presents our findings and conclusions. We essentially conclude that
the current emphasis on trade rules and trade negotiations for the digital economy focuses too
narrowly on e‐commerce to the detriment of other important issues such as various non‐tariff barriers
that different negotiating fora have addressed with varying levels of ambition but only modest success
to date. Because of Huawei’s sheer size and our vast global footprint, we are uniquely positioned to
operate across a broad spectrum of the digital economy, but this is both a source of strength as well
as posing problems as there may be significant misalignments with how our different customers and
stakeholders view the best approach with respect to their own interests. Nevertheless, rules that
benefit the global ICT industry as a whole will also benefit Huawei, since a rising tide lifts all boats. The
unprecedented growth and success of the internet as a platform for global commerce, communication,
and self‐expression has been underpinned by the relative openness of regulatory regimes it has
enjoyed in the first 25 years since it rose to prominence in the mid‐1990s. We must all be vigilant to
maintain that openness in a world where the forces of anti‐globalization are starting to raise their
voices and question the very foundations on which the remarkable economic growth of the last sixty
years has been achieved.
19

Chapter Six | Findings and Conclusions
1 Huawei’s thought leadership is timely
Even before the fate of the TPP became questionable, the timeliness of the present White Paper was never
in any doubt. Trade rules specifically designed for the digital economy have been taking shape since 1998
(the year of the WTO’s Work Program on Electronic Commerce). But it has only been in the last six years
or so that regulatory interventions by policymakers outside of the United States have seen internet
companies mobilize in an effort to directly bring about a set of targeted negotiated outcomes on issues
such as the free flow of information, data localization and mandatory disclosure of source code. These
efforts although stalled in for a such as the TPP and TiSA, are nevertheless likely to come to fruition at some
point in the next few years, perhaps at the WTO, or in RCEP, or in the context of future bilateral agreements.
The consensus on where the balance lies between internet freedom and regulatory autonomy now seems
to be up for grabs all over again.
2 The new trade rules will impact Huawei’s interests
Ever since before the conclusion of the Information Technology Agreement (1997) and the elucidation of
the above‐mentioned WTO Work Program on Electronic Commerce (1998), and particularly as negotiations
began in earnest on the TPP (starting in 2010), the global ICT industry and internet companies have been
working hard to achieve binding and enforceable trade rules that would maximize the industry’s freedom
of action, underpin transparency and predictability, and reduce both trade barriers and trade costs for
them. These efforts have culminated in a number of early successes (the ITA itself), and ongoing trade and
investment liberalization in the form of various FTAs. As part of the global ICT industry and as a company
that does business in some 170 countries, Huawei’s interests are of course affected in positive ways by
these developments. But the enactment of new rules which have the potential to alter the underlying
environmental conditions in which the global ICT industry operates must be carefully studied by a company
the size of Huawei. Our White Paper on the new trade rules being negotiated for the digital economy has
made an initial attempt to do just that. We have found for example, that our Carrier Network business is
likely to benefit from further tariff reduction or zero‐duty commitments negotiated and being
implemented now under the ITA Expansion initiative at the WTO. We also predict that negotiations on nontariff
barriers being contemplated as part of the ITA Expansion work could be of great benefit to us in future,
particularly on issues like conformity assessment procedures and electromagnetic compatibility.
3 Huawei should be part of the conversation
Because we at Huawei operate across such a broad swathe of the digital economy and are now an
undisputed industry leader in network equipment and devices, we need to make our voice heard, either
directly or indirectly, loudly or softly, but we should not remain silent. This is even more so the case now
that leadership on the negotiation of mega‐regional trade negotiations has shifted from the TPP to RCEP.
As a Chinese multinational, Huawei is uniquely placed to contribute to the conversation in the next few
years. Our White Paper represents a first milestone in this direction. The previous set of initiatives launched
in an effort to write new rules for the digital economy (TPP, TiSA, and TTIP) was to a very large extent
influenced by a narrow set of industry players and government actors. With the finalization and ratification
of these initiatives now in doubt, this represents a unique moment in history for other voices to be heard
and to become part of the conversation. Even if our views and perspectives may not differ radically from
those expressed by other actors in the digital economy, it is still important that our voice be heard.
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Huawei | Trade and the Digital Economy | White Paper Key Points and Findings
4 Huawei has much to contribute to this dialogue
Precisely because of our size, the breadth of our activities and the extent of our reach, we at Huawei are
uniquely positioned to offer insights into what rules are likely to contribute towards an optimal trade
regime for the digital economy. In addition to these attributes, we at Huawei are fortunate to count among
our 170,000+ employees, dedicated experts on global trade rules based in Shenzhen as well as in important
regional trade‐policy capitals such as Brussels and Washington DC. We are in a position and at a unique
moment in time where we can provide thought leadership on these important emerging issues.
5 Huawei's interests are broadly aligned with the rest of the global ICT industry
We at Huawei are deeply entrenched in global digital value chains and have long been working closely with
suppliers, partners, customers and other stakeholders in many countries, and across many different
product and services markets within the digital economy. As such, we are undeniably a significant part of
the global ICT industry, and our prospects rise and fall in conjunction with the general welfare of the global
ICT industry as a whole. This means that what’s good for the global ICT industry and for the digital economy
is almost certain to be good for Huawei, and what’s bad for the global ICT industry and the digital economy
in general is likely not going to benefit Huawei either. As the saying goes: “a rising tide lifts all boats” and
this saying is very applicable when it comes to policies, measures and trade rules that have an impact on
trade flows in the digital economy.
6 We all win in a world where the internet is global, open and accessible
Disproportionately restrictive policies enacted for protectionist purposes or without taking into account
the realities of the global internet are likely to create negative externalities both within and beyond the
borders of the authorities that enact them. In the same way, trade rules that promote an open, accessible
and global internet promote the exchange of ideas, grant open access to the latest ideas and innovation
and provide a global public good that benefits the whole ICT industry and all players in the digital economy,
including Huawei.
7 Governments must and will remain the arbiters of the public policy exception
Huawei recognizes and is completely supportive of the very important role governments can and must play
as watchdogs and overseers of the public interest. We also recognize that governments must act when
doing so is required to safeguard legitimate public policy interests. However, like many in the industry, and
as governments have recognized in fora like APEC, the OECD and the G20, the invocation of public policy
exceptions should be done in good faith and subject to certain agreed limiting principles, such as
proportionality, least‐trade restrictiveness of measures, and the effectiveness of any measures taken in
achieving the purported public policy objectives for which they were imposed
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Chapter Six | Findings and Conclusions
8 National security is vital but cannot be used to justify every policy intervention
We live in a world today where both the public at large as well as governments have become increasingly
aware of not only the benefits of an increasingly connected world, but also the risks that increased
interconnectivity brings with it. As such, governments are legitimately starting to take a broader and
deeper view of what constitutes critical national infrastructure and are becoming increasingly vigilant
against potential cybersecurity threats. Be this as it may, we believe that the national security exception
cannot be used as a blank check to justify measures that are essentially protectionist in intent and nature.
This is a very sensitive topic, and we also recognize that it must be treated as such. Equally, it should be
subject to disciples which are agreed and reviewable.
9 Regardless of who exercises leadership, these rules ultimately belong in the WTO
We view the different initiatives to develop new rules in the context of various FTAs and plurilateral
initiatives as a very positive development that we wish to wholeheartedly support. We also recognize that
a strong and effective body of rules governing much of the economic activity in the digital economy already
exists in the form of the WTO Agreements. The application of those “analog rules” in today’s digital
economy has been highlighted. Given the WTO’s track record in the negotiation and enforcement of these
rules, we view it as essential in the medium to long term that any new or updated rules that are enacted
to govern the digital economy be brought under the auspices of the WTO and particularly its overriding
principle of most‐favored nation and its dispute settlement procedures.
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