19 May 2020

Brave New World: Australia and Singapore press forward with landmark Digital Economy Agreement

This article was written by Adrian Perkins, Michael Lawson and Jake Miyairi.

On 23 March 2020, it was announced that Australia and Singapore had finalised negotiation of the Digital Economy Agreement (“DEA”) between the nations.

The conclusion of DEA negotiations follows on from similar in-principle agreements on digital economy partnership reached between Singapore, Chile and New Zealand earlier this year.

As they are implemented in law, pilot programmes and other measures, the digital partnership arrangements can lay the foundations and can help to reduce barriers to trade and increase collaboration between businesses and government in Singapore and Australia, as well as increase levels of confidence in the cross-border business environment.  The government focus on digital transactions reflects and supports a growing reliance by business on conducting international trade in a digital environment.  No doubt the initiatives outlined in the DEA will better enable businesses to capture, store and manipulate trade data to drive business efficiencies and value, and ultimately move closer to a more holistic data driven cross border supply chain. 

What is it?

The DEA is expected to take the form of an additional chapter in the existing Singapore-Australia Free Trade Agreement, which first entered into force on 28 July 2003.  While the text of the DEA is subject to legal review and yet to be published, the Department of Foreign Affairs and Trade (“DFAT”) has released seven Memorandums of Understanding (“MoUs”), a summary of key outcomes and a fact sheet which clarify the following key areas that the DEA will address:

  • e-invoicing and e-payment collaboration: a commitment to collaborate in relation to the transmission of business documents, including by promoting aligned e-invoicing standards;
  • reducing restrictions on the transfer and location of data: allowing for the transfer of data between Australia and Singapore for business purposes and eliminating requirements to store data in either jurisdiction, including in the financial sector;
  • protections of source code: access to or disclosure of software source code will not be required to be transferred to Singapore as a condition for the import, distribution, sale or use of software;
  • inter-governmental ledgers: agreement to co-operate on the development of shared ledger technologies to assure authenticity of trade documents including Certificates of Origin and Certificates of Non-Manipulation;
  • harmonised customs procedures and data standards: commitment to support the harmonisation of customs procedures and data standards to facilitate cross-border trade to the highest degree, particularly in relation to the Indo-Pacific region;
  • electronic certification: development of an electronic certification exchange program for agricultural products imported and exported between the countries;
  • digital identities: developing consistent regulatory frameworks supporting digital identities, including electronic signatures, liability and contracts legislation, data storage and privacy and audit requirements;
  • data innovation: exchanging knowledge in data innovation (including the use of regulatory sandboxes) and collaborating on the application of the Internet of Things;
  • artificial intelligence: developing an ethical governance framework and establishing multi-site test beds to demonstrate artificial intelligence solutions;
  • personal data protection: developing best practices on data protection, including by exchanging information (excluding personal data) and providing assistance in relation to investigations into suspected contraventions of either country’s data protection legislation. Importantly, the Privacy Act 1988 (Cth) will still apply when Australian data is transferred into another country.

Why should you care?

Among numerous possibilities, development of e-certification programmes (along with collaboration on e-payments and inter-governmental ledgers) will facilitate innovation, efficiencies and cost-savings in agricultural trade.  Homogenisation of digital identity regimes and comfort about unfettered transfer of data (subject to maintenance of appropriate privacy protection) could offer a powerful platform for the development of digital banking innovation in a region (ASEAN and beyond) ripe for growth and crying out for strong leadership in the space. 

Looking forward, any such developments will certainly be welcome as businesses emerge and start to rebuild from the global malaise upon us in the midst of the COVID-19 pandemic and global trade tensions.  Whether it is companies for whom digital is core business or others who stand to benefit from the efficiencies and innovation which digital services can bring to their businesses, our clients in Australia and Singapore have reason to be excited about the opportunities which the DEA arrangements might bring.  And we encourage you to be thinking and acting ahead of the curve.

What’s next?

The MoUs are currently non-binding and are yet to be implemented in accordance with either country’s laws.  The DEA text will undergo further legal review prior to signature and publication, followed by each country’s treaty ratification processes.

A key area that is left uncertain under the MoUs is that of cost allocation – the nations must discuss and mutually determine the allocation of many of the resources and expenses associated with activities advancing the agreed outcomes.  Since dispute resolution is to take place by way of a negotiation between the nations (rather than being referred to an international court, tribunal, or mediator), it remains to be seen if, and how, agreement will be reached on these matters in the future and the extent to which the two countries will be able to progress the DEA’s ambitious initiatives.

Nonetheless, these arrangements recognise the importance of pressing ahead with forward-looking trade initiatives in the face of the COVID-19 pandemic and global trade tensions and industry participants’ submissions to DFAT in relation to the DEA have been supportive of the plans

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