The promise of TradeTechPolicy approaches to harness trade digitalizationAbout the World Economic ForumThe World Economic Forum is the international organization for publicprivate cooperation. The Forum engages the foremost political, business, cultural and other leaders of society to shape global, regional and industry agendas. About the World Trade OrganizationThe World Trade Organization (WTO) is the international body dealing with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible, with a level playing field for all its members. Acknowledgements This publication is the result of a joint effort of the World Economic Forum and the WTO. The lead drafters and coordinators were Ziyang Fan and Jimena Sotelo of the Forum and Kian Cassehgari Posada and Emmanuelle Ganne of the WTO. A full list of the contributors and reviewers can be found at the end. The publication was edited and reviewed by Ross McRae of the WTO. Disclaimer This publication has been prepared under the World Economic Forum and the WTO Secretariats own responsibilities and without prejudice to the position of the Forum and WTO members and to their rights and obligations under the Forum and the WTO. The designations employed in this publication and the presentation of material therein do not imply the expression of any opinion whatsoever on the part of the Forum and the WTO concerning the legal status of any country, area or territory or of its authorities, or concerning the delimitation of its frontiers. CONTENTSForeword p. 03Executive summary p. 04Introduction p. 081 Global data transmission and liability frameworksp. 162 Global legal recognition of electronic transactions and documentsp. 283 Global digital identity of persons and objects p. 404 Global interoperability of data models for trade documents and platformsp. 48Trade rules5 Global trade rules access and computational law p. 52Conclusion p. 58Annex: Examples of provisions on digital identity that could be included in trade agreementsp. 60 Bibliography p. 62List of contributors and reviewers p. 64Abbreviations p. 66 FOREWORDTechnology has always propelled trade. From the invention of the steam engine and steamship in the 1700s, the popularization of the standard shipping container in the 1950s, and the rise of the internet in the 1990s, technology has over the centuries profoundly changed the way we trade. Today, emerging technologies and digitalization are changing trade at a speed much faster than before leading to both opportunities and challenges. The COVID-19 pandemic has shown that digital trade and commerce has become a staple for survival for small and medium-sized enterprises all over the world, while the application of autonomous technologies from robotics to artificial intelligence have contributed to the operation of ports and warehouses with minimal staffing during lockdowns. According to a World Economic Forum business survey, the adoption of TradeTech the set of technologies that enables global trade to become more efficient, inclusive and sustainable has helped to ease supply chain bottlenecks across different industries.As TradeTech adoption is moving fast and is largely driven by the private sector, there is an urgent need for trade policymaking to keep pace. For trade to work for all, TradeTech adoption must happen in the most efficient and inclusive manner across the globe and for all members of society. The benefits of TradeTech on efficiency and sustainability are highly promising. However, uneven deployment due to regulatory fragmentation could result in unintended consequences of unequal growth, threats to cybersecurity and a growing trend in techno-nationalism.Leveraging technologies for trade requires more than technological innovation. The major challenge might actually be international policy coordination and coherence. The right ecosystem needs to be in place to drive global adoption and scalability. Trade agreements can play a key role in this regard. Recent trade agreements and plurilateral initiatives have started to explore the interplay between technology and trade. Yet, further input and analysis are needed on issues such as electronic transferable records, automated contracts, digital tokens, the interoperability of data models, and the digital identity of legal and physical persons and of physical and digital goods. This joint World Economic Forum and WTO publication aims to shed light in this area, providing public, private and civil societys inputs on the building blocks for TradeTech policy adoption: the 5 Gs of TradeTech. This publication builds on the “Trade for Tomorrow” call to action put forward by both organizations last year, to bring trade to a new speed for all.Brge BrendePresident, World Economic ForumNgozi Okonjo-IwealaDirector-General, World Trade Organization 03EXECUTIVE SUMMARY The promise of TradeTech the set of technologies that enables global trade to become more efficient, inclusive and sustainable is multifaceted, from trade facilitation to efficiency gains and reduced costs, to greater transparency and resilience of supply chains. Of particular interest for this publication is the potential of artificial intelligence (AI), blockchain and distributed ledger technology (DLT) and the internet of things (IoT) to shape the global trade ecosystem. Although the technological innovation exists, the major challenge to the global adoption of TradeTech will be building international policy coordination. Here, trade agreements can play a key role. Trade agreements are generally technology neutral, and many existing trade rules apply to digital trade. Yet, developing explicit rules will be needed to provide further legal certainty as to how they apply in the digital field. Trade rules can: prevent a fragmented technological environment by encouraging international regulatory cooperation and by promoting regulatory harmonization and coherence; prevent governments from introducing discriminatory measures favouring local providers or measures that are unnecessarily trade restrictive; ensure transparency of regulatory requirements and procedures; enhance market access; facilitate foreign direct investment, such as investments in information and communications technology (ICT) to fortify TradeTech adoption.Since 2010, regional trade agreements (RTAs) have increasingly integrated e-commerce and digital trade provisions. Recent RTAs, such as the United StatesMexicoCanada Agreement, cover a wider range of e-commerce issues than previously, including a chapter on e-commerce and digital trade. Governments have introduced digital-only trade agreements, such as the SingaporeAustralia Digital Economy Agreement (SADEA) and the Digital Economy Partnership Agreement (DEPA) between Chile, New Zealand and Singapore, which address a wide range of digital trade issues. Furthermore, more than 85 WTO members also participate in the Joint Initiative on E-commerce. Despite these ongoing efforts, there remain many unseized opportunities and unexplored policies. According to public and private-sector experts, five building blocks (referred to in this publication as the 5 Gs of TradeTech) play a critical role in supporting trade digitalization and wide-scale adoption of TradeTech: Global data transmission and liability frameworks Global legal recognition of electronic transactions and documents Global digital identity of persons and objects Global interoperability of data models for trade documents and platforms Global trade rules access and computational lawAlthough some of the 5 Gs are commonly covered by trade agreements, unseized opportunities remain in connectivity, data sharing and e-signatures. Other 5 Gs are either not discussed in trade agreements or only in a few recent agreements, and include electronic transferable records, automated contracts, digital tokens, interoperability of data models, and digital identity of legal and physical persons and of physical and digital goods. These new policy frontiers can help to bring trade to a new speed, and work for all. 1 | GLOBAL DATA TRANSMISSION AND LIABILITY FRAMEWORKSEnd-to-end trade digitalization requires global access to reliable, affordable and fast connections as well as a legal framework enabling data transmission across borders in a trusted manner.Advanced technologies such as AI, blockchain and DLT and IoT require the development of ICT infrastructure and wireless technologies to enable continuous connectivity. In addition to access THE PROMISE OF TRADETECH POLICY APPROACHES TO HARNESS TRADE DIGITALIZATION04to digital infrastructure, information, which can be personal, sensitive or confidential, needs to flow across borders while preserving the rights of individuals (e.g. privacy), companies (e.g. business confidential information) and governmental entities (e.g. data requests for law enforcement or regulatory purposes). However, multiple challenges need to be addressed to allow the development of a global data transmission ecosystem, including closing the digital divide, promoting international standards and mutual recognition schemes relating to cybersecurity, addressing regulatory fragmentation, and clarifying or adapting liability frameworks. Closing the digital divide in terms of access, bandwidth and skills is more urgent than ever. International cooperation should also continue to foster regulatory convergence by promoting international standards and mutual recognition schemes relating to cybersecurity. The regulatory fragmentation across the world and sometimes even across different agencies within the same territory on how the content of data is regulated also limits the cross-border exchange of information for trade purposes. Similarly, private-sector practices by some entities to lock in data hinder the flow of information within and across borders. Lastly, given the complexity of advanced technologies and the multiplicity of stakeholders involved in their ecosystem, tracing back specific harmful actions to specific human input or to decisions in the design will be extremely difficult for an end-user without the (expensive) assistance of legal and technical experts. Large-scale TradeTech adoption will require liability frameworks to be clarified or adapted or new frameworks to be developed.Trade agreements have contributed to the far-reaching changes of the telecommunications market, both hardware and software, since 2010. Multilateral, plurilateral and regional efforts highlighted in this publication should be further pursued by governments to foster global connectivity for all. These efforts include, inter alia, market access commitments in telecommunications services, adoption of the WTOs Information Technology Agreement (ITA), and integration of the net neutrality principle in domestic telecommunications regulation. The WTOs Technical Barriers to Trade (TBT) Agreement also promotes global regulatory coherence (via sharing and discussion of international standards at the pre-implementation stage) and global regulatory cooperation (via good regulatory practices, equivalence and mutual recognition) with respect to cybersecurity rules on equipment, infrastructure, and software-enabled and network-connected goods. Trade agreements can also play a key role in fostering regulatory convergence and interoperability, and in facilitating the exchange of information and good practices in areas such as privacy, law enforcement and regulatory oversight, competition and data-sharing mechanisms. Trade agreements could be leveraged to promote regulatory convergence and international regulatory cooperation and to foster interoperability of mechanisms, thus enabling the cross-border exchange of information while preserving the rights of individuals, companies and governmental entities. International cooperation should also facilitate the exchange of information among governments for law enforcement and regulatory oversight purposes as well as among companies for competition and innovation purposes. Trade negotiators could leverage the political momentum created by the negotiation of trade agreements to move on reforming mutual legal assistance treaties with a view to maintaining trust and timely access to remedies across borders. Similarly, trade agreements could encourage governments to exchange best practices on data-sharing mechanisms to mitigate market distortions arising from abuses of market dominance in digital markets, such as data services lock-ins.2 | GLOBAL LEGAL RECOGNITION OF ELECTRONIC TRANSACTIONS AND DOCUMENTS End-to-end trade digitalization requires a legal framework supporting the cross-border legal recognition of electronic trade documents and transactions. The large number of documents involved in international trade places a heavy burden on businesses seeking to trade internationally, in particular micro, small and medium-sized enterprises (MSMEs). Due to burdensome documentary processes, it can take days to transfer and process trade documents and payments. TradeTech offers new opportunities to facilitate trade processes and automate trade transactions to increase efficiency and operational cost savings while enhancing the security and integrity of information. For governments, transaction and document digitalization can also contribute to better revenue collection. However, the cross-border use ExEcutivE summary 05of electronic transactions and documents is limited. Some governments have not yet recognized the legal validity and enforceability of electronic means when used in trade transactions. Those who have recognized them do not necessarily share mutually recognized criteria. Governments could leverage trade agreements to support the global recognition of electronic transactions and documents (i.e. e-signatures and trust services, electronic transferable records, e-contracts) and to coordinate regulatory approaches on new emerging issues such as tokenization and smart contracts to avoid regulatory fragmentation. International standards and guidelines, such as the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Electronic Transferable Records (MLETR), provide a useful basis upon which governments can work towards regulatory convergence. Systematically including a commitment to support these international frameworks in trade agreements would go a long way in facilitating the digitalization of trade. The sooner governments coordinate their regulatory approaches with respect to new TradeTech applications, such as tokenization or smart contracts based on autonomous systems, the less likely these national regulatory approaches will result in regulatory fragmentation. Governments should recognize that global regulatory alignment is one step towards the cross-border use of e-signatures and trust services and, more generally, of electronic documents and transactions. 3 | GLOBA