Digitalizartion of World Trade: Scope, Forms, Implications

The authors undertake an in-depth analysis of how process of digitalization, namely, wide-scale introduction of powerful information and communication technologies, affects and redefines the international trade. It is pointed out that, according to fresh UN and WTO data, the scope of transborder deliveries within the segment of e-commerce is expanding at a noticeably faster pace than the traditional global trade. The increasing application of ICT-technologies significantly accelerates export and import transactions. This allows to significantly expand the range of participants in cross-border turnover of goods and services. Moreover, it makes possible to involve into this turnover the resources that had been traditionally considered as internationally non-tradable. Thus, new comparative advantages of trading nations are formed. Global trading platforms based on sophisticated Internet solutions have become particularly important due their convenience for involved parties. The sectoral composition of e-commerce is of special interest. Available statistics shows that B2B transactions noticeably prevail over B2C globally and in the leading trading nations. The only important exception from this general trend is presented by China, most possibly thanks to its huge 1.5 billion consumers’ domestic market. In addition to the many positive effects, the digitalization of trade poses a number of conceptual and practical problems. Concerning the theory, there are growing doubts in the analytical appropriateness of the gravity model that had been traditionally applied for explaining and predicting the geographical distribution of international trade flows. Within the modern global economy with its close digital connectivity and powerful transportation-logistic networks the trades can interact in the almost real-time mode. Respectively, the importance of geographical proximity factor seems to be fading away. In terms of practicalities, an major negative implication of digitalization is that it creates additional preconditions for the monopolization of trade exchange between countries by a handful of Big-tech companies. At last, the fundamental issues of regulating this new area of international cooperation need to be resolved. The governmental policies and rules should be adjusted to the ongoing digital transformations. First of all, this relates to the taxation of e-commerce. The temporary moratorium on imposition of import tariffs was adopted by WTO member-states in 1998 and extended in 2017. In the conditions of a virtual burst of B2B and B2C trade such an approach is increasingly disputed by developing countries. The issue needs to be resolved on a consensus basis. The adoption of recently proposed of Agreement on digital products and other services (ADPOS) may give the WTO a chance to revitalize its role in the global economy.