Canada has a window of opportunity to show global leadership as the world grapples with the changes that digitization presents for global trade. A new Conference Board of Canada report argues that digitization has opened up new trading possibilities, but Canada has not yet put forward a leading-edge, clear digital trade strategy.
Digitization – translation of real-world information into a form that can be sent anywhere in the world using information and communication technologies- is now fundamental to every kind of international trade and investment. However, Canadian and global trade policy and research have focused largely on traditional trade barriers, such as tariffs. In a digital world, barriers to information flows – such as threats by India, the United Arab Emirates, Turkey and other countries to ban access for Research in Motion’s BlackBerry devices – can frustrate the expansion of trade.
“With thoughtful and forward-thinking policies, Canada could have a major impact on emerging policy in this area. Where Canada has a strong stake, it could shape policies that support greater confidence in digital technologies and trade, while balancing other public interest goals, such as privacy and security,” said Danielle Goldfarb, Associate Director, International Trade and Investment Centre, author of Canada’s Trade in a Digital World.
Compared to its international peers, Canada has a solid foundation in terms of its technology infrastructure and ability to use it. But Canada was once considered a global leader in terms of its digital economy strategy. In recent years, our position has slipped as other countries have made concerted investments in infrastructure and adopted leading-edge technology practices.
Digitization is now fundamental to every kind of trade and investment. The ability to digitize information opens up new global trade and investment possibilities, such as trade in virtual markets and trade in digital products (video games, for example). It also changes and increases trade in the same parts, products, and services that we have been trading in for decades – including making it easier to coordinate across global value chains.
To help Canadian companies benefit from globalization, Canada’s “digital trade and investment strategy” needs to look beyond traditional policies that focus on tariffs to address barriers to digital trade, such as restrictions on data flows, services, people movements, technology trade, and investment. Policies are in flux, so Canadian governments have an opportunity to help shape the global agenda.
Businesses will need to more widely adopt digital technologies, identify their relative strengths in producing and using digitization, and rethink how it changes – or does not change – the way they and their competitors trade in global markets. (For example, evidence presented in the publication suggests that physical networks still matter for trade, even with rapid growth in online social networks.)
This briefing is the first to consider the effect of digitization on Canada’s global trade and related policies. The report is published by The Conference Board of Canada’s International Trade and Investment Centre. The Centre is intended to help Canadian leaders better understand what global economic dynamics —such as global and regional supply chains, barriers to trade, U.S. policies, or tighter border security—could mean for public policies and business strategies.
Date: April 12, 2011