SESSION 3: ADVANCING A SECURE DIGITAL ECONOMY Digital communications have bridged the enormous physical distance between the US and Australia, enabling people on both sides of the Pacific to take advantage of innovative technologies and services. The growing opportunities for trans-Pacific digital trade prompted the Australia–US Cyber Security Dialogue to consider how best to securely expand the digital economy. McKinsey & Company estimated transnational data flows to be worth US$2.8 trillion in 2014, highlighting the increasingly important role of digital trade in the economies of both Australia and the US, as well as the broader Asia–Pacific region.9 The dialogue discussion traversed the connection between cybersecurity and consumer confidence in digital commerce, corporate understanding of the threats and risks of cyberspace, the role of innovation and the effects of government regulation and free trade agreements on the digital economy. Public trust in cybersecurity measures that protect personal and financial information underpins the stability and growth of digital commerce. Therefore, it’s in companies’ direct interests to effectively protect their customers’ personal information from cyber threats. Discussions at the dialogue indicated that private-sector threat awareness is comparatively greater and deeper in the US than in Australia. In Australia, only the top group of the large ASX-listed firms seem to have a good grasp of the issue, with a significant drop-off below that level. The new Australian Cyber Security Strategy includes several measures designed to address the issue, including education and awareness raising for senior executives.10 However, raising the awareness of the C-suite is only one part of the solution. Cybersecurity product vendors need to reflect upon the limited success of their messaging, which has only penetrated a select number of corporate entities in Australia. The onus is on the cybersecurity industry to not only translate its products in a relatable way, but to also ensure that they’re scaled to meet the needs of small to medium-sized enterprises, not just the top end of town. Innovation in digital goods and services is a key theme of the economic policies of both the US and Australian governments, and these developments must be integrated within broader cybersecurity considerations. Innovative services and products promise to unlock new markets and increase productivity at home and abroad. The US remains a hotbed of innovative digital businesses, attracted to communities such as Silicon Valley where capital and technical expertise are concentrated. Australia recognised this when the first of several Australian international innovation hubs was established in San Francisco in 2015. Innovation requires a strong commitment to a digital-first policy, an alignment with cybersecurity policy and cybersecurity capability development, ‘baked-in’ awareness of cybersecurity, and encouragement of other regional partners to follow suit. Cooperation between the public and private sectors to implement innovation and cybersecurity policies is critical to ensure that investment and regulation are aligned with each other. Inconsistent and contradictory trade regulations in the Asia–Pacific were also a key topic of discussion for Australian and American business at the dialogue. Trade agreements are one way to encourage regional countries to enact common policy and regulatory frameworks. The World Trade Organization agreement laid the foundation for digital trade as it exists now, but it didn’t consider complex issues such as data storage. Building on the World Trade Organization arrangement, the rules of the Trans-Pacific Partnership’s (TPP’s) ‘Digital Two Dozen’ included