Dr Murat Üngör
Department of Economics
The University of Otago
We live in the age of data and information. It’s cliché but it’s true. This is the age of the digital economy.
The digital economy incorporates all economic activity reliant on digital technologies, data, digitally-enabled services and other digital inputs. The adoption of digital technologies, from online education and work to online shopping, in transforming businesses and consumers has been one of the key features of the COVID-related lockdowns.
One of the aspects of the digital economy is digital trade. Cross-border flows of digital technologies and services necessitate policy coordination among countries, from data privacy to consumer protection. In recent years, several countries have signed bilateral or regional digital trade agreements to address the opportunities and challenges arising from digital economy and trade.
A digital trade agreement is a treaty that establishes digital trade rules and digital economy collaborations between two or more economies. New Zealand’s acceptance of multilateral cooperation on digital trade has been an important component of economic resilience during this global pandemic.
Chile, New Zealand and Singapore signed the Digital Economy Partnership Agreement (DEPA) in a virtual ceremony on June 12, 2020. The DEPA establishes rules and procedures to engage in digital economy and digital trade. Among them are the treatment of digital products, trade facilitation, digital inclusion, small and medium enterprises cooperation, innovation, emerging technologies, and business and consumer trust. These are important components of a digital economy.
Other digital agreements are chapters of larger trade agreements. Two recent examples are chapter 12 of the Regional Comprehensive Economic Partnership (RCEP) and chapter 15 of the New Zealand-United Kingdom (UK) Free Trade Agreement (FTA).
RCEP was signed by New Zealand and 14 other countries in Asia and the Pacific on 15 November 2020. RCEP’s chapter 12 is about electronic commerce. Enhancing cooperation among the member countries regarding development of electronic commerce is one of the objectives of the agreement. RCEP entered into force on 1 January 2022, including for New Zealand.
On 28 February 2022, New Zealand signed an FTA with the UK. Chapter 15 of this agreement contains provisions that support increased growth in digital trade between New Zealand and the UK. It commits to increasing opportunities for digital trade for all businesses and consumers.
Digital trade has the potential to lower trade barriers, facilitate market access and create new trade opportunities. More than 95 per cent of all New Zealand businesses are classified as small or medium enterprises (SMEs). SMEs can explore business opportunities via the development, implementation, or adoption of new or improved digital technologies.
Digital trade is inclusive; all people and businesses can participate in, contribute towards and benefit from its opportunities. This is particularly important for disadvantaged groups’ involvement in economic activities. The full engagement of Māori and Pacifica entrepreneurs in all areas of digital economy and trade will generate overall benefits for sustainable economic development.
Digital technology allows access to a new range of products and services. Low socio-economic groups and rural consumers can explore lower prices and more choices with better information. Digital trade agreements also recognise the importance of adopting and maintaining measures to protect consumers from fraudulent and deceptive commercial activities.
There are regional opportunities for New Zealand in Asia and the Pacific. On 1 April 2022, Australia launched a digital trade strategy with its Trade Minister, Mr Tehan, saying that digital trade was predicted to grow to AUS$192 billion by 2030. Australia is exploring regional digital trade initiatives with other countries in the Indo-Pacific.
Data, knowledge and innovation are strategic assets for the future of New Zealand. Digital trade should be recognised as an increasingly important way for New Zealand to trade with the rest of the world.
Economic prosperity can be enhanced and sustained with embracing digital economy and digital trade.