data flows

Time to Upgrade the CPTPP

Time to Upgrade the CPTPP

Since all CPTPP member countries will gather together various working groups to discuss UK accession, it makes sense for these working parties to also reflect on what aspects of the agreement may need a bit of a refresh. There are lots of new ideas that have been built into other agreements that might be usefully imported in the CPTPP. One area, in particular, that is due for an upgrade is the e-commerce chapter. For example, it currently carves out in the opening chapter paragraphs, via the definitions of “covered persons,” the cross-border transfer of financial services data. This exception has not been replicated in other trade arrangements by the current CPTPP members. The existence of this definition is problematic because it seems to conflict with pledges elsewhere in the agreement, including the financial services chapter, to provide such services. It could be time to remove this exception or, at a minimum, relook at the language to determine whether it needs to remain exactly as it was originally written. The rest of the chapter was pathbreaking for its time. But the digital economy, in particular, does not stand still and many innovations in technology, the extent to which digital increasingly underpins nearly every other aspect of the economy, and changes in rules outside the CPTPP suggest that it is due for a closer look and review. Many members will balk or hesitate at the idea of adjusting the agreement now, and especially as part of an accession process. Thus far, every new member joining the deal has had to commit to taking the rule book “as it stands.” Bringing changes or a review into the accession proceedings sets a new precedent to allow future members to expect similar treatment. While a legitimate and valid concern, it raises the issue of when such reviews might take place. If not now, then when? Preparing teams to handle the CPTPP is not simple. Absent a Secretariat with full-time officials that have made CPTPP a daily priority, every government manages the CPTPP on the side or as part of their overall job addressing a range of trade commitments and new negotiations elsewhere. Staffing up at the level of detail and knowledge necessary to carefully review provisions is likely to be a major undertaking. It won’t happen again easily.

The Siren Call of Data Nationalism

The Siren Call of Data Nationalism

The notion that building a larger stockpile of “data” and denying it to other countries will give one a relative advantage is misguided. Countries implementing data nationalism in Asia are some of the most populous countries in the region/world, i.e. they already produce a large amount of data. What would be more helpful is for them to maximize their existing supply of reusable data by getting more firms to use ICT to generate, collect, and analyze data. Having a large cache of raw, unprocessed data is itself not helpful. What is important is how that data is leveraged to generate insights and unlock value. To this end, countries should focus on how to assist local firms, MSMEs in particular, to understand how they can generate and create value from data, including information they create and collect themselves. This should be complemented by efforts to increase data literacy among workers and improve digital infrastructure. As more firms use ICT services, more data can be generated, collected, and analyzed. This will lead to the sort of virtuous cycle of growth that countries need to propel their data aspirations.

Making E-Commerce and Digital Trade Work for Smaller Firms

Making E-Commerce and Digital Trade Work for Smaller Firms

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. 

Why Policy Matters to Me: The Example of Cross-Border Data Flows

In another APRU presentation, presidents noted the increasing integration of the cyber and physical worlds.  Using artificial intelligence to innovate for the future sounds nice, but if not communicated to policymakers, it will not work as anticipated.  Why not? Governments can shut down data flows.  They can do so and they will do so. Government can do so by a variety of regulations that will make it difficult, complicated, expensive or even impossible to move information.  Government will do so in many markets because many officials do not understand the needs of academics or companies. They do not understand the issues because the stakeholders in the system do not see that policy matters. Until and unless these exchanges take place better, we will not get the policies that make sense for everyone.  Policy frameworks are not just the province of someone else—created by governments and driven by ideas drafted from somewhere else.  Policy is supposed to be created for the benefit of stakeholders.  But it requires that stakeholders actually participate in crafting policy.