Mapping

Photo de Luca Bravo sur Unsplash.

the EU’s EUROPE IN THE
WORLD

digital trade
POLICY PAPER N°292
JULY 2023

#trade
#digital
A global leader hidden in plain sight?

Introduction Nicolas
Köhler-Suzuki,
The pandemic has moved our work and life online and accelerated the European Associate Researcher
Union’s transition towards a digital economy. Surveys show that up to three quar- at the Jacques Delors
ters of European employees would like to continue teleworking in the future.1 Institute, Trade
Digital networks deliver video to the 141 million Europeans that are subscribing Policy Advisor at
to streaming services for entertainment.2 Moreover, the volume of physical goods International Trade
that businesses and consumers order online has increased by 58% in 2020 alone.3 Intelligence
Such developments are deeply altering the structure of the European economy and
have become important drivers for productivity.4 At the same time, the center of The author would like to
the world economy is shifting east. The European Commission estimates that 85% express his sincere gratitude
of future economic growth will take place outside of the EU–and much of it in the to Barbara D’Andrea Adrian,
digital sector.5 It is therefore crucial that the EU connects with the markets of the Lucian Cernat, Elvire Fabry
and Sébastien Maillard for
future, so that Europe remains at the forefront of the digital transformation.
their valuable comments
and insightful discussions
A widely held view is that the EU currently tries to make up for shortcomings in during the drafting of this
its digital economy with excessive regulation against foreign competition. French paper. Their contributions
President Emmanuel Macron summarized this predicament, when he wrote in 2020 have significantly
enriched the analysis
and recommendations
1 Eurofound, 2021, Working during COVID-19 presented herein. Any
2 The Hollywood Reporter, 2021, European Streaming Market Tops $14 Billion, Netflix, Amazon Domi- errors, inaccuracies, or
nate omissions found within
3 Estimates by Oscar de Bok, Global chief executive officer, DHL Supply Chain, at the World Trade this report are solely the
Symposium 2021
responsibility of the author.
4 See in particular the work of the OECD on this topic.
5 European Commission, 2021, Trade Policy Review - An Open, Sustainable and Assertive Trade Policy

1 • Jacques Delors Institute • Policy Paper

that the US has the GAFA (in reference to Google, Apple, Facebook, and Amazon)
and China the BATX (in reference to Baidu, Alibaba, Tencent, and Xiaomi), but the EU
only the GDPR (in reference to the General Data Protection Regulation).6 Although
Europe only has few large technology companies with a market capitalization that
approaches the largest American and Chinese platforms, this narrative may at
the same time be short selling an important strength that is hidden in plain view:
the EU’s central role in the emerging digital trade regime as the world’s leading
exporter and importer of digitally deliverable services and a key player in the
quickly developing regulatory sphere for digital trade.

In fact, as the data in the analysis below shows, the EU exports and imports more
digitally deliverable services than other leading economies, such as the United
States, China, or India. On the one hand, this means that the EU must safeguard the
market access interests of its firms–and perhaps do so more aggressively than it
has in the recent past. On the other hand, its leading role as an importer of digitally
deliverable services can help to explain the ‘Brussels effect’ in the global digital
economy.7

With its recent privacy, platform, competition and data regulations, the EU has
been responding to the functional demands that arise in a globally integrated
digital economy, which grew around a largely self-regulated internet. The lack
of rules allowed for rapid growth and development, but it has also raised ques-
tions about the appropriate role of government as data crossing international
borders creates externalities and regulatory gaps. Consumers, for example, are
worried about their privacy if personal data are stored outside of their jurisdiction.
Businesses must deal with digital market access barriers when trying to sell their
goods and services across borders. EU trade policy is not a new tool to address such
gaps. The EU has therefore included digital trade provisions in its trade agreements
as far back as 2001 and in a total of twenty-four agreements to date, continuously
expanding their scope and scale over the years. The 2021 EU Trade Policy Review,
which is guiding the current European trade agenda, also recognizes the role of
trade policy in the digital economy:
‘the digital transformation is [a] key enabler of
sustainable development, but also a space of competition
and inadequate multilateral governance. As it embarks
on its Digital Decade, supporting Europe’s digital
transformation is a priority both in internal and external
policies including trade policy and instruments.’8

This indicates that EU trade policy will continue to increasingly address cross-
border transactions in the digital realm, which can be subsumed under the emerging
‘digital trade’ paradigm.

Discussions around digital trade developed in the early 2010s from the non-binding
internet governance agenda and the long-dormant e-commerce work program of
the WTO and have seen rapid advances in recent years.9 Despite this, policymakers
still have a somewhat fuzzy understanding of digital trade, both in terms of its
definition and measurement. While the EU Commission is beginning to take the

6 Emmanuel Macron, 2021, LinkedIn post on European technological sovereignty

7 Anu Bradford, 2020, The Brussels effect: How the European Union rules the world. Oxford Univer-
sity Press, Oxford.
8 European Commission (2021) Trade Policy Review - An Open, Sustainable and Assertive Trade
Policy
9 Shamel Azmeh, Christopher Foster, Jaime Echavarri, The International Trade Regime and the Quest
for Free Digital Trade, International Studies Review, Volume 22, Issue 3, September 2020, pp.
671–692

2 • Jacques Delors Institute • Policy Paper

need for a digital trade strategy more seriously, the member states must quickly
improve their understanding about Europe’s strengths in digital trade and how to
use them as a leverage in promoting its regulatory model for the digital economy.

This policy paper contributes to the evolving debate by attempting to map the size
and direction of the European Union’s digital trade and analyzing recent European
efforts to regulate cross-border digital flows in trade agreements and a new gene-
ration of digital partnerships.

I What is digital trade and how does it differ from e-commerce?

The term digital trade has not been in use for very long. In fact, there is at least
one other competing terminology, which can lead to confusion among both policy
makers and the general public. In 1998, when WTO members first decided to discuss
issues related to the then-nascent internet, they chose to table a work programme
on electronic commerce, or e-commerce, which was defined as the ‘production, dis-
tribution, marketing, sale or delivery of goods and services by electronic means’.10
However, the term e-commerce is somewhat ambiguous as in common usage it
often also refers to domestic commercial activities by electronic means. The term
digital trade, on the other hand, more clearly delineates that there is an international
dimension to some commercial electronic activities. While ‘e-commerce’ continues
to be widely used in the trade policy community, most notably in the WTO Joint
Initiative on electronic commerce, this is increasingly a historic artifact. A growing
number of countries, including the EU, the US and international organizations like
the OECD are instead switching to the term ‘digital trade’.

The most authoritative definition of this concept is provided by the Inter-Agency

Task Force on International Trade’s Expert Group on Measuring Digital Trade:
‘All trade that is digitally ordered and/or digitally
delivered.’11

Whereas digitally ordered trade is defined as:

‘The international sale or purchase of a good or service,
conducted over computer networks by methods
specifically designed for the purpose of receiving or
placing orders.’12

And digitally delivered trade is defined as:

‘International transactions that are delivered remotely
in an electronic format, using computer networks
specifically designed for the purpose.’13

While digitally ordered trade in this definition encompasses the international

exchange of both goods and services, digital delivery is exclusively referring to
the exchange of services. The terminology has implications for the scope of inter-
national negotiations, as some countries want to avoid commitments on services
liberalization and prefer broader terminology that leaves them with policy space.
The coexistence of the terms e-commerce and digital may therefore point to deeper
cleavages amongst WTO members. However, as the next section will show, from a
technical perspective, a more precise definition is crucial for accurate measurement
and this paper will therefore exclusively use the ‘digital trade’ lexicon.

10 WTO, 1998, Work Programme on Electronic Commerce, WT/L/274, p.1

11 OECD, WTO, IMF, 2020, Handbook on Measuring Digital Trade, Version 1, p.11
12 Ibid.
13 Ibid.

3 • Jacques Delors Institute • Policy Paper

The most significant achievement of the aforementioned WTO work programme on
electronic commerce was the temporary ‘Moratorium on Customs Duties on Elec-
tronic Transmission’, signed in 1998 and reaffirmed biennially at WTO’s ministerial
conferences.14 Although a number of significant issues on ‘trade-related aspects of
global e-commerce’ were initially identified, discussions amongst WTO members
were divided up among the committees for goods, services, trade-related aspects of
intellectual property rights (TRIPS), and trade and development.15 The flailing Doha
Round all but guaranteed that there was little progress on finding common rules for
digital trade, which continued to grow at breakneck speed. In the absence of pro-
gress to update the multilateral rulebook on digital trade, more and more countries
started to address digital trade in bilateral trade agreements.

The Trade Agreements Provisions on Electronic-commerce and Data (TAPED) pro-

ject at the University of Lucerne has shown that the first regional trade agreement
(RTA) with a provision on digital trade was an accord between Jordan and the US,
signed in 2000, and the first RTA with a dedicated chapter on digital trade was the
agreement between South Korea and the US, signed in 2007.16 In the years since,
an increasing share of RTAs features provisions on digital trade, while the number
of provisions per agreement is increasing as well. Of the total 345 RTAs concluded
between 2000 and June 2019, 182 contain provisions related to digital trade and 77
have a dedicated chapter.17 With lack of progress in the Doha Round, trade agree-
ments have therefore served as a laboratory for the regulation of digital trade.

Table 1 lists the key provisions related to digital trade that can be found in trade
agreements and that have recently also been included in negotiations at the WTO.
It shows that some provisions address mostly the facilitation of digitally ordered
goods, such as de minimis requirements, changes to customs procedures, and
market access and national treatment for logistics services. There are also a number
of cross-cutting provisions that affect both digitally ordered goods and services and
digitally deliverable services, such as competition clauses, consumer protection,
data protection, digital taxation, digital trade-related intellectual property, the faci-
litation of electronic transactions, government procurement, internet access, and
open government data. Lastly, there are provisions that mostly address the delivery
of digital services, such as those on cross-border data flows, cryptography, customs
duties on electronic transmissions, cybersecurity cooperation, data localization,
intermediary liability, net neutrality, source code protection, spam, and technolo-
gical neutrality.

The delivery of digital services, in particular discussions around cross-border data

flows, customs duties on electronic transmissions, and data localization measures
have proven to be amongst the most contentious topics in negotiations on digital
trade. At the WTO, customs duties on electronic transmissions have also become
a controversial topic in recent years, as some developing countries, such as India
and South Africa, are worried about the customs revenue implications from lower

14 Note that the moratorium has become a more heated topic of debate in recent years.
15 Yasmin Ismail, 2020, E-commerce in the World Trade Organization: History and latest develop-
ments in the negotiations under the Joint Statement Initiative, International Institute for Sustai-
nable Development (IISD) and CUTS International, Geneva, pp.8-9
16 https://www.unilu.ch/en/faculties/faculty-of-law/professorships/managing-director-internatio-
nalisation/research/taped/; The United States’ dominant position in the technology sector is a key
factor behind their aggressive push to incorporate digital trade provisions into major trade agree-
ments such as negotiations for the (failed) Transatlantic Trade and Investment Partnership (TTIP),
the (failed) Comprehensive and Progressive Agreement for Trans-Pacific Partnership (TPP), the
United States-Mexico-Canada Agreement (USMCA), and most recently the Indo-Pacific Economic
Framework (IPEF).
17 Ibid.

4 • Jacques Delors Institute • Policy Paper

trade in goods due to digitization.18 These negotiations therefore point to the cen-
trality of data in digital trade, around which at least three different models of digital
trade that have evolved.19 First, a liberal US model that prizes openness –an offen-
sive position that is aided by the strong position of US technology firms in both
digitally-ordered goods (e.g. Amazon and eBay) and digitally-delivered services
(e.g. Google and Facebook). Second, a Chinese model, that is offensive on digitally
ordered trade of goods (benefiting firms like Alibaba and JD.com), but defensive
on digitally deliverable services, which are at odds with the Chinese system of cen-
sorship. Lastly, the EU, which is the world’s largest export of goods and services
and therefore has strong interests in facilitating both digitally-ordered goods and
digitally deliverable services, but whose strong privacy regulation has sometimes
seen it take a somewhat defensive position on digitally deliverable services.20 Sec-
tion four of this paper will return to the regulatory aspects of the EU’s digital trade
agenda with a detailed map of the digital trade provisions that have been employed
in the EU’s trade agreements. But before, the next section will take a closer look at
the size and composition of the EU’s digital trade.

18 Cf. Nicolas Köhler-Suzuki, 2020, New evidence on the impact of customs duties for digitizable pro-
ducts and electronic transmissions. The cases of Egypt and Vietnam, Dalberg, p.3
19 Ferracane, Martina Francesca; van der Marel, Erik. 2021. Regulating Personal Data: Data Models and
Digital Services Trade. Policy Research Working Paper No. 9596. World Bank, Washington, DC.
20 Note that some critics charge the EU’s privacy regulations are a hidden form of digital protec-
tionism, given that only one of the largest thirty internet firms is European (Spotify). Cf. Nicolas
Köhler-Suzuki, 2020, Strategic Choices for the EU’s Digital Trade Policy after the US Elections,
Jacques Delors Institute

5 • Jacques Delors Institute • Policy Paper

TABLE 1. A glossary of key digital trade issues

Competition Addressing negative externalities of platform business models and network effects that are amplified
through digital markets
Consumer protection Addressing misleading, fraudulent and deceptive commercial cross-border activities in the digital
realm; consumer redress mechanisms; transparency on transaction costs, warranty periods and expi-
ration dates
Cross-border data flows Prohibiting restrictions on the cross-border transfer of information
Cryptography Restrictions on the transfer of encryption keys
Customs duties on Prohibiting the levying of tariffs on the content and/or carrier medium of electronically transmitted
electronic transmissions information, often in reference to the 1998 WTO Moratorium on Customs Duties on Electronic Trans-
missions (subject to reapproval by WTO Ministerial Conferences)
Cybersecurity cooperation Intergovernmental cooperation to address security externalities arising from digital integration
Data localization Requiring the use of computing facilities in the jurisdiction of a territory as a precondition to conduct
business there.
Data protection Recognition of privacy safeguards for personal and/or confidential non-personal data
Digital taxation Taxes on digital services to address negative externalities from the cross-border exchange of data,
such as Base Erosion and Profit Shifting (BEPS). This can also include principles and mechanisms to
address the challenges for the collection of Value Added Tax (VAT) on cross-border sales of digitally
ordered goods and services.
Digital trade facilitation De minimis requirements for digitally purchased goods, changes to customs procedures, electronic
interfaces for exchanging data with customs authorities and system interoperability, market access
and national treatment obligations for logistics services, paperless trade and technological solutions
for customs clearance
Digital trade-related Remedies to digital copyright infringement, such as online piracy or counterfeit goods ordered online
intellectual property
Facilitation of electronic Electronic transaction frameworks; including standards on electronic authentication, electronic signa-
transactions tures or digital certificates; electronic contracts; electronic invoicing; electronic payments services;
harmonization of domestic electronic commerce regulation with the 1996 UNCITRAL Model Law on
Electronic Commerce
Government procurement Commitments to electronic tendering of government procurement
Intermediary liability Legal responsibility of digital platforms for what their users do and say
Internet access Ensuring that users have access to the internet on a fair, reasonable and non-discriminatory basis
Net neutrality Non-discriminatory treatment of digital communications by Internet Service Providers (ISPs)
Open government data Public access and use of non-confidential government data in a machine-readable and open format
Regulatory transparency Transparency on laws related to electronic commerce, electronic availability of trade-related informa-
tion
Source code protection Prohibitions against the transfer of, or access to, the source code of software as a condition for import,
distribution, or sale
Spam Safeguards against unsolicited electronic messages (sometimes also subsumed under consumer
protection)
Technological neutrality Digitally delivered services will be treated no less favorable than services delivered via other modes of
supply (also defined in the 1996 UNCITRAL Model Law on Electronic Commerce)

▲ Source: Author’s compilation based on TAPED database and provisions in the consolidated negotia-
ting text of the WTO Joint Initiative on electronic commerce (INF/ECOM/62/Rev.1)

6 • Jacques Delors Institute • Policy Paper

II Measuring the EU’s digital trade: how much, what, and with
whom?

The definition of digital trade as a composite of digitally ordered goods and services
and digitally delivered services provides some clarity which economic activity should
be analyzed to get a picture of the EU’s digital trade. However, statistical measure-
ment of digital trade is still at nascent stage. The latest EU Trade Policy Review
recognizes these shortcomings and calls for a European analytical framework for
the measurement of data flows to better assess their size and value.21 However, as
the debate on EU digital trade is gathering steam, it is useful to get a first idea about
its size, structure, and direction.

I HOW TO ESTIMATE THE VALUE OF DIGITAL TRADE

While more precise information on the value of data flows will become available in
the future, new experimental datasets from the WTO offer some first insights. The
Trade in Services data by mode of supply (TiSMoS) dataset for the first time allows
us to disaggregate services trade data by mode of supply.22 In the digital age, it can
safely be assumed that a majority of the cross-border supply of services (Mode 1)
is delivered via digital networks.23 There is thus a close correlation between Mode 1
services data and digitally delivered trade as defined by the Expert Group on Mea-
suring Digital Trade.24 Moreover, the WTO-OECD Balanced Trade in Services (BaTiS)
dataset captures 90% of EU services trade on a bilateral basis. However, for the pur-
pose of this study there are some limitations that come with these databases. First,
while the WTO has recently started to publish export data for digitally deliverable
services, extra-EU TiSMoS data to compute digitally deliverable imports and sec-
toral breakdowns is for now still aggregated for the EU-28 –i.e. including the UK.25
Second, the BaTiS data doesn’t include digitally tradeable sectors other than insu-
rance and pension services, financial services, charges for the use of intellectual
property; telecommunications computer, and information services. Third, as the
data is based on cross-border payments, it doesn’t include free digital services, in
which no monetary transaction takes place, but data crosses borders that may the-
reafter be monetized, e.g. for analytical or advertisement purposes. Fourth, services
data does not provide insight into the value of digitally ordered goods. The Expert
Group on Measuring Digital Trade proposes to fill this gap through surveys, financial
transaction information, and Universal Postal Union data to break down B2B and

21 EU European Commission, 2021, Trade Policy Review - An Open, Sustainable and Assertive Trade
Policy
22 Services trade data is based on Balance of Payments Statistics (BOPS). The allocation by Mode of
Supply is an expert estimate for each service category. Cf. Wettstein et al., 2019, A Global Trade in
Services Data Set by Mode of Supply (TiSMoS), WTO.
23 The four modes of supply for services under the General Agreement on Trade in Services (GATS)
are: cross-border supply (Mode 1), whereas services are provided from the territory of one country
into the territory of another; consumption abroad (Mode 2), whereas service provision in the terri-
tory of one country to the consumer of another country; commercial presence (Mode 3), whereas
the service provider establishes a physical presence in another country to provide the service; and
presence of natural persons (Mode 4), whereas the service provider sends personnel to another
country to provide the service.
24 Note that many, but not all Mode 1 services are supplied via digital networks. According to the
Handbook on Measuring Digital Trade, other forms of cross-border supply of services include
phone, fax or manually typed email. In addition, the Handbook recognizes that some transactions
for digitally delivered trade can also take place under Mode 2, such as telecommunications services
received abroad, and encourages statistical agencies to use complementary survey tools to derive
estimates (p.13). However, these data are not yet available and for the purpose of this study, a less
precise estimate using Mode 1 data as ‘reasonable approximation’ (p.14) will be used to give an early
estimate of EU digital trade.
25 An update to the TiSMoS dataset, including EU-27 data on extra-EU trade, is likely to be published
in the coming months.

7 • Jacques Delors Institute • Policy Paper

B2C transactions.26 In the meantime, there is not yet comprehensive data available
for extra-EU trade. With these limitations in mind, there are still important insights
that the data can offer for the EU’s digitally deliverable services trade.

While some services, such as construction, are by definition not supplied across
borders since they require a physical presence in the receiving territory, many other
contemporary services depend on digital networks for delivery. Few architectural
firms today will deliver their blueprints by mail or fax. Similarly, the original Netflix
delivery of physical DVDs by mail has been surpassed many times over by content
delivery via digital networks. For digital trade, this concept applies to cross-border
delivery and the Handbook on Measuring Digital Trade identifies twelve categories
of services that are digitally deliverable: Insurance and pensions services; financial
services; charges for the use of intellectual property; telecommunications, com-
puter, and information services; research and development services; professional
and management consulting services; architectural, engineering, scientific and
other technical services; other business services; audio-visual services; health ser-
vices; education services; and heritage and recreational services.27

I THE EU’S LEADERSHIP IN DIGITALLY DELIVERABLE SERVICES

Figure 1 shows that the EU-27 is the world’s largest exporter of digitally delive-
rable services. It exported digitally deliverable services valued at 314 billion USD in
2010, which increased to 770 billion USD in 2022. Throughout the 2010s, the EU-27
exported more digitally deliverable services than the United States and the gap has
widened in recent years. The EU-27 also exported about two times as many digitally
deliverable services as the United Kingdom, and about three times as much as India
and China. This data runs counter to the expectation that the United States is the
greatest beneficiary of free cross-border data flows and shows that the EU should
be just as invested in the topic.

FIGURE 1. The world’s five leading exporters of digitally deliverable services

26 Cf. Chapter 3 of the Handbook on Measuring Digital Trade

27 OECD, WTO, IMF, 2020, Handbook on Measuring Digital Trade, Version 1, p.13; note that for presen-
tation purposes this paper excludes the estimates of imports and exports of digital intermediation
services, covered in various parts of EBOPS.

8 • Jacques Delors Institute • Policy Paper

Figure 2 shows the composition of the EU’s digitally deliverable services exports.
Contrary to many popular illustrations of digital trade applications, telehealth and
online education are only a small fraction of the EU’s digital services exports. Even
the exports of audiovisual and related services, which presumably includes one
of the EU’s largest technology firms–the Swedish music streaming giant Spotify–
amounted to only one per cent of all digitally deliverable services exports.

FIGURE 2. Composition of EU-28 digitally deliverable services exports

Instead, the data shows significant shares for telecommunications computer and
information services (23%); professional and management consulting services
(11%); other business services (10%); research and development services (7%) and
architectural, engineering, scientific and other technical services (6%). The 19%
share for financial services is also noteworthy but may be a particular reflection
of the United Kingdom’s financial sector. Moreover, data for intellectual property
charges are likely an artefact of tax avoidance strategies of multinational corpora-
tions rather than a reflection of real underlying economic activity.28 However, the
composition is still indicative that several economic sectors outside of a more nar-
rowly defined scope for the digital economy make up a significant share in the EU’s
digitally deliverable services exports and should be closely consulted for digital
market access concerns.

28 Cf. Brad Setser, 2020, When the Services Trade Data Tells You More About Tax Avoidance Than
About Actual Trade, Council on Foreign Relations

9 • Jacques Delors Institute • Policy Paper

FIGURE 3. The European Union’s digitally deliverable services imports

Figure 3 shows that the EU-28 was also the largest importer of digitally deliverable
services in the 2010s. It imported digitally deliverable services valued at 256 billion
USD in 2010, which increased to 410 billion USD in 2017. This is equivalent to about
forty to eighty per cent more than US imports of digitally deliverable during the
same period, about six to eight times as much as India and about three to four times
as much as China. Data for the EU-27 would likely be about 12 per cent lower, which
would still place make the EU-27 the largest importer of digitally deliverable ser-
vices over the last decade.29 This emphasizes the market power of the EU in digital
trade. It also underlines why the General Data Protection Regulation (GDPR) had
such a strong influence on privacy legislation worldwide.30 The data suggests that
the EU can continue to leverage the weight of its digital market to influence future
global regulatory regimes for the digital economy, including those on digital taxa-
tion, competition, and artificial intelligence.

Figure 4 reveals that the most critical economic sectors for EU-28 imports of
digitally deliverable services are financial services (13%); telecommunications,
computer and information services as well as professional and management consul-
ting services (both 12%); research and development services and other business
services (both 11%). Comparable to the EU’s digitally deliverable services exports,
telehealth, online education services, and audio-visual services only have a minor
role. The data for charges for the use of intellectual property, much like the data
for digitally deliverable services exports, can be largely discounted as a statistical
artifact. In short, the data suggests that, similar to digitally deliverable services
exports, the EU should take a holistic picture of digital flows into the Union that
goes beyond a narrowly defined technology sector when it engages with partner
countries to regulate cross-border regulatory spillovers.

Unfortunately, there is currently no available bilateral data on the trade of digitally

deliverable services under Mode 1. However, the World Trade Organization’s statis-
tics on bilateral services trade for all modes of delivery can still provide an indication
of the European Union’s main trading partners in the digital domain.31 In order to

29 Estimate based on 2019 Eurostat data for all services imports (all modes of supply) for the EU-28
(2065 billion EUR) in comparison with the EU-27 (1823 billion EUR).
30 Cf. Anu Bradford, 2020, The Brussels Effect, How the European Union Rules the World. Oxford Uni-
versity Press, Oxford.
31 WTO, 2019, WTO-OECD Balanced Trade in Services Dataset (BaTiS); note that the April 2023 ver-
sion of BaTiS does not contain extra-EU data on a bilateral basis.

10 • Jacques Delors Institute • Policy Paper

FIGURE 4. Composition of EU-28 digitally deliverable services imports

gain a clearer picture, it is necessary to focus on the more narrowly defined sec-
tors of telecommunications, computer, and information services, as the inclusion of
other digitally deliverable services that are largely delivered through other modes
would skew the data. The data, as presented in Figure 3, reveal that nine countries
in the recent past made up 60% of the EU’s extra-EU trade in telecommunications,
computer, and information services, with a total value of 183 billion USD in 2019.
These countries, listed in descending order of magnitude, are the United Kingdom,
United States, Switzerland, China, Japan, India, Russia, Canada, and Brazil. This
highlights the importance of the size of a partner economy and distance to the EU
in determining trade patterns.

Figure 5 shows that the value of extra-EU trade in telecommunications, computer,

and information services has grown significantly between 2013 and 2019, with the
United Kingdom and United States each accounting for around 30% of EU-27 totals.
However, this growth has been more moderate with the other top nine partner coun-
tries. The data on trade of digitally deliverable services in EU suggests that policy
makers in Europe should focus on digital trade negotiations with its top trading
partners. This is particularly important in light of the ongoing discussions (and
potential legal challenges) surrounding the Trans-Atlantic Data Privacy Framework
and the EU-UK Trade and Cooperation Agreement. As the data shows, the US and
UK are among the EU’s top trading partners in the digital domain, making it crucial
for Europe to ensure that any agreements reached with these countries are favo-
rable for the EU’s exporters of digital services.

11 • Jacques Delors Institute • Policy Paper

FIGURE 5. Destination of EU-27 telecommunications, computer, and information services
exports

The EU has digital trade agreements in place with just three of its top nine
digital partner economies: the UK, Japan, and Canada. Furthermore, the EU-Mer-
cosur agreement, which includes a digital trade chapter, is yet to be ratified. While
adequacy decisions and data transfer frameworks have been established with Swit-
zerland and the United States, these do not extend to other areas of digital trade
such as market access and national treatment, prohibition of electronic customs
duties, digital trade facilitation and consumer protection.

12 • Jacques Delors Institute • Policy Paper

III How does the EU regulate digital trade?

In recent years, the regulation of digital trade in the Asia-Pacific region has gar-
nered significant attention amongst policymakers, with accelerated discussions
surrounding agreements such as the Transpacific Partnership (TPP). Following the
United States’ withdrawal from the TPP in early 2017, there has been an increa-
sing number of digital trade agreements, such as the 2020 Digital Economy
Partnership Agreement (DEPA) between Singapore, New Zealand, and Chile and
the 2022 Korea-Singapore Digital Partnership Agreement.

However, the European Union has also had a long history of including electronic
commerce in its trade agreements and has more recently moved towards soft law
frameworks with other partners. While the Asia-Pacific may have served as a policy
laboratory for digital trade regulation, the EU’s efforts are frequently overlooked,
in particular considering the substantial global reach of the EU’s wide network of
trade agreements.

The European Union has been incorporating digital trade provisions into its trade
agreements for almost two decades, according to data from the Trade Agreements
Provisions on Electronic-commerce and Data (TAPED) database from the Univer-
sity of Lucerne, which is presented in Table 2.32 It shows that already in the early
2000s, the EU began including provisions for data in its trade agreements, prima-
rily focusing on trade facilitation and intellectual property (IP) that covered some
aspects of digital trade. However, at the time there were no standalone digital
trade or e-commerce chapters in these agreements.

This started to change in the late 2000s, when the EU began including more com-
prehensive digital provisions. This trend was particularly evident in the EU’s Free
Trade Agreement with South Korea, which was signed in 2010 and included the EU’s
most comprehensive e-commerce chapter to that date. Notably, this is indicative
to a certain amount of policy diffusion, as South Korea had signed an FTA with the
United States in 2007 which was South Korea’s most comprehensive trade agree-
ment on electronic commerce at that time. More recently, the EU’s trade agreements
have included even greater coverage and more binding provisions for digital trade.
This is particularly true of the 2020 EU–UK Trade and Cooperation Agreement and
the soon-to-be ratified FTA with New Zealand.

The omissions in the EU’s trade agreements are as significant as their inclusions,
as they provide insight into the EU’s policy preferences. Specifically, the EU’s
trade agreements lack provisions concerning digital trade, such as: (1) constraints
on data localization requirements, (except for non-binding provisions in the FTAs
with Colombia-Peru, Mexico, and Japan), although this has recently changed in
the EU-UK Trade and Cooperation Agreement and the FTA with New Zealand, (2)
national and MFN treatment in digital trade, (3) reference to the 1996 UNCITRAL
Model Law on Electronic Commerce, (4) open government data or public access to
government information, (5) principles on access to and use of the internet for elec-
tronic commerce (except for a soft provision in the EU-Mexico Modernised Global
Agreement), (6) net neutrality rules, (7) prohibition of intermediary liability of inte-
ractive computer services (which is championed by the United States, similar to
section 230 of the US Communications Decency Act), and (8) cryptography.

Consequently, it is evident that the EU has a distinct and continually evolving

approach to digital trade when compared to other economies.

32 Mira Burri, 2023, A Dataset on Digital Trade Provisions

13 • Jacques Delors Institute • Policy Paper

TABLE 2. EU trade agreements with digital trade commitments

Prohibition of customs duties

Market access and national

Government procurement
Technological neutrality

Digital trade facilitation

Electronic signatures

Consumer protection
E-commerce chapter

Intellectual property
Dispute settlement

Data protection

Cybersecurity
Transparency

Source code
Data flows
treatment

Spam
Agreement Signed In force
Egypt AA 2001 2004 ◐ ◐
Algeria AA 2002 2005 ◐ ● ◐ ◐
Chile AA 2002 2003 ◐ ◐ ◐ ◐ ●
Bosnia and Herzegovina 2008 2008 ◐ ◐ ◐
SAA
CARIFORUM EPA 2008 2008 ● ● ● ● ◯ ◯ ◐ ◐ ◯ ◐ ◯
Côte d’Ivoire EPA 2008 2016 ◐
Papua New Guinea and 2009 2009 ◯ ◐ ◐
Fiji IPA
Cameroon EPA 2009 2013 ● ◯ ◐ ◯
South Korea FTA 2010 2011 X ● ● ● ◯ ◯ ◯ ◐ ◯ ◐
Central America EU FTA 2012 2013 X ● ● ● ● ◯ ◯ ◐ ◯ ◐ ◯
Colombia Peru FTA 2012/2014 2013 X ● ● ● ◐ ◯ ◯ ◐ ◯ ◯ ◐ ◯
Moldova AA 2014 2014 X ● ● ● ◯ ◯ ◐ ◯ ◯ ◐
Georgia AA 2014 2016 X ● ● ● ◯ ◯ ◐ ◯ ◐
Ukraine AA 2014 2017 X ● ● ● ◯ ◯ ◐ ◯ ◐
Ghana EPA 2016 2016 ◐ ◐
Canada CETA 2016 2017 X ● ● ● ◯ ◯ ◯ ◯ ◐ ◯ ◐ ◯
(provisionally)
Armenia CEPA 2017 2018 X ● ● ● ◯ ◯ ◯ ◯ ◐ ◯ ◐
Japan EPA 2018 2019 X ◯ ◐ ● ● ◯ ◯ ● ◯ ◐ ◐ ● ◐ ● ◐
Singapore FTA 2018 2019 X ● ● ● ◯ ◯ ◯ ◐ ◐ ◯ ◐ ◯
Mexico (update) 2018 not yet X ● ● ● ◐ ◐ ◐ ◐ ● ◯ ● ◐ ◯
ratifFIed
Vietnam FTA 2019 2020 X ● ● ● ◯ ◯ ◐ ◐ ◯ ◐ ◯
MERCOSUR AA 2019 not yet X ◯ ● ● ◯ ● ◐ ◐ ◐ ◐ ◯
ratified
UK TCA 2020 2021 X ● ● ● ◯ ● ● ● ●
New Zealand FTA 2023 not yet X ● ● ● ◐ ● ◐ ◐ ● ● ◯ ● ● ◯
(negotiations ratified
concluded)

● binding commitments
◐ mixed commitments
◯ non-binding commitments

▲ Note: Agreements under negotiation are subject to change, some TAPED categories were combined for presentation
purposes (digital trade facilitation and intellectual property)
▲ Source: Author’s compilation of data adapted from Trade Agreements Provisions on Electronic-commerce and Data
(TAPED)

14 • Jacques Delors Institute • Policy Paper

I WTO NEGOTIATIONS AND EMERGING MODELS FOR COOPERATION

The European Union is actively participating in the World Trade Organization’s

Joint Initiative on E-commerce, which began in 2017 and now involves over 87 WTO
members. The initiative focuses on six key themes, including enabling electronic
commerce, openness and electronic commerce, trust and digital trade, cross-cut-
ting issues, telecommunications, and market access.33 These subjects overlap
significantly with the objectives the EU has pursued bilaterally. Most notably, the
EU negotiation position emphasizes securing improved market access for goods
and services, consumer benefits, fair competition within the telecommunications
sector, and an extension of the moratorium on customs duties on electronic trans-
missions.34 While a plurilateral or multilateral outcome would be desirable to avoid
duplication and achieve common global standards across a large number of coun-
tries, it remains questionable at this point if the e-commerce negotiations at the
WTO can be successfully concluded, particularly due to significant differences in
preferences on data governance among some major participants, which may prove
to be insurmountable obstacles.35

Perhaps as a fallback option, the EU has therefore recently started to conclude

stand-alone ‘digital partnerships’ with Japan (May 2022), South Korea (November
2022) and Singapore (December 2022), which may serve as a template for coo-
peration on digital issues with other countries. The digital partnership model is
emerging as a distinct approach to digital trade compared to the commitments
seen in traditional EU trade agreements. It covers a range of substantive issue
areas, including privacy, cybersecurity, and data governance. It also includes spe-
cific digital trade issues, such as paperless trading, electronic invoicing, digital
identities, and online consumer protection.36 Notably, the agreements emphasize
is the EU’s conditional safeguards approach to data flows, which differs from the
more laissez-faire approach of the US and the restrictive Chinese model.37 The
digital partnerships also establish coordination mechanisms with partner coun-
tries on issues such as semiconductors, 5G networks, high performance computing,
quantum technology, artificial intelligence, digital connectivity, and distributed
ledger technologies. Crucially, however, the commitments in these partnerships are
on a soft-law basis and are non-binding for signatories. Instead, they are intended as
process-driven, with meetings at the ministerial level, known as ‘Digital Partnership
Councils’. Notably, within the European Commission, DG CONNECT is responsible
for these partnerships, rather than DG TRADE, which is traditionally in charge of
goods and services trade negotiations. While their non-binding nature may pro-
vide greater flexibility, it raises an existential question for the digital trade agenda,
which was born precisely to include digital regulations in trade regimes, which have
a greater degree of enforceability than most other international agreements.38

Still, as tensions continue to rise between China and other global powers, discus-
sions surrounding technology and trade are also taking center stage in other new
international fora that the EU engages in. For example, the EU-US Trade and Tech-
nology Council (TTC), which was established in June 2021, has largely focused on
issues such as semiconductor supply chains, AI regulation, investment screening,
and export controls. However, discussions also include topics on the digital trade

33 WTO, 2023, Joint Initiative on E-commerce

34 European Parliament, 2022, WTO e-commerce negotiations
35 Borderlex, 2023, WTO e-commerce plurilateral: what negotiators need to work out in 2023
36 European Commission, 2022, Japan-EU Digital Partnership
37 World Bank, 2021, Regulating Personal Data: Data Models and Digital Services Trade
38 Shamel Azmeh, Christopher Foster, Jaime Echavarri, The International Trade Regime and the Quest
for Free Digital Trade, International Studies Review, Volume 22, Issue 3, September 2020, pp.
671–692

15 • Jacques Delors Institute • Policy Paper

agenda, such as cybersecurity data and platform governance. Moreover, similar to
the Digital Partnership model, the TTC model could proliferate in the future. For
example, in April 2022 the EU established a second TTC, with India, which includes
discussions around strategic technologies, digital governance, and digital connec-
tivity.39

I COMPARING THE EU’S DIGITAL TRADE ARRANGEMENTS WITH THE US AND CHINA

The EU therefore has an extensive network of 24 trade agreements with provi-

sions for digital trade, 15 of which feature dedicated chapters for such issues,
along with additional regulatory cooperation arrangements with five other coun-
tries. How does this compare to the digital trade engagement of the EU’s main
competitors, the US and China?

According to the TAPED database, the United States has entered into 15 trade
agreements that contain digital trade chapters and are currently in force.40 These
agreements include RTAs with Singapore (2003), Chile (2004), Australia (2004),
Morocco (2004), CAFTA and the Dominican Republic (2004), Bahrain (2004),
Oman (2006), Peru (2006), Colombia (2006), Panama (2006), South Korea (2007),
the Trans-Pacific Partnership (2016), the United States-Mexico-Canada Agreement
(2018), and Japan (2019). However, comprehensive data flow provisions with bin-
ding prohibitions on data localization have only been included in the agreements
signed after the TPP, from which the US notably withdrew in 2017. Additionally, the
Biden administration has put the negotiations of new trade agreements on hold and
its reluctance to grant market access to the US for domestic political reasons raises
uncertainty about the data and privacy component in the more recent Indo-Pacific
Economic Framework, which includes a number of partner countries.

China has also entered into several trade agreements that contain digital trade
chapters: South Korea (2015), Australia (2015), the Eurasian Economic Union
(2018), Singapore (2019), Mauritius (2019, Cambodia (2020), the Regional Compre-
hensive Economic Partnership or RCEP (2020), and New Zealand (2021). China’s
agreements particularly feature provisions on prohibition customs duties on elec-
tronic transmissions, electronic signatures, and digital trade facilitation, as well
as consumer protection and cybersecurity measures. However, for now China’s
only agreement with enforceable data localization restrictions is RCEP, which also
include significant national security exceptions.

In summary, the EU has currently a greater number of trade agreements that

cover digital trade than either the United States or China. Furthermore, the EU
has established new templates for cooperating on digital trade with partner coun-
tries through digital partnerships and trade and cooperation councils, which can be
quickly scaled to other partner countries. The US, however, has been slow to engage
in meaningful trade agreements, while China’s agreements appear to favor a model
with wide-ranging exemptions that call into question their enforceability.

39 European Commission, 2023, EU-India: new Trade and Technology Council to lead on digital trans-
formation, green technologies and trade
40 Mira Burri, 2023, A Dataset on Digital Trade Provisions

16 • Jacques Delors Institute • Policy Paper

 Conclusions

This analysis demonstrates that the European Union is a prominent player in the
export and import of digital services and at the forefront of regulating digital
trade with international partners. It also highlights that discussions surrounding
technology leadership often neglect the fact that, in the context of the digital
transformation of the economy, it is necessary to expand our definition of the tech-
nology sector and take into account the role of other digitally deliverable services
when designing digital trade policies and market access strategies. These firms are
increasingly dependent on cross-border digital infrastructure and data flows.

In line with this, the European Commission’s 2030 Digital Compass Communication,
which serves as a strategic medium-term framework for the EU’s digital transforma-
tion, calls for the formation of digital partnerships with like-minded partners. The EU
can leverage its extensive network of trade agreements and cooperation arrange-
ments, which already have substantial coverage of digital trade issues, to maintain
a competitive advantage over its main rivals in the digital economy. The data on
digitally deliverable services exports presented in this paper suggest that the EU
should also adopt an offensive approach to promote its interests abroad, while
continuing to uphold the European model for the digital economy, which priori-
tizes consumer rights and other public policy objectives. The Commission should
moreover review, after a period of experimentation, whether binding or non-binding
pathways of cooperation are more effective in promoting European interests and
values.

Finally, the analysis highlights that there is still a lack of sufficient data to fully
understand the cross-border digital economy. In light of this, the EU should support
and expand support for the OECD, UNCTAD, and WTO’s work on measuring the digital
economy, including databases such as WTO TiSMoS and BaTiS, and to consistently
update them with time series data for extra-EU-27 trade to help policymaking in a
post-Brexit EU. Future European legislation could also mandate reporting requi-
rements for firms to improve the measurement of digital trade and support better
policies to address the challenges of the digital transformation.

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