Estimated reading time: 7 minutes
By Peter Bouwhuis
Let me ask you something. When was the last time you bought something online from abroad? Maybe a gadget from an Asian webshop, a subscription to an American streaming service, or software from a European developer? You probably didn’t think twice about it. But behind that seamless transaction, there’s a massive geopolitical tug of war happening, and most people have absolutely no idea.
A new report from the Hinrich Foundation and Digital Policy Alert, written by Tommaso Giardini and Vladislav Alifirov, lays it all out in remarkable detail. The report, titled Why Digital Is Different, maps 2,587 digital trade commitments signed across 163 agreements between 163 jurisdictions since 2001. That’s a staggering amount of rulebook-writing. And here’s the kicker: more than half of all those commitments were negotiated in just the past four years.
So why now? Why this frantic pace?
Because governments have finally woken up to the fact that digital trade is not just commerce. It’s power. Whoever writes the rules for how data flows, what taxes get imposed on digital services, and who can demand access to a company’s source code essentially controls the arteries of the modern economy.
The US Played Hooky and Now Wants Its Seat Back
Here’s an analogy I keep coming back to. Imagine you’re part of a neighbourhood committee that sets the rules for a shared garden. You show up in the early years, you write half the rulebook, and then you just… stop attending meetings. Your neighbours keep going, they rewrite things, they make new agreements. Then one day you come back and say, “Actually, I want everything done my way again.” That’s roughly what the United States has done with digital trade governance.
The US was the pioneer. It spearheaded early digital trade commitments through bilateral free trade agreements in the early 2000s. Then, famously, it walked away from the Trans-Pacific Partnership in January 2017 under President Trump. Other countries didn’t fold. They kept going. The remaining 11 members formed the CPTPP, a framework that still serves as a template for digital trade negotiations worldwide today.
While Washington was absent, the rest of the world got busy. The UAE is now party to 21 agreements. Singapore leads the pack with 26. The EU has 20. Even Africa is catching up, with the African Continental Free Trade Area’s Digital Trade Protocol covering 54 countries and 208 provisions on the verge of entering into force.
And now? The US is back. But not in the way you might hope.
Tariff Deals as a Trojan Horse
Instead of rejoining multilateral negotiations, the US has taken a transactional approach. It’s using bilateral “tariff deals” to extract digital trade commitments from trading partners on American terms. We’re talking about things like banning digital services taxes, ensuring free cross-border data flows, prohibiting customs duties on electronic transmissions, and removing requirements for companies to hand over their source code as a condition for market access.
The report documents this clearly. Countries like Indonesia, Bangladesh, Cambodia, Malaysia, and others have signed up to these terms. Indonesia, which had long championed the right to impose customs duties on electronic transmissions and had even set up domestic procedures to do exactly that, completely reversed course under US pressure.
That’s not nothing. That’s a country abandoning years of policy positioning because Washington leaned on it hard enough.
And the pressure isn’t just economic. The report notes a genuine “chilling effect” where countries are now regulating their digital economies less, and less firmly, in areas where the US has pushed back. Governments are preemptively backing down.
The Problem With Winning Every Battle
Now, I’m not saying the US position is entirely wrong. Regulatory fragmentation is a real problem. Imagine a small business in the Netherlands trying to sell software globally while navigating 50 different sets of data localization rules, each demanding that data be stored locally, in different formats, under different legal frameworks. It’s exhausting and expensive. Anything that reduces that complexity is, in principle, good.
But the report makes a point that I think deserves more attention. Bilateral wins don’t add up to a global solution. Data flows that are protected between two countries don’t automatically mean data can flow freely everywhere. You need truly multilateral agreements for that. And the US, right now, is not interested in multilateral anything.
There’s also the trust issue. When you bully your trading partners into signing deals that only protect your companies while reserving the right to restrict data transfers to countries you don’t like, you’re not building a foundation. You’re building resentment. The report flags that the US recently began restricting transfers of sensitive personal data to six “countries of concern,” including China and Russia, even while demanding other nations keep their borders wide open for American companies.
You can’t have it both ways forever.
The Topics Nobody Wants to Talk About
What I found genuinely fascinating in this report is how it maps the newer, messier issues that haven’t yet made it into binding agreements. Artificial intelligence governance, for instance. Only 12 dedicated AI provisions exist across 12 agreements. Most of them use careful, non-binding language about cooperation and shared principles. The EU and the US haven’t entered into a single AI commitment in their trade agreements, even as they pursue completely opposite regulatory philosophies at home.
Online safety is another one. Barely 10 provisions exist globally. The US has actively pushed back against foreign content moderation rules, framing them as censorship. Meanwhile it quietly passed the TAKE IT DOWN Act domestically, which imposes content moderation obligations on platforms. The irony is hard to miss.
And intermediary liability, which basically determines whether platforms like social media companies can be held responsible for content posted by users, is only covered in 7 agreements worldwide. The US approach and the European approach are fundamentally different, and neither side seems eager to compromise in a trade context.
These gaps matter. Because domestic regulations on AI, online safety, and platform liability are multiplying fast. Digital Policy Alert tracked over 1,400 policy and enforcement developments on online content moderation alone since 2020. When domestic rules diverge globally without any international alignment, companies face a nightmare of compliance costs, and smaller players simply can’t keep up.
What Needs to Happen
The report doesn’t pretend there are easy answers. But it does make one thing clear: the pursuit of digital trade commitments has to remain a priority, even when it’s hard, even when it’s slow, even when geopolitics makes the room uncomfortable.
Regulatory interoperability, which is basically a fancy way of saying “let’s at least make sure our rules can talk to each other,” requires structured dialogue built on trust. That’s hard to build and easy to destroy. The current US approach of transactional bilateralism might deliver short-term wins, but it erodes exactly the kind of trust that makes deeper cooperation possible.
The WTO Electronic Commerce Agreement, if it ever comes into force, would cover 72 governments. The US is currently not a co-sponsor. That absence speaks volumes.
I’ll leave you with a question that I think the report implicitly raises. Is it better to win the room by shouting, or to build a room worth being in?
Right now, the US is doing a lot of shouting. The rest of the world is quietly building.
