What Happened?
Before, digital trade was a component of international trade and supported the way international commerce was conducted. But with the rise of digitalisation and AI, digitally ordered and digitally delivered transactions represented around 25 percent of global trade, or
just under US$5 trillion, in 2020 (OECD, n.d.). Digital trade refers to international trade that is digitally ordered or digitally delivered (IMF et al., 2023). It has two main features: it includes a physical product purchased through an online platform, and it includes services such as software or digital content delivered remotely across borders. It is important to understand digital trade because it does not simply change how goods are purchased. It is expanding the range of goods and, particularly, services that can be traded without requiring the buyer and seller to be physically present in the same country.
Why Does It Matter?
Digital trade matters because it is shaping what can be traded across borders, how trade is organised, and who can participate in it. Digitally delivered services can cross borders without the physical movement of the provider or consumer, changing the costs and conditions under which services are traded. Digitally delivered services exports reached US$4.8 trillion in 2024, growing by about 10 percent from the previous year and accounting for more than half of global services exports (WTO, 2026a). Digitalisation has reduced trade costs and expanded the range of services that can be accessed across borders, shifting the nexus of global trade towards digitally delivered services. AI development depends on access to data and cross-border data flows, meaning restrictions on digital trade can also affect the development and use of AI technologies (Ferencz et al., 2022).
Background
Digital trade can be understood through three stages of evolution. First came digital ordering, including e-commerce, which allowed businesses and consumers to place orders electronically while goods continued to move through conventional border systems. The next stage was the shift towards digital delivery. Improvements in broadband, telecommunications, digital platforms and cloud computing made an increasing range of services remotely tradable. The third stage was the integration of digital systems into value chains. It allows the data to flow between producers and companies across borders. This evolution has made digital trade increasingly difficult to identify separately within conventional trade, as the digital nature of a transaction is not always visible in recorded trade flows (IMF et al., 2023). Implications Digital trade is reshaping the trade landscape, but its growth also exposes gaps in the multilateral trading system. Between 2005 and 2024, digitally delivered services exports rose from US$173 billion to US$741 billion in the United States, from US$395 billion to US$1.87 trillion in the European Union, from US$14 billion to US$220 billion in China, and from US$30 billion to US$275 billion in India (WTO, 2026a). This shift is changing market access, as digital platforms allow smaller firms to provide services across borders without establishing a physical presence abroad. However, participation still depends on digital infrastructure and platform access. Cross-border data flows have created challenges around cybersecurity and national security. Fragmented data regulations can increase compliance costs for businesses and affect participation in international trade (OECD/WTO, 2025). Countries have also taken different approaches to digital trade rules, with differences visible across the United States, European Union, China and India’s trade agreements (Mishra et al., 2026). Digital trade is also testing the existing multilateral trading system.
What Happens Next?
The WTO’s Work Programme on Electronic Commerce, established in 1998, has provided a forum for discussing trade-related aspects of e-commerce. However, digital trade has expanded into questions of data flows, taxation, regulation and customs duties on electronic transmissions. On 28 March 2026, 67 WTO members, covering approximately 70 percent of global trade, adopted a pathway to bring the WTO Agreement on Electronic Commerce into force through
interim arrangements (WTO, n.d.). However, the WTO moratorium on customs duties on electronic transmissions, first introduced in 1998, lapsed on 30 March 2026 after members failed to reach consensus at MC14 (WTO, 2026b). The next stage will depend on how governments negotiate rules for cross-border data flows and digital regulation while balancing the economic opportunities of digital trade with concerns over security and regulatory policy.
References
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international trade: Some preliminary implications (OECD Trade Policy Papers No.
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Mishra, S., Verma, V., Srivastava, V., & Banerjee, P. (2026). Digital trade report: Analysis of
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