Digital trade (e-commerce)

Digital trade (e-commerce)

Overview: A new, risky trade agenda

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. 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. The same agenda is being pursued in free trade agreements including the UK’s upcoming deals with the US and the EU.

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 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.

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 the digital economy for public benefit.

We need time and policy space to develop new rules for digital spaces, to make them safer, more equal and to more fairly share the wealth that they create.

“Governments seem be-dazzled by unsubstantiated claims that adopting [digital trade rules] will bring new development opportunities and potential cost savings, when in reality these rules are designed to tie their hands.” Public Services International (2020)

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In depth: Risks for citizens, workers, public services and the South

Our digital society is evolving fast and bringing both benefits and problems. We need policy space to regulate this sector in the public interest. The new digital trade rules are presented by many as a vital modernisation of trade law. However, these new rules are not really regulation: they are designed to liberalise digital trade and therefore to effectively prevent certain kinds of regulation from being applied to the digital economy.

New digital trade rules present:

  1. Risks to economic justice and our ability to retain a fair share of data wealth for society
  2. Concerns about data security, privacy and the abuse of information
  3. Transparency issues that could make it difficult to root out problematic digital products
  4. Limitations on the liability of platforms that could erode online safety.

1. Economic justice

Data is generated by us all and it becomes valuable when it is aggregated together to represent communities. Debates are therefore arising about whether communities - be they local or global, or particular groups such as NHS patients, Uber drivers, or smallholder farmers in the Global South - should have more meaningful ownership of- and control over their data, not just to keep it secure but also to derive a fair share of the value that is created from it. This would be a significant shift from current models of data ownership, in which data is owned by those who collect it - usually Big Tech companies based in the US or China. Digital trade rules that ban the localisation of data or the handing over of computer code could help to cement in place the current model and make it more difficult to develop alternatives that could more fairly share digital wealth. This could ultimately deprive citizens, workers and public services of their fair share of digital revenue, and cement inequalities between the Global North and South.

2. Data security and privacy

Privacy is a fundamental human right, which is challenged by the extent of modern data collection. We allow internet platforms and smart goods providers to collect our data based on the expectation that this digital picture of us will be stored securely and used appropriately. This can be surprisingly difficult to ensure and digital trade rules that mandate free cross-border data flows could make it even more challenging, as enforcement authorities may lose the ability to scrutinise how data is used once it moves beyond borders. Even anonymised data is at risk: one academic study developed a de-anonymisation tool and reported that, “Through a proof-of-concept attack, we link 347 out of 2805 WebMD users to real world people, and find [their] full names, medical information, birthdates and other sensitive information.” Attacks on our privacy can also have wider effects on our society and democracy, as in the Cambridge Analytica scandal in which the Facebook data of 87 million Facebook users was harvested and used to support Republican campaigns in the 2016 US Presidential election.

3. Fraud, safety and discrimination risks from secret computer code

New digital trade chapters often ban requirements that computer code be visible to regulators. This lack of transparency means that companies can include coding that deliberately breaks laws, as in the Volkswagen emissions scandal in which diesel cars were coded to cheat at emissions tests. Regulators will also be unable to check the quality of code to ensure that products are safe. Goods ranging from self-driving vehicles, medical IV pumps, smoke alarms and remote braking systems for wheelchairs and children’s bikes can now be run through digital code systems, posing serious risk to life if this coding turns out to be low quality. This rule could also block efforts to ensure that digital services such as Google Search avoid cementing racial and gender bias through their coding. Google has been shown to throw up biased search results, which imply that people with traditionally Black names may have been arrested, and that show more executive job adverts to men than to women. Addressing these problems will become more difficult if trade rules prevent any outside examination of computer code.

4. Online safety

If YouTube were to host videos of terrorist acts or Facebook allowed pro-anorexia groups to target teenagers, should the platforms be liable? Like other questions of digital regulation, this may not feel like a trade matter, yet the US’ proposal for digital trade rules with the UK demands strict limits on the liability of platforms. Other digital trade provisions may compound these risks to online safety. The source code secrecy rule could make it impossible for regulators to check whether age verification systems used by, for instance, gambling or pornography websites are coded effectively. The ban on data localisation could allow highly sensitive data, such as the addresses of looked-after children (whose dangerous relatives may be trying to find them), to be moved overseas where we can no longer ensure that data is being stored safely enough. In order to protect children and adults from harm we need strong regulation of the internet and of digital systems and products, yet this could be held back by inappropriate digital trade rules.

At both the national and multilateral levels, efforts to regulate our increasingly digital world have barely begun. In time - and with sufficient policy space - we may create rules to ensure that digital wealth is better shared, citizens and workers are better protected and our well-being is placed front and centre in the digital revolution. However, the premature liberalisation of digital trade could stand in the way of such developments.

“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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Digital trade rules - a summary

  • 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. 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 is likely to be vital for 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, academics and others to monitor developments in digital trade. We provide training and resources for organisations, and lobby 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

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