G7 countries agree to a set of five digital trade principles to make digital and telecommunications markets more competitive, transparent and fair

The question

How will G7 countries work together to create an environment conducive to digital trade, whilst also taking into account the concerns of various stakeholders?

The key takeaway

On 22 October 2021, at the G7 Trade Track, trade ministers from the G7 countries (the UK, Canada, France, Germany, Italy, Japan, the US, and the EU) agreed to a set of digital trade principles covering open digital markets, the free flow of data, safeguards for workers, consumers, and businesses, and digital trading systems.

The background

The agreement builds on a G7 Technology and Ministerial Declaration published in April 2021 which set out six ways in which governments could intervene in the digital economy to help create a more ‘sustainable’ and ‘values driven’ digital eco-system. The agreed upon five digital trade principles are also virtually identical to those published by the UK government on 20 September 2021 in its ‘five-point plan’ for digital trade, highlighting the strong consensus between countries on this issue.

The development

The following five core digital trade principles were agreed by the G7 trade ministers:

1. Open digital markets, including a joint statement by the G7 trade ministers in support of open digital markets and in opposition to digital protectionism. Ministers also endorsed a permanent prohibition on customs duties applied to cross-border electronic transmissions, in accordance with the WTO Moratorium on Customs Duties on Electronic Transmissions;
   
   
2. Data free flow with trust, including explicit references to trade ministers’ concerns about data localisation requirements being used for protectionist/discriminatory purposes and or to undermine democratic values. The text also emphasizes how inter-governmental cooperation and commonalities in regulatory approaches can help better secure the personal data of consumers by ensuring that data protection standards are consistently high across all G7 countries.
   
   
3. Safeguards for workers, consumers, and businesses, including calls for measures to support labour and consumer protection, enhance cybersecurity, and implement more effective and balanced intellectual property frameworks. There is also a specific statement that businesses should not be required or coerced by governments to transfer technology or provide access to source code or encryption keys as a condition of market access.
   
   
4. Digital trading systems, with the justification that the digitisation of trade related documents will decrease bureaucratic and administrative hurdles to cross-border trade. Ministers have also suggested that single trade windows should be developed to streamline stakeholder interactions with border agencies.
   
   
5. Fair and inclusive global governance, including a call for common rules on digital trade to be agreed that comply with principles already set out by the WTO, and to tackle the digital divides between and within countries.

Why is this important?

Digital trade encompasses all digitally enabled transactions of trade in goods and services. Thus, all business, but especially large tech companies could be impacted by the G7 governments’ adoption of these principles. Tech giants, therefore, should brace themselves for change across their entire business, from the way in which they hire workers to their interactions with government entities when engaging in cross-border trade.

Any practical tips?

Tech companies at the forefront of digital trade may wish to align their business functions with these core principles so that they can better cooperate with governments and consumers in the future when it comes to the introduction of any legislation.