Digital trade has skyrocketed in the last two decades. From e-commerce and international professional services to cloud computing and digitisation of finance, it has become a fundamental part of the global economy and our everyday lives. This is only the start.
Digital trade means efficiency and productivity gains as significant as those experienced in the last industrial revolution. Emerging new sectors will challenge incumbents through new inventions and innovation. Entirely new skill-sets required for the modern economy will be developed and refined.
Digital trade is creating a new generation of entrepreneurs, with individuals and micro-businesses no longer confined to their domestic market. The opportunity for growth, competition and better customer outcomes is significant: Wise has been a part of that journey, re-thinking how cross-border transactions are done, putting the customer first, and achieving almost 50% of our global transactions instantaneously. The gains are real, but navigating the complex international regulatory environment remains difficult.
To truly unleash the digital economy, create global competition and ultimately benefit customers, policy frameworks need to be updated to match the ambition of this new generation of global entrepreneurs. From customs procedures to data localisation, viable minimum standards globally should be the ultimate aim. The accounting industry did this back in 1973, creating the International Accounting Standards Committee to begin the conversation about harmonising the various complex national frameworks across some of the world’s biggest economies. It now covers over 140 jurisdictions, has simplified processes and given people confidence to grow their businesses internationally. We need to see a similar mindset applied to the digital economy and reap the benefits harmonisation can bring for customers and businesses alike.
There are countless traditional reasons why international agreements on digital trade are difficult. Whether it’s a lack of political will, a fear of first-mover disadvantage or simply a lack of sectoral understanding to create an appropriate policy framework, moving the needle is hard. After all, it was only in 2018 that data protection rights finally became codified in Europe after decades of us all being online. Like Wise, governments need to go where consumers and businesses are - online - and support them in having the best experience to truly support digital trade. This is ultimately taking a consumer-first approach to policymaking; regulatory frameworks should make digital trade as seamless as possible.
But for now, digital chapters in trade agreements have been the first step for most nations. Seeing applications from Britain and others to join CPTPP will expand broad digital reach in the global marketplace. Evolving this to create specific Digital Economy Agreements (DEA) - like the one the UK has recently signed with Singapore - is a further step in the right direction. More nations need to be bold in developing these bilateral agreements, which should lead to the ultimate goal of digital trade multilateral agreements. The lodestar, however, needs to always remain mindful of consumer needs. It is only through this attitude will we see Digital Trade simply and suitably turn into “trade”.