The latest Trump tariff threat, of course, is designed to facilitate conclusion of the trade negotiations. Talks are scheduled for Washington DC on Thursday. It is certainly possible that the impeding escalation of tariffs will concentrate minds once more, leading to a very speedy conclusion of talks. Or not. Either way, the coming few days promise more drama on the US-China front than trade watchers have seen in months-- a major escalation of the trade war will happen on Friday or a truce. A second notable set of events takes place early next week that will also help shape global trade for the future. Dueling meetings are scheduled for Geneva and New Delhi for May 13-15. The former is the setting for the first round of talks of what is called the “plurilateral” on e-commerce in the World Trade Organization (WTO). Not all WTO member countries have agreed to join negotiations on the topic, so only a subset of members (74 so far) will sit down to start.
One of the challenges that many commentators have had in describing the impact of CPTPP, however, is that most have focused attention on only one or two elements of the deal. Seen in isolation, chapters of the agreement do not always look radically different than what has gone before in various settings. This is rather like the parable of the group of blind individuals that try to describe an elephant based on touching just one portion of the animal. The person that grasps the tusk has a different idea of the beast than the one who touched the tail or the ears. The complete CPTPP agreement is like the elephant—30 chapters comprising nearly 600 pages of dense legal text in tiny font accompanied by thousands of pages of individual country schedules for goods, services, investment, government procurement, business mobility and more, plus dozens of bilateral letters. Sorting out what it all means clearly and succinctly is probably impossible. Instead, individuals default to describing certain elements of the agreement or trying to measure portions of the deal that are most easily quantified. This fails to properly capture the totality of the agreement. It can lead to description of the CPTPP that suggests it is less ambitious than it actually is or will deliver fewer economic benefits to companies and consumers.
But as Søndergaard suggested, data is not like oil. For one thing, oil doesn’t go anywhere. It sits in the ground until it is brought up and used. It can be used all at once or just some at a time while the rest remains waiting. Oil can be stored forever (or at least for a very long time) without significant problems. Data, by contrast, is like an avocado. It has a clearly defined shelf-life. Data collected and used too early is pointless. Data harvested too late is often of no use at all. Søndergaard’s company runs what is billed as the world’s largest online wine marketplace. In his business, it does no good at all to rate a wine that does not exist as all the stock is gone or to recommend a wine to a customer that has already purchased something to drink for dinner. What matters is knowing what is needed in the moment when the information is “ripe.”
The list of obstacles could go on. The point is that the promise of selling globally comes with increasing challenges. Hence the very good news that the World Trade Organization (WTO) has launched talks in Geneva to begin to create some global rules to sort out some of these issues. For smaller firms, global rules can at least ensure that added expense and time becomes a necessary part of doing business, rather than an irritating element of doing business with some countries. The size of the “prize” is huge. Estimates are all over the place on the current size of the digital economy, but Asia tends to lead the way. An extremely useful series of reports just released by the Hinrich Foundation on eight economies in the region (five out now: Vietnam, China, Indonesia, Malaysia and Australia) shows how much additional trade might be gained from eliminating barriers to digital trade.
The Southeast Asian digital economy is already estimated to be worth US$72 billion. The digital economy is on track to hit $240 billion by 2025, more than $40 billion higher than originally projected in a Google/Temasek study. The region is increasingly home to important unicorns like Grab, GoJek, Lazada, Sea and Tokopedia. Getting these firms and others that follow to flourish requires a nurturing policy framework. So far, ASEAN member states have had limited experience in crafting complementary digital regulations. At the domestic level, many ASEAN countries are headed in problematic directions—creating policies in various areas that could dramatically impede the ability of future unicorns to grow and thrive and strangling the prospects for smaller firms along the way. Hence the necessity for ASEAN to start to tackle e-commerce and digital trade in a regional manner. The agreement reached in November puts in place some useful provisions to get going. It urges member states to use paperless trading schemes and the use of information (other than financial services) via electronic means. It encourages members to be transparent about consumer protection measures and urges online personal information protection.