Summary

Question 1

Def Digitization and digitalization

Answer 1

Digitization = The conversion of analogue data and processes into a machine-readable format

Digitalization = The use of digital technologies and data and the interconnections between them,
which result in new activities or in changes to existing activities

Question 2

Digital technologies’ impacts on international trade

Answer 2

• Firms harness digital technologies to enhance efficiency, productivity, and innovation,
  transforming business processes.
• Digitalization catalyzes the adoption of digital technologies, notably through the expansion of online retail, wholesale, and digital platforms.
• Market access for business ↑ (especially MSMEs)
• Consumers for a wider product range and greater customization options ↑
• Decrease in costs associated with international transactions (E.g. Fintech)
• Facilitating production fragmentation in the global value chains
• Lower costs in storing and sharing information

Question 3

How RTAs (regional trade agreement) act as incubators and testing grounds for new trade
rules

Answer 3

RTAs are critical for setting digital trade standards
o Many WTO members have RTAs with e-commerce clause

Variability in RTA’s Digital Trade Provision
o Legal coherence and inclusivity in legal framework

Question 4

Major rules on digital trade in USMCA (United States-Mexico-Canade Agreement)

Answer 4

• Prohibiting customs duties and other discriminatory measures to digital products distributed
  electronically (e.g., e-books, videos, music, games, etc.)
• Ensuring data can be transferred across borders
• Data Localization
• Facilitating digital transactions by permitting the use of electronic authentication
• Protecting consumer information
• Cracking down on data localization measures used to restrict where data can be stored and
  processed, enhancing and protecting the global digital ecosystem

Question 5

Digitally ordered trade & digitally delivered trade

Answer 5

Ordered:
- Digitally ordered trade refers to international e-commerce and as such it is a subset of total e-commerce
- Digitally ordered transactions in international trade
o Purchases of apps and in-app online purchases
o Transactions via online bidding platforms

Delivered:
- Only services can be digitally delivered
o Services delivered by phone, fac, video call and email are included in digitally delivered
trade

Question 6

Modes of supply (GATS)

Answer 6

Mode 1: Cross-border supply (E.g. e-learning/legal advice)
o Takes place when a service is supplied “from the territory of one [WTO] Member into the
territory of any other Member”

Mode 2: Consumption abroad (E.g. exchange student/tourist)
o Takes place when the service is supplied “in the territory of one Member to the service
consumer of any other Member”

Mode 3: Commercial presence (E.g. subsidiary / affiliate)
o Takes place through supply of a service “by a service supplier of one Member, through
commercial presence in the territory of any other Member”

Mode 4: Presence of natural persons (E.g. teaching as an Korean prof in Germany)
o Takes place when a service is supplied “by a service supplier of one Member, through
[temporary] presence of natural persons in the territory of any other Member”

Question 7

COVID-19 pandemic and impacts on digital trade

Answer 7

• Digital trade has expanded globally, requiring various policy responses
  o To facilitate digital transactions,…
• Restrictions on movement and other interventions to protect public health
  o Digital solutions became essential for remote activities => people more online
• Expansion of E-commerce in advanced and developing economies
  o Increasing inequalities in income, economic development,…

Question 8

Digital divide between advanced and developing economies

Answer 8

• The positions and stages of development in e-commerce or digital trade vary greatly from
  country to country
• However, countries that have established digital trade agreements through RTAs and such are likely to be in a favorable position in WTO negotiations, especially advocating for clauses established in individual agreements, such as the prohibition of data localization
• As such clauses become established in various trade agreements, they will start to be recognized as a single norm, even if the obligations may differ according to each country’s position or development stage of digital trade

Question 9

WTO’s Work Programme on Electronic Commerce

Answer 9

In 1998 , the WTO Work Programme on Electronic Commerce, adopted by the general Council,
agreed not to impose tariffs on the movement of electronic transmissions between member
countries, which include eBooks, music, videos, and software.

This concept of e-commerce has since expanded to encompass digital trade, which includes the cross
border transfer of data.

Question 10

EU’s GDPR and digital tax mechanism

Answer 10

GDPR:
- Stringent requirements for the protection of personal data and the cross border transfer of such data

• Many businesses regard ‘restrictions on cross-border data movement’ and ‘strict privacy
  regulations’ as barriers to trade

Digital Tax:
- Criticism on big technology firms

• Big Tech firms online revenues => 3% payment for digital tax
  o Routing significant profits through low-tax EU member states (Ireland, Luxembourg)
• EU’s DMA (Digital Market Act) 2024
  o Against monopolies and investigations of violation of this contract