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

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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. 5
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
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