The Digital Economic Partnership Agreement: Should Canada Join?

Abstract

With an increasing share of global commerce taking place in digital form or facilitated by digital platforms, it is becoming increasingly important to update the rules-based framework to accommodate and enable the development of the intangibles-based data-driven economy while reconciling the security, privacy and other regulatory issues associated with the flow of data across borders and the application of the new general-purpose technologies of machine learning and artificial intelligence. The development of norms, standards and operational protocols for e-commerce, digital platforms, cloud services and digital products more generally is proceeding apace in various fora, and the most comprehensive template for a trade agreement tailored for the digitally transformed economy is provided by the Digital Economic Partnership Agreement (DEPA). However, numerous areas remain under-developed and the interface with non-economic issues remains to be articulated. This brief sets out the rationale for Canada to join the existing agreement between Chile, New Zealand and Singapore, and outlines the areas where further development of the agreement is particularly needed. Joining the DEPA at an early stage would give Canada the opportunity to participate in the development of this agreement in a way that meets the needs of the small, open economies as well as help to mitigate the extent to which DEPA could limit future Canadian domestic policy space to adopt new laws and regulations to protect privacy, prevent algorithmic bias, protect critical infrastructure, ensure national security or promote domestic innovation. DEPA can also become a template for a much larger agreement, including possibly for the World Trade Organization itself. This brief sets out the rationale for Canada to join the existing agreement between Chile, New Zealand and Singapore, and outlines the areas where further development of the agreement is particularly needed.

Keywords: DEPA, data-driven economy, digital transformation, e-commerce, WTO, rules-based system

JEL Classification: F13, F52, F55, F63, L40, L52, O30, K21, K24