 Hello and welcome to NewsClick. Today, we are going to discuss the new talks on e-commerce, which are going to be announced in Davos. Though that should not have been the platform for these talks anyway, because as we know, currently the global trading architecture is the World Trading Organization or WTO. But when then what explains the sudden shift to Davos of this so-called e-commerce stocks? We'll have to go to the background of what is happening. It was in 2017 when WTO had its ministerial in Buenos Aires. The ministerial of a WTO is their main plenary body, which sets the agenda of WTO for the next two years. And at that time, a lot of US and its allies wanted WTO to start taking up e-commerce issues. Even though the development agenda, the Doha round things are still under the bans. Exactly. And on one side, the traditional stand of developing countries has been that tail development agenda issues are sorted out. No new issues, which have been called like Singapore issues for instance, would be taken up, including investment issues and such. But this definitely was a new issue. So that was one part that no new issues should be taken up. And in any case, India, African countries said that this area is too new. Things are not very clear too. And therefore starting to make global rules about it, it's premature. And they did not allow this to happen. And they stood firm. And the WTO ministerial did not take a decision on starting negotiations at the WTO in that meeting. Now what happened after that was, and during that meeting itself, some countries, mostly Japan, Singapore, from developing countries side, if you can call Singapore a developing country, it's a member of G77. If you can call it a country anyway, small little towns. But a member of G77. Which should have been either Malaysia or Indonesia. Yes. So that's what it really is. Yes, exactly. So in Asia, Singapore is one big watery, Japan, Australia, US, they got together and also pulled on their side some developing countries. And I'll come to why those developing countries, you know, get on to this bandwagon. But some of these countries got together and made a purely literal declaration at the WTO meeting, which was called as the joint statement on e-commerce initiative, in which they said that they will start exploring the possibilities of negotiations on new e-commerce rules. And after they made that declaration, and after Buenos Aires ended, they started holding meetings inside the WTO, exploring this agenda, which whose legality has been questioned because even a purely literal inside WTO is allowed only if all the members with consensus allow that to happen. And in this case, the consensus was that new talks on e-commerce should not start. And that was going on over the last one year, overall of 2018. And now these countries say that the situation is mature enough to start negotiations. And of all places that chose the World Economic Forum, that was- Should we say the forum of the rich? Yes. That's what it really is. Which is quite paradoxical, but yeah. So I think the interests of the rich are very clear that if that's the forum that choose to announce this negotiations, plunilateral negotiations, it's really the forum of the rich asking that this be done to help them further. Leaving that out for- One point. The paradoxical part of it is that if you ever talk to them, what are these talks about? They always say it's about medium and small enterprises of developing countries. They're trying to help the development. You know, whenever the rich want to talk about anything, it's always for the poor. You know, everything they want even tax concessions have been always for the poor and we know that. Leaving that out for the time being, what is e-commerce? And what is at the core of this so-called e-commerce discussions? Well, first of all, it is not e-commerce. And we know e-commerce, when we think e-commerce, we talk about getting some things on e-commerce platforms. We order something, something gets delivered to us and it looks so convenient and people tend to say that e-commerce is a good thing. Why? I have to walk to a shop and the shopkeeper can deliver a thing to my house. And that's what normally e-commerce is made to look like. But this is much more than e-commerce. First of all, what is happening in a shopkeeper delivering it to your house is not just the delivery, but behind it is data and platforms. But not only that, here when we talk about what is called e-commerce is Uber, is AI and BNB, all kinds of digital corporations, including Google and Facebook, by the way. So first of all, we should be calling it digital trade and not e-commerce, to say the least. And at the heart of the discussions is that developed countries want that the data flows between the countries should not be stopped, right now. So the argument regarding data localization, that is at the heart of the so-called e-commerce discussions. Absolutely. It's a crux because if you really think about it, we have been using Facebook and Google for years. We've been using Microsoft. Everybody's been doing business. Even Amazons of this world have been doing business and nobody has figured out what is it that is happening, which should not happen or what is not happening should be facilitated by new rules. So the rules really are not there to facilitate something, but they really are afraid that as developing countries learn that data is a valuable resource, they're going to talk about controlling its flows, maximizing economic value for themselves. And before they understand that, they want countries to sign on a global agreement that data can flow freely across the globe. So at the heart of these discussions is indeed data flows. So this is what I think the Justit coalition to which you and I both belong termed it as a data colonialism that one of the early what we'll say the colonial empire's basic advantage was they control the seas. And if in this world you control the data, then you control the economies. Would that be a way of looking at it? More or less, I mean probably the seas can be compared to the networks as the channels on through which data flows and if you control the channels of data flow, then that's equivalent to controlling the seas and that's equivalent to the old kind of colonization. But data itself perhaps is more comparable to raw material whereby developed countries colonized developing countries took raw material from these countries. From that raw material, manufacturing goods were manufactured in developed countries and they were sold back to the markets in developing countries. Now data is taken and manufacturing and manufactured goods in the form of digital services are manufactured in developed countries and then they're sold back to developing countries and this is a new cycle. Well, you know, I think the other aspect of it that you have touched upon in some of your articles is also the growth of the platforms and the platforms encompass the informal sector that exists and local moments pop stores which still existed very large numbers in India for instance can be enclosed by a flip cart or an Amazon. And therefore this platform economies in fact, which rely on data of course, the platform economies in fact are also doing enclosures of the informal sector and the net result will be really huge loss of employment in informal sector as they take it over. Absolutely. Employment loss and autonomy, economic autonomy of these small informal actors is lost. An example of Uber drivers is very much in front of. So you talk about Uber being actually as if they're independent entrepreneurs, but they really are essentially workers who invest in it themselves by buying cars, paying the installments and so on. So they are not entrepreneurs, they're really glorified workers. Absolutely, a new kind of labor which actually buys the capital itself. Capital goods itself. But then act as labor. So you take, put the risk also on the labor apart from the other negative things the labor suffers in an economic relationship. And that exactly is the situation and going to what you were describing as a platform which encloses the informal sectors, whether they're small traders or they're taxi owners or they're people who may have some accommodation or it could be a barber or a domestic help or a plumber. Any service. All these people, all service can be organized by a platform. Now I want to also put it in another way. There's a good side of the digital. Of course there's a huge amount of efficiency that there would be plumbers in one part of the city and you want a plumber who maybe is just crossing close to your house and you don't know that person is close to your house and there's a great inefficiency in calling a shopkeeper and the shopkeeper saying somebody will come tomorrow and all that and that you know happens in taxes also happens in retail. And digital efficiencies can organize all this in a manner in which huge amount of efficiencies and positive value is released for the society. In that sense it's a bit like industrialization. When mechanization comes its efficiencies are such that it has a historic force which is very difficult to resist. The digital also has that kind of a force because it releases huge amount of efficiencies. So in a way that is good but the point is that extra value which is released who gets that extra value. Does the consumer and the service provider distribute those that value between themselves and perhaps a third party player who facilitates gets a small part of the fees or somebody comes and takes most of its value and the consumer and the service provider are squeezed through the minimum possible you know value situation. So bulk of the enclosure is the consequence enclosure is bulk of the what you say the increase to value the efficiency increase really leads to value accretion to the platform. That's what you really say. That's the problem so digital is not the problem. The manner in which the digital value is monopolized and a very big part of it is taken by one actor and earlier times they used to be national regulation to look around these kind of situations to control market power. They're none today and the second problem is most of this takes place at not a national scale but at the global scale which makes regulation even more difficult and the second part of the e-commerce negotiations which are going on apart from the data part is to foreclose developing countries ever being able to make effective regulation to stop that monopolization and centralization of value capture by saying for example that you can't say that digital company should have a local presence and if you don't have a local presence you can of course not regulate it. You can't look up its source code for regulating because you need to look up the source code to see what kind of decisions a certain algorithm is taking. So apart from data flows all other provisions relate to pre-empting countries having national regulation and therefore this unequality of data capture is a major issue. To paraphrase this what it means is if you don't control the data flows you cannot control those companies. If you can't control those companies neither can you regulate them you probably cannot even tax them because you will not know how much they're really generating out of your country. All of these are the consequence of what happens and as we can see the Googles of the world, the Facebooks of the world neither accept for instance Indian law when it comes to their Indian operations nor do they accept very easy taxation policies because the bulk of the wealth they keep in tax havens claiming this is really the royalty we have to pay the headquarters which is somehow in Cayman Islands or in some such tax haven so that you can't even even tax it. So it's really not only the question of control or for regulatory purpose even for taxation. Yes as you were saying one of the problems in digital value chains is that it's very difficult to describe where exactly the value capture took place and therefore they can always conveniently say it took place in a place where the tax is minimum zero by the way most likely because I'll give you an example one of the top credit card companies in India were moving their data to their headquarters in New Zealand and showing the maximum value capture in New Zealand and they will declare that though we take take data from people transactions here the value is created in the analysis which takes place which takes place in the headquarters and therefore the maximum value is created in New Zealand and therefore it should be text there and later on the in-conduct guys found out that they actually send the data back to BPO units in Pune and that's where the transactions of value capture really took place and they asked them to pay text because neither are they collecting data in New Zealand nor they analyzing data in New Zealand it just makes a wrong round trip to escape taxes in just one example Uber does it all the time they show that the value is created outside in Ireland all these companies try to show that the value is created in a place where they have nearly zero taxes so effectively the argument is if we allow this shall we say data flows not to be impeded at all by national boundaries what we really talking about is extraterritorial control of your economy by certain global players and those global players of course are backed by the big countries in this case the United States and a few other western countries yes when you say US and some other developing countries I think we just developed countries sorry we just say it out of habit though actually EU does not own any digital platform or digital platforms of any worth as the head of NASPERS which is African largest African company and owns the biggest portion of Tencent's said recently when he was in India that EU is a digital colony of the US so well that that that was a point on the on the side and yes so they get controlled from outside and what and and another angle to data flows is that data in our understanding and I'm also doing some paper on that is a collective economic resource first of all it is an economic resource best would like to make you believe that it is just a issue of privacy which it is of course but it is also an economic resource they won't allow you to be understood as an economic resource second even if you understand it as an economic resource they will try to make it look like is an individual's economic resource and they're all kind of this new schemes where individuals try to monetize data it's not work it's a flop it's a dud idea individuals transaction costs in trying to do all those things and expertise needed just too high to show a promising balance and nobody does that it has failed everywhere so the only way people can leverage it as a resource is as a collective resource whether as a community you're part of the town it owns the consumer behaviour of that kind of people or or or a kind of a group a tribal group has always been you know they have had indigenous ownership of intellectual property as well but here all groups are implicated or as a national community they own the consumer behaviour they own how how cars commute on the roads of Delhi for instance all this collective data is supposed to be a collective resource and only if we can control the data flows can we start leveraging this collective resource for example to promote our own industry so our draft e-commerce policy of India which is now being held back because of a lot of pressures actually says that this kind of data would be reserved for small businesses in India which allows you to promote your infant digital industry which is what we did for the industrialization as well we protected our infant industry so these kind of things would not be possible if you can't control your data flows thank you very much for being with us explaining what's really an esoteric topic for most of us but increasingly we all are as you said participants in the digital economy so we have vital stake in it as well thank you very much thank you so much Praveer this is all the time we have for news click today do keep watching news click