Can Cybersecurity Be a Unifying Factor in Digital Trade Negotiations?

Amidst the global debates and disputes over digital trade policies such as data privacy, cross-border data flows, and e-customs duties, there is one area where progress is being made: cybersecurity. While consensus on many key digital trade issues remains elusive, the advancement of cybersecurity policies stands out as a bright spot in the landscape of international trade negotiations.

The tension surrounding digital trade policy was initially ignited by the European Union’s General Data Protection Regulation (GDPR), which set stringent data protection standards. The conflict over secure data flows between the EU and the US further exacerbated the digital trade rift. The concerns over data transfer across borders escalated as the GDPR’s adequacy requirements created obstacles for US-EU collaboration.

Apart from data policies, negotiations at the OECD and WTO on digital taxes and customs duties also garnered attention. However, a significant shift occurred when the US Trade Representative unexpectedly withdrew support for critical issues related to cross-border data flows, data localization, and source code review in the Joint Statement Initiative on eCommerce at the WTO. This move surprised many stakeholders and led to calls for a reversal of the decision from US industry groups and trading partners.

While disputes over data-related issues continue, cybersecurity has emerged as a less controversial aspect of digital trade policy. Policymakers recognize the importance of cybersecurity in fostering trust in the digital economy and fostering international cooperation. Efforts to harmonize regulations and standards across borders are crucial to avoiding trade barriers and ensuring a secure digital environment.

A recent report by the Coalition to Reduce Cyber Risk highlights the inclusion of cybersecurity provisions in free trade agreements (FTAs) as a positive trend. The report examines the evolution of cybersecurity clauses in trade agreements since 2018, noting a growing emphasis on building government capacities, addressing security incidents, and aligning with international standards. Ambitious agreements like the Singapore-UK Digital Economy Agreement are setting new benchmarks by establishing mutual recognition of security standards for Internet of Things devices.

Looking ahead, there are opportunities for further advancement in digital trade policy. Ongoing negotiations within the World Trade Organization and potential trade talks between the US and Taiwan present avenues for progress. Emulating successful digital trade commitments made by countries like the UK, Singapore, and Australia could help the US enhance its digital trade agenda. Adopting measures like mutual recognition of IoT security standards and coordinated vulnerability disclosure requirements for critical infrastructure would position the US as a leader in cybersecurity.

Despite challenges in areas like data flows and customs duties, there is potential for continued growth in digital trade policy. The United States Trade Representative has a crucial role to play in seizing opportunities for further collaboration and development in cybersecurity and digital trade. By prioritizing cybersecurity measures and aligning with global standards, countries can collectively enhance the security and sustainability of the digital economy.

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