Digital trade games

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The Hindu | 22 June 2017

Digital trade games

by Parminder Jeet Singh

Negotiators for the proposed Regional Comprehensive Economic Partnership (RCEP) treaty between ASEAN countries, China, India, Japan, South Korea, Australia and New Zealand are currently meeting in Hyderabad. E-commerce will be a key focus.

A misnomer

While there are many contentious issues involved in the RCEP, countries at least know what they are negotiating about and their likely implications. However, it is not the case with e-commerce issues. In fact, e-commerce is a misnomer here. What is under discussion is placing great limitations on digital policymaking by any country in the name of promoting e-commerce. Few understand the real nature of the digital issues involved and the relevant policy requirements of the present and the future. In these circumstances, a blank cheque could possibly be made out to global digital corporations and the countries backing them.

Let’s consider the issue of the free global flow of data — something wrongly presented as being the same as the free flow of information. While data that underpins global media, or personal/social communication networks is one thing, data that today is increasingly basic to banking, retailing, the defence forces, public services, health and education services and so on is an entirely different matter.

There is no one thing called “data” that countries could agree to let flow freely across borders. What we have instead are digitalised versions of banking, retail, public services, health services and so on. If something can be meaningfully negotiated at global trade talks, it is such digital services — each of which has different dynamics and implications and needs different treatment. But it may be too early to understand the real nature of these emergent digitalised services — which will eventually be their mainstream form. It was just yesterday that the technology wave of artificial intelligence (AI) — that may economically be even more transformational than the Internet as we know it — struck us.

Free flow of intelligence

Therefore, there is no single thing as “data” or its global flows to negotiate about. Instead, there are different kinds of digital services. Further, almost all such services are in their infancy whereby there is scant understanding about them. It is hardly an appropriate time for countries to make trade bargains and policy curtailment promises around them.

Instead of seeing it as a global flow of data — a phrase with a deliberate and positive ring about it — one must see it as a global flow of intelligence. The raw resource of data is useful only when turned into digital intelligence. Let’s then try to understand what is meant by an unhindered global flow of digital intelligence.

First, digital intelligence is going to be by far the single most important economic resource. Whoever has it controls everything. Accenture recently named AI as a new factor of production, along with capital and labour.

Second, digital intelligence tends to concentrate strongly around a few poles or centres. That is the very nature of intelligence, where two and two is more than twenty-two.

This results in every sector getting organised around a very few centres of sectoral digital intelligence. Uber has worldwide intelligence about urban transport; Monsanto is working on a global agriculture networking and intelligence platform; for General Electric, it’s “the operating system for industrial Internet”; Baidu, the Chinese Google, is developing the “android of transportation” in partnership with Ford, Daimler, Microsoft and others. In short, global consolidation is taking place in every sector.

A prominent Chinese businessman recently observed that countries “will be forced to negotiate with whichever country supplies most of their A.I. software — China or the United States — to essentially become that country’s economic dependent, taking in welfare subsidies in exchange for letting the “parent” nation’s A.I. companies continue to profit from the dependent country’s users. Such economic arrangements would reshape today’s geopolitical alliances.”

Digital industrialisation

India is still stuck in the IT realities of yesterday. It remains in denial about the major transformations in the sector that are taking place along with unprecedented job losses. No doubt there is still a lot of software code to be written and IT to be pulled together, and India retains some key advantages in core IT areas. But the issues of e-commerce or digital trade are much larger. We face a very new reality today as we stand on the threshold of a digital society, where every major economic and social activity will be underpinned by digital intelligence.

The main questions for India to consider are these. How much digital intelligence is flowing into India and how much outwards? Is this trend going to change any time soon? Are there strategies in place to change this trend?

India must consider a digital industrialisation strategy that ensures that the immense value arising from digitally-induced efficiencies in every sector is retained within India and not allowed to flow out uninhibitedly. If it allows such outflows, it will soon find itself on the wrong side of digital colonisation. It must put its digital house in order before thinking of getting a part of the global digital pie, as China did. Domestic digital strengths should first be developed on the back of its big domestic market. This requires an independent digital policy, including protections for India’s incipient digital industry. This will not only ensure that our economy and society are not controlled from outside but also protect existing jobs and create many more new ones.

India has just begun some good policy work for a data economy and society, with its “Digital India” policies, and development of “digital public goods” like the IndiaStack of basic digital platforms and infrastructural data systems that are open to all. These can be very helpful in developing a local digital industry. However, such efforts can get nullified if India succumbs to global digital trade paradigms and rules developed by countries that back predatory global digital business, by accepting the “free global flow of data” and sacrificing its digital policymaking powers and sovereignty.

Parminder Jeet Singh is with the Bengaluru-based NGO, IT for Change. The views expressed are personal. E-mail: parminder.js@itforchange.net

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source: The Hindu