Digital Trade Governance in Asia-Pacific Region

In a world under the combined impacts of major changes unseen in a century and the COVID-19 pandemic， the digital economy is undergoing fast development. Digital trade governance has become the frontier and an integral part of global economic governance. The Asia-Pacific region has become a frontrunner in digital trade governance in recent years， and regional cooperation in this field boasts distinctive features.

Features of Digital Trade Governance in Asia-Pacific

The Asia-Pacific region is one of the most dynamic growth belts in the world and a powerhouse of global growth. In the digital age， cooperation on digital trade governance in the region distinguishes itself from the following aspects.

First， cooperation mechanisms are diverse in forms and content. Asia-Pacific cooperation on digital trade governance has different forms. It has moved from enactment of provisions， to chapters and to agreements. In this process， the regulatory framework for digital trade governance has also become more fleshed-out， sophisticated and refined. Regional mechanisms differ from one another in terms of content. For instance， the United States-Mexico-Canada Agreement （USMCA） which embodies America’s propositions is quite radical and strict. The U.S.-Japan Digital Trade Agreement is more moderate with some revisions and expansion on the basis of the USMCA. The Regional Comprehensive Economic Partnership fully accommodates the competitiveness of developing countries and especially underdeveloped countries in the region. In addition， a growing number of digital trade agreements like the Digital Economic Partnership Agreement （DEPA） initiated by Chile， New Zealand and Singapore in 2020， the UK-Singapore Digital Economy Agreement and the Korea-Singapore Digital Partnership Agreement signed in 2022 are divided into “modules”. Negotiations on rules cover a wide range of new areas from cross-border data flows to Fintech and financial services， cyber security， digital trade facilitation and digital identities cooperation.

Second， cooperation mechanisms are flexible and inclusive. Flexibility and inclusiveness have long been the hallmark of economic and trade cooperation in the Asia Pacific. Take DEPA， the first digital-only multilateral agreement， for example. It covers nearly all areas related to the digital economy and digital trade， including business and trade facilitation， treatment of digital products and related issues， data issues， business and consumer trust， emerging trends and technologies， innovation and the digital economy， small and medium enterprise cooperation as well as digital inclusion. To attract countries in different stages of the digital economy and digital trade， DEPA employs an “a la carte” approach in which signatories can choose to accept some modules in light of their conditions rather than join the agreement in its entirety. Such flexibility opens more opportunities and pathways for developing countries to engage in cooperation on digital trade governance in greater depth， making regulation of global trade in the 21st century more accessible. Thanks to its flexibility and inclusiveness， DEPA has demonstrated considerable attraction and influence， and gained the attention of many countries. To date， China， South Korea and the UK have already submitted applications to join the agreement.

Third， small- and medium-sized open economies in the Asia-Pacific represented by Singapore have had remarkable performance. Against the backdrop of rapid development of digital technologies and the digital economy， small- and medium-sized open economies in the region have initiated， actively engaged in negotiations for， and worked towards the signing and implementation of several digital trade and e-commerce agreements. These agreements serve as public products for regional and international cooperation on digital trade governance. Singapore， a typical small open economy known for its small state diplomacy， stands out. With a keen understanding of the impacts of digital technologies on global trade， an interest in global economic governance and aspirations for a say in designing global trade rules in the age of digital economy， the country has signed several digital trade agreements in a short span of time. In this process， Singapore has demonstrated such qualities as being flexible， open， inclusive， politic and ready to seek common ground with trade partners. It has also shown its coordination， collaboration and leadership skills in promoting regional economic integration.

Fourth， the Asia-Pacific has become a pacesetter in global digital trade governance. Among the 7 existing mechanisms for digital trade governance in the world， the ASEAN Agreement on Electronic Commerce， the U.S.-Japan Digital Trade Agreement， the Digital Economy Partnership Agreement， the Australia-Singapore Digital Economy Agreement， the UK-Singapore Digital Economy Agreement and the Korea-Singapore Digital Partnership Agreement all have their roots in the region， except for the Mercosur Agreement on Electronic Commerce. These Asia-Pacific-born agreements are easier to be reached， as the parties involved are small in number with similar digital levels， values and ideas. These agreements can meet member states’ urgent demands for digital trade governance. At the same time， they also enrich global trade governance in the age of the digital economy， add momentum for the institutionalization of digital trade governance in the region and beyond， and enable the Asia-Pacific region to champion， explore and promote global digital trade governance.

Rationales Behind Asia-Pacific’s Lead

It is no coincidence that the Asia-Pacific region leads and breaks new ground in digital trade governance， and has given birth to DEPA. There are some right conditions.

First， the Asia-Pacific region is home to many pioneering digital economies with high demand for regional digital trade governance norms. The region， an engine of global growth for many years， has witnessed the rise of a number of pioneers in the digital economy such as the United States， China， South Korea， Canada， Australia， Singapore and Japan， thanks to world-leading digital technologies， hefty capital flows， a large population and a promising electronics consumer market. As some countries in the region accelerate digital transformation and their growth becomes increasingly digital-driven， there is an urgent need for digital trade governance norms. This gives rise to the birth of new mechanisms dedicated to digital trade governance to serve high-standard competition in Asia-Pacific’s digital economic and trade market.