IGF Workshop Report
#301 – Global Trade, Local Rules & Internet Governance
(For Rapporteurs)
1. Provide brief substantive summary and present the main issues raised during the discussion.
The panel focused on the importance of the Internet as a vehicle for trade with discussion on the progress that has been made over the years. The business models and policies that have proved effective were addressed. Current issues and potential solutions were acknowledged.
Richard Beaird, Senior International Policy Advisor and moderator of the panel introduced the panelists and opened the session by giving the audience an overview of the current eco system. He spoke of the seamless nature of the Internet whereby data packets flow freely, across borders enabling new patterns of trade. The importance of supporting internet-enabled economic growth by unimpeded trade and regulatory barriers was highlighted. He also spoke of the dynamics associated with hosting content locally – while it can improve competition and facilitate trade, there can be policies that act as barrier to trade. Therefore, it is important to identify such practices that may hinder trade and economic development.
Jacquelynn Ruff, Vice President, International Public Policy and Regulatory Affairs, Verizon Communications added to the opening remarks of the moderator and set the scene by speaking of how the Internet facilitates cross border trade. New concepts have been developed in recent times that advance the nature of the Internet in its relation to digital trade. She provided some interesting statistics that put into perspective what can be at risk if all tools that enable the seamless flow of crow border data aren’t preserved. The importance of carrying through the progress that has been made thus far was further highlighted by examples from the banking, education and healthcare sectors that use the Internet as a platform for providing cross-border services. For example, an online educational service provider in the US says that 82 percent of the 3 million students are located outside the US. Cloud services are particularly important for the development and creation of small / micro enterprises that do not have the capital to invest in expensive IT infrastructure and services. She also spoke of the various bilateral and multilateral trade agreements that have been in place and those in ongoing discussion. Both domestic and international laws should be studied to assess what can be done locally to facilitate the positive trends of Internet related trade.
Rohan Samarajiva, Chair of LIRNEasia spoke of their studies on the teleuse of those at the base of the economic pyramid (approximately equates to those who earn approximately USD 2 or less a day). An astonishing but relevant finding from the LIRNEasia study and their partner organization Research ICT Africa (RIA) was that a number of survey respondents claimed they did not know of the Internet but use Facebook. This illustrates the importance of having attractive and relevant content and services without additional charge that brings people to the Internet. The emerging business models created by Internet based businesses (which are fundamentally different from telecom operators) were used as promising examples for online trade. There were many sentiments expressed on how to deal with the exponential rise in use of data, with the proliferation of smart phones. One such debate was on adapting the Sending-Party Network-Pays (SPNP). However, such models may create unnecessary barriers to content sharing across borders / operators. Other debates including pay walls, that in-turn have their own set of issues with the majority of users from developing countries not having access to credit cards and in serving the unbanked in general. Therefore, a different model has to be adapted that would provide a win-win for all. One sided markets can yield adequate revenue if the pricing is done right. In addition, the chokepoints of the backhaul network and its constraints have to be addressed in light of the tremendous growth in data use. LIRNEasia is working with UN ESCAP towards addressing the lack of terrestrial connectivity in Asia.
Sam Paltridge from the Organization for Economic Cooperation and Development (OECD) commenced his talk by emphasizing the importance of communication and infrastructure to an economy. A recent study of reloading patterns for prepaid SIM cards in Cote d’ivoire found that the geographical locations where top-ups were made for longer validity periods were in close proximity to the trade routes. This is an interesting correlation between the trade economy and communications. He also used a map of the world that illustrates the countries whose data is stored overseas than locally. In the case of Mexico, the only OECD country that does not have local Internet Exchange Points (IXPs), all data is hosted in the US. However, the Mexican government is taking action with new reforms including, on priority basis, the setting up of local IXPs. Hosting content in the US is cost effective though, and therein lies an important trade dynamic – hosting content locally can be advantageous but must not be forced; market driven solutions should be assessed. In an analysis of phone calls (frequency and duration) made from the US to Africa and India, it was found that the traffic to India has increased tremendously over the last 10 years. This is due to the competitive market forces in India that have driven down termination rates (but have increased in Africa). Such actions create barriers for communication and trade in Africa.
Joseph Alhadeff, Vice President for Global Public Policy and Chief Privacy Officer Oracle added context to the complexity of the eco system the users of Internet services operate in. With multiple sensors and devices communicating with each other and with end users, policy makers must create the necessary conditions of economies to become successful. The framework for government entities responsible for policy includes investment, information flows, innovation, intellectual capital, infrastructure and integration (i.e. trade of all kinds). All elements overlap and have an effect on each other. A change in one element creates a reaction and possibly a constraint on another aspect. All goals have an associated cost. While localized strategies may seem beneficial to an economy (or are security or capacity driven) it may in fact have negative effects on innovation and may contain an underlying constraint. Instead of focusing on the solution it is more important to address the problem and discuss all possible ways of overcoming the issues; thereby, not ruling out other potential workarounds that may prove to be more beneficial than an idealistic or forced solution. It is better to create an eco system so that people will want to invest and develop infrastructure, host data centers and the like locally, without having paradigms of forced localization even with good intentions, as one may dampen the prospects of innovation on the race to the top.
2. What were the conclusions drawn from the workshop
The session addressed a number of business models and good practices to better trade discipline in the digital economy. The need for evidence-driven data and standard definitions for use in discussions around trade policies were highlighted when preparing the environment for trade negotiations. Really understanding the various interactions and creating policies around the different interactions between all entities before imposing rules on Internet data traffic is also of importance. Policy makers should also be mindful of not trying to restructure the whole system that may have dire consequences on historic trade agreements. To assess workarounds to problems or when creating new services synergies are needed between those involved in policy and technology. All participants agreed that active multi-stakeholder discussions are of utmost importance so as to break the silo effect and to create necessary agreements and polices from the trade world that support digital products.
3. Describe if the session discussed issues affecting gender equality and women’s empowerment
Not Applicable