(The article was published in Print Review No. 62 (July 2021)).

The Fourth Industrial Revolution has had a far-reaching and powerful impact on a global scale, posing major challenges to all economies, and also the trade sector. Thanks to digital technology, trade in goods and services in all modalities has taken place more rapidly and conveniently, expanding beyond national borders. Trade based on digital technology or digital trade, has become an inevitable trend of the future. Countries around the world have been currently developing their strategies and policies in line with the trends and impacts of the digital era, including digital trade. For Viet Nam, leveraging opportunities and overcoming challenges arising from the digital era will make contributions to implementing the guideline of active, proactive, extensive, intensive and comprehensive international integration set out in the Document of the 13th Party Congress. Using the above approach, the author will delve into some fundamental issues of digital trade and propose some policy recommendations for Viet Nam in digital trade management.

Keywords: Trade policy; The Fourth Industrial Revolution; Digital platform; E-commerce; Digital trade.

1. Digital trade: An overview

Digital trade is not a new concept while considering its connotation. Commercial transactions conducted with the support of digital technology have taken place for years. However, in recent years, with the development of information technology and digital transformation trends, the scale and quantity of commercial transactions and the emergence of new commercial business models related to digital technology have been changing how businesses and people perceive digital trade. Besides other modes of trade, digital trade has grown rapidly, gaining increasing attention regionally and globally.

When referring to the concept of digital trade, it is necessary to define the term ‘e-commerce’, which is commonly used today. It means ‘the conduct of part or the entire process of commercial activity by electronic means.’ Literally, e-commerce is the purchase and sale of products or services by the Internet and electronic means. E-commerce covers different activities including transactions, purchases, payments, orders, advertising, and delivery at home and abroad.

So far, no concept of digital trade has been officially recognized, but some organizations that study this area share the view that digital trade includes trade in goods and services offered in the digital environment or traditionally provided together with the support of digital technology. Most generally, ‘Digital commerce is the transfer of data, products, or services by electronic means, usually the Internet’ (Emily Benson, 2019). Digital trade plays a crucial role in e-commerce by facilitating the buying, selling, and servicing of physical goods and services. As such, e-commerce and digital trade are closely related to each other, but people, depending on different purposes, tend to associate these terms with specific activities.

With the rapid development of information technology and information safety and security solutions on the Internet, most of the fundamental processes of commercial activities such as transactions, marketing, advertising, negotiation, contracting, payments and delivery tracking can be finalized quickly and securely via electronic exchanges on the Internet. Digital trade will become the major mode of global trade in the coming time, noting its emergence during the recent Covid-19 pandemic.

Digital trade has three important components including trade in information technology products and services (software, e-books), cross-border e-commerce, and cross-border data flows.

Digital trade is conducted via digital technologies, while products and services are delivered directly to customers or provided via digital platforms. Digital trade covers business-to-business (B2B) and business-to-consumer (B2C) transactions. All transactions are based on data, which is perceived as the ‘lifeblood’ of digital trade.

Digital trade brings various advantages to business activities of enterprises such as reducing transaction costs, optimizing export processes and reaching international customers directly, minimizing investments in traditional stores, the cost of finding and reaching new customers, and attracting customers to visit companies’ websites. In addition, digital trade enables countries to deepen their participation in the global value chain as well as improve market access and opening for goods and services. Enterprises engaging in digital trade also have a competitive advantage and greater business efficiency than those using traditional modes of trade.

2. Some issues raised in state management of digital trade

Currently, many countries around the world are facing challenges in establishing legal and institutional frameworks to regulate digital trade in order to maintain its smooth operation as well as ensure that its opportunities and benefits are harmoniously shared. Specifically:

First, how should international trade rules, established before the emergence of digital trade, be amended to foster trade in the digital era?

Second, traditional trade rules focus on determining whether a product is a commodity or service and the geographic scope of goods and services. However, digital technology and new business models have blurred the distinction between goods, services, and the origin of products. For example, a 3D print is designed in one country, then printed out and delivered in another. So, at the time of consumption, is this a commodity or a service? Will the rules of trade in goods or the rules of trade in services be applied?

Third, how will governments regulate taxes on digital trade transactions? It has been a debatable issue and no consensus has been reached so far. While developed countries have been in favor of imposing no tariffs on digital trade activities, developing countries such as India and South Africa argue that it will lead to tax losses and help developed countries dominate the digital trade market thanks to technological advantages.

Fourth, in terms of data flow, countries seek to protect cyber-security, freedom, and personal security while ensuring the benefits of cross-border data flow.

Fifth, in the field of intellectual property, countries need to protect the intellectual property rights of individuals and companies as well as ensure the monitoring and accountability for infringements of intellectual property rights.

Sixth, it is necessary for countries to regulate the use of the Internet to prevent malicious content (such as defamatory, false information, and culturally infringing content) to protect users and their fundamental rights such as freedom of access to information, encouraging economic growth and scientific and technical progress.

Regarding countries’ efforts to join hands in digital trade regulation, in late 1990, several member countries of the World Trade Organization began discussing rules governing digital trade, but they focused only on e-commerce. However, after the stalemate of the Doha round, WTO countries have adopted different approaches such as group negotiations and bilateral negotiations. In 2013, the United States led a group of 23 countries negotiating the Trade in Services Agreement but later came to a standstill. Since 2019, a group of 86 WTO countries has been negotiating a Joint Initiative on e-commerce, which covers various areas including data transfer, unwanted email (spam), source code, electronic signatures and authentication, online consumer protection, etc.

The United States is at the forefront of setting the rules for digital trade in free trade agreements with countries such as Japan, Canada, Mexico, Australia, Bahrain, Chile, Morocco, Oman, Peru, Singapore, Panama, Colombia, and South Korea. In these agreements, the United States and its partners are committed to applying digital trade rules higher than WTO standards and regulations. Through these agreements, the United States wants to create a legal framework to manage digital trade with partner countries, and also set a precedent and standard for future negotiations on global digital trade rules.

Within the framework of the Association of Southeast Asian Nations (ASEAN), at the 53rd ASEAN Economic Ministers' Meeting in the virtual format in September 2021, Ministers pledged to build a foundation for an ASEAN Digital Economy, including digital trade, towards post-pandemic regional economic growth recovery and the region's competitiveness enhancement in the immediate and long term. The main pillar of this foundation is the ASEAN Digital Economic Framework Agreement (DEFA), which establishes trade rules and facilitates the promotion of synchronous coordination between the digital systems of the two or more economies. The agreement also supports cross-border data flows, protects personal data and consumer rights, and promotes innovation and cooperation in areas such as artificial intelligence.

Within the framework of bilateral cooperation, on June 21, 2021, Viet Nam and Singapore agreed to establish a joint technical working group on Digital Partnerships, examining the potential for negotiating a bilateral digital trade agreement. The initiative was introduced right before Asia - Europe Meeting (ASEM) High-level Policy Dialogue, indicating its importance to the political agenda of both countries. However, due to several objective and subjective causes, especially the differences in the level of development in digital trade and technology, digital standards, and benefits obtained, the agreement’s success depends heavily on how Viet Nam improves its digital trade regime to maximize opportunities offered by this potential agreement.

3. Policy recommendations for Viet Nam

It is recommended that Viet Nam should:

First, upgrade information technology infrastructure and automation in the management and administration of state agencies; strengthen cyber security and safety in accordance with the requirements of the digital economy era.

Second, quickly develop a comprehensive legal framework for digital trade regulation which focuses on a number of principles as follows: (i) Ensuring the transparency of information and access to information; (ii) Ensuring non-discrimination between digital products and traditional goods and services; (iii) Avoiding measures that restrict digital trade, harmonizing the objectives of digital trade management and development; (iv) Ensuring the cross-border free flow of data and taking measures to ensure the accountability of data service providers (e.g. server placement in Viet Nam).

Third, explore and establish a legal framework to regulate tax obligations arising from digital trade activities in order to increase state budget revenues; continue to amend legal provisions in the field of taxation, finance, and banking such as policies to promote cashless payments, stimulating digital trade and controlling the obligations of cross-border digital service providers.

Fourth, proactively formulate a plan to negotiate digital trade agreements with key partners in the region and the world.

Fifth, foster cooperation between the government and enterprises to utilize technology platforms, in order to facilitate state management of businesses’ digital trade.

In addition, it is vital to have plans to disseminate information about digital trade, support human resources training and digital trade solutions development; support the integration of online payment solutions; and improve  state management capacity for digital trade./.

REFERENCES

1. Emily Benson (2019), “E-Commerce vs. Digital Trade”, The Bertelsmann Foundation, Washington DC, The US.
2. Ling Tong (2021), “Vietnam, Singapore begin negotiations on Digital Trade”, The Diplomat.
3. My Phuong (2021), “Development of digital commerce infrastructure: Strategy to restructure market share”, Vietnam News Agency.
4. Central Institute for Economic Management (Ciem) (2019), “Data Revolution: Digital Trade and Opportunities for Vietnam”, Workshop Report, Hanoi.
5. Vu Khue (2021), “Developing domestic trade based on digitalization”, Vneconomy.com (July 5, 2021)