WTO must ensure the benefits of the digital economy are available to every business, everywhere

In managing transactions within and among nations, providing services, and supplying information, the digital economy has become a powerful enabler of economic activity.

Its contribution to growth and productivity is considerable and continues to expand. The technological revolution underlying this virtual world also offers new access and integration opportunities to otherwise excluded communities.

Harnessing the benefits of digitisation requires intergovernmental cooperation.

Following its release from the shackles of a stalled Doha Round at the end of last year, the World Trade Organisation has started discussions on electronic commerce.

In the view of many, the WTO is the international forum where policies need to be shaped and agreed.

The WTO is not a newcomer to the issue. A Work Programme on Electronic Commerce was initiated in 1998. But engagement has been sporadic and progress elusive. This has changed in the last few months. July saw no fewer than seven proposals from an array of governments on how to promote and regulate digital trade.

In the work undertaken in the late 1990s, e-commerce was defined as “the production, distribution, marketing, sale and delivery of goods and services by electronic means”.

This is a broad definition that could largely cover the scope of a new WTO remit, but it should be expanded to take in development-related issues.

Some governments emphasise a hands-off approach to regulation, but even this requires explicit agreement among governments.

A non-interventionist positioning emphasises the unimpeded flow of data, reliance on markets, open choice of preferred technologies, and stakeholder participation in the formulation of regulations and standards.

Particular concerns from this perspective include forced localisation of data, demands for the surrender of source codes, technology transfer requirements and local content requirements.

Some governments have resorted to these kinds of requirements, either to develop domestic service capacity or in the belief that such restraints serve public policy objectives.

All governments recognise the need for guarantees of consumer protection, privacy, data confidentiality, and national security. In some jurisdictions, an additional concern is data content on ethical, cultural or political grounds. These may be seen as inviolate public policy prerequisites, but differences plague the detail.

When the European Court of Justice struck down the EU’s 2000 “safe harbour” agreement with the US for data transfer in October 2015, for example, it took until July this year to agree the new EU-US Privacy Shield. Even then, some still see the Privacy Shield as a work in progress.

A WTO approach to a comprehensive agreement on regulating electronic commerce will need to address some fundamental differences in emphasis and preferences among the membership. Leaders in the field want minimal regulation, and no fiscal imposition.

Augmenting infrastructure, deepening knowledge, and facilitating access to technology are part of what is still lacking in many places

Others will be more cautious, either because they fear data manipulation and appropriation over which they have inadequate control, or they may be intervening with a view to nurturing domestic capabilities.

The WTO’s recent performance as a negotiating body will be tested should the e-commerce agenda gain traction.

An issue on which a meeting of minds should be more straightforward is a positive development agenda. The explosion of wireless communication in the last two to three decades has extended connectivity enormously, including in remote areas with low-income populations.

Ready information and burgeoning platforms for conducting business have expanded opportunities for new and small businesses.

All this new opportunity, however, has not closed the digital divide for many individuals and communities. Missing out on what benefits others means being left even further behind. Augmenting infrastructure, deepening knowledge, and facilitating access to technology are part of what is still lacking in many places.

In a recent Financial Times blog Chandran Nair of the Global Institute for Tomorrow does well to remind us that the technological revolution does not answer problems of poverty and deprivation. But in making the point he goes too far.

A binary view of a world in which digital technology is a play thing of privilege that does nothing for what he terms pre-industrial societies is an invitation to let opportunities slide by.

Patrick Low is a fellow at the Asia Global Institute of the University of Hong Kong

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