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

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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. 3
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
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White Paper Trade Rules and the Digital Economy Key Points and Findings

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