Civil Society Letter Against Digital Trade Rules in WTO

CSO Letter Digital Trade 2019-04-01-ENG

CSO Letter Digital Trade 2019-04-01-ESP

CSO Letter Digital Trade 2019-04-01-FRA

Release-CSO Letter-E-CommWTO 2019-04-01

Dear WTO Members,

Technology can stimulate development and help build sustainable livelihoods, but the right policies are
essential to ensure that countries, workers and consumers everywhere can benefit. But some countries have
declared their intent to rewrite the rules of the global economy, to give giant technology corporations, the
largest companies in the world, new “rights” to profit – while limiting public interest oversight and benefits
from the new economy for everyone else – by commencing new negotiations on “e-commerce” in the WTO.
The rules proposed by Big Tech transnational corporations (TNCs) go far beyond “e-commerce” and have
implications for all aspects of domestic as well as the global economy, even for countries not participating.
We are writing to express our profound and urgent opposition to these proposed negotiations which, if
concluded, could result in the full liberalization of the entire (digital) economy, and thus represent back door
attempt to achieve a “WTO 2.0”. While the rhetoric surrounding “e-commerce” highlights the opportunities
for developing country entrepreneurs, having binding rules on the still-emerging digital economy would
severely constrain the ability of countries to develop their economies in the future. It would accelerate the
global disadvantaging of workers and small enterprises in all countries vis-à-vis large corporations that
characterizes the current global economy. It would enable Big Tech 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 labor stripped of its rights; expanding its power through monopolies; and evading the payment of
taxes. The proposed rules thus represent a grave threat to development, human rights, labor, and shared
prosperity around the world, and are the opposite of the policies needed to rein in the power of Big Tech.

1. We need appropriate democratic governance, not unlimited power over data by Big Tech.
Democracy and sustainable development depend on the free flow of information, and we strongly believe in
freedom of expression. But this is different from unregulated collection of, and cross border transfer of, data
by TNCs. Big Tech’s surveillance capitalism is harming democratic functioning in our media, knowledge,
culture, transportation, agricultural, judicial, commercial, health, and other sectors, and damaging our
democratic processes. Public debates increasingly focus on the need to reduce the power of Big Tech through
stronger regulations on the national and international level, but proposed e-commerce rules – including their
top goal of unrestricted “free flow of data”– could pre-empt such efforts in the appropriate agencies.

2. Public interest data policies are essential for economic development and prosperity in all countries.
At this point, most countries (and most people) don’t properly grasp the value of data, the most valuable
resource, so governments are too easily allowing it to be collected indiscriminately and transferred outside
their countries by TNCs. Just as in previous centuries, when developing countries lost control of the capacity
to properly take advantage of the wealth-creating potential of commodities, there is a danger of repeating
those same mistakes now with data, leading to digital colonialism and the exacerbation of the serious problem
of increasing inequality around the world. All countries, and especially developing countries, need to harness
the value of data for domestic entrepreneurs, but also for community economic development in the public
interest. Thus, they must maintain the policy space to tailor policies on governance of data, including
potentially maintaining data locally or regionally when that might be in the national or community interest.
Proposals in the WTO to give Big Tech the right to unregulated cross-border data transfers, to ban countries
from being able to require domestic data storage, or to use local servers would severely constrain the ability of
developing countries – and all who are not Big Tech – to ensure that their citizens benefit from digitalization.

3. Strong consumer protections, privacy, and rights would be jeopardized by “e-commerce” rules.
Strong policies for digital user protection are needed, including around matters of privacy and data protection.
Citizens have rights to privacy and consumers have rights to have our data protected and not abused by giant
TNCs for private profit, or by governments against our human rights in the digital space. The proposed WTO
rules would give corporations unlimited rights to transfer data to whatever jurisdiction they please and would
privilege commercial rights over consumer protections and citizens’ privacy rights in ways that cannot be
fixed by rules in the WTO itself. Human, labor, consumer, economic, and civil rights must apply equally in
the digital sphere without being constrained as “barriers to trade”. As companies increasingly use artificial
intelligence (AI) such as in hiring and firing, and governments increasingly use it in functions such as judicial
April 1, 2019 CSO Letter Against E-commerce Rules in the WTO
sentencing, we also need strong algorithmic accountability frameworks to ameliorate gender and racial
discrimination and bias, not restrictions on access to source code and algorithms as in the proposed rules.

4. Digital policies must promote decent jobs for shared prosperity, not reduce workers’ power.
Inclusive digital industrialization for shared prosperity must focus on decent job and livelihood creation and
associated social and economic rights. UNCTAD’s Trade and Development Report has shown that workers
are losing their share of global production vis-à-vis capital, partially because capital has used its surplus
wealth to rewrite the rules to allow it to extract increasing profits. Automation and trade policies have
weakened workers’ bargaining power, and the proposed “e-commerce” rules would further erode workers’
rights and power vis-à-vis giant digital corporations and lead to increasing inequality and precariousness in
many sectors. As more women enter the digital economy, we object to how “gender” and “women’s economic
empowerment” are being used in the WTO to push anti-development policies which will reduce power of
women workers. New rules that reinforce structural inequalities between and within countries will not be
acceptable just because of a gender or labor clause. The most important strategy to ensure widespread and
inclusive benefits from digitalization is a commitment to job creation towards full employment, focused on
equity, including strong labor rights and decent work and working conditions for all workers; gender equality;
workers’ data rights; and comprehensive and portable social protection including for platform workers.

5. Anti-monopoly regulations and actions are urgently needed, in jurisdictions outside of the WTO.
Nearly all digital trade is dominated by a few global players from the United States and China in ways that are
not simply disrupting and re-organizing economic activity but leading to digital domination. An ever-larger
source of Big Tech’s profit-making is derived from buying competitors and avoiding regulation. In addition to
creating new and strengthening existing anti-monopoly regulations, governments must consider breaking up
companies engaged in harmful monopoly practices. Until this occurs, it would be foolish to tip the scale in
favor of the technology monopolists’ power even further by agreeing to their proposals in the WTO.

6. Digital liberalization would decimate development and increase poverty in developing countries.
In order to trade, developing countries have to produce and increase the value captured from production. If
digital trade is expanded without first improving productive capacities in developing countries, as well as
closing the digital divide through improvements in physical infrastructure and interconnectivity, and adopting
enforceable norms for privacy, data protection, and economic data rights, developing countries will simply be
opening their economies even further to foreign imports. Linking into e-commerce platforms will not
automatically increase exports but can lead to further erosion of domestic market shares. Thus, liberalization
in the digital sphere, without the required domestic investments to improve productive capacities, will destroy
jobs and further informalize them, decimate micro, small and medium enterprises (MSMEs), and severely
constrain future development. These threats to economic sovereignty and future development prospects from
premature digital liberalization would be greatly amplified if the rapidly evolving digital economic space is
governed by rules that were developed by TNCs for their own profit-making around the world.

7. Digital Industrialization is urgently needed to foster development and MSMEs.
Instead of digital liberalization, what is needed around the world is a development-focused digital
industrialization strategy. In Africa, this is reflected in the Agenda 2063: The Africa We Want vision. Digital
industrialization indicates the need for investment in countries’ technical, legal and economic infrastructure
and policies to develop and support domestic digital businesses and platforms and build capacities to use
domestic data in the public interest; to strategically promote domestic MSMEs including through technology
transfer and national data use frameworks; to ensure universal benefits of the digital economy through full
employment policies; to ensure proper taxation and investments to close the digital divide; to advance
consumer welfare and privacy through enforceable consumer protection measures; to ensure public interest
regulation of the digital economy and sound competition practices; and more. Specific policies are required to
protect the small actors, traders, farmers, small service providers, workers, etcetera that are threatened by new
globally organized digital models. Much of this can be accomplished through domestic policies that should be
developed with appropriate stakeholder input, as well as through regional integration. But “e-commerce” rules
in the WTO are intended to specifically restrict the ability of countries to implement most such policies.
April 1, 2019 CSO Letter Against E-commerce Rules in the WTO

8. Fairer taxation would be severely constrained by proposed e-commerce rules in the WTO.
“E-commerce” proposals in the WTO include at least five mechanisms to limit tax liabilities for Big Tech, not
just by prohibiting appropriate taxation but also by banning requirements that companies have a local presence
in countries where they operate. But giant technology companies should contribute to the national tax base,
just as do local or non-digital companies. Digital players are taking advantage of the mobility and intangibility
of digital goods and services to avoid tax and create an uneven playing field. Tax rules that allow digital
TNCs to artificially reduce taxable income or shift profits to low-tax jurisdictions in which little or no
economic activity is performed should be tackled and must not be codified by digital trade rules. Appropriate
taxation is essential for investments in development-focused infrastructure and good quality and accessible
public services, including social infrastructure that can reduce unpaid and poorly paid care work in the home
mostly carried by women. This is all the more important given that the build-up of debt (both public and
corporate) in recent years is once again raising concerns about its sustainability. Developing countries will not
be able to achieve the Sustainable Development Goals (SDGs) without expanding fiscal supports to achieve
quality accessible public services in education, health, social care, access to water, electricity, and more.

9. We need policies to promote innovation, small businesses, and security, not more patent monopolies.
UNCTAD has highlighted that all countries which successfully industrialized used infant industry protections.
Since developing countries, and particularly Least Developed Countries (LDCs), still need to industrialize,
they need to be able to use protections for nascent industries, including through active policies of technology
transfer. The international system of rules governing patents and copyrights have resulted in an incalculable
transfer of wealth from the global South and consumers everywhere to a tiny set of hyper-protected patentand
copyright-holding TNCs in a few countries. Extreme protections for “intellectual property” (IP) stifle
innovation, reduce freedom and creativity, promote monopolies, and facilitate tax avoidance. They also reduce
our security against hacking, as source codes and algorithms treated as trade secrets could evade regulatory
oversight. Proposals in the WTO under the name of “e-commerce” would further entrench systems of IP
maximalism and should be rejected, especially for LDCs that are not required to implement them. Instead, we
need proven policies that promote innovation, unconstrained by anti-development extreme IP monopolies.

10. Countries need policy space; the e-commerce agenda is promoting harmful total liberalization.
“E-commerce” is being used as a Trojan horse for other proposals that would expand liberalization including
the removal of tariffs (on information technology products); liberalization of various services; and allowing
foreign companies to compete for government procurement contracts of all ministries. They are proposed to
apply even to LDCs who do not have to liberalize goods or services in the Doha Round. These proposals
include issues which developing countries successfully stopped from being negotiated in the Doha Round. “Ecommerce”
should not function as a back door for anti-development rules that have already been rejected.

11. We need a new agenda for digital economic policies, and for the global economy.
Developing countries must develop their own agenda for digital industrialization. They must not advance the
“e-commerce rules” that were developed by TNCs like Amazon, Google, Facebook, and Alibaba in their own
interests. Other models can more equitably distribute the benefits of the digital economy while reinforcing
human rights. All countries likewise urgently need policies to constrain the behavior of these corporate
behemoths, not to further entrench their outsized monopoly power. A pro-development outcome cannot be
achieved in e-commerce talks because the rules and policies needed for digital industrialization are the
opposite of WTO rules, which give companies rights while constraining the role of the state in regulating.
Civil society has argued that the global trade system must provide countries sufficient policy space to pursue a
positive agenda for development and job-creation, and must facilitate, rather than hinder, global efforts to
ensure food sovereignty and true food security, sustainable development, access to affordable medicines, and
global financial stability. It must privilege global agreements on human rights, the environment, and SDGs
over corporate profit. This pro-development agenda is being shoved aside in the WTO in favor of Big Tech’s
interests through the “e-commerce” talks. We thus urge WTO members to abandon their push for digital trade
negotiations in the WTO and focus urgently on transforming global trade rules for shared prosperity for all.