The Internet revolution and the digital environment have spurred a significant amount of innovative activity that has had spillover effects on many sectors of the economy. For a growing group of countries – both developed and developing – digital goods and services have become an important engine of economic growth and a clear priority in their future-oriented economic strategies. Neither the rapid technological developments associated with digitization, nor their increased societal significance have so far been reflected in international economic law in a comprehensive manner. The law of the World Trade Organization (WTO) in particular, has not reacted in any proactive manner. A pertinent question that arises is whether the WTO rules, despite some inherent features of adaptive governance, are still useful and able to accommodate the new digital economy or whether they have been rendered dated and incapable of dealing with this important development. The chapter seeks answers to these questions. It maps the key issues and challenges which the WTO faces, both due to the left-overs of the Uruguay Round and the E-Commerce Work Programme, as well as due to the new generation of digital trade barriers. The chapter critically reviews the patchwork of regulatory responses in preferential trade agreements and sketches different and potentially better WTO scenarios. Depending on the political will and commitment, these can encompass variations of an extended Information Technology Agreement (ITA) and Trade in Services Agreement (TiSA).
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