Julie Bishop launches International Cyber Engagement Strategy

| October 6, 2017

Julie Bishop, the Minister for Foreign Affairs, has launched the government’s new International Cyber Engagement Strategy. The document outlines a three year strategy to encourage digital trade to generate economic growth for Australian companies.

The strategy places the private sector at the centre of Australia’s digital trade efforts and offers mid-sized firms a chance to influence future policy making. The Strategy will rely on private sector partnerships to maximise opportunities while mitigating risks and forms part of the Government’s $230 million Cyber Security Strategy. The Cyber Cooperation Program will receive an additional $10 million to support its implementation, on top of the $4 million allocated last year, and focus on the Indo-Pacific region.

To maximise international digital trade opportunities, Australia will develop a holistic Government digital economy strategy, led by the Department of Industry, Innovation and Science. Austrade will also create a practical guide for Australian companies exporting in the digital economy in close consultation with the private sector. The strategy commits the government to holding regular consultations with industry stakeholders on digital trade and to invite submissions from the private sector when developing new digital trade rules. Similarly, Australia will encourage other countries to consult with businesses when developing new trade laws and policies. In addition to consulting with large multi-nationals through APEC and the G20, the Ambassador for Cyber Affairs will establish industry consultations and workshops, including an Industry Advisory Group focused on Australia’s international cyber engagement for medium sized and other firms.

The strategy will promote a ‘peaceful and stable online environment’ at a time of increasingly hostile state and non-state activities in cyber-space. Most of the cybercrime affecting Australian firms and individuals originates overseas and Australia will work with its allies to close cybercrime safe havens. The government will also foster good cyber security practices at home and improve the nation’s collective capacity to respond to global cyber incidents.

In addition to the paper’s proposals on cyber-crime, human rights, technological development and administration, the paper stresses the government’s commitment to boost digital trade through trade agreements, trade facilitation and the harmonisation of international standards. The government will promote trade and investment opportunities for Australian digital goods and services, potentially offering scope for mid-sized firms to export overseas while fending off intensified international competition.

The report accepts that digital technologies and the Internet are now key drivers of economic growth and innovation as the digital economy has quickly shifted from a niche sector to become an essential part of the economy. The line between traditional goods and digital goods is blurring and the Internet makes it easier for consumers and businesses to trade goods, services and information around the world, offering both threats and opportunities to Australian mid-sized firms.

While firms and customers naturally view digital trade in terms of buying and selling goods and services online, the government must work to improve the transmission of information and data across borders to facilitate their activities. Digital technologies can help trade by streamlining customs procedures, for example, and so while flows of information and data may not always be for profit, they are essential enablers of commercial activities.

More than half the world’s internet users now live in Indo-Pacific, yet only half the region’s inhabitants are connected to the internet, offering scope for more explosive growth in digital trade. Australian mid-sized firms must understand the scope of both current and future developments to open new markets for themselves as well as promoting mutually beneficial economic development across the region. The new strategy therefore urges countries to cooperate in creating an optimum environment for digital trade, and to work with the private sector and consumer groups to ensure that digital policies and practises foster economic growth and security, rather than undermining it.

Australia will therefore help shape global rules on digital trade to support the digitisation of policies, build trust and confidence in the online environment and reduce barriers to digital trade. These rules should chime with existing global and regional trade norms, principles and guidelines developed through the United Nations, the World Trade Organization, the Organisation for Economic Cooperation and Development, the G20, APEC, and international standards-setting bodies such as the International Organisation for Standardisation. By working with these international bodies, the government will help Australian firms gain greater access to global markets and create a more certain regulatory environment for firms to plan their digital growth strategies.

Australia has included ‘electronic commerce’ chapters in 10 of its 11 current free trade agreement and is pursuing commitments on digital trade in bilateral negotiations with Indonesia, Hong Kong and Peru. It is also stressing digital trade in its negotiations with a number of other nations for a Regional Comprehensive Economic Partnership and the Trade in Services Agreement. International rules that facilitate the free flow of information and data across borders are also important for promoting digital trade. Indeed, data flows may have a greater impact on gross domestic product growth than trade in goods around the world. As the imposition of customs duties on electronic transmissions may restrict the growth of online trade, Australia backs a permanent moratorium on customs duties on electronic transmissions.

Australia will work through the World Trade Organization to improve digital market access for businesses and increase consumer choice. However, there is an acceptance that governments must be able to respond to legitimate public policy concerns, including consumer and privacy protection. Australia supports the adoption of transparent and evidence based policies, created in consultation with appropriate stakeholders, to protect health, environmental, consumer and privacy protections as well as national security.

The new strategy lays out a number of specific provisions it wants to see encourage international digital trade. These include the spread of paperless trading, with countries encouraged to offer import and export documentation online and to allow electronic submission of required documents. Countries should also accept electronic authentication on such documents and adopt a flexible approach to authentication technologies. Online customers should enjoy the same legal protection as any other consumers, and their personal information should be safeguarded from unauthorised disclosure by a strong legal framework at all times. Consumers should also be protected from spam – unsolicited commercial electronic messages – by measures which allow them to opt out of receiving unwanted adverts through email and SMS. Indeed businesses should only send such messages with the expressed or inferred consent of the consumer and should clearly identify their source.

The government opposes measures which force businesses operating in a particular country to base their computing facilities, servers and storage in that territory and calls for nations to allow cross-border transfers of information by electronic means. Countries should not require the transfer of mass-market software source code as a condition for the import, distribution, sale or use of software. The government paper also calls for the international community to cooperate on areas of mutual interest such as cyber security, to eliminate cyber-customs duties and to implement commitments already made in the Trade Facilitation Agreement. Countries should also not require technological transfers as a condition of investing in another country

The strategy stresses the government’s intention to pursue further digital trade liberalisation through free trade agreements and participation in the WTO, OECD, APEC and G20 because internationally harmonised standards are required to facilitate digital trade across borders. However these international standards should be industry-led and technology-neutral, just as they are in the domestic arena. Australia therefore supports the development of globally interoperable Internet standards and associated reference architecture, as well as ISO 27000 Information Security Management Systems standards.

To reduce the need for burdensome regulation, Australia therefore supports increased cooperation between national standards bodies and regulatory agencies across the Indo-Pacific. Australia will proactively harmonise its standards as well as promoting the implementation of the WTO Trade Facilitation Agreement through bilateral representations and involvement with WTO committees and councils, APEC and the G20. The new strategy also outlines plans to design and test an electronic Secure Trade Lane with New Zealand to help trusted traders in both countries.

The government will support cooperation between Australian and international regulators to ensure fairness and transparency in the market while encouraging innovation. Regulatory cooperation in the financial technology sector is already underway, for example, with ASIC establishing formal innovator business referral arrangements with its counterparts in the United Kingdom, Singapore, Malaysia, Japan and Hong Kong. The cyber engagement strategy will leverage Australia’s bilateral exchanges, such as the Australian free trade agreement agenda, Aid for Trade activities, as well as engagement in APEC and the G20 to support transparency and evidence-based policy solutions.

The report accepts that more accurate measurement of the shape and scale of digital trade is required to understand the uptake of digital technologies by micro, small and medium enterprises Understanding the barriers to digital participation will better inform policy and so Australia is committed to working towards internationally consistent and robust measurement of these metrics.

The government strategy promises to actively promote the nation’s digital goods and services around the globe to maximise opportunities for Australian businesses in the booming global digital economy. To attract foreign investment, Australia should leverage its well deserved reputation as a trusted and secure place to do business, highlighting its robust domestic safeguards, well-developed services economy and high quality education system. However, while it remains up to individual mid-sized firms to make the most of the opportunities afforded by digital trade, the sector will keep a close eye on the government’s ability to deliver on its promises over the next three years.