Digitrade Digest #19
Global Tax Deal a win for Big Tech, US- Taiwan talk trade, Fireworks at FTCs opening meeting, Vietnam and Singapore begin negotiations on Digital Trade
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Big Tech
Big Tech Says Global Tax Deal Is a Win
The Wall Street Journal: Big tech companies said Thursday’s breakthrough in negotiations over a global tax overhaul was a step toward avoiding a patchwork of overlapping national taxes, but executives and trade bodies said they still need to see those tax regimes disappear before calling the deal a win.
The U.S. secured international backing for a global minimum rate of tax as part of a wider overhaul of the rules for taxing international companies. Officials from 130 countries that met virtually agreed Thursday to the broad outlines of the overhaul. It would be the most sweeping change in international taxation in a century.
Those governments now will seek to hammer out the details and then pass local laws to make the deal a reality, according to Thursday’s agreement.
One set of rules generally agreed to on Thursday would ensure that all companies based in signatories’ countries pay a minimum tax rate of at least 15% in each of the nations in which they operate, reducing opportunities for tax avoidance. Another set of changes would shift where some of the world’s biggest and most profitable companies pay some of their income taxes, though some industries would be exempted. Most big mining and oil-and-gas companies, for instance, already pay higher tax rates in the places they operate. The deal in its current form doesn’t include financial services.
Tech industry pushes Europe for WTO data flows deal
NETZPOLITIK: Some topics on the negotiating agenda „reflect the interests of the major digital powers and their superstar firms which are reaping first-mover advantages“, said a recent report by the United Nations Conference on Trade and Development (UNCTAD).
Poorer nations are concerned over proposed rules in favour of unrestricted cross-border data flows. Alternatively, provisions for data localization and customs duties on cross-border data flows could provide a „significant data chip to negotiate fair terms with global digital platforms seeking to work on local data and in domestic economies“, the UNCTAD report notes.
While some economic justice campaigners hope that data localization could help to generate economic activity in the Global South, civil liberties groups warn that it could give authoritarian countries such as Turkey new surveillance powers.
These warnings have been echoed in public by tech giants like Facebook, whose CEO Mark Zuckerberg has warned of „a really bad future“ in which authoritarian governments could abuse data localization laws.
Critics note that data localisation laws currently discussed or already passed in Nigeria, India and South Africa find a controversial precursor in China’s Cyber Security Law enacted in 2016, which requires personal data gathered in China to be stored on Chinese territory and to only be transferred overseas following a security assessment.
US
US-Taiwan talks to focus on supply chains and digital trade
Financial Times: Digital trade, one of the issues both sides are focused on, covers topics including duty-free trade of digital products, data localisation barriers, cyber security and privacy rules.
Wendy Cutler, a former US trade negotiator, said it would be crucial that the talks yielded some joint initiatives, rather than just “a commitment to talk and co-ordinate more” to effectively strengthen trade ties.
Cutler suggested the US and Taiwan could work practically together on mapping out semiconductor supply chains amid a global chip shortage.
Federal Trade Commission expands antitrust powers in Chair Lina Khan’s first open proceeding
The Verge: In an open meeting on Thursday, the Federal Trade Commission passed a pair of pivotal measures expanding its power to regulate anti-competitive business practices, setting the stage for a more aggressive enforcement approach from the embattled agency.
In the most aggressive effort, the commission voted to rescind a 2015 “Statement of Enforcement Principles” that restricted the FTC Act’s prescriptions on “unfair methods of competition” to explicit violations of existing antitrust law (specifically the Sherman and Clayton Acts). The vote proceeded along party lines, passing 3-2 with Democrats in the majority
Biden team sketches out early ideas for boosting trade with Africa
PoliticoPro: Neither official said whether plans include completion of talks on a free trade agreement with Kenya. That initiative began late in the Trump administration and has been under review since Biden took office.
Graves said the Commerce Department's efforts to boost commercial engagement with Africa “will prioritize relationship-building across governments and businesses and between them.” He also promised to engage with “the private sector early and regularly” to help connect businesses and create new opportunities.
The Biden administration also plans to roll out a new “Digital Africa initiative to help African partners digitize and monetize their technology architectures,” Banks said.
Asia-Pacific
U.K. and Singapore Start Talks to Cut Digital Trade Barriers
Bloomberg: The two sides want to make it easier for companies to trade by using technology such as e-contracts and e-signatures, the U.K.’s Department for International Trade said in a statement. Singapore is Britain’s 21st-largest trading partner globally, accounting for 1.2% of total U.K. trade.
“Our ambition is to make the U.K. a global hub for services and digital trade,” Trade Secretary Liz Truss said. “A cutting-edge deal with Singapore will keep us at the forefront of the technological revolution.”
The U.K. is seeking to deepen its commercial ties globally following its split from the EU, which erected costly new trade barriers with its largest and closest market. Britain is also pursuing free-trade agreements with Australia, New Zealand and the United States, plus seeking to accede to the 11-nation trans-Pacific partnership.
Vietnam, Singapore Begin Negotiations on Digital Trade Agreement
Diplomat: The establishment of a joint technical working group on digital partnership with Vietnam, though not yet an official part of bilateral trade negotiations, is a political win for Singapore. Despite being a relatively small country in size, Singapore has successfully used diplomacy to shape new rules around the digital trade game. Those who have been watching the agenda of the World Trade Organization (WTO) closely are well aware of Singapore’s active role, alongside that of Australia and Japan, in pushing forward consensus on e-commerce regulations.
One of Singapore’s strategies is to facilitate small group discussions among WTO members in order to promote consensus on key e-commerce issues of interest to Singapore. These include open government data, e-contracts, online consumer protection, and paperless trading, which, if realized at the WTO level, would solidify Singapore’s position as an international and regional trade hub. In fact, as the convener of these discussions, the Singaporean government has expressed its ambition about concluding clean texts on these issues before the summer.
The Digitrade Digest is a weekly publication of the Digital Rights Program at Public Citizen.