What are We Talking About When We Discuss Digital Protectionism?
Working Paper for the Economic Research Institute of Asia (Eria), July 2017
44 Pages Posted: 7 Sep 2017
Date Written: September 4, 2017
For almost a decade, executives, scholars, and trade diplomats have argued that filtering, censorship, localization requirements and domestic regulations are distorting the cross-border information flows that underpin the internet. Herein I make 5 points about digital protectionism. 1. Digital protectionism differs from protectionism of goods and other services because trade in information is different from trade in goods and other services. Information is intangible, highly tradable, and some information is a public good which governments must provide and regulate effectively. 2. It will not be easy to set international rules to limit digital protectionism without a shared set of norms and definitions. However, we can only obtain greater clarity with trade disputes and clearer trade rules. 3. The US, EU, and Canada have labeled other countries policies’ protectionist, yet their arguments and actions sometimes appear hypocritical. 4. China allegedly has used a wide range of cyber-strategies including distributed denial of service (DDoS) attacks (bombarding a web site with service requests) to censor information flows and impede online market access beyond its borders. WTO members have yet to discuss this issue and the threat it poses to trade norms and rules. 5. Digital protectionism may be self-defeating. Governments that adopt digital protectionist strategies could experience unanticipated side effects, including reduced access to information, internet stability, and generativity. Digital protectionism may also undermine human rights and scientific progress.
Recommendations — Policymakers Should: 1. Ask the WTO Secretariat to examine whether domestic policies that restrict information (short of exceptions for national security, privacy, and public morals) constitute barriers to cross-border information flows that could be challenged in a trade dispute. 2. Convene a study group at the WTO to examine the trade implications of governmental use of malware or DDoS attacks to improve the competitiveness of their firms or censor the internet in other countries. These tactics should be banned, although the WTO may not be the best forum for discussion of these problems. 3. During each WTO member state’s trade policy review process, the members of the WTO should monitor how each member’s rules governing information flows potentially distort trade. 4. Propose and negotiate an international agreement that defines and limits digital protectionism and delineates clear and limited exceptions.
Keywords: digital trade, digital protectionism, WTO, TPP cross-border information flows, censorship
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