Global business of bytes

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At this year’s World Economic Forum in Davos, 76 World Trade Organisation members signed a joint statement that they would consider ‘negotiations on trade-related aspects of e-commerce’. (Seventy had said they would do so after the Buenos Aires ministerial conference in 2017.) The US, Japan, EU, Russia and China all signed, but India and most African countries did not, and consensus is still a long way off.


Jane Kelsey of the University of Auckland explains, ‘Electronic commerce, or digital trade, is the newest and most far-reaching of the 21st-century “new issues” in international trade negotiations. The “disciplines” being developed extend far beyond any legitimate notions of trade. They seek to impose global rules on governance of the digital domain — perhaps the most complex, multi-dimensional and hence controversial subject confronting states and societies this century, alongside climate change’.


Even the term ‘e-commerce’ is tricky. Since 1998 the WTO has defined it vaguely as ‘the production, advertising, sale and distribution of products via telecommunication networks’; this originally referred to goods and services offered on the Internet, but now covers the global circulation of data, the new gold of the 21st century, which many believe is the real issue in the negotiations. Pepe Robles, director of the Instituto del Mundo del Trabajo Julio Godio labour research institute in Buenos Aires, writes that ‘hidden inside the Trojan horse of “e-commerce” is the ownership of data ... the real question is who controls the data? For the moment, it’s just the big corporations’.


New-generation accords


Google, Amazon, Facebook, Microsoft and other digital giants have taken advantage of the regulatory vacuum to establish an oligopoly, and to maintain it they invested from the early 2010s in intensive lobbying of the architects of US economic and trade policy. Their goal was to defend principles such as the free circulation of data and to resist attempts to require them to localise storage of personal information (eg that Europeans’ data should be stored on servers located in Europe), so as to limit state intervention in their activities. Deborah James of the Our World is Not For Sale (Owinfs) network explains, ‘They want to be able to capture the billions of data points that we as digitally connected humans produce on a daily basis, transfer the data wherever they want, and store them on servers wherever they want, most of which are in the United States’.


According to Kelsey, ‘the peak achievements to date have been the new-generation mega-regional trade and investment agreements’. The US has been trying to increase the number of such agreements since the early 2010s, to get around blockages in the WTO system and establish a global normative framework aligned with its strategic interests in the context of the new economy.


The Trans-Pacific Partnership (TPP), signed in February 2016, was the digital industry’s first decisive victory. Its chapter on e-commerce repeated almost word for word the demands of lobbying groups such as the Internet Association and the Computer and Communications Industry Association, representing the industry’s biggest firms. The Office of the US Trade Representative (then headed by Robert Holleyman, ex-president and CEO of another lobby group, the Business Software Alliance) summarised the demands in a document titled ‘Digital 2 Dozen’, intended as a reference for future negotiations. It lists 24 ‘obligations’, including ‘Enabling cross-border data flows’ (no 4), ‘Preventing localisation barriers’ (no 5), ‘Barring forced technology transfers’ (no 6) and ‘Protecting critical source code’ (no 7).


In 2017 the US’s withdrawal from TPP before it came into force worried the data industry. In 2018 the other signatories formed a replacement agreement (TPP-11) that incorporates all of TPP’s clauses on e-commerce. The renegotiation of the North American Free Trade Agreement (Nafta) between the US, Mexico and Canada led to a text that continues the trend, especially in protecting source code and algorithms.


However, including the clauses in as many agreements as possible has not been an effective strategy. Major agreements have got nowhere or been abandoned (Transatlantic Trade and Investment Partnership, General Agreement on Trade in Services), and the reorientation of trade policy under President Trump has blocked further progress.


Three different agendas


So the WTO option looks attractive again. From 2016 the US, Japan and the EU tried to put it on the agenda of the 11th ministerial conference (December 2017). Parminder Jeet Singh of the Indian NGO IT for Change has identified three different camps that ‘not only follow[ed] a North-South divide as is the tradition in WTO, but interestingly a South-South divide’. The first camp is countries that favour an almost entirely unregulated digital economy, including the US, Japan and the EU (with minor exceptions).


The second includes India and many African countries, which feel the WTO should resolve other issues before addressing e-commerce (including the failure of the Doha development round and the US block on the renewal of the WTO appellate body, which began under Barack Obama). Léopold Ismael Samba of the Central African Republic, who is WTO special coordinator for the least developed countries, says these countries believe it is too early to ‘commit to international rules in a sector they have difficulty in regulating at national level’. The third camp covers developing countries such as Malaysia, Thailand, Nigeria and Bangladesh, interested in e-commerce but opposed to the North’s deregulatory agenda.


The backers of the WTO option claim e-commerce will lead to growth, especially for small and medium enterprises of the South. Singh believes this is an illusion: ‘There is nothing that global discussions, negotiations or agreements can do to strengthen the budding digital industry of this middle group of countries ... the fear of considerable harm is much more real’. Singh advocates a digital sovereignty that would allow these states to establish their own national digital sectors before multilateral negotiations. He also calls for the establishment of the South’s own forums for discussion, perhaps within the UN Conference on Trade and Development (Unctad): ‘Trade governance venues like the WTO are for hard-nosed bargains. Developing countries will need to develop their understanding of digital business, its geo-economics and different possible governance frameworks at other [forums]. And then come well prepared to the WTO’.


Other centres of resistance are emerging. This April, at the instigation of the Owinfs network, 315 civil society organisations from more than 90 countries signed an open letter against digital trade rules in the WTO, which they saw as ‘a grave threat to development, human rights, labour and shared prosperity around the world’. It called on the members of the WTO to ‘abandon their push for digital trade negotiations in the WTO and focus urgently on transforming global trade rules for shared prosperity for all’.


The struggle between China and the US looms over the negotiations. China is the only country with giant data corporations rivalling Silicon Valley, and is ahead of the US in key areas, including the underlying technology for 5G. It has gained this advantage through policies that go directly against the principle of a ‘free and open’ (free-trade) Internet that the West’s digital sector officially supports. The New York Times notes that ‘over the past two decades, China built and shored up the Great Firewall, which blocks websites including YouTube, Facebook, Google and the New York Times from reaching more than 700 million Chinese internet users. Behind those barriers, Chinese internet companies like Alibaba, Baidu and Tencent have thrived, developing cutting-edge services that have in many respects surpassed those of their western competitors’.


Foreign companies operating in China are required to store their data in China and form partnerships with Chinese firms. The NYT writes, ‘China describes its data restrictions as an issue of national security, but technology firms, financial advisers, energy companies and others argue that the rules are intended to help Beijing dominate data-intensive industries.’ It will be a while before these barriers are removed. A Chinese official points out, ‘Even in the ongoing bilateral negotiations with the United States, China has made it very clear that areas such as data flows, removal of prohibitions for storing data on local servers, and cloud computing are red lines’.


At the G20 meeting in Osaka this June, Japanese negotiators tabled the idea of ‘data free flow with trust’, as a response to criticism of the negotiations in progress at the WTO. India and South Africa, notably, rejected the proposal. The negotiations in the lead-up to the WTO’s next ministerial conference — in Astana, Kazakhstan, in June 2020 — will be crucial.



- Cédric Leterme is a researcher at the Centre Tricontinental (Cetri) in Louvain-la-Neuve, Belgium, and the author of L’Avenir du travail vu du Sud: Critique de la ‘quatrième révolution industrielle’ (The Future of Work as Seen from the South), Syllepse, Paris, 2019. Translated by Charles Goulden.


Copyright ©2019 Le Monde diplomatique — used by permission of Agence Global.
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