Another gold standard in digital trade? DEPA, modules and regionalism

 More on digital trade, economy and agreements.

I had blogged about the "gold standard" DEA between Australia and Singapore in this blog. I seemed to have missed another one - a Digital Economy Partnership Agreement (DEPA) between Chile, New Zealand and Singapore.

The new DEPA text is here. It covers areas that are now familiar in digital trade agreements - data transmission, treatment of digital products, cross border data exchange, e-invoicing.

4 initials comments:

1. Modular approach - As Giridharan Ramasubramanian has brought out in this piece in the East Asia Forum, this agreement has a modular approach that is unique to trade agreements.So there could be a pick and choose between modules - an incrementalism that if often missing in holistic trade agreements.

A modular design is made up of building blocks within a building block, resembling a multi-level complex adaptive system. Traditionally, individual free trade agreements (FTAs) are often seen as incrementally contributing to the complex trade institutional architecture. They are often considered in totality even if only part of the language is incorporated in subsequent agreements. In a modular agreement, each individual module acts as a detachable component that could be used elsewhere.

This modular structure provides countries with more options. They could join the agreement in its entirety. Alternatively, they could incorporate specific modules either within their domestic policy settings or in different trade negotiations. Countries working on digital economy legislation at a national level may find modular templates helpful in drafting their language. Similarly, DEPA has the potential to shape ideas and norms in multilateral processes such as the World Trade Organization (WTO) Joint Statement on Electronic Commerce Initiative with the inclusion of content from specific modules.

2. The real gold standard - Some provisions seem to be more ambitious or go beyond earlier agreements that are considered to be the gold standard. Provisions on digital identities, artificial intelligence and financial technologies are apparently fresh off the block. The earlier piece states:

These modules could also be incorporated into current and future FTAs such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the EU–Japan Economic Partnership Agreement and the United States–Mexico–Canada Agreement. For example, a comparison of the language of DEPA and the electronic commerce chapter of the CPTPP shows that key emerging issues related to digital identities, financial technology and artificial intelligence are missing in the current CPTPP but covered in DEPA. If negotiators of the CPTPP and other living agreements look to the specific modules of DEPA for future inspiration, this will diffuse the content of DEPA at a faster pace, accelerating its influence over international digital rule-making. 

3. Scope of dispute settlement - Module 14 of the DEPA covers dispute settlement. A look at Annex 14-A indicates that some very important provisions are outside the scope of dispute settlement - basically unenforceable through the legal mechanism. 

Annex 14-A states:

Module 14 (Dispute Settlement), including Annex 14-B (Mediation Mechanism) and Annex 14-C (Arbitration Mechanism), shall not apply to: 

(a) Article 3.3 (Non-Discriminatory Treatment of Digital Products); 

(b) Article 3.4 (Information and Communication Technology Products that Use Cryptography); 

(c) Article 4.3 (Cross-Border Transfer of Information by Electronic Means); and 

(d) Article 4.4 (Location of Computing Facilities). 

Those are pretty important provisions to be left out of the dispute settlement framework. May be incrementalism in enforcement of rights too?

 4. Regional tinge - Most of the new trade agreements on digital trade are emanating from the Indo-Pacific region. A new regionalism to digital trade?