Digital Restrictions, Digital Trade Agreements and Bilateral Trade: Structural Gravity Evidence in the Era of Economic Security

Security concerns now lead many governments to restrict cross-border flows of data and digital services, while a growing number of trade agreements commit selected partners to open rules on data and e-commerce. We examine whether digital restrictions reduce international trade, whether their effect varies with the political alignment between partners, and how the trade effect of agreements with digital chapters differs across regulatory regimes. Our panel combines the OECD Digital Services Trade Restrictiveness Index (Digital STRI) with bilateral and within-country flows from the 2025 release of the OECD Trade in Value Added (TiVA) database for 64 economies over the period 2014–2022 (36,864 observations). We estimate a structural gravity model using PPML with exporter-by-year, importer-by-year and country-pair effects, using home sales to identify policies that apply equally to all partners. The composite index has no detectable average effect, and political distance based on UN voting does not alter it. Intellectual property restrictions, however, do matter: for partners without an agreement, a one-standard-deviation increase is associated with about 10% less international trade; a smaller association for payment restrictions (about 5%) does not survive the Holm adjustment and is unstable under the bias corrections. The trade effect of agreements with digital chapters rises with the importer’s restrictiveness, from about −6% for the most open importers to +17% at the 90th percentile, or to about +10% when only foreign partners are compared. The gradient remains positive under both jackknife bias corrections and is robust to agreement-level inference and to the exclusion of each major agreement. Event-study and staggered-adoption estimates confirm it but show that trade between future partners was already rising before agreements took effect. The estimates therefore describe how agreement effects differ across regulatory regimes; they do not show that agreements causally shield trade from tightening restrictions.