The Biden administration says it is keen to forge better relations with allies abroad and has a good chance of proving that this is about trade in Asia. A comprehensive trade deal like the old Trans-Pacific Partnership appears to be politically a dead letter in Washington, alas, but a new opportunity for US leadership is emerging around digital commerce.
The economic benefits are obvious, especially in Asia. As commerce goes digital, data regulations and privacy rules are replacing tariffs and quotas as the main barriers to trade. The flourishing trade in high-tech goods and services requires certainty as to where data should be stored and under what circumstances it can cross borders. The regulation of areas such as artificial intelligence is also expected to become a business issue.
Volunteer partners are not lacking in possible models. The Digital Economy Partnership Agreement between Singapore, New Zealand and Chile serves less as a formal trade agreement than as a voluntary framework for discussions on digital trade issues. Covenants such as the 2019 US-Japan digital trade deal, a Singapore-Australia digital deal, or the digital chapter of the US-Mexico-Canada trade deal offer more formal protections on issues such as pricing on e-books and data feeds within global companies.
Beyond economic benefits, new digital trade agreements can serve an important strategic and political objective. Because so many aspects of digital commerce are still so new, governments around the world are trying to follow the rules of the road. A strong agreement between the United States and its allies to establish open digital trade can set a benchmark.
This will be particularly important when it comes to China, which is not included in the current discussions on digital trade agreements. For example, a common feature of recent digital agreements is the prohibition of “data localization” requirements, i.e. the obligation for companies to store data relating to their activity in a country on servers. located in this country. Authoritarian regimes such as Beijing value localization of data because it allows easier political control of the economy and its citizens. A high-quality digital agreement is a chance to establish free cross-border data flows as an international standard.