BEIJING, March 13, 2023 /PRNewswire/ — A news report from China Report ASEAN:
The Central Economic Work Conference in December 2022 introduced a series of measures to promote economic growth including working actively for China’s accession to the Digital Economy Partnership Agreement (DEPA) and other high-standard economic and trade agreements.
What is DEPA? What is the significance of China’s accession to the agreement?
Let’s start with the digital economy. "The digital economy is the main economic form after the agricultural and industrial economies," declared the 14th Five-Year Plan for Digital Economy Development. "It refers to a broad range of economic activities that include using digitized information and knowledge as the key factor of production, modern information networks as an important activity space, and the effective use of information and communication technology (ICT) as an important driver of productivity growth and economic structural optimization."
The digital economy of the future is not a branch of the economy, but the economy itself. The digital economy will replace the two former pillars of agricultural and industrial economies and become the main economic form of the future.
Therefore, countries around the world consider development of the digital economy extremely important and are actively participating in the formulation of digital economy rules. Against this backdrop, in January 2021, Singapore, New Zealand, and Chile signed DEPA, the world’s first digital-only trade agreement.
Unique DEPA
DEPA contains five important factors of modern digital economy governance, namely, convenience, freedom, trust, inclusiveness, and innovation.
To promote digital trade facilitation, DEPA seeks to eliminate trade barriers in the digital economy and facilitate seamless end-to-end digital trade through paperless trade, domestic electronic transaction framework, electronic payment, and other rules. To promote digital trade liberalization, DEPA further advances the opening of the digital product market in terms of tariffs, non-discriminatory treatment of digital products, and commitments on technology products that use cryptography. To build a trust system for digital systems, DEPA established unified digital rules and standards to promote interoperability between the digital systems in member states, which aims to achieve trusted data flow, maintain network security, and protect online consumer rights. To achieve the inclusive development of the digital economy and bridge the "digital divide," DEPA advocates for more opportunities for socially vulnerable groups and small and medium-sized enterprises to participate in the digital economy, and encourages individuals and enterprises to benefit more equally from the digital economy. To explore innovation-driven development in the digital economy, DEPA focuses on digital technology and data innovation such as fin-tech, artificial intelligence, and government data openness to help its members carry out innovative cooperation in emerging areas.
Why has an agreement with only three member states attracted so much attention? Generally speaking, DEPA is unique in the following four aspects:
First, DEPA is a digital-only trade agreement. Unlike other regional trade agreements (RTAs), all the provisions in this agreement focus on the digital economy, while other RTAs only touch on the digital economy in certain provisions.
Second, DEPA’s superiority is constantly being up to date. DEPA includes a large number of frontier and innovative provisions to promote important exploration and cooperation in emerging areas of the digital economy. The content of this agreement will be adjusted and updated with the emergence of new technologies and challenges. Modifying procedures will ensure DEPA becomes a "living agreement."
Third, DEPA is highly flexible. DEPA has an open modular structure that allows members to choose from the menu. Members do not have to agree to all the contents of DEPA and can join selective modules that align with their own interests.
Fourth, DEPA has enormous potential for expansion. Since it came into effect, DEPA has attracted widespread attention due to its potential to develop into a large-scale digital economy agreement with constant expansion. Alongside China, South Korea and Canada have also formally applied to join DEPA. More economies are expected to participate in the future. The expanded DEPA will play a greater role in global digital economic cooperation.
Why Did China Apply?
On November 1, 2021, China officially applied to join DEPA. China made the application not only to promote openness and mutually beneficial cooperation in the digital economy, but also to participate in global digital economy governance more actively.
China remains committed to the fundamental national policy of opening-up. China will continue to pursue high-level opening-up and steadily expand institutional opening-up with regard to rules, regulations, management, and standards. As the world’s second largest digital economy, China is accelerating its digital development and building a "Digital China." China’s application to join DEPA and active promotion of the process demonstrate its willingness to align with high-standard international digital rules and expand international cooperation in the digital economy. It’s an important step to pursue high-level opening-up. China hopes that its accession to DEPA will further open the digital trade sector, establish an integrated digital trade market with similar rules and compatible standards with other members, expand mutually beneficial cooperation with other countries in emerging digital sectors, and bring enterprises business opportunities for digital industry cooperation.
Furthermore, existing problems related to the cross-border data flow, cyber security, and digital divide transcend traditional boundaries of global economic governance and demand urgent action to build and improve the global digital governance system. DEPA has already surpassed the "American model" and "European model" of digital economic governance in three aspects: more focus on the inclusive development of the digital economy, more focus on cooperation in emerging technologies, and more focus on diversified and coordinated regulatory governance.
In general, DEPA embodies the principle of "Digital for Good," which is more in line with China’s national conditions and expectations and international consensus on digital economy governance. Therefore, China’s application to join DEPA is an important measure to actively participate in global digital economy governance, which will help China adapt to the new requirements of the digital economy era and improve its governance of the digital economy.
Positive Impact
Joining DEPA will exert a positive impact on China’s economic development in multiple areas:
It will help to improve China’s digital economy governance system. DEPA embodies the latest requirements of modern digital economy governance. By meeting the standards of the DEPA digital economy rules, China will accelerate the opening of its digital products market, strengthen the government’s digital governance capacity, improve the rules of the data factor market, create a standardized and orderly policy environment, and improve the governance system for the digital economy to further unleash the vitality of the digital economy.
It is conducive to promoting construction and upgrading of China’s digital value chain. (1) DEPA encourages cross-border partners to share business information and business data and supports data openness and innovation among governments and enterprises. Data is the key factor of production in the digital economy era. It is not only "oil," but also "sunshine." DEPA’s data innovation utilization rules will release more valuable data, thus providing more factor input for the development of the digital value chain. (2) DEPA proposes connectivity in the electronic contract system, invoice system, and payment system to improve the interoperability among members. It also widely adopts paperless trade, electronic documents, and single windows to facilitate digital trade and significantly reduce trade costs of cross-border digital production networks. (3) DEPA is committed to improving the digital transformation capacity of small and medium-sized enterprises and encourages enterprises to carry out industrial cooperation and talent exchange in cutting-edge areas such as digital identity, fin-tech, and artificial intelligence, which will effectively improve the technological capabilities of digital enterprises. Therefore, joining DEPA will promote the construction and upgrading of China’s digital value chain through expansion of factor input, reduction of trade costs, and improvement of enterprise capabilities.
The deal is conducive to developing cooperation on global digital economy governance. Without biased rules of national values, DEPA is more in line with the trends of the times for the development of the digital economy and aligns with China’s policy positions.
Furthermore, China can contribute wisdom and solutions to improve global digital governance with its significant advantages in industry, technology, and market accumulated during its long-term practice of digital economy. China’s successful accession to DEPA will add a lot to DEPA’s "magnitude." It will help DEPA become the model for Asia-Pacific digital economic and trade rules and even global digital economic and trade rules, which will create a win-win situation for both China and DEPA members.