The EU’s digital trade policy

Summary:

Digital trade has become a key element in the EU's trade policy. Every modern trade agreement that the EU has concluded contains a dedicated digital trade chapter. The digital trade provisions in EU trade agreements have evolved over time, which reflects the increasing role digital trade plays today in the world economy. While there is no clear measurement of digital trade yet, the OECD estimates nevertheless that digital trade represents around 25 % (in 2020) of total trade. The EU, as the world's largest exporter and importer of digitally deliverable services, has a strong market position. Therefore, the development towards more digital trade provides opportunities for European consumers and the economy. In order to exploit the full potential of digital trade, it is essential to overcome fragmentation and set international standards and common digital trade rules. The EU aims to shape digital trade rules at the WTO and through free trade agreements. Moreover, the EU's digital trade policy is an important instrument for its green and digital transition. The European Commission stated in its 2021 'Trade Policy Review – An Open, Sustainable and Assertive Trade Policy' that the Union's (multilateral and bilateral) trade policy – as a priority – should support Europe's green and digital agenda and pursue the objective of ensuring a leading position for the EU in digital trade. The key difference between digital trade and traditional trade is the prominence of cross-border data flows. The free flow of data is key for economic growth and can increase the benefits from digital trade. However, certain data are considered 'sensitive' and require protection and/or specific processing conditions. The absence of comprehensive, binding multilateral rules specifically for cross-border data flows and privacy is challenging. That is why 87 WTO Members, including EU Member States, are currently engaged in e-commerce negotiations at the WTO. Most recently, the EU started to strengthen its digital ties with like-minded partners. In April 2023, the Council of the EU authorised the Commission to open negotiations on digital trade principles with Singapore and the Republic of Korea.

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