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Info Service on UN Sustainable Development (Apr22/06) Geneva, 22 Apr (D. Ravi Kanth) – As the United Nations Conference on Trade and Development (UNCTAD) convenes e-Commerce Week on “data and digitalization for development” from 25 April, the United States as well as the WTO director-general are allegedly pushing an anti-developmental agenda on data flows that appears to be inimical to the interests of the developing countries, said people familiar with the development. UNCTAD’s Digital Economy Report 2021 appears to have significantly shifted its earlier stand on the free flow of data to the recognition that data flows are not part of the global trade rubric, said a developing country trade negotiator, who asked not to be quoted. “It is a positive change as UNCTAD now recognizes that data flows can’t advance as part of the global trade framework,” the negotiator said. In its program for e-commerce week, UNCTAD says that “the 2022 edition will be held under the theme “Data and Digitalization for Development”, putting a special emphasis on data and cross-border data flows and the crucial role they play in economic and social development.” UNCTAD says that “the connectivity-related digital divide is being heightened by an emerging data divide, reflecting the wide differences that exist between and within countries to harness data.” More importantly, it says that “countries with limited capacities to turn data into digital intelligence and business opportunities, and use them for economic and social development are at a clear disadvantage.” UNCTAD also said that the e-commerce week will discuss “ways to re-frame and broaden the international policy debate on harnessing cross-border flows of digital data through the development lens.” NORTHERN DIGITAL AGENDA As opposition to free data flows is growing in several South countries, including India, China, and South Africa, the developed countries led by the United States are stepping up their opposition to data localization and sharing of source code through the allegedly WTO-illegal Joint Statement Initiative (JSI) on digital trade at the WTO. It is against this backdrop that recent pronouncements made by the US Treasury Secretary Ms Janet Yellen and the WTO director-general Ms Ngozi Okonjo-Iweala at different venues assume considerable importance. As reported in SUNS #9558 dated 20 April, Ms Yellen asked countries to “consider building a network of plurilateral trade arrangements to incorporate elements of the modern economy that are growing in economic importance, specifically digital services.” The US Treasury Secretary had said “we should harmonize our approaches to protecting the privacy of data”. “And a modernized trade system will also require the ability to effectively enforce trade policies and practices, both multilateral and bilateral,” she added. The US has consistently called for free data flows, and has its interests in digital trade cut out in support of Google, Apple, Facebook, and Amazon (GAFA), as well as Microsoft. WTO DG’S REMARKS AT BRASILIA Speaking to young Brazilian diplomats in Brasilia, Brazil on 18 April, the WTO DG Ms Okonjo-Iweala seems to have advanced a similar narrative to that of the US Treasury Secretary. Without mentioning the word “JSIs”, the DG said “WTO members need to articulate agreements in new areas such as digital trade, environment, micro, small, and medium-sized enterprises, and women’s economic empowerment.” Knowing full well that these issues are not part of the Doha multilateral trade agenda, the DG went on to chip away at the Marrakesh Agreement when she said that “common global rules for digital trade, complemented by action to narrow the digital divide, would lower the bar for businesses of all sizes to use the online economy to operate across borders.” In her address, she said that “WTO members can do more to leverage trade to spread green technologies and lower the cost of getting to net-zero carbon emissions. Cutting trade barriers to environmental goods and services is one place to start.” Ms Okonjo-Iweala said “finally, doing more to help MSMEs (micro, small, and medium enterprises) and women- owned businesses connect to value chains would make trade a direct instrument for socio-economic inclusion.” Without mentioning that the current consensus-based decision-making process is a hurdle for advancing the plurilateral initiatives on digital trade and other areas, Ms Okonjo-Iweala said “carrying on with the old way of doing business is a sure path to not get a WTO that is fit for purpose. A WTO that provides not more, but diminishing returns to the global economy.” She said that “reforming and modernizing the WTO will ensure that a critically important multilateral organization continues to play the role that people around the world need it to play.” More disturbingly, the DG stated in her address in Brasilia that “I will argue that it is in the world’s best interest to strengthen multilateralism. But I will also insist that such multilateralism cannot be the multilateralism of old. It must be re-imagined and made fit for purpose to serve 21st century challenges. Multilateral institutions, such as the WTO, need to evolve to respond to new realities.” So, it appears pretty clear that the nuanced messages from the US Treasury Secretary and the WTO DG seem to be advancing the same narrative, namely, that the WTO, in its current rules-based and member-driven structure, should clear the way to a “new multilateralism” that advances the plurilateral initiatives on digital trade and other issues. UNCTAD’S DIGITAL ECONOMY REPORT It is in this context that UNCTAD’s e-commerce week starting on 25 April assumes importance. Last year, UNCTAD’s Digital Economy Report made many things clear. That report seems to have differed sharply from the trans-Atlantic EU-US Trade and Technology Council targeting China. As part of the trans-Atlantic initiative, ten working groups were created. Among the ten working groups constituted by the EU and the US in tackling several issues, working group five on “Data Governance and Technology Platforms” appears to be significant. According to the US and the EU, working group five is “tasked to exchange information on our respective approaches to data government and technology platform governance, seeking consistency and interoperability where feasible.” The US and the EU are not on the same page on data flows and data privacy in the informal plurilateral Joint Statement Initiative (JSI) group discussions until now, according to the proposals tabled by the US and the EU. The EU’s General Data Protection Regulation (GDPR) on data protection and privacy, which was passed in 2016, seems to be gaining support from many countries, including developing countries. The US, however, wants no restrictions on cross-border data flows. Increasingly, the US position on data flows appears to be failing to secure support from many JSI member countries, said a JSI negotiator, who asked not to be quoted. It is against this backdrop that the US and the EU are now suggesting that they “intend to exchange information and views regarding the current and future regulations in both the United States and the European Union with a goal of effectively addressing shared concerns, while respecting the full regulatory autonomy of the United States and the European Union.” The two sides “identified common issues of concern around: illegal and harmful content and their algorithmic amplification, transparency, and access to platforms’ data for researchers as well as the democratic responsibility of online intermediaries.” Working group five is “also tasked to discuss, alongside other working groups, common approaches on the role of cloud infrastructure and services,” implying that they could oppose data localization policies. Significantly, UNCTAD’s Digital Economy Report (DER) 2021 argued that treating “data flows” as “trade flows” could have adverse effects on developing countries. The DER 2021 argued for taking “data flows” out of the negotiations on trade, such as the Joint Statement Initiatives and other trade agreements like the CPTPP (Comprehensive and Progressive Agreement for Trans- Pacific Partnership). According to the UNCTAD report, “… given the different characteristics of data in comparison to goods and services, cross-border data flows are to be considered a new kind of international flow; data flows remain distinct from trade, and treating them as trade can be problematic, for various reasons. While much global data being produced, stored and exchanged are related to commercial transactions, a huge share of these data are not related to such transactions, but to other aspects of human life, and there are challenges facing the distinction between different types of transactions. As such data are produced, collected, stored and transferred, these processes impact issues related to privacy, personal data, social relations and security, among others, and treating these issues just through a “trade lens” implies taking a too-narrow approach.” The report proposed the United Nations as the institution for providing the global governance architecture around data flows. It underscored the following goals: 1. The need for developing a global approach to the governance of data and cross-border data flows; 2. Should address a number of key policy areas and priorities, including developing a common understanding about definitions of key data-related concepts; 3. Establishing terms of access to data; strengthening the measurement of the value of data and cross-border data flows; dealing with data as a (global) public good; 4. Exploring emerging forms of data governance; 5. Agreeing on digital and data-related rights and principles; 6. Developing data-related standards; and 7. Increasing international cooperation related to platform governance, including with regard to competition policy and taxation in the digital economy. According to the DER 2021, global data governance would help enable global data-sharing, and develop public goods that could help address major global development challenges, such as poverty, health, hunger and climate change. The report argued that global data governance becomes more important in light of the implementation of 5G and IoT (Internet of Things), as well as the acceleration in digitization triggered by the COVID-19 pandemic. A global approach to data governance is needed to prevent long-standing inequalities against developing countries from becoming amplified in the data-driven digital space, said a trade official, who asked not to be quoted. It is essential to ensure that their local knowledge, needs and viewpoints become adequately represented in global policy discussions. “While a global approach to data governance is being suggested by the Digital Economy Report, it becomes important that this approach should focus on identifying the key principles and objectives that countries need to follow while designing their national regulations so as to be able to use their data for their development”, said a digital trade expert. “National regulations are now going beyond fulfilling trade objectives and catering to trading partners. They are incorporating many objectives including national security, social objectives, data rights, human rights and are catering to multi-stakeholders,” the expert added.
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