Artificial intelligence (AI) has strong potential to spur innovation, help firms create new value from data, and reduce trade costs. Growing interest in the economic and societal impacts of AI has also prompted interest in the trade implications of this new technology. While AI technologies have the potential to fundamentally change trade and international business models, trade itself can also be an important mechanism through which countries and firms access the inputs needed to build AI systems, whether goods, services, people or data, and through which they can deploy AI solutions globally. This paper explores the interlinkages between AI technologies and international trade and outlines key trade policy considerations for policy makers seeking to harness the full potential of AI technologies.
1. Introduction
Artificial intelligence (AI) is widely considered to be a general-purpose technology with a strong potential to spur innovation, help firms create new value from data, and reduce trade costs (Agrawal, Gans and Goldfarb, 2017). Broadly defined, AI is “a machine-based system that can, for a given set of human-defined objectives, make predictions, recommendations, or decisions influencing real or virtual environments. AI systems are designed to operate with varying levels of autonomy” (OECD, 2019). AI uses data to train algorithms and often co-exists with software that can be embedded in hardware such as robots, autonomous cars or appliances based on Internet of Things (IoT). Examples of AI application include smart assistants, translation, self-driving cars, medical diagnosis and robotics. Today, AI is used in many sectors ranging from precision agriculture (Forbes, 2019) to manufacturing (McKinsey, 2019) (Li, Hou and Yu, 2017) and services (Huang and Rust, 2018).
Growing interest in the economic and societal impacts of AI is being matched by growing interest in the issues at the intersection of trade policy and AI (Lee-Makiyama, 2018; Irion and Williams, 2019; Goldfarb and Trefler, 2018). While the larger regulatory and policy environment around AI (e.g. security, privacy, etc.) continues to evolve, it is important to also think about the issues that are specific to trade and AI. This is also important in the context of the current trade policy deliberations, including in the Joint Statement Initiative on e-commerce discussed at the WTO or in regional trade agreements.
Previous OECD work has outlined the profound implications that digitalisation has had for trade and market openness, as well as how policy makers approach trade in goods and services in the context of rapid technological developments (López González and Ferencz, 2018). The COVID-19 pandemic further accelerated the digital transformation underscoring the importance of digital trade for mitigating the economic slowdown and speeding up recovery (OECD, 2020). This paper focuses on the specific applications for AI with a view to helping policy makers better understand the benefits and challenges that AI brings for trade and to outline key trade policy considerations for harnessing the full potential of this technology.
The paper begins with a brief description of AI technologies and shows what existing data can tell us about the adoption and proliferation of AI. This is followed by a deeper discussion on the policy issues at the intersection of trade and AI: looking at what AI means for trade and what trade means for AI. Three case studies then discuss specific applications of AI technologies in international trade. The last section provides some concluding remarks.
The paper is intentionally short and focused on the broad issues that might be worthy of consideration by trade policy-makers. The field of AI is fast evolving and has many different important, and indeed contentious, facets. This paper aims to provide an initial framework for thinking about the implications of AI for trade without delving into a number of important but broader regulatory concerns which are being discussed in the context of the work of the OECD Science Technology and Innovation Directorate.
Janos Ferencz is a trade policy analyst at the Trade in Services Division of the Organisation for Economic Co-operation and Development (OECD).
Javier López González is a Senior Economist at the Trade and Agriculture Directorate of the OECD.
Irene Oliván is a trade policy analyst at the Trade in Services Division of the OECD.
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