Apec 2021: Unlocking digital trade in the Asia-Pacific

Stephanie Honey. Photo / Supplied

Digital is booming, not least thanks to Covid: under the pressure of lockdowns and disrupted supply chains, the share of digitalised products and services has leapt ahead by more than a decade in the Asia-Pacific. In turn, Apec economies have responded to Covid blockages by moving to permit electronic versions of trade paperwork, digital payments and other digital approaches.

We're all digital now: prospects for New Zealand exporters

A shift to digital has helped keep trade flowing to a region which took nearly three-quarters, or around $59 billion, of our exports last year.

Potential gains are not only for high-tech exports, but also traditional sectors such as food and beverage, where e-commerce platforms, digitally-enabled supply chains, e-payments and "paperless" trade have helped lower costs, reduce red tape, innovate and add value.

The challenge now will be to retain those more digitalised models, despite the temptation for some Apec economies to switch back to more old-school, potentially less trade-friendly, approaches. As Apec chair this year, New Zealand has championed a more permanent move to paperless trade across the region, among other goals — and Apec trade ministers agreed in June to speed up the shift to digital trade facilitation, including through embedding digital measures taken during the pandemic.

Apec's digital agenda

Apec has a broad and deep digital agenda — not surprising when you consider that the region is home to the world's largest tech companies, most innovative business models and biggest digital consumers. Paradoxically, even as digital trade is growing in the region, there is an increasingly siloed approach to regulation, and rising hurdles to cross-border data flows in particular. This makes for a complex, costly and challenging operating environment for businesses.

New Zealand is leading work this year on an implementation plan for Apec's digitalisation work for the next 20 years under the 2020 Apec Putrajaya Vision. Apec economies are also working on implementing the Apec Internet and Digital Economic Roadmap, as well as in other areas such as structural reform and the digital enhancement of food systems. Concrete deliverables have been slow to emerge, however, and in June Apec trade ministers acknowledged the call by the Apec Business Advisory Council, chaired by Abac New Zealand's Rachel Taulelei, to speed up progress — not least to unlock the enormous potential of digital trade for small businesses, women and Indigenous entrepreneurs. While Apec is a key forum to explore these issues, the main game lies in trade agreements.

Virtually all our free trade agreements in the region include digital provisions, as does nearly every trade agreement in Asia over the past decade, including the "mega-regional" Comprehensive and Progressive Agreement for Trans-Pacific Partnership, and the Regional Comprehensive Economic Partnership.

The region has also seen a raft of "digital only" trade deals. New Zealand is a founding member of the world's first, the 2020 Digital Economy Partnership Agreement, or DEPA, with Apec neighbours Chile and Singapore; Singapore is negotiating bilateral Digital Economy Agreements with others including Australia, Korea and Vietnam, and the US concluded a Digital Trade Agreement with Japan last year.

While many of these agreements help to create a digital trade-friendly environment for exporters into specific markets, first-best would be a wider approach. A regional deal would create a bigger streamlined market for exports of digital trade, grounded in common or interoperable standards, norms and regulatory approaches, and foster collaborative approaches in emerging technologies such as artificial intelligence or digital identities. DEPA would seem to be an ideal starting point for this: it is open to accession and was designed as a building block to broader outcomes. Korea submitted a formal accession request in October, and Canada is also interested. Another obvious DEPA candidate would seem to be the US, which has been openly musing about the merits of an Asia-Pacific digital agreement this year — albeit driven as much by its concerns about China's technological rise as by its direct trade interests. While the US is so far reticent, the DEPA would seem to fit well with the Biden Administration's emphasis on a "worker-centric" trade policy, given that it contains specific modules on inclusion and SMEs, and new frameworks that would enhance the ability of small businesses to trade, such as e-invoicing and e-payments.

The landscape has recently become even more complex, however: at the end of October, China signalled its own interesting in joining DEPA. At first blush this seems likely to deter the US, given the broader geopolitics involved, but it is to be hoped not. Just as the Apec acronym is sometimes jokingly explained as "A Perfect Excuse for a Conversation", DEPA could provide a platform for them to see where common ground and shared interests might lie, for mutual and broader benefit.

● Stephanie Honey is an international trade policy consultant, with over 25 years' experience in the public and private sectors. She is a former trade negotiator and diplomat and runs an independent trade policy consultancy, Honey Consulting, as well as a business that provides executive education in trade, Global Trade Insights.