Do Digital Trade Rules Within the <scp>RTAs</scp> Promote Trade and Welfare Growth?

ABSTRACT This study employs the OECD Digital Services Trade Restrictiveness Index framework to quantify changes in digital trade costs triggered by digital trade provisions within RTAs and incorporates these changes into a trade structure model that differentiates between intermediate and final goods. It assesses the trade and welfare impacts resulting from the implementation of digital trade rules under the Comprehensive and Progressive Agreement for Trans‐Pacific Partnership (CPTPP) and the Digital Economy Partnership Agreement (DEPA). Unlike traditional tariff concessions, digital trade rules—once implemented by a country—apply universally, thus significantly promoting trade for both member and non‐member countries. Further decomposition reveals that the changes in trade flows are primarily driven by intermediate goods. Welfare levels have substantially improved for CPTPP and DEPA members, mainly due to the welfare gains associated with reduced digital trade costs. Non‐member countries have also seen slight welfare improvements due to the spillover effects of these digital trade rules. Should China accede to either CPTPP or DEPA, it would generate positive trade and welfare effects for member countries, with China being the primary beneficiary. Non‐member countries would also benefit, albeit to a lesser extent than members, ultimately leading to an improvement in global welfare.