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Services & digital trade

Digital trade & the digital economy

Digital trade is not just about buying and selling goods and services online, it is also the transmission of information and data across borders. It relies on the use of digital technologies to facilitate trade and improve productivity, for example through simplified customs procedures. While flows of information and data may not always be for profit, they are essential enablers of digital trade.

The digital economy more broadly creates opportunities for SMEs and encourages innovation in their products and services, access to market intelligence, talent, financing and increasing competitiveness in local and global markets.

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Why is digital trade important to Australia?

Digital trade is an increasingly important way for Australia to trade with the rest of the world, and opens up exciting opportunities for Australian businesses and consumers. It provides more opportunities for Australian businesses to reach more customers across the globe as well as further grow our economy.

Data flows are intrinsic to trade in virtual goods and services. According to the Export Council of Australia, Australia's digital exports were worth around $6 billion in 2017, equivalent to Australia's fourth largest export sector and this figure is set to grow. Data flows increasingly enable our other goods and services exports, and the movement of finance, people and ideas: virtually every cross-border transaction has a digital element. Australian investors send huge volumes of data internationally in their daily operations. Domestically, data flows drive productivity improvements as traditional sectors adopt digital technologies.

Around half of Australian businesses are already engaged in the digital economy in some way, and this number is anticipated to grow further in the future. The 2018 Australian International Business Survey found that 44 per cent of respondents reported using e-commerce for selling purposes, 43 per cent of which said they relied “entirely” or “to a great extent” on these channels for export sales. 34 per cent of respondents also expressed their intention to increase both their use of digital or mobile technology, as well as of online channels in their international business activities in order to secure more export sales in the next year.

Some of the significant issues cited by businesses as creating barriers to selling goods and services online include:

  • regulatory barriers and compliance issues
  • tariffs, quotas and import duties
  • data localisation issues
  • online payment issues
  • data protection issues / fraud/ cyber crime
  • restrictions on transferring information/data

What is DFAT doing to reduce barriers for Australian businesses in digital trade?

The Australian Government participates in global rule-making to shape and support an open digital economy. Governments have an important role to play in helping businesses (including small and medium enterprises) make the most of the digital economy while ensuring appropriate consumer and privacy protections.

DFAT and Austrade are working with countries around the world to ensure Australian businesses and consumers benefit from the immense opportunities that e-commerce and digital trade offer.

As outlined in Australia’s Foreign Policy White Paper and International Cyber Engagement Strategy, we advocate strongly for a rules-based and open global trading environment that supports the digitalisation of trade, builds trust and confidence in the online environment, and reduces barriers to digital trade.

In addition to negotiating rules to govern digital trade in the World Trade Organisation and through Free Trade Agreements and the Australia-Singapore Digital Economy Agreement , we also pursue these issues in the Asia-Pacific Economic Cooperation (APEC), the G20 and the OECD.

Multilateral discussions and e-commerce negotiations

Australia and other countries are increasingly working together on digital trade via groups such as the G20, World Trade Organisation (WTO), Asia-Pacific Economic Cooperation (APEC) and the Organisation for Economic Development (OECD).

WTO E-commerce negotiations

On 25 January 2019, in the margins of the World Economic Forum in Davos, Australia joined 75 other WTO Members in launching negotiations on trade-related aspects of electronic commerce [PDF], representing 90 per cent of global trade. Australia is chairing the process with co-convenors Japan and Singapore, and all WTO Members are encouraged to participate in the initiative.

From our stakeholder consultations on e-commerce to date, we know there is interest in facilitating digital trade and electronic transactions (such as paperless trading and e-signatures), ensuring consumer protection (including rules to deal with spam and protecting personal information and privacy), and prohibiting restrictions on data flows, including the requirement to store data in a particular location. Another priority is making permanent a WTO moratorium on imposing customs duties on electronic transmissions, as this would encourage even more digital trade.

We are always interested in hearing from you – business, NGOs, civil society, academia and individuals – on your experience and views on digital trade, to make sure we are addressing the right issues in these negotiations and that they will benefit Australian stakeholders.

Please send submissions to digitaltrade@dfat.gov.au

Other multilateral initiatives

There is currently a WTO moratorium on imposing customs duties on electronic transmissions in place until the 12th WTO Ministerial Conference in June 2020. As mentioned above, Australia is one of the countries that would like to see this moratorium made permanent.

Australia negotiated and implemented the WTO's Information Technology Agreement, which cuts tariffs on IT products to reduce costs for businesses and consumers. In December 2015, some participating members, including Australia, agreed to update the agreement and expand the coverage to cover additional goods. The expansion of the ITA was the first major tariff-cutting deal at the WTO since the original ITA. The ITA has been one of the most effective mechanisms in reducing duties on IT products thereby making IT inputs cheaper for business and consumers.

Australia also played a pivotal role in negotiating the WTO's Trade Facilitation Agreement, which entered into force for all WTO members on 22 February 2017. This agreement promotes simpler, more harmonious international trade procedures, including online submission and payment systems for customs documents. The TFA commits parties to reducing red tape and the burden of administrative costs associated with exporting and importing, including an endeavour to establish or maintain a ‘single window’. A single window is a facility that allows businesses to lodge documents required to satisfy export, import and transit-related regulatory requirements through a single entry point. The Australian Government is committed to establishing a single window for export documentation to make it easier for Australian businesses to enter overseas markets.

Our region has enormous potential for further digital trade growth. DFAT will continue taking part in multilateral, regional and bilateral e-commerce discussions to maximise the benefits for Australian businesses and consumers.

E-commerce chapters in Australia’s Free Trade Agreements (FTAs)

Australia has e-commerce chapters in 14 of its 16 concluded FTAs:

As part of the Australian Government’s commitment to keep its FTAs up-to-date and relevant for business, digital trade provisions will continue to be an important part of the FTAs that DFAT negotiates. Australia’s FTAs also support tariff reduction on technological inputs for businesses and consumers alongside rules that benefit investors in digital businesses.

The table below outlines some of the key objectives Australia pursues in its trade agreements to enable digital trade. These objectives are general, may change in specific negotiations, and are negotiated on the basis that we are able to accommodate our policy sensitivities, including in regards to health, consumer and privacy protections, and security.

Provision Description of discipline
Transparency Countries should make available to the public any measures related to e-commerce; including online. Also, to the extent possible, provide advance publication and opportunity to comment
Paperless trading Countries should provide for online availability of import and export documentation and electronic submission of those documents
Electronic authentication Countries should not deny a signature on the basis it is in electronic form, and should adopt a flexible approach to authentication technologies
Online consumer protection Countries should provide the same protections for online consumers as they do for any other consumer
Online protection of personal information Countries should adopt or maintain a legal framework to protect the personal information of electronic commerce users from unauthorised disclosure
Unsolicited commercial electronic messages (spam) Countries should adopt or maintain measures to allow consumers to opt out of receiving unwanted commercial messages from various sources (for example, email and SMS) from various sources and to provide that businesses only send such messages with the expressed or inferred consent of the consumer with the source of the messages identified
Customs duties on electronic transmissions Countries should continue the practice of not applying customs duties to electronic transmissions
Domestic regulatory frameworks/ domestic electronic transaction frameworks Countries should adopt or maintain legal frameworks consistent with the principles of the UN Commission on International Trade Law (UNCITRAL) Model law on Electronic Commerce (1996) and the UN Convention on the Use of Electronic Communications in International Contracts (2005)
Localisation of computing facilities Countries should not require businesses operating in their territory to locate computing facilities (including computer servers and storage devices for processing or storing information for commercial use) within the country's borders
Cross-border transfer of information by electronic means Countries should allow cross-border transfers of information by electronic means
Disclosure of source code Countries should not require the transfer of or access to mass-market software source code as a condition for the import, distribution, sale or use of software
Cooperation Governments should cooperate on areas of mutual interest in digital trade including on cyber security matters
Elimination of customs duties on technological products Countries should eliminate customs duties on technological business and consumer products through participation in the Information Technology Agreement, or products covered by that Agreement
Trade facilitation commitments Countries should continue to implement commitments made in the WTO Trade Facilitation Agreement and endeavour to build on those commitments to ensure the efficient movement of goods across borders
Commitments on performance requirements Countries should not require technological transfers as a condition of investment in another country

Joint Standing Committee on Trade and Investment Growth report ‘Trade and the digital economy’

The Joint Standing Committee on Trade and Investment Growth launched an inquiry into the trade system and the digital economy, considering the following:

  • the responsiveness of Australia’s trade architecture and regulatory system to the contemporary needs of the digital economy and disruptive technology; and
  • measures to improve the cyber resilience of Australia’s trade-focused business sector.

DFAT submission to the Inquiry into the trade system and the digital economy

The Joint Standing Committee on Trade and Investment Growth report on its inquiry into the trade system and the digital economy was tabled in Parliament on 20 September 2018. The report included 11 recommendations, including that the Australian Government investigate ways to assist Australian small and medium-sized enterprises to improve their cyber security awareness and resilience levels.

Trade and the digital economy Report — Tabled 20 September 2018

The Government’s response to the report on the trade system and the digital economy by the Joint Standing Committee on Trade and Investment Growth was tabled on 28 November 2019. The Government supports the direction of all the recommendations.

Australian Government response to the Joint Standing Committee on Trade and Investment Growth report: Trade and the Digital Economy

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