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A Roadmap for Korea’s Digital Trade Agreements international trade, electronic commerce

Author Kyu Yub Lee, Cheon-Kee Lee, Wonseok Choi, Jun Hyun Eom, and Unjung Whang Series 22-02 Language Korean Date 2022.12.30

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This report examined the short- to medium-term roadmap for Korea's digital trade agreements. It suggested that the roadmap include, among other things, an assessment of Korea's position in the network of digital trade agreements, the objectives and directions of digital trade agreement policies, the scope and content of digital trade agreements, the priorities and selection criteria for negotiating partners to reach digital trade agreements, the procedures and timeline for such agreements, and the expected quantitative and qualitative effects of digital trade agreements.

Understanding Korea's current position in the process of developing a roadmap for digital trade agreements necessitates objectivity. This report claimed that Korea's influence on the network of digital trade agreements has been moderate. It is the outcome of assessing using network analysis, which takes into account centrality of digital trade network, similarity of agreement text, and the size of the economy.

The report suggested Korea to target becoming a hub for digital trade as a short-term and mid-term strategic priority. It is costly and subject to numerous restrictions for Korea to be a global leader in the digital space in the short- to medium-term. That is, to be a leader in the global digital trade and to establish relevant digital trade rules, Korea requires a sufficiently sizable digital trade market, abundant human resources, and high-skilled labor. In particular, it needs specific strategies to support the leadership that sets rules for norms in digital trade. The report thus suggested that Korea's primary role in the short- to medium-term is to become a rule-promoter of the digital trade norms through an active promotion strategy based on the roadmap for digital trade agreements.

When determining the scope and content of digital trade agreements, it is critical to develop criteria for selecting negotiation partners and rank countries in order of importance. Essentially, digital trade agreement text for Korea should be written in a way that reduces or eliminates barriers to digital trade and challenges faced by domestic businesses. Furthermore, Korea should make efforts to improve the thoroughness of the form and content aspects of trade law in relation to key elements identified as appropriate for the development of the digital trade roadmap. To achieve policy objectives of digital trade, the report recommended to develop a Korean-style digital trade agreement template with varying levels of protection. This is due to the fact that the process of developing a template comprised of digital trade norms appropriate for Korea has numerous advantages and can take the lead from selecting a partner to negotiate with to coordinating, through negotiating contents of the text, to signing the negotiation. The report also emphasized the importance of developing supplemental content to strengthen digital economic cooperation in order to increase trading partners' willingness to negotiate and activate digital trade among countries and regions.

The report listed four criteria for selecting a partner to negotiate with, such as the possibility for export expansion, the potential for market growth, the compatibility of the regulatory framework, and practicality. For instance, the top 20 countries in Korea that export digital services are estimated to be the United States, United Kingdom, Japan, Hong Kong, China, Singapore, Australia, Germany, Switzerland, the Netherlands, Ireland, India, France, Canada, Italy, Brazil, Spain, Russia, Norway, and Sweden, in that order. Thus, the most important are the Korea-UK FTA, Korea-China FTA, Korea-EU FTA, Korea-Canada FTA, Korea-India FTA, and Korea-Mercosur TA. The report came to the conclusion that Korea should actively participate in IPEF negotiations and consider upgrading the most recent digital trade rules in the FTA. Furthermore, it advocated for the creation of a digital trade agreement in the style of Korea.

According to the report, domestic regulations and institutional reform plans must be developed in accordance with the scope and content of the digital trade agreement. This is because maintaining the coherence of domestic regulations and system restructuring for digital trade are linked to the problem of determining the content and level of digital trade agreements and selecting a negotiating partner. Korea should consider how to collaborate or respond jointly with other nations in relation to current issues related to digital trade, such as internet service, data localization, and cloud. It was also recognized that a careful assessment is necessary to keep domestic rules in line with industry standards for digital trading.

The report concluded by saying that it is critical for enhancing effectiveness of digital trade agreements to have the process of actively soliciting feedback from businesses involved in digital trade transactions, as well as public relations strategies that can elicit support from the general public. A roadmap for Korea's digital trade agreements is necessary to explain the anticipated economic implications of its conclusion quantitatively and qualitatively.


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