For 25 years, the WTO has protected the ‘free flow of information’ online — this year, that could change 

It’s no secret that the Internet has experienced a gradual fragmentation as national, provincial and even municipal governments seek to regulate or tax Internet activities within their geographies.  

This trend away from a global seamless Internet has been both promoted and opposed by a shifting coalition of developing countries, tech businesses, developed countries and NGOs, all fueled by geopolitics and self-interests. Quite often, one’s view of whether the Internet should operate globally seamlessly or under the control or regulation of each national or local government changes — sometimes totally — depending on the topic, causing the Internet experience to fragment based on location. 

Arguably, a major milestone in the fragmentation of the Internet will take place following the conclusion of the World Trade Organization’s 13^th biennial Ministerial Conference (MC13) in Abu Dhabi this month.  

More than any other body, these WTO conferences create global rules for international trade — and “digital trade” has been high on their agenda since 1998, when the second-ever ministerial conference issued a Declaration on Global Electronic Commerce and a two-year moratorium on customs duties on electronic transmissions. (Full disclosure: At the time, I directed Internet policy for IBM and strongly supported the declaration and moratorium. Interestingly, many of the tech companies involved in MC2 do not even exist today, and many tech companies actively involved in MC13 did not exist in 1998.)  

Consequently, a WTO e-commerce trade program has been under development since 1998, during which time a cornerstone has been U.S. and high-tech support for global trade rules that ensure the “free flow of information” to, among other things, prevent countries from requiring that data that is collected or source codes that are used inside any country be required to remain within that country (so they could be regulated or confiscated by that country’s government).  

While the WTO has struggled to conclude broad new trade agreements for decades over such major, non-Internet issues as trade dispute resolution, agricultural subsidies and international investment rules, numerous negotiating groups have actually made progress on detailed aspects of e-commerce, including electronic contracts and digital signatures. Partly as a result of the stalled multilateral trade negotiations, however, the U.S. and other countries have negotiated bilateral trade agreements that incorporate such U.S. e-commerce trade priorities as prohibiting tariffs on electronic transmissions and prohibiting any requirements that data or source code be kept within the country of collection. 

Until now, WTO support for prohibitions on Internet tariffs and for the free flow of information have been constant. The WTO’s moratorium on digital tariffs requires that it be renewed every other year, however, and developing countries like South Africa and India have challenged the Internet tariff moratorium. They assert that the moratorium’s prohibitions allow a very few Internet powerhouse countries to export their services to numerous developing countries without paying any tariffs, thus making it difficult for small, local start-up e-commerce businesses to compete with the global giants, and also depriving the importing countries of the tariff revenues they need for economic development.  

This year, more countries than ever seem to be open to ending the WTO’s Internet tariff moratorium. If opposition to the ban on Internet tariffs prevails, a wide range of new, national Internet tariffs could emerge — and once such tariffs emerge, they will be difficult to stop.  

Separately, continued U.S. and allied support for the free flow of information has also shifted, but on a different path.  

Beginning with the 2013 Edward Snowden disclosures that American intelligence agencies accessed personal data held inside the U.S. by American Internet businesses, global objections to the principle of the free flow of information — sometimes called “unrestricted cross-border data flows” — have grown, even among U.S. allies, whose governments want the ability to “protect their citizens” from any Internet-based abuse or content that is illegal in their own country. Requiring that computers, software and data be kept within the country of collection (called data localization) is one way to approach the goal of local government control.  

Recently, as China has grown into a global Internet powerhouse by offering popular, Internet-based services, objections to the Internet free flow of information have even grown within the U.S. Allegations that Chinese-based Internet businesses providing services within the U.S. send information about Americans back to computer servers in China are common, as are allegations that foreign-based Internet services jeopardize U.S. jobs. So, when the U.S. declared last October that it would no longer insist on the free flow of information in the WTO, the debate significantly shifted, and the principle of free flow may be dropped from further action in future WTO trade agreements. 

Neither of these shifts toward greater governmental control over Internet services should come as a great surprise. As the Internet has grown in importance, it is entirely predictable that governments will commit themselves to greater control over the Internet within their territory, despite the fact that most businesses, media, government agencies, nonprofits and individuals will strongly prefer to operate globally over a seamless Internet. They naturally find compliance with geographically based regulations over local data collection, content or transactions or the imposition of taxes/fees within certain geographic areas disruptive, costly and sometimes impossible.  

Whether it’s China’s great firewall, the EU’s Digital Services Act, Maryland’s tax on Internet advertising within the state or the 34 U.S. states that have in some way banned the use of TikTok, the tendency for many national or local governments to impose its rules or fees on a global Internet service within that government’s territory should come as no surprise to anyone. And, judging by the trends within the World Trade Organization, this trend will continue to strengthen.       

Roger Cochetti has served as a senior executive with COMSAT, IBM, VeriSign and CompTIA. A former U.S. government official, he has helped found a number of nonprofits in the tech sector and is the author of textbooks on the history of satellite communications.