April 03, 2019
Common Dreams, April 3, 2019
As thousands gather for “UNCTAD eCommerce Week” in Geneva, just weeks after some countries launched talks on “e-commerce,” groups warn governments of serious dangers and urge them to instead focus on transforming global trade rules for shared prosperity for all
Today, 315 civil society organizations (CSOs) – including global union federations, development advocates, consumer organizations, and environmental groups – from more than 90 countries delivered a letter (available in English, Spanish, and French in PDF) to members of the World Trade Organization (WTO). In it, they express their “profound and urgent opposition to these proposed negotiations which, if concluded, could result in the full liberalization of the entire (digital) economy, and thus represent back door attempt to achieve a ‘WTO 2.0.’”
The WTO membership rejected displacing the “development agenda” in the WTO for a new agenda on digital trade at the last Ministerial meeting in December 2017 in Argentina. In spite of this, a number of countries decided to launch negotiations in March 2019.
The intent – as advocated for by Big Tech industry groups – is to rewrite the rules of the global economy in a way that would give them, the largest corporations in the world, new “rights” to profit – while limiting public interest oversight and benefits from the new economy for everyone else – by commencing new negotiations on “e-commerce” in the WTO. The rules proposed by Big Tech transnational corporations (TNCs) go far beyond “e-commerce” and have implications for all aspects of domestic as well as the global economy, even for countries not participating.
The letter noted that “[w]hile the rhetoric surrounding ‘e-commerce’ highlights the opportunities for developing country entrepreneurs, having binding rules on the still-emerging digital economy would severely constrain the ability of countries to develop their economies in the future. It would accelerate the global disadvantaging of workers and small enterprises in all countries vis-à-vis large corporations that characterize the current global economy.”
In the letter, the 315 CSOs argue that the new rules “would enable Big Tech to consolidate its exploitative business model, including gaining rights to access markets globally; extracting and controlling personal, social, and business data around the world; locking-in deregulation and evading future regulation; accessing an unlimited supply of labor stripped of its rights; expanding its power through monopolies; and, evading the payment of taxes. The proposed rules thus represent a grave threat to development, human rights, labor, and shared prosperity around the world, and are the opposite of the policies needed to rein in the power of Big Tech.”
This was the first time that such a large swath of civil society has pronounced itself of this issue. Perhaps this is because, as the letter notes, “Big Tech’s surveillance capitalism is harming democratic functioning in our media, knowledge, culture, transportation, agricultural, judicial, commercial, health, and other sectors, and damaging our democratic processes. Public debates increasingly focus on the need to reduce the power of Big Tech through stronger regulations on the national and international level, but proposed e-commerce rules – including their top goal of unrestricted ‘free flow of data’– could pre-empt such efforts in the appropriate agencies.” The letter thus argues that we need “appropriate democratic governance, not unlimited power over data by Big Tech.”
The large number of global union federations and other national trade union organizations from around the world are nearly unprecedented in signing such a letter. The letter highlighted that “digital policies must promote decent jobs for shared prosperity, not reduce workers’ power.” The letter explained that, “[i]nclusive digital industrialization for shared prosperity must focus on decent job and livelihood creation and associated social and economic rights. UNCTAD’s Trade and Development Report has shown that workers are losing their share of global production vis-à-vis capital, partially because capital has used its surplus wealth to rewrite the rules to allow it to extract increasing profits. Automation and trade policies have weakened workers’ bargaining power, and the proposed ‘e-commerce’ rules would further erode workers’ rights and power vis-à-vis giant digital corporations and lead to increasing inequality and precariousness in many sectors.” They further stated that “[t]he most important strategy to ensure widespread and inclusive benefits from digitalization is a commitment to job creation towards full employment, focused on equity, including strong labor rights and decent work and working conditions for all workers; gender equality; workers’ data rights; and, comprehensive and portable social protection including for platform workers.”
Large global women’s networks also endorsed the letter. They noted that “[a]s more women enter the digital economy, we object to how ‘gender’ and ‘women’s economic empowerment’ are being used in the WTO to push anti-development policies which will reduce the power of women workers. New rules that reinforce structural inequalities between and within countries will not be acceptable just because of a gender or labor clause.”
Many consumer groups endorsed the letter, noting that “strong consumer protections, privacy, and rights would be jeopardized by ‘e-commerce’ rules.” They argued that “[s]trong policies for digital user protection are needed, including around matters of privacy and data protection. Citizens have rights to privacy and consumers have rights to have our data protected and not abused by giant TNCs for private profit, or by governments against our human rights in the digital space. The proposed WTO rules would give corporations unlimited rights to transfer data to whatever jurisdiction they please and would privilege commercial rights over consumer protections and citizens’ privacy rights in ways that cannot be fixed by rules in the WTO itself. Human, labor, consumer, economic, and civil rights must apply equally in the digital sphere without being constrained as ‘barriers to trade.’”
Many groups with a deep knowledge of the internet supported the letter, noting that “[p]ublic interest data policies are essential for economic development and prosperity in all countries. They explained that at this point, “most countries (and most people) don’t properly grasp the value of data, the most valuable resource, so governments are too easily allowing it to be collected indiscriminately and transferred outside their countries by TNCs. Just as in previous centuries, when developing countries lost control of the capacity to properly take advantage of the wealth-creating potential of commodities, there is a danger of repeating those same mistakes now with data, leading to digital colonialism and the exacerbation of the serious problem of increasing inequality around the world. All countries, and especially developing countries, need to harness the value of data for domestic entrepreneurs, but also for community economic development in the public interest. Thus, they must maintain the policy space to tailor policies on governance of data, including potentially maintaining data locally or regionally when that might be in the national or community interest.” They concluded that “[p]roposals in the WTO to give Big Tech the right to unregulated cross-border data transfers, to ban countries from being able to require domestic data storage, or to use local servers would severely constrain the ability of developing countries – and all who are not Big Tech – to ensure that their citizens benefit from digitalization.”
The letter, supported by hundreds of groups from developing countries, further argued that “[d]igital liberalization would decimate development and increase poverty in developing countries.” They noted that in order to trade, “developing countries have to produce and increase the value captured from production. If digital trade is expanded without first improving productive capacities in developing countries, as well as closing the digital divide through improvements in physical infrastructure and interconnectivity, and adopting enforceable norms for privacy, data protection, and economic data rights, developing countries will simply be opening their economies even further to foreign imports. Linking into e-commerce platforms will not automatically increase exports but can lead to further erosion of domestic market shares.” They thus cautioned that “liberalization in the digital sphere, without the required domestic investments to improve productive capacities, will destroy jobs and further informalize them, decimate micro, small and medium enterprises (MSMEs), and severely constrain future development. These threats to economic sovereignty and future development prospects from premature digital liberalization would be greatly amplified if the rapidly evolving digital economic space is governed by rules that were developed by TNCs for their own profit-making around the world.”
An overwhelming number of organizations from Africa endorsed the letter, highlighting that “[d]igital Industrialization is urgently needed to foster development and MSMEs.” “Instead of digital liberalization, what is needed around the world is a development-focused digital industrialization strategy. In Africa, this is reflected in the Agenda 2063: The Africa We Want vision. Digital industrialization indicates the need for investment in countries’ technical, legal and economic infrastructure and policies to develop and support domestic digital businesses and platforms and build capacities to use domestic data in the public interest; to strategically promote domestic MSMEs including through technology transfer and national data use frameworks; to ensure universal benefits of the digital economy through full employment policies; to ensure proper taxation and investments to close the digital divide; to advance consumer welfare and privacy through enforceable consumer protection measures; to ensure public interest regulation of the digital economy and sound competition practices; and more. Specific policies are required to protect the small actors, traders, farmers, small service providers, workers, etcetera that are threatened by new globally organized digital models. Much of this can be accomplished through domestic policies that should be developed with appropriate stakeholder input, as well as through regional integration. But “e-commerce” rules in the WTO are intended to specifically restrict the ability of countries to implement most such policies.
Many prominent CSOs working on global tax reform, including groups advocating for quality accessible public services, endorsed the letter, noting that “[f]airer taxation would be severely constrained by proposed e-commerce rules in the WTO. ‘E-commerce’ proposals in the WTO include at least five mechanisms to limit tax liabilities for Big Tech, not just by prohibiting appropriate taxation but also by banning requirements that companies have a local presence in countries where they operate. But giant technology companies should contribute to the national tax base, just as do local or non-digital companies. Digital players are taking advantage of the mobility and intangibility of digital goods and services to avoid tax and create an uneven playing field. Tax rules that allow digital TNCs to artificially reduce taxable income or shift profits to low-tax jurisdictions in which little or no economic activity is performed should be tackled and must not be codified by digital trade rules. Appropriate taxation is essential for investments in development-focused infrastructure and good quality and accessible public services, including social infrastructure that can reduce unpaid and poorly paid care work in the home mostly carried by women.” They pointed out that “developing countries will not be able to achieve the Sustainable Development Goals (SDGs) without expanding fiscal supports to achieve quality accessible public services in education, health, social care, access to water, electricity, and more.”
Anti-monopoly and pro-competition groups also endorsed, noting that “anti-monopoly regulations and actions are urgently needed, in jurisdictions outside of the WTO.” The letter highlighted that “[n]early all digital trade is dominated by a few global players from the United States and China in ways that are not simply disrupting and re-organizing economic activity but leading to digital domination. An ever-larger source of Big Tech’s profit-making is derived from buying competitors and avoiding regulation. In addition to creating new and strengthening existing anti-monopoly regulations, governments must consider breaking up companies engaged in harmful monopoly practices. Until this occurs, it would be foolish to tip the scale in favor of the technology monopolists’ power even further by agreeing to their proposals in the WTO.”
Many organizations that have a long experience working on trade also endorsed the letter, pointing out that “[c]ountries need policy space; the e-commerce agenda is promoting harmful total liberalization.” They highlighted how “‘e-commerce’ is being used as a Trojan horse for other proposals that would expand liberalization including the removal of tariffs (on information technology products); liberalization of various services; and allowing foreign companies to compete for government procurement contracts of all ministries. They are proposed to apply even to LDCs [Least Developed Countries] who do not have to liberalize goods or services in the Doha Round. These proposals include issues which developing countries successfully stopped from being negotiated in the Doha Round. ‘E-commerce’ should not function as a back door for anti-development rules that have already been rejected.”
The organizations come to the conclusion that “[w]e need a new agenda for digital economic policies, and for the global economy.” They agreed that “developing countries must develop their own agenda for digital industrialization. They must not advance the ‘e-commerce rules’ that were developed by TNCs like Amazon, Google, Facebook, and Alibaba in their own interests. Other models can more equitably distribute the benefits of the digital economy while reinforcing human rights. All countries likewise urgently need policies to constrain the behavior of these corporate behemoths, not to further entrench their outsized monopoly power. A pro-development outcome cannot be achieved in e-commerce talks because the rules and policies needed for digital industrialization are the opposite of WTO rules, which give companies rights while constraining the role of the state in regulating.”
Civil society has argued that “the global trade system must provide countries sufficient policy space to pursue a positive agenda for development and job creation, and must facilitate, rather than hinder, global efforts to ensure food sovereignty and true food security, sustainable development, access to affordable medicines, and global financial stability. It must privilege global agreements on human rights, the environment, and SDGs over corporate profit. This pro-development agenda is being shoved aside in the WTO in favor of Big Tech’s interests through the ‘e-commerce’ talks.”
In conclusion, the groups “thus urge WTO members to abandon their push for digital trade negotiations in the WTO and focus urgently on transforming global trade rules for shared prosperity for all.”
Deborah James is the Director of International Programs at the Center for Economic and Policy Research (www.cepr.net) and coordinates the global Our World Is Not for Sale (OWINFS) network (www.ourworldisnotforsale.net).