10 Quick Wins for Digital Trade - Part 1
This episode consists of a conversation with Johanna Hill, the TradeExperettes Outreach Director, about the TE Project “10 Quick Wins for Digital Trade,” that is part of TE’s Digital Trade Year and was launched in September 2022, in Geneva, during the WTO Public Forum week. It also includes the insightful comments of some of the experts that contributed to the report, like Yan Xiao, Lead of the Digital Payments Project at the World Economic Forum, and Victoria Bruno, Independent Lawyer and Consultant in International Trade, Program Leader of the TradeExperettes Skills Lab and Host, TradeExperettes Confidentials.
Belén Gracia: Welcome to the TradeExperettes Podcast! My name is Belén Gracia, and today you will hear the first episode of a two episode series that we're going to publish about the "Ten Quick Wins for Digital Trade". A TradeExperettes' Report that we launched last year during the WTO Public Forum.
This time we want to have Kelly's inputs because she's taking a well deserved holiday. So to talk about this report with me is Johanna Hill, the Outreach Director of the TradeExperettes. Johanna is a trade expert with more than 20 years of experience in international trade. Currently, she's managing partner of the Central American Trade Consulting Group in El Salvador, where she advises governments, private sector clients, and international organizations on issues related to the negotiation and implementation of international trade agreements.
Let's jump into the conversation!
Hi Joha, welcome to the podcast and thank you for joining me today.
Johanna Hill: Hi Belén! Thank you for having me.
Belén Gracia: So to start, I think it will be useful for our listeners to hear about how was the 10 Quick Wins Project born, what is the goal of the report and its relevance?
Johanna Hill: Yes, let me give you a little bit of background. Before starting, you know, my private practice in Central America, giving trade advisory services, I was in government for a long time and my first job was to work on the file ratifying the Uruguay Round Agreements back in 1995. And since then I have worked in trade. My last government jobs were as a trade negotiator and then Vice Minister of Economy. So, I had tons and tons of reading to do before every and any meeting and even more when we were undertaking a negotiation.
At TradeExperettes we work on many trade issues from fossil fuel subsidies to national security exceptions, to trade and gender. And in the year 2021, when we were flying to Geneva for the Public Forum, we wanted to share with a group of ambassadors the importance that we found of the work being done at the WTO on trade and gender. But we didn't want one voice to be heard, we wanted many voices to be heard, especially of female trade experts, and give them a seat at the table. So we brought together an esteemed group of experts to share their analysis and pragmatic proposals on trade and gender, so that policy makers could have at hand well-researched and accessible information and could turn these ideas into actions. So these voices come from academia, they come from the public policy realm, negotiators, international organizations, and the private sector. And in this meeting we had the fortune of the ambassador of El Salvador, who is co-convenor of the informal Working Group on Trade and Gender, and Deputy Director General Anabel Gonzalez, who convened an Ambassadors' Round Table during the week of the Public Forum. And we had the opportunity to present to all this esteemed group of ambassadors wonderful and practical ideas and concepts on the issue of trade and gender. And that's how it got started.
Belén Gracia: And in 2022, we also gathered a group of female trade experts to write about digital trade. And we put together the report 10 Quick Wins for digital Trade. Could you share with us the background of that report as well?
Johanna Hill: That's right, Belén. So, after we did the trade and gender, we thought, okay, if we go back to the Public Forum, what issue do we think that really needs, you know, more voices of female trade experts contributing to the discussion? And we thought digital trade is definitely one that we wanna jump in on. The pandemic accelerated the adoption of digital technologies and many of these affected trade in many positive ways. But at the same time, we see that there is a lack of agreement or convergence on some of the important issues related to digital trade. So we thought we could maybe weigh in again on this issue.
Belén Gracia: Excellent! And again, we had an incredible group of experts that contributed to this report. And the first quick win of this report recommends policymakers to adopt a holistic, responsive, and agile approach to realize the full potential of digital trade.The main reason behind this recommendation is that digital trade policy needs to look at the value chain end-to-end, including all the elements that are part of the digital realm, from issues related to data flows, to consumer protection and safety, paperless trade and simplification of procedures, electronic documents and signatures, digital payments, etcetera. So this approach will help address, in a coherent manner, the different impediments that make doing business digitally a real headache nowadays, especially for small and medium enterprises, particularly for those from developing countries. So the report points to the digital economy agreements, like the DEPA, the Digital Economy Partnership Agreement, as a good example of a type of agreement that not only favors a collaborative and an agile approach, but also allows the parties to co-design robust trade rules over time.
The second quick win, quick win number two points towards the necessity to promote the use of international standards in digital trade. Right, Joha? Could you perhaps say a little bit more about this recommendation?
Johanna Hill: As you said, Belén, the world has shifted towards a world that is led by digital technologies, and post pandemic we saw an important increase in the use of e-commerce, and we saw how different customs authorities rely on paperless trade to ensure a fast and easier flow of goods, especially those essential, during the pandemic, like food and medicine. So, you know, this technological transition gives us many opportunities, especially for small and medium enterprises. But there are also dangers that this, you know, digitally led growth can be hampered if each country or regional trading block designs its own rules without care for the necessary coordination or convergence that they should have with other trading partners at the world stage.
So in Quick Win No 2, we stress the importance of countries agreeing on basic rules, so that those opportunities can become a reality, and the adoption of international standards can really mean a reduction of cost, a reduction of the times and environmental impacts. And both private sector and intergovernmental institutions have raised their voices on this issue. So in Quick Win No 2, we really emphasize that one of the main obstacles that should be tackled at an intergovernmental multilateral level is to increase the use of cross border paperless trade. What is being hampered right now is the uncertainty around the legality of many of those e-documents that are being used. And this could be because many countries might lack domestic legislation that recognizes the validity of using trade-related electronic documents, or because there is a lack of compatibility across paperless trading systems. And so, in the paper we call WTO members to adopt strong commitments in the e-commerce negotiations, including paperless trading systems and e-transactions to ensure that members increasingly use international frameworks such as the UNCITRAL model law on electronic transferable records and the UNCITRAL model law on the use and cross border recognitions of identity management and trust services.
And the third Quick Win recommends WTO members to adopt a commitment to promote financial inclusion and to endorse internationally accepted payment standards to enable greater interoperability. Yan Xiao, Project lead on digital trade for the World Economic Forum, and one of the contributors to this report has shared her thoughts about this recommendation. Let's listen to her.
Yan Xiao: As we all know, the speed of digital payments adoption during Covid has been phenomenal according to the latest global FINDEX, two thirds of adults worldwide now make or receive digital payments. While 55% of online shoppers have purchased from another country in a 12 month period, close to 40% of merchants consider accepting and processing foreign transactions a big obstacle. Ensuring affordable and efficient digital payments is important to build an inclusive digital economy and for facilitating international trade. There have been several joint efforts to improve the future of payments. For example, G-20 are working with IMF, World Bank, Bank for International Settlements and Financial Stability Board to improve cross-border payments. Australia, Singapore, New Zealand and Chile have all entered into digital economy agreements with specific provisions committing to promote financial inclusion, fostering the adoption and use of internationally accepted standards, promoting interoperability, and also interlinkage of payment infrastructures. Singapore, Thailand, India, Philippines, and Malaysia are all linking their real-time payment systems to promote regional economic integration.
With e-commerce constituting at least 30% of global GDP, improving the status of digital payments is crucial for job creation and economic prosperity with this e-commerce negotiation underway, we believe that the WTO is at the best position to align all member countries to commit to financial inclusion through public and private collaboration, and to endorse internationally accepted standards for more efficient global trade.
Johanna Hill: Quick win number four looks to promote the adoption of a predictable regulatory environment for data flows. So we've been talking about the importance of the digital economy and how it contributes to elevate worldwide GDP, and we've mentioned the importance of encouraging small and medium enterprises to participate in the digital economy.
As we saw, digital trade became super important for SMEs during the pandemic, and many see digital trade as a way to encourage, integrate more small and medium companies in global value chains. But an essential component to that, to digital trade. Is the ability of data to flow across borders. And yet more and more countries are imposing different laws that may become barriers to the free flow of data. The restrictions are often identified by firms as being among the most burdensome barriers to trade and could impact their ability to trade in services, raise their productivity and ability to innovate. There are many ways to address this type of issue. Sometimes countries have decided to address it through preferential trade agreements and digital economy agreements, such as the DEPA, the US-Canada-Mexico Agreement, and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, and parties there have reached common understanding on the importance of data in a digital economy. There have been commitments that include prohibiting data localization. And initiative towards interoperability and cooperation in areas essential to digital innovations such as digital identity and FinTech solutions.
So, while this has been done under preferential trade agreements, we believe that meaningful binding commitments on data flows are needed at the multilateral level. So, in the paper we call for the creation of a task force comprise of researchers, policy makers and the private sector to encourage cooperation at the multilateral level on cross-border data transfers. The objectives of this task force should be to enhance understanding of the consequences of restrictive policies on data flows, address the concerns and legitimate policy objectives that lead to data restrictions, identifying capacity building and targeted technical training programs for government institutions and local companies on new skills for the digital economy, and develop programs to support innovation through incubators and accelerators for startups and innovative companies. It's important to make a call of action to high level government officials on ongoing digital economic cooperation, and on the importance of the WTO in discussing multilateral digital trade agreements with binding commitments on data flows.
The last quick win that we are going to cover in this first episode of the 10 Quick Win series is Quick Win No 5, which recommends promoting a regulatory environment that fosters consumer trust in digital trade. And to explain this point, we are going to listen to Victoria Bruno, an independent lawyer and consultant in international trade, who is the program leader of the TradeExperetes Skills Lab and host of the TradeExperettes Confidentials. Let's listen to her.
Victoria Bruno: So, when talking about promoting digital trade, of course the free flow of data is quintessential, but I would say that there's a flip side to that coin, which is trust. Because for digital trade to thrive, both businesses and consumers need to have assurances that their interests are protected. And from the online consumer's perspective, this would imply that transactions take place in an environment that is both able to safeguard them from fraudulent, or deceptive commercial practices and also protect users' privacy and personal information. However, if we look at existing WTO rules, we see that they are insufficient to address some of the challenges around this topic and that they do not really resolve trade barriers, nor contribute to compatibility between different approaches. So, in this sense, I think it is very important that this matters are being addressed in the WTO JSI on e-commerce. And actually participants have already agreed on the topics of spam and, online consumer protection, but there is still work to be done on privacy and the protection of personal information. And of course this is not an easy topic because countries have had, different approaches when dealing with data protection, but we shouldn't lose sight of the fact that they have also found some common ground in FTAs and that recent developments such as the DEPA, the Digital Economy Partnership Agreement, do offer innovative ways forward that could inspire WTO talks. So, to foster consumer trust in the digital economy, it would be important that WTO members keep working to find consensus on rules that adequately protect consumer privacy online and, and personal information. But they also encourage international regulatory cooperation on these issues to be able to promote the compatibility and, more importantly, the interoperability between different regulatory frameworks, which would be essential if we want to avoid creating further trade barriers for enterprises willing to engage in digital trade.
Belén Gracia: Joha, do you have any additional thoughts that you want to share with us?
Johanna Hill: Thank you Belén for this opportunity to participate in the podcast and have a chance to talk a little bit about how the 10 quick wins came about and the work we have done on gender and digital trade. It is a great opportunity for all those women trade experts in our network to have their voice, to have their thoughts and experience being put down on paper, on actionable items to be brought to the attention of world leaders in trade.
Belén Gracia: Thank you again, Joha, for having this conversation with me today, and I'm already looking forward to talk with you again for the second part of this series in which we are going to discuss the importance to craft digital trade rules that are sensitive to the needs of small and medium enterprises, the simplification and digitalization of border processes, the application of a gender lens to digital trade, as well as providing equitable and accessible capacity building, and increasing transparency and engagement in the WTO e-commerce negotiations, so stay tuned.
Kellie Kemock: The TradeExperettes Podcast is hosted by me, Kellie Kemock, and by me Belén Gracia, and I'm also the executive producer. If you would like to know more about the TradeExperettes, you can find us online at tradeexperettes.org, on LinkedIn and Twitter. Join us!