The Emergence Of Digital Economy Agreements
The pandemic has highlighted the significance of the digital economy and its impact globally. It has precipitated the importance of including new digital trade chapters in trade agreements as well as standalone digital trade agreements like the Digital Economy Partnership Agreement (DEPA).
DEPA is an agreement currently between Chile, New Zealand and Singapore. DEPA was signed in 2020 and it came into force in January 2021. DEPA is the first standalone open plurilateral agreement to which other World Trade Organization (WTO) members are eligible to join.
On February 16, 2021 Canada announced its interest in being a possible signatory and in May 2022 submitted a formal request to the DEPA parties for Canada to join the agreement.
What Exactly Is The Digital Economy?
The digital economy is a term that describes the impact of digital technology on patterns of production and consumption. This includes how goods and services are marketed, traded, and paid for.
The term has evolved from the 1990s when the internet became worldwide and began to impact the economy. Today the term has included an array of technologies and their applications such as artificial intelligence, augmented and virtual reality, cloud computing, blockchain, robotics and autonomous vehicles.
The digital economy now includes all parts of the economy where technological change has affected the access to markets, made changes to business models, and transformed day-to-day operations. It includes e-commerce, digital banking, and even traditional sectors such as agriculture, mining and manufacturing where we see these industries being affected by emerging technologies.
These industries are using technology to improve their processes to become more efficient and cost effective. The digital economy will likely be the ordinary economy. Digital transformation of the economy is witnessing a change in how businesses are structured, how consumers obtain services, information and goods. More and more people are working online and the companies that support the systems of the internet are becoming more and more profitable than before.
National governments need to look at the regulation of this new emerging economy and the challenges it brings. DEPA is one step towards meeting this challenge.
Singapore's Ministry of Trade and Industry offers the following description of DEPA to explain its features:
“The DEPA is a first of its kind agreement that establishes new approaches and collaborations in digital trade issues, promotes interoperability between different regimes and addresses the new issue brought about by digitalisation.”
Why Is DEPA Of Interest To Canada?
We see that the digital economy is expanding rapidly as is digital trade. Canada announced its possible accession to DEPA and stated, “Past trade agreements are not advanced enough to eliminate or reduce the barriers faced by businesses operating in the digital economy. The DEPA is a new type of standalone trade agreement that focuses exclusively on facilitating digital trade. There is value for Canada to join early so that we are positioned to contribute to the future course of the agreement.”
The Canadian government sought input from its citizens regarding the possibility of Canada joining the DEPA. The consultation was open to all Canadians and ran from March 19, 2021 to May 3, 2021.Canada will continue to consult with Canadians as it moves forward towards setting the groundwork for regulating the digital economy.
More and more countries are looking to sign on with DEPA. China, South Korea and Japan are all looking at possibly signing. Barron, the US Investing and Financial news magazine, encourages the US to join DEPA and explains:
“DEPA is pathbreaking for several reasons. First, the participants see their relationship as a partnership; they pledge to build a digital economy that supports innovation and builds trust in their own countries and globally. Second, they drafted the agreement to demonstrate the benefits of collaboration at a time when many economies are choosing to go it alone or bilaterally because of Covid-19. The agreement includes provisions designed to spur cooperation on emerging issues such as a shared approach to competition policy, which all nations may need as they seek to regulate giant data firms such as Alibaba, Google, and Facebook. These firms not only hold much of the world’s personal data, but they have annual revenues larger than many governments. With that market clout, they can bully nations that seek to regulate them.”
We will continue to watch this space and keep you informed with how Canada progresses through this process.
If you have any questions on trade or freight logistics please contact one of our Trade Advisors.