On the Non-discrimination Principles in Digital Trade

What does the provisions on the non-discrimination principle (“the principles”) in digital trade mean under trade agreements, especially in the absence of a clear international consensus on the subject of the principles? To answer this question, this study first identifies the issues related to the application of the principles in digital trade and presents a theoretical framework to explain how the principles can affect digital trade despite such issues. Using various data sources such as digital trade flows, the inclusion of the principles in digital trade agreements, and digital trade barriers, we empirically test the hypotheses constructed from our theoretical framework. We find that the inclusion of the principles in the trade agreements are more likely to increase digital trade flows. Moreover, though digital trade barriers decrease digital trade flows, this negative effect can be mitigated when the principles are more clearly defined in the trade agreements. Finally, such a trade barrier mitigation effect of the principles is more effective against the trade barriers related to cross-border data flows including data localization requirement