Explanation
Over the past decade, the digital trade policy community has been embroiled in battles over data privacy, cross-border data flows, and electronic tariffs, which remain difficult to reach international consensus on. But amidst the geopolitical flurry of these issues, there is at least one key area where we are seeing steady and visible progress in digital trade policy. It's cybersecurity.
In today's global economy, global cyber regulation is increasingly fragmented, undermining cybersecurity and the growth potential of digital trade. Trade negotiators will promote a fair, inclusive, sustainable and secure digital trade environment and secure more ambitious cybersecurity commitments, even as negotiations on more contentious digital issues remain stalled should take advantage of the opportunity to
How we got here
European Union General Data Protection Regulation (GDPR) and subsequent regulations Transatlantic battle over secure data flows It was an initial source of tension over digital trade in recent negotiations. GDPR adequacy requirements Setting strict data protection standards for non-EU countries has hampered previous U.S.-EU cooperation on cross-border data flows and has challenged whether data can continue to cross the Atlantic. A panic was caused.
The attention not devoted to data policy focused on negotiations over digital taxes and tariffs at the Organization for Economic Co-operation and Development (OECD) and the World Trade Organization (WTO), respectively.
Then, last October, the Office of the U.S. Trade Representative made a sudden thunderclap. Reversing decades of U.S. digital trade policy. The decision to withdraw US support on issues of cross-border data flows, data localization, and source code review in the negotiations of the Joint Statement Initiative on Electronic Commerce at the WTO came as a shock to many.
U.S. industry and trade associations called on the U.S. government to reverse the decision and reaffirm its support for cross-border data flows. Concerns also spread to Congress, where public hearings were held to understand the root causes of the decision. Meanwhile, U.S. trading partners felt snubbed because they had long insisted on such provisions with U.S. encouragement.
Bright signs for digital policy
Cybersecurity policy, on the other hand, is far less controversial and fosters international cooperation, and for good reason. Trust in the digital economy is fundamental. As policymakers continue to take a more active role in national cybersecurity policymaking, governments also need to ensure that regulations are interoperable with national regulations to avoid unnecessary non-tariff barriers to trade. We also need to ensure that. So far, central governments around the world have built a strong foundation on international agreements, but much more work is needed to negotiate digital security standards across borders.
The basis for this can be found here: new reportfrom “Securing Global Trade: How to Address Cybersecurity in International Trade Agreements” Coalition to Reduce Cyber Risk. The report assesses 11 free trade agreements (FTAs) that have incorporated cybersecurity provisions to date. We categorize these provisions into eight different areas and analyze the similarities and differences in how they are handled.
According to the report, more FTAs have incorporated cybersecurity provisions since 2018, and these provisions have become increasingly comprehensive. Building government cybersecurity capacity, cooperating in responding to security incidents, and leveraging risk management-based approaches and international standards in domestic cyber policymaking are becoming fundamental expectations in modern trade agreements. However, more ambitious agreements have also been concluded, including: Singapore and UK Digital Economy Agreementeven going so far as to “establish a mutual recognition agreement for baseline security standards” for Internet of Things devices.
While trade policy in general continues to face challenges, there are also opportunities for further progress. The World Trade Organization's Joint Statement Initiative on Electronic Commerce, an agreement between 90 countries covering much of the global economy, could be concluded by the fall. Future trade talks between the United States and Taiwan offer an opportunity to match the ambitious digital trade pledges made by peer countries such as the United Kingdom, Singapore, and Australia.
For the United States, adopting language that mirrors the Singapore and UK DEA regarding mutual recognition of IoT security baselines would be a good starting point. Incorporating coordinated vulnerability disclosure requirements for critical infrastructure will once again put the United States at the forefront of this topic. We continue to face headwinds on provisions such as data flows and electronic tariffs, but further progress is needed. This can be achieved through digital trade policy. The Office of the United States Trade Representative should take advantage of this opportunity.
