Prior to the Covid-19 pandemic, the WTO was set to host its 12th ministerial from 8-11 June 2020, in Nur-Sultan, Kazakhstan. The negotiation would establish new trade rules for the new global digital economy.
I want to focus on two key aspects of the impact of digitisation. First is the impact on the world of work, and second, the impact on economies such as those in the Caribbean.
One of the biggest myths of digitisation is the prospect for new jobs and new areas of work. Quite apart from the large proportion of the younger workforce, which dominates the gig economy, the data simply does not support the claim.
While between 1996 and 2015 there were clear increases in capitalisation, ie revenues and physical assets, the global domination of big tech firms—and here I am referring to Google, Apple, Facebook, Amazon, and Microsoft—has not resulted in increased job creation. People may be shifting job focus, but there is no expanded job market for the workforce.
How are trade unions preparing for this? The fact is that the jobs that are available will change, and there will be less emolument income jobs. Children who are in primary school now will go into the job market to access jobs that do not currently exist! This is a discussion that ought to have more urgency.
Furthermore, the current global lockdown has demonstrated the extent to which there has been resistance on some levels to integrate technology into several business functions. Their survival depends on it now so many have been forced to adjust.
We have expanded online services, work from home is being facilitated with alternating office days and there is more regular, though not necessarily improved, communication from government agencies. What will we take away from this experience? This is a learning moment if we are game!
It is useful for unions and workers generally to also examine which jobs will be the most vulnerable and to assess the nature of the vulnerability. Will there be room for these jobs on the other side of this pandemic?
Do we need to then do an assessment at a national level of our vulnerabilities and work at corrective measures, ie the impact of fluctuating oil prices and our fundamental challenge to feed the population? There is a silver lining here, however, but it will take some political will.
In August of 2019, Ansa McAl chairman Norman Sabga stated that he had ‘a problem with Facebook, Twitter and the other international companies being able to sell media in TT without paying a significant penalty’. Needless to say, such a comment was not well received.
I must admit that I also listened sceptically as the irony of a local businessman calling out tax evaders was not lost on me (but that is for another time). However, this is not just a Trinidad and Tobago issue. In fact, in 2017, Amazon was able to maximise new tax break facilities to pay zero taxes on 5.6 Billion USD in profits.
With the current global population under quarantine, the reliance on social media platforms and entertainments sites like Netflix has probably grown exponentially. Imagine if we could access revenue from this growth to make up for shortfalls from energy markets.
As it stands, there is no mechanism to tax these entities. And the new proposed WTO rules will not only make it harder to collect taxes from these entities, but it will make it almost impossible for new tech companies to enter the markets with any competitive advantage. The table below shows the 2017 tax data for Facebook and Google.
Even though revenue outside of the US is much higher, regions like the Caribbean are unable to collect their share of taxes. The facilitation of tax avoidance is a major component of the new regulations. There are several issues that can be discussed here. I will just list three:
- A permanent waiver on tariffs on electronic transmissions.
- A high minimum for tariff-free packages (de minimis).
- A ban on local presence requirements. No local presence = no way to assess taxes!
E-transmissions include digital books (Amazon), digital movies (Netflix, Youtube), digital photographs, software, etc. A recent United Nations Conference on Trade and Development (UNCTAD) study showed that 97% of the tariff losses of electronic transmissions and digital products would be borne by developing countries, ie a transfer of about USD $10 billion from developing countries to Big Tech.
In December 2019, several trade unions from the region gathered in Jamaica to discuss the implications for digitisation on the world of work and the implications for the outcomes of the upcoming World Trade Organisation (WTO) ministerial. The discussion was ably guided by Deborah James of Our World is Not for Sale (Owins). I was invited in my capacity as the coordinator for the Elma Francois Institute for Research and Debate at the Cipriani College of Labour and Cooperative Studies by Public Services International (PSI).
Owins identified some other key issues to be debated at the ministerial. These points ought to be the subject of major discussions at all levels throughout the region before any national policies are developed. And definitely before we sign on to any international policy.
The ways that Big Tech’s interests could be prioritised are:
- Market access rights—rights to participate in the market without restrictions.
- Not having to pay taxes to contribute to everything they want access to.
- Locking in deregulation—handcuffing public interest oversight.
- Not being obligated to contribute to community development in any way.
- Access to an infinite supply of cheap labour stripped of its rights.
- Control of data—from consumers, workers, everything.
What is the big take away? The importance of data as a commodity! And we are eerily silent on the matter. Why is Tesla more highly valued than General Motors? How are the largest corporations so highly valued? How are Airbnb and Uber doing IPOs at USD $2.2 billion when they have never turned a profit?
It’s because they have the data, which is the most valuable asset. Why are so many service providers prepared to waive fees so easily? Because the real service is not what the give to the customer but what the customer gives to them … your data! This has a high resale value.
Every boardroom today is discussing the value of data. Whoever has access to the data in the future will control the sector—AI, etc.—which depends on massive data inputs—data inputs we create but do not benefit from.
My intent is to make the reader aware of a discussion which needs to begin. It is not an anti-tech discourse. But if we do not start the discussion of the impact of digitisation in a material way, we may well find our economies recolonised. This current situation has the potential to make permanent changes in the way we do things.
Are we prepared and willing to grasp the moment? Only time will tell.