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Japan, G20 Shine Spotlight on Digital Trade

· July 3, 2019

At the G20 Leaders Summit last weekend in Osaka, Japan, trade and digital economy issues took focus. Earlier this year, Japanese Prime Minister Shinzō Abe anticipated that, under Japan’s presidency of the G20, the “Osaka G20 will be the summit that started world-wide data governance.” While multilateral approaches to the Internet economy aren’t exactly new, the increased attention to digital trade and data governance at the G20 Summit is indicative of the growing need for more cooperation and international rules fit for 21st century commerce. DisCo covered the 2018 G20 Digital Economy Ministerial outcomes here

This year, Japan set out ambitious goals for the G20 on facilitating data flows and digital trade. Japan used the G20 to promote its concept of “Data Free Flow with Trust” (DFFT) and encourage the World Trade Organization to take up the task of setting new rules for the global economy (under the ongoing e-commerce negotiations). Previewed by a speech by Prime Minister Abe in January at the World Economic Forum in Davos, the DFFT proposal is “an approach that attempts to allow the free flow of data under rules upon which all can rely.”

The DFFT rhetoric can be seen in a number of G20 documents this year, in addition to other digital policy issues including artificial intelligence, tackling misuse of online services, cybersecurity, and digital taxation. Below is an overview of the primary documents containing these items from this year’s G20. 

Osaka Leaders’ Declaration 

The Leaders’ Declaration was issued following the June 28-29 Summit. The paragraphs under the “Innovation” heading further outline the DFFT framework and illustrate the benefits of enabling data flows. The Declaration states:  

Cross-border flow of data, information, ideas and knowledge generates higher productivity, greater innovation, and improved sustainable development, while raising challenges related to privacy, data protection, intellectual property rights, and security. By continuing to address these challenges, we can further facilitate data free flow and strengthen consumer and business trust. In this respect, it is necessary that legal frameworks, both domestic and international, should be respected. Such data free flow with trust will harness the opportunities of the digital economy. 

G20 members commit to “encourag[ing] the interoperability of different frameworks” and “affirm the role of data for development.”  

Regarding global taxation, G20 members also renewed their commitment in the Declaration to facilitate a long-term solution by 2020 for a global framework in light of the digitalization of firms and to support the OECD-led Base Erosion and Profit Shifting Project

Osaka Declaration on Digital Economy 

Some G20 members also used the Summit as the venue to launch the “Osaka Track”, which will “demonstrate[] [these countries’] commitment to promote international policy discussions, inter alia, international rule-making on trade-related aspects of electronic commerce at the WTO.” 

The statement, joined by 24 delegations, set a timeline for the WTO to “resolve to make further efforts to achieve substantial progress in the negotiations by the 12th WTO Ministerial Conference in June 2020.” 

There is some lack of clarity on whether the activities under the Osaka Track would expand upon the WTO work. India, South Africa, and Indonesia, all critical of and absent from the current WTO e-commerce negotiations, did not join this Declaration. 

Osaka Leaders’ Statement on Preventing Exploitation of the Internet for Terrorism and Violent Extremism Conducive to Terrorism (VECT)

Content policies and careful approaches to moderating user-generated content are also a critical part of Internet governance. Misuse of online services to promote terrorist and extremist content is a concern firms take seriously. 

The G20 Leaders issued a statement encouraging further work for online platforms within the Global Internet Forum to Counter Terrorism (GIFCT). GIFCT is an industry-led initiative that closely coordinates with NGOs, experts, and governments to “substantially disrupt terrorists’ ability to promote terrorism, disseminate violent extremist propaganda, and exploit or glorify real-world acts of violence using [online] platforms.” 

Among other items, the statement “encourage[s] collaboration with industry, media outlets, researchers and civil society to strengthen GIFCT and expand its membership to be more inclusive”, noting that a “strengthened GIFCT would enhance cross industry understanding, collaboration and the capability of big and small companies to prevent terrorist and VECT exploitation of their platforms.” 

G20 Ministerial Statement on Trade and Digital Economy

Earlier in June, the Trade and Digital Economy Ministers met to build upon work from previous G20 meetings and set priorities for countries to realize the full potential of the Internet and the digital economy. 

Key themes from the outcome document are below: 

Benefits of the Digital Economy: 

The G20 recognizes the benefits that digitalization and the digital economy produce, noting that “[d]igitalization is expected to continue creating benefits for our economies and societies as a whole. The benefits brought by increased productivity through the use of emerging technologies such as [AI, 5G, IoT, and blockchain] will empower all individuals and firms by creating new opportunities, and generate new services and employment, all of which can lead to greater well-being and further inclusiveness for individuals and firms.” The statement also highlights how digitalization can foster innovation and help micro, small, and medium-sized enterprises (MSMEs). 

Evidence-Based Policy Responses, Industry-Led Security Standards

Language regarding concerns brought forth by the digital economy is accompanied by commitments for governments to respond with “evidence-based policy approaches.” G20 members also call for an improvement to the measurement of the digital economy in order to “enable the widest possible adoption and use of innovative technology.” There is also support for industry-led and market-led global technical standards to secure the digital economy. 

Human-Centered Artificial Intelligence: 

G20 members recognize the benefits of AI and how its “responsible” use can build a sustainable and inclusive society. The G20 adopted the “G20 Human-Centered AI Principles” that draw significantly from the OECD Council Recommendation on AI. These principles are to be used as a tool to guide policymakers to foster public trust. 

Interface Between Trade and the Digital Economy: 

The document notes that Ministers had discussions on various digital trade issues and that there is a desire to continue these discussions “with a view to enhance the benefits of digitalization, which is transforming every aspect of our economies and societies, and can contribute to economic growth, job creation, inclusion, development and innovation.” 

As WTO Director-General Roberto Azevêdo recently noted

[W]e have to recognise the scale of opportunity that the digital economy provides, especially for women, small and medium enterprises, and other more excluded groups, like rural communities in developing and least developed countries. It can be transformational in helping to tackle trade costs and help many more join global trade flows. . . . But on the flipside, this potential can only be fully realised if we are prepared to agree on new rules and practices for the digital economy. If we do not, then the outcome could be fragmentation and a proliferation of technological regulations.

The G20’s continued commitment to facilitate global trade flows for the digital economy is welcomed and a positive sign that consensus on a workable framework could be achieved in the near future.

Digital Trade

Companies rely on clear, predictable rules that facilitate digital trade to export their products and services around the world. These rules include balancing the competing interests between encouraging investment and enabling information access; promoting the free flow of information online; and maintaining balanced intermediary liability regimes.