The U.S.’s signal of a huge digital shift
Why in News?
America's withdrawal from key digital trade positions at the WTO now provides developing countries with an excellent opportunity to create effective digital regulation.
Key points
- Thomas L. Friedman (a famous author and commentator) triumphantly declared in 2005 that the world was flat, with the opportunities having been equalized globally, and that it was considerably premised on new digital developments.
- The United States, home to the majority of the world's Big Tech, led this new geopolitical and geoeconomic worldview.
- It first sought to redefine development through the field of ICT4D (Information and Communication Technologies for Development), and then herald a new dawn for democracy globally, most characterized by colour revolutions in East Europe and the so-called Arab Spring.
Pre-empting digital regulation
- Its purpose was a new plan to employ global reach of digital branches and subsequent data-enabled controls for economic expansionism.
- Due to its extractive nature it is also seen as digital colonization. And it is seen by the US as an attempt to prevent concerned national governments from redrawing borders to control digital globalization.
- It created a set of digital trade ideas that sought binding agreements from countries in order to effectively prohibit any future regulation of Big Tech.
- For some years, such digital trade proposals have dominated the agenda in various plurilateral trade talks and the World Trade Organization (WTO).
World’s action
- Countries such as India and South Africa, as well as some other developing nations, have steadfastly resisted the challenges of digital trade deals spearheaded by the United States.
Impact of USA’s Action
- The world was surprised to learn that the United States had withdrawn from its key digital trade positions at the WTO, including those on data flows/localisation, access to source code, and the location of computing infrastructure.
- The declaration represents a watershed moment in the evolution of the global digital economy and society.
- The claimed motivation is a recognition that the United States requires domestic policy space to govern Big Tech and AI, for which data and source code could be valuable bargaining points.
- Developing countries can feel vindicated after using this as a significant justification to oppose global digital trade accords. They also have substantial economic considerations; an unrestricted remit of Big Tech would prevent domestic digital industrialization.
From flat to a split digital world (Reason behind the USA’s Action)
- The China issue is a major (maybe the main, unacknowledged) reason for the US announcement. When it meant sole digital hegemony, the flat world was a happy place for the United States. However, with China hot on the heels of the United States in the race to become a digital superpower, the situation has gotten more complicated.
- The WTO digital trade negotiations are open to all countries, and China jumped at the chance to participate.
- China had used its WTO entrance in 2001 to become the 'world's factory,' catapulting its economic development and, as a result, geopolitical clout to a whole new level.
- A free digital trade agreement—with unrestricted data flows, no requirement to exchange the source code of digital products, and remote computing facilities—might be used globally by China to suddenly outwit the US digitally.
- It has the potential to put China on an equal footing with the United States in terms of access to global digital markets, as well as driving and managing global digitalization in all industries.
- Aside from the economic problem, the United States regards any widespread Chinese digital presence as a huge security risk.
- Such Cold War-style economic and security exclusions and bloc formation may be as important a justification for the US announcement as the claimed one of retaining policy space.
USA’s steps to counter china
- Despite withdrawing from these critical positions in the WTO digital trade negotiations, where China cannot be excluded, the United States may still press for data flow, source code, and facility placement rules in regional digital trade agreements in some form or another.
- Such agreements will be led by the United States and, crucially, will be limited to its allies. The United States has two such initiatives: the Indo-Pacific Economic Framework for Prosperity (IPEF) and the Americas Partnership for Economic Prosperity (APEP).
- It pursues comparable goals through bilateral trade and technology councils with the European Union (EU) and India.
- The historic proclamation by the United States represents a complete worldwide consensus that protecting national policy space surrounding data flows, source code, and computing facility placement is critical to all-important digital regulation.
Way Forward
- Developing countries should seize this chance to develop new paradigms for national digital regulation as soon as possible.
- At the same time, developing countries must vigorously oppose a new trap of a digital Cold War, in which they become entangled in digital dependence with either the US or China.
- They should capitalize on the growing global consensus on the need for strong digital rules to rein in Big Tech and control AI, including standards governing data, source code, and computing facility placement.
- To strengthen the local digital industry, a new digital regulation paradigm should be combined with strong digital industrial policy. Countries should strive to develop globally open standards, protocols, and digital public infrastructures.
- All of this could result in comprehensive and genuine global-scale interoperability.
- This would allow for open worldwide digital value chains, enabling easy switching between global digital trade partners — suppliers or customers — from the United States, China, or elsewhere.
Conclusion:
The new digital shift will be difficult in a changing world order where data and information are becoming increasingly valuable and critical for a person or country. This is a very positive development. On another level, what is truly concerning is that it may presage the division of the global digital space, structures, and value chains into two competing blocs, one led by the United States and the other by China.
Mains PYQ
Q. How have digital initiatives in India contributed to the functioning of the education system in the country? Elaborate your answer. (UPSC 2020)
