WTO: World Digital Economy Needs Open Markets

The world economy requires open, predictable, and competitive markets for digital goods and services, the World Trade Organization (WTO) ’s Deputy Director-General Yi Xiaozhun said while presenting the World Trade Report 2020.

Yi Xiaozhun recommended updating the WTO framework to address new challenges and demands, despite some 115 countries having instituted “new industrial policies” and other industrial and digital development strategies to advance their economies towards digitally-enabled production processes and services.

Current policies are “aimed at addressing access to data, research and development support such as tax breaks to assist digital innovation, knowledge diffusion through the agglomeration of talents and skills, and technological hubs to maximize knowledge spill-overs.”

“Other policy instruments are more conventional, such as tariffs on infrastructural equipment, investment and tax incentives to develop local technologies, innovation-oriented procurement to shift markets towards innovative products and incentives to foster patent and other intellectual property creation. The report notes that government policies retain“defensive” aspects, particularly in mature non-digital sectors subject to intense competition and technological transition,” the WTO’s official emphasized.

Yi Xiaozhun noted that the WTO report shows the COVID-19 pandemic is pushing e-commerce and digital innovation fast development. However, developing countries face challenges in infrastructure building and the digitization of manufacturing production.

The WTO has contributed to the digital sector by eliminating tariffs on internet and telecommunications infrastructure products through the Information Technology Agreement (ITA), by liberalizing internet services through the telecommunications agreement and by stimulating e-commerce with the moratorium on duties on cross-border digital flows, as well as by providing a robust and stable framework for the development of global and open standards, intellectual property protection and other critical rules based on the principles of non-discrimination, transparency and reciprocity, the organization’s official said.

However, WTO “members will have to consider how to encourage the sharing of benefits arising from innovation policies, what measures will be needed to facilitate investment, and whether new flexibilities can be expanded for governments to support domestic digital innovation. The mobility of skilled workers, data flows and privacy concerns, and anti-competitive behaviour in the digital industry will be of high concern as well," according to the annual report.