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E-commerce discussions at the WTO: Neoliberal policies negotiated in secret are not acceptable

Richard Hill

Some proposals on the digital economy submitted to the World Trade Organisation (WTO)1 appear to reflect an intent by some states to impose future-proof neoliberal policies on those aspects of cyberspace that are most significant for citizens and developing countries.  These documents appear to be an attempt to move into the WTO many key aspects of current discussions on how best to govern cyberspace, including how to protect data privacy in an appropriate manner.

Not surprisingly considering the venue, the proposals are based on a neoliberal model that is likely to favour the interests of large companies based in developed countries.

This must stop.

Outline of the proposals

The scope of the proposals is such that the WTO would take over essentially all key aspects of everything related to information and communications technology (ICT) policy. That would be a vast expansion of the WTO's mandate and scope, and would move discussions into an intergovernmental forum that is widely considered to be one of the least transparent and least open to civil society. 

This appears to contradict the consistent calls by the proponents of these proposals to the effect that Internet governance discussions (and by extension, discussions of ICT policies) should take place only in so-called multi-stakeholder forums.  While there is some disagreement about what is or is not an appropriate multi-stakeholder forum, it is obvious that the WTO is not at all multi-stakeholder. So it is astonishing that these states are proposing to discuss e-commerce in the WTO. Of course hypocrisy is common in international relations, but this appears to be taking it to new heights.

If all these proposals were accepted, the WTO would be duplicating or contradicting the work of other agencies. For example, it is proposed that the WTO should discuss electronic contracts. Why? The matter has been handled by the United Nations Commission on International Trade Law (UNCITRAL).  If more work is needed, then UNCITRAL should be asked to carry it out.

The proposals ask the WTO to handle a vast range of issues that are not normally considered to be primarily trade issues, e.g., consumer protection and spam.  The measures proposed to combat spam (which are sensible) are far weaker than the measures that the proponents refused to accept in the 2012 International Telecommunication Regulations.2 Why propose in the WTO things that were vehemently rejected in the International Telecommunication Union?  Could it be because the goal is to discuss matters on the basis of the principle that 'free trade is always good' and in a setting where developed countries can exercise their economic power to obtain concessions from developing countries?

In fairness, it should be noted that at least one person who is familiar with the WTO takes the view that I have misunderstood the scope, implications and intent of the documents cited above.  According to that person, e-commerce discussions already take place in the WTO, so there is no real expansion of scope; the WTO would not duplicate the work of other bodies; it is not that difficult to obtain access to WTO documents; and one of the goals of the discussions is to improve consumer protection. 

Needless to say, others remain sceptical, particularly in light of well-known criticism of the WTO.3 As Parminder Jeet Singh puts the matter:

'The main work that is happening at global normative and law making stages is to ensure that data flows freely everywhere, countries are not able to put technical regulations that would restrict its flow, and so on.  Basically for countries to not only not regulate big data business now, but also to take away pre-emptively any possibility to do so even in the future.  That is the key point of the e-commerce discussions in WTO, and at the plurilaterals (TiSA, etc.).

'Is this our biggest normative and legal need right now, in the face of how big data and digital intelligence is being used by big business around us?  To further facilitate their path!?  But if trade forums are the main, perhaps only, ones where digital issues are being discussed with any seriousness we will only get more easements for big data business, while we can keep shocking ourselves with eye-opening articles. Soon we will get too numb to be further shocked any more, and accept these things as reality and common-sense.

'We are refusing to see some simple and clear facts in their face.

'We all accept that data is basic to the economy now, and even call it data economy.  But we also know that almost all data and digital intelligence is corporate owned (mostly by a few big ones), and almost all of it is unregulated.  And we deliberately turn a blind eye towards this most important contemporary fact, allowing the new data and digital intelligence based economic and social structures to set up and concretise around us.  The actors who are in a position to do something about it are afraid to touch the key political economy issues, because they are afraid that anything said or done against the dominant corporate model of data/digital intelligence economy may not serve their class and geopolitical interests.  This one thing has caused the political paralysis we find ourselves in.

'The way out is simple: to recognise that data/digital intelligence economy needs to be regulated, and draw its basic principles of regulation. Further, like the physical economy, it has to be a mixed economy and state/community must own and run some key parts and sectors of the data economy. Thereupon, draw the basic political economy lines of the new mixed economy of a data and digital intelligence driven world.'

In conclusion, it seems reasonable to assume that the purpose of the proposals presented to the WTO is to negotiate key cyberspace issues under the principles that (1) more free trade is always good and (2) data is just one more commodity that should be allowed to flow freely.  Neither principle is correct.  We discuss below the data issue; for free trade in general, see criticisms from the point of view of citizens,4 developing countries5 and even developed countries.6

The importance of data

It is obvious that personal data has great value when it is collected on a mass scale and cross-referenced.7 The monetisation of personal data drives today's Internet economy and the provision of so-called free services such as search engines.

Much discussion, and some decisions, appear to be based on an implicit (or explicit) principle that data should flow freely. That principle appears to be derived from other implicit (or explicit) principles, including 'the Internet is borderless, and so is data associated with the Internet' and/or 'data is just another commodity, and so should not be subject to restrictions on trade'. 

The statement 'the Internet is borderless' has no meaning.  A correct statement is 'some aspects of the Internet are not tied to national borders; for example, many domain names and most Internet Protocol (IP) addresses are not allocated on a national basis.'

It is not contested that offline law applies equally online. So a meaningful statement would be 'what national and international laws are appropriate for the Internet, and is there a need to change existing laws?'.

It is in this context that there are calls to treat data as a commodity that should not be subject to trade restrictions. We consider below the idea that data is a commodity, and show that the implications of that idea are that data should be taxed and that users should be adequately compensated for the data they provide. However, in the subsequent section, we show that this idea is false: data is not a commodity and cannot be treated as such.

Data as a commodity

A propensity by some to advocate in favour of the free flow of data was clearly illustrated in a workshop on 'Data Localization and Barriers to Cross-Border Data Flows' held at the 2017 World Summit on the Information Society (WSIS) Forum in Geneva in June.  The description of that workshop includes the following:

'There is growing debate about the spread of national data localisation restrictions and barriers to Cross-Border Data Flows (CBDF). Localisation policies include requirements such as: data must be processed within a national territory, and involve a specific level of 'local content', or the use of locally provided services or equipment; data must be locally stored or "resident" in a jurisdiction; data processing and/or storage must conform to unique national standards; or data transfers must be routed largely or solely within a national or regional space when possible. In addition, in some cases, data transfers may require government approval based on certain conditions, or even be prohibited. Governments' motivations for establishing such policies vary and may include e.g. promoting local industry; protecting (nominally, or in reality) the privacy of their citizens, and more broadly their legal jurisdiction; or advancing national security or an expansive vision of "cyber-sovereignty".

'The stakes here are high. McKinsey has estimated that data flows enabled economic activity that boosted global GDP by US$2.8 trillion in 2014, and that data flows now have a larger impact on growth than flows of traded goods. The growth of localisation measures and barriers to CBDF could reduce these values and impair not only business operations but also vital social processes that are predicated on the flow of data across the Internet. Hence, language limiting such policies has been included in a number of trade agreements, including the TPP and the proposed TTIP and TiSA. It also is possible that at least some of the policies in question are inconsistent with governments' commitments under the WTO's GATS [General Agreement on Trade in Services]. But the extent to which these issues should be addressed by trade instruments remains controversial, with many in the global Internet community and civil society remaining critical of non-transparent intergovernmental approaches to the Internet, and many privacy advocates opposing the application of trade rules to personal data.

'This workshop will take stock of the growth of data localisation measures and barriers to data flows and assess the impacts of these trends; consider what can be achieved via international trade instruments in the current geopolitical context; and explore the possibility of a parallel track of multistakeholder dialogue and norm setting that is balanced and supported by diverse actors. It will consider whether normative approaches involving monitoring and reporting could help to ensure that data policies do not involve arbitrary discrimination or disguised digital protectionism, and do not impose restrictions greater than what is required to achieve legitimate public policy objectives.'

We stress here the phrase in the last sentence above: 'do not impose restrictions greater than what is required to achieve legitimate public policy objectives'. This raises the question: who will decide what public policy objectives would not be legitimate? 

During the workshop, it was made clear that the legitimacy of restrictions, and of public policies themselves, would be determined by arbitration panels under the WTO or related agreements. That is, the intent is to subordinate decisions made by national parliaments and national governments to the opinion of a panel of international jurists regarding whether or not those decisions are 'legitimate' in light of the provisions of trade treaties such as the Trans-Pacific Partnership (TPP), Trade in Services Agreement (TiSA) etc. But why should trade agreements be given primacy over other international instruments, in particular those regarding human rights? 

Some recognise that trade is not the only, or even the pre-eminent, matter to be considered. For example, at a session in the 2017 WSIS Forum on 'Digital Economy and Trade', Julian Braithwaite, UK Ambassador and Permanent Representative to the United Nations and Other International Organisations in Geneva, stated:9

'There are two big public policy challenges on digital. The first is over data, and as the Internet is so important for wider public policy, the regulatory response to that, child protection online, cybersecurity, privacy, is to regulate in a way to apply online the laws that you apply offline. Putting your arms in a data in a national jurisdiction. This may be the right response for that particular public policy issue but the unintended consequence of that is you close down data flows internationally and you potentially break up this extraordinary advantage of the Internet providing as a global platform. How one achieves the wider public policy goals which involve the safe, responsible use and sharing of data while maintaining the cross-border flows that are the things that lead to the advantages, that's the first question.'

According to this view, cross-border flows are always beneficial, so it is important to consider the disadvantages that might result if cross-border data flows are restricted, for example to protect privacy.

However, it is not obvious that cross-border flows are always beneficial. Reacting to the above statement and to other statements at the WSIS Forum session, a staff member of the European Commission stated, speaking in a private capacity:

'I wanted to raise a word of caution from the European Commission, I will talk in my personal behalf as an economist. You introduced this session saying there is a wide consensus that broadband will grow, jobs, et cetera.

'I would say that's not 100% true. There is increasing evidence and papers, other international organisations saying that technologies are increasing inequality and in the long run thus is a cause of slowing growth. This is an important point. The enthusiasm that's tried to be here for the new technology should probably be kind of moderated if we think about the Sustainable Development Goals. So the thing is, probably on the agenda of the international organisation it should not only be data trade, common rules for access to data, et cetera, but also some other very hot issues like taxation of multinationals, migration problems, et cetera which are closely related to evolution of digital technologies.'

Indeed, if data is considered to be a commodity, subject to trade facilitation rules, then why isn't it considered a commodity also from the point of view of taxation?  And why aren't the producers of the raw material (the end users who provide the data) fairly compensated for their production?

Data in the context of 'over-the-top' (OTT) Internet-based services has often been compared to oil.  Nobody expects the owners of the ground in which there is crude oil to provide the crude oil for free to the companies that refine it, add value to it and sell the products derived from crude oil.  And nobody expects the flow of oil to escape taxation.

So there is a fundamental inconsistency here: if one argues that data should be treated as a commodity, because it is valuable when it is combined with other data, then one cannot simultaneously argue that it cannot be taxed and that end users should provide their personal data without adequate compensation.

Of course users are, at present, compensated for their data because they receive so-called 'free' services, such as social networks, search engines etc.  But the value of those services is far less than the value of the data, as can be seen from the fact that the OTT providers are extremely profitable - in fact, far more profitable than other extractive industries.  Thus users do not receive adequate compensation for the raw material that they provide: their personal data.

Data is not a commodity

But personal data is not a commodity like any other commodity: it is related to a person's private life and thus to his or her human rights.

The Universal Declaration of Human Rights provides in its Article 12: 'No one shall be subjected to arbitrary interference with his privacy, family, home or correspondence, nor to attacks upon his honour and reputation. Everyone has the right to the protection of the law against such interference or attacks.'

Thus it is up to the law (meaning national law) to define what an 'arbitrary' interference with a person's privacy is. Many states, in particular in Europe, have enacted and enforced laws regarding the protection of personal data.  And the Supreme Court of India has recently ruled that data privacy is a fundamental right.10

Thus laws that implement the human right to privacy take priority over other laws.  Consequently, data is not a commodity like oil, because data can be processed only in accordance with laws that protect personal data and the fundamental right to privacy of the people to whom the data relates.

Further, the Universal Declaration of Human Rights provides in its Article 22: 'Everyone, as a member of society, has the right to social security and is entitled to realisation, through national effort and international co-operation and in accordance with the organisation and resources of each State, of the economic, social and cultural rights indispensable for his dignity and the free development of his personality.'

As noted above, data is a valuable resource: Internet companies derive their profits from extracting and refining data. People have the right to realise the economic rights needed for their dignity and the free development of their personality.  That right includes the right to be adequately compensated for the value of the data that is provided to OTT providers, both individually and as residents of a state, through taxation of data flows.

Attempts to lock in the free flow of data

Past and current trade negotiations have resulted (or are likely to result) in agreement on provisions that place restrictions on the ability of states to restrict data flows. For example, Article 14.11 of the TPP includes the following provisions:

'2. Each Party shall allow the cross-border transfer of information by electronic means, including personal information, when this activity is for the conduct of the business of a covered person.

'3. Nothing in this Article shall prevent a Party from adopting or maintaining measures inconsistent with paragraph 2 to achieve a legitimate public policy objective, provided that the measure:

(a) is not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on trade; and

(b) does not impose restrictions on transfers of information greater than are required to achieve the objective.'

What will prevent a state from arguing that taxation of data is a disguised restriction on trade which is not required to achieve a legitimate public policy objective? Or from arguing that data localisation requirements, thought to be necessary to protect privacy, are a disguised restriction on trade which is not required to achieve a legitimate public policy objective?

Recall that disputes regarding the interpretation and implementation of trade agreements are not decided by national courts. They are decided by arbitration panels composed of international jurists. Thus national measures regarding data flows can be overturned even if they have been democratically decided by a national parliament.

This appears to us to be a violation of the human right to take part in the conduct of public affairs, as provided in Article 25 of the International Covenant on Civil and Political Rights (and also in Article 22 of the Universal Declaration of Human Rights).

Leaked versions of the documents being discussed in the context of TiSA11 indicate that provisions similar to (or even worse than) those of the TPP are being negotiated at present. 

This must stop.  As two experts put the matter:12

'One must wonder whether this [trade negotiations regarding e-commerce] will be an opportunity to foster digital rights or leave us with even lower standards and a concentrated, quasi-monopolistic market benefiting from public infrastructure? The rhetoric of opportunities for the excluded - connecting the next billion - sounds great, but only if we disconnect it from the current realities of the global economy, where trade deals push for deregulation, for lower standards of protection for the data and privacy of citizens, where aggressive copyright enforcement risks the security of devices, and when distributing the benefits, where big monopolies, tech giants (so called GAFA [Google, Apple, Facebook and Amazon]) based mostly in the US, to put it bluntly, take them all... 

'Never before has a trade negotiation had such a limited number of beneficiaries. Make no mistake, what will be discussed there, with the South arriving unprepared, will affect each and every space, from government to health, from development to innovation going well beyond just trade. Data is the new oil - and we need to start organising ourselves for the fourth industrial revolution. The data lords, those who have the computational power to develop superior products and services from machine learning and artificial intelligence, want to make sure that no domestic regulation, no competition laws, privacy or consumer protection would interfere with their plans.

'Disguised as support for access and affordability, they want everyone to connect as fast as they can. Pretending to offer opportunities to grow, they want to deploy and concentrate their platforms, systems and content everywhere in the world. Enforcement measures will be coded in technology, borders for data extraction will be blurred, the ability to regulate and protect the data of citizens will be disputed by supranational courts, as local industries cannot compete and local jobs soar.  If we are not vigilant, we will rapidly consolidate this digital colonisation, a neo-feudal regime where all the rules are dictated by the technology giants, to be obeyed by the rest of us.'

Conclusion

The principle that data should be borderless and that it should flow freely is a policy decision that has profound effects. 

As shown above, it does not flow logically from the idea that data is a commodity: commodities are taxed and the producers of raw material are compensated for providing that material to the industries that transform it and add value to it.

Further, the idea that data is a community to be freely traded contradicts fundamental human rights.

And the economic benefits of free flow of data have been overstated: indeed, free flow of data is likely increasing income inequality. 

There is no obvious justification for policies favouring the free flow of data other than to allow Internet companies to continue to accumulate huge profits (often monopoly profits) by extracting and refining data, without paying taxes and without compensating the users who produce the data in the first place.

As a consequence, there should be a moratorium on negotiations regarding the free flow of data and a moratorium on discussions of e-commerce and other cyberspace issues in the WTO and other forums where trade matters are discussed.

Richard Hill (rhill@alum.mit.edu) is an independent consultant, author and activist based in Geneva, Switzerland. He was formerly a senior official at the International Telecommunication Union (ITU) and worked extensively in the information and communications technology sector before that. The above article is based on material that was originally published at https://www.newsclick.in/e-commerce-discussions-wto-more-neo-liberal-policies-negotiated-secret and http://www.itu.int/en/Lists/consultationJune2017/Attachments/5//CWG-Internet%202017-2bis.pdf.

Notes

1. See, for example, the proposals presented in WTO documents JOB/SERV/248/Rev.2 and TN/S/W/64.  The first is from a group of mostly developed states, and the second is from the European Union.

2. http://www.hill-a.ch/wcit.htm

3.https://en.wikipedia.org/wiki/Criticism_of_the_World_Trade_Organization

4. http://www.globalissues.org/article/40/criticisms-of-current-forms-of-free-trade

5. http://www.economicshelp.org/trade/arguments-against-free-trade/

6. https://hbr.org/1986/09/the-folly-of-free-trade

7. See, for example, pp. vii and 2 of the Global Commission on Internet Governance report, available at: http://ourinternet.org/sites/default/files/inline-files/GCIG_Final%20Report%20-%20USB.pdf. See also 7.4 of http://www.oecd-ilibrary.org/taxation/addressing-the-tax-challenges-of-the-digital-economy_9789264218789-en; http://www.other-news.info/2016/12/they-have-right-now-another-you/; the study of data brokers at https://www.opensocietyfoundations.org/sites/default/files/data-brokers-in-an-open-society-20161121.pdf; https://www.internetsociety.org/blog/public-policy/2017/03/my-data-your-business;and http://www.economist.com/news/leaders/21721656-data-economy-demands-new-approach-antitrust-rules-worlds-most-valuable-resource

8. http://www.theatlantic.com/technology/archive/2014/08/advertising-is-the-internets-original-sin/376041/; 7.4 of the cited OECD report; http://www.other-news.info/2016/12/they-have-right-now-another-you/; and https://www.internetsociety.org/blog/public-policy/2017/03/my-data-your-business

9. The transcript is at: https://www.itu.int/net4/wsis/forum/2017/Content/Uploads/DOC/3490e121a88547aea5502d3f5cba96a9/Captioning_287.pdf

10.http://supremecourtofindia.nic.in/pdf/LU/ALL%20WP(C)%20No.494%20of%202012%20Right%20to%20Privacy.pdf

11. The TiSA negotiations are secret (as are other trade negotiations): even members of parliament have been denied access to negotiating texts.  The discussion of such matters in secret forums is a blatant contradiction of the principles of transparency and multi-stakeholder participation. For that reason alone, these negotiations must be stopped.

12. https://www.opendemocracy.net/digitaliberties/renata-avila-burcu-kilic/new-digital-trade-agenda-are-we-giving-away-internet


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