Lobbying on behalf of the internet giants at the World Economic Forum in Davos, the US, Japan, EU and Australia are attempting to push for restarting negotiations at the WTO for setting up a system of global governance for e-commerce.
The proposed system operates on a set of rules which, if institutionalized, will have debilitating consequences for developing economies, while allowing the existing digital monopolies to further expand their market share.
A statement on the outcome of the meeting between the representatives of some of the WTO member states who will be discussing the implementation of these proposals is expected to be made today.
Previous attempts made to this end by the US and its allies at the WTO’s Eleventh Ministerial Conference in Buenos Aires in December 2017 was stalled by the developing countries, almost all of which voted against the proposal.
Should the lobbyists succeed, national governments will no longer be able to impose tax on commercial digital transactions for crossing borders. Neither will the governments be able to mandate that tech companies profiting from operations inside a country should have a local presence. This allows these companies to profit from a country while not falling within its government’s tax jurisdiction.
“We oppose this, as 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 that is hurting competitors who are running traditional businesses and complying with traditional tax models. 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 exacerbated by digital trade rules proposed at the WTO,” Justnet, a global network of civil society actors who campaign for free and open internet access, said in a statement .
One of the provisions in the proposal also forbids governments from regulating transfer of data across borders or mandating that data be held locally. This makes way for a practice that is called “digital colonialism”. For example, when Facebook collects a user’s data in India, the data is immediately transferred to servers held in the US. The ownership of this data then rests with Facebook, which can profit from it by selling to advertisers.
The danger of this data colonialism lies not simply in fact that foreign corporations profit from resources, in this case data, extracted from another country to which it can pays no return. The effects extend beyond the inability of a country to access potential profits from its data, whose ownership it will be losing. All sectors of the economy use digital applications for a variety of purposes like payments, communication, information storage etc. When the ownership of the data generated in the process is transferred to the companies which operate these digital applications, all sectors of the economy using it will be affected.
JustNet explains, “Such expansive and minute data enables them to develop thorough real time digital intelligence about every sector and every single economic activity and actor. It would be as if the ‘brains’ of all physical activities and processes in all other countries are ‘outsourced’ to these few corporations. A complete cognitive lock-in and digital intelligence dependency soon sets the conditions for total economic and social domination. As it gets entrenched, future options for developing countries to ever extricate themselves also get foreclosed.”
This process of data colonization is already underway. However, a number of developing countries are considering measures to stop the process. The rules being proposed at the World Economic Forum today, if instituted at the WTO, ties the hands of national governments and renders them incapable of taking action by having them commit to uphold what is called the “free flow of data”.
This has particularly dangerous implications under the present circumstances when most of the data from across the globe flows to a few tech monopolies, most of which are based in the US and a few in China.
Another key proposal that is being lobbied for at the forum today is to prohibit the governments from demanding disclosure of source code of the softwares when it conducts any business with a corporation. Not being able to view the source code renders governments incapable of regulating or checking against manipulations.
Parminder Singh, who heads the JustNet in India, explained the wide ranging impact of this to People’s Dispatch. Softwares algorithms are used by many Indian banks while assessing loan applications. Without accessing the source code of this software, the Reserve Bank of India cannot ensure that certain prohibited discriminatory practices are not being employed in the process. In the extreme case of US, courts are using software algorithms to decide on parole applications.
Further, when commodities ranging from automobiles to food products are tested and declared to meet the regulatory standards required for sale in a market, authorities cannot ensure that there is no manipulation of or inaccuracy in the test results without accessing the source code.
“Digital opportunities, many believe, can bring unprecedented prosperity for all. But for this, digital governance must be based on principles of social justice and equity within and across societies. This is required even more in this formative period of the digital society. Quite the opposite is sought, however, through rules for global usurpation of the most valuable digital resource, and hamstringing national regulation. A few powerful businesses and governments plan to digitally control all social activities and economic sectors across the world,” JustNet Coalition warned in its statement.
