Lynn Fries of The Real News—reporting from the World Trade Organization (WTO)—describes how high-tech giants are “determined to achieve in WTO what they have yet to secure in any other deal: new rules that will lock in profit-making opportunities in the digitalized economy of the future.” What will this mean for developing countries and global inequities?
Full text below the jump.
LYNN FRIES: Welcome to The Real News, I’m Lynn Fries in Geneva. In shaping the global economy, history has shown complex injustice can be done by trade rules that lock in corporate rights and lock out public oversight. Injustices, that are reflected in public protest in the most advanced to the least developed countries. Based on my recent shoot at the World Trade Organization, in this program I report on the state of play on rules for the global economy of the future – the digital economy. Specifically, dangers ahead at the WTO in a push by a small number of digital superpowers to table new rules for e-commerce.
After years of languishing while other “free trade” agreements were negotiated, big business has turned its focus back to the World Trade Organization, particularly among the high-tech sector that now includes five of the seven largest corporations globally. They are determined to achieve in WTO what they have yet to secure in any other deal: new rules that will lock in profit-making opportunities in the digitalized economy of the future. The prize they seek in Argentina is a mandate for new negotiations under the rubric of e-commerce.
So wrote Deborah James back in June in commenting on the state of play in the WTO specifically the upcoming 11th Ministerial Meeting of the World Trade Organization to be held in Argentina in December. James went on to say Business interests are sure to weigh in with governments. Will civil society – trade unionists, environmentalists, public interest and development advocates – do the same?
Fast forward to October and 300 organizations of global civil society from more than 150 countries, representing tens of millions of people from around the world put this forward as one of their key concerns in a letter they sent to WTO Members. In the letter they stated: “We are increasingly concerned about press reports indicating that some WTO Members are pushing a dangerous and inappropriate new agenda under the disguising rubric of e-commerce. Even though there was no consensus to introduce this new issue during or since the Nairobi Ministerial.
While consensus was not reached to introduce this new issue in the Nairobi WTO Ministerial in 2015, in contrast the Doha WTO Ministerial in 2001 did deliver a mandate by consensus agreement aimed to eliminate systemic inequalities inherited from many of the Agreements that came into force with the creation of the WTO in 1995.
The issue of systemic inequities in the current WTO system and dangers ahead in the push for new WTO rules was part of a broad discussion at a recent event in Geneva. The topic of the event was the upcoming 2017 WTO Ministerial. Organized by the Third World Network Africa and Our World Is Not For Sale, the event was hosted as part of the World Trade Organization Public Forum and moderated by Our World Is Not For Sale’s Deborah James.
In this report, we feature clips of that event with a specific focus on the push for new rules on e-commerce. We open as Aileen Kwa of the South Centre gives an example of the kind of recommendations governments are hearing from business interests. And then goes on to explain the huge challenges that governments are facing with respect to the future digital economy
AILEEN KWA: The ICC and G20 recommend that for the sake of MSMEs we should have new digital rules for everyone. Now, is this really going to help MSNEs?
Even the big companies today when struggling with the digital companies and competing with them are actually not making it basically. A recent report Why Tesla Is Worth More Than GM talks about how GM even though it is selling ten million cars and Tesla eighty thousand cars, GM’s market capitalization is smaller than Tesla because Tesla is a digital company and therefore it is predicted to do much better for the future than anything GM could accomplish. Now if this is what the big companies are struggling with then the question is what about MSMEs.
We have huge challenges in terms of industrialization with the digital economy. And these challenges have been captured. There is a UBS White Paper on Extreme Automation and Connectivity. And it says that many of the economies, developing country economies are not going to do well. They have not dealt with the challenges of the previous industrial revolutions – the second and third industrial revolutions. And They will fact the threat of the Fourth Industrial Revolution compromising low-skilled jobs via extreme automation, but may not have the technological ability to enjoy the relative gains that could be redistributed via extreme connectivity. . And these countries that they are referring to in that case study are Mexico, Turkey, Egypt, India, South Africa and Brazil. We are not even talking about smaller developing countries like the others in Africa or LDCs .
Now by and large we have, if you can sum the situation up in the negotiations, we have two models of liberalisation under e-commerce that is really at the heart of the current struggle today in the discussions. So the two models are one, we have the 1998 work program on e-commerce. This is a work program all members have been engaging in. And developing countries now many of them like the Africa Group, LDCs etcetera, they are saying we want to engage in this work program. I think the Ambassador of India also mentioned that this is also their position. And two, we have the new rules that some members are suggesting to introduce into the WTO including the EU, Japan, the United States and others.
So there is this 1998 e-commerce work program. It’s not that the WTO doesn’t deal with e-commerce. That is not true. We already have a work program. And it is a very, very comprehensive and actually very far sighted work program. We are talking here about e-commerce in relation to the existing agreements. So it is basically about how we fine tune the existing agreements so that it can actually apply to e-commerce as well. What has been done in these agreements is that it is about progressive liberalisation. It’s not about opening completely your markets tomorrow. It is about saying OK we open here, we close there. We have to align it to our industrialization policy. We have to be strategic. We have to etcetera. So this is about strategic liberalisation. And this, all members in the WTO have been doing in the last 50 years. The other model that I am talking about, right, because I said that there are two models of liberalisation. The other model is new rules that Edouard had mentioned about free data flows, about no localisation, no possibility to have localisation rules, no disclosure of source code. That is the other model. The new rules that we are talking about is comprehensive opening. Basically if you have free data flows you would completely open your digital economy. So these are the two models.
Many developing countries that are not at the forefront of the emerging technologies like artificial intelligence know that if they open up completely they would further deindustrialize. So their markets would completely be swamped by the digital goods and services that will come in from the forerunners of the digital economy. This is why there is a huge stalemate now.
EDOUARD BIZUMUREMYI: We do not have a mandate to negotiate e-commerce. If you look at the many decisions in the past ministerial conferences, the last one Nairobi, it was said that while we concur that officials should prioritize work where results have not been achieved some wish to identify and discuss other issues including e-commerce. In the sense, that it has not been under the negotiating mandate not that e-commerce has not been in the WTO because it has been here since 1998 but it has not been at all under a negotiating mandate. And the sentence says that: to launch multilateral negotiations it will require the approval by all members. We have not approved this negotiating agenda. Even reasons that have been given by many people particularly focusing on key immediate deliverables for the majority of poor people.
J.S. DEEPAK: Coming to the package of outcomes that we expect. Obviously, we in India believe that a permanent solution to the problem related to public stock-holding for food security purposes is Item Number One on the agenda and an overriding priority. Not only because it has the mandate of Ministers from Nairobi but also because it seeks to address the food, the hunger and the needs of more that eight hundred million people in more than fifty countries around the world.
VAHINI NAIDU: There is no mandate to negotiate rules. The previous two speakers have said that you would require multilateral consensus in terms of paragraph 34 of the Nairobi Ministerial decision. And just to say that the scope and depth of the issues are so far apart that it is impossible to consider negotiating rules at this ministerial conference.
Yes of course, e-commerce can be used as a tool for development. There are so many benefits. I mean there is not enough time to talk about them. We know about the digital dividends that can accrue in e-commerce. But it is very important to note and Edouard has already touched on it that no one started out by disciplining e-commerce. We’ve heard how these technologies are making development more inclusive, efficient and innovative but when we look at the kinds of rules that are being proposed they are not necessarily going to contribute towards development. And let’s look at why.
So the first thing would be: cross border commerce is highly, highly asymmetrical in nature. It is a very highly concentrated area. It is dominated by six countries. And it is oligopolistic. This is the reality. Two, the wider digital transformation of which e-commerce is a little part is important but very, very disruptive. And so with automation, with artificial intelligence it would also mean job losses and government ability to maybe have some kind of foresight in terms of developing or adopting innovative policies to try to address these. And what we are finding at least in my country is that we have only started looking at the Fourth Industrial Revolution and trying to incorporate certain policies in our industrial action plan only very recently. And so we are not sure how long it would take in terms of implementing policies to try to adapt to what is happening but we are noticing a lot of disruption in social cohesion. For example Uber has led to quite a lot of civil unrest in my country because it has disrupted the taxi industry. Thirdly, I mentioned that it is highly oligopolistic but what we are also seeing is that it is replete with instances of rent-seeking, anti-competitive practices. And you find that the bigger players try to enter your market. They either decimate smaller players, they try to buy them out, and so in terms of developing your own local industries it is becoming increasingly difficult without having the ability to develop certain policies to address these issues.
AILEEN KWA: It is clear that if countries want to have digital industrialization, as was said earlier, we need to have a model where we can provide a market also for our domestic players.
This is why so much effort is now in place to build a CFTA, the Continental Free Trade Area. This regional market is so important because Africa consumes its own manufactured products. It does not get exported elsewhere. And with e-commerce and the new rules that have been proposed, what is happening is that you will simply completely dismantle the existence of a regional market. And if Africa needs to continue to industrialize they will need to have this regional market. There will not be a regional market based on tariffs anymore because tariffs do not exist in a digital economy. But it will have to be built through government regulations and these are exactly the regulations that are sought to not be allowed through these new rules.
LYNN FRIES: In these closing clips, we provide further context on all this and misleading stories that Doha is dead. It should be noted that a top priority of the WTO Doha Agenda is to close loopholes in the Agreement on Agriculture that enable agricultural giants to price their products both in their home market and for export to the rest of the world well below the cost of production. So as well as a push to get new rules for e-commerce onto the WTO negotiating table, a push is also being made to get the Doha Development Agenda off the table.
EDOUARD BIZUMUREMYI: On agriculture, agriculture is extremely important for Africa. More than eighty percent of jobs are being provided in the agriculture sector. It contributes to livelihood security, rural development and economic development. And unfortunately since a long time, harmful trade distorting subsidies in agriculture have devastated many commodities. There are case studies that show commodities like poultry in many countries, maize, and many other commodities have been devastated due to cheap imports, subsidized imports.
The Doha Round that was launched in 2001 created hopes, promises, that it will deliver on development issues. That’s why we view the Doha Round as extremely important and would like to pursue the Doha Round.
Our position that I want to state as the Africa Group stems from the African Continental overarching objectives. We are guided by the renewal of industrial development in Africa. Actually, we are instructed that any rule making at the WTO should not undermine continental integration, industrialization efforts and structural transformation efforts.
DEBORAH JAMES: There seem to be these two different visions of how we should proceed in the WTO. One very much focused on changing the institutions current rules to make them more flexible so that developing countries can pursue autonomous development and make sure either in a trade context or a non-trade context to grow their economies and reduce poverty in their countries.
And this sort of other vision, that is looking at leaving development behind. Not addressing any of the current crises in the global economy that have to do with negative impacts of rules 20 years ago from the WTO and actually setting us up for a different kind of economy. And to me it seems like when we look at the proposals that are being packaged as e-commerce and we know they are not really about e-commerce, right. They are looking at the digital economy of the future which is actually pretty much the whole economy at some point in the future considering the impact of data on anything not just UBER or transportation, but agriculture and services and everything else.
What is being proposed seems to me being packaged as e-commerce and being packaged as beneficial for medium, small and micro enterprises is really a new constitution for that future digital economy. And it seems to me to be a moment when they are trying to push this agenda without people even understanding the potential implications of the rules and including on countries that have very low rates not even of broadband penetration but of electrification or of access to basic infrastructure. And then they are asking countries to take on commitments in transfer of data and transfer of this natural resource that is just mind boggling. And it seems to me to be a moment if it were to be a situation where there was going to be a new mandate on discussing new e-commerce rules in the WTO in Argentina, that would be akin to the moment of the founding of the WTO
And there is no way it seems to me that members or civil society or anyone else who cares about development should allow the idea that there should be a new negotiating mandate on this digital economy for the next century before we have addressed some of the inequities of the current WTO system.
LYNN FRIES: We have to leave it there. Special thanks the Third World Network Africa and Our World Is Not For Sale as organizers of this event. And thank you for joining us on The Real News Network.
Originally published at The Real News Network.
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