Digital or Trade? The Contrasting Approaches of China and US to Digital Trade

Abstract

With the growing importance of the internet, digital trade, or electronic commerce, has become a key issue in international trade regulation. As the home to some of the largest internet companies in the world, the United States took the lead in bringing the issue into the WTO and has been the leading proponent on the issue. In contrast, the developing countries were quite sceptical and reluctant to engage on discussions on the issue. Recently, however, several developing countries have changed their positions and become more active participants. Chief among them is China, which has raised some interesting proposals both within and beyond the WTO. The issue has also been identified as one of the main issues to be discussed at the 11th Ministerial Conference of the WTO. This paper provides a critical examination of the contrasting approaches of the US and China on the issue. It argues that, the US approach tends to focus more on the “digital” nature of digital trade, while the Chinese approach prefers to address the issue from the traditional “trade” perspective. The paper analyses the reasons for the different approaches, and provides some suggestions on how to move forward on the issue at MC11 and beyond given the differences between the two approaches.