Digital trade

While there is no single accepted definition of digital trade, there is a growing consensus that digital trade includes the exchange of goods and services that are digitally ordered or digitally delivered. In other words, it spans both digitally ordered but physically delivered transactions, such as buying a book through an online marketplace or booking accommodation through a digital intermediary platform, and digitally delivered trade, like streaming a film or receiving architectural designs from abroad.

At the heart of digital trade are data flows. Data is not only a means of production and delivery, it is also a tradable asset and a means through which global value chains (GVCs) are organised. Data also supports trade facilitation for physical goods, and is at the core of new and rapidly growing technologies such as artificial intelligence, cloud computing, the Internet of Things (IoT), and additive manufacturing.

Digitalisation is creating new ecosystems for exchange, such as digital platforms, and helping firms, especially small and medium-sized enterprises (SMEs), connect more easily with one another and with consumers around the world.

In goods, platform-enabled trade in small parcels has grown significantly. Transitioning from paper-based, analogue, trade to trade that relies on digitised information and processes – going paperless –  plays an increasingly important role in streamlining trade transactions and in increasing transparency and resilience across the entire supply chain.

In services, digitalisation is driving increased trade in:

• Services that were previously considered non-tradeable (e.g. health services)
• New combinations of goods and embedded “smart” services (e.g. smart speakers)
• Entirely new digital services (e.g. cloud computing, intermediation platforms, and fintech)

While digital transformation is making trade more accessible and cost-effective, it is also adding layers of complexity to cross-border transactions and presenting new challenges for market openness.

With growing global interconnectedness and rising demand for just-in-time delivery, trade must now be faster, more reliable than ever before. It also needs to be aligned with a wide range of policy objectives, including data privacy, consumer protection, cybersecurity, and national security.

In this fast-moving digital landscape, governments face new challenges in ensuring that the benefits of digital trade are fully realised and equitably shared for both consumers and businesses.

To support policymakers navigating this evolving environment, the OECD has developed tools such as the Digital Services Trade Restrictiveness Index (DSTRI), which tracks domestic regulations affecting digital trade, and the Index of Digital Trade Integration and Openness (INDIGO), which maps international digital trade policy discussions.

Cross-border data flows, including both personal and non-personal data, have become the lifeblood of today’s global economy and digital society. As data increasingly moves across international borders, concerns about potential misuse, privacy, and security have amplified. In response, economies have adopted varying regulatory approaches, ranging from restrictions on data transfers to data localisation requirements, which mandate that certain data be stored within national borders.

The key challenge is to build a trusted and inclusive global digital environment, one that facilitates the seamless movement of data across borders while ensuring that appropriate safeguards, oversight, and protections are in place wherever the data travels. OECD-WTO analysis shows that such data free flows with trust approaches can lead to increase in global GDP of 1.77%.

Artificial intelligence (AI) and international trade are deeply intertwined. On one hand, AI can boost trade by improving productivity, streamlining supply chains, lowering language and logistics barriers, and facilitating services across borders. On the other hand, trade is critical for the adoption and diffusion of AI globally.

Trade policy-makers need to focus on easing tariff and non-tariff barriers to trade on ICT goods, reducing regulatory barriers for digital and services trade, enabling talent mobility, and ensuring trusted cross-border data flows so that countries can both benefit from and contribute to the AI-trade nexus.