OCTOBER 04, 2024

By Neeraj Prasad, IRS (C&IT)

THE European Union (EU) and Singapore has recently concluded a Digital Trade Agreement (DTA). The new agreement seeks to improve cross-border digital trade, & enhance cooperation in the digital economy, setting a global benchmark for future digital agreements.

A digital trade agreement facilitates and regulates trade in the digital economy by addressing issues related to the cross-border flow of data, e-commerce, and the use of digital technologies in trade, creating a more predictable and open environment for digital transactions.

Digital trade refers to commerce enabled by electronic means by telecommunications and/or ICT services and covers trade in both goods and services. It affects all sectors of the economy and is highly important for European industry. Digital technologies increasingly enable trade. For example:

- banks rely heavily on the international transfer of data;

- agricultural commodity traders use e-signatures to conclude international purchases;

- manufacturers, freight operators and logistics enterprises can track and improve the performance of their machines and vehicles around the world thanks to electronic data transfers, and;

- everyday items increasingly combine sensors and internet-enabled applications, large datasets, and high-performance computing capabilities ('Internet of Things').

The growing importance of digital trade is reflected in the EU's trade policy communication, An Open, Sustainable and Assertive Trade Policy, published in 2021.The increasing importance the EU attaches to digital trade is reflected in its bilateral trade agreements. The EU's approach to digital trade in its free trade agreements has gradually been adapted to respond to this growing strategic priority. Recent EU trade agreements contain a self-standing chapter on digital trade. The digital trade chapter contains several binding provisions on a wide range of issues, including the following:

- banning customs duties on electronic transmissions (this does not forbid the imposition of internal taxes);

- promoting electronic contracts, electronic authentication methods and electronic trust services (such as e-signatures, e-seals and time stamps), which are necessary for the validation of online transactions and thus constitute a key enabler for digital trade;

- ensuring online consumer protection, including protection against spam;

- prohibiting unjustified government access to software source code;

- prohibiting unjustified barriers to data flows, including data localisation requirements and protecting privacy, and;

- facilitating regulatory cooperation.

The Digital Trade Agreement (DTA) between EU and Singapore complements the existing EU-Singapore Free Trade and Investment Protection Agreement (EUSFTA). (DTA art. 1.) The DTA extends a prior agreement between the parties on digital trade, the EU-Singapore Digital Partnership, entered into force in 2023 pursuant to the EUSFTA, which includes a set of norms called the Digital Partnership Principles that preliminarily addressed topics later covered by the DTA.

The objective of this agreement are to: -

- unlock new markets;

- make electronic transactions easier;

- promote a safe online environment for consumers;

- create legal certainty for businesses;

- improve access to electronic commerce, and;

- facilitate digital trade.

The EU-Singapore DTA is designed to streamline cross-border data flows, strengthen e-commerce regulations, and ensure data privacy. (Arts. 5, 6.) The parties agree not to require data to be stored or processed only within their own territory, not to ban storing or processing data in the other party's territory, and not to block data from being transferred into their territory. (Art. 5.) They also agree to recognize the legal validity of electronic signatures. (Art. 10). The agreement establishes measures for online customer safety, including requirements for transparency on products and vendors and adopting consumer protection laws and regulations. (Art. 12.)

The DTA encourages;

- digital trade by requiring the exchange information on regulatory issues, facilitating end-user access to the internet, and use of electronic invoices. (Art. 14, para. 2; art. 15; art. 17, para. 1).

- incorporates principles and guidelines developed by relevant international bodies, such as the OECD Guideline Governing the Protection of Privacy and Transborder Flows of Personal Data, to prevent fraudulent activities and ensure data privacy and protection. (Art. 6, para. 1).

- addresses the governance and regulation of online platforms by striving to improve the interoperability of digital trust services and preventing misleading, fraudulent and deceptive commercial activities. (Art. 12).

Another focus of the DTA is cooperation in AI, including developing governance frameworks and enhancing interoperability, with potential future agreements formalizing mutual recognition arrangements. (Art. 14, para. 1) In the financial sector, the agreement promotes collaboration on digital finance, such as online banking and online payment systems, to harness opportunities and manage associated risks. For example, the DTA aims to make cross-border electronic payments more secure and accessible by encouraging financial services to use open platforms and to share their technology to make it easier for different systems to work together. (Art. 21, para. 2.b.) Support for small and medium-sized enterprises is emphasized, with initiatives geared toward facilitating their participation in digital trade through the exchange of information on best practices in leveraging digital tools and new technology. (Art. 24, para. 3.) Additionally, the agreement promotes education and inclusion by encouraging accessible digital education and sharing best practices and content. (Art. 25 paras. 1, 2.a.) Regarding the standards and requirements set by the Digital Services Act of the EU and the Digital Service Standards of Singapore, the DTA calls for mutual recognition to ensure compatibility and interoperability across digital platforms. (Art. 23.) It also emphasizes enhancing information exchange and collaboration on cybersecurity, aiming to foster transparency in these efforts. (Art. 22.)

So, what is there in it for us? The following excerpt from the book THROUGH THE LOOKING GLASS by LEWIS CARROL would sum it all; …said the Queen." Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run twice as fast as that "

Its all about enhancing our productivity and thus competitiveness!!

[The views expressed are strictly personal.]