- Cross-border trade in digital services has accelerated in last couple of years, expanding at a rapid pace when compared to trading in goods.
- Digital flow of data and delivery of digital services across countries are playing a pivotal role in battling COVID-19 pandemic.
- Considerable barriers have held back capabilities of this burgeoning form of trade; right regulations and broadened digital access across the world can help unleash various benefits in the form of innovative digital tools, along with boosting businesses, sector, and economy.
Digital technology is a key driver of productivity gains and is all set to shape up global economy over the next decade. Australia’s CSIRO expects digital technology to contribute AU$315 billion towards Australian economy in upcoming 10 years period.
In the present fast-moving and interconnected world, governments of various nations are encountering new challenges; they are not only administration related issues arising from digital disruption, but also encompasses establishment of opportunities and benefits derived from digital trade; accomplished and shared at a broader level.
What is this Digital trade?
Digital trade is way more than buying and selling of goods and services online; it also includes movement of information and data across various countries.
Trade relies on usage of digital technologies to expedite it and boost productivity.
The flow of information and data are facilitators of digital trade; digitisation speeding up economic growth and trade is primarily driven by the usage and derivation of value from data.
Digital trade across countries would create robust opportunities for SMEs
Digital trade would augment innovation in the products and services of SME’s. Moreover, it will assist in easy accessibility of financing, talent and also surge competitiveness in domestic, as well as international markets.
Furthermore, it empowers businesses, majorly small businesses, to make use of innovative digital tools to conquer barricades to growth, facilitate payments and collaboration.
Do you know digitalisation is changing trade?
Digitalisation is helping in expanding the scale, scope, and pace of trade.
Globally, it opens wider doors for various companies to cater to a larger number of digitally-connected customers via introduction of new products and services.
Digital transformation has enhanced co-ordination of value chains, propagated ideas and technologies, and interconnected large number of businesses and consumers across the globe.
COVID-19 has reshaped the digital landscape
In last few months, amid lockdown and social distancing, a boom in the online marketplace, real-time deliveries, video conferencing, e-learning and remote working have been witnessed.
This adoption of the new normal of living and working has triggered various fresh business opportunities in the digital space.
Globally, digital services are keeping us connected and our economies running during the time of pandemic.
Coronavirus has emerged as a wake-up call for governments to recognise the relevance of digital services trade.
Heard of the phrase, ‘React to cope, respond to thrive.’
Digital trade can enable creating a more resilient global economy and grow beyond this pandemic. It also encourages the trade of digital services securely and inclusively.
Globally, multiple businesses are adapting to the new normal and trade in current times; signifying the fact that economies around the globe are more focused and have their door wide open to have trade agreements.
Surprisingly, digital trade has emerged as the lifeblood of numerous sectors and endless interactions.
Recently, on 17 June, the UK kick started its negotiations for a trade deal with old friends ‘Australia and New Zealand’; digital trade remains a key focus in it.
The two areas of focus for the trade deal with both countries include trading digitally and SMEs- maximising opportunities for businesses to trade digitally and to aid small businesses in the UK to sell goods and services to Australia and New Zealand.
The Department for International Trade, UK believes that completion of free trade agreement with New Zealand and Australia could boost UK exports by ~ £1billion.
As per latest media reports, the US is planning to seek a digital trade deal with Australia; deriving benefits in the form of lowered barriers to digital services trade, and assimilation of online economies more smoothly.
Though discussions of this deal are at a fundamental stage, it is believed that this digital trade deal between the US and Australia would primarily benefit small and medium-sized tech companies in Australia; establishing an opportunity to sell digital goods and services into the vast US market.
In the wake of coronavirus pandemic, there are several companies that have spread their wings in other countries and established strong foothold such as BNPL pioneer company Afterpay Limited (ASX:APT) is blooming in the US market, while Zip Co Limited (ASX:Z1P) has enhanced its expansion in the US market as well, after acquiring US-BNPL player, QuadPay.
Moreover, there are several US companies who are exploring Australian Market and providing their services such as Netflix, Inc. (NASDAQ:NFLX), Amazon.com, Inc. (NASDAQ:AMZN), and Alphabet Inc. (NASDAQ:GOOG,GOOGL).
Digital Economy Agreement (DEA) between Australia and Singapore
At the end of March, negotiations for Australia-Singapore Digital Economy Agreement (DEA) were concluded.
Signing of two MoUs on Data Innovation and Artificial Intelligence by Prime Ministers of both countries was noted. These two MOUs are a part of seven MoUs that were signed under the DEA; bolstering collaboration on emerging technologies and shared challenges.
The negotiated DEA between two countries has seven signed MoUs on the areas ranging from data innovation, e-invoicing, artificial intelligence, electric certification concerning exports and imports in agriculture, personal data protection, trade facilitation and digital identity.
DEA will reduce trade barriers and increase collaboration between businesses and government in both the countries, by making it easier to transfer the data between the two countries, along with improved protections for source code; new commitments on easier e-invoicing and e-payment frameworks, and better rules for safety of online consumer’s personal information and experiences.
Source: Department of Foreign Affairs and Trade (Australia-Singapore Digital Trade Standards presentation)
The text of the DEA is undergoing legal review by the 2 nations before inking and publishing (in latter part of 2020), followed by ratification procedures of treaty.
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