Modernizing the CPTPP’s e-commerce chapter

Just weeks into the Trump administration’s second term, global economic policy has entered a period of profound uncertainty. Speculation about renewed trade wars, a revolving door of announcements (requiring a dedicated tracker just to keep pundits up to date), and the administration’s new "reciprocal tariff" policy, effectively threaten to launch a process of progressive protectionism rather than the gradual opening of markets that has been the organizing principle of the global trading system to date.

Small and medium-sized economies find themselves in a new trade landscape that is both unpredictable and arbitrarily restrictive. With the World Trade Organization (WTO) struggling to fulfil its negotiating and dispute settlement functions and talk of de-risking and diversification becoming more common, the case for doubling down on the existing international trade architecture has never been more compelling.

The CPTPP: A framework worth building on

Why the e-commerce chapter needs an update

The e-commerce chapter is certainly well overdue for an update. Though cutting-edge for its day, the digital economy has changed materially since the digital provisions were finalized in 2015. At the most recent CPTPP Commission meeting in November 2024, officials recommended concluding exploratory discussions in 2025 on improving the chapter, noting that the goal of work for the preceding two years had been to explore interest in "potentially modernizing the CPTPP Electronic Commerce Chapter to ensure it remains the high watermark for digital trade disciplines".

CPTPP members will need to make considerable advances – in both governance frameworks and in responding to emerging and disruptive technologies – to meet this benchmark. Launching detailed upgrade negotiations this year is particularly important as new members look to join.

Digital governance innovations since 2015

The period since 2015 has seen a raft of innovations in digital trade governance which build upon, but far outpace, the CPTPP’s original approach. Most notable are the new digital economy agreements (DEAs), such as the Digital Economy Partnership Agreement and the Association of Southeast Asian Nation (ASEAN)’s Digital Economy Framework Agreement, which aim to facilitate trade in the digital economy through collaborative approaches to the development of digital trade rules.

Beyond these relatively small, mainly bilateral agreements, there has been a substantial move towards greater coherence in global digital trade rules. Last July, more than 80 WTO members – almost all CPTPP members and aspirants included – released the "stabilised text" of a new plurilateral WTO e-commerce agreement. Though finalizing this agreement and incorporating it into the WTO rulebook face hurdles, the "stabilised text" itself demonstrates just how far the global digital trade policy conversation has advanced from the CPTPP starting point.

The incipient WTO Agreement on E-Commerce covers a range of topics not included in the CPTPP but which are in the DEAs, such as electronic invoicing, e-payments, and open government data. It includes one key issue which is also in the CPTPP – the prohibition on customs duties on electronic transmissions (the so-called "e-commerce moratorium"). It also includes CPTPP-plus provisions in a range of important areas of trade enablement, such as paperless trade, personal information protection, and cybersecurity. (That said, while the WTO agreement may provide an important baseline in these areas, DEPA and other DEAs have in fact already surpassed the plurilateral e-commerce agreement’s level of ambition.)

A modernized CPTPP should reasonably reflect these advances. In addition, there are other areas where even DEAs have not made significant progress, but where businesses face considerable friction, such as competition policy and platform regulation, as well as key building blocks relating to digital trust such as digital identities and a safe online environment. These issues are likely to be more challenging to address for CPTPP members, but would help to create more seamless, competitive, and trusted digital trade.

The past decade has also seen detailed technical and legal work in international fora, such as legal frameworks for electronic trade documents and a broad range of technical and technological standards. The CPTPP was originally designed to foster cross-border business models including global value chains. Keeping with the times, CPTPP members would do well to include a strong push for the use of and participation in the development of international standards as an important mechanism to support coherence and interoperability at the practical level in digital value chains and transactions.

Responding to technological disruption

Digital trade governance aside, technology itself has also evolved dramatically since 2015, with the advent of generative artificial intelligence and other next-generation technologies, such as quantum computing, edging out of the lab and into practical application. 

Along with new technologies, new business models have also emerged – most notably the sweeping digitalization of services trade, with nearly 60% of all services exports now delivered digitally, and 9% growth in digitally-delivered services exports globally in 2023 far surpassing merchandise trade. AI will likely accelerate these trends. Unfortunately, these advances have coincided with increasing restrictions on cross-border digital services and growing regulatory fragmentation, especially for cross-border data flows.

On digitally delivered services, CPTPP members could potentially future-proof this important category of trade. As a comprehensive free trade agreement, CPTPP includes both services market access commitments and rules on services and digital trade. Members could potentially seek to fully liberalize digitally deliverable services. However, given the evident reluctance of at least some CPTPP members to reopen market access commitments (which are not explicitly mentioned in the Terms of Reference for the Review), this seems less likely.

On data flows, the surge in regulations restricting or imposing conditions on cross-border data flows have real-world negative implications for trade and growth, as a new report from the WTO and Organisation for Economic Co-operation and Development (OECD) shows. A "full fragmentation" scenario (where all economies fully restrict their data flows) leads to global GDP losses of 4.5% and reductions in exports of 8.5%, the report says. While the CPTPP first set the "gold standard" for cross-border data flows and forced data localization rules (with an unfortunate exception in the latter for financial services), there is room now to clarify and narrow data-flow exceptions, particularly given the nuanced approaches of some trading partners in this area.

The strategic case to modernize the e-commerce chapter: Expanding CPTPP membership

As noted above, CPTPP has a lengthy queue of potential new members – although, despite a strong case for bringing on board a group of interested economies, only Costa Rica received an invitation to commence the accession process at last November’s CPTPP Commission meeting. China, Taiwan, Ecuador, Uruguay, Ukraine, and Indonesia are still waiting in line, while Korea, Thailand, and the Philippines have informally signalled their interest.

There is likely to be a considerable dividend for global coherence if these aspirants, including some very large economies, join an updated CPTPP agreement with a modernized e-commerce chapter.  With no immediate end in sight to the current disruption in the global trading system, strengthening and expanding the CPTPP would provide much-needed stability for businesses and act as an important hedge against further economic fragmentation and unilateralism – and perhaps eventually even for a return to a more multilateral approach.

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