Behind the agenda to introduce global rules on digital trade, there are significant tensions that could spill over into conflict. On one side is the US and a number of leading digital nations, backed by the vast lobbying power of Silicon Valley and big business. On the other side, a number of emerging and developing countries are looking to resist new rules that they see as adding extra burden on them, with vague benefits.

Leading digital firms, and other big companies using digital tools, have mobilised. They are pushing for international rules on issues such as data flows, custom duties on e-commerce and requirements that foreign firms reveal their computer (source) code. This campaign is most visible in the US where digital firms like Google, Facebook, and Amazon have grown in political power. They have pushed for trade rules that enable them to expand globally without facing complex rules in different countries, which limit their ability to operate from a distance. This is the core of their business models.

During the Obama administration in the US these activities contributed to the emergence of the “digital trade agenda”. Digital trade rules were seen as crucial for giving rapidly growing US firms a predictable global landscape, as they expanded. This agenda was pursued through a number of channels, notably the Trans-Pacific Partnership (TPP), which was described by the US trade representative at the time as the “most ambitious and visionary internet trade agreement ever attempted”. The Trump administration, with a focus on supporting traditional industries, has shown less interest in digital trade. This has led to a stronger roles for other leading digital economies such as Australia, Japan, and some European countries, with support from global digital firms.

But there has been strong opposition from a number of less developed countries. Many of them believe these rules will widen the digital divide that already exists between the developed and the developing world, by exposing local digital firms to fierce competition. As the history of trade rules has shown, rapidly opening developing economies up to foreign competition can potentially hollow them out. Plus, some countries argue that they might need to adopt more active policy to develop their own digital economies, which they fear global rules could limit.

Their resistance came to the fore during discussions on new digital trade rules in the World Trade Organisation (WTO) in 2017. The fight was led by India and the WTO’s Africa Group, which highlighted the risks of imposing WTO rules on future economic development. Through coalition building, they were able to resist the push for new rules leading to an impasse in the WTO.