During the COVID-19 pandemic, we have all had to figure out, pretty much overnight, how to work remotely, connect virtually and remain productive. Governments and parliaments around the world have also had to work out quickly how to move essential discussions, negotiations and voting procedures online. Yet, it is probably fair to say that out of all intergovernmental usual business, trade discussions have been the slowest to transfer online. And as trade has proven essential in responding to this crisis and will likely prove even more essential in the economic recovery phase, how do we recreate momentum around some of the ongoing and upcoming trade negotiations? What should be the lessons learnt from facing this crisis and what role technology and digital trade can play in reinventing the economy of the future?
This was the topic of the fifth of a techUK series of webinars discussing the world in the aftermath of the COVID-19 pandemic.
Dr. Hanna Norberg, Founder and Principal at Trade Economista, has joined us from Sweden and kicked off the discussion. She highlighted three major trends that are fundamentally changing trade policy. We used to think of trade as negotiations around tariffs, until we started doing TTIP and we woke up to regulation, which includes non-tariff barriers and a sub-group of that which is called technical barriers to trade. Through the ICT revolution, we saw that trade completely changed, through platforms, e-commerce and brand-new types of trade. But what we don’t really think about is the servicification. Data flows underpin everything, so we need a forum to discuss those issues. And the third part is technology: we had the container that lowered the cost of transportation, we had ICT which lowered the cost of communication and now we have blockchain which is lowering the cost of information. The cost of information, which includes the paperwork that flows with something has been estimated to be at least three times the cost of transportation. Blockchain can revolutionise trade in many aspects, from trade financing to standards to labour rights. Which would incur questions around blockchain regulation, to allow products and services to flow cross borders.
Paul Moorby, Managing Director at Chipside Limited, highlighted that while thousands of pages of trade policy are written and free trade negotiations take years, SMEs are still out there trading. With help from trade associations, the Department of International Trade and international trade advisors, SMEs in the UK benefit from a fantastic support base. In the UK, around 96% of businesses are less than 10 staff, they do not have legal advisors or accountants and definitely no person skilled in WTO negotiations. Paul highlighted the need to get to the point where technology is allowing trade to add value to national economies. As Paul put it, data is the new soil, if technology provides the platform to protect the data, people can mine it for the rest of time and get value from it.
Jennifer Taylor Hodges, Vice-President for Global Public Affairs at BT over in Washington DC, said that much of today’s trade is digital or digitally-enabled, so dependant on those global data flows. Data is only set to explode further with emerging tech, but more immediately we are faced with increased volumes as businesses, governments, citizens, schools, are all going online. In terms of process, COVID-19 has accelerated digitisation. Video ranks highly in its ability to build trust, as you can still read cues, but the side conversations are harder. And you also have transcription, translation, security, and resilience issues. When it comes to trade negotiations, it’s an exciting but in some ways a challenging context for the UK-US negotiations. Undoubtedly not everything is going to be perfect, but it’s a good opportunity to see what we can get right in online trade negotiations. All of these underlines that telecom and cybersecurity are vital and all the more so looking ahead. It’s not only about the tools that enable the continuity of operations, it’s also about the politics that impact the networks that provide that connectivity. BT has long focused on telecom access issues in trade agreements, but current circumstances make it all the more relevant. The world needs an underlying global network infrastructure that’s competitive, open, affordable, that’s spurs jobs, investment, innovation and benefits not just business but those anchor institutions that are so important, schools, hospitals, libraries. And we need such telecom access regimes in all major markets, consistently applied, transparent, fact-based, in line with WTO norms. The state of competition in the UK is a success story. But over in the US, there are some challenges in the business broadband space. For example, when it comes to defining competitive markets: a single provider of those business services can constitute adequate competition, if there’s a possibility that there is another. Some regulatory safeguards are important to ensure competitors have adequate opportunities. This discussion on telecoms and global competition norms should feature in trade agreements that are looking to harness the benefits of the digital economy. On data flows, businesses need that ability to transfer data freely and securely across borders with no data localisation obligations. Both the UK and the US are leading economies in trade in services and digital especially, so there’s a huge opportunity to develop 21st century standards that will benefit the whole global economy. It could provide a path for future trade agreements and a chance to think about those emerging technologies. The UK-US deal isn’t in a vacuum, so it’s important that the UK government makes the case for digital trade at the WTO, in the UK-EU negotiations, as well as in other agreements.
Nick Ashton-Hart, Geneva representative for the Digital Trade Network, said the WTO is becoming visibly slow getting to work in an online environment. Details have emerged that the JSI should recommence its work and convene meetings virtually. And while there are some developing countries who face genuine issues of internet access in the capitals, there are also serious trade issues related to this pandemic, like for instance countries using protectionism for false policy outcomes. This an opportunity for making the link between wellbeing, health and trade-restrictive measures and an opportunity to show that protectionism doesn’t work. In looking at the key areas of economic progress in recovering from the pandemic, we should identify where tariff and NTBs have existed for a long time and have been counterproductive. It is also a good chance to make the wider public understand that populism on trade equals poor economic policy. And it’s also a great opportunity for digital. So many developing countries are now racing to get online, because the people who can work from home can continue to be productive, the people who can’t have to be paid by the state. Automated factories can continue operating and those which require high intensity of individuals working in close contact either can’t keep working together or need the acquire the same PPE that there are shortages of. It’s never been more important to get online the half of the world that is not yet connected to the internet. Connectivity, digital skills and life-long learning are key and the negotiations in Geneva provide a focal point to make this case to negotiating states on why this is important to them. Getting a full agreement on ecommerce, not just the low hanging fruit, hasn’t been more timely. If the private sector can make the case with their respective trade ministers, the political will also follow.
The ensuing conversation centred around the importance of highlighting SME views to trade negotiators, the necessity of moving trade negotiations online, the role of trade in the recovery process and the increasing importance of putting digital trade at the heart of trade policy.
You can watch the full webinar below:
A reminder that techUK published in January “A Vision for UK Digital Trade Policy”, a report setting out an ambitious agenda for the UK to shape the future of global digital trade.