Digital trade (e-commerce)

READING TIME 8 mins
Digital trade (e-commerce)


Overview: Smoothing the way for tech multinationals

The digital economy now reaches deeply into our lives, and much trade in goods and services, as well as the transfer and use of data, now falls under the title ‘digital trade’, aka e-commerce. Many of the largest digital companies like Google, Apple and Amazon run ‘platforms’: they own the forum or marketplace that others use, and they take a valuable data output or a commission from each interaction.

A new set of trade rules on e-commerce is being developed at the WTO. Despite most developing countries voting against it, plurilateral negotiations were launched in 2019. Ministerial meetings are happening monthly, and they aim to have a draft text by mid 2020. The same agenda is being pursued in free trade agreements including TPP, the 'new NAFTA', and the upcoming EU-UK deal.

This agenda includes some non-controversial improvements, such as in the use of e-signatures or fighting spam. However the overall aim is to lock in the liberalisation of digital trade, and deplete the toolkit of those who would try and hold the major tech corporations in check.

The agenda is being driven by the US, EU and other richer countries. It is being resisted strongly by India and the WTO's African Group who are unconvinced by attempts to present the new rules as beneficial for their MSMEs, and instead perceive the process as a new way of dominating their economies, extracting their wealth and holding back their development. China is taking part in the e-commerce negotiations but is pushing for national policy space rather than one-size-fits-all liberalisation.

The world does need global co-operation to manage the digital economy, but this should not be done through free trade deals, as the focus of these will always be to 'liberalise' trade rather than harness it for public benefit. There are other, better forums that we should use to regulate the digital economy and build the internet that we want.

“New [e-commerce] rules would entrench existing imbalances and further constrain the ability of our governments to implement industrial policy and catch-up.” African Group, WTO (2017)

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In depth: Digitalisation brings risks for workers, citizens and development

The digital economy can connect people worldwide, create jobs, and support action on major issues like poverty and climate change. But this new economic sphere has become dominated by a small number of powerful companies, who have acquired an unacceptable level of control over the global economy and over our lives as citizens and workers. Problematic impacts include:

'Free' digital trade enables multinational tech companies to extend their reach into yet more areas of the global economy and cement favourable terms and influence for themselves. Proposed e-commerce rules would ban governments from restraining these growing monopolies and managing the digital economy for social benefit.

“Research shows that the value of data flows has overtaken the value of global trade in physical goods.” OECD (2016)

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Digital trade (e-commerce) provisions that pose risks to justice

  • Bans on data localisation and rules requiring free data flows across borders. Data is the raw material of the digital economy and control over this resource is highly lucrative. The proposed rules would allow data, and its profit-making potential, to be freely exported overseas, leading to the loss of this resource for local industrial development. Banning controls over data flows can also undermine privacy protections, an issue which has become particularly salient in the context of the mining of data from Facebook to influence US elections.
  • 'Necessity' limits on digital trade regulations. Governments should be free to regulate the digital economy, to ensure that trends towards job casualisation, tax avoidance and other harmful impacts can be reined in. Rules in Services deals/chapters (which may apply to e-commerce) that regulation must be 'necessary' create a risk of multi-million pound lawsuits and will hold back efforts to build a citizen-focused digital economy. This task is barely begun so these provisions are especially inappropriate in the case of digital trade.
  • Source code and algorithm secrecy. E-commerce rules aim to ban source code disclosure requirements and may go further to offer patent-type protections to algorithms, as proposed by the US. Source code disclosure is essential to identify and prevent tax avoidance, financial crashes, fraud, breaches of standards, hacking and espionage. For example, disclosure would have revealed the code in Volkswagen car computers that enabled them to detect when a test was occurring and bypass emissions regulations. Disclosure is also necessary for technology transfer to support industrial development (an aim the US, EU and Japan describe as 'deplorable') as well as for open source provision of internet services.
  • The tariff ban. Discussions at the WTO may make the current tariff moratorium on electronic transmissions (ET) permanent. India and South Africa are deeply concerned, as this would restrict their ability to raise revenue with potentially major effects given the growth of digitisation in manufacturing and goods trade. A ban on ET tariffs has been described by UNCTAD as “agreeing to reduce tariffs to zero on almost all of [developing countries'] non-agricultural manufactured products.”
  • No exceptions for developing countries. Most WTO agreements allow developing countries to retain more policy space than other Parties are permitted. There are no such exceptions in the digital trade agenda, so the impacts of e-commerce provisions could have particularly harmful impacts in the global South, where digital industrialisation and domestic regulation are at earlier stages of development.

People-focused (not trade-focused) digital rules

The internet and data-driven technologies are increasingly important in our lives and in our economies.The digital economy is not just about trade, so its regulations should not be developed through trade discussions. These have a very narrow remit that excludes broader considerations like inequality, free expression and human rights, which should be the basis of new digital economy rules. Including liberalising e-commerce measures in WTO rules or free trade agreements would solidify the advantages of major tech corporations, and restrict our ability to create an internet and an economy that works for people and planet.

Alternative digital economy proposals are emerging, including the African Union's Nairobi Manifesto, India's Draft National E-Commerce Policy, and the EU's DECODE project. The concerns of consumer groups are expressly not being met by the free digital trade agenda, and UNCTAD’s e-commerce week had an entirely different focus, as it explored, “the digital divide, digital skills, digital data, gender, trade and logistics, online platforms, consumer trust and new technologies (such as artificial intelligence and blockchain).”

These alternative initiatives aim to get more people online, build up digital industries as a form of pro-poor economic development, and create new shared wealth by treating data and the internet as a common resource. The WTO and 'free trade' e-commerce agenda works against these goals and should therefore be rejected by supporters of human rights and sustainable development.

“We are not advocating digital de-globalisation. What is sought is simply a fair place for developing countries, and for public interest, in the emerging global digital order.” Parminder Jeet Singh, IT For Change (2017)

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What TJM is doing about it

TJM is working with trade unions, digital rights groups, business associations and other civil society organisations to monitor the WTO negotiations on e-commerce and the UK and EU’s proposals on digital trade. We are providing training and resources for citizens and organisations, and lobbying policy-makers to adopt a justice-oriented approach to the digital economy.

If you are interested in working with us on digital trade, please contact laura@tjm.org.uk

Further information