The Importance of Cross-Border Regulatory Cooperation in an Era of Digital Trade

Abstract Technology is transforming global trade. The global trading system, however, has struggled to keep up with changes in technology. One of the major challenges for the trading system is that the issues raised by digitally enabled commerce are largely regulatory in nature. The issues that are at the forefront of digital trade increasingly relate to citizens’ most fundamental interactions, including speech, finance, energy, and transportation. This paper argues that resolving these international regulatory issues will require reforming the approach that has been taken to global trade negotiations. International discussions around the most challenging issues in the digital economy ought to move away from the ‘horse-trading’ nature of traditional trade negotiations and towards a strategy focused on regulatory cooperation. Failure to achieve regulatory cooperation could further fragment digital services based upon national borders. The Internet has the potential to positively impact the global economy precisely because it is global, decentralized, and bottom-up in nature. International policymaking through regulatory cooperation can maintain those principles, while protecting fundamental national concerns such as stability, privacy, and security.