Data flows, e-commerce, and development

Event report

[Read more session reports from the UNCTAD E-Commerce Week 2018]

The moderator of the session, Mr Richard Hill (President, Association for Proper Internet Governance), started by providing an overview of the issues related to data flows. Free data flows support the revenue model of large Internet companies, mostly funded by advertising. Users’ personal data and searches – including those that take place on other websites – are used for targeted advertising and also for political purposes in the context of elections. In the World Trade Organization (WTO) and in regional trade agreements such as the Trans-Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP), there are proposals aiming to forbid data localisation and to guarantee the free flow of data. However, if data is the new oil, then data should not be given away for free. There needs to be a discussion on the individual and collective value of data. Norms such as the General Data Protection Regulation (GDPR) tackle the former, but not the latter.  If norms to forbid data localisation are adopted, states will lose an important instrument for intervention in cases of market dominance and abuse of power by Internet companies.

Prof. Jane Kelsey (Professor of Law, University of Auckland, New Zealand) focused on how data flows affect development in relation to agriculture. Traditionally, agriculture is discussed in the context of the WTO Agreement on Agriculture and the Doha Round. Nevertheless, technology development is changing the nature of future agriculture. The unfettered right to move and store data anywhere and proposals that aim to forbid obligations to disclose the source-code will have an impact on food production.

Kelsey explained how the landscape of agriculture is changing, with the agribusiness sector embracing digital technology and digital-related companies, such as Panasonic and Fujitsu, entering into the business of food production. Technology is being used for everyday activities, such as soil moisturising and crop harvesting, along with increasing automation and the introduction of drones. Precision agriculture will be one of the flash points of the fourth industrial revolution. To maintain food sovereignty, security, and jobs, governments need to pay attention to e-commerce negotiations at the WTO. According to Kelsey, precision agriculture will strengthen the power of global commodity producers. The job of farmers will be directed by these companies, which will determine what to produce, what seeds to use, for example, thus creating lock-in effects when it comes to technology. The job market will also be affected by automation, according to Kelsey, reducing the demand for workers in labour-intensive developing countries.

Ms Sanya Reid Smith (Legal advisor and Senior Researcher, Third World Network) focused on negotiations at the WTO and their impact on development. She reminded the session that there was no consensus on e-commerce issues in the last WTO Ministerial Conference, but there is a group of countries that have decided to continue discussions towards future negotiations on e-commerce. They are currently putting forward their proposals. Many of these proposals take inspiration from provisions that are being included in regional trade agreements (RTAs), such as the Comprehensive and Progressive Agreement for TPP (CPTPP) and the RCEP.

Smith focused on proposals under discussion at the WTO in three areas: cross-border data flows, restrictions on source-code disclosure, and raising the de minimis. When it comes to cross-border data flows, she stated her opinion that restrictions on data localisation could have negative implications in several areas such as privacy, access to tax records, and the applicability of financial regulation. Restrictions on access to the source-code are in contradiction with existing laws in several countries, which aim to protect health and safety. For example, in the USA, there is authorisation to check the code of machines that produce sensitive medication, such as drugs to treat cancer, in order to make sure they are balanced and are respecting dosages. The software of cars may also need to be checked, in order to protect safety. Finally, proposals that aim to raise the de minimis would have negative implications for developing countries which are extremely reliant on tariff revenues. 

Ms Sofia Scasserra (Principal Assistant, Economic and International Trade Issues, UNI Americas, Argentina) tackled the impact of e-commerce on jobs. The introduction of technology will only entrench current asymmetries, such as gender, development gaps, and concentration, unless we regulate in favour of the less powerful. She noted that free flow of data is not the same as equal access to the data. If developing countries do not have the same conditions to access data, they will not be able to be producers of the technology and products of the future, such as artificial intelligence. Scasserra also called attention to the need for frameworks that will protect workers, dealing with privacy issues in work relations. Private data cannot be held against workers and used to establish the conditions for promotions or firing, for example.  She mused that this regulatory gap should not be addressed at the WTO; first there is a need for discussion in other organisations, which are more centred on development and workers’ rights, such as the United Nations Conference on Trade and Development (UNCTAD) and the International Labour Organization (ILO).

Ms Vahini Naidu (Counsellor, South African Permanent Mission, Geneva) explained that, at the WTO, a large number of members have raised important questions and are trying to grapple with the changes brought by the digital transformation. She called attention to the importance of making a distinction: members are not questioning the relevance of the digital economy and e-commerce, or the benefits that they can bring to sustainable development. They are rather arguing that there is a knowledge gap in relation to the practical consequences of many of the proposals.

According to Naidu, the implementation of national industrial policies could help to achieve the promised benefits that could arise from e-commerce. For a long time, developed countries benefited from the lack of rules in many other areas. When these countries manage to foster their development, they press for the introduction of rules. Nevertheless, developing countries need to have the policy space to make interventions in strategic sectors of their economy. It is not productive to negotiate rules when there are so many questions unanswered: countries in the WTO still cannot agree on the classification of some digitised products as goods or services, nor on the application of the principle of technological neutrality, for example. These issues need to be resolved. Moreover, the WTO should not be the space to discuss the broad spectrum of Internet governance issues. Finally, it is not clear how the introduction of rules at the WTO would contribute to ensuring a more equal distribution of digital dividends and the overcoming of development gaps.

Discussions with the audience tackled a plurality of questions, such as the applicability of current norms, for example the General Agreement on Trade in Services (GATS), the identification of best practices in the field of industrial policies, and the further implications of non-disclosure of source code. 

By Marilia Maciel