Digitrade Digest#55
EU-Japan Digital Partnership launched, UK’s rebooting Bigtech laws, Singapore ‘welcomes’ IPEF and more
IPEF
US-led economic framework for Indo-Pacific should be inclusive, provide 'tangible benefits' to countries: PM Lee
Todayonline: Elaborating on the potential areas that the framework can cover, Mr Lee said on Thursday that the focus on digital trade can harness Asean’s growing digital potential, such as by facilitating cross-border data flows.
Cooperation in this area can also take advantage of Asean’s ongoing work on digital trade standards, data and digital utilities and payments, said Mr Lee.
On cooperating in the area of trade facilitation and supply chain resilience, Mr Lee said: “A resilient supply chain is fundamentally underpinned by strong connectivity, so that there is early detection and timely responses to potential disruptions.
“We welcome collaboration to build digital capabilities, and to strengthen regional connectivity and logistics infrastructure.”
In the third area of capacity building, Mr Lee said that Singapore supports regional human capital development, including through the US-Singapore Third Country Training Programme.
The programme aims to help Asean countries meet their development goals and strengthen community building in the region.
UK
UK opts for slow reboot of Big Tech rules, pushes ahead on privacy ‘reforms’
TechCrunch: The overarching question here is whose “gold standard” the U.K. is intending to meet? Brexiters might scream for their own yellow streak — but the reality is there are wider forces at play once you’re talking about data exports.
Despite Johnson’s government’s fondness for ‘Brexit freedom’ rhetoric, when it comes to data protection law the U.K.’s hands are tied by the need to continue meeting the EU’s privacy standards, which require the an equivalent level of protection for citizens’ data outside the bloc — at least if the U.K. wants data to be able to flow freely into the country from the bloc’s ~447 million citizens, i.e., to all those U.K. businesses keen to sell digital services to Europeans.
This free flow of data is governed by a so-called adequacy decision which the European Commission granted the U.K. in June last year, essentially on account that no changes had (yet) been made to U.K. law since it adopted the bloc’s General Data Protection Regulation (GDPR) in 2018 by incorporating it into U.K. law.
And the Commission simultaneously warned that any attempt by the U.K. to weaken domestic data protection rules — and thereby degrade fundamental protections for EU citizens’ data exported to the U.K. — would risk an intervention. Put simply, that means the EU could revoke adequacy — requiring all EU-U.K. data flows to be assessed for legality on a case-by-case basis, vastly ramping up compliance costs for U.K. businesses wanting to import EU data.
EU-Japan Digital Partnership
Joint Statement EU-Japan Summit 2022
Europa.eu: We launch the EU-Japan Digital Partnership in order to advance cooperation on a wide range of digital issues to foster economic growth and achieve a sustainable society through an inclusive, sustainable, human-centric digital transformation based on our common values. We will continue cooperation on “Data Free Flow with Trust” with a view to facilitating safe and secure cross-border data flows through enhancing security and privacy. This will help us harness the benefits of the digital economy. Our Partnership will reinforce the existing dialogue on these issues with a view to delivering concrete results, notably on secure 5G, “Beyond 5G” / 6G technologies, safe and ethical applications of artificial intelligence and the resilience of global supply chains in the semiconductor industry, while encouraging an open and innovative environment. The Digital Partnership will also allow us to work together in areas such as EU-Japan secure international connectivity and green data infrastructures, privacy, data innovation, digital regulation, the development of digital skills for workers, and the digital transformation of businesses, including small and medium enterprises (SMEs), and of public services. We will also work together for the development of global interoperable standards and to facilitate digital trade to the benefit of our workers and businesses. In addition, we underscore our joint commitment to high standards of protection for personal data, based on the EU-Japan mutual adequacy arrangement. We will start the implementation of the Digital Partnership without delay and will review annually the progress made.
China and CPTPP
What is the CPTPP and why is China eager to join?
SCMP: China’s application is viewed in some quarters as a “spoiler” to ruin the trade bloc’s momentum, as it does not need or want to participate in the CPTPP, Carrai said.
Joanna Shelton, a non-resident senior associate with the Economics Programme at the Centre for Strategic and International Studies, said on the think tank’s website in November that China’s formal application to join the CPTPP, a day after Australia, Britain and the US announced the so-called Aukus defence alliance, was a clear effort to divide Washington from its allies and partners.
Wang Xiaohong, deputy director of the information department at China Centre for International Economic Exchanges, said in an interview with the Shanghai Securities News in October that China’s participation in the deal could deepen domestic reforms, such as enhancing innovation and efficiency, ensuring supply chain resilience and developing the digital economy.
What are the benefits for China in joining the CPTPP?
Wang Shouwen, China’s vice commerce minister, said in March Beijing’s intentions to join are consistent with the country’s efforts to reform and open up the economy.
Membership would help other countries strengthen cooperation with China for trade in goods and services, investment and in other areas, he added.
The CPTPP could increase China’s gross domestic product (GDP) by 0.74 to 2.27 percentage points and its exports by 4.69 to 10.25 percentage points, according to a model developed by Li Chunding, a professor at the school of economics and management at China Agricultural University.
GDP will grow by 0.25 percentage points and exports by 0.09 percentage points if China does not join the trade pact, the model showed.
Chinese scholars are positive about the country’s involvement in the CPTPP, but concerned about its ability and commitment to meet the rules of the trade pact, Carrai said.
What challenges does China face for entry into the CPTPP?
There are strict provisions banning data localisation and prohibiting the forced transfer of source code, according to Carrai, which conflicts with China’s restrictive data laws.
China’s cybersecurity law stipulates that personal information, as well as important data collected and generated by critical information infrastructure operators should be stored within the territory, she said.
But the specific scope and extent of national security and personal information protection are not clearly defined.
China’s’ support for SOEs, through industrial subsidies and other trade distorting practices, does not meet CPTPP standards, which highlights more neutral competition, Wang Xiaohong told The Paper in March.
ADB on Digital Trade
Digital trade, technology could aid Southeast Asia's recovery from the pandemic, says ADB
The EdgeMarket: On digital trade, ADB foresaw a strong growth potential in the region post pandemic.
"Much of the region's digital trade now concentrates on digital marketplaces and information technology and business process outsourcing (IT-BPO), while software development is picking up in some countries.
"As demand for digital products and services grows, it is important to enhance digital connectivity, invest in logistics and distribution facilities, develop an IT–BPO road map, support skills development and training, and rethink digital regulations to protect consumers," it said.
ADB Report
Supporting Post-COVID-19 Economic Recovery in Southeast Asia
adb.org: Digital trade is relatively new. While the contributions to gross domestic product of digital products (software), digitally enabled services (business process outsourcing, online advertising, export of data processing services), and indirect digital services are not yet captured well in national statistics across Southeast Asia, their importance is likely to grow tremendously as more activities shift online. Much of the region’s digital trade currently concentrates on information technology and business process outsourcing (IT-BPO). Software application (app) development has also been picking up in some countries. To harness the growth potential of the region’s digital trade sector, addressing the following key challenges is vital: risk from automation; limited connectivity; low level digitalization of micro, small, and medium-sized enterprises (MSMEs); tax base erosion; and a restrictive regulatory framework. For instance, many MSMEs lack the resources to research international sales opportunities, to build a global business network, and to market their products overseas. Digital technologies can help, but many MSMEs lack understanding of available digital solutions, available software or business platforms, and related trade opportunities. Some may consider the (further) digitalization of their business model and information technology infrastructure as too risky, disruptive, or costly.
To address the challenges identified and support an enabling environment for digital trade, Southeast Asian countries could develop an IT-BPO road map, enhance connectivity, support skills development, enable MSMEs to go digital, and rethink digital regulation. For example, to enable MSMEs to go digital, a range of initiatives is needed to support digital skills development. Greater industry involvement in curriculum development can help ensure that key skills like English language fluency, critical thinking, and complex problem solving are covered. This needs to be accompanied by support and financial incentives for employers to ensure more and higher quality training in the workplace.