Digitrade Digest #11
Data is Power; US-Japan summit & calls for Asia-Pacific digital trade agreement; Google lobbies for US-EU tech council
Washington Needs to Craft New Rules for the Digital Age
Foreign Affairs: Data is now at the center of global trade. For decades, international trade in goods and services set the pace of globalization. After the global financial crisis, however, growth in trade plateaued, and in its place came an explosion of cross-border data flows. Measured by bandwidth, cross-border data flows grew roughly 112 times over from 2008 to 2020.
The global economy has become a perpetual motion machine of data: it consumes it, processes it, and produces ever more quantities of it. Digital technologies trafficking in data now enable, and in some cases have replaced, traditional trade in goods and services. Movies, once sold primarily as DVDs, now stream on digital platforms, and news, books, and research papers are consumed online. Even physical goods come laden with digital components. Cars are no longer merely chassis built around internal combustion engines; they also house complex electronics and software capturing massive amounts of data. Trade in physical goods also comes with digital enablers, such as devices and programs that track shipping containers, and these likewise generate data and improve efficiency. And now, COVID-19 has sped up the digital transformation of businesses, pushing even more commerce into the cloud.
Eurasia Review: President Joe Biden and Prime Minister Yoshihide Suga will meet in Washington this week as both the United States and Japan show the world that alliances are back. But despite touting the U.S.-Japan Alliance as the cornerstone of peace and security in the Indo-Pacific, both countries walk a fine line when it comes to trade. That’s why both leaders should commit to using the existing U.S.-Japan Digital Trade Agreement as a template to expand free and open digital trade among both countries’ partners and allies in the Indo-Pacific with a regional digital trade agreement.
This is a critical inflection point for the U.S.-Japan Alliance.
Both countries are climbing out of the pandemic with hopes of celebrating meaningful progress this summer – Independence Day for the United States, as Biden aspired to in his March primetime address, and the Olympic and Paralympic Games for Japan, as Suga has insisted throughout the pandemic will go on.
Both countries are emphasizing their steadfast alliance after on-again off-again tensions over the past four years, during which even former Prime Minister Abe’s aggressive courtship of President Trump could not deter tariffs and trade frictions between the 60-year-old allies.
Both countries are also seeking to assert leadership by bringing regional partners and allies into the fold of the Free and Open Indo-Pacific to balance China’s influence.
Wall Street Journal: WASHINGTON—China’s rising military might may top the agenda when President Biden and Japanese Prime Minister Yoshihide Suga meet Friday, but the two leaders also have unfinished business to resolve on the trade front.
The U.S. and Japan are at odds over the future of the Trans-Pacific Partnership, or TPP, a regional trade bloc to fend off Chinese competition that the U.S. has abandoned and Japan now champions.
Biden administration officials have made clear the U.S. wouldn’t return to the pact anytime soon as they undertake a comprehensive review of the trade policies they inherited from Mr. Trump and focus on strengthening the domestic economy.
Japan, a loyal ally of the U.S. on security issues, has been pushing for the U.S. to rejoin the TPP, something Mr. Trump at one point asked his own economic advisers to consider.
The Hill: Washington’s cherry blossoms are beyond their peak, but the U.S.-Japan alliance will be in full bloom this Friday when Prime Minister Yoshihide Suga becomes the first foreign leader to visit President Biden in the White House.
Even if seldom mentioned by name, China is the unmistakable fulcrum around which alliance policy on all issues turns. Competition with China is primarily economic and technological, but these issues often spill over into security and human rights.
Economically, a rebounding U.S. economy and Japan will collaborate to strengthen the resilience of vital supply chains. Semiconductor chips are essential for all electronics, and Suga and Biden are determined to ensure their availability. Equally, the U.S. and Japan have an opportunity to leverage their two-year-old digital trade agreement to help negotiate a multilateral accord and establish high international standards for finance and commerce in the cyber age.
East Asia Forum: Data is not the new oil, it’s much more. The digital economy is the new economy and will underpin productivity growth and recovery from the pandemic.
Healthcare, education and service delivery were all enabled during COVID-19 lockdowns and social distancing as digitalisation of economies accelerated by several years in a few months.
Sources of innovation and technological progress are increasingly diffuse across the globe and physical distance matters less for international commerce and exchange. So we appear to be on the crest of a new wave of globalisation and connectivity. Information sharing and the cost of transporting digital services is virtually zero.
But digital protectionism is also on the rise and geopolitics are propelling a digitally divided global economy. The strategic rivalry between China and the United States is leading to digital decoupling and contributing to digital economic fragmentation.
The difficulty for governments is to balance the competing policy objectives of privacy, intellectual property protection, consumer protection and competition policy. There is an absence of multilateral rules governing the digital economy so Europe, the United States and China as well as other countries are pushing ahead with their own systems as the world tries to navigate them.
In our lead article this week, Shiro Armstrong, Rebecca Sta Maria and Tetsuya Watanabe argue that getting things right in the Asia Pacific can help avoid a fractured global digital economy. Armstrong, Sta Maria and Watanabe are authors on a report released today, Towards an Asia-Pacific Digital Economy Governance Regime.
ZdNet: Google is worried that an "explosion in national policies" is harming technology trade between the US and Europe, and considers the threat greater than the trade dispute between the US and China.
Google has appealed to the Biden Administration to agree to join a US-European technology council to prevent individual European countries and the US from erecting more hurdles to trade.
Google is urging the US to accept a recent proposal by the EU to establish a technology and trade council as a show of transatlantic strength and unity. The US and EU populations amount to almost one billion people, with trade between them worth trillions of dollars.
The Digitrade Digest is a weekly publication of the Digital Rights Program at Public Citizen.