Adapting to the Digital Trade Era: Challenges and Opportunities

Thursday, July 1

Mr. Maarten Smeets, Former Manager of the WTO Chairs Program
Ms. Amrita Bahri, Assistant Professor of International Trade Law at ITAM and Co-Chair Professor for WTO Chair Program (Mexico)
Ms. Roberta Piermartini, Chief of Trade Cost Analysis, World Trade Organization
Mr. Mustapha Sadni Jallab, Economist, World Trade Organization
Mr. Alexander Pogorletskiy, Professor of Economics, St. Petersburg State University, Russian Federation
Mr. Sergei Sutyrin, Professor of Economics, St. Petersburg State University, Russian Federation
Mr. Robert Teh, Extraordinary Professor in Trade and Development, North-West University, South Africa

Mr. Holger Flörkemeier, Deputy Director, Joint Vienna Institute

On July 1, 2021, JVI organized a panel discussion with several co-authors of the book Adapting to the Digital Trade Era: Challenges and Opportunities, edited by former JVI Board member Maarten Smeets and published under the aegis of the World Trade Organization (WTO) Chairs Program. The webinar examined what the rapid adoption of digital technologies means for trade and development, and the role domestic policies and international cooperation can play in creating a more prosperous and inclusive future.

Digital innovations are transforming the global economy. The decline in search and information costs, rapid growth of new products and markets, and emergence of new players ushered in by digital technologies have the promise of boosting global trade flows, including exports from developing countries. At the same time, digital technologies are also threatening privacy and security worldwide, while developing countries that lack the tools to compete in the new digital environment are in danger of being left even further behind. 

Mr. Smeets provided an overview of the topics covered in the book and put these in the context of the current challenging period of the COVID-19 pandemic. He sketched out how the co-authors’ various contributions address what needs to be done at the domestic and regional level to take full advantage of the opportunities offered in the new digital trade era, and examined the roles of domestic policy and international cooperation in creating a more prosperous and inclusive future for developing countries. 

Mr. Robert Teh, Extraordinary Professor in Trade and Development, North-West University, South Africa, discussed the challenges and opportunities of the digital trade era for developing countries. He identified automation, servicification, and e-commerce as the most influential digital technologies changing world trade and presented alternative scenarios of their impact on developing countries. He concluded that countries that are not on the technological frontier could make rapid advances in their trade, provided policies create a favorable environment for innovation.

Mr. Mustapha Sadni Jallab, WTO economist, argued that e-commerce is a key factor in achieving economic development in developing countries by increasing market opportunities while reducing trade costs. E-commerce can promote entrepreneurship, contribute to developing the private sector and creating jobs. It also plays a critical role in connecting to global value chains. Challenges to reap the benefits from e-commerce include developing countries’ relatively low levels of internet penetration, weak infrastructure, and underdeveloped regulatory systems. Mr. Jallab argued that the COVID-19 pandemic will contribute to accelerating innovations and boosting the supply of new digital solutions to support and develop e-commerce.

Ms. Roberta Piermartini, Chief of Trade Cost Analysis at the WTO, discussed inclusiveness in terms of fostering development in poorer countries, but also inclusion of the poor within countries. Creating the right environment for a country to seize the opportunities that digital technologies provide and to attract investment does not only include goods-related trade policy measures such as lower tariffs on IT products, but it also includes digital trade policy that fosters data exchanges and allows for the harmonization of e-certificates. Trade policies related to services sectors, such as finance, distribution, logistics and transport, are also key determinants for a country to reap the benefits of digital technologies. International cooperation may help to (i) tackle the potential negative impact of digitalization on competition resulting from market dominance by leading operators; (ii) address the issue of data availability; and (iii) resolve some of the tensions generated by uncoordinated unilateral approaches to digitalization. 

Ms. Amrita Bahri, Assistant Professor of International Trade Law at ITAM (Mexico), focused on how blockchain can help women access economic opportunities. Blockchain allows unbanked women to carry out payment transactions on a peer-to-peer basis without a third-party intermediary. It can allow women to have access to finance, receive, save, and send money, and build creditworthiness. Blockchain also allows women in developing countries who may not have an official identification document to create their own digital identity, allowing them to enter contracts and register businesses. Ms. Bahri’s key takeaways were that (i) the use of blockchain in trade transactions can empower women; (ii) just like free trade, the use of blockchain in trade can create more barriers for women to trade if it is not regulated; and (iii) a multilateral framework of regulation is needed to ensure that the use of blockchain narrows and not widens the gender gap. 

Mr. Alexander Pogorletskiy, Professor of Economics at St. Petersburg State University, discussed how digitalization brings about new approaches in taxing international trade. Previously, trade taxation focused mostly on indirect taxes (customs duties and value-added tax). In today’s digital trade era, it is covering also direct taxes. The digital service tax (DST) is a kind of corporate profit tax applied to cross-border e-trade operations. Russia is following the global tendencies of e-trade tax regulation, while in tax administration issues, Russia is one of the leading countries, and can serve as a role model for other countries.

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