Estimating the Economic Impact of Digital Trade Agreement

With the growth of the digital economy and digital trade, discussions to establish common rules for digital trade and to enhance cooperation in the digital economy are taking place on various platforms. At the multilateral level, WTO e-commerce negotiations are in progress, and at the bilateral level, e-commerce chapters of regional trade agreements are being revised. Korea is also expanding its digital trade network by promoting a number of digital trade agreements. Digital trade rules introduced within digital trade agreements are expected to have an economic impact through various channels. Digital trade rules are able to facilitate digital trade by reducing trade barriers, leading to overall trade expansion. Expanding trade not only boosts production through increased imports and exports, but can also increase productivity through the spillover of new technologies and increased competition. As the digital trade network expands, the need to analyze the economic impact of digital trade agreements also grows. The study provides methodologies that quantitatively analyze the economic effects of digital trade agreements through a general equilibrium model. This study first identifies the key digital trade rules in digital trade agreements and estimate how much they reduce trade barriers. Then the macroeconomic impact of introducing digital trade rules is analyzed by building a general equilibrium model that includes the characteristics of the digital economy.