Digital Trade for Development
Event report
Speakers:
- Mona Haddad
- Ulrik Knudsen
- Ralph Ossa
- Michele Ruta
- Shamika Sirimanne
Moderators:
- Usha Canabady
Knowledge Graph of Debate
Session report
Ulrik Knudsen
Digitalization and its potential to drive inclusive outcomes are highlighted by various speakers. They argue that digital trade brings numerous benefits, such as increased trade and opportunities for countries at all levels of development and across all sectors. For instance, a 1% increase in digital connectivity can lead to a 1.5% increase in trade. Ulrik Knudsen strongly believes in the importance of digitalization for achieving inclusive outcomes.
However, there are concerns about the rising restrictions on digital trade and the absence of global regulations. Despite evidence of positive reforms, digital trade restrictions are on the rise. This underscores the need for more international cooperation. The internet is global, but regulations are not. To address this, increased interest can be seen in building regulatory bridges and common approaches on digital trade issues.
In stimulating digital trade, various areas are identified as priorities, including open markets, education, digital connectivity, and data governance. Ulrik Knudsen calls for more policy formulation and investment to reap the benefits of digital trade. While positive reforms have taken place, there is still work to be done.
On the issue of applying customs duties on electronic transmissions, Ulrik Knudsen supports the renewal of the moratorium. The collective work conducted at the OECD supports the case for renewing the moratorium, as it has a positive impact on decent work and economic growth.
One of the biggest challenges in digital transformation is the uneven distribution of its benefits. Speakers argue against giving digital transformation and globalization a bad name based on this uneven distribution. They highlight that both globalization and digital transformation have benefits that are not evenly distributed. The world economy depends on the "globalization engine" and digital transformation to increase productivity.
To address the uneven distribution of benefits, speakers suggest that getting the discussion on digital trade and development right is crucial. This can help resolve issues of uneven benefits distribution and drive positive change. Addressing the nexus between trade and digital is essential. The decisions taken now will impact the perception and acceptance of digital transformation and globalization.
In conclusion, the speakers emphasize the importance of digitalization and digital trade in driving inclusive outcomes. They highlight the benefits and opportunities it brings, but also express concerns about the rising restrictions and lack of global regulations. More international cooperation and policy formulation are needed. The uneven distribution of benefits in digital transformation and globalization is seen as a challenge, but speakers argue against giving them a bad name. Getting the discussion on digital trade and development right is crucial for addressing issues of uneven benefits distribution and ensuring positive change.
Shamika Sirimanne
Digital trade has the potential to greatly benefit developing countries, as it currently represents 55% of global services exports and has shown significant growth since 2010. This indicates a promising opportunity for these countries to participate in and benefit from the global digital economy. However, there is a significant inequality in digital trade, with developed countries accounting for 76% of global exports of digitally deliverable services, while developing countries, including major economies like China, contribute only 24%. This highlights a clear disparity in participation and benefits between different regions.
One of the reasons behind this inequality is the lack of necessary infrastructure and skills in many developing countries. Less than half of the least developed countries have access to fast 4G networks, which are crucial for efficient digital communication and trade. Additionally, digital skills are lacking, hindering the ability of individuals and businesses to fully participate in and leverage digital trade opportunities. Furthermore, many countries still lack reliable e-payment systems, which are essential for secure and efficient digital transactions. It is important to address these infrastructure and skills gaps to create a level playing field for developing countries in the digital trade arena.
Another aspect that impedes the participation of developing countries in digital trade is the presence of outdated laws and regulations. These laws are not enforced and thus fail to create an enabling environment for digital trade. Additionally, women entrepreneurs face difficulties in breaking into the digital economy due to various barriers. These include limited access to resources and networks, as well as discriminatory societal norms. It is crucial to address these barriers and create an inclusive digital economy that provides equal opportunities for women.
Evidence-based decision making is vital in shaping effective policies and strategies for digital trade. Shamika Sirimanne highlights the need for countries to be aware of their position in the spectrum of digital trade to make informed and effective decisions. By basing decisions on evidence, countries can better understand their strengths and weaknesses in digital trade and tailor their policies accordingly.
Governments play a crucial role in creating an enabling environment for digital trade. Specifically, they need to focus on investing in infrastructure development, such as fast and reliable internet connectivity, that supports digital trade. Additionally, the development of domestic payment solutions is essential to facilitate secure and efficient digital transactions. These initiatives will help bridge the gap between developed and developing countries in terms of digital trade capabilities.
To support the participation of least developed and developing countries in digital trade, it is important for development partners to increase their support. Currently, the digital sector represents a very small portion of aid commitments. By increasing investment and providing targeted assistance, development partners can contribute to the growth and inclusivity of digital trade in these countries.
Furthermore, the challenges and magnitude of the issues surrounding digital trade require integrated support from various organizations. Addressing cross-border data governance is crucial, as data is an integral part of digital trade. Countries need to be aware of the larger implications of data governance and its impact on digital trade, as it goes beyond the realms of trade and has implications on privacy, human rights, and global cooperation.
Lastly, it is important to address gender equality in the digital trade sector. While women face double the difficulties in the digital world compared to men, they also have immense opportunities in e-commerce. Mentorship programs and initiatives that support women entrepreneurs in the digital economy can help unlock their potential and contribute to a more inclusive and diverse digital trade landscape.
In conclusion, digital trade holds great promise for developing countries, but there are significant challenges and disparities that need to be addressed. By investing in infrastructure, developing digital skills, updating laws and regulations, and providing targeted support to developing countries, the potential of digital trade can be fully realized. It is crucial for countries and development partners to collaborate and take collective action to ensure that digital trade benefits all economies and contributes to sustainable and inclusive economic growth.
Ralph Ossa
Digital technologies play a significant role in providing opportunities for global markets. They contribute to increased productivity, promote innovation, and enhance resilience to shocks. By leveraging digital tools and platforms, businesses can streamline their operations, improve efficiency, and reach a wider customer base. This ultimately leads to economic growth and the creation of decent work opportunities (SDG 8: Decent Work and Economic Growth). Additionally, digital technologies enable businesses to adapt and thrive, even in challenging circumstances, making them more resilient to shocks such as economic downturns or natural disasters.
However, it is important to note that low-income countries require support to fully benefit from digital technologies. Despite the potential for growth, the contribution of digitally delivered services exports in Africa is less than 1%, highlighting the need for targeted interventions and capacity-building initiatives to bridge the digital divide and unlock the full potential of digital trade (SDG 10: Reduced Inequalities). Similarly, least developed countries only contribute 0.2% to globally exported digitally delivered services. Therefore, efforts must be made to address the structural and technological barriers that hinder these countries from fully participating in digital markets.
The implication of the moratorium on government revenues, which refers to the suspension of taxes on digital trade, is found to be minimal. While concerns are raised about the potential loss of tax revenue, existing estimates suggest that the impact is limited. Alternatives exist for taxing digital trade in a less distortionary manner, and many countries are extending their Value Added Taxes (VATs) or Goods and Services Taxes (GSTs) to include the digital economy. Therefore, discussions around the tax implications of digital trade should focus on finding equitable solutions that balance the needs of governments and the growth potential of digital markets (SDG 17: Partnerships for the Goals).
Policymaking for the digital economy requires a whole-of-government approach and global cooperation. The complexities and cross-cutting nature of digital trade issues demand collaboration across ministries and jurisdictions. By fostering a cooperative environment, countries can effectively address policy challenges, establish common frameworks, and ensure inclusive benefits from digital trade (SDG 17: Partnerships for the Goals).
Regulatory frameworks are crucial for facilitating smooth and fair digital trade transactions. It is essential to ensure that there is easy entry and exit of firms in the digital market, promoting healthy competition and preventing anti-competitive behavior. Concerns about market power and anti-competitive behavior have emerged as digital trade expands. Therefore, it is important to establish and enforce regulatory measures that maintain a level playing field for all participants, while also fostering innovation and growth in the digital economy.
The World Trade Report emphasizes the need to embrace international trade, specifically digital trade, to promote security, inclusiveness, and sustainability. During the COVID-19 pandemic, digital trade acted as a lifeline for many, enabling them to continue working, producing, consuming, and trading. By embracing digital trade, countries can enhance security, as it reduces reliance on traditional supply chains and enables diversification. Furthermore, digital trade presents opportunities for inclusiveness by allowing businesses from diverse backgrounds and regions, such as Africa, to engage in e-commerce. Africa, with its young population and suitable time zones for many services, has immense potential in harnessing digital trade for economic growth and reducing inequalities.
Embracing digital trade also has significant environmental benefits, as it reduces transport emissions and enables more efficient organization of production, consumption, and trade. By leveraging digital technologies, businesses can reduce the cost of trading, providing particular benefits for women-run businesses in regions like Africa. Consequently, digital trade aligns with the goals of responsible consumption and production (SDG 12: Responsible Consumption and Production) and climate action (SDG 13: Climate Action).
Ralph Ossa, a prominent expert in the field, emphasizes the need for a cooperative approach to addressing the challenges of digital trade. While trade liberalization alone is not sufficient, collective efforts, skill upgrading, and improved infrastructures are crucial for fully reaping the benefits of digital trade. Ossa applauds the initiative that aims to reduce trade costs, promote skills upgrading, and increase digitally delivered services. He acknowledges measurement issues and uncertainties regarding the tax implications of the moratorium but advocates for further discussions and follow-up on the issue in a cooperative manner (SDG 17: Partnerships for the Goals).
In conclusion, digital technologies provide immense opportunities for global markets, as they enhance productivity, promote innovation, and improve resilience to shocks. However, support is needed for low-income countries to bridge the digital divide. The implications of the moratorium on government revenues are minimal, and alternative taxation mechanisms exist. Policymaking for the digital economy requires a whole-of-government approach and global cooperation. Regulatory frameworks are essential for smooth digital trade transactions. Embracing international digital trade can promote security, inclusiveness, and sustainability. Africa, with its young population and suitable time zones, has significant potential for digital trade. Embracing digital trade also offers environmental benefits, reducing transport emissions and enabling more efficient production and consumption. A cooperative approach is needed, alongside skill upgrading and infrastructure development. Ralph Ossa advocates for collective work, infrastructure development, and skills enhancement, while also calling for further discussions and follow-up on the issue.
Audience
The analysis provides a comprehensive overview of various topics related to digital trade and taxation, with a particular focus on their impact on developing countries and gender equality. It covers a range of arguments, evidence, and perspectives to shed light on the complexities and implications of these issues.
One of the main arguments highlighted in the analysis is the negative effect of current digital trade rules on governmental regulation. The analysis suggests that these rules may hinder the ability of governments to effectively regulate technologies due to restrictions such as the banning of source code revelation, which can inhibit the regulation of artificial intelligence. This argument points to the need for a careful balance between facilitating digital trade and ensuring effective governance.
In addition, the analysis raises concerns about the disproportionate negative impact of non-discriminatory taxation on women in the context of digital trade. It highlights that VAT (Value Added Tax) has disproportionately negative effects on women due to their consumption patterns and lower income. This argument emphasizes the importance of considering gender-specific impacts when formulating digital trade taxation policies to promote greater equality.
The role of the World Trade Organization (WTO) in advancing the conversation on business and human rights is another important point discussed. Although no specific evidence or arguments are provided regarding this topic, the mention of the WTO suggests that it plays a significant role in shaping the discourse around the intersection of business activities, trade, and human rights.
The analysis also touches upon the transformative potential of emerging technologies such as 3D printing and automated manufacturing in reshaping digital trade. It highlights that these changing technologies enable more manufacturing and services to be done remotely, demonstrating the evolving nature of digital trade and its relationship to technological advancements.
Furthermore, the analysis emphasizes the importance of cross-border data governance and its relevance to global issues such as climate change. It suggests that cross-border data governance is not just a trade issue but also a development issue, as exemplified by the crucial role data sharing played during the COVID-19 pandemic for vaccine development. This argument highlights the need for effective mechanisms for data sharing to tackle global challenges and facilitate cooperation.
Overall, the analysis argues for the need to implement more advantageous policies for developing countries in the context of digital trade and taxation. It recognizes the enormous opportunities for women in the digital world, such as conducting business from home while fulfilling caring duties. However, it also acknowledges the double difficulties faced by women due to the challenges posed by the digital world. These arguments underscore the need for inclusive and gender-responsive approaches to digital trade and taxation.
In conclusion, the analysis provides a nuanced understanding of the various aspects related to digital trade and taxation, ranging from their impact on governmental regulation and gender equality to the role of the WTO and the transformative potential of emerging technologies. It highlights the need for careful consideration and the formulation of policies that address the specific needs and challenges faced by developing countries and women in the digital realm. The analysis underscores the importance of data governance and cooperation to tackle global issues and ensure a fair and equitable digital trade landscape.
Mona Haddad
The World Bank plays a crucial role in supporting developing countries in boosting digital trade. It achieves this through its strong presence at the country level, providing financing and financing instruments, and offering policy advice. The World Bank adopts a comprehensive approach towards digital trade, which includes focusing on improving digital connectivity in these countries.
Improving digital connectivity is essential for enabling digital trade. Many low- and low-middle-income countries are currently lagging behind in terms of digital connectivity. For instance, in Africa, out of 35 countries, only 39 have connection speeds lower than 10 megabits per second. To address this issue, the World Bank has launched the Digital Economy for Africa (DE4A) program, aiming to improve digital connectivity and infrastructure on the continent.
Additionally, it is not enough for developing countries to have access to digital connectivity; they need to adopt and make productive use of digital technology. While 84% of people in sub-Saharan Africa have access to 3G and 4G mobile connectivity, only 22% actually make productive use of the Internet. Similar situations persist in many other developing countries. Therefore, adopting and using digital technology for productive purposes is crucial for enhancing digital trade.
In order for digital trade to thrive, creating an enabling environment is necessary. This includes ensuring affordability, digital literacy, and supportive regulations and institutions. Affordability, especially for businesses, is a major concern. The World Bank is involved in various projects aimed at facilitating digital trade by addressing these concerns. For example, there is a major project in Eastern Africa focused on regional digital connectivity and another project in the Philippines aimed at fostering digital technology.
The World Bank's efforts in promoting digital trade have shown positive results. Digital trade is rising as a share of exports in lower-income countries, indicating its growing importance in their economies. Furthermore, there is a notable trend in some African countries, where they are leapfrogging from agriculture to services instead of going through traditional manufacturing. This leapfrogging is attributed to various obstacles such as transport, logistics, and infrastructure problems. The World Bank's support and investment in digital trade can enhance this transition.
However, there are challenges that must be addressed for digital trade to thrive. The regulatory environment needs to be adapted to the unique characteristics of digital businesses. Analogue regulations and policies are no longer fit for this new type of business model. Digital businesses require regulations that recognise e-invoices, e-contracts, e-signatures, e-payments, and e-transactions. Additionally, regulations that deal with possible market dominance by new digital business entrants need to be put in place. Financing considerations also need to be rethought due to the lower collateral and higher risk associated with digital businesses.
While trade offers opportunities for development in developing countries, it is important to acknowledge that the world today has concerns apart from trade liberalisation. Issues such as climate change, human rights, and national security also need to be prioritised and addressed.
In conclusion, the World Bank's support and investments can significantly contribute to boosting digital trade in developing countries. By focusing on improving digital connectivity, fostering the adoption and productive use of digital technology, and creating an enabling environment, the World Bank can help these countries realise the benefits of digital trade. However, it is crucial to adapt the regulatory environment and address challenges faced by digital businesses. Additionally, it is important to recognise and address other important global concerns alongside trade liberalisation.
Usha Canabady
The future of trade is moving towards a digital landscape, driven by services, green practices, and inclusivity. Global exports of digitally delivered services have tripled since 2005, reaching a value of $3.82 trillion in 2022. This growth is fueled by the digital transformation, which promotes economic growth and employment, while also bringing marginalized communities into the global marketplace.
However, to fully benefit from digital trade, it is important to improve infrastructure, develop skills, and establish supportive policy frameworks. Enhancing digital infrastructure regulations could reduce trade costs in Africa by 20% for goods and 30% for business and professional services.
It is crucial to maintain the WTO's moratorium against customs duties on electronic transmissions to support the growth of digital trade. The exemption of customs duties on electronic transmissions has facilitated its rapid expansion and innovation.
A forthcoming joint report will provide insights into the current state of digital trade and how policymakers can further strengthen its impact on growth and development.
In summary, the future of trade is digital, with services, green practices, and inclusivity driving its growth. The expansion of digitally delivered services has created economic growth and employment opportunities. However, investment in infrastructure, skills development, and supportive policy frameworks are necessary for fully harnessing the potential of digital trade. Maintaining the moratorium against customs duties on electronic transmissions is essential. The upcoming joint report will offer valuable insights for policymakers.
Michele Ruta
The analysis delves into several topics related to tax policy, digital goods, and digital currencies. One key aspect discussed is the need for tax policies to adapt to the evolving landscape of online commerce. In the past, when physical goods were involved, tariffs could be imposed by customs officials. However, with the shift towards digital goods, a new system is needed to regulate and tax these transactions.
The argument presented in favour of broad-based non-discriminatory taxes, such as value-added taxes (VATs), over tariffs for digital goods, is supported by several reasons. Firstly, tariffs can distort consumption decisions, while VATs are considered to be non-distortionary in nature. Secondly, there is more experience and learning in collecting VATs for digital goods compared to tariffs. Lastly, VATs tend to provide higher revenue collection abilities compared to tariffs.
Another related argument is the use of a moratorium as a commitment device to encourage countries to focus on implementing efficient tax reforms. The idea is that by granting a temporary suspension on specific tax policies, countries can evaluate and steer their reforms towards more efficient and effective systems.
Capacity development and technical assistance are highlighted as crucial elements for assisting developing countries in adopting efficient taxation models. The analysis emphasizes the need to invest in development and technical assistance to support developing countries in their efforts to reform towards more efficient taxation systems.
The significance of digital currencies in international trade is also discussed. Digital currencies are portrayed as the backbone of international trade, capable of improving cross-border payments and filling gaps in trade finance. However, it is noted that their widespread implementation necessitates substantial investment in infrastructure and the establishment of new regulations requiring regulatory cooperation.
While digital currencies offer numerous potential benefits, it is cautioned that their adoption might exacerbate the digital divide in areas lacking adequate internet access and infrastructure. Countries and communities with limited access could be negatively affected by the emphasis on digital currencies, widening the existing inequality.
The analysis suggests that further research is required to fully comprehend the potential benefits and challenges associated with digital currencies. Currently, the understanding of their implications remains incomplete.
In opposition to discriminatory taxes, Michele Ruta argues for efficiency in tax policies, emphasizing that discriminatory taxes are not in the best interest of everyone, including developing countries. The focus should be on implementing efficient tax practices that benefit all.
The negative impact of tariffs on inclusion, particularly for women, is also discussed. A report by the World Bank and the World Trade Organization (WTO) suggests that tariffs do not promote women's inclusion. Michele Ruta further supports this by stating that while different types of taxes may have varying effects on inclusion, tariffs are not the solution.
To conclude, the analysis highlights the need for tax policies to adapt to the digital age and emphasizes the advantages of broad-based non-discriminatory taxes over tariffs for digital goods. It recommends the use of a moratorium as a commitment device to steer countries towards efficient tax reforms. The importance of capacity development and technical assistance for developing countries to reform their taxation models is also stressed. Furthermore, the significance of digital currencies in international trade is discussed, advocating for investment in infrastructure and regulatory cooperation. However, it is cautioned that the adoption of digital currencies should not further widen the digital divide. Research is still required to fully understand the implications of digital currencies. Finally, arguments against discriminatory taxes and the negative impact of tariffs on inclusion are also presented.
Moderator
The future of trade is set to be digital, inclusive, green, and services-oriented, according to various perspectives discussed. One key point is that global exports of services delivered via computer networks have more than tripled since 2005, indicating the increasing prominence of digital trade. In fact, trade in digitally delivered services was worth $3.82 trillion in 2022, which is equivalent to 12% of all trade in goods and services. This growth in digital trade is seen as positive as it creates new opportunities for international market connection and export-led growth.
However, it is noted that low-income countries face challenges in harnessing digitalisation for inclusive trade and growth. Least Developed Countries (LDCs) contribute only 0.2% to globally exported digitally delivered services, and this number has even decreased since 2010. The barriers to digital trade in developing countries include inadequate infrastructure, lack of high-speed internet, unaffordability, lack of necessary skills, unreliable e-payment systems for cross-border transactions, and outdated or unenforced laws on data protection, privacy, and consumer protection.
Bridging the digital divide and creating a conducive regulatory environment require international cooperation. It is highlighted that 66% of the world population is estimated to be able to connect to the internet, leaving 2.7 billion people offline, many of them in low or lower-middle-income countries. There is a need for international cooperation to manage the global nature of the internet and ensure that the benefits from digital trade are inclusive. The importance of a whole-of-government approach to policymaking for the digital economy is also emphasised.
The World Bank is recognized as being well positioned to support developing countries in boosting digital trade. With its strong country-level presence and engagement, financing instruments, and policy advice, the World Bank can provide comprehensive support to developing countries in overcoming the challenges they face in digital trade.
Furthermore, it is noted that digital trade can contribute to sustainability efforts. Digital technologies cause fewer transport emissions than traditional trade, and they have the potential to improve the efficiency of production, consumption, and trade. This highlights the potential for digital trade to align with sustainable development goals.
Overall, while digital trade presents opportunities for inclusive, sustainable, and services-oriented growth, there are challenges and barriers that need to be addressed. International cooperation, infrastructure development, digital literacy, and a conducive regulatory environment are crucial in ensuring the benefits of digital trade are realized by all. Continued engagement, discussion, and support from organizations are necessary to further advance digital trade and assist developing countries in benefiting from digitalisation.
Speakers
A
Audience
Speech speed
179 words per minute
Speech length
1453 words
Speech time
488 secs
MR
Michele Ruta
Speech speed
170 words per minute
Speech length
1530 words
Speech time
539 secs
M
Moderator
Speech speed
227 words per minute
Speech length
1451 words
Speech time
384 secs
MH
Mona Haddad
Speech speed
132 words per minute
Speech length
1349 words
Speech time
614 secs
RO
Ralph Ossa
Speech speed
150 words per minute
Speech length
3415 words
Speech time
1364 secs
SS
Shamika Sirimanne
Speech speed
170 words per minute
Speech length
2352 words
Speech time
829 secs
UK
Ulrik Knudsen
Speech speed
183 words per minute
Speech length
1061 words
Speech time
348 secs
UC
Usha Canabady
Speech speed
145 words per minute
Speech length
1098 words
Speech time
455 secs
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