WTO digital trade agreement aims to modernise global commerce

The UK and 90 other countries have reached the first ever global digital trade agreement, after five years of negotiations at the World Trade Organization (WTO), which aims to facilitate cross-border electronic transactions and reduce barriers to digital trade.

Known as the E-Commerce Agreement, the deal sets global ground rules on digital trade for WTO members, committing countries to digitising their customs processes and systems so that physical documents will no longer be required at border entry points.

The signatories to the agreement have also committed to recognising e-documents and e-signatures, which is expected to save time and reduce costs for businesses by eliminating the need for physical signatures or the physical exchange of documents.

The agreement also includes provisions to improve trust in the digital trade environment by strengthening consumer protection online, facilitate closer international collaboration on cyber security risks, and provide technical support and capacity building to developing countries.

It will also permanently ban customs duties on digital content and electronic transmissions among the signatories.

According to a UK government analysis, the adoption of digital trading systems could increase the UK’s GDP by between £2.7bn and £24.2bn, based on GDP figures for 2023.

“We are proud to play our part in securing the first ever global digital trade agreement, cutting costs for business and delivering on this government’s ambition to deliver economic growth,” said business and trade secretary Jonathan Reynolds.

“Global digital trade is already estimated by the OECD [Organisation for Economic Co-operation and Development] to be worth around £4tn and counting, but no common set of global rules exist. This is a huge step forward in correcting that and ensuring British businesses feel the benefit.”

The UK government in particular highlighted the benefits of the agreement to financial services providers, noting that doing business in any of the participating countries would require fewer paper documents and time-consuming manual authentication processes.

Given the rapid pace of technological development, the agreement will be periodically reviewed to keep it up to date and relevant. Further deliberations on issues including international data flows and intellectual property of software or encryption technology will take place in a further phase of the negotiations.

Chris Southworth, the secretary general at International Chambers of Commerce (ICC) UK, described the agreement as “a major breakthrough” for international digital trade. “It creates the environment we need to drive innovation as we transition away from archaic paper-based processes and into the modern world of data and technology,” he said.

This is good news for business, consumers and the economy

“It is an opportunity to accelerate efforts to digitalise our borders and global supply chains, and help to remove unnecessary friction and costs that prevent SMEs from trading. This is good news for business, consumers and the economy.”

WTO partners will now work to incorporate the agreement into the WTO legal framework, after which countries will look to ratify the agreement.

Valdis Dombrovskis, executive vice-president and commissioner for trade at the European Commission, said that once the rules are integrated into the WTO framework, they will be fundamental for the development of global digital trade by helping to set a common ground and avoid fragmentation.

“This agreement will benefit businesses and consumers, contribute to integrating developing and least developed countries in the global digital economy, and help bridge the digital divide,” he said. “The EU sees great value in the agreement published today, and will work with all involved parties towards its incorporation into the WTO framework. We call on all WTO members to do the same.”

The agreement follows the UK passage of the Electronic Trade Document Act in July 2023, which accords digital trade documents the same legal status as physical ones.