Emergent Digital Fragmentation: The Perils of Unilateralism

Policymakers are flying blind as they shape and nurture the digital domain. The last inventory of government intervention affecting this critical vehicle for opportunity and growth was published four years ago. Much has happened since. No official institution has a global mandate to track policy intervention in the digital domain.

Nothing good comes of this evidence gap. Officials learn less from the prior choices of peers. Patchy information reinforces the tendency of officials to retreat into silos, resulting in state initiatives that don’t take into account the complexities of an evolving, multi-faceted digital domain which exists in a world with extensive cross-border ties. Accountability is diminished too.

This report fills in the evidence gap. It adopts a comprehensive view of both the economic activities associated with the digital domain and the policies affecting the digital domain and their cross-border repercussions. Drawing upon two extensive inventories of public policy intervention, the Digital Policy Alert and the Global Trade Alert, this report delineates the global policy landscape towards the digital domain with a focus on the G20 nations and members of the European Union.

Evidence on legal and regulatory developments—such as those relating to the governance of data, content moderation, and differential taxation—is presented along with information on resort to trade and investment policy changes and subsidy policies so as to provide a comprehensive perspective. Information on over 15,000 policy and regulatory developments was used to compile this report.

The perils of unilateral governance action are becoming clearer. Officials around the globe must intensify efforts to develop shared understandings on sound principles to regulate and nurture their economies’ digital sectors. Worthwhile efforts to negotiate a plurilateral accord on e-commerce need to be wrapped up and a more ambitious work programme launched at the WTO. Bilateral and regional initiatives to align policy and regulation (such as the Indo-Pacific Economic Framework), as well as the negotiation of more digital trade chapters in regional trade agreements, are useful stepping stones to counter emergent digital fragmentation.