No, no one wants to tax your emails – the WTO stitch-up gives Big Tech a free ride

By: Cleodie Rickard
Date: 28 February 2024
Campaigns: Trade

Our trade minister, Greg Hands, said of this week’s World Trade Organisation ministerial: “the UK joins this conference with a clear mission: to be the world’s leading voice for Free Trade”. Capital F, capital T – a dogmatic commitment to the global economic rules that have helped herald the climate crisis, yawning inequality gaps and growing corporate monopolies.

Bluster around this “road to prosperity” hides what’s going on at the WTO. Trade rules that are blocking poorer countries from developing the critical industries of the future and harming workers, farmers, fisherfolk and the environment in order to shore up corporate power are increasingly decided in exclusive rich country clubs – or ‘plurilaterals’, which civil society commentators claim are illegal under the WTO’s own rules.

While UK ministers double down on Free Trade, the multilateralism supposed to accompany it – if it ever was – is on death’s door. Trade rules for negotiation this week, over seemingly dry areas such as ‘e-commerce’ and ‘investment facilitation’, are nails being hammered into its coffin.

The real dangers of digital trade rules

The UK says it wants to see the WTO ministerial agree to extend the e-commerce moratorium – a ban on imposing taxes on digital goods and services transmitted across borders put in place 26 years ago. In the era of digitalisation of our economies, and as countries such as India, Indonesia and South Africa are currently arguing in Abu Dhabi, this essentially functions as a tax holiday for Big Tech. Trade minister Greg Hands explaining the moratorium as “preventing digital products like emails being taxed” is scaremongering, and a vast oversimplification.

The global justice movement has battled to show that what’s really at stake is countries’ right to decide if taxing the likes of Amazon and Apple is in their national interest, as these multinationals compete tariff-free against home-grown businesses. It’s not that we’re going to be charged for sending an email. It’s about both global south countries’ fiscal space – to raise much needed revenues from foreign tech companies seeking unfettered access into their economies – and, even more crucially but overlooked in the media, regulatory space: the ability for countries to protect citizens’ data and regulate the growing and fast-changing digital economy to support their own digital industrialisation.

Rolling over the moratorium means enabling rampant Big Tech monopolies and their attempt to lock in deregulation. The WTO’s broader digital trade agenda is being drafted in one of these rich country club ‘plurilaterals’, arm-twisted by the powerful Big Tech lobby. It’s recently been dealt a blow, as the US rescinded support for harmful proposals requiring the liberalisation of data flows and banning mandating source code disclosure (that is: signing away the ability to look into the under-the-bonnet programming of AI to examine its biases or vulnerabilities). The UK should follow its lead and recognise that such proposals only hamstring governments’ ability to rein in Big Tech and use data for the public good.

Investment facilitation – ‘good for development’ or just good for investors?

Another issue championed by the UK at the WTO is a text on Investment Facilitation for Development, agreed in July and planned for adoption this week. Also incubated in an exclusive ‘Joint Statement Initiative’, Greg Hands argues it “streamlines burdensome processes for potential investors and improves transparency, which is set to benefit developing countries the most”, using the tired trope of ‘Foreign Direct Investment flows = economic development’ that lacks any conclusive evidence.

Its real impacts could actually hinder countries’ ability to leverage investment for sustainable development, as its “overall premise… is that all investors are to be treated the same, irrespective of their impact on the host country and effect on the host communities.” In simple terms, this means that a government’s attempts to privilege investments that actually help their development could be challenged under binding, enforceable WTO rules.

‘Transparency’ provisions sound nice – but these actually aim to ensure that foreign investors are consulted prior to a government adopting any measures or policies that affect them. This only gives multinationals opportunity to lobby and potentially threaten investor-state dispute settlement (ISDS) claims against capital importing (largely global south) countries over policies they don’t like. This at a time when the legitimacy of the ISDS regime is in freefall amongst wealthier nations, the UK just having left the controversial Energy Charter Treaty due to risks of fossil fuel companies’ claims over climate action, and the likes of the US and Australia foreswearing ISDS in future trade deals.

Global south countries are pushing back against the ‘good for development’ mythmaking, with South Africa and India filing a formal objection against this investment agreement at the WTO today.

An unfit ideology backing an unfit model for global trade

This array of false solutions and corporate capture shows the WTO is an unfit model to meet the polycrises we face. And backing it, the UK’s unflinching free trade ideology is one unfit for the present moment, when major economies are turning away from liberalisation at-all-costs towards supply chain resilience – that is, the ability to secure the resources critical to the energy transition – through greater government intervention in the economy.

In some cases, such as the US’s Inflation Reduction Act, accusations are being levelled that these go against the very WTO rules long forced upon the world as the natural order of things. Many in the global south are calling out how rich countries are moving to capture the value of new industries, like renewables, in a way that leaves poorer countries behind, still forced to comply with the old neoliberal system that never worked for their sustainable development.

It’s also a live and pressing question whether these measures really constitute public stewardship of the desperately needed energy transition, or mere hand-outs to corporations who will keep maintain the same extractive systems behind green window-dressing.

That is what really matters at this week’s ministerial, and the UK is miles behind.