AfCFTA & Digital Governance

Guest Contribution by Dr. Burcu Kilic, Senior Fellow, Centre for International Governance Innovation (CIGI).

Last month, the World Trade Organization's 13th Ministerial Conference in Abu Dhabi captured global attention. With a full agenda and high expectations, the conference confronted the enduring challenges of negotiations and recent dysfunctions within WTO proceedings. As trade delegations prepared for Abu Dhabi, African nations quietly adopted the AfCFTA Protocol on Digital Trade (Digital Trade Protocol) during the 37th African Union (AU) Heads of States Summit, held on February 17-18, 2024. Despite its significance, the Protocol barely made headlines, receiving minimal coverage.

In reality, the digital trade protocol has been a topic of interest in trade and digital policy circles for some time. The discussions were characterized by a significant level of ambiguity, making it difficult to pinpoint the exact details of what was negotiated. Information disparities and limited access to the negotiating text have additionally complicated efforts to fully understand the specifics of the agreement.

A week prior to the AU summit, the draft protocol was made public, attracting some attention and sparking questions. It also shed light on why negotiators were keen to keep the details under wraps, and even they kept the protocol's signature very low profile.

Initiated in 2018, with trade commencing on January 1, 2021, AfCFTA was established by the African Union with 54 of the 55 member nations signing on. It is distinguished as the largest free trade area since the formation of the World Trade Organization, aiming to enhance intra-African trade by reducing tariffs and facilitating free access to commodities, goods, and services across the continent. This initiative is regarded as a critical step toward economic integration and trade cooperation among African nations.

Despite digital trade being the fastest-growing segment of international trade in Africa, the continent's contribution to global digital trade remains minimal. However, the potential of Africa as a new data resource has not gone unnoticed by tech giants. Referred to as the 'last frontier,' Africa is seen as an untapped market for data.

Surprisingly, AfCFTA negotiators seem to overlook this reality in the digital trade protocol, choosing to adopt some of the most aggressive digital trade rules crafted by U.S. trade negotiators in the past decade with the interests of U.S. tech companies in mind. These rules were designed to dismantle what are termed non-tariff trade barriers. In this context, these barriers can encompass a variety of regulatory measures, including privacy protections, anti-monopoly policies, consumer protection laws, and rules ensuring fairness and non-discrimination.

Since the Biden administration assumed office, the domestic conversation in the U.S. has adopted a more critical view of the tech industry. The administration has embraced a holistic approach to tech regulation, placing the interests of the American public ahead of corporate agendas. This paradigm shift was evident in the USTR's latest decision, which received strong public approval but provoked outrage from tech companies.

In October 2023, the United States Trade Representative (USTR) took a notable step by revising its approach to digital policy. Acknowledging the limitations of trade governance to address the challenges posed by digital technologies and artificial intelligence (AI), the USTR strategically chose to withdraw its support for certain provisions in the ongoing World Trade Organization's (WTO) Joint Statement Initiative on e-commerce talks. This decision was designed to clear a path for the US Congress and the Administration to exercise more direct control over the governance of the digital economy. These contentious provisions included cross-border data flows, server localization mandates, non-discrimination, and the protection of trade secrets concerning source code and algorithms, with significant implications for tech-related policies, touching upon privacy, antitrust, democracy, and AI policy. Ultimately, they aim to create an environment conducive to surveillance capitalism, where minimal domestic regulations provide tech companies with significant operational freedom, often at the expense of democratic and social interests.

It is noteworthy that African negotiators have chosen to replicate these contentious provisions within the AfCFTA digital trade protocol, venturing into the complex domain of digital governance—a field still under debate regarding the optimal way to regulate digital technologies. This move suggests that African negotiators are willing to engage with complex and often criticized trade rules that are considered outdated by many, indicating a bold, albeit controversial, interest in shaping digital governance in Africa.

Although the final version of the protocol has not been made public, the text from February appears to be conclusive, indicating that it may be too late to revise the provisions. Nonetheless, the protocol includes a provision requiring the negotiation of annexes on specified issues, such as cross-border data transfers, digital identities, source code, online safety and security, emerging technology, etc. It does not specify the content of these annexes— potentially, they could focus on identifying best practices regarding these issues—and does not establish a timeline for the completion of these negotiations.

Digital governance is a rapidly evolving area. Acknowledging the shortcomings of traditional trade governance in addressing the challenges posed by data and emerging technologies, US trade negotiators have opted to step back, allowing Congress and the Administration more direct control over the digital economy. However, African trade negotiators are now entering this arena without a clear understanding of the far-reaching implications of these rules, potentially undermining the regulatory authority rightfully belonging to African governments.

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