What are the potential implications of recent WTO e-commerce proposals on digital industrial policy?

Event report

[Read more session reports from WTO Public Forum 2017]

Mr Malcom Damon, Executive Director, Economic Justice Network, welcomed and introduced the panellists. He pointed out how companies such as Amazon are exercising a stranglehold on our economies, especially in terms of data accessibility.

Dr Rashmi Banga,Senior Economist, United Nations Conference on Trade and Development

(UNCTAD), started by mentioning how rising product digitalisation is making the less developed countries (LDCs) lose out on global trade competitiveness. According to her, there are three categories of digital products:

1. e-commerce products,
2. electronically transmitted products, and
3. emerging categories in e-commerce such as artificial intelligence (AI) and 3D-printing.

The LDCs are losing out in trade due to the digital divide in access. While all this is already known in existing fields of e-commerce, the impact of the emerging categories is still unknown. She concluded by outlining some solutions. For example, enacting industrial policies and legal rules would allow the LDCs to shape global development policies and processes. An essential part of this is an increase in South-South cooperation, which would aid the LDCs in addressing digital industrialisation.

Dr Shamel Azmeh, Assistant Professor, University of Bath,, began by highlighting the central role of global rules and regulations in bridging knowledge and technology gaps as two aspects of a wider digital divide. These rules in the global economy consist of bilateral and multilateral development negotiations. As these rules impact industrial policies in force, they are central in digitalisation and technological improvement. Azmeh reminded us that the digital divide should not only be seen in terms of internet penetration and access but also in terms of know-how. To him, the second aspect is currently putting the LDCs further behind the EU, the US, and China. The LDCs should seek to place data and privacy restrictions in trade agreements while learning from existing policies and adapting them.

Mr Parminder Jeet Singh, Executive Director, IT for Change, discussed what digital industrialisation policies could be. However, more important to him than policy options, it needed to be pointed out that data remains a central aspect of the digital economy, as it contains the information and intelligence which are paramount as they are potent organisational tools. Therefore, whoever controls the data  controls sectors of the economy. Control of data may even require its producers to then purchase the same data as it offers further added value. He moved on to discuss what digital industrialisation policies could look like via the examples of the US, China, and the EU. Singh concluded by highlighting the importance of data infrastructure for the LDCs, which remains limited to national environments and as such could provide a platform for creative approaches.

Mr Abhjiit Das, Head, Centre for WTO Studies, presented an argument that existing flexibilities in the General Agreement on Tariffs and Trade (GATT) and WTO rules would vanish with the ratification of current e-commerce proposals. In these processes, according to him, there are two key strands: firstly that industrial policy matters, globally and nationally, and secondly, that the data flows matter as those with control of and access to the data gain market advantage over those who do not. While countries under the current GATT have been able to maintain control over their domestic resources, e-commerce proposals would erode these practices. In the first place, the free flow of data would remove the raw material from the control of the LDCs and force individuals in LDC countries to purchase refined data products later. Secondly, with higher global standards, the smaller firms in the LDCs would not be able to sustain themselves due to problems with compliance. Das concluded by saying that with e-commerce regulations which would remove industrial policy flexibility, the LDCs would not be able to catch up.

Ambassador François Xavier Ngarambe, Permanent Representative of Rwanda to the United Nations and other international organisations in Geneva, commented that Africa and the Middle East are falling behind in e-commerce. The central essence in catching up remains increasing productivity by investing in human capital and developing industrial and trade policies. However, he pointed out that infrastructure is required to set up an environment which would contribute positively to the development of human capital and policies. On the policy side, Ngarambe highlighted the need for smart protectionism which would not only prevent the free flow of data outside the country but would also enable small and medium sized digital companies to compete. He concluded by stating that the free flow of data is basically the same thing as giving away resources for free. Therefore, what Africa needs is policy space to close the digital divide.

In the following discussion session, Singh pointed out the role of governments in terms of data management structures, with Das highlighting that governments are already utilising procurement practices to support the national digital commerce sector. Singh also reminded the session that even developed countries and regions, such as the US and the EU, are enacting legislation to protect strategically important companies. Ngarambe finished by stating that existing mandates ought to be fulfilled first before putting new proposals and rules on the table.

Damon closed the debate by thanking all panellists and the audience. 
 

by Arto Väisänen