The purpose of this report is to unpack the Digital Agenda of the Pacific Alliance (“PA”) in tangible and concrete top priorities. It seeks to help the PA learn best practices from other countries and organizations. It makes proposals and action plans that are doable through regulation and will have an immediate and practical impact on the people and businesses in the region. This document will be presented during the Digital Trade Group’s meeting in May 2018 for discussion.
The document sets up a list of top priorities in developing the Digital Agenda. It conducts comparative studies and looks closely at regional organizations like APEC, BRIC, EU, and MERCOSUR, as well as international institutions like the International Trade Center (“ITC”), World Bank, WTO, etc. In addition, successful precedents and best practices are drawn from countries like China, Finland, the United States, and other leading predecessors in the development of a digital economy. The priorities are categorized under Low-Hanging Fruit and High Reaching objectives. Low-Hanging Fruit identify measures that (i) are easily achievable through regulation, (ii) are concrete, and (iii) have immediate effects. High Reaching priorities, on the other hand, are longer-term measures that usually require investment in infrastructure and logistics systems. Nevertheless, they are necessary for the sustained development of a digital economy.
The list below summarizes the Low-Hanging Fruit and the key actions to be taken by the PA under each of them.
Custom Duties (De Minimis): De Minimis is a fixed price level, below which there is minimum clearance procedure and no custom duties for imported goods. The PA may first establish a uniform internal higher de minimis level to facilitate intra-PA trade. Then PA members may decide next steps based on the impact assessment of a higher de minimis level. Options include raising the general de minimis level applicable to more countries and setting different de minimis levels for custom duties and GSTs.
Harmonization of Digital Trade Rules in Transparency: Harmonization of rules makes PA’s policy objectives unambiguously clear and leaves room for national regulatory preferences. The proposal recommends making soft commitments among the PA members. Alternatively, the PA may shift towards binding regional preferential trade agreements by filling the gap of CPTTP and making legislative, regulatory, and administrative policies readily available to the public.
E-Government: E-Government means providing public services to all citizens and businesses digitally and granting interconnection of public databases. The proposal recommends establishing common principles on e-government to improve government capacity, enhance SME competitiveness, and attract investors.
Regional Trade Promotion Organizations (“TPOs”): TPOs streamline resources, maximize industry efforts, and keep governments informed of the needs and aspirations of the private sector. The proposal recommends synergizing trade promotion and increasing private sector participation through regional TPOs. The TPOs should operate to improve SME competitiveness, reinforce knowledge sharing, and standardize production and certification processes.
Digital Finance: Peer to Peer (“P2P”) Lending is particularly beneficial to PA’s small companies that view availability of digital finance, including online P2P working capital loans, as their biggest challenge to develop e-commerce. The proposal recommends engaging in dialogues to locate the specific challenges for both companies and P2P platforms, promulgating operation guidelines and principles for P2P platforms, promoting cooperation between P2P platforms and traditional financial institutions, and educating the public on the advantages and the risks of P2P Lending.
Cross-Border Data Flow: The availability of non-personal data and its free flow are fundamental to increasing transparency and reducing costs for SMEs. The proposal recommends implementing the principles reflected in the International Open Data Charter to ensure availability of data.
Prevent Geo-Blocking: Preventing discrimination based on consumers’ geographical locations have many benefits. It allows consumers equal access to goods and services, increase SMEs’ profits, and facilitates the free flow of online payment. The proposal recommends evaluating the impact of geo-blocking on PA’s businesses and consumers and committing to the prevention of such discrimination to offset its negative impact.
Cross-Border Online Payment: 30% of PA’s companies find online payments to be an obstacle for cross-border online sales. The proposal recommends engaging in dialogues to identify the specific obstacles, encouraging the development of a uniform online payment system for PA sellers and buyers, and informing PA businesses about cross-border online payment systems and the opportunities to facilitate foreign transactions.
Electronic Data Exchange System: Electronic systems for filing, transferring, processing, and exchanging customs information is important to manage information flow and streamline customs processes. The proposal recommends developing an electronic system to allow frictionless processing and exchange of customs information, establishing a committee and an executing agency to work closely with the PA governments, and constantly increasing the technical capability of the system.
The four High-Reaching priorities offer a preview of the longer-term considerations in PA’s sustainable development of its Digital Agenda.
Data Protection Systems: The need to ensure data security is more acute today due to the increase of cross-border data flow. The proposal recommends evaluating the need to develop a data protection system at the national level, choosing between a self-executing and a non-self-executing data protection system, and designating authorities to oversee its implementation.
Electronic Single Window: Coordination among the PA members’ Single Window systems help increase intra-PA trade. The proposal recommends enhancing information-sharing and implementing a Regional Single Window in long term.
Training & Education: Companies and citizens need to be aware of and be able to use the available tools to benefit from the Digital Agenda. The proposal recommends promoting alliances between public and private sectors and developing education plans and training programs.
Trade Logistics Infrastructure: The long-term development of a Digital Agenda needs adequate infrastructure support. The proposal recommends promoting public-private alliances to improve infrastructure, establishing consistent regional policies, and improving weak dimensions based on supply chain performance evaluation.
To read and download the full memo, please visit here.