Context: The report titled, ‘World Trade Report 2020: Government Policies to Promote Innovation in the Digital Age’ was launched online by the WTO.
Key highlights of the report

• It analyzes the adoption of government policies to foster digital innovation and technological progress for economies, and explains the WTO’s role in this changing context.
• 115 countries have instituted new industrial policies and other digital and industrial development strategies to foster a transition to the digital economy.
• The developing countries are “showing a clear interest in the transition to the digital economy.” 

The report highlights a number of new policy instruments that are being used to support this transition. These include:

• The policies to address access to data.
• The research and development support, such as tax breaks to facilitate digital innovation.
• Technological hubs to maximize knowledge spillovers and knowledge diffusion.

Governments are also continuing to employ several conventional policy instruments including:

• The investment and tax incentives to develop local technologies
• The incentives to foster patent and other intellectual property creation.
• The tariffs on infrastructural equipment, and innovation-oriented procurement to shift markets towards innovative products and incentives.

The opportunities related to inclusion in the new digital services supply chain:

• The Lower costs of reaching international markets through the internet.
• The digitization of manufacturing production.
• The challenges include developing the necessary infrastructure to facilitate this transition.
• The pandemic has accelerated the uptake of digital innovation and e-commerce.
• The WTO has supported innovation, including through eliminating tariffs on internet and telecommunications infrastructure products through the Information Technology Agreement (ITA).
• The WTO has stimulated e-commerce through a moratorium on duties on cross-border digital flows, liberalizing internet services through the telecommunications agreement.
• It has provided a stable framework for the development of global and open standards, intellectual property protection, and other critical rules based on principles of non-discrimination, transparency, and reciprocity.
• The international cooperation can play a key role in countries’ efforts to accelerate a digital transition while minimizing the negative impacts from national policies, including distorting trade, diverting investment, and promoting unfair competition.
• The rising importance of data as an input in production and the potential use of such data is resulting in a demand for new international rules on data transfer, data localization, and privacy protection.