Digital Trade: Grasp Opportunities with Modern Trade Policy

The new EU trade strategy places particular weight on digital trade. This is a response to the increasing digitalisation of world trade, which also offers great opportunities for German industry.

International e-commerce reduces transaction costs, facilitates participation in global value chains, improves market access and reach, and produces clear efficiency gains. It enables companies to export more competitively and to increase productivity. The volume of international business-to-consumer e-commerce is forecasted be close to $1 trillion by 2020 – and international e-commerce between companies is even bigger.

International data transfer is a precondition for e-commerce, and equally fundamental for efficient management of global value chains. According to estimates by McKinsey, international data transfer ($2.8 trillion) contributes more to global GDP than trade in goods ($2.7 trillion). Trade in ICT products is an important export sector, as well as forming an essential production input for many industrial goods.

Digital commerce growing and increasingly international

International e-commerce in billion U.S. dollars and share of international trade in percent

The three components of digital trade – trade in ICT products, international e-commerce, and international data transfer – are, however, inadequately reflected in the international trade regime, with the notable exceptions of the WTO’s Information Technology Agreement II (ITA II) and the Trans-Pacific Partnership (TPP). Existing international trade law is often applied inconsistently to digital trade, leading to planning uncertainty and opening the gates to digital protectionism. If the opportunities of digital trade are to be grasped, the EU’s trade talks must seek ambitious arrangements for the digitalised trade of the 21st century.