The impact of the digital revolution on international trade has only just begun. Digital commerce is creating significant new opportunities for U.S. businesses of all sizes and sectors – not just for companies traditionally referred to as “internet companies.” As a result, U.S. companies and the workers they employ are able to reach millions of new customers overseas more easily, profitably, and faster than ever before. As a first step, Singapore companies can participate in the following digitization initiatives. These are geared towards modules in AEDs that will help extend their benefits to their businesses and cross-border transactions when AEDs come into effect. Electronic invoicing is the automated creation, exchange and processing of payment requests between suppliers and buyers in a structured digital format. AEDs enable interoperability of e-invoicing systems between countries, so that an e-invoice created in Singapore can be accepted directly by another country`s e-invoicing system. Businesses can benefit from shorter invoice processing time and potentially faster payment, which translates into significant cost savings because they don`t have to create and track physical invoices. However, given these important opportunities for U.S. workers and businesses, the prospects for their ability to continue to penetrate foreign markets are uncertain.
Unfortunately, many countries around the world have erected barriers to digital trade, and these barriers are multiplying. Mercantilist policies aimed at limiting the flow of data, forcing data localization, preventing foreign companies from seizing market opportunities, and in some cases targeting U.S. companies threaten to create new barriers for U.S. exporters. If left unchecked, this trend threatens to deprive American workers and businesses of the potential benefits of digital trade. At the end of 2020, digital trade facilitation received a major boost through the creation of the Regional Comprehensive Economic Partnership (RCEP), which is currently the world`s largest regional economic bloc, accounting for nearly 30% of global GDP. E-commerce is highlighted as one of the main priorities of Chapter 12 of the Trade Pact, which targets electronic authentication and signatures, paperless trade facilitation, online consumer protection and the protection of personal data on the Internet. The severity of distance varies from sector to sector, with trade in services generally less sensitive to the severity of distance than trade in goods. As PWC experts noted, “sectors that tend to be sold as part of goods – or integrated – such as construction and repair services, are weighed down by gravity. At the other end of the spectrum, the UK`s cultural exports such as music and performing arts, fashion, film and television are examples of services exports that have strong global appeal, not just in geographically close markets.
The latter category of trade in services (music, television, etc.) is characterized not only by a lower distance dependency, but also by a high degree of digitization. As digitalization continues to increase in services such as finance, education, health, the severity of the distance is likely to be further undermined. Most U.S. small business exporters are manufacturers or other exporters of goods, but digital trade also offers huge opportunities for U.S. service companies. Another study on the EU assessed the importance of distance for e-commerce. This study of 721 regions in five European Union countries shows that while distance in e-commerce is not “dead”, there is evidence that express delivery reduces distance for cross-border demand. More importantly, however, the resilience of digital/e-commerce to the distance factor was clearly demonstrated during the pandemic when, in the context of increasing distance (actually due to restrictions associated with the pandemic), the share of e-commerce in retail sales increased significantly in all countries in 2020. To illustrate the magnitude of digital barriers to trade, the European Centre for International Political Economy published a few years ago its Digital Trade Restriction Index (DTRI), which “measures how 64 countries around the world are restricting digital trade”.
The index “shows that many leading economies are significantly restricting digital commerce. These restrictions drive up costs for businesses and consumers. The AEDs aim to build on Singapore`s extensive network of free trade agreements and other digital cooperation initiatives. They also complement Singapore`s leadership in the World Trade Organization (WTO) as co-organizer (with Australia and Japan) of the Joint Statement Initiative on Electronic Commerce (JSI). It also includes commitments to share best practices to promote and develop new logistics technologies, such as deliveries. B of the last mile and the use of drones and lockers to deliver and collect purchases. The digital products approach maintains the obligations set out in previous agreements on the moratorium on the application of tariffs to electronic commerce. It also adds a cryptography standard that prohibits countries from requesting keys or access codes when importing encrypted products.
These results, which are superior to official statistics, suggest that digital trade is already helping to increase U.S. small business exports and create jobs. The Chamber`s study found that the stimulation of digital trade for small exporting companies is particularly pronounced in the following three areas: This agreement is a great opportunity for Latin American and Caribbean countries. By joining DEPA, they benefit from rules that represent the new generation of digital free trade agreements that will define the world of tomorrow. AEDs establish common frameworks and rules for digital commerce that make it easier for Singaporean companies to connect with their overseas partners. The ultimate goals of AEDs are to reduce operating costs, increase business efficiency, and create more transparent and easier access to foreign markets. DePA is clearly not the end of the digital journey, but an excellent starting point for the development of multilateral rules around the digital economy. The Chamber report noted that the digital commerce revolution for U.S. small exporting businesses is still a work in progress. While 92% of small businesses exporting use digital tools, a large majority reported persistent concerns. Small businesses surveyed highlighted the challenge posed by foreign regulations such as data localization requirements, data protection regulations and liability risks, as well as taxes.
However, with further progress on these fronts and new measures to take advantage of digital commerce, small businesses surveyed predicted a 14 percent increase in sales, which would increase U.S. economic output by $81 billion and create 900,000 jobs. Overall, these trends are extremely positive news for the U.S. economy. Millions of high-paying U.S. jobs are already supported by international trade in services, and digital commerce offers exciting prospects for overseas sales growth for companies in these highly competitive U.S. industries. Against this backdrop, the digital commerce revolution offers impressive new opportunities for U.S.
small businesses. New digital technologies have the potential to overcome long-standing barriers for small exporters. Through the interoperability of digital identities and business information, a Singaporean company could register the company overseas or open a new corporate bank account in a DEA partner country through its CorpPass. Cross-border data flows are becoming increasingly important for the growth of the digital economy, as they support e-commerce and other digitally supported activities, such as data analytics and AI. Under the AEDs, the parties agree to allow the free flow of data across borders and to prohibit the location of data, except for legitimate purposes such as the protection of personal data. This allows for an enabling environment in which businesses can do so: perhaps no other sector will benefit more from digital trade than small U.S. exporting companies. While small and medium-sized businesses in the U.S. generate about two-thirds of all new U.S. businesses…