UK government launches report on digital trade

Report outlines future opportunities and challenges such as the rise of digital protectionism and poor infrastructure

The UK government has launched a report that examines the opportunities and barriers for the country to become a global leader in digital trade.

Published by the Department for International Trade’s (DIT) Board of Trade, the report sets out the government’s vision for Britain in relation to digital trade for businesses and individuals.

Reiterating the relevance of the digital economy – worth about $11tn, or 15.% of global GDP in 2019 – the fact that trillions of pounds are being invested in digital transformation globally and that digital trade increases the available market for goods and services, the report stated that digital trade could drive productivity, jobs and growth.

“Just as Great Britain led the world in the first industrial revolution in the 1700s, we now have the chance to play a leading role in the digital revolution,” said international trade secretary Anne-Marie Trevelyan in the report’s foreword.

According to Trevelyan, countries have struggled to keep up with the pace of technological change, with “the global rulebook on digital trade still largely unwritten”. She said this presented an opportunity for countries to present digital trade “champions”, with approaches underpinned by common global rules that “promote growth and the free flow of data, while also protecting businesses and individuals”.

Arguing that digital is fast becoming the dominant form of trade, Trevelyan said evolving the UK’s approach in this area was “fundamental” to the country’s prosperity. She noted that in 2019, the digital sector alone contributed approximately £151bn to the British economy, employing almost 5% of the national workforce. She also noted that digitisation of global trade could boost the UK’s global exports, worth £372bn in 2019.

The report noted that focusing on digital trade could also benefit businesses, workers and consumers across the UK. In relation to businesses, the government sees digital trade as a means to “revolutionise” product and service delivery across sectors such as retail, healthcare, education, engineering, agriculture, manufacturing and the creative industries.

Further, it made the point that focusing on the digital economy should bring new opportunities for skills development and jobs with higher wages. Under the vision for digital trade, consumers would also be able to access more services and products more easily and cheaply.

Outlining the UK’s advantages, Trevelyan said the country was well-placed to become one of those champions: “We are already the second largest services exporter in the world, meaning that we are ideally positioned to take advantage of this new way of doing business.

“We have highly competitive, world-leading digital and services sectors, the third highest rate of technology investment globally, exceptional talent, and a wide range of innovative businesses and startups using digital technologies to develop new products and sell them to worldwide markets,” Trevelyan added.

In terms of challenges, the trade secretary noted that the UK could not be complacent and just wait for opportunities in digital trade, adding that the road ahead was “littered with potential barriers”. These include a lack of digital trading systems, an area the report said should be a priority focus, based on standards agreed with trading partners, as a means to cut red tape and bureaucracy.

Another hurdle is the “unjustified restrictions” on data, which according to the DIT limits opportunities for UK businesses to sell their services overseas and stifles innovation, while increasing business costs. The report suggested addressing this by developing a balanced approach, maximising the benefits of cross-border data flows while maintaining high standards of personal data protection.

Consumer rights protection is another barrier the report suggested the UK should focus on, to increase confidence in shopping online from traders in other countries, as well as finding ways to ensure the intellectual property of businesses is protected.

The need for norms, rules and standards for digital trade was also mentioned in the report, which argued that the absence of these could lead to more protectionist regulations which are less effective at protecting individuals and businesses in the digital economy. The report recommended the UK take a lead in that space, helping to shape a framework for digital trade.

While arguing the UK should prioritise modern free trade agreements (FTAs) with dynamic, high-growth countries in the Indo-Pacific such as Singapore, and large strategic partners like the EU and the US, the report also mentioned the role the UK should play in less developed nations.

“If digital trade is to be the ‘new normal’, digital rules will need to be developed. These must enable all countries, including developed, developing and least developed countries, to benefit from the opportunities digital trade can provide,” the report noted, adding that the UK should increase focus on participating in international forums aimed at shaping its global digital economy vision.

The DIT report builds on the UK’s digital trade strategy announced in September 2021. The five-point plan is aimed at improving ways to sell and deliver services digitally, making the sector more resilient to disruption.

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