It is reported that momentum is building for rules for e commerce under the WTO. India is both a hotbed of e commerce developments (Walmart has just gained majority control of Flipkart) and a heavyweight in international trade negotiations. Its role in scuttling the Doha Round is still remembered. But India is said to lack adequate knowledge to formulate positions on e commerce, except for one blatantly protectionist issue and one that poses significant challenges to implement: Consider, for instance, one key demand by developed countries to make permanent the current ban on customs duties on ‘global electronic transactions’ that were suspended in 1998. On the face of it, this is a reasonable ask: if the ban is overturned, it would give countries the right to impose tariffs on downloads of mobile applications, streamed music from Spotify or videos from Netflix.
Most people think platforms and transformative ICT companies are best described by the acronym GAFA. Some add Microsoft to make it five. But living in Asia, we know better. There’s Baidu, Alibaba and TenCent. Alibaba has become one of the most highly valued technology companies in the world, and its recent string of strong financial results has signaled the continued rise of China’s internet industry and the heartiness of its hundreds of millions of online shoppers.
UNCTAD (UN Commission on Trade and Development) is increasingly creating interesting spaces for discussing the digital economy. Their first meeting of the Intergovernmental Group of Experts was convened 4-6 October 2017 in Geneva. Our CEO Helani Galpaya was invited to speak on the specific challenges faced by developing countries in attempting to measure eCommerce activities. The meeting coincided with the 2017 Information Economy Report, the annual publication by UNCTAD, which this year had the theme of “Digitisation, Trade and Development”. Helani’s talk also mentioned the upcoming nationally representative surveys in 17 global south countries (including 6 in Asia) as being a good source of data on ICT use by households and individuals as well as (in Africa) informal enterprises.
ICTs are what make today’s complex global value chains and global production networks possible. It is the reduction of transaction costs (a central element in many of LIRNEasia’s research projects) that has made these new ways of organizing production emerge. Therefore, I write and talk about GPNs and GVCs. This coming Friday, 29th September, I’ll be speaking on this and participating in a panel discussion at 1800 hrs at Galadari Hotel. The event is organized by the Market Alumni Association.
At the end of a conference celebrating 20 years of BIMSTEC and 100 of Chulalongkorn University, I was on a panel that was tasked with identifying priorities for the organization. Given there were seven panelists each proposing three priorities and some more suggestions coming up from the audience, there was then a need to develop a rule to rank them. I proposed that we ask what tasks could only be done by a plurilateral organization and give those priority. For example, lowering of non-tariff barriers affecting simple trade in goods could be done bilaterally or even unilaterally. But creating the conditions for global production networks could not be done bilaterally.
This was a key point I made in yesterday’s presentation to the “Citizens’ Commission on a National Trade Policy”: 1.0 The future is Asia. Most models of international trade assume that greater trade will occur with nearby countries than with those which are far distant. At present, Sri Lanka’s goods exports violate this assumption, going primarily to the US and Europe. This was also the case with Mode 2 service exports in tourism until recently.
On Thursday, 04th of May 2017, I will be speaking on the proposed Economic and Technological Cooperation Agreement between India and Sri Lanka at the invitation of the Jaffna Managers’ Forum. The talk will begin at 4.30 PM at the Euroville Conference Hall in Nallur. In addition to addressing the concerns of the opponents, I will be presenting ideas on why we need trade agreements to make it possible to participate in global production networks. The slides are here.
The Tamil mediasphere in Sri Lanka has been over-determined by the political. Now that we’re reverting to a more normal country, it’s time for economic issues to be covered. A group of volunteers including LIRNEasia’s Suthaharan Perampalan assembled a group of eager Tamil media personnel for training program today. I was one of the speakers. Here are the slides I prepared but was not able to use because the projector went on the blink.
Ahilan Kadiragamar is an articulate spokesperson of the Collective for Economic Democratisation in Sri Lanka. Therefore, I looked forward to an exchange of views on the proposed economic and technological cooperation agreement (ETCA) with India, organized by the Church and Nation Committee of the Sri Lanka Methodist Church. The slides that I used are here. It was a little disappointing to hear that the alternative policies being advocated by these well-meaning people boiled down to import controls and juche. The problem was encapsulated by a question from the audience: In which countries are these import control policies being implemented?
Twenty years ago, when NAFTA was still a novelty, Patrick Hadley and I looked at the interface of trade and communication policy. I recalled this when I was asked a question during a TV talk show about safeguards for culture in trade agreements. Looks like the issues we wrote about are becoming mainstream: China’s notorious online controls have long been criticized as censorship by human rights groups, businesses, Chinese Internet users and others. Now they have earned a new label from the American government: trade barrier. United States trade officials have for the first time added China’s system of Internet filters and blocks — broadly known as the Great Firewall — to an annual list of trade impediments.
India used to be the center of gravity of everything we did at LIRNEasia. In terms of expenditure and effort, perhaps the center is shifting. But intellectually, the challenge of managing the asymmetrical relationship between Sri Lanka and India continues to engage. I was asked to write something for the visit of Prime Minister Modi. Unbeknownst, the piece had also been published in the government-owned newspaper: One subject that is likely to come up in the Modi-Sirisena discussion is the long delayed coal power station.
It takes guts to question protectionism, but I guess it’s not that difficult when you are in the Prime Minister’s Office: The Prime Minister’s Office is worried about the IT and Communication Ministry’s policy of encouraging domestic manufacturing. The PMO has sent the Ministry a note asking for comments on how the policy aims to link manufacturing requirements to national security. ‘MARKET DISTORTIONS’ “Efforts to link manufacturing with security is questionable. It will lead to distortions in the market. Security objectives can be met through audits, tests and need to be handled separately,” states the note sent by the PMO.
Just before WCIT, Hosuk Lee and I did a rush job that looked at the possibility that the ETNO-inspired efforts to extract rents from OTT players such as Facebook may violate GATS commitments. Now the issue has bubbled up on another front: When China and other nations block the websites of U.S. companies but the United States doesn’t respond in kind there’s a strong argument that creates an unfair trade barrier, said Andrew McLaughlin, former White House deputy chief technology officer. He cited the example of Facebook, which is blocked in China, and Renren, a Chinese social networking service colloquially known as the “Facebook of China.
Though not part of LIRNEasia’s funded research, we have kept an eye on, and engaged with, issues related to services trade liberalization, partly because ICTs form a critical element of international services trade and the success of telecom reform exemplifies what can be achieved by liberalization of Mode 3 trade in services. In debates around the Comprehensive Economic Partnership Agreement between India and Sri Lanka, I recall someone raising the question as to why I was not advocated the optimal solution of multilateral agreements to liberalize trade. I answered “Doha is dead and SAARC is comatose, this is the best we got.” Now finally it appears that the death of Doha is being officially recognized. Contrary to the declarations made at the G20 summit meetings in earlier years, the world leaders seem to have finally given up on the possibility of concluding the trade talks within the parameters on which they had launched them as a single undertaking.
Not formally part of LIRNEasia’s work, but relevant to the theme of knowledge based economies. Protected economies are not knowledge based. In addition, I start off from what was stated by Michael Spence at Harvard Forum II. This was a LIRNEasia activity. My slideset is here.
Much of the work of LIRNEasia must be seen on the context of connectivity fueling growth. Connectivity does not mean simply electronic connectivity, but also the removal of barriers, including barriers to trade and investment. Using comments by Nobel Laureate Micheal Spence at Harvard Forum II last September as the anchor, Rohan talks about how best South Asia, and Sri Lanka in particular, can position itself to ride out the after effects of the Great Recession. Details of the event here. Click here to view presentation.