The rapid advance of digitisation has seen the creation of new data-driven products and online services which can easily be traded across borders. Now, with the advent of technologies such as AI and robotics, we stand on the brink of a new era where even physical services such as surgery could be offered to patients by providers in different countries. So what are governments doing in response – and what does this mean for business?

Digitisation is the process by which information is converted and used in digital form. On their own, these streams of binary code are of little practical value. But add computers and communications technologies, and digital information can be reproduced, distributed and processed at scale.

From its origins in calculation, digitisation now encompasses information that is harvested in bulk from online activity (via algorithms), offline activity (via sensors) and is even coming to be self-generated on the basis of machine learning (via artificial intelligence). Now, thanks to robotics and intelligent devices, interaction between the digital and physical worlds is increasingly reciprocal.

From an economic perspective, this process has revolutionised trade. Today, goods and physically supplied services are increasingly converting to online services, which are inherently tradeable and transferable across borders.

The advance of digitisation has sparked major legal and regulatory developments.

• First, existing regulatory structures have started to be adapted to new situations, including rules on intellectual property, undesirable content, and marketplace behaviour.
• Second, digitisation has produced some entirely novel regulatory challenges based on the scale, types and uses of information now in digital form, including in relation to personal privacy, discrimination, liability, competition and infrastructure security.
• Third, the fact the digital world is inherently cross-border makes it difficult for governments to regulate, at least in a way that they consider to be consistent with other principles such as economic efficiency and personal liberties. In some cases, governments have erected borders, with controls on foreign investment in digital technologies or restrictions on imports and exports of data. In others, they have sought to cooperate, agreeing to promote and, at times, to regulate online economic activity. More recently, they have even started to allow each other to tax corporate income on the basis of where profits are generated rather than where companies are established.

Here, we explore the process of digitisation and how it has led to digital trade; examine how trade agreements are evolving to facilitate this shift; how governments are adapting their legal and regulatory frameworks to assert control over companies entering their markets; and how companies can exploit the opportunities – and manage the risks – of this borderless world.

How did we get here? A brief history of digitisation

In order to understand digital trade, it’s important to understand digitisation and the legal and regulatory issues it raises. Here, we take a whistlestop tour from the mid-1900s to the present day.