China Willing to Join Digital Economy Partnership Agreement

As per a report1 in ‘The Business Times’ published from Singapore, China has applied to join Digital Economy Partnership Agreement (DEPA)2 to strengthen international cooperation on digital regulation. Singapore, Chile, and New Zealand have acceded to this agreement, with Singapore leading the way. The report says that Canada has also expressed an interest to join it. 

The DEPA is a first of its kind agreement that establishes new approaches and collaborations in digital trade issues, promotes interoperability between different regimes and addresses the contemporary issues brought about by digitalisation. It is a first of its kind agreement representing a new form of economic engagement and trade in the digital era. 

China’s interest in joining DEPA has proved that China is trying to get a backdoor entry to CPP-11, the countries that acceded to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)3. In September, China had submitted a formal letter to join the CPTPP, a trade treaty that Washington once pushed to exclude Beijing. Donald Trump had pulled the US out of the deal in 2017, but it concluded successfully in 2018 with 11 signatories that have a combined economic value worth about 13 per cent of global gross domestic product.

Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore and Vietnam are members of CPP-11. The United Kingdom also had filed a formal accession request4 to the CPTPP. 

In a virtual speech during the Group of 20 Leaders’ Summit in Rome, President Xi Jinping said that China attaches great importance to International Cooperation on the digital economy. He called on countries to discuss and develop international rules for digital governance and settle a non-discriminatory environment for digital development. 

After the announcement, the Chinese commerce ministry sent a formal application to New Zealand, the depositary of the DEPA. However, it is unclear what China’s planned application to DEPA would mean for the US.

According to its proponents, DEPA will facilitate seamless end-to-end digital trade, enable trusted data flows, build trust in digital systems and promote opportunities for participation in the Digital Economy. Key features of the agreement are as follows: 

  1. Digital Identities: Develop safe and secure digital identities that are mutually recognised. 
  2. Paperless Trade: Reduce time for document transit and cargo clearance, resulting in lower operating costs.
  3. E-invoicing: shorter invoice processing time, faster payment and cost savings when similar e-invoicing standards are adopted.
  4. FinTech and E-Payments: Promote cooperation among companies in the FinTech sector and develop FinTech solutions for businesses. 
  5. Personal Data Protection: Develop mechanisms to protect personal data transferred across borders, based on international frameworks.
  6. Cross-border Data Flows: Businesses can transfer information across borders and serve their customers, regardless of where they are located.  
  7. Open Government Data: Expand access to and use open government data to generate new business opportunities, especially SMEs. 
  8. Data Innovation and Regulatory Sandboxes: Facilitate the development of new products and services by promoting data-driven innovation across borders. 
  9. Artificial Intelligence: Promotes the adoption of ethical AI governance frameworks, which factor in principles the countries have agreed to harness AI responsibly. 
  10. Online Consumer Protection: Adopt or maintain laws and regulations that guard against fraudulent, misleading or deceptive conduct that causes harm to consumers engaged in online commercial activities. 
  11. SMEs Cooperation: Capacity building efforts such as a Digital SME Dialogue to promote information sharing and exchange. 
  12. Digital Inclusivity: Remove barriers to the digital economy and promote digital inclusion and participation. 

China has previously proposed rules designed to prevent foreign governments from acquiring data stored locally, part of its attempts to set global standards for the digital sphere.

At the same time, the US has also intensified its effort to restrict Chinese companies access to the private data of Americans, which could reshape the global economy for decades to come.