Data as a factor of production

29 Apr, 2021 - 00:04 0 Views
Data as a factor of production Cybersecurity, treatment of personal data and rules of interoperability remain burning issues.

The Herald

Sitshengisiwe Ndlovu

As economies transition to become digital economies that are heavily reliant on technology it becomes imperative for the countries of the world to scale up the discussions around the regulation of the cross-border flow of data, the cost of data, portability and interoperability of data.

The increase of e-commerce and digital trade both intertwined with data generation, demands policy makers to urgently come up with trade rules and regulations that will govern the flow of data across borders. 

This is no mean feat; What is obtaining on the global landscape, largely in industrialized countries is that data has become currency while at both national and international level, regulation of the flow of data across borders without stifling trade has been difficult.

A paper published in the Centre of Governess and Innovation publication attempts to distinguish between e-commerce and digital trade. 

E-commerce is goods and services acquired through a transaction over the internet while digital trade covers e-commerce and new data services like social media platforms such as Twitter and Facebook.

Susan Aaronson, in the CGI, posits that the challenge faced by policy makers is that GATS is technically neutral to tackle challenges associated with e-commerce, digital trade and other services that have come about as a result of the advancement in technology. 

GATS has the relevant provisos that can regulate treatment of financial services, telecommunications, and computer services. Interpretation of these provisos vary widely among members due to the fact that GATS came into existence before the advent of World Wide Web. 

Furthermore, other members are of the view that the WTO GATS needs to be overhauled to enable amplification and regulation of new data driven services.

However, consensus has been unanimously reached by WTO members to place a moratorium on customs duties attracted by electronic transmission goods to make it easy for countries to overcome the glaring digital gaps found in developing countries.

Failure to reach a consensus on regulation and governess under GATS made some members to recommend the creation of another agreement known as Trade in Services Agreement.

The moratorium while being an enabler, the resultant loss of revenue in terms of duties cannot be ignored. In the context of trade facilitation reforms, the liberalisation of trade tariff lines has been one of the first steps to stimulate trade within the Africa Continent Free Trade Agreement. 

It is also important to acknowledge that customs duties and other taxes are significant contributors to the fiscus of developing countries and nevertheless the collection of such revenue is relatively less costly while easy too. 

India and Indonesia have openly indicated that they are not going to extend the moratorium on digital products any further according to the latest World Development Report by the World Bank.

Clearly digital trade when harnessed and balanced properly with trade facilitation, will present a great opportunity for revenue generation. 

The World Bank Report on Data advises that a strengthened customs administration will be better positioned to tackle e-commerce shipments. 

Furthermore, the customs administration may consider revising nominal clearance thresholds to capture more dutiable consignments and enlarge the revenue base.

To the tax man, the digitally changing landscape is fraught with opportunities and challenges. 

The World Bank report reveals that collection of VAT/GST on platform businesses could be a low hanging fruit for tax administrators in developing countries only if the infrastructure to collect that tax was similar to that obtaining in developed countries. 

The International VAT/GST Guidelines of the Organisation for Eco- nomic Co-operation and Development (OECD) remains a recommended guide that assist developing countries in collecting VAT on platform businesses.

Digital data has been likened to a natural resource like factors of production, in scholarly articles. The search of data was compared to the mining of oil by the Economist publication of 2010. 

Different research has disputed this analogy as unlike oil, data can be used by different entities for different purposes. 

Examples cited are Google, Amazon, Facebook who have exploited data in a manner similar to exploitation of labour as a factor production. 

People have freely provided data to the mentioned entities and in turn, the latter, has turned data into wealth through algorithms that are useful to third parties.

In the wide-ranging debates about the regulation and governance of digital trade, developing countries are under-represented says the World Bank Report on Data. Within the WTO Joint Statement on Electric Commerce, Burkina Faso is the only country from the group of low-income countries that is involved in the wide-ranging consultations on digital trade.

The inherent risks of Africa not participating in such forums is that the outcome of the processes will not reflect Africa’s interest. 

Cybersecurity, treatment of personal data, rules of interoperability remain burning issues. African countries should be in the forefront of such discussions to influence an outcome that will be in the interest of Africa.

While there are plenty recommendations and guidelines for policy makers to adopt as they design digital trade governess rules, the rules must be guided by the interest of the country first. 

This is because the potential benefits offered by digital trade and the capacity to implement may vary from country to country.

Sitshengisiwe Ndlovu is president of OWITZIMBABWE: MBA/UNCTAD: Trade and Gender Linkages/ IAC Dip/Cert: Trade in Services and SDGs: Robert Schuman Center of Advanced Studies/IDEPCert: Making the African Continental Free Trade Agreement Work. She writes in her personal capacity. For more on trade matters visit her Blog on website:

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