Digital Trade Agreements Expand Rapidly as Global Rules Shift Towards
Regional Frameworks
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The Hinrich Foundation and Digital Policy
Alert released the report "Why Digital is Different: Making Digital
Trade Policy for the 21st Century", providing the first comprehensive
inventory of digital trade commitments in Free Trade Agreements (FTAs).
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Digital trade is becoming an increasingly important
component of global trade, with governments relying on digital trade
provisions in FTAs to facilitate cross-border digital commerce.
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The report identifies 2,587 digital trade
provisions across 163 trade agreements involving 163
jurisdictions, with more than half negotiated during the last four years
(2022–2026).
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The study highlights two major trends:
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Digital trade is accounting for a growing share of
global trade.
o
Digital trade governance is shifting from multilateral
negotiations towards regional and plurilateral agreements.
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The report warns that regulatory fragmentation
across countries is increasing compliance costs, particularly for SMEs, and
underscores the need for regulatory interoperability rather than
isolated national regulations.
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It argues that bilateral and plurilateral
agreements cannot fully substitute for a multilateral framework, as their
commitments apply only to participating economies.
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Asia is the leading region in
digital trade agreements. Among individual economies:
o
Singapore participates in 26 agreements,
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UAE (21),
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EU (20),
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Korea (18),
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Australia and the UK (16 each),
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followed by Chile, China, the US, Canada, Peru
and New Zealand.
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Digital trade commitments have expanded from 10
topics in 2001 to 26 distinct topics, grouped into six thematic
clusters:
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Technology,
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Data,
o
Trust,
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Market Access,
o
Digital Business, and
o
Digital Government.
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The report identifies three phases in the
evolution of digital trade rules:
o
2001–2010: Narrow, largely non-binding
commitments.
o
2011–2017: Greater geographic spread with
stronger binding obligations.
o
Since 2018: Rapid expansion through regional
digital economy agreements with broader and more binding commitments.
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Major agreements driving recent expansion include:
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CPTPP (2018),
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USMCA (2018),
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RCEP (2020),
o
Digital Economy Partnership Agreement (DEPA),
o
African Continental Free Trade Area (AfCFTA)
Digital Trade Protocol, and
o
the WTO Joint Statement Initiative (JSI) on
Electronic Commerce, whose agreement text was stabilised in 2024 but is yet
to enter into force.
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Artificial Intelligence (AI) has
emerged as a new area of digital trade governance:
o
There are 12 AI provisions across 12
agreements involving 29 jurisdictions.
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These focus primarily on international
cooperation, responsible AI use, and the development of interoperable AI
governance frameworks.
o
Singapore, Australia and the UAE have
been the leading proponents of AI provisions in trade agreements.
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The report notes that neither the US nor the EU
has included AI commitments in trade agreements, reflecting their divergent
domestic AI regulatory approaches.
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On cross-border data flows, the report
identifies 71 provisions across 66 agreements, with most modern FTAs
adopting binding commitments permitting data transfers while allowing
exceptions for legitimate public policy objectives.
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Provisions restricting data localisation
requirements now appear in 55 agreements covering 120 jurisdictions,
generally prohibiting mandatory local computing facilities except under
specified public policy exceptions.
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The report also highlights increasing commitments
on:
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Source code protection,
prohibiting mandatory disclosure of proprietary software source code except
under defined regulatory or judicial exceptions; and
o
Cryptography, limiting mandatory disclosure
of proprietary encryption technologies while preserving law enforcement and
regulatory access in specified circumstances.
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The report concludes that future digital trade
governance will depend on enhancing regulatory interoperability,
strengthening trust among governments, and pursuing broader international
cooperation to reduce digital fragmentation and enable seamless cross-border
digital trade.