By controlling large volumes of data, officials believe they can gain economic advantage in the digital economy and be better positioned to counter the market power of the giant platforms. But advocates of data sovereignty may be misguided. Researchers cannot yet ascertain if economics of scale and scope in data will yield competitive advantage. However, the hoarding of data by nations or firms may reduce data generativity and the public benefits of data analysis.

In this essay, Professor Susan Ariel Aaronson of George Washington University provides an overview of data governance and trade, and the defensive reactions of governments around the world as data becomes more central in today’s economy – and how trade agreements may facilitate rather than limit restrictions.

To read the full report from the Hinrich Foundation, please click here. 

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Nigel Cory (@NigelCory) is an associate director covering trade policy at ITIF. He focuses on cross-border data flows, data governance, and intellectual property, and how they each relate to digital trade and the broader digital economy.

Luke Dascoli is the economic and technology policy research assistant at ITIF. He was previously a research assistant in the MDI Scholars Program at the McCourt School of Public Policy’s Massive Data Institute. He holds a B.A. in Political Economy from Georgetown University.

To read the original research report from the Information Technology & Innovation Foundation, please visit here

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When US President Joe Biden met EU leaders in Brussels in June, one of the most important things they agreed was that there should be increased transatlantic co-operation on technology policy. They announced the creation of the Trade and Technology Council (TTC) – a new forum for discussion on technology standards and governance – and a formal dialogue on the thorny issue of competition in technology markets. Biden’s attention to digital issues, his willingness to work with the EU, and his stated commitment to shared values in the digital sphere are a relief to the EU after the Trump years. Europeans are also cautiously optimistic about resolving the dispute over digital services taxes, after the G7 agreed to amend international tax treaties to ensure digital giants can be forced to pay tax in the countries where they make sales. 

The fanfare about greater co-operation should be greeted with a degree of scepticism, however. Many past attempts at transatlantic policy co-ordination – such as the New Transatlantic Agenda, the Transatlantic Economic Council, and the Transatlantic Trade and Investment Partnership (TTIP) – sputtered out with little achieved. In some cases, these initiatives even caused major rifts in domestic politics on both sides of the Atlantic. The joint EU-US statement announcing the TTC and the competition dialogue suggests that Europe should not get carried away. For example, the statement contains little detail about how these dialogues will work in practice, reportedly because of internal disagreements on both sides about basic procedural details.

To read the full report from the Centre for European Reform (CER), please click here. 

Image from the Centre for European Reform.

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In this policy brief, we take a closer look at why some European countries have imposed DSTs but not others. The argument from countries that have introduced these taxes are that firms supplying digital services are not paying enough in tax. That may be true, but there is surely a richer explanation behind the fact that Austria, France, Italy, Spain, and the UK have introduced DSTs – but not other countries in Europe.

Other countries may be waiting for the result of the OECD talks about broader changes to corporate income taxation – and perhaps they are prepared to introduce their variant of a DST in the future. Still, what might be the reason these countries did not join forces with other European countries that went for the DST? Indeed, why did many of non-DST countries take a sceptical view of the EU proposal to have a Europe-wide agreement on taxing digital services? Are there explanations that are anchored in the relative competitiveness of countries?

To read the full policy brief from the European Centre for International Political Economy (ECIPE), please click here.

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The COVID-19 pandemic and associated global recession have had a devastating effect on international trade. In the second quarter of 2020, global trade was down 18.5 percent, a far sharper drop than was seen for GDP. Much of the economic activity that continues in a pandemic— health services, housing services, utilities—is not traded internationally, while the widely traded goods such as cars, electronics, and tourism are cut back as people face an uncertain future. The COVID-19 pandemic comes on top of other issues that were already affecting trade, notably Industry 4.0—the current trend of automation and data exchange in manufacturing technologies, including cyberphysical systems, the internet of things, cloud computing, and smart factories. In the years before the pandemic, merchandise trade was increasing less rapidly than world GDP, breaking a long-standing pattern, though trade in services was rising more rapidly. The declining importance of merchandise trade probably reflected both Industry 4.0 as well as the U.S.-China trade war.

The main question addressed in this essay is, what is the likely evolution of supply chains and international trade in the medium to long run after the COVID-19 pandemic? In other words, once the global economy recovers from the cyclical downturn, are there likely to be permanent changes in global trade? Will these create a more difficult environment for development? What policies at the national and international level can mitigate effects that harm development? These are naturally highly speculative questions, but by thinking of them now, we can potentially mitigate the worst long-run effects of this crisis on development. 

To read the full essay, please click here.

David Dollar is a Senior Fellow in the John L. Thornton China Center at the Brookings Institution.

Copyright 2020 The Brookings Institution

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