Global Differences on Data Use Will Likely Make Trade Less Open, Lamy Says

Global trade in the digital era will probably not be as open as before due to differences between governments on how data should be used and exchanged, the head of a major global nonprofit for collective action said Saturday.

Speaking via video link at the 2020 Global Digital Trade Conference in the central Chinese city of Wuhan, Pascal Lamy, the president of the Paris Peace Forum, said the world is shifting away from exchanging goods and services and toward exchanging data, a trend that has been accelerated by the Covid-19 pandemic.

“I have my doubts whether, (in) this new phase of globalization, data-driven international exchange will remain open as the previous wave of globalization was open,” said Lamy, who previously served as the director-general of the World Trade Organization.

He said governments hold different attitudes toward a string of data-related issues including user safety, infrastructure, telecommunications, the internet and cybersecurity. The divergences, which reflect countries’ political, philosophical, cultural and cognitive differences, are unlikely to be resolved in the same way as previous disagreements on the trade in goods and services.

“The world of digitized international exchange will not be as open as the previous world of international exchange, because digitization is a case in point of ‘precautionism,’ given the wide range of safety and security concerns,” he said.

Some parts of the world have made efforts to keep trade open, Lamy said, citing the recently adopted Regional Comprehensive Economic Partnership, a free trade agreement covering 15 Asia-Pacific member states. He added that many countries have pledged trade openness in the digital sphere.

But such convergences are rare in international dialogues, he said.

According to Lamy, the world has three major data governance systems: a U.S.-led system based on the idea that data can be merchandized; a China-led system where data is broadly under state control; and a European Union-led system that views data as personal property.

That kind of fragmentation hampers economies of scale, Lamy said, adding that governments should aim for a form of coexistence, perhaps by developing an overarching system that combines generally accepted rules or by setting up interfaces between different global systems.

Alternatively, countries could state mutual recognition of each other’s systems, he said, although such a move is less realistic and could threaten a loss of trust between nations.

“We have to … acknowledge (the) coming face of globalization, which will be data-driven,” Lamy said. “Finding the right balance between competition and cooperation (is) the fundamental challenge of globalization.

“I hope that collectively we will be wise enough to address it so that this world of data does not fracture,” he said.

Contact reporter Tang Ziyi (ziyitang@caixin.com) and editor Matthew Walsh (matthewwalsh@caixin.com)

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