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This is ARTNeT Working Paper No. 168, “International trade, Internet governance and the shaping of the digital economy”, by Neha Mishra.

The interface between trade and Internet governance is one of the most complex policy challenges in the current-day digital economy. This working paper highlights the following observations and findings on the delicate and complex relationship between international trade and the Internet:

• Recent preferential trade agreements (PTAs) such as the Trans-Pacific Partnership Agreement (TPP) and the Japan – Mongolia Economic Partnership Agreement (Japan – Mongolia FTA) contain legal provisions on cybersecurity, data protection, data localisation, consumer protection, net neutrality, spam control, and protection of online intellectual property, intended to facilitate electronic commerce and enable cross-border data flows. However, these provisions will also have a lasting impact on important aspects of Internet regulation. Similar provisions are likely to appear in other ongoing trade deals such as the Trade in Services Agreement (TISA) and the renegotiation of North American Free Trade Agreement (NAFTA).

• International trade law does not contain adequate tools to address all aspects of Internet data flows because: (a) Internet is not just an important platform for trade, but also a site for political, cultural and social engagement – the latter aspects largely relate to the domestic regulatory space of countries and fall outside the scope of international trade law; (b) trade lawyers and policy-makers have insufficient knowledge of the technical and policy aspects of the Internet; and (c) the ideological divide between countries on issues including online censorship and surveillance, cybersecurity and privacy (which deeply impact cross-border data flows) cannot be resolved through international trade agreements. Yet, many issues related to Internet policy are also central to trade in digital economy, and thereby, not entirely avoidable in international trade law.

• Internet openness, security and trust are fundamental to the governance of Internet data flows. Measures designed to enforce Internet security and Internet trust, when implemented in a well-reasoned and proportionate manner, do not act as impediments to Internet openness— to the contrary, these measures play an essential role in facilitating efficient and secure data flows through the Internet. Thus, issues of cybersecurity, privacy and data protection can not only act as barriers to electronic commerce, but also facilitate electronic commerce – this perspective necessitates a reorientation of legal provisions in trade agreements.

• International trade institutions should explore both formal and informal means to engage with the Internet policy community in course of dialogues and/or trade negotiations within the World Trade Organization (WTO) as well as bilateral and plurilateral trade agreements, and in multi stakeholder platforms such as the Internet Governance Forum. Further, international trade tribunals can rely on the technical and policy expertise of the Internet community to resolve certain complex trade disputes in international trade law.

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