The inclusive power of digital trade: Why combatting digital protectionism is crucial to the WTO’s mission in the twenty-first century

Event report

[Read more session reports and live updates from the 2016 WTO Public Forum.]

This session explored ICT-enabled inclusion in the global trading system, with particular emphasis on how the free flow of data across borders is critical to small and medium enterprises (SMEs) participating in digital trade.

Moderator Cody Ankeny, Manager of Global Policy at the Information Technology Industry Council, started the session by showing a video that highlighted the importance of global data flows and considered them to be a ‘critical resource for the future prosperity of the communities where we live’.

Deepak Mishra, Lead Economist at the World Bank and Co-Director of the World Development Report, drew on the Report’s findings and connected them to inclusive trade. He showed that while the digital revolutions bring enormous potential for businesses, people, and governments, this is not always translated into aggregated economic growth, job creation, and trust in the government. Whether the digital economy can lead to prosperity is largely dependent on the ‘analogue complements’, in the form of regulations, skills development, and institutions.

According to Mishra, the Internet can promote trade by making it more inclusive, efficient, and innovative. Still, despite the booming Internet industry, global trade is slowing down, due to both the digital divide and the analogue barriers to digital trade. These barriers include protectionism, a lack of clarity on regulation, and a lack of consensus on how to deal with digital monopolies. To overcome these barriers, Mishra presented solutions at the sectoral, national, and global levels, mostly aimed at boosting competition. The question remains: ‘Can the WTO help to strengthen the analogue foundations while Silicon Valley accelerates the pace of digital revolutions?’

Makoto Yokozawa, Professor at Kyoto University, Senior Consultant at Nomura Research, and Vice Chair of Public Policy of the Japan Information Technology Industry Association, provided a view from the business sector. He argued that while data will strengthen regional and local economies, localisation requirements impose obstacles to businesses.

To make better regulations, Yokozawa pleaded for dynamic relationships among stakeholders to overcome ‘mismatched discussions’ in governmental silos and closed arenas. He concluded by arguing that digital business needs ‘stable, safe, and reliable data flows’. If one of the layers of the digital ecosystem breaks down, businesses will be inevitably affected. Therefore, we need to keep all layers ‘healthy and working’.

Melissa Blaustein, Founder and CEO of Allied for Startups, offered a view from the start-up community. She explained that the new global connectivity provides business potential for millions of people worldwide, and 86% of start-ups have some sort of cross-border data flow. Nevertheless, start-ups also face obstacles, as they often do not have the means to be included in policy processes. Yet their involvement is needed to create inclusive policies from which start-ups and SMEs can benefit.

Hosuk Lee-Makiyama, Director of the European Centre for International Political Economy (ECIPE), looked at the specific ways in which the topic of inclusive digital trade can be dealt with within the Framework of the WTO. He advocated looking at existing legislation, such as the Telecom Annex and case law, before attempting to create new laws. He also emphasised that different countries have different standards and regulations, and that there is a need for harmonisation. This need was echoed by Blaustein and Yokozawa.

The discussion that followed addressed the perceived dichotomy between trade and privacy regulation and whether this dichotomy is valid. One participant expressed the need for capacity building among missions of least developed countries (LDCs) to effectively engage in these highly complex negotiations. Mishra responded that LDCs not only need capacity, but also that digital policy needs to be relevant for their countries. Without widespread access to the Internet, digital policy concerns will not be prioritised by LDCs. As a solution, advanced countries can set global standards through bilateral and multilateral agreements that could be set as a benchmark. Other countries can come on board when their digital economies have progressed. Lee-Makiyama highlighted that a lack of understanding is not only common among LDCs, but also even among advanced countries. Developing negotiation capabilities in digital trade issues is therefore an important activity.

by Barbara Rosen Jacobson