CETRI
Executive summary :
Digitalisation is transforming the way we work, communicate, eat, live and conduct our social and family relationships. Technology can stimulate prosperity and development, bring us closer together and help build sustainable livelihoods. But it can also constrain development, exacerbate inequalities and destroy jobs and ways of life. Whether countries, workers and consumers everywhere will benefit, or whether the benefits will accrue only to a tiny minority, will be determined by the rules which set the playing field for how digitalisation will evolve over time.
One of the best investments that corporations can make is to change the rules under which they operate, so that they can extract greater profits from the economy while preventing their competitors from having a level playing field. Powerful corporations have long used trade agreements to lock in rules promoting their “rights” to make profits, while limiting governments’ ability to regulate them in the public interest, often in ways they could not have advanced through normal democratic channels.
The World Trade Organization (WTO), based in Geneva, is the global rule-setting body on international trade, counting 164 countries as members. When it was founded in 1995, new agreements within the WTO gave rights to the dominant industries at that time, such as agriculture, finance, services, pharmaceuticals, and manufacturing. The technology industries lack such an agreement in the WTO and are seeking similar rules to these to liberalise the digitalisation that is currently transforming the global economy, particularly the governance of today’s most valuable resource, which is data.
Data is the life blood of the digital economy. Whichever firms dominate Artificial Intelligence (AI) in their sectors will dominate their industries. AI depends on massively large sets of Big Data to train the machines learning to make decisions. The valuation of the world’s largest corporations in terms of market capitalisation is so high because they are data collectors, and investors know the value of data for future profits. Even corporations that have failed to turn a profit can still garner venture capital if their business model appears to put them in a position to collect data in a way that sets them up to dominate their industry.
Right now, a tiny minority is seeking to use its excessive power, taking advantage of the undemocratic practices within ‘trade’ policy-making, to rewrite the rules of the global economy, to give themselves new ‘rights’ to profit – while limiting public-interest oversight and benefits from the new data-based economy for everyone else. US-based Big Tech transnational corporations (TNCs) Google, Amazon, Facebook, Apple and Microsoft are now five of the six largest corporations in the world – and they (and other Big Tech corporations operating in the transport logistics, telecoms, finance, agribusiness and other sectors) are lobbying governments to negotiate new rules under the guise of so-called “ecommerce” in the WTO and other recent bilateral or regional trade agreements.
Proponents of digital trade rules highlight the opportunities for entrepreneurs, especially small and medium-sized enterprises from developing countries.
But the rules proposed by Big Tech go far beyond e-commerce and have implications for all aspects of the domestic and global economies, even for countries not participating in the latter. If concluded, these rules could result in the complete liberalisation of the entire (digital) economy.
In reality, Big Tech has proposed the rules in order 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 labour that has been stripped of its rights; expanding its power through monopolies; and avoiding the payment of taxes.
Therefore, the rules they propose would allow large corporations to accelerate their appropriation of the productivity of workers and small businesses in all countries, which is a characteristic of the contemporary global economy. The rules would inhibit the ability of all countries to promote digital innovation to further shared prosperity in the future, including by protecting the monopolistic power of the Big Tech giants. They would severely constrain the ability of developing countries to use digital industrialisation to take their populations out of poverty. They would jeopardise the privacy of our personal data, put our security at risk and increase the risks from digital-based discrimination, eroding our human, social, economic and civil rights. They would threaten the robust provision of public services on which our societies depend and would inhibit essential public-interest regulatory oversight, the urgency of which is becoming increasingly obvious. They would ensure that the largest and most powerful corporations can avoid contributing to the tax base in the societies in which they operate and profit. And they would ensure that the world’s most valuable resource, data, remains permanently privatised and corporatised rather than put to use to advance shared human prosperity as a public good.
The proposed rules thus represent a grave threat to development, human rights, labour and shared prosperity around the world, and are the very antithesis of the type of policies needed to rein in the cancerous growth of the power of Big Tech.
1 January 2020 marks the 25thanniversary of the WTOs foundation. In that time, while global poverty has been reduced, inequality has grown dramatically, and our consumption practices are threatening the stability of our climate as a place that can foster human life. Proponents of the WTO will claim that they are not to blame for the low levels of poverty reduction in many countries or for the inequality or the devastation of the climate, yet they regularly credit the WTO system with the overall poverty reduction and economic growth globally.
However, the vast majority of poverty reduction around the world in this period has taken place in China, which has followed a very different economic path from that adopted in the WTO, and most of the rest has occurred in countries trading with China [1].
Industrialised countries now face economic and democratic crises because of the negative impacts of decades of neoliberal economic policies, enforced internationally through trade agreements. Yet their trade negotiators are pushing ahead with entrenching a set of rules that would rig the entire digital economy of the future in favour of giant companies.
After years of resistance to this agenda by the vast majority of developing countries in the WTO, and after being denied a consensus mandate to do so, a group of around 76 countries has just launched talks aiming to bring about a binding agreement on digital trade in the WTO in 2019. These nations are constantly lobbying and pressuring those developing countries that are not participating to join their ranks.
Their aim is to conclude an agreement involving as many countries as possible, as well as to secure a mandate for talks among all members of the WTO by the time of the next Ministerial Conference, which will be held in Nur Sultan (Kazakhstan) from 8to 11June 2020 [This has since been postponed for at least a year.]. 1Mark Weisbrot, ‘The Scorecard on Development, 1960 –2016: China and the Global Economic Rebound’, Center for Economic and Policy Research, 11 October 2017.
Of course, e-commerce can be a force for job creation and development, and certainly has the power to expand innovation, increase consumer choice, connect remote producers and consumers, and increase global connectedness. But this is not the same as having binding global rules on the entire digital economy written by Big Tech for its benefit.
Ensuring that technology is deployed to serve the well-being of humanity and the planet and shared prosperity will only be possible if we exercise our democratic rights and prevent Big Tech from rigging the rules of the future global economy to increase their own private control and profits.
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