The digitalisation of the economy requires new ways of thinking about competition, intellectual property, taxation, industrial policy, privacy, cyber security, the labour market, immigration, skills, investment and, of course, trade.

Digital economy^[1] is understood as that part of economic output derived primarily from digital technologies with a business model based on digital goods and services. The main components of the digital economy include fundamental innovations (semiconductors, processors), core technologies (computers, electronic devices) and enabling infrastructures (the internet and telecoms networks), digital and information technology (e.g. digital platforms, mobile applications and payment services). The digital economy encompasses online platforms (e.g. Google, Facebook and Amazon), platform-enabled services (e.g. Uber and Airbnb), trade in electronic transmissions (e.g. online delivery of software, music, e-books, films and video game) and mobile technology and applications including mobile payment services.

The wheels of international trade are powered by the internet. From the smallest informal trade to a major supply agreement, contracts are transacted online; whether via email, e-commerce store, or digital platform. Any formal trade relies on the internet for implementation – financing, documentation and logistics are all digitally driven, and becoming more and more so. Whether it is an emailed order, an online purchase, or merely the financial arrangements behind the transaction, the internet will inevitably be used in conducting international trade.

Digitisation has contributed to a changing trade environment in many ways – facilitating multinational value chains, enabling the rise of the micro-multinational and giving us new tradeable goods and services. It is also blurring the traditional boundaries between goods and services, blurring the boundaries between jurisdictions and bringing into question the way our legal and regulatory infrastructure operates at national, regional and global levels. Digital permeates every aspect of trade – from agriculture to clothing, from manufactured goods to business services.

^[1] There are no universally agreed definitions of digital economy, digital trade and e-commerce. These terms, though distinct, are often used inter-changeably on the same issues. This booklet will refer to commonly used definitions of these terms.

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