Data driven economies, conflicts and international trade regulation

Data, as everyone now knows, is the new oil or gold! We are in a data driven-economy and many international developments are flowing from the growth and conflict this data-driven economy brings. 

The recent debates and developments on the digital services tax (against global technology giants - the data controllers), anti-competitive practices by technology giants as well as the tension over 5G networks point to the fact that data, its control and access is going to be the next battlefield in international economic and political diplomacy.

Dan Ciuriak, has written a brilliant piece titled "Economic Rents and the Contours of Conflict in the Data-driven Economy" on the nature and future of this data driven economy. Theorising on the historical growth of the causes of conflict from land, to mercantilist trade, to oil to intellectual property, he opines that a data-driven economy is the next battleground for both internal and external conflicts. Sharing of the economic rents flowing from the data-driven economy will determine future conflicts and that fact that the large technology players are concentrated in a few economies would be a cause for concern. 

He also suggests that the WTO could be a forum where the new rules on data to avoid future conflicts should be written. He has opined that the negotiations on the digital services tax too should be n the WTO. That would be an aspiration considering the present state of negotiations. Further, OECD is already engaged in such negotiations. That would involve a grand bargain since economies that are not strong players in the data economy apart from being consumers would seek a quid pro quo. What could that be - a reduction in industrial and agricultural subsidies? May be the trends of norm setting in plurilateral and bilateral trade agreements on digital trade could have some lessons - but they do not cover digital services tax for sure, for now!

An interesting point that Dan has made is the dichotomy in the various branches of government vis a vis big technology companies in the US - on the one hand being protected against the global barrage of digital services tax while internally being questioned hard for anti-competitive practises. An example of institutional independence amongst various domestic actors? He captures it well here:

In the consumer- and society-facing aspects of the data-driven economy, China evolved separately from the rest of the world behind its Great Firewall. Accordingly, the main contest for rents in these areas boils down to the United States, which hosts global champions that capture the vast bulk of the market, versus the rest of the world, which captures little. Interestingly, whereas domestically US populist politics align against the technology giants, internationally, US interests align with them. This makes for particularly challenging governance issues for the United States and likely militates against an international accord being reached. Moreover, China is not in this picture.

The paper itself is an enriching historical account of how international economic conquest and conflict were shaped and how data fits into that narrative. An enjoyable read.