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Digital Trade

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Describes what digital trade is and how Belgium scores regarding its position on digital trade restrictions.

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Digital Trade

  1. 1. Digital Trade and Belgium FLANDERS INVESTMENT & TRADE Erik van der Marel Senior Economist at ECIPE Univesité Libre de Bruxelles (ULB) - Solvay Brussels School
  2. 2. Concept • Fiscal restrictions • Investment in digital sectors* • Digital services • Digital-intense services (and goods) • Role of “data” in the economy • E-commerce (online transactions)
  3. 3. Wider digital economy and policies (BE) • ECIPE’s Digital Trade Restrictiveness Index Chapters Chapters (cont’d) (1) Tariff and Trade defence (8) Data policies (see above) (2) Taxation & Subsidies (9) Intermediary liability (3) Public procurement (10) Content access (4) Foreign investment (11) Quantitative Trade Restrictions (5) Intellectual Property Rights (IPRs) (11) Standards (6) Competition policy (13) Online sales & transactions (7) Business mobility
  4. 4. Wider digital economy and policies (BE) 0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 CHN RUS IND IDN VNM BRA TUR ARG FRA THA MYS PAK DEU ECU KOR NGA ZAF MEX ROU BRN ESP USA TWN GRC ITA HUN AUS SVK CAN CHE FIN PHL BEL POL DNK LTU EUR PRY COL SWE BGR ISR HRV GBR AUT PRT CZE CYP SVN JPN EST LUX LVA NLD MLT CHL SGP PER CRI PAN HKG IRL NOR ISL NZL Digital Trade Restrictiveness Index (DTRI) Index Average
  5. 5. Wider digital economy and policies (BE) • Belgium is relatively more restricted in: • Investment restrictions in digital sectors, competition policy regarding telecom sector, some taxation issues.
  6. 6. Wider digital economy and policies (BE) • Investment • There is a legal requirement for the state to retain a 50% plus one share stake in Proximus (Belgacom incumbent) • The European Commission has raised concerns on the independence of the telecom regulator, the Belgian Institute for Postal Services and Telecommunications (BIPT).
  7. 7. Wider digital economy and policies (BE) • Competition • The privatization of the Belgian telecom market began in 1998 and Belgacom (the incumbent) still owns access to the last mile. • By 2012, the Belgian government owned 53.51% of Belgacom Group or commercially known as Proximus, the incumbent.
  8. 8. Wider digital economy and policies (BE) • Taxation • Relates to B2C suppliers of telecommunications, broadcasting and electronically supplied services. All supplies of telecommunications, broadcasting and electronic services will be taxable at the place where the customer belongs • Copyright levies
  9. 9. Digital services (future) • Digital services or digital-enabled services • The role of “data”
  10. 10. Services over the internet 0 1 2 3 4 5 6 7 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Indexgrowthrate Growth of goods, services and ICT services flows Goods Total services Digital services
  11. 11. Services trade over the internet
  12. 12. The role of data in globalization • Contribution of data to GDP > goods (McKinsey) • Particularly great role in Artificial Intelligence (Goldfarb and Trefler, 2018)
  13. 13. Data-intensity (US Census) 5.9 4.6 3.4 3.0 2.3 1.6 1.4 1.2 0.9 0.9 0.7 0.5 0.4 0.3 0.3 0.1 0.1 0.0 0246Telecom C om puter Inform ation Financial Insurance Intellectualproperty O thertransport Sea transport Audiovisual& related Airtransport R &D Professional& m anag Postal& courier Personal,cultural& recr. Tech.,trade-rel.& other M aintenance & repair C onstructionTravel Data-intensity Cap (over labour)
  14. 14. Data-intense services (Mode 3 / Mode 1; gross terms) Source: Andrenelli et al (2018); using analytical AMNE database.
  15. 15. What “trade” policies are problematic? Internet com services Cloud-based data processing Digital content E-commerce IoT Data measures Data protection and privacy x x x x x Data localization x x x x Cybersecurity measures Disclosing source codes x x x x Restrictions on cryptography x x x x x Censorship x IPR measures Intermediate liability x x x Anciliary copyrights x x x USITC (2017)
  16. 16. All “data” policies0 .2.4.6.8 C H NR U STU RFR AID NVN MD EUKO RBR NM YSD N KLTU FIN ITAIN DG BRPAKH U NESPTH AR O UPO LSW EM EXSG PC H EC ANAU SEU RN G AG R CC O LPR TPERN ZLM LTAU TZAFLVALU X IR LESTEC USVK ISLBELSVN ISRAR GPR YH KGC ZEU SABR AC YPBG RN O RN LDTW NPH LH R VJPNC R IC H LPAN
  17. 17. Are data policies harmful? • Yes, they lower productivity and lower services trade • Productivity losses are high – role of ideas in technology
  18. 18. Data policy index and exports in GDP ARG AUS AUT BEL BGR BRA CAN CHE CHL CHN COL CRI CYP CZE DEU DNK ECU ESP EST FIN FRAGBR GRCHKG HRV HUN IDN IND IRL ISL ISR ITA JPN KOR LTU LVA LUX MEX MLT MYS NGA NLD NOR NZLPAK PAN PERPHL POL PRT PRY ROU RUS SGP SVK SVN SWE THA TUR USA VNM ZAF 02468 0 .2 .4 .6 .8 1 Data policy index (2015)
  19. 19. Conclusions • Digital trade is more than just Alibaba • Many services today (Belgian’s CA) are coming data-intense • And more and more trade over the internet • Belgium can trade and is more ready than policy predicts • Able to capitalize much more than it currently does!

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