Eminent economists warn against new e-commerce initiative for WTO

February 13, 2019: Chakravarthi Raghavan, an esteemed author of several books on the WTO, and Jomo Kwame Sundaram, former United Nations Assistant Secretary General for Economic Development, have issued a sharp warning to developing countries about the e-commerce initiative recently launched at Davos by a group of rich country governments, including Australia.

They warn first that the idea of an agreement between a minority of World Trade Organisation members on e-commerce, which has not been endorsed by the majority, would be unlawful and undemocratic, allowing a small group of WTO countries to impose their view on the majority.

They warn that the initiative aims to consolidate the power of global technology corporations to gain access to new foreign markets, secure free access to others’ data, accelerate deregulation, casualise labour markets, and minimize tax liabilities. The negotiations are intended to diminish the right of national authorities to require ‘local presence’, a prerequisite for the consumer and public to hold suppliers accountable.

Global corporations want to divert more business through e-commerce platforms. They argue that this will not only reduce domestic market shares, as existing digital trade is currently dominated by a few TNCs from the United States and China, but also reduce sales tax revenue which governments increasingly rely upon with the earlier shift from direct to indirect taxation.

Instead of this threat of ‘data colonialism’, Raghavan and Jomo are urging developing countries and civil society organisations to create a development-focused and jobs-enhancing digitization strategy.

Developmental digitization will require investment in countries’ technical, legal and economic infrastructure, and policies to:

  • bridge the digital divide; develop domestic digital platforms, businesses and capacities to use data in the public interest;
  • strategically promote national enterprises, e.g., through national data use frameworks;
  • ensure digitization conducive to full employment policies;
  • advance the public interest, consumer protection, healthy competition and sustainable development.

They urge international institutions like the WTO to support this approach, which could also apply in other agreements like the RCEP.