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1、A blueprint for UK Digital TradePreface 031.Executive Summary 06 2.The State of Digital Trade 14The Growth of Digital Trade 15 COVID-19 and its Impact on Digital Trade 17 Digital Protectionism 19 Trends in Digital Trade Policy 213.Digital Trade Principles 27 Data 30 Tariffs 37 Intellectual Property

2、40 Regulatory Cooperation 43 Trade Facilitation 484.Supporting Digital Trade 51Services 52Telecommunications 53Limitations to Liability 56Government Procurement 56Standards 59Rules of Origin 595.Digital Trade and the Environment 606.Summary of Recommendations 67Endnotes 77ContentsA blueprint for UK

3、Digital Trade23PrefacePrefacePreface4A lot has changed in the world since the first version of this report came out.The COVID-19 pandemic has uprooted our economy and society.It has shown the essential role digital technologies play in keeping both functioning.They have kept people connected.They ha

4、ve also helped maintain complex international supply chains even under the greatest of strains.The pandemic though has also laid bare the stark digital divides that still exist both in the UK and across the world.Not everyone has had a stable internet connection to enable online learning.Not every b

5、usiness has been set up to trade online or enable their workers to work at home.It is more urgent than ever that we work to close this divide.The other major change,of course,has been the UKs exit from the European Union.After four and a half years of negotiations,the Trade and Cooperation Agreement

6、(TCA)has now set the new terms of trade for businesses.This outcome was in doubt at many points and the successful conclusion of negotiations should be applauded.This is especially true given that the TCA includes many things that the tech sector wanted to see.While the UKs exit will see new checks

7、and paperwork for traders,the TCA is high in its ambition for digital.Indeed,the inclusion of a digital trade chapter goes beyond the usual EU practice,marking the sectors importance to both sides.Many of the principles for the UKs digital trade policy set out below are met in the TCA.A positive obl

8、igation in favour of cross-border data flows,as well as a ban on data localisation,are welcome steps to maintain the UKs role as an important data hub.Ongoing cooperation on emerging technologies will be important to help ensure alignment and access to the UKs biggest market.A framework for cooperat

9、ion on cybersecurity and the high level of access secured for telecoms are among the other important provisions to facilitate digital trade.What is Digital Trade?“Digital trade is the cross-border transfer of data,products,or services by electronic means,usually the Internet”Nigel Cory,“Explainer:Un

10、derstanding Digital Trade”,Real Clear Policy,March 2019,https:/ TCA may mark the end of trade negotiations but it is also the beginning of the UKs future relationship with the EU.The digital sector will continue to evolve and new technologies and business models will come to the fore.The UK and EU a

11、re going to need to continue to work together to their mutual benefit.Further afield,other countries are pushing forward with ambitious digital trade agreements.The UK needs to set its sights on joining that club of the most forward-thinking digital nations.61.Executive SummaryThe UK has been a majo

12、r beneficiary of the rise of digital trade with over 67%of service exports worth 190.3 billion being digitally delivered.1 Early UK trade deals since leaving the European Union,in particular the UK-Japan Comprehensive Economic Partnership Agreement(CEPA),have recognised this importance and establish

13、ed that the UK is serious about an ambitious digital trade policy.But much as technology moves fast,so does trade policy.Already countries such as New Zealand,Australia,Singapore and Chile are moving ahead of the UK in what they are attempting to do in the digital realm.As the UK seeks to recover fr

14、om COVID-19,it should continue to strive to lead the world in digital trade.The Rise of Digital Protectionism and the Global ContextWhile some countries have bold visions of a digital trading world,others have taken a protectionist turn.This stance threatens the economic growth that digital trade ha

15、s brought and will increase costs for consumers and businesses.An open trading system is in dire need of champions,and the UK should be a strong defender of the importance of reducing barriers to trade,rather than splintering the digital ecosystem.This needs to be modelled both in the UKs engagement

16、 in international fora and the tone and direction of the domestic policy agenda on digital.We live in a digital world.The COVID-19 pandemic starkly demonstrated the centrality of digital technologies to our social lives and our businesses.It also showed the continuing existence of a deep digital div

17、ide both in the UK and internationally.With the pandemics substantial economic and social fallout,it is going to be ever more essential to have a policy agenda that is fit for our digital world and that includes everyone in it.A digital trade policy should be a central part of that agenda.1.Executiv

18、e SummaryExecutive summary78To do this,it is going to be essential that digital trade is at the heart of the UKs trade policy in all arenas as a champion of multi-and pluri-lateralism.At the World Trade Organization(WTO),ongoing e-commerce negotiations offer the only opportunity to bring in the USA,

19、China and the EU under the same set of rules for the digital economy.The UK should be a leader in these talks to ensure it is as inclusive and ambitious a deal as is possible.Such an agreement would help stem the tide of protectionist measures and set new standards for the digital economy.The impact

20、s of digital trade will be felt across the world,but its opportunities are not open to all at the moment.COVID-19 has made that especially clear.It is important that the UK recognises the links between digital technologies and their potential in helping solve the UNs Sustainable Development Goals.To

21、 achieve global rules,it is essential that digital trade is inclusive to all across the world.The UK should not lose sight of the important role its development policy can play in closing the global digital divide and helping developing nations in their transition into digital economies participatin

22、g in Global Value Chains.Much as digital trade will have a substantial impact on development,it will also increasingly affect other policy areas.To ensure that the UK is a leader in Digital Trade,the UK should seek to proactively engage in the wide range of international forums that deal with digita

23、l issues,including through its Presidency of the G7,and its membership of the G20 and the OECD.When negotiating trade agreements,it is essential that the UK continues to include an ambitious digital trade chapter including rules on telecommunications,that build on and go beyond newly established pri

24、nciples of digital trade including those established in the digital chapters of the Comprehensive and Progressive Trans-Pacific Partnership(CPTPP),the US-Mexico-Canada Agreement(USMCA),and the Digital Economy Partnership Agreement(DEPA).The UK should go forward with its ambition to join the CPTPP an

25、d seek to join DEPA to enter the group of ambitious countries breaking the newest ground in digital trade.Digital PrinciplesWhatever form a trade agreement takes for the UK in the future,it should be based on 14 key digital trade principles in five areas:I.Data1.Enable the cross-border flow of data

26、without compromising data protection standards2.Prevent the forced localisation of data3.Facilitate regulatory access to data4.Prevent separate treatment for cross-border flows of financial dataData is an essential foundation to the entire global economy.Enabling the cross-border flow of data must b

27、e a part of future UK trade agreements,as should preventing the forced localisation of data.The definitions of data should include financial data,which should not be treated differently to other categories of data.Concerns around regulatory and law enforcement access can be mitigated both in domesti

28、c UK law and through international agreements which the UK should seek to join or replicate.9II.Tariffs5.Secure the expansion of the Information Technology Agreement in both geographic and product coverage6.Make the moratorium on customs duties on electronic transmissions permanentThe re-emergence o

29、f tariffs as an offensive weapon in economic disputes is a troubling development.The UKs Digital Trade policy should seek to extend the protections offered by the WTOs Information Technology Agreement and entrench those in bilateral UK deals and in the WTO e-commerce work track.It should also discus

30、s the next steps for the ITA,including the role that digital technologies can play for protecting the environment and mitigating climate change.It should also do all it can to protect the moratorium on digital tariffs both at the WTO level and in its agreements.To allow the imposition of customs dut

31、ies on electronic transmissions would undermine a key enabler of the digital economy.III.Intellectual Property7.Prevent the mandatory transfer of source codes,algorithms,or encryption keys as a condition of market access8.Support the development of AI through enabling open government data and text a

32、nd data mining while respecting intellectual property rightsIntellectual property rights are an enabler of innovation.Yet some states have sought to demand intellectual property as a condition of market access.The UK should work through its trade agreements to prevent the mandatory transfer of sourc

33、e codes,algorithms,and encryption keys.In other areas,new technology is transforming traditional notions of intellectual property.The UKs trade policy can enable the development of innovative AI by supporting the use of open government data and text and data mining.IV.Regulatory Cooperation9.Establi

34、sh cooperation on the regulation of AI,fintech and other emerging technologies10.Establish cooperation on cybersecurity issues with an emphasis on a risk-based approach11.Work towards internationally interoperable digital identities 12.Use trade policy to further measures to protect online safetyWhi

35、le tariffs are an important issue for digital trade,the reality is that the primary barriers are those behind the border.Non-tariff barriers,like differing approaches to regulation,will be the main block to digital trade and the export of innovative UK technologies such as AI or fintech products.The

36、 UKs digital trade policy should look to establish cooperation between regulatory bodies,expand promising new approaches such as fintech bridges,and look to make digital identities interoperable between countries.Executive summary1011V.Trade Facilitation13.Standardise minimum de minimis thresholds t

37、o facilitate e-commerce14.Secure recognition of e-signatures and expansion of paperless tradingDigital trade policy can also play a role in facilitating the flow of other goods and services.E-commerce platforms have opened global markets in goods for SMEs.The UK should seek to standardise de minimis

38、 thresholds to help the cross-border trade of small packages.Working with international bodies and other partners,the UK should secure the recognition of e-signatures and expand paperless trading,helping to bring all aspects of trade into the 21st Century.Executive summary12Supporting Digital TradeU

39、K free trade agreements that are built on these principles would set a new gold standard in Digital Trade.They would firmly establish data flows as an essential foundation to all trade and would break new ground in supporting innovative technologies like AI in trade agreements.But the digital trade

40、chapter alone is not enough to support the international growth and expansion of the UK tech sector.Reducing barriers to the export of services and the movement of talent across borders are important areas,as is increasing access to telecommunications markets.The principle of limited liability has b

41、een an important part of the growth of the online economy,helping safeguard important principles of expression and protect supply chains.Governments are important buyers of technology and expanding procurement opportunities will do a lot to support the UKs thriving GovTech sector.Protecting the UKs

42、approach to standards-setting processes will be important to maintain the UKs lead in their development.Finally,given the complexity of modern tech products and the supply chains that go into producing them,it should be an aim to include reasonable local content requirements in rules of origin.13Dig

43、ital Trade and the EnvironmentIt should not be forgotten that the ability to trade digitally is dependent on billions of electronic devices and the energy required to power them.These devices are not without their environmental costs.However,digital technologies also have great potential in our acti

44、ons to combat climate change.Trade policy has an important role to play in these efforts.It can help smooth the path to adoption of carbon mitigating technologies through ensuring they are tariff free and that there is regulatory cooperation in place to enable their use.As UK companies increase thei

45、r efforts to disclose corporate climate impacts and emissions,provisions in trade agreements can hold our trading partners to similarly high standards.The data centre sector is an essential one to the functioning of the digital economy,as well as a highly competitive UK export,and an important facto

46、r in a climate orientated trade policy.Recent years have seen an explosion in internet traffic and data centre workloads.However,this has not been accompanied with a rise in data centre energy use thanks to much greater efficiencies in process technology and other new approaches.In addition,data cen

47、tres have become key purchasers of renewable power and are ideally positioned to become anchor customers of technologies such as green hydrogen and battery storage.Digital trade policies such as enabling cross-border data flows and preventing data localisation requirements support the growth and suc

48、cess of the sector by allowing customers to store their data with the most energy and efficient providers compared to keeping IT functions in inefficient on-premises infrastructure.Finally,trade policy can support the transition to a circular economy and help reduce electronic waste.This is a global

49、 problem,requiring global cooperation.By encouraging regulatory cooperation and harmonisation relating to electronic waste,as well as removing barriers to the import and export of waste and scrap where there are regulatory protections in place,UK trade policy can help reduce the environmental impact

50、s of our end-of-life technologies.The UK has a unique opportunity to set a new course in its trade policy and design its approach from the ground up.In all arenas,the UK should seek to place digital issues at the heart of its trade policies.This will be a digital century and the UK needs to have a c

51、lear vision in the digital trade policy sphere.142.The State of Digital Trade The mass adoption of personal computers,mobile phones and broadband internet,as well as the software that underpins them,defined the ICT Revolution.Now Industry 4.0 brings automation into the mix,with the industrial IoT,ma

52、chine learning,additive manufacturing and autonomous robots along with other technologies already taking on a major role in innovative economies.2 If the pace of change was already quick,the COVID-19 pandemic has accelerated it even further.With large parts of the economy forced to shutter and indiv

53、iduals told to stay home,business operations and social lives moved online.Digital connectivity proved itself to be essential to the continuing functioning of society far beyond any narrow definition of the tech sector.This much was clear even before the pandemic.Across the economy,industries are be

54、nefiting from emerging technologies and digital trade.Mining companies now expect to employ more data scientists than mining engineers3 and already use autonomous machinery extensively in their operations.4 Retail stores are deploying IoT technology to help with predictive equipment maintenance in r

55、efrigeration units and automating warehouses to fulfil orders.5 Digital transformation is present in all parts of the economy.Indeed,75%of the value created by the internet has been captured by companies in traditional industries.6The impact on the global economy by digital technologies has been hug

56、e.The UN Conference on Trade and Development(UNCTAD)has estimated that the value of e-commerce sales reached almost US$26 trillion in 2018,up 8%on the previous year.Of this,the vast majority(US$21 trillion)was in business-to-business(B2B)e-commerce comprising both sales over online market platforms

57、and electronic data interchange transactions.Business-to-consumer(B2C)value increased by 16%compared to 2017,and cross-border B2C sales amounted to$404 billion.1.4 billion people made purchases The Growth of Digital Trade Digital technologies have transformed international trade.In the space of thre

58、e decades,an analogue world has been wiped away by information communication technologies(ICTs).These have upended traditional goods supply chains and created entirely new industries and services through the internet which can be traded across borders with ease.2.The State of Digital Trade The State

59、 of Digital Trade1516online in 2018,a number that has likely grown significantly thanks to pandemic lockdowns.7Other elements of digital trade have also established themselves as major engines of the economy.Since 1996 the trade in the physical IT goods that the digital economy depends on has triple

60、d to reach$1.6 trillion in 2016.8 Though hard to measure their economic impact accurately,9 data flows themselves have been estimated to have increased global GDP by$2.8 trillion in 2014.10These changes are underpinned by the globalisation of goods,services,people and ideas.When intangible goods and

61、 services,such as online banking,predictive analytics,or the designs for a 3D printed item,can flow across borders at ease,then it is important to approach digital technologies with a global mindset.11 Global Value Chains(GVCs)are now an essential component of modern trade and have seen the diffusio

62、n of intermediate services(such as design,marketing,or logistics),as well as component manufacturing,across borders.12The UK has been a pioneer and a beneficiary of this growth in digital trade.The UK is the third largest B2C market with sales worth US$266 billion,ranking only behind China and the U

63、S.13 Beyond e-commerce,recent experimental statistics from the Office for National Statistics have better measured for the first-time the trade in services actually delivered digitally.According to this new methodology,in 2018 the UK exported 190.3 billion in digitally delivered services,amounting t

64、o 67.1%of total UK services exports.In turn it imported 91.1 billion(51.7%of total UK services imports)with a trade surplus of 99.2 billion.14 While this doesnt capture all of the UKs digital trade,or digitals role in enabling other non-digital trade,these statistics nonetheless demonstrate the pote

65、ntial economic importance of the UKs digital trade policies.Going forward it is clear that this trade policy must be digital by default.The technologies of Industry 4.0 are essential to all sectors of the economy,are enablers of the goods trade and now a primary means of delivering services.A failur

66、e to get digital right would mean that the UK would not reap the full advantages from trade across a huge range of sectors.The State of Digital Trade17COVID-19 and its Impact on Digital TradeSince the first version of this report was published in January 2020,the COVID-19 pandemic has caused immense

67、 health,social and economic damage across the globe.The urgent need to reduce the spread of the virus led to an unprecedented shutting down of the UK.Whole sectors of the economy ceased to operate with the result that the UKs GDP shrank by a record 19.8%in the second quarter of 2020.15Without digita

68、l technologies,this drop in would have been even more.While streaming,remote working,and video conferencing have all been around for years,the pandemic saw them become the only way to conduct many types of social and business interactions.The early weeks of the pandemic saw total internet hits surge

69、 between 50%to 70%.16 Companies that had already been preparing themselves for Industry 4.0 were better able to pivot into the new reality.Those who hadnt been preparing found that they quickly had to catch up.One survey found that COVID-19 caused companies to accelerate their digital communications

70、 strategy by over 5 years in the UK,with 1 in 3 organizations dramatically increasing their budgets for digital transformation to enable that.17E-commerce has similarly seen massive growth during the pandemic as peoples shopping has been forced online.In the UK,e-commerces share of total retail sale

71、s grew from 19%in February 2020 to a peak of 32.8%in May 2020 almost a decade of market share growth in three months.18 Despite the disruption,cross-border e-commerce supply chains have held up well on the whole.Many logistics firms have maintained their services,and while there have been delays for

72、 some carriers due to lack of commercial flights,others have seen their commercial flights converted for cargo.19 This resiliency has underpinned a 63%year on year growth in cross-border e-commerce across the festive season as fresh lockdowns forced Christmas shoppers online again.20However,the move

73、 to digital services during the pandemic has also highlighted the continuing existence of a deep digital divide.As of 2018 there were still 5.3 million adults(10%of all adults)in the UK defined as internet non-users.4.3 million people in 2018 were estimated to have zero basic digital skills with a f

74、urther 6.4 million adults estimated to have only limited abilities.21 The rapid shift of life online thanks to COVID-19 has left many of these people stranded,with the Lancet reporting on how“the lockdown strategies in the UK are actually increasing digital inequality”.22 Researchers from the Univer

75、sity of Cambridge describe digital exclusion as“yet another manifestation of the profound inequality which casts in shadow over the UK”with many of the countrys most disadvantaged people set to suffer the most in the fallout from the pandemic.23The pandemic has also brought the global digital divide

76、 into stark relief.As of 2019,3.6 billion people globally still did not have access to the internet and in 40 of the 84 countries where data is available,less than half of the population has basic digital skills.24 The existence of this digital chasm has not only exacerbated inequalities during the

77、pandemic but will weaken the ability of countries to recover from it.In many countries across the world,local economies are based on traditional SMEs restaurants,bars,corner stores and mom-and-pop shops.With business conducted face-to-face,and without the physical infrastructure needed to switch to

78、digital,the digital divide in these countries could imperil the livelihoods of millions of people.25COVID-19 has demonstrated the power and importance of digital technologies as essential infrastructure of modern life.Digital trade has enabled business to continue,and people to still connect with ot

79、hers around the globe,even when much of the world has been under some form of lockdown.But COVID-19 has also laid bare the continuing existence of deep digital divides,both in the UK and across the world.We will not have as quick a recovery as is possible unless steps are taken to quickly close that

80、.We will also not have the resiliency that digital technologies can bring unless those steps are taken.The UK should make closing the digital divide,both domestically and in developing nations,a central part of its COVID-19 recovery strategy.This strategy should include steps to provide access to di

81、gital technologies,economic development to support SMEs adopt digital technologies,and education to individuals of all ages,as well as business owners,in how to use digital technologies.The State of Digital Trade1819Digital ProtectionismA rise in digital protectionism puts the need for an effective

82、UK digital trade policy in a starker light.Over recent years a growing number of countries have introduced measures that seek to either shelter their domestic markets from international competition or shelter their citizens from outside services by restricting trade or discriminating foreign firms.2

83、6 The OECDs Digital Services Trade Restrictiveness Index shows that seven G20 nations have more restrictiveness measures in place in 2018 compared to 2014,while only three countries have lowered their restrictiveness.27Digitally protectionist policies take different forms.These include measures such

84、 as,but not limited to:Web censorship Restriction of data flows(including data localisation)Tariffs on goods and intangible products Conditions for market access Forced transfer of intellectual property28The implications of these types of policies are stark.The Swedish Board of Trade has said that t

85、he rising restrictions on the movement of data“threatens to fragment the global digital economy and raise the costs of goods and services”.29 The European Centre for International Political Economy(ECIPE)has argued that a“restrictive regulatory environment for digital trade will weigh down many non-

86、digital sectors”.30Economic analysis by ECIPE has quantified the losses that result from data localisation requirements and related data privacy and security measures that discriminate against foreign suppliers of data.It found that the impact of proposed or enacted legislation on GDP was to the tun

87、e of-1.1%in China and-1.7%in Vietnam.The impact on domestic investments by measures of data localisation was-4.2%in Brazil and-3.9%for the EU.Exports of China and Indonesia decrease by-1.7%due to loss of competitiveness.The welfare losses are substantial:up to US$63 billion for China and US$193 bill

88、ion for the EU thanks to higher prices and displaced domestic demand that cannot be met by supply.31Protectionist policies can also have other effects,such as undermining internet stability and interoperability,with a growing risk that this will end in a balkanisation of isolated country specific we

89、bs.32 Reductions to internet openness can reduce technology diffusion,affect global value chains and weaken growth.33 The implications can be even more extreme when protectionism evolves in to forms of cyberwarfare,as in the case of China who has allegedly used distributed denial of service attacks

90、and other methods to disrupt information flows and impede online access.34While China is at the forefront of implementing digitally protectionist measures,they are by no means the only country to do so.Notable recent provisions from 2018 include those by Indonesia that allow it to impose tariffs on

91、digital products and steps by India to enact discriminatory local data storage requirements and target foreign e-commerce firms and user platforms.35 The UK itself has followed France and Italy in introducing its own digital services tax that specifically targets businesses that provide a social med

92、ia service,search engine or online marketplace,and essentially acts as a non-tariff barrier to trade in these particular digital activities.36 Globalisation raises legitimate questions about the appropriate way to tax multinational corporations operating in multiple countries.As techUK has argued pr

93、eviously,digital services taxes directly cut across the OECD/G20 efforts to establish common approaches to taxation of multinationals and address the tax challenges arising from digitalisation.37 Indeed,the OECD has said that without a consensus-based solution there could be“a proliferation of unila

94、teral digital services taxes and an increase in damaging tax and trade disputes,which would undermine tax certainty and investment”.Under their worst-case scenario of a global trade war triggered by these unilateral measures,“the failure to reach agreement could reduce global GDP by more than 1%annu

95、ally”.38The trade war between the USA and China has further complicated the digital trade landscape.The disagreement is fuelled by a growing The State of Digital Trade2021competition between the two countries in the technologies of Industry 4.0.This has manifested in two main ways:US objections to p

96、rotectionist measures implemented by the Chinese such as the forced transfer of technology,39 and from security concerns,for example around social media,an area long-dominated by US firms.40 The costs of this trade war are already immense.One September 2019 analysis estimates that it had cost the US

97、 economy nearly 300,000 jobs,another that the cost to US GDP is around 0.7%,while research from the Federal Reserve Bank of New York and Columbia University has found that US companies lost at least US$1.7 trillion in the price of their stocks thanks to US tariffs.41 Post-Brexit,the UK has entered a

98、 world buffeted by protectionist currents and adverse trade winds.The UKs digital trade policy needs to grapple with a situation that is less open than it has been in a long time.In multilateral forums and through bilateral and regional trade agreements,it is important that the UK is a strong and co

99、nsistent voice in favour of combatting protectionism which costs businesses and consumers and threatens economic growth.It should be a firm advocate of removing restrictions to trade and preventing the rise of new barriers as the global economy adapts to the digital world.Trends in Digital Trade Pol

100、icyThe UK is not charting a lone course in being an advocate of digital trade.Instead,it can build off the best practices established by other countries.Ever since Australia and Singapore concluded the first FTA to contain a dedicated e-commerce chapter in 2003,various countries have embarked on an

101、iterative process to develop deeper commitments in the digital space.42 These initiatives in FTAs have happened in the absence of overarching rules on digital trade.Early post-Brexit agreements that the UK has negotiated,notably the UK-Japan Comprehensive Economic Partnership Agreement(CEPA),show an

102、 iterative approach building on these existing agreements.Other recent ground-breaking digital agreements show though that further ambition is needed to make new gold-standard agreements.Multilateral EffortsA lack of shared definitions and norms for digital trade have helped create the conditions wh

103、ere protectionism can spread,and FTA provisions are necessary.The rules governing international trade,as set out in the General Agreement on Tariffs and Trade(GATT)and the General Agreement on Trade in Services(GATS),which together are the foundational documents of the WTO,predate the commercialisat

104、ion of the internet.Though GATS has provisions for telecommunication services,there are no agreed provisions for,or definitions of,digital trade.So far,efforts to update these rules to take account of the shape of the 21st century digital economy have failed.A work programme was started on e-commerc

105、e at the WTO in 1998,but aside from agreeing the renewal of the moratorium on customs duties on electronic transmissions,it has been without notable successes.43More recent efforts have also failed to yield results.The Trade in Services Agreement(TiSA)set out to update the rules around services,with

106、 a focus on bringing in digital trade provisions.23 WTO members took part in negotiations,including the UK through the EU,but talks have been stalled since 2016.44 While it is unlikely TiSA will be revived any time soon,should talks restart then the UK should join the negotiations.A more promising a

107、venue to update global rules is through the Joint Statement Initiative on e-commerce(JSI).Informal talks that staked out the key areas began following the 11th WTO Ministerial Conference in Buenos Aires in 2017.On the margins of the World Economic Forum in Davos in January 2019,76 WTO members announ

108、ced the formal start of negotiations to reach a plurilateral agreement on the“trade-related aspects of electronic commerce”.45 Notably,participating members include China as well as the USA,EU and a range of developing nations,though India is a notable omission.There are decades of multilateral iner

109、tia on digital trade and deep divides remain between China and the USA in particular.Despite this though,the JSI talks are progressing towards producing a consolidated text in time for the next WTO Ministerial Conference in 2021,a timeline slowed down by the COVID-19 pandemic.The JSI is the only for

110、um where it is going to be possible to reach an agreement between the USA,China and the EU,even if only on parts of the digital economy.It is important the UK is an active participant in the JSI and works towards an ambitious and inclusive outcome.The State of Digital Trade22Digital Trade and Develo

111、pmentBringing on board developing nations and ensuring it is an inclusive agreement will be key to the success of the JSI.For the agreement to have as much legitimacy as possible then it needs to be based on a wide range of WTO members.Furthermore,to be commercially significant then it will be impor

112、tant that it includes developing countries,who are experiencing rapid growth in internet and mobile penetration,and who are also often more protectionist in the digital realm.46As the negotiations progress,and as the UK embarks on its own trade policy,it is important that the UK recognises the links

113、 between its digital aspirations and international development.While Industry 4.0 poses challenges and opportunities to countries such as the UK,for example around the future of work,these can be magnified in the context of developing countries.There is a risk that the digital divide could increase,

114、with developed countries adopting cutting edge technology,such as AI and robotics,while other countries lack the capital or the skill base to make use of them,thus widening global inequality.47 Worries over other pressing problems,such as food security or the effects of climate change,mean that digi

115、tal issues can be seen as a distraction.2324Yet technology can play a crucial role in helping meet the UNs Sustainable Development Goals and addressing global challenges.48 The UK can play an important part in this process through its aid budget.The 2018“Digital Strategy 2018-2020:Doing Development

116、in a Digital World”provided a foundation for the use of technology in improving digital outcomes,though is focused on internal processes.49 This work should not be lost in the transition to the combined Foreign,Commonwealth&Development Office.Building off the former Department for International Deve

117、lopments“Digital Strategy 2018-2020”,the UK should help support transitions into participation in GVCs and the digital economy.Furthermore,the UK should go beyond just incorporating digital into its own development practices.Instead it should be a leader in supporting developing countries enter the

118、global digital economy.Steps to do this can include building the physical infrastructure requirements needed for participation in the digital economy,such as stable power supplies,providing data from UK sources,for example satellite imagery of soil erosion to help farmers,support the teaching of dig

119、ital skills in schools,and facilitate capacity building in regulatory agencies such as secondments from the Information Commissioners.Doing this will not only support the development of recipient countries but also help enable more people to participate in value chains,eventually supporting UK digit

120、al exports.The UK should use its international development work to support developing countries entry into the global digital economy and help them establish themselves in global value chains.Digital Trade in Trade AgreementsIn the absence of global digital trade rules,many nations have worked towar

121、ds establishing provisions on digital trade through bilateral and plurilateral trade agreements.As of 2017,69 FTAs included a standalone e-commerce chapter or articles dedicated to e-commerce issues,with a further 21 agreements including some kind of provision relating to issues such as paperless tr

122、ading or digital rights management.Around half of the members of the WTO have signed at least one FTA including an e-commerce chapter,from a range of developed and developing countries.50 It is in these trade agreements that the UK will have the greatest opportunity to craft a leading digital trade

123、strategy.The number of agreements that include digital provisions is growing rapidly.Recent years have seen an ambitious digital chapter included in the updated NAFTA,the United States-Mexico-Canada Agreement(USMCA).51 This in turn builds off the Comprehensive and Progressive Trans-Pacific Partnersh

124、ip(CPTPP),an agreement between 11 developed and developing Pacific nations and which the USA participated in negotiating,but did not ultimately join.52 Up until 2020,the USMCA and CPTPP set the gold standard in digital trade provisions.53 They include clauses on crucial issues such as data flows,dat

125、a localisation and the moratorium on digital tariffs,as well as being the first to include new areas such as cybersecurity and regulatory cooperation.In its first major post-Brexit trade deal,the UK-Japan Japan CEPA,54 the UK negotiated an admirably comprehensive e-commerce chapter by building on th

126、ese existing agreements and the EU-Japan Economic Partnership Agreement.55 The structure closely follows the EU-Japan agreement but it goes beyond it in some areas.The new deal in particular leans heavily on clauses from CPTPP,that Japan is party to and that the UK has formally applied to join.56 Th

127、ese additions cover areas that techUK has identified as important for the UK tech sector in the first version of this report,including on cross-border data flows,commitment to high standards of data protection,and provisions protecting source codes.It also incorporates some language from USMCA relat

128、ing to open government data.These additions will benefit the UK tech sector looking to serve the Japanese market,and compete with companies who already have similar access through CPTPP.The UK should build off the UK-Japan Comprehensive Economic Partnership Agreement and the EU-Japan Economic Partne

129、rship Agreement and ensure that all future agreements also include robust digital trade chapters.While the UK-Japan CEPA represents a promising step in the evolution of the UKs digital trade policy,other recent agreements have been the ones to set new and higher bar on digital trade.The Digital Econ

130、omy Partnership Agreement(DEPA)between Chile,New Zealand and Singapore,signed in June 2020,is the first digital only trade agreement.57 It has broken new ground in digital trade,complementing the multilateral efforts detailed above while going further for those countries willing to take that step.Th

131、e agreement itself is open for new members to join wholesale,or for them to opt into various modules in the agreement.These modules include a number of areas that have never before formed a part of trade agreement,such as digital identities or digital inclusion.58Following shortly after DEPA,Singapo

132、re went on to sign a further Digital Economy Agreement(DEA)with Australia in August 2020.59 This agreement replaced the older e-commerce chapter in the Singapore-Australia Free Trade Agreement.The DEA goes further than any comparable bilateral digital chapter,including provisions not only in areas c

133、overed by CPTPP but also breaks new ground in areas such asThe State of Digital Trade2526creating a safe online environment,cooperation on competition policy,and clauses on submarine telecommunication cable systems.The agreement is notably also accompanied by a number of MoUs on digital economy topi

134、cs.These include on data innovation,AI,trade facilitation and cooperation on digital identity,among others.60 Given the fast-moving nature of technology and the regulatory challenges that can arise from it,these additional MoUs provide a flexible and adaptive framework to advance the interests of bo

135、th countries in cooperation with each other.The UK should follow the example of the Digital Economy Agreement and utilise new gold standard digital trade provisions in future agreements,and accompany these with additional means of cooperation such as MoUs.Between them DEPA and DEA mark the cutting e

136、dge of what an ambitious digital trade policy can be.However,these agreements are not pure innovations.They instead reflect decades of commitment by the signatory countries to push the boundary of what trade agreements can do for the digital sector.Each step of that process has involved building on

137、what has come before rather than revolutionary changes of approach.This is essential as trade policy still needs to be accessible to industry to enable them to take advantage of its provisions.As the UK establishes its own digital trade policy,it should take a similar iterative approach and seek to

138、join other leading nations to build on and take advantage of existing best practice as well as push the envelope of an ambitious digital trade policy.The UK should go forward with its ambition to join the CPTPP and seek to accede to the Digital Economy Partnership Agreement to help establish its lea

139、dership on digital trade.Digital Trade in Other ForumsTrade agreements and the WTO are not the only forums relevant to digital trade.The growth of the digital economy has created vast new policy questions requiring international cooperation to deal with.Examples include the work of the OECD on“Going

140、 Digital”which seeks to help equip policy makers with the tools they need to deal with digital transformation,including through the development of AI principles.61 In 2019,the G20 under the presidency of Japan held the first joint Trade and Digital Economy ministerial meeting to reflect the importan

141、t interlinkage between the two areas.62 In 2020,the Saudi Arabian G20 presidency continued this work by convening a G20 Digital Economy Task Force.63 Likewise,the 2019 G7 had a major focus on digital issues64 and digital technology featured heavily in the G7 Finance Ministers meeting,though in this

142、case the momentum was not maintained into the US presidency,in part thanks to COVID-19 related postponements.65 Nevertheless,forums such as these can play a significant role in shaping the wider policy questions around digital trade.The UK should ensure it is a proactive leader in international foru

143、ms such as the G20 and OECD in pushing for steps that facilitate and enable digital trade,and should utilise its Presidency of the G7 to advance these ends.The State of Digital Trade273.Digital Trade PrinciplesIt is imperative that the UK makes the most of its newly independent trade policy to chart

144、 a course as a leading digital nation,utilising it to advance its digital agenda.There are a number of areas where any international agreement can set a new bar for digital trade.This could be through a traditional FTA,i.e.a wide ranging multi-sectoral agreement that covers substantially all trade a

145、s required by the WTO.The UK-Japan Comprehensive Economic Partnership Agreement is an example of this.Alternatively,sector specific deals such as the Digital Economy Partnership Agreement could offer interesting new avenues to pursue digital trade with like-minded nations.Large plurilateral talks li

146、ke the JSI on e-commerce are a further avenue where the UK seeks to raise the bar on digital trade and help set new global standards.Whatever form future UK agreements take,they should ensure they have strong commitments on digital trade across five key areas.In these areas,we are putting forward fo

147、urteen specific recommendations:Data1.Enable the cross-border flow of data without compromising data protection standards2.Prevent the forced localisation of data3.Facilitate regulatory access to data 4.Prevent separate treatment for cross-border flows of financial dataTariffs5.Secure the expansion

148、of the Information Technology Agreement in both geographic and product coverage6.Make the moratorium on customs duties on electronic transmissions permanentAs a leading digital economy,with high rates of internet penetration and use,a skilled workforce,and sophisticated academic and financial ecosys

149、tems well placed to leverage new ideas,the UK is already one of the best places in the world to establish and grow a tech company.Going forward,it is essential that the UK uses all of the tools at its disposal to cement its leadership in this space.3.Digital Trade PrinciplesDigital Trade Principles2

150、829Intellectual Property7.Prevent the mandatory transfer of source codes,algorithms,or encryption keys as a condition of market access8.Support the development of AI through enabling open government data and text and data mining while respecting intellectual property rightsRegulatory Cooperation9.Es

151、tablish cooperation on the regulation of AI,fintech and other emerging technologies10.Establish cooperation on cybersecurity issues with an emphasis on a risk-based approach11.Work towards internationally interoperable digital identities 12.Use trade policy to further measures to protect online safe

152、tyTrade Facilitation13.Standardise minimum de minimis thresholds to facilitate e-commerce14.Secure recognition of e-signatures and expansion of paperless tradingDataThe global economy runs on data.Across sectors and borders,data is an essential component of innovation,productivity growth and economi

153、c expansion.The use of data in the global economy will only become more ubiquitous as technologies such as cloud computing and AI become more embedded in value chains.The extent to which the flow of data is the modern engine of global economic growth should not be underestimated.Global flows of data

154、 were estimated to have increased global GDP by US$2.8 trillion in 2014 alone-a larger contribution than was made by the trade in goods.66 Indeed,the proliferation of digital technologies has helped the growth in global services trade outstrip that in goods,67 with just the trade in services over th

155、e internet now representing more than 20%of total trade worldwide.68The global transformation of businesses and trade by the flow of data can be characterised in four ways:The use of the internet to export goods The purchase and consumption of services online The use of data collection and data anal

156、ytics to allow new services,adding value to goods Data flows underpinning global value chains,opening up opportunities for participation.69 Despite the importance of data flows many countries have sought to restrict them.Recent research has shown that restrictive regulatory barriers have had“a negat

157、ive and significant impact on trade in services”,both from sector-specific and economy-wide barriers.The result is that“policies restricting data flows across borders are likely to impede countries to reap the efficiency gains stemming from services imports”and that,in addition,“exports of data-inte

158、nsive services would,in turn,decrease towards countries that impose strict data policies”.70 In terms of the impact on businesses,barriers to data flows can result in higher costs to store and process data-often between 30-60%more than if they were able to go outside their country.71 Restricting dig

159、ital trade between countries with equivalent data protection standards can also prevent the transfer of day-to-day data needed for activities such as human resources leading to duplicative processes and incur higher compliance costs-a greater weight on smaller firms.Specific requirements that financ

160、ial data should be localised adds greater costs and restricts digital banking options for one of the most data intensive sectors of all.72Digital Trade Principles301.Enable the cross-border flow of data without compromising data protection standards2.Prevent the forced localisation of data3.Facilita

161、te regulatory access to data 4.Prevent separate treatment for cross-border flows of financial data31It is essential then to reach a sensible balance between measures that address legitimate public concerns,for example the protection of personal data or the need for regulators to access financial dat

162、a,while not unduly erecting barriers to trade.In its trade negotiations the UK should seek to do this in four different ways to ensure it has a world leading digital trade policy.1.Enable the Cross-Border Flow of Data without compromising data protection standardsEnsuring that data can flow across b

163、orders is the essential bedrock of digital trade.The UK should ensure that it enables the cross-border flow of data in future trade agreements by taking five steps.Include a Data Protection FrameworkStrong and robust data protection frameworks are a crucial prerequisite to ensuring enduring public t

164、rust and support in the cross-border flow of data.Data protection is a fundamental right in UK law and the UKs trade policy should reflect this.Future UK trade agreements should ensure that all parties are encouraged to adopt or maintain a legal framework providing for the protection of personal inf

165、ormation.These should take into account the principles set out by the General Data Protection Regulation(GDPR)and enshrined in the UK Data Protection Act 2018:Lawfulness,fairness and transparency Purpose limitation Data minimisation Accuracy Storage limitation Integrity and confidentiality(security)

166、Accountability73Future agreements should also ensure that parties must publish clear and accessible information and guidance available online on how businesses can comply with the legal requirements of the data protection frameworks and how individuals can pursue remedies.Digital Trade Principles32I

167、nclude an Onward Transfer MechanismWhere differences may arise between different data protection frameworks,it is important to ensure that there are mechanisms to allow businesses to continue to transfer personal data provided they meet the required level of protection.GDPR allows this through mecha

168、nisms such as standard contractual clauses and binding corporate rules.Future trade agreements should include provisions to oblige the existence of onward transfer mechanisms for personal data in full compliance with applicable data protection rules.Commitment to Allow the Cross-Border Flow of DataF

169、uture UK trade agreements should include a strong commitment that parties shall not prohibit or restrict the cross-border flow of data and information.Measures that restrict it for legitimate public policy objectives would be allowed,in a manner that is consistent in all trade agreements,provided th

170、at measures are not a means of arbitrary or unjustifiable discrimination or a disguised restriction on trade,and does not impose restrictions that are greater than are necessary to achieve the objective.Dispute ResolutionGiven the increasing centrality of data flows to the all sectors of the UK econ

171、omy,the UK should ensure that provisions and commitments on the cross-border flow of data are subject to dispute resolution.These commitments can then be properly enforced and the UK and its businesses would have a means of redress if trade distorting measures are imposed or commitments on onward tr

172、ansfer not honoured.Protection of UK-EU Mutual AdequacyFinally,the UK should ensure that any commitment it makes in future trade agreements does not jeopardise a UK-EU Mutual Adequacy Agreement.75%of the UKs cross-border data flows are with EU countries and preventing any barriers to UK-EU data flow

173、s should be the UKs priority.74 The above steps should not risk a Mutual Adequacy Agreement.Japan,for example,has such an agreement with the EU and has signed up to similar commitments through its participation in CPTPP and APECs Cross-Border Privacy Rules and its key underlying concept of the Osaka

174、 Track“data free flow with trust”.3334342.Prevent the Forced Localisation of DataThe case is often made that keeping data within a countrys borders is more private and secure,both from risks of hacking and from government surveillance.However,in most cases the reverse is true and localisation requir

175、ements do not increase commercial privacy or data security.75 Data transferred overseas is not exempt from the home countrys laws and contracts between consumers and businesses are an effective and enforceable means of ensuring data is protected.Not only do localisation requirements fail to meet the

176、ir own policy objectives but they then impose significant costs on a countrys economy.A 2016 study by the Centre for International Governance Innovation and Chatham House demonstrated that data intensive sectors such as communications and financial services suffered relatively high productivity loss

177、es but the impacts were even felt in other sectors such as manufacturing.They concluded that data localisation regulations“tend to cause an economys production structure to shift(back)toward less innovative and relatively volatile sectors such as agriculture,raw materials and natural resources”.76As

178、 stated above,it is important that the UK requires its trade partners to ensure they have a strong and robust data protection framework,which is an essential enabler of trust in other parties treatment of data and facilitator of allowing data to be stored in other jurisdictions.The UK should ensure

179、it includes a reciprocal commitment in future trade agreements that ensures that no party shall require the use of computing facilities or their location in a Partys territory as a condition of market access.3.Facilitate Regulatory Access to Data One of the accompanying arguments for the forced loca

180、lisation data is centred on concerns over regulatory and law enforcement access to data which brought about changes to the USs approach to data localisation.This has its roots in the difficulty US regulators faced in accessing data from Lehman Brothers in the wake of the financial crisis and their b

181、ankruptcy in 2008.As the company unravelled and overseas subsidiaries were sold off,there were numerous hurdles and practical difficulties in the way as the Federal Reserve and Federal Deposit Insurance Corporation tried to access Lehmans 26,000 servers scattered across various jurisdictions.77These

182、 are genuine concerns but ones that can be addressed both through domestic steps and in international agreements.In the former case,for“systemically important financial institutions”(SIFIs)oversight has been introduced in the US into how they manage their IT systems through the Dodd-Frank Act.This r

183、equires that SIFIs prepare“resolution plans”that ensure that there is an orderly winding down of the business in the case of bankruptcy to ensure regulators can access any information they need.78 A similar system is in place in the UK through the amended Banking Act 2009.79 While these measures are

184、 limited to large financial institutions and there may be a case to extend its requirements to other financial companies,they demonstrate that it is in the gift of domestic authorities to ensure that they have the ability to access important data regardless of the location it is stored in.Outside of

185、 the realm of finance,there are other examples of international cooperation to ensure that regulators can access data and investigations can be conducted.APEC has been a leader in this area.In 2010 it created the APEC Cross-border Privacy Enforcement Arrangement(CPEA)to aid in the enforcement of pri

186、vacy laws.It is designed to help facilitate information sharing,providing mechanisms to promote effective cross-border cooperation and encourage information sharing and cooperation on investigations and enforcement with regulators outside of APEC.80 The APEC arrangement has been used effectively in

187、aiding regulatory investigations.One notable example is the joint investigation by the Privacy Commissioner of Canada,the Australian Privacy Commissioner and Acting Australian Information Commissioner into the hack of Ashley Madison.This took place thanks to the APEC CPEA.81 For law enforcement,the

188、growth of the digital realm has created new challenges in accessing evidence that may be stored on servers across the globe.Traditionally Mutual Legal Assistance Treaties have provided the means to access evidence in different jurisdictions but these have not proved capable of meeting the needs of l

189、aw enforcement authorities when seeking the timely acquisition of e-evidence.82 International cooperation is needed to provide a coherent and consistent multinational approach to law enforcement access to data.The UK should ensure that it complements trade negotiations with talks on new mechanisms o

190、f cooperation between the Parties,or on the UKs accession to existing mechanisms.A trade agreement should include,where a separate agreement is not already in place,a clause that Parties will:endeavour to promote compatibility between regulatory regimes relating to access to data;exchange informatio

191、n on mechanisms within their jurisdictions;and explore ways to extend these or other suitable arrangements to promote compatibility between them.Digital Trade Principles35364.Prevent separate treatment for cross-border flows of financial dataFinancial data is an essential component of the functionin

192、g of the digital economy and the lifeblood of cross-border e-commerce.Yet,partly out of the experience of the Lehman Brothers bankruptcy,it has been subject to separate carve outs in trade agreements.This is despite the provisions for regulatory access for data that have been discussed,and the exist

193、ence of prudential exemptions for the banking and financial system.83 The imposition of additional data localisation requirements on financial institutions and their data specifically has impacted them in a number of ways.One study found it has limited their competitiveness;raised direct costs,for e

194、xample by imposing the need to build dedicated data centres in each jurisdiction they operate in;and has potentially slowed the expansion of financial services in developing countries.84The UKs financial services sector was worth 119 billion in 2017 employing 1.1 million people.85 The fintech sector

195、 is an increasingly central part of the UKs financial and tech offering-already accounting for around 6.6 billion in revenue in 201586 and attracting$2.3 billion in investment in 2018.87 It should be a key UK priority to ensure that financial data is not subject to separate carve outs in future trad

196、e agreements to increase competitiveness and growth in this area.Digital Trade Principles37TariffsTariffs are a drag on a nations economy and raise costs for consumers.A study by economists from the Federal Reserve Bank of New York,Princeton University,and Colombia University found that the impositi

197、on of tariffs by the USA in 2018 resulted in a reduction of the countrys real income of$1.4 billion per month.88 With smartphones containing components from up to 2,200 suppliers and other tech products similarly dependent on complex supply chains,tariffs can hit the sector very hard.89 Indeed,analy

198、sis by the Consumer Technology Association found that the new US tariffs would cause the price for mobile phones in the US(imported from all countries)to rise by 14%,laptops and video game consoles by 19%and toy drones by 15%costs that will eventually be passed onto consumers.90 Fortunately,the tren

199、d over recent decades has been to exempt technology products from tariffs,and in the case of electronic transmissions,to prevent their imposition to begin with.The WTO has been central to this effort.The Information 5.Secure the expansion of the Information Technology Agreement in both geographic an

200、d product coverage6.Make the moratorium on customs duties on electronic transmissions permanent Technology Agreement,which entered into force in July 1997 and was expanded in 2015,eliminated tariffs on a large number of technology products with an annual value of approximately$1.7 trillion.82 WTO me

201、mbers have signed up to the ITA,and the agreement covers 97%of world trade in IT products.91The other key achievement of the WTO in supporting the digital economy was the introduction of a moratorium on customs duties on electronic transmissions.Since 1998,the moratorium has been a key plank of the

202、multilateral trading system,and a vital enabler of the growth of the internet as we know it today.By preventing the development and imposition of tariffs and customs duties on electronic transmissions,the moratorium has facilitated the development of the$27.7 trillion global e-commerce market.92Yet

203、both the ITA and the moratorium are not be-all and end-all solutions to the questions of tariffs.Even setting aside the imposition of tariffs on ITA covered products by the USA in its trade dispute with China,which opens the USA to the possibility of dispute settlement for contravening WTO rules,the

204、 ITA has been relatively inflexible to the swift advance of technology.The 18 years it took to update the product coverage of the ITA,which itemizes specific products for inclusion meant that entire waves of innovation have been,and are continuing to be missed.Already,widely used products such as sm

205、art TVs are not covered under the ITAs positive list,nor are other emerging products such as 3D printers and alternate and virtual reality technologies.As for the moratorium,it has only ever been a temporary measure,subject to renewal at every WTO Ministerial Conference.Though it was renewed at the

206、last meeting,in 2017,it has since come under renewed attack.India and South Africa have called for a“re-think”of the moratorium,citing the potential revenue lost due to the expansion of items electronically transmitted.93 In fact,goods that are readily digitizable of the kind that India and South Af

207、rica cite,such as books or DVDs,make up less than 1%of the total goods trade in both developed and developing countries,yielding only around 0.25%of all customs revenues in 2014.94Other countries have a different protectionist take on the moratorium,with Indonesia arguing that the moratorium“applies

208、 only to the electronic transmissions and not to products or contents which are submitted electronically”.95 It has consequently introduced tariff lines on intangible products such as software.96Ending the moratorium,or defining it in such a way as to open up the contents of electronic transmissions

209、 to the imposition of tariffs,would mark the single biggest reversal of trade liberalisation in living memory.With the global sales of the top 10 software companies coming to over$250 billion in 2019,new digital tariffs could threaten entire digital business models,and increase costs for other rapid

210、ly digitizing sectors.97 More importantly,recent research has shown that the imposition of tariffs on electronic transmissions in developing countries would fail to increase revenue and be“fiscally counter-productive”as it would result in“higher prices and reduced consumption,which would in turn slo

211、w GDP growth and shrink tax revenues”.98 Digital Trade Principles3839Indeed,in a scenario of reciprocal digital tariffs,India,for example,would lose 49 times more in GDP than it would generate in tariffs,while Indonesia would lose 160 times more,meaning their policies on the moratorium would yield i

212、ncredibly negative consequences on their economy.995.Secure the expansion of the Information Technology Agreement in both geographic and product coverageAn ambitious UK digital trade policy should look to primarily focus on increasing product coverage for the ITA while also focusing on expanding the

213、 geography of the agreement.Though some large countries like Mexico and Brazil have not signed onto the agreement yet,it is worth noting that 97%of trade in IT products under the purview of the ITA is already covered.100 In the medium-term the UK should work to invoke the review mechanism for the IT

214、A as part of the JSI on e-commerce at the WTO to ensure that it is not another 18 years before the ITA is again updated.In the short-term,the UK needs to complement this approach with efforts to diffuse the current tensions placed on the ITA by the current US-China trade dispute and ongoing dispute

215、settlements at the WTOWithin future UK trade deals,it is important to ensure that widespread and emerging technologies is included as part of tariff liberalisation.Items such as,but not limited to,3D printers(HS Code 847780,1.7%3rd country duty),Smart TVs(HS Code 852859,14%3rd country duty)and lithi

216、um-ion batteries(HS Code 850760,2.7%3rd country duty)should be tariff free.To prevent the imposition of tariffs on future technologies,tariffs should be dealt with using a negative list in future UK trade agreements.This way,only the items that are specifically listed are subject to duties and every

217、thing else that is currently being created or imagined,will remain tariff free unless specifically added to that list.This approach will help protect future technologies and emerging industries from the imposition of tariffs by the UKs trading partners.In addition,the next steps for the ITA should i

218、nclude addressing non-tariffs barriers for the ICT sector and discussing the role of digital technologies for supporting the protection of the environment and mitigating climate change.A relaunch of the WTO plurilateral Environmental Goods Agreement negotiations with an extension to services should

219、be explored in parallel.6.Make the moratorium on customs duties on electronic transmissions permanent The UK should make it a central tenant of its digital trade policy to make the moratorium a permanent feature of the multilateral trading system.This should primarily be done through the WTO by work

220、ing with likeminded countries to secure a consensus on making it permanent.The e-commerce negotiations offer an unprecedented opportunity to reach an agreement and finally secure a tariff free future for cross-border electronic transmissions.In this process,the UK should advocate for a broad definit

221、ion of electronic transmissions and include the content of those transmissions(i.e.e-books,video,software,etc.).The UK should continue to resist attempts to characterize the moratorium as only covering the transmissions themselves.Furthermore,the UK should follow best practice in digital trade polic

222、y and include a strong commitment in future trade deals to ban the imposition of customs duties in connection with the import or export of digital products transmitted electronically.This commitment should extend to all digital products regardless of source rather than being limited to just the sign

223、atories of the agreement,thus helping embed the moratorium in international law.As Mark Wu has argued,This approach is highly practicable.In a world where the data necessary to create a digital product can be stored in and flow through various jurisdictions,determining the origin of a digital produc

224、t can be complicated.101 In trying to establish a world-leading digital trade policy,extending an obligation to impose no tariffs on digital products to any country is an important marker of that ambition and commitment to free trade principles.Intellectual PropertyRecent years have seen a transform

225、ation in the use of intellectual property,bringing with it many challenges and opportunities.The protection of proprietary knowledge,to ensure creators of new products are duly rewarded needs to be an important ongoing element in the UKs trade policy.As the Information Technology and Innovation Foun

226、dation has argued,the protection of intellectual property rights(IPR)has a number of positive benefits by:creating powerful incentives for domestic innovation inducing knowledge spillovers that help others to innovate ensuring a countrys companies can focus on operating productively and innovating,i

227、nstead of having to devote an undue amount of their time and resources to protecting their IP in an environment where its at riskDigital Trade Principles407.Prevent the mandatory transfer of source codes,algorithms,or encryption keys as a condition of market access8.Support the development of AI thr

228、ough enabling open government data and text and data mining while respecting intellectual property rights promoting the international diffusion of technology,innovation,and knowhow boosting a countrys levels of research and development,inbound foreign direct investment(FDI),and exports of goods and

229、services.102The UK already has a robust IP framework and it is important this is protected,including in relation to patents.Any future trade deal should seek to build on the UKs high standard of IP protection and should not threaten the UKs membership of the Unified Patent Court and the European Pat

230、ent Convention.These are highly valued by the UK tech sector and continued membership should be a key priority.However,the impact of the digital economy has widened IPR issues far beyond patents.Issues such as the protection of source codes and the enabling of AI through the use of open data should

231、also be central elements of a future UK digital trade policy.417.Prevent the mandatory transfer of source codes,algorithms or encryption keys as a condition of market accessWhile innovations in working practices have led to much more intellectual property being co-created via open source software,th

232、e reality is that for many businesses their products are a mix between proprietary content and open source.103 It is therefore worrying that the forced transfer of technology is demanded in certain jurisdictions as a condition of market access.This is notably the case in China,who was subject to a S

233、ection 301 investigation by the Office of the United States Trade Representative into its“Acts,Policies,and Practices Related to Technology Transfer,Intellectual Property,and Innovation”.104 Indeed,as the Peterson Institute for International Economics summarises:“China has adopted policies deliberat

234、ely designed to force foreign multinational to transfer strategically sensitive technologies to indigenous Chinese firms”.105It is important that the UKs digital trade policy is used to protect the IP of innovative UK firms.The UK should work with likeminded countries to ensure the JSI e-commerce ne

235、gotiations include robust provisions to prevent the mandatory transfer of source codes,algorithms,or encryption keys as a condition of market access.Likewise,future trade agreements should include a clause stating that no party shall require the transfer of,or access to,source code of software,algor

236、ithms,or encryption keys owned by a person of another party,as a condition for the import,distribution,sale or use of such software,or products containing such software,in its territory.Such wording would not prevent the provision of source code in commercially negotiated contracts,nor would it prev

237、ent requiring the modification of software to comply with a partys laws and regulations.The clause should seek to include an agreement that such laws and regulations will not lead to arbitrary or unjustifiable discrimination,or be a disguised restriction on trade,and do not impose restrictions that

238、are greater than are necessary to achieve their objectives.8.Support the development of AI through enabling open government data and text and data mining while respecting intellectual property rightsThe development of AI has also had implications for intellectual property rights.Access to large data

239、 sources are crucial to train AI programs.With 27 MB of data set to be created every second for every human on the planet by 2020,and 90%of all data ever created in the last two years,the ability to analyse and harness that data relies on innovative AI.106 The results of doing this will be transform

240、ative one estimate is that AI could deliver a$13 trillion of additional economic output by 2030,boosting global GDP by about 1.2%a year.107 Unlike the major trading powers of the US,EU,and China,the UK does not have a domestic market of hundreds of millions of people as a foundation.To continue to s

241、cale the UKs AI sector and export its innovations then access to global data will be essential.If the UK aspires to have a world leading digital trade policy,then it needs to ensure that it calibrates it to helping the UKs most innovative emerging sectors.Digital Trade Principles4243One way that the

242、 UK government can facilitate the development of AI technology is to build on the gold standard set by the USMCA in future trade deals that commit parties to make government data available to the public in machine-readable and searchable open formats,and allow it to be searched,retrieved,used,reused

243、,and redistributed.Facilitating the provision of accessible,organisable public data will help allow innovative UK AI companies to develop and train their products and deploy them readily in foreign markets.It is positive to see that the UK has set a precedent of including this provision in the UK-Ja

244、pan CEPA.An additional step that the UK should take to break new ground on digital trade would be to include mutual commitments to facilitate the use of text and data mining in the training of AI programs and artificial neural networks by providing greater access to data,where that material is lawfu

245、lly accessed.This would help drive the development of technologies that can find previously unknown patterns and possibilities in vast data sets,helping to develop predictive analytics.108 Copies of works and content that are made should only be retained as long as necessary for the text and data mi

246、ning to train AI and artificial neural networks.Such a commitment should also only apply to works and content that has not been expressly reserved by IP holders in the appropriate manner,such as by machine-readable means in the case of content made publicly available online.Regulatory CooperationThe

247、 reality of technological change today means that it will not be tariffs that are the main barrier to digital trade,but regulatory divergence.Across a huge range of areas,Governments are scrambling to understand the implications of new technologies and business models.From what cryptocurrency and fi

248、ntech mean 9.Establish cooperation on the regulation of AI,fintech and other emerging technologies10.Establish cooperation on cybersecurity issues with an emphasis on a risk-based approach11.Work towards internationally interoperable digital identities 12.Use trade policy to further measures to prot

249、ect online safetyto banking systems,to the ethical and legal implications of AI and autonomous vehicles,to the impact of social media on elections,the regulatory landscape for emerging technologies is going to get more complex very soon.The UK has often been at the forefront of developing new innova

250、tion-friendly regulation that maintains public trust and safety.The development of Open Banking under the leadership of the Competition and Markets Authority has played a significant role in fostering the growth of UK fintech companies.109 As of November 2020,the Financial Conduct Authoritys Regulat

251、ory Sandbox has already helped 140 companies over six cohorts test innovative technologies and products actually in the market with real consumers.110 This kind of steps have clearly demonstrated the role that regulators can play in encouraging innovation.111 In the AI sphere,the creation of the Cen

252、tre for Data Ethics and Innovation as the worlds first body to be dedicated to fostering the UKs use of data and AI,will help cement the UKs leadership in this field.112But if these innovative regulatory approaches are not replicated elsewhere,then UK tech firms will find themselves unable to export

253、 their products abroad without significant modification.A trade agreement is not the appropriate avenue to attempt substantial alignment of regulation.However,it can provide a framework for constructive engagement and cooperation between governments.This can be valuable in enabling the effective and

254、 enforceable regulation of emerging areas in a way that both helps innovative businesses navigate international regulatory regimes while maintaining public trust and safety in all parties.9.Establish cooperation on the regulation of AI,fintech and other emerging technologiesIn future UK trade agreem

255、ents,it should be an aim to support the growth of emerging technology companies by establishing frameworks for cooperation in the development of regulation.These should include specific provisions to maintain an ongoing regulatory dialogue including the sharing of information,experience,laws,regulat

256、ions,implementation,compliance and best practices.There should be a commitment highlighting both the specific regulatory bodies that should be in dialogue,for example privacy commissioners,as well as across technologies where they may not be a specific regulator in place.The Singapore-Australia DEA

257、provides a model for doing this with its accompanying MoUs.113 It is welcome that the UK-EU TCA includes positive obligations to cooperate on the development of emerging technologies,however,greater ambition is required on the scope of cooperation,regulators included within it,and the technologies i

258、ncluded within it.Trade agreements should also include commitments to cooperate and maintain a dialogue on the promotion and development of mechanisms that facilitate the interoperability of regulatory regimes and on other multilateral regulatory efforts.Examples of this include OECD principles on A

259、I114 and the development of the G20/OECD Policy Guidance on Financial Consumer Protection Approaches in the Digital Age.115The UK should also seek other means to expand the access for innovative UK firms.One example of this can be seen through the UK“Fintech Bridges”,agreed with Hong Kong,Digital Tr

260、ade Principles44Digital Trade Principles45South Korea,Singapore,China and Australia.116 These agreements help secure access of UK fintech companies into the regulatory sandboxes of other countries,helping them establish an international footprint at an early stage.117 They also help facilitate commo

261、n approaches to the regulatory challenges raised by emerging financial technologies,helping ensure that non-tariff barriers will not be erected at a later point.The UK should continue to negotiate“Fintech Bridges”with other important and emerging markets and explore ways this approach could be expan

262、ded into other sectors.10.Establish cooperation on cybersecurity issues with an emphasis on a risk-based approachIn a complex,interconnected world,good cybersecurity plays a central role and this importance is beginning to demonstrate itself in digital trade policy.The cost of cybercrime is signific

263、ant over 60%of large businesses reported having cyber security breaches or attacks in 2018.118 The most recent National Crime Agency and National Cyber Security Centre report on cybercrime notes that between 2016 and the end of 2017 there were 34 significant cyber-attacks(i.e.those requiring a cross

264、-government response)with a further 762 less serious incidents.They further note an expectation that“the race between hackers and defenders capabilities will increase in pace and intensity”.119Meanwhile,the UK has a leading cybersecurity sector,with annual revenues of 5.7 billion and a total GVA con

265、tribution of 2.3 billion in 2015-16.120 The Governments 2016 National Cyber Security Strategy committed 1.9 billion over five years to both help make the state more resilient to attacks and to promote the growth of the domestic sector through measures such as cyber innovation centres on allocated in

266、novation procurement funds.121 The UK should seek to help support the development of the domestic cybersecurity sector and promote common approaches to cyber issues through its digital trade policy.To this end it was very welcome to see that the UK-EU TCA included ambitious and detailed cybersecurit

267、y provisions.122 UK digital trade policy should build on the standard set in the UK-EU TCA for cybersecurity cooperation and that in USMCA that recognises that risk-based approaches relying on consensus-based standards and risk management best practices are the most effective way to deal with cybers

268、ecurity threats and encouraging enterprises within the jurisdiction of the parties to take that approach.Furthermore,future trade agreements,including the WTO e-commerce work track,should include provisions to strengthen collaboration and cooperation in the identification and mitigation of cybersecu

269、rity threats and enable the sharing of information and best practices.11.Work towards internationally interoperable digital identities Without a verifiable identity,individuals can find themselves facing systemic barriers to accessing justice,opening bank accounts,registering to vote as well as more

270、 widely being locked out of the digital economy.Research from the World Bank has found that just under 1 billion people globally lack any official proof of identity in 2018.123 The residents of low-income countries,in particular women and those in the lowest 40%of income are the most impacted by lac

271、k of IDs.124 That one of the targets of the UN Sustainable Development Goals is to ensure that everyone has a legal identity by 2030 reflects the importance of identity in increasing inclusion.125 Well designed and governed digital identities can have a big impact on the economy.Analysis from McKins

272、ey estimates that countries could unlock significant economic value from implementing digital identity programs.For the Digital Trade Principles4647UK specifically,if it were to adopt an advanced identity system,one designed with principles of data minimization,owner agency,and privacy protection,th

273、en gains could be in the range of 3%of GDP in 2030.126 As techUK have argued,identity is not something bound by borders.National identities must be recognised in other jurisdictions for the smooth functioning of business.127 The UK should use its trade policy to advance the interoperability of digit

274、al identities internationally,ensure the comparable protection of digital identities in other jurisdictions,and further support their development through regulatory dialogues.12.Use trade policy to further measures to protect online safetyFor all that the internet has opened up opportunities for ind

275、ividuals and businesses,the online world has also exposed many avenues for harm.Whether that is criminal and extremist content,grooming of children,cyberbullying,or misinformation,there is an array of threats and problems that threaten children,individuals,businesses,governments,and society in gener

276、al the world over.The line between illegal content and legal but harmful content is not always clear cut,and how to respect freedom of speech while ensuring a safe online environment is not one amenable to easy solutions.As techUKs engagement with the UK Governments Online Harms White Paper shows,th

277、e complexity involved in regulating and enforcing this area requires deep thought and scrutiny to get right.128 Furthermore,the very nature of the internet means that online threats and harms are not constrained by international borders.International cooperation will be at the heart of addressing th

278、em.The Australia-Singapore DEA and Singapore-New Zealand-Chile DEPA have broken new ground by moving beyond online consumer protection and specifically addressing online harms in the context of a trade agreement.The UK should follow the best practice set in the DEA and DEPA,and include provisions in

279、 future trade agreements that commit parties to working together and within international fora to advance online safety.Trade FacilitationDigital trade policy has an important role in facilitating other forms of trade.For example,e-commerce platforms have opened access to international markets for U

280、K SMEs,helping them export at far higher rates than brick and mortar small businesses.Indeed,91%of SMEs on eBay with sales of more than 6,400 were exporting in 2015 on average to 20 different countries annually,compared to an export rate of just 28%for traditional stores.129 Reducing trade costs for

281、 the delivery of small packages,and standardising these internationally,would make it significantly easier for small businesses to export using digital platforms.Likewise,simple digital technologies have increased the ease of doing business across borders.While previously,the conclusion of 4813.Stan

282、dardise minimum de minimis thresholds to facilitate e-commerce14.Secure recognition of e-signatures and expansion of paperless tradingcontract negotiations often meant they had to be physically signed and sent to other parties,now it is possible to use e-signatures and digital signatures to massivel

283、y cut the times required to seal a deal.One company reduced the turnaround time for sales contracts by five days,and another reduced it by 83%from 23.5 days to 4 days and 2 hours.130 Yet e-signatures are not universally recognised and they are often subject to divergent regulatory approaches.The lac

284、k of uniformity makes“cross-border digital activities more complex and raises the cost of doing business in multiple markets”.131Going beyond e-signatures and extending paperless trading across global value chains offers further savings in time and money.From purchasing orders,inventory reports,sani

285、tary and phytosanitary certificates,the digitisation of trading documents has played a significant role in the development of“just-in-time”supply chains yet paperless trade measures are far from universally adopted.132DEPA broke new ground with its comprehensive module to business and trade facilita

286、tion and its interaction with the digital economy.The inclusion of new provisions to encourage cooperation and the sharing of best practices on logistics and electronic invoicing established a new standard on these topics that the DEA then replicated.The UK should ensure that its future trade agreem

287、ents take a comprehensive approach to business and trade facilitation building on the DEPA example.13.Standardise minimum de minimis thresholds to facilitate e-commerceThe UK boasts the third largest B2C market with sales worth US$266 billion as of 2018.133 The cross-border flow of parcels is an eve

288、r more essential component of this market-total volumes reaching 284 million items in 2017-18,an increase of 30%year on year.134 Not only is the UK a major importer of small items via e-commerce platforms but it is also a significant exporter.Across the EU and EEA,a market that is experiencing signi

289、ficant e-commerce growth,the UK was either the first or second most common origin of the most recent online purchase of shoppers in 17 countries.135De minimis thresholds(DMT)remain one of the key costs for this trade in small items.The DMT is the valuation ceiling for imports,below which there is no

290、 duty or tax charged and other procedures are minimal.136 DMTs have two key objectives balancing the costs of assessing and collecting duties and taxes compared to the amounts raised,and promoting digital trade and the express delivery of low-value shipments,a major plus for businesses and consumers

291、.137 Too low a threshold could end up costing a country more than it makes in revenue,increasing costs to importers in the process,as was the case in Canada,which had the lowest DMT of any industrialised nation until it committed to raising it as part of USMCA.138As part of its digital trade policy,

292、the UK should seek to ensure that other countries DMT are at a comparable level to the UKs to ensure a level playing field for UK e-commerce exporters and that these thresholds are periodically reviewed to take into account relevant factors Digital Trade Principles4950including rates of inflation,ef

293、fect on trade facilitation,administrative cost of collecting duties compared to the amount of duties,and the impact on SMEs.The UK currently charges no customs duty on any goods under 135 and no VAT for goods under 15(rules differ for gifts).139 Furthermore,the UK should work with international part

294、ners at the WCO and WTO to seek an alignment on DMTs and related customs declarations for small items to reduce trade costs for consumers and businesses.14.Secure recognition of e-signatures and expansion of paperless tradingThe UK should seek to use its digital trade policy to advance the recogniti

295、on and adoption of paperless trading and e-signatures,helping reduce trade costs across global supply chains.This should include specific provisions in future trade agreements that ensure:Non-discrimination and functional and legal equivalency for trade administration documents submitted electronica

296、lly;Non-discrimination and functional and legal equivalency for contracts concluded electronically and those using e-signatures and electronic authentication;Technological neutrality in legislation in the use of e-signatures and electronic authentication;A commitment to the use or introduction of el

297、ectronic single windows for trade processes and that trade administration documents should be available to the public electronically;and A regulatory dialogue between trade administration bodies encouraging cooperation in the implantation of paperless trading.Additionally,the UK should build off the

298、 WTO Trade Facilitation Agreement and seek to encourage countries to implement its provisions,especially relating to paperless trade.The UK should also work with international partners at the WTO and WCO,as well as through the United Nations Commission on International Trade Law(UNCITRAL)and UN Cent

299、re for Trade Facilitation and Electronic Business(UN/CEFACT)to continue to push for the development of new best practices in paperless trading and develop new innovation friendly model regulations.514.Supporting Digital Trade Services Telecommunications Limitations to Liability Government Procuremen

300、t Standards Rules of OriginServicesThe technology sector in the UK is dominated by services.As Frontier Economics report for techUK,“The Digital Sectors After Brexit”found,96%of the sectors output and 81%of its exports are spread across services activities.140 Getting services right in trade agreeme

301、nts is going to be essential if the UK tech sector is going to benefit from the countrys trade policy.The most digital heavy exports,(telecommunication,computer and information services),were worth over 21 billion to the UK in 2019.141 However,the scale of digital dependent exports is far greater wh

302、en digitally delivered services are included.In 2018 these amounted to exports worth 190.3 billion 67.1%of total UK services exports.142In addition to the many digitally specific barriers to trade in services,such as data localisation requirements or regulatory divergence that are dealt with above,t

303、here are a range of other non-sector specific barriers as well.These include requirements for local presence,a highly restrictive measure for online-only businesses.Similarly,local content requirements,most often used for manufactured goods such as cars,are in some jurisdictions applied to software,

304、in particular as part of procurement processes.These local content requirements can also oblige firms to use local engineering and installation services.143Trade agreements include more than the digital trade chapter and,likewise,the UKs digital sector rely on a range of different provisions if they

305、 are to successfully trade.Whether it is the right to establish in a country without onerous conditions or the ability to move workers from the UK to be part of a local team,and many things in between,future UK trade agreements should include comprehensive provisions to support its businesses.These

306、should include reference to:4.Supporting Digital TradeSupporting Digital Trade5253A UK digital trade policy should ensure that local presence and local content requirements are eliminated in future trade deals.It should ensure that UK services exporters are dealt with under the principles of Nationa

307、l Treatment and Most Favoured Nation.MobilityMobility is a key barrier to the export of services.While many services can be delivered over the internet,these are often underpinned by the need for staff to be on the ground either short-term or long-term.For example,a cloud computing service provider

308、may need to send engineers into a country to repair its servers.Restrictions and bureaucratic requirements directly lead to increased costs and delays for businesses.In a competitive and fast-moving sector,the ability to recruit talent easily and move them within a business is critical and,as techUK

309、 has previously argued,there is much space to improve the UKs immigration system.144Facilitating the movement of people(both short-term movement and long-term migration)should be an objective of future trade agreements.The UK should look to secure more generous visas as part of UK trade agreements,f

310、or example building on provisions that allow for short term mobility,such as those allowed under CETA,145 and carving out new pathways for long-term migration.Mutual recognition of qualifications is another barrier that is increasingly going to affect the tech sector in a variety of ways.The first i

311、s as tech roles receive greater professional recognition.For example,the Department for Digital,Culture,Media and Sport in 2018 ran a consultation into developing the UK cyber security profession,including on proposals to create a new chartered body for cyber professionals.146 As other countries pur

312、sue similar initiatives it will be important to ensure that these are mutually recognized and align with international standards otherwise it will not be possible for UK chartered cyber professionals to provide services in other jurisdictions.Tech is also impacted by the need for the mutual recognit

313、ion of other professions.As new technology transforms established professions,through areas like medtech,fintech and legaltech,ensuring that the qualifications of the specified person behind the technology is recognized will be crucial to enable the product to be used in other countries,both for ind

314、ividuals coming into the UK and UK citizens going elsewhere.Provisions on the mutual recognition of qualifications should be a central objective of any future UK services chapter.Finally,it is important that any services chapter should be in the form of a negative list.This approach,as taken in the

315、EU-Japan Economic Partnership Agreement,ensures that liberalisation is universal to all service sectors,unless specifically exempted.147 For a fast-developing sector,where key UK digital exports,such as those in fintech,did not exist even a decade ago,the use of a negative list will enable innovativ

316、e new companies to be able to benefit from liberalisation immediately,and will help ensure that the FTA supports the UK economy of the future.To not use a negative list,or to use one but with large carveouts reserving the right to impose trade-distorting regulations in emerging areas,will directly l

317、imit the value of future trade agreements to the tech sector.TelecommunicationsImproving access of UK companies to international telecommunication markets should be an aim of future trade agreements.Telecommunication services provide the backbone to the digital economy yet they are subject to some o

318、f the most protectionist requirements and anti-competitive policies.148 The UKs telecommunications sector is highly competitive,with exports of 6.4 billion in 2017 of which 58.6%was to non-EU countries.149 The intention of the EU to review and sharpen existing WTO telecommunications rules as part of

319、 the WTO e-commerce negotiations is to be welcomed.Future UK trade agreements should seek to liberalise telecommunications trade in a number of ways:ensure that the definitions of public telecommunications networks and/or services must include an explicit reference to business to business supplies;e

320、nhance non-discrimination clauses for wholesale access,including an obligation on domestic suppliers not to discriminate in favour of their own downstream business,to ensure consistent,pro-competitive regulation of business grade wholesale access;Supporting Digital Trade54Supporting Digital Trade55

321、ensure that UK providers enjoy the same rights to offer services and trade on equivalent terms as domestic providers,including not facing additional licensing or domestic ownership requirements;remove geo-blocking restrictions,allowing the transfer of content across borders;include direct,indirect a

322、nd common costs,as well as a reasonable rate of return,where cost-oriented rates are applied.Such rates shall not include costs not related to the provision of public telecommunications services;and ensure that competent regulatory authorities should be fully independent and impartial,with appropria

323、te enforcement powers and appeal mechanisms.Their powers and standing should be mutually recognised and there should be mechanisms in place for ongoing regulatory dialogue to exchange best practice with a view to ensuring consistency of approach.Future UK trade agreements should not jeopardise the l

324、ight touch regulatory approach which has helped position the UK as an enabling regime for digital and which is particularly important for emerging services,such as IoT and 5G.This approach should apply to telecommunication services.Limitations to LiabilityThe principle of limited liability for onlin

325、e intermediary activities was established in the UK under the European Union e-Commerce Directive(Directive 200/31/EC(ECD)and implemented in the UK under the Electronic Commerce(EC Directive)Regulations 2002.150 This directive forms a long-standing,core component of the legal framework that underpin

326、s the internet and has been fundamental to the growth of the UKs digital economy.It has allowed a diversity of intermediaries to become established and grow,and has provided previously unimaginable opportunities for people and businesses to access new markets.Under these regulations,there is no blan

327、ket exemption from liability stemming from online services.Instead liability is limited and conditional.Crucially,the regime is activity based,not business-model specific,so where a limitation to liability exists,it applies to a specific activity,not the entity as a whole or economic sector.Future U

328、K trade agreements must adopt provisions that commit parties to principles on intermediary limited liability equivalent to those set out in the USMCA.UK consumers and small businesses increasingly leverage a wide array of comparison websites,customer support tools,and marketing platforms to reach fa

329、r beyond their local markets.For these trade-enabling online services to function,UK firms need some level of assurance that they will not be held liable for communications that arise between businesses and consumers using these tools,particularly where firms take appropriate action upon notice of i

330、llegal content.The UK should work through bilateral agreements and the WTO JSI proceedings to establish predictable non-IP safe harbours that allow online services to serve this trade-enabling function,while at the same time encouraging firms to work with public authorities to ensure a safe online e

331、nvironment.Domestically,the UK should continue to maintain a viable,clear liability framework for online services.Government Procurement Governments are key customers of digital technologies.From traditional areas such as communications equipment and database services,through cybersecurity products

332、and CRM systems to emerging areas like the use of AI in decision making or diagnostic healthcare,Governments increasingly need a huge range of tech products.This is an area where the UK is a leading player.The UK Government has been a pioneer in the development of e-procurement,for example through i

333、ts Digital Marketplace.This saw sales of 2.03 billion in 2018/19,with almost 40%through SMEs.151 Initiatives like NHSX,which seeks to drive the digitisation of healthcare in the UK,help to chart a course of public and private collaboration that can deliver improved services through the use of digital technologies.152There is a major opportunity for UK businesses in opening up foreign procurement m