For starters, I wish to quote verbatim the comments made by a perceptive reader on the current state of IT in the world. “Perhaps the deals being made by the social media giants are a bit reminiscent of the one-sided deals the British forced on China in the 1800s and in effect encouraged their addiction to opium and a “pillaging” of the country which inevitably led to a loss of sovereignty and the collapse of the Qing Dynasty. It seems, today’s opium is social media and internet commerce. The Americans can’t easily push around China these days, but there are plenty of other countries that can be.” Touche.
Bilateral and multilateral trade treaties currently being crafted will revolve around four important provisions -- National Treatment, Most Favoured Nation (MFN) status, Investor-State Dispute Settlement (ISDS) system, and Digital Trade. While National Treatment, MFN and ISDS have been incorporated into many existing treaties, the one on digital trade is quite new. All four may prove extremely problematic in the years to come since they lead to one-sided deals, especially if the US is one of the parties in any trade deal.
National Treatment, a principle in international law, requires that a State that grants special rights, benefits or privileges to its own citizens must also grant those advantages to the citizens of other States while they are in that country. Since a company is considered a person, companies with huge market power, such as Amazon, Google, IBM, or Netflix, will be treated as if they were local companies and allowed to bid on local government contracts, among other things.
The MFN provision in a treaty ensures that if a nation accords another nation MFN status with respect to a product, the same privilege must be granted to all other nations which are party to the treaty.
ISDS, a mechanism to resolve trade disputes between sovereign nations and foreign companies that do business within their borders, has been used to punish nations for imposing taxes, cancelling contracts, or passing restrictive laws that can adversely affect a company’s profits. Companies can sue countries, but not vice versa.
That ISDS confers greater legal rights on foreign companies than those available to domestic ones should be viewed as MFN and extra-territorial provisions just for companies. If you are not convinced, here is an extra-territorial provision as applied to natural persons. Article 16 in the 1883 Treaty of Hue between Vietnam and France reads thus: “The Residents shall dispense justice in all civil, criminal and commercial disputes involving Europeans of any nationality and natives, and between Europeans and Asians of foreign nationality who wish to benefit from the advantages of French protection. Appeals against the decisions of the Residents must be made at Saigon.”
In ISDS, a tribunal of three arbitrators, usually corporate lawyers and technical experts, decides who wins an investor-State dispute, and there is no appeal process. Countries are obligated to obey ISDS verdicts and the fines the tribunal imposes can be arbitrarily large, especially when ‘future profits’ are taken into account. This has happened in Indonesia, Peru, Egypt and elsewhere. Examples of restrictive laws include minimum wage requirements, anti-smoking legislation, and minimum domestic content requirement on goods. ISDS will now include digital goods such as video, audio, digitised versions of print media, and all broadcast network services (radio, TV, cable, satellite, and cable).
As for digital trade, I quote from the fact sheet of the US Trade Representative website pertaining to the 2020 US-Mexico-Canada trade deal: “Limit the civil liability of Internet platforms for third-party content that such platforms host or process, outside of the realm of intellectual property enforcement, thereby enhancing the economic viability of these engines of growth that depend on user interaction and user content.”
In practical terms, what the quoted remarks essentially mean is that no restrictions can be placed on any internet platform or internet service provider whatsoever with regard to cross-border data traffic, the nature of data or where the data is stored. Facebook is absolved of any responsibility if it disseminates fake information, and Amazon is free to promote its own brands.
Whether it is coal-mining or data-mining, the net effect is the same – devastation of the countryside and of the human psyche. Sovereign countries in the global south are having asymmetric trade deals shoved down their throats because the party with the upper hand has already gotten them addicted to their “opium”.
Years ago, China refused to deploy Microsoft software in the country since they could sense the danger right away. India on the other hand…
Need I say more?