Monitoring Indonesia for Global Justice (IGJ)
An opinion article from:
A Researcher for IGJ’s Digital Issues
Soon after the end of the Second World War, the victorious nations created a new world order. Following the birth of institutions such as the United Nations, World Bank, IMF (International Monetary Bank) and including the birth of GATT (General Agreement on Tariffs and Trade). The new world order with a liberalization agenda began to take place and has been implemented systematically since then. Avoiding open mass wars such as the Second World War is the reason for the construction of a new world order. An order that is based on capital power and is built systematically and globally.
Opposition immediately arose not long after the period of forming the new world order. The situation developed with the strengthening of the Western and Eastern Blocs. Political tensions occured based on the struggle of market liberalization against controlled markets which have become strong poles. The ‘Cold War’ for about 40 years only subsided after the Soviet Union collapsed in 1988. This change opened the widest possible opportunity for the free market regime to construct a global neo-liberal economic infrastructure.
Following the formation of the international financial organization, in 1947 an agreement was made to exempt tariffs on trade goods, known as GATT. GATT keeps continuing and developing, the countries involved are slowly growing. The expansion of its members and trade consequences has made GATT’s global influence broader and more profound.
Through the Uruguay Round which began in 1986, GATT officially became the WTO (World Trade Organization) with the enactment of trade rules in January 1995. The organization, which currently consists of 123 countries, has the main objective of liberalizing world trade. Since the Uruguay Round, the issue that has been regulated is not only limited to reducing tariffs on trade goods, but has also expanded to issues of services and intellectual property.
China in the Global Liberalization Agenda
The People’s Republic of China (PRC), which became independent after the Second World War, has seen rapid economic development with its enormous population power. One of the early signatories to GATT had criticized GATT harshly, and finally made a unique change in its economic strategy. The decision to adopt a market economy while still being led by a centralized Communist Party eventually led the PRC to re-apply for membership in the WTO organization. After waiting for 15 years, finally in 2001 China officially became a member of the WTO, which previously had a series of trade agreements with the US (United States).
Prior to joining the WTO, the PRC economy had actually experienced rapid development. To keep pace with the large and increasing production capacity, the PRC needs a broader and wider market. The Chinese electronics market share in the US has increased rapidly from 9.5% in 1992 to 21.8% in 1999. The contribution of computer products from China has also increased from 4% in 1996 to 21% in 2000 for the world market. The hard disk drive products from China for the global market increased from 1% in 1996 to 6% in 2000.
Generally, WTO member countries, especially developing countries, hope that through the WTO they have the opportunity to improve their economies. However in reality, the rules applied by the WTO on the other hand give a burden and make it difficult for many developing countries to export their products. The rules and patterns of WTO decision-making also tend to favor developed countries. This situation ultimately makes the WTO more of a “controller” for world trade rather than a “fair opportunity” for the countries of the world.
The PRC in the process shows a slightly different matter. After joining the WTO, the PRC’s production soon filled the world market freely, at least able to flood many developing countries. It was slowly but surely starting to shift many of the products that have been dominated by developed countries. Reports from several surveys and research show that economic actors in Europe and America finally felt negative pressure after the PRC joined the WTO.
After the WTO was founded in 1995, the globalization process began to systematically strengthen. The power of global capital is increasingly exerting its influence in many places and fields. Globalization strengthens all countries to comply with the rules of trade and capital economy laws globally. Market and financial parameters are strict measures that must be met by every country. The domination of capital that occurs globally develops as without opponents and leaves only the opponent itself, the crisis.
The 2008 crisis has hit the global capital regime hard which hit the United States and European countries. Some European countries have even experienced economic bankruptcy. The transfer of capital and control that follows is a consequence that must occur. In this situation, the German economy, which had grown rapidly, was getting stronger in the European Union. Germany itself has grown to become an economically important country in Europe.
Germany after its collapse after the Second World War and political dynamics, reunification in line with the dissolution of the Soviet Union, managed to grow and strengthen its economy. German industry takes an important position in global trade. On the other hand, Japan after the destruction in the Second World War has managed to grow and become one of the economically important powers in Asia. Unlike Germany, Japan experienced difficulties in facing the consequences of running its economy in the current global capital regime. Japan remains facing economic problems, especially after the 2008 crisis.
On the other hand, the fast growing PRC economy and production which increasingly dominate world trade soon became a new global economic power. The 2008 economic crisis became an important momentum for how China became an important actor in the Global Supply Chain. The shift in production from many countries (the US and the European Union) to China is an important face of how the process of transferring world production to China.
The production of ICT (Information Communication Technology) and other products, especially those made from rare earths, is increasingly dominating the world. China is estimated to control 97% of the world’s rare earths. Important materials for modern equipment such as electronics and other modern equipment including defense technology. Rare earth is also a key ingredient for environmentally friendly technologies such as wind turbines and other similar technologies, where the development of modern alternative technologies is currently developing in this direction.
In 2013, following the development of its economy, PRC launched the One Belt One Road (OBOR) initiative or also known as the Belt Road Initiative (BRI); Marking the most ambitious land and marine infrastructure development program today. The idea that connects infrastructure and economic relations takes almost 2/3 of the world. It is not limited only to transportation infrastructure and its supporters, but also telecommunication infrastructure and digital facilities which previously have developed as well. The land, sea and “air” transportation networks cover a large area. The north and west sides pass through West Asia to Europe, the east side through East Asia to the Pacific, the south side covers most of Africa and penetrates into southern America.
The development of the PRC is not limited to trading in goods alone, China’s financial strength has also begun to show its influence and strength globally. In line with the OBOR/BRI idea, after the prolonged 2008 crisis, China also took the initiative to establish the Asian Infrastructure Investment Bank (AIIB). Financial institutions consisting of Asian and European countries. A financial institution that offsets the ADB (19866) which is dominated by the United States and Japan where each has a share of 15.7%. This shows China’s intention to take an important role in the global economy, at least in the Asia and Pacific region.
The 2008 economic crisis has shown how China can recover its economy more quickly and even get reinforcement from the crisis situation. After showing how Chinese production dominates the global market, the next phase encourages the development of global transportation infrastructure and continues in the financial sector. This global strengthening has placed China in an important position in the global economy. Changes in the map of global economic power began to experience a shift with some weakness in developed countries and strengthening in developing countries. This situation is represented in the “economic war” that occurred between the US and PRC.
The New World Order Post-Covid19
In a situation the heating up of the economic war between the US and PRC as well as falling world oil prices and global economic developments that are increasingly entering a new crisis, the Covid19 pandemic has emerged. The lock down policy implemented in almost all countries of the world has immediately given strong and deep economic pressure greatly. The economic blows were global, at least in the first few months after the pandemic broke out.
The Covid19 vaccine, which has started to enter the production phase, has given hope that the situation will soon recover in the not-too-distant future. This means that conditions will soon recover, but the situation is going to be not exactly the same as before the crisis. Countries that are quicker to cope with the pandemic situation and restore their economic activity will have the opportunity to benefit and strengthen their economy. For countries with significant potential and capacity, it is an opportunity to become ‘stronger’
What is the situation for the global economic power map post-Covid19? Will the PRC get new momentum that could benefit them, just like the 2008 crisis? Or will a global capital regime gain momentum in returning their power and “control of the game”? Or will this situation emerge a completely new map of global economic power? Generating new ideas for a new global economic form?
Whatever it is, digitalization will be an important factor in the future development of the global economy. This can be seen from the number of fields and sectors that have undergone a deeper digitalization process. The global lock down policy during the pandemic has also provided important lessons on how digital mechanisms play an important role with an increasingly developed potential.
Businesses with digital services will clearly have a broader space in economic activity and various service needs. New digital-based business models will also grow, even faster than expected. Likewise with digital products that will increasingly grow with innovations that may not have been previously imagined. Several digital applications during the lock down period have shown this matter.
Digital warfare will have the opportunity to determine the course of the ‘game’ and global economic struggle. Various regulations must be able to adapt immediately and anticipate this development or will continue to be left behind. The pace of digital and telecommunication development and the impact it causes is fast, extensive and profound. Continuing with the pre-pandemic situation, the battle for technology and digital domination between the US and PRC will be an important color in the global digital battle.
The US as a pioneer country in digital technology will clearly rely on its Intellectual Property Rights (IPR) as a “weapon”. Meanwhile, the PRC with the power of data as a consequence of their large population will become an important mainstay. The fight and the race for new technology itself such as 5G has become increasingly fierce, considering that China has shown its aggressiveness in developing this technology in many countries, even to Europe. The expansion of China’s technology-based network of connections and infrastructure has spread rapidly and widely.
One of the important ‘competitions’ in the digital world is data mastery. Mastery of data is the mastery of many things covering massive fields and sectors of life, and not only related to the economy. Through technological developments, such as Artificial Intelligence or AI and Big Data, there is no longer meaningless data. All data can be important and valuable. Mastery of data also means mastery of knowledge, mastery of the development of various fields, control of the market, control of policies and many more.
Data control is implemented by collecting data through all possible tools and applications. Data collection through networks, digital infrastructure and telecommunications is highly important and strategic. The battle is not only limited to competition against products and control of the ITC (Information Telecommunication Technology) market, but also involves the extent to which the collection and control of data occurs.
The absence of regulations which control the collection, control and utilization of data creates a massively large space for major digital and telecommunication companies or Big Tech to dominate the market and control the data behind it. This includes direct and indirect consequences for controlling the data. The capital support behind Big Tech companies makes them even stronger in controlling and monopolizing the digital space and telecommunications.
The liberalization of electronic and digital transmissions is the foundation on which global developments are built. Freedom to transmit across countries and regions is a prerequisite. Freedom that is not bound by local or state regulations on digital facilities is a model that must be implemented by every country. Freedom of control over the source code of digital applications is a “right” that cannot be disturbed. Tax and customs exemptions on electronic transmissions and digital goods are models that are being maintained globally.
These matters are at least a frame for how Big Tech, the developed country, the masters of communication and digital technology have been using the collected data. How this very loose rule has become a safe-haven for getting the most out of data. Even though in reality, this utilization is not as big as it is today, but from time to time the usage of data keeps getting bigger and expanding exponentially.
There are at least two phenomena that have been noted in the development of digital and telecommunications, especially those related to the use of AI. First, the entry of a developing country, China, as an important “player” in the global development of telecommunications and digital. The flood of Chinese products has disturbed the “spoiled” situation previously enjoyed by developed countries. The reaction to demand a change of rules or the creation of new rules is seen as an attempt to restore the situation to the “old players” with the support of the power of capital behind them.
Second, the creation of the GDPR (General Data Proctection Regulation) in 2018 in Europe. The Snowden scandal has shown how digital service providers through their applications and electronic equipment have become data collection tools for various needs and not solely for business needs, even for the intelligence needs of countries like the US. The presence of the GDPR has at least disturbed the “data collection paradise”. Access to data collection for Big Tech companies is becoming increasingly limited, at least in Europe. The impact that seems to also affect the development of AI for European countries.
Realizing that AI will have an important role in the development of digital and telecommunications, the two phenomena above have created a map composition of global competition in the digital world. Although the US still dominates the mastery of technology, the PRC has shown progress and a highly competitive capability, even excellence in some parts of the digital world. Europe, on the other hand, is lagging a little behind in the ‘competition’.
In developing countries, digitalization is a new hope for increasing their economic potential as well as solutions for the provision of various service facilities. Education, health, social and other services are becoming more likely to be available in a relatively shorter time. For billions of people and micro, small and medium enterprises, it is an opportunity to open markets and capacities for their production. The provision of telecommunications and digital infrastructure is an important requirement for fulfilling these expectations. The role of digital and not limited to economic issues, is increasingly showing its important role in the model of global change that will occur.
The Covid19, which occurred when entering a global crisis, has forced dramatic changes. The inevitable ‘flash’ crisis has occurred in almost all countries and is forcing the entry into a ‘new climate’ globally. The composition of global economic forces is driven to face new dynamics with demands for changing “rules of the game”. Trump has at least demonstrated these demands in a straightforward manner both in his attitude and his demands of international institutions for changes in global rules. Significant change demands over what has been built up since the end of the Second World War. ****