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Call for global agreement to promote digital trade growth

08 Jun 2016

It's time for a renewed digital trade policy to stop digital protectionism in its tracks, a new report by The Information Technology and Innovation Foundation (ITIF) says.

ITIF is a think tank specialising in technology policy, believe disruptive competition has caused countries to keep companies local, at the expense of global growth.

Digital protectionism has been a root cause of antiquated and ill-fitting international trade rules, preventing economic growth in the technology sector, ITIF says.

ITIF suggests a new solution that will see policies updated for the digital age through what it calls a Trade in Services Agreement (TiSA), which it says will boost productivity and innovation.

The report was authored by Nigel Cory, ITIF trade policy analyst and Stephen Ezell, ITIF president for global innovation policy.

Together, they analysed the methods countries use to prevent disruptive competition, such as nontariff barriers including foreign investment limitations, citizenship and residency limitations, and a lack of transparency and certainty. These are costly barriers for technology firms, they state.

Cory says that the formation of international trade rules for services in the 1990s no longer applies to today's modern world, and that services such as retail, news, banking and health care don't have to be limited to local markets. 

Cory believes that it's this remote access which is driving innovation and growth, but it is at risk because of the outdated trade rules.  

"In particular, outdated rules allow countries to effectively close themselves off to foreign competition by adopting protectionist regulations. Done right, TiSA gives us a chance to update the global services trade rules to create an environment that would significantly spur innovation and productivity,” Cory says.

Cory and Ezell also believe that technology's ability to drive remote interaction is increasing the amount of global economy services, so companies can mix and match their offerings. They believe increased services trade will promote productivity and increase living standards in a sustainable way.

“A focus on trade in services has long taken a backseat to goods trade, despite the fact that services account for around 70 percent of the global economy,” Ezell says. Ezell believes that TiSA will liberalise the modern global economy that thrives on trade. If an agreement can't be formed, countries will form more barriers against technology-related global economy growth to protect themselves.

Their TiSA proposal includes recommendations such as:

  • Providing non-discriminatory, open-market access to service sectors
  • Using future-proofing methods to ensure trade rules and service
  • Providing easier market concession access to TiSA members
  • Implement ways to make data flow more freely and to protect ecommerce
  • Establish best practices that will test public policy goals for protectionism
  • Increase trade regulation transparency.

The report says that 23 economies have joined TiSA negotiations, but countries such as the US, EU and other leaders must pave the way to influence China and make it more difficult for it to implement more trade barriers.

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