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WTO Digital Trade Agreement aims to modernise global trade

Posted on by darion

The UK and 90 other countries have reached the first-ever global digital trade agreement, following five years of negotiations at the World Trade Organisation (WTO), which aims to make cross-border electronic transactions easier and reduce barriers to digital trade.

The agreement, known as the E-Commerce Agreement, sets global rules for e-commerce for WTO members, requiring countries to digitalize their customs processes and systems so that physical documents are no longer required at border entry points.

Signatories to the agreement also committed to recognising electronic documents and electronic signatures, which should save time and reduce costs for businesses by eliminating the need for physical signatures or the physical exchange of documents.

The Agreement also includes provisions to increase trust in the digital trade environment by strengthening consumer protection online, facilitating closer international cooperation on cybersecurity threats, and providing technical and capacity-building support to developing countries.

The Act also permanently prohibits the application of customs duties on digital content and electronic transmissions between signatories.

According to UK government analysis, the adoption of digital trading systems could add between £2.7bn and £24.2bn to UK GDP, based on 2023 GDP figures.

“We are proud to play our part in securing the world’s first global digital trade agreement, cutting costs for businesses and delivering on this government’s ambition to deliver economic growth,” said Business and Trade Secretary Jonathan Reynolds.

“The OECD (Organisation for Economic Co-operation and Development) already estimates that global digital trade is worth around £4 trillion and growing, but there is no common set of global rules. This is a huge step forward in correcting this and ensuring that UK businesses see the benefits.”

The UK government has particularly highlighted the benefits of the agreement for financial services providers, noting that doing business in each of the participating countries will require less paper and time-consuming manual authentication processes.

Given the rapid pace of technological developments, the agreement will be reviewed periodically to keep it current and relevant. Further consideration of issues including international data flows and intellectual property in software or encryption technology will take place in the later stages of negotiations.

Chris Southworth, secretary general of the International Chambers of Commerce (ICC) UK, described the agreement as a “major breakthrough” for international digital trade. “It creates the environment we need to drive innovation as we move from archaic paper processes to the modern world of data and technology,” he said.

This is good news for business, consumers and the economy.

Chris Southworth, ICC Great Britain

“This is an opportunity to accelerate efforts to digitalise our borders and global supply chains and help remove unnecessary friction and costs that prevent SMEs from trading. This is good news for business, consumers and the economy.”

WTO partners will now work to incorporate the agreement into the WTO legal framework, after which countries will seek its ratification.

Valdis Dombrovskis, Executive Vice-President and Commissioner for Trade of the European Commission, said that once integrated into the WTO framework, the rules will be fundamental to the development of global digital trade, helping to create common ground and avoid fragmentation.

“This agreement will benefit businesses and consumers, integrate developing and least developed countries into the global digital economy and help bridge the digital divide,” he said. “The EU sees great value in the agreement published today and will work with all parties involved to integrate it into the WTO framework. We call on all WTO members to do the same.”

The agreement follows the passage of the UK Electronic Trade Documents Act in July 2023, which gives digital trade documents the same legal status as physical documents.