Digital Diplomacy 2023 PDF

Digital Diplomacy: New Media and New Technologies in International Relations. ============================================================================= To investigate the digital macro-scenario in which contemporary international relations develop, as well as the differences it presents compare...

Digital Diplomacy: New Media and New Technologies in International Relations. ============================================================================= To investigate the digital macro-scenario in which contemporary international relations develop, as well as the differences it presents compared to the past. To analyze the emergence of new actors in international relations 4.0, with particular reference to non-state actors (such as, for example, multinational companies, increasingly active players in the complex web of contemporary international relations). To illustrate the emerging challenges, including the role of public opinion and the interaction between the different actors in a scenario increasingly centered on the multi-stakeholder dimension of relations, as well as the impact of the increasing digitisation of systems and the risks related to emerging threats to technological infrastructures. What will we cover? =================== Technology and Digitalization (Why do technologies and digitalization matter? Why do they have «geostrategic» implications?); EU, USA & China (Why do the EU, the US and China have different industrial and regulatory approaches? Which are their goals in the digital space?); Battlefield (Where is this battle being fought? (Digital infrastructure; Internet governance; data governance; cyber; AI; future of money)); Link between Technologies and Media (Why are corporations (and particularly Big Techs) relevant in this discussion? How do technologies affect media?). **Why do we need to study Digital Diplomacy?** 1. **Development of the Internet and Computer Systems** From Governmental Use to General Public ======================================= Transition to Mobile Technology + Global reach with Mobile Satellites ===================================================================== The Rise of Social Media ======================== What is "Digital Diplomacy"?: ============================= Digital Diplomacy is the "use of digital technologies in support of diplomatic objectives": → broader definition: **"new understanding of new public diplomacy"**: new public diplomacy, which uses the internet, new information and communication technologies (ICT) and social media as means for strengthening diplomatic relations; → it is not easy to define it, there are some definitions such as: cyber diplomacy, e-diplomacy, net-diplomacy; etc → they all concern a more specific area of the main topic → it is not easy to give a definition of digital diplomacy that suits everyone; → we'll discuss digital diplomacy but we'll get in detail by analyzing it. Traditional Public Diplomacy vs. Digital Diplomacy: =================================================== 1. greater access to information; 2. greater interaction among individuals and organizations, transcending geographical boundaries; 3. greater transparency. Why are we discussing Digital Diplomacy? ======================================== → it is considered a new kind of diplomacy (does it affect international relations?); → it brings new opportunities and challenges at the same time (change of economy and society = ex. competitiveness between countries businesses, which can have an impact in the geopolitical balance of powers); → the rapid development of disruptive technologies is fundamentally transforming economies and societies. → Digitalization affects key competitive parameters, potentially altering the geopolitical balance of power; → Digital alliances and partnerships are becoming pivotal in modern diplomacy. How does Digital Evolution affect International Relations? ========================================================== 1. potential impact on political environment (the digitalization of policy affects the environment): 2. topics discussed and negotiated by diplomats; 3. tools that diplomates use for representation, negotiation and promotion. - Evolution of Digital Diplomacy Index in 2023: - Evolution of the Global Country Visibility in 2023: Geopolitical Environment (areas of focus): ========================================== Digital politics is centered around: protection of submarine cables and satellites ============================================= - These technologies are the backbone of the internet and other forms of communication as they make the flow of internet traffic between countries and continents happen. - Over 90% of global internet traffic currently travels through submarine cables/more than 1 million kilometers of submarine cables satellite technology still under development. - These cables often trace historical routes used by telegraph cables in the 19th century, making them essential for modern global connectivity. - How to deal with vulnerabilities? Natural disasters/malicious actors the production of semiconductors ================================ - Semiconductors/chips hold immense geopolitical significance as they underpin modern technology and innovation of any digital device (pc, tablets, e-vehicles, healthcare devices, etc...) and strategic asset for key industrial value chains. - Strategic importance for nations leverage in international diplomacy (e.g. USA, China, Taiwan, South Korea) - ex.: 1. US strategy to limit the flow of advanced chip technology to China (Chips Act of 2022: semiconductor manufacturing grants, research investments, investment tax credit for chip manufacturing...) 2. EU Chips Act to address semiconductor shortages and strengthen Europe's technological leadership. free flow of data (the critical role of data flows) =================================================== - Growth in data volume data processing + data flows are indispensable for social stability, economic prosperity, and the growth of countries. - Nevertheless, new risks: cyber-attacks, government data access, increased data processing by the private sector, data leaks. - Restricting or controlling data flows can have significant repercussions on human rights and from an economic and geopolitical perspective. - ex. (different approaches towards data privacy in data governance): US: private control (role of platforms and gatekeepers); \*Impact on global green and digital twin transitions. EU Strategy: ============ → european commission released documents on Digital Diplomacy (goals and strategies); → The Council calls upon all relevant stakeholders to embrace digital diplomacy as a fundamental element within the framework of EU external action; → It emphasizes the need for close coordination between digital diplomacy and other EU external policies (this includes policies related to cybersecurity, countering hybrid threats, and addressing foreign information manipulation and interference). → How to get there? **Technology and Economic Growth** \> Technology is a key source of power, and technological change deeply affects international relations. At the same time, technology is not an autonomous factor in producing change: societal, political, economic and organizational factors interact with technological ones in shaping transformation in the international system. = if we want to consider Technology a factor of Growth, then we have to keep in mind that technology is one of the key drivers but not the only one and that it relies on three "things", which are: 1. productivity; 2. capital; 3. labour. - endogenous: economic growth is based on econometric analysis, which includes a number of variables and quantifies their impact on economic growth; - institutional-evolutionary: the underlying assumption of the national innovation system concept is that the economic growth of the country is possible with technological progress, and that it is not predominantly affected by the quantity of research and development resources, but the quality of the Tangible and Intangible assets: =============================== → Intangible assets support firms' **digitalisation** (software, databases), **innovation** (R&D, design, patents) and the **business knowledge** necessary for their functioning (market knowledge, organizational knowledge, training for employees); → Some of these assets enable firms to obtain productivity gains and efficiencies from new technologies and, as such, play a strategic role in a firm's value creation/competitiveness. What are the Intangibles? ========================= → These assets help to gain productivity and foster competitiveness in the market (investment that changes during the year). - they are more likely to be **scalable**; - sunk costs; =========== - they have **spillovers**; - they exhibit **synergies** with each other. Economic, Political and Social consequences: ============================================ - winner takes all; - market concentration; - competition or monopoly; - taxation; - balance of power (Zingales: economic and political power); - Strange: (security; production; finance; knowledge) «power is the ability to influence the agenda o to decide it» - Stigliz: superstar firms - inequality (gender gap); - labour market. \* all of them have a geopolitical impact. **US-CHINA-EU:** **The race for digital sovereignty:** **EU Digital Sovereignty European Prospective:** → The EU lags behind global technology leaders, the US and China(there is a huge gap between digitalization in the EU with China and USA); → EU has been left behind but "thanks" to what has been going on with the pandemic (in terms of development) the digital sector advanced. In fact, the pandemic accelerated the goal of the EU to establish as a digital sovereignty; Actions/Measures Adopted: ========================= → main target: China (fear of chinese direct investment in Europe); → soft approach (no strong exclusion); → connection between technological investment and digital investment; → new awareness in the European economy → strategy in venture investments, which have the aim to ? - E.g. investment in venture capital (small businesses need to acquire capital): ================================================================================ (switch in the measures adopted) ================================ → EU reliance on 3rd countries: Role in the global arena and need of independent sovereignty in the global sector of digitalization. → A private document of the European Commission that was leaked in 2019 stated that relying on third countries' hardware and software "*means relying on their values"*. the change in strategy also comes from: ======================================= → EU member states need to act as a "whole", which means they need to act as one; → change of mentality: awareness from the EU Investment Bank (risk of getting back to what happened in the 90s, when the USA was ahead of every country in technology investments: briefly explained, what happened was that the US gained a remarkable advancement in productivity due to heavy investments in information technology, leaving the EU behind); Investment strategy: huge mobility of money: EU RESILIENCE IN THE TECHNOLOGICAL FIELD; - EUR 127 billion10 dedicated to digital reforms and investments in the 25 national Recovery and Resilience Plans (13% to promote the roll-out of very high-capacity networks, 37% the digitalisation of public services and government processes, 19% the digitalisation of businesses, in particular SMEs, 17% the development of basic and advanced digital skills, and 14% digital-related R&D and the deployment of advanced technologies ) - to invest in their own digital transformation; - to collectively contribute to increasing the Union's resilience and innovative potential, as well as to reducing the EU's external dependencies. Does a single digital market exist? =================================== → According to the Digital Economy and Society Index\*, across the EU, the average EU score was around 50, with Nordic countries topping the rank with 70 while Greece, Romania, and Bulgaria were at the bottom with 40 in 2019. → In 2022, Finland, Denmark, the Netherlands and Sweden continue to be the EU frontrunners. Member States that initially had lower digitalization levels are catching up, with accelerated growth rates. Italy, Poland, and Greece, among others, have significantly improved their Digital Economy and Society Index (DESI) scores. \* Digital Economy and Society Index (DESI) summarized indicators on Europe's digital performance and tracked the progress of EU countries. Technological or digital sovereignty: ===================================== Quest for digital sovereignty is just a segment of a wider narrative to strengthen the geopolitical weight of the European Union. → (one of the aims of digital sovereignty): =========================================== 1. **strengthen the Geopolitical position;** 2. EU privacy and data protection (concern in Cyber Security and National Security + concern foreign influence \[infiltrate systems/reliance on non-european data services like for ex. USA **CLOUD ACT**, which is an extraterritorial reach of european data by the american authorities\]); 3. establishment of a secure and safe digital environment (protection of human rights by following a european way of doing things); 4. EU data economy and innovation (biggest issue: small and medium enterprises; it is troublesome for them to keep up with the technological process). Main sources of concern in detail: EU data economy and innovation: =============================== Privacy and data protection =========================== Cybersecurity, data control and online platforms\' behavior =========================================================== Reliance on non-European data services by European governments and industry players: → The global public cloud market is dominated by US and Asian companies, → The US CLOUD Act grants extensive extra-territorial authority to US law enforcement agencies for obtaining foreigners\' personal data. → Instead, there\'s a growing trend to deploy European-designed cloud solutions that offer greater data control and security (ex. Gaia-X project, jointly announced by Germany and France to establish a federated data infrastructure at EU level). → Donald **Trump** stated that the EU was looking for "easy money" when investigating US digital companies' market behaviors; → Barack **Obama** also attacked the EU policies towards US digital multinationals, labeling those actions as technology protectionism against US firms, driven by commercial interests; → Core "gatekeeper" function in the European digital architecture, intermediating the interaction between EU consumers and digital services. → 90% of European data is managed by US corporations; less than 4% of most important platforms are Europeans; only 10% of microchips in the EU are produced in the EU. → This is \[the European Union's\] opportunity to make change happen by design, not by disaster or by diktat from others in the world \[...\] it is about Europe's digital sovereignty on a small and large scale (Von der Leyen). Are regulations enough? ======================= Unified regulations come from the european mentality to come and act as one ex. GDPR; → January and June 2019: 49% of global regulatory proposals for the tech industry stemmed from the European Union or from EU member states, and more than half of those proposals regulated competition and company structures; 1. data governance (ex. GDPR; European Data Strategy, EU-US Data transfer); 2. constraining platform power (ex. Digital Services Act (DSA) and Digital Markets Act); 3. digital infrastructures (ex. GAIA X project aka cloud; Connecting Europe Facility); 4. emerging technologies (ex. European Initiative on Processors and Semiconductor Technologies); 5. Cybersecurity (ex. Cybersecurity Strategy for the Digital Decade, Cyber Resilience Act ). What we are working on: ======================= ***European Chips Act* →** strengthening Europe's competitiveness and resilience on semiconductor technologies; ***Artificial Intelligence*** → achieving better healthcare, safer and cleaner transport, more efficient manufacturing, and cheaper and more sustainable energy through AI; ***Space*** → EU initiatives for a satellite-based connectivity system and management of space traffic. Evolution of digital sovereignty: ================================= → the EU tried to regulate as much as possible but they did it keeping in mind the values of Europe; → protection of EU values + reaching EU autonomy, which is an autonomy related to the external actions of the EU (2014/16) with the so called **"open strategic autonomy";** → What does it mean now? Open Strategic autonomy: ======================== - ensuring that the EU has the capacity to cope alone if necessary but without ruling out cooperation whenever possible; - it goes some steps beyond smart supply chain management by taking into account geopolitics as well as economic factors; - "*With other international actors such as the United States (US), China and India developing their capabilities for greater strategic autonomy, the EU is in danger of being left behind*". European Economic Security Strategy (June 2023): ================================================ → **avoid the risks of threats** from other countrie**s** \[DERISKING (de-risk from threats, not de-couple EU economy from China) → promoting the competitiveness of EU industry, protect itself from external threats, and forge partnerships with other countries\]; EU digital abroad: ================== → Access to open, affordable and secure broadband connectivity and digital infrastructure including the necessary regulatory framework; → Digital literacy and digital skills; → Digital for growth, entrepreneurship and job creation; → Digital technologies as an enabler: ex. With Africa in 2018 the EU-AU Digital Economy Task Force. CHINA ===== **→** (Un)regulation «First develop, then regulate»; → Closed domestic market; Subsidies: ========== - China has spent at least ten times more on quantum R&D than the United States, estimates start from USD 50 billion; - In the AI sector, China filed 30,000 patents in 2018 alone, 2.5 times more than the United States; - China has also announced plans to invest USD 411 billion in upgrading its telecommunications systems to 5G between 2020 and 2030; - China accounts for 22 per cent of the market capitalisation value of the world's 70 largest digital platforms; - With 38%, China is the world's largest ICT exporter. Strong economic connections, also with the EU: ============================================== - The central focus of business relations between the European Union and China centers around their strong **trade** and **investment connections**; - China holds the position of being the EU's second-largest trading partner, with the US occupying the top spot; - In 2022, the trade between the EU and China amounted to a substantial 856.3 billion euros. China's FDI in Europe: ====================== → significant rise in Chinese investments in the European Union, that began in 2008 during the Global Financial crisis and the subsequent Eurozone debt crisis starting from 2013, the launch of the Belt and Road Initiative (BRI) and the economic reforms approved at the Third Plenum of the Eighteenth Congress of the **Chinese Communist Party** further bolstered **Chinese FDI** in Europe; Over the past twenty years: → an estimated cumulative total of 120 billion euros in Chinese FDI has flowed into the EU; → Global cross-border investment activities have generally declined since 2017: (Why? COVID-19 pandemic and escalating geopolitical tensions, notably the Sino American trade war and the conflict in Ukraine); → Chinese global investment has not been an exception to this trend. → As a result, while 2021 witnessed a strong global recovery in FDI flows from exceptionally low levels in 2020 due to the pandemic, Chinese FDI in Europe hit a fresh decade-low in 2022, amounting to 7.9 billion euros, down by 22 percent from the previous year. Chinese Strategy: ================= → is changing towards national strategic goals, which means no more irrational investments (\> The overarching Chinese investment strategy is now designed to move away from **"irrational investment activities"** that do not align with national strategic goals); → as a consequence: EYE ON EU. China: **SYSTEMATIC RIVAL** for the EU in many policy areas; (Chinese investments in many sectors: Transports, High-Tech Industries; Energy → Chinese FDI in the EU has shifted from "**hardware**" sectors like transportation infrastructure to include energy, telecommunications, and various high-tech industries, encompassing a wide range of cutting-edge technologies); - Limit the dependency of China in Europe: Ambition: ========= → How? ====== - the **National Informatization Strategy** (2016--2020) calls upon China's internet companies to "go out" into the world and support the creation of a **"Digital Silk Road"**; - the **"Made in China 2025"** roadmap and **"Internet Plus"** were launched in 2015 to drive domestic industrial and digital innovation. growth model. In AI, China intends to establish at least 50 academic and research institutes by 2020. → Concern of Europe: China's approach to economic statecraft: ============================================================= Current Challenges: =================== → Since 2019, the EU has seen China as a multifaceted partner, involving cooperation, negotiation, economic competition, and systemic rivalry in various policy areas. → Ursula von der Leyen, in late March: → risk that it would affect sensitive technologies where investment could potentially contribute to the development of military capabilities that pose a risk to national security. Balancing promising opportunities with considerable risks: ========================================================== The EU is actively seeking increased access to Chinese markets, but it continues to face challenges due to the relative closure of the Chinese market. \* ex. "**Catalogue Guiding Foreign Investment in Industry,"** jointly issued by China's National Development and Reform Commission and the Ministry of Commerce: lists various sectors where restrictions, limitations, or partnerships with Chinese companies are required for foreign entities. → The rise of Economic and National Security Concerns: ====================================================== Economically, certain transactions have raised concerns about the future competitiveness of EU companies due to the outflow of advanced technologies in strategic sectors. In addition, national security concerns revolve around the potential risks associated with foreign control of strategic assets, the production of key defense components, and the risk of espionage or disruptive actions → Coping with the EU Regulatory Fragmentation. ============================================== - The US leader role is built on an **efficient research and innovation ecosystem** as well as a **market-liberal** approach supporting a quick commercialisation of digital innovations; - **Like-minded partner in the relationship with the EU** (strong economic ties: significant value that amounts to 7.1 trillion USD1, with the trade in goods and services amounting to over 1 trillion USD dollar per year); - More assertive approach towards China: de-risking strategy + several measures; - Industrial policy in the US with the **Inflation Reduction Act** (IRA) and the **Creating Helpful Incentives to Produce Semiconductors and Science** (CHIPS) Act. US: The (under pressure) Champion: ================================== The US leader role is built on an efficient research and innovation ecosystem as well as a market-liberal approach supporting a quick commercialisation of digital innovations: → "The Innovation Triangle": ============================ - business environment factors, the trade, tax, and regulatory environment and innovation policy environment; - Advantages of the Innovation: ============================= a. Financial markets; b. Stated-backed defense budget; c. Global standards. Evolutive path: =============== In 1960, the United States dominated global R&D, accounting for 69 percent share of the world's R&D investment: → U.S. share of global R&D expenditures has dropped to 28 percent in 2016. In 1992, U.S. investors represented 97% of the \$2 billion in venture finance and accounted for about three-quarters just a decade ago. However, in 2017, U.S. investors led 44% of a record \$154 billion in venture finance, with Asian investors (with China leading) accounting for 40%. Venture Capital in the US in recent years: ========================================== **\* Venture capital** is a form of equity financing particularly relevant for young companies with innovation and growth potential but untested business models and no track record. it replaces or complements traditional bank finance. The development of the venture capital industry is considered an important framework condition to stimulate innovative entrepreneurship (cfr. OECD). Venture capital in the US reached \$235 billion in 2022, a 35% drop relative to 2021. However, the investment rate has been fairly consistent over the last ten years when we exclude 2021. The rise of US leadership in digital policy: ============================================ During the 1990s, the US has emerged as a global leader in digital policy in part due to its: a. pro-innovation mindset to digital innovation; b. light-touch regulation of digital innovation**.** Clinton Administration: ======================= → In the 1990s, the U.S. digital policy direction was primarily shaped by the White House, with significant influence from Ira Magaziner, who served as the chief policy advisor to President Clinton. → Magaziner drafted the Clinton administration's "Framework for Global Electronic Commerce," released in July 1997, it detailed **5 core principles** aimed at fostering the expansion of the digital economy in the US: 1. The **private sector** should have the lead; 2. **Governments** should avoid undue restrictions on electronic commerce; 3. Where governmental involvement is needed, its aim should be to support and enforce a predictable, minimalist, consistent, and simple legal **environment for commerce**; 4. Governments should recognize the **unique qualities of the Internet**; 5. **Electronic commerce** over the Internet should be facilitated on a global basis. What happened next? =================== FROM: innovation policies, active role in multilateral forums and multistakeholder approach; TO: a lack of interest in digital policy and a rising anti-tech sentiment. \*U.S.'s global dominance in digital policy has declined in recent years, allowing for allies like the EU and foreign adversaries like China to fill a digital power vacuum. Has the US lost its global leadership position in digital policy? ================================================================= → the United States lost this global leadership position after **deprioritizing digital policy** and stands to lose even more as rising anti-tech sentiment translates into policies that stifle innovation and economic growth. → in recent years the global digital policy scene has been marked by European overregulation and overreach, a rise in digital protectionist policies, and threats to democracy from China and Russia. - Report titled "Restoring U.S. Leadership on Digital Policy" -- published by the Information Technology and Innovation Foundation on July 31, 2023. American Leadership Failures: ============================= Multiple failures from recent administrations and Congress: → Bush Administration: ====================== Digital policy matters receded in importance due to the events of September 11, 2001, which redirected the government\'s focus towards the conflicts in Afghanistan and Iraq, along with the global war on terror. → Obama Administration: ======================= His administration achieved several accomplishments in digital policy: - the Federal Communications Commission (FCC) developed the **National Broadband Plan** to expand Americans' access to high-speed Internet + guidelines for the deployment of 5G technology; - The White House exerted pressure on then-FCC chairman Tom Wheeler to adopt an e**xcessively regulatory stance on net neutrality**\*, a move that many argued was unnecessary and only fuelled partisan disputes. - the principle that internet service providers should enable access to all content and applications regardless of the source, and without favoring or blocking products or websites. → Trump Administration: ======================= - The net neutrality regulations implemented during the Obama administration were rightly dismantled during the Trump administration; - President Trump decided to withdraw from the Trans-Pacific Partnership (TPP), a trade agreement championed by President Obama involving 12 trans-Pacific nations. Among other benefits, this agreement would have protected the global flow of data by prohibiting data localisation measures that restrict data within the borders of a single country. - **Regulatory back and forth:** It created uncertainty for businesses and highlighted the need for net neutrality legislation, which still does not exist. → Biden Administration (Biden's Digital Policy): ================================================ - **Declaration for the Future of the Internet**, a nonbinding statement signed by 61 countries, including the United States and all EU member states. - Executive Order 14067 on Ensuring Responsible Development of Digital Assets: ============================================================================== Fragmented approach to digital policy: ====================================== → The US has not undertaken a comprehensive approach to digital policy. → Instead, on the federal level, there have been sporadic efforts to address four separate concerns: ==================================================================================================== 1. privacy; 2. consumer protection; 3. security; 4. online content. Snapchat of today's rivalry: ============================ **→ 5G:** Despite advantages in 5G standards and chip design, **America's 5G** infrastructure rollout is years behind China's, giving China a first-mover advantage in developing the 5G era's platforms. → FCC adopted guidelines for the development of 5G (**Obama administration**, 2016), which opened up spectrum for 5G networks, making the US the first country to do so. → Under **Chairman Ajit Pai**, who served from 2017 to 2021, the FCC pursued a strategy of allocating additional spectrum for 5G, updating infrastructure policy, and modernizing regulations to encourage investment in 5G, called the 5G FAST Plan; → FCC established its **5G Fund for Rural America** in 2020, making \$9 billion available to make 5G wireless service available in rural areas. **Semiconductor:** China is catching up in two key arenas: semiconductor fabrication and chip design: → **CHIPS and Science Act**: effort to strengthen American manufacturing, create jobs, bolster supply chains, and compete with China. It provides: - \$76 billion in funding for U.S. **semiconductor research** and development, manufacturing, and investment; - \$81 billion for the **National Science Foundation** (NSF) over five years for scientific research and STEM (science, technology, engineering, and mathematics) education; - \$10 billion for NIST for manufacturing, an increase in funding for the **Department of Energy**; - \$10 billion over five years for 20 geographically distributed **regional technology and innovation hubs**. - **Quantum information:** China has already surpassed the U.S. in quantum communication and has rapidly narrowed America's lead in quantum computing; - **Biotech:** The U.S. has seven of the ten most-valuable life sciences companies, but China is competing fiercely across the full biotech R&D spectrum; - **Green Tech:** China is the world's leading manufacturer, user, and exporter of green technologies; US Ambition: ============ → Influencing global standards & multilateral institutions; Other Global Players: ===================== **→** The Russian Science and Technology Foresight (a full-fledged study targeted at the identification of the most promising areas of science and technology development in Russia as it nears 2030) revealed that in numerous EDTs, Russia is lagging behind world leaders (GDP in R&D only 1.16%); Financial constraints; sanctions that restrict access to international technologies; preference for domestic tech supply; failing to retain talents. → Both **China and Russia** prop up domestic tech companies that are willing to accede to → The Chinese and Russian approach present attractive models for other authoritarian regimes, which could lead to a **global rise in digital authoritarianism**, especially without a strong, unified response from the United States and its allies. JAPAN: ====== → Japanese R&D is occurring in an isolated 'in house' manner; → The national innovation system failed to re-invent itself for the 2021 tech transformations (like lack of venture capital); → However, high GDP in R&D. SOUTH KOREA: ============ → top-down innovation system: close collaboration between government, industry, and the academic community in the process of nation building; → High GDP in R&D (4.5%). Multilateral Fora: ================== **- G7/G20:** - UN: === a. radio-communications; b. telecommunications standardization; c. development issues. Plenipotentiary Conference: =========================== - decision making body; - the Council → acts as the Union's governing body in the interval between Plenipotentiary Conferences. Most decisions are taken by consensus. Internet Governance Forum: ========================== → UN Secretary-General set up a **Working Group on Internet Governance** in 2005: Internet Governance Forum was created as a multilateral, multistakeholder, democratic and transparent platform for discussions on Internet governance issues. - Exchange ideas and good practices among governments, intergovernmental organizations, the private sector, the technical community, and civil society (including academia). - The IGF **does not** adopt resolutions or create any binding treaties (18th annual meeting of the Internet Governance Forum: hosted by the Government of Japan in Kyoto from 8 to 12 October 2023). OECD: ===== → It is an international organization in which governments work together to find solutions to common challenges, develop global standards, share experiences and identify best practices to promote better policies for better lives. - Technical support, no binding resolutions. Council (Representatives of member countries and the European Union provide strategic orientations for the OECD. Chaired by the Secretary-General, decisions are taken mostly by consensus). \*E.g. Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (BEPS) or OECD's AI principles. WTO: ==== → It usually meets every two years; → The **General Council** acts on behalf of the Ministerial Conference and runs the Dispute Settlement Body and the Trade Policy Review Body; → It is made up of representatives (usually ambassadors) from all member governments. → Decisions are made by the entire membership; → A majority vote is also possible but it has never been used in the WTO agreements negotiated to foster free trade and lower barriers; → The WTO can impose trade sanctions. Bilateral/Regional Agreements: ============================== **→** EU-US technology, economic and trade relationship and cooperation in addressing global challenges: → The EU and the US met in Luleå, Sweden on 30-31 May 2023 for the fourth ministerial-level meeting of the Trade and Technology Council. They agreed on: Trustworthy artificial intelligence =================================== a. launch three expert groups working on terminologies, taxonomies, standards and emerging risks; b. focus on generative AI systems; c. prioritize certain areas under the Administrative Arrangement on **Artificial Intelligence for the Public Good** to address global challenges in the fields of climate change, natural disasters, healthcare, energy and agriculture. 2. Emerging technologies The EU and US: ==================================== d. agreed on a **common standard** for the recharging of heavy-duty vehicles; e. issued recommendations for **public electro-mobility charging infrastructure**; f. established a **Task Force** on quantum technologies; g. issued a **6G outlook** which sets out guiding principles and next steps to develop this critical technology; announced two new cooperation projects on trusted connectivity with Costa Rica and the Philippines Silk Digital Road: ================== → Launched in 2015 as a component of Beijing's vast vision for global connectivity (Belt and Road Initiative - BRI); Global Gateway: =============== → between 2021 and 2027, the EU will invest up to 300 billion euro, focusing also in the digital domain; → Through the Global Gateway, the EU will **strengthen connections** between Europe and the world and help partner countries address the digital divide and further integrate into the global digital ecosystem. Build Back Better World by the G7: ================================== Science & Technology: ===================== → power-balance dynamics between sovereign nations and between states and private corporations; → Three dimensions: =================== 1. **Science in Diplomacy:** using scientific and technology advisory to achieve foreign policy objectives; 2. **Science for Diplomacy**: using technology cooperation to improve relations between countries; 3. **Diplomacy for Science**: facilitating cooperation and exchange in technology. Role of Data and its Importance (for relations between states): =============================================================== When we talk about Data → economic relevance = wealth of Data. The digital developments makes data more important from an economic point of view but data is the one that drives the economy as well. - Data is the base of the digital economy, data fuel and drive digital development (e.g. - In the digital age, data has become a valuable and sought-after resource, driving economic activities across various sectors. How to make data an economic value? =================================== ex. → China Data grew exponentially in 5 years. China has added «data» as fifth factor of production; According to the OECD: between 2010 and 2015 the global volume of data grew x8 times (reaching 8 zettabytes aka 8 trillion gigabytes); Impressive? Between 2015-2020 the recorded growth was X40! Why? Economy and society are much more digitally enabled and integrated. 1. when data is transformed into knowledge (gaining insights through analysis); 2. when this knowledge allows to make action (for decision-making = taking action)in the elaboration of data itself. → Enhancing access to and sharing of data can create value for data holders (direct impact), but it can help create 10 to 20 times more value to data users (indirect impact), and 20 to 50 times more value for the wider economy (induced impact). → Restriction applied by the EU on data cross-border flows might have affected its economic growth by 0.4% and 1.1%; → Enhanced access and sharing can help generate social and economic benefits worth between 0.1% and 1.5% of GDP in the case of public sector data, and between 1% and 2.5% of GDP (in few studies up to 4% of GDP) when also including private sector data; → Where sharing data across borders is concerned, estimates suggest that cross-border data flows contribute USD 2.8 trillion to global economic activity. → In 2022, the value of the data market in the U.S. was estimated to be 289.5 billion euros, nearly four times the total value in the EU (73 billion euros), and seven times that of China, which reached (40 billion euros) (Euractiv, 2023); → Looking ahead, the data economy is projected to grow even further, with estimates suggesting it could reach 827 billion euros by 2025 (European Commission, 2020). → *McKinsey:* since 2015 the value of cross-border data is higher than the one of physical goods: its value is expected to increase from \$2.8 trillion in 2014 to \$11 trillion in 2025. Values of Data: =============== a. **international trade**: data exchange can be likened to a form of international trade and has become ingrained in the digital economy's fabric, underpinning its dynamism and vitality; b. **improvement of the government and policy development** (link between public and privacy \[companies\]); c. **fuel innovation**: The economic value of data and personal data lies in the potential to fuel innovation, drive business strategies, and enable targeted advertising and personalized experiences; d. Already in 2016, the European Commission stated that data access 'spurs marketplace efficiency and innovation', as well can help to 'improve government services and policy development' (European Commission, 2016): ex. **importance of use of data for firms**: - firms that apply data analysis in their decision-making process records +5/6% in terms of productivity. - firm level studies suggest that firms that use data exhibit faster labor productivity growth than those that do not by approximately 5% to 10%; - If the top 100 largest European manufacturing corporations apply -- even partially -- data analyses they could increase their growth by 1.9% in a few years. What is data governance? ======================== **→** it is defined as a **set of rules** (and mechanisms that can allow the enforcement of these rules) that regulate the collection, the access, then the storage and the processing of third-party data. → here, when we talk about GDPR the focus is on personal data. → it is necessary to have a regulation on how they are used in digital trade (no clear definition), at the same time they cover fiscal goods, intellectual property but there is no provision for digital goods; → main issues: ============== 1. Digital localization; 2. Data flow; 3. Data protection. Broader picture: which are the dimensions that are affected by the importance of data? ====================================================================================== 1. Sovereignty (data control: defines the rules for access, use and re-use of data); 2. Competitiveness (private sector/fair competition between companies based in different countries :: competition regulation sanctions the behavior and business practice of the digital "market makers); 3. National interest (determines (the increasingly broad) set of data-types and uses which are off-limits + if we think about the global scenarios, this point is strictly related to sovereignty since there is the need to protect the national interests (ex. EU Economic Security + EU Open Strategy). Data Control: ============= 1. step: regulate and identify the criteria to allow a collection of personal data; 2. step: identify a legal perimeter within which data-enabled service providers can access personal information that has already been collected by other providers (business-to-business data sharing, B2B data sharing); 3. step: flow of privately held data into the public sphere (access to private actors) + (business to-government data sharing, B2G data sharing); 4. step: (how can they be transferred to the public?) this step is all the way around from the third point, because in this case we go from the public sphere (public bodies) to the private sphere (which involves businesses and individuals) + (government-to-business or G2B Data sharing). - ex. covid → data was something important for the security of the state + implication in the health system and in the economic relations. **NATIONAL SECURITY** (from a prospective that is less related to national security and it is more related to military security and sensitive assets of a country): Why does it matter? =================== → **Cybersecurity norms** aim at preventing illicit access to information by imposing heightened security requirements on critical infrastructures or entities; → While **cybersecurity regulation** does not discipline data access per se, it recognizes the critical nature of information and the presence of hostile actors. ex. → In the US, the 2018 Foreign Investment Risk Review Modernization Act (FIRRMA) extended the definition of screenable transactions to foreign investments yielding non-controlling stakes on sensitive personal data of United States citizens. In the EU, the 2019 FDI screening Regulation, which sets out a procedure for investment screening coordination within the common market, includes transactions involving access to sensitive information, including personal data, within a specific screenable activity (ex. Tencent purchasing a stake of Satispay). The national security implications of hostile-yet-legal access to sensitive personal data: → safety and integrity of the communication infrastructure concerns (ex. US and several allied countries to ban Huawei, and sometimes ZTE, components from their telecom infrastructure) New concerns have arisen in different states and they are all related to data. In fact, we can think of the problems in the US during the Trump presidency: there has been an acquisition of assets related to data (case involving tik tok and grind) → protection of US citizens + national protection. Competition policy: =================== Digital markets are characterized by network effects, economies of scale and scope, and cross-sectoral spill-overs → data protection principles into competition: the approach to data has an effect on the competition: ex. The US has an economic approach (monetization of data); while the EU has a more personal approach, since protecting data for the EU means protecting the human rights of people as well. → antitrust concerns have emerged due to the potential unfair advantage enjoyed by U.S. companies, given their ability to leverage more permissive privacy laws compared to those in the EU. Different Countries have Different Approaches: ============================================== Furthermore, the **EU** has adopted various regulations and directives to support its data strategy. These include: a. the **Regulation Free Flow of Non-Personal Data** (Regulation (EU) 2018/1807); b. the **Open Data Directive** (Directive (EU) 2019/1024); c. the **Data Governance Act** (DGA, Regulation (EU) 2022/868 - aimed at enabling the sharing of sensitive data held by public bodies and private actors); d. a proposal for a **Data Act.** While the **GDPR** focuses on personal data governance, the DGA and Data Act aim to establish an additional framework for the reuse, transfer, and protection of non-personal data, enabling Europe to fully capitalize on the advantages that its generated data offers. - **Canada and Japan** → in these countries the access to personal data is regulated by some limitations and regulations (on which information can be collected, which uses it can be put to, who can access it, and how long it can be retained for), which set the criteria; - **US** → Since the US is fragmented in different federations, the result is that the regulations are different from state to state (anyway the regulation of data is getting more and more towards a strategic way); - **EU** → GDPR; - **Russia and China** → in these two countries the approach is more focused on the concept of Cyber Sovereignty (Data is considered a National Strategic Asset). Two significant events in 2018 captured the attention of citizens and lawmakers regarding data privacy legislation: 1. The introduction of the General Data Protection Regulation (**GDPR**); 2. The **Cambridge Analytica incident** that occurred in spring 2018 further intensified the public's concern: Privacy Legislation: ==================== → main aspects: =============== - providers have the legal liability to protect personal data; - sub-contractors have a co-liability to protect personal data; - privacy by design. **→** The GDPR is built around a conception of the data-handling process as consisting in **three roles:** 1. Data Subject; 2. Controllers; 3. Processors. Data Portability: ================= The GDPR applies to all European firms when dealing with a European citizen; if you are a firm of the US, then you do not have to comply with the regulations; → applies for EU firms (if you have business with EU citizens, then you have to comply with the GDPR) \*the US is changing the standards even in situations where there is no EU citizen involved. → Up to May 2021, over 500 actions have been taken against non-compliant companies, and over €260 million in fines have been imposed; → The recent fine imposed on Meta (1.3 billion US dollars, highest ever so far!) is the latest in a long line of sanctions imposed by the EU; → Violations of the GDPR have been already identified and penalized in cases involving other major tech companies such as Amazon, Google, and Twitter. Consequences?: ============== Microsoft extended worldwide the control rights to consumers offered in the EU's GDPR (cfr. ***Bruxelles effect***). → The GDPR has created considerable legal uncertainty. → Combined with a broader territorial application, a risk of joint responsibilities between data controllers and processors, a drastic increase in possible sanctions After the EU GDPR principles: ============================= Furthermore, the EU has adopted various regulations and directives to support its data strategy. These include: - the **Regulation Free Flow of Non-Personal Data** (Regulation (EU) 2018/1807); - the **Open Data Directive** (Directive (EU) 2019/1024); - the **Data Governance Act** (DGA, Regulation (EU) 2022/868 - aimed at enabling the sharing of sensitive data held by public bodies and private actors); - and a proposal for a **Data Act.** While the GDPR focuses on personal data governance, the DGA and Data Act aim to establish an additional framework for the reuse, transfer, and protection of non-personal data, enabling Europe to fully capitalize on the advantages that its generated data offers. To sum up: EU → GDPR = PERSONAL DATA FOCUS DGA + proposal of DATA ACT = NON PERSONAL DATA/THE AIM IS TO ESTABLISH AN ADDITIONAL FRAMEWORK. Features of US Approach: ======================== → No Federal Law ( sectoral system and relying on a mix of legislation, regulation, and self-regulation); - In contrast to the GDPR, which in effect requires consumers to opt into data collection, the CCPA allows consumers to opt out. In that sense, it is less stringent than the GDPR; - the CCPA gives users the right to ask a company to produce all the personal information it has gathered on them over the years, as well as all the categories of businesses it got that information from or sold it to; - the California act does not contain processing principles and does not place limits on what businesses do with personal data internally. → commercial interests VS privacy rights: in the US technology companies are making money out of data (personal data): they are offering money in exchange of personal data (=monetizing data). commercial interests and privacy rights. ======================================== - On the one hand, the U.S. a business model is adopted where tech companies provide free services to users in exchange for monetizing their personal data through either selling the data itself or granting access to advertisers (Hoofnagle and Whittington, 2014). - Conversely, European regulators have expressed concerns about this approach, leading to several cases being filed against U.S. tech companies by national data protection authorities (Houser and Voss, 2018). - Right to: a. access personal data; b. know what information has been collected; c. what information has been shared; d. opt-out of the selling of personal data e. be erased; f. against discrimination. Approach of China and India =========================== **(**\*India is in the same category of EU because some features come from there)**:** CHINA: ====== - **Internet Cyber Security Law** (national security) → China's model asserts the central role of the state in regulating the flow and usage of data. It effectively establishes the state as a de facto data processor; - **Local storage** → copies of data must be stored locally on Chinese servers; - **Restrictions on cross-border data transfer →** there is a ban on the export of all technological, economic, or scientific data that can pose a threat to public interest or national security; - **Government Security Audits →**foreign IT companies might be subject to spot checks and asked to provide their source codes as part of national security considerations. - All the provisions have as aim the national security and cyber security; even if it is so, there is a **change in the strategy**, which is becoming a **comprehensive** strategy; India Mixed Approach: ===================== - **"Personal Data Protection Bill" (PDPB) →** proposed in 2018: New rights for data subjects: in line with GDPR legislation, data subjects in India are granted the right to confirm, access, and change their data; - **focus on data sovereignty** → Indian authorities may access data stored in India, if it is judged to fall under the national interest; - national interest. ================== Data & Geopolitics: =================== There is no comprehensive international legal regime on data governance. Under existing laws, data is transferred and traded as a service under the General Agreement on Trade in Services (GATS) → OLD! \*ex. no international agreements on whether GATS covers cloud services. WTO's dispute settlement system (DSS) in the international trade legal regime is ineffective for data-related issues: due to the fact that data rules tend to have a large scope and to apply universally to all cross-border data transfers, whereas the DSS is designed to deal with breaches of trade law in one particular good or service. → The US former Secretary of Commerce (Trump administration, 2017-2021), Wilbur Ross: GDPR could "significantly interrupt transatlantic co-operation and create unnecessary barriers to trade"; → India and USA tension: in 2018 India proposed stricter rules on data localization, the US threatened to reduce working VISA for Indian; → Nigeria and Vietnam introduced data regulations shaped on China's model. Can this help their commercial ties? EU-US Data tension: Cloud Act: ============================== The evolution of the system equals the evolution of data (as the world goes on, data do the same → there is the need to also consider new data); Cloud Act: ========== **→** act elaborated to mediate the data tension between the US and the EU (CONTROL OF THE PROBLEM OF DATA FLOW); **→** ex. (during Trump administration) 2013 Case involving Microsoft: Microsoft was required to comply with the law. They refused. Anyways they had to comply with the regulation. After this case there is the Cloud Act of 2018: "communication service providers are required to comply with the legal requests from the US government for data, regardless whether the data was located within or outside the country". → For the EU there is still the need of an International Agreement; → In any case there is the Article 48 of GDPR → provision on electronic evidence. Microsoft case in detail from the slides: The 2013 Microsoft Ireland case is a notable example of the dispute surrounding government access to data in a foreign jurisdiction: The U.S. government issued a warrant under the **Stored Communications Act (SCA)**, seeking access to emails related to a criminal investigation stored on a Microsoft-operated server located in Dublin, Ireland. Microsoft argued that the warrant could not be enforced beyond U.S. borders and that the U.S. government should follow international legal procedures to obtain the data. In 2014, a federal court ruled that Microsoft was indeed required to comply with the warrant, regardless of where the data was stored. Before the Supreme Court could issue a final decision, President Trump signed **the Cloud [Act ]**[on **March 23, 2018**], requiring communication service providers to comply with legal requests from the U.S. government for data, regardless of whether the data was located within or outside the U.S. Consequently, **[the Cloud Act raised concerns]** within the EU about the extraterritorial jurisdiction of U.S. law over data stored outside its borders and the sovereignty of EU citizens' data. → These concerns were rooted in a broader context of mistrust surrounding **user privacy and data protection**, which was amplified by Snowden's revelations about U.S. surveillance practices. → according to it, a transfer or disclosure of data not authorized by EU law would not be deemed lawful solely based on a foreign court order unless it is 'based on an international agreement.' → in the absence of an international agreement, Article 49 GDPR establishes conditions under which an international transfer could occur, including the subject's consent or the occurrence of a state of necessity for 'important reasons of public interest.' To address these concerns, the Cloud Act included a provision allowing the U.S. government to enter into executive agreements with third countries for reciprocal expedited access to electronic evidence held by providers based abroad. In September 2019, a joint U.S.-EU statement announced the starting of formal negotiations on an agreement, intended to occur in parallel with the EU's framework for e-evidence (E-Evidence Regulation, 2018). In March 2023, the U.S. Department of Justice announced that negotiations with the EU had resumed. → The judicial process that followed led the **CJEU (Court of Justice of the EU)** to invalidate two EU-US data protection equivalence decisions known as safe harbor (struck down in 2015 - so-called Schrems I decision ) and privacy shield (struck down in 2020 - so-called Schrems II decision); → Under the **Data Protection Directive 95/46/EC**, the transfer of personal data from the EU to third countries outside the European Economic Area, including the U.S., could only take place if the third country ensured an adequate level of protection, to be ascertained by the Commission. **→ The Safe Harbor Agreement** consisted in an EU-U.S. arrangement, setting up a series of principles and rules endorsed by U.S. authorities designed to bridge the gap between the Data Protection Directive's requirements for cross-border data transfers and the U.S. privacy framework. In response to the invalidation of the Safe Harbour and following extensive negotiations, a new privacy framework, the so-called **Privacy Shield**, was announced on February 2, **2016**: → This agreement was presented as a strengthened and more institutionalized version of the Safe Harbour, aimed to address legal weaknesses of the previous framework and establish stricter safeguards for data transfer OK for the EC...... NO for the CJEU: Two main points were raised: 1. from the EU perspective, it felt that the framework did not strike a proper balance between the EU's citizen-focused regulations and the market-driven 2. EU privacy advocates were concerned that U.S. intelligence agencies could bypass the Privacy Shield Framework for surveillance purposes under the pretext of national security, especially under the post-9/11 and Patriot Act era. The CJEU held that the US does not provide for an essentially equivalent, and therefore sufficient, level of protection as guaranteed by the European data protection legislation. Consequences? - endorsed by US President Joe Biden and European Commission President Ursula von der Leyen; - the agreement reflected the shared commitment to facilitate data flows between both jurisdictions in a manner that protects individual rights and personal data; - *"Our challenge of enabling the responsible use of our data infrastructure through a robust global regulatory framework has never been more urgent"* ( Microsoft's Corporate Vice President for Global Privacy and Regulatory Affairs and Chief Privacy Officer Julie Brill) OECD Guidelines governing the Protection of Privacy and Transborder Flows of Personal Data ("OECD Privacy Guidelines"): ======================================================================================================================= - revised in 2013 set out guiding principles to ensure the protection of privacy while avoiding restrictions on data flows that are disproportionate to the risks presented; - The OECD Privacy guidelines were the first internationally agreed upon set of privacy principles on the protection of personal data whether in the public or private sector. "MAPPING APPROACHES TO DATA AND DATA FLOWS" G20 Saudi Arabia 2020 How does data impact diplomacy? =============================== 1. impact on the **environment** in which diplomats operate. The flow of data shapes the flow of money. It influences and creates new data-driven geopolitics and geo-economics; 2. **new topics** (data brings new topics to the negotiation and policy-making tables, from privacy and data protection, to digital commerce and trade; 3. data provides **new diplomatic activities** (data provides diplomats with new tools to make diplomatic activities more efficient and effective, including data mining and AI). Some regulations may have extraterritorial scopes, we have seen it with the Cloud Act. Digital Localization: ===================== Data localization is the practice of keeping data within the region it originated from. The number of data-localization measures in force around the world has more than doubled in four years. - In 2017, 35 countries had implemented 67 such barriers. - Now, 62 countries have imposed 144 restrictions and dozens more are under consideration. EU-US Data Tension (Resume): ============================ sum up of the last lesson: → 2013: two agreements; two decision from the EU Commission; → strong ties since a lot of companies from both sides are involved; → both countries have a huge economic and social impact on the rest of the world; → **principles to fill the gap**: Data Protection Directive/ The Safe Harbor Agreement (checked by the EU Commission → compliant with the EU standards); even though there was an issue: there were a few points missing out so it just got invalidated in 2015. → 2016: **Privacy Shield Framework** (involvement of institutions): EU Commission declared that the act was compliant but for the EU Court of Justice the framework was still not enough, even if it was stronger than the previous one it got invalidated (no sufficient protection of data privacy). → disagreement → companies in crisis → long period of uncertainties. To sum up: 1. there was still a lack of common ground on data privacy and data protection; 2. level of safeguards from the US side; 3. lack of legal remedies for people to access their own data. → 2023: new EU-US privacy agreement for transfer data ("shared commitment from both sides to facilitate data flows") - issues on negotiation and appliance + issues regarding who has access to personal data; - Guidelines OECD. Broader perspective: - G7, G20 (digitalization + issues related to it); Data Localization: ================== - it is the practice that allows to keep data in the local region; - issue on the measures. Digital Infrastructure ====================== It comprises the physical resources that are necessary to enable the use of data, computerized devices, methods, systems and processes. - broad category that is getting more and more important; Why do they matter? 1. they play a fundamental role in economy (digital economy) and society; 2. as long as the economy is getting digital, the competitive businesses have to follow: Digital Trade: ============== - **no definition**: key elements: a digital trade it is considered as one if parts of the transaction are digital; - if we compare the digital trade to the traditional trade there is a new difference in goods and services: prominence of **cross-border data flows**; - Generally, **trade** is considered to be digital if parts of the transaction are conducted through digital means → goods and services can both be traded through "digital transactions". Data as an economic input: ========================== - non-rival in consumption: **data is not consumed** when is being used, so it is more similar to a resource, a public good; - **Excludable**: one can control access to it (e.g. similar to a resource) - Between 2005 and 2019, the value of service exports from the EU-28, the US and India grew faster than good exports (pre-Brexit data in this example). In China, services exports grew less than goods exports (still high rate); - In 2019, services exports accounted for approximately 33% of the value of all exports from the EU-28 and the US (29% in 2005), 8% in China and 40% in India. - EU-28 perspective (exports from EU/imports from partners): Digital trade has played a role in the proliferation of global value chains: it enabled and simplified exchanges, payments and controls between partners in the value chain across the world. Digital Trade Policy: ===================== Several policies have been adopted: OECD Digital Services Trade Restrictiveness Index (DSTRI): ========================================================== It measures cross-cutting barriers that inhibit or completely prohibit firms' ability to supply services using electronic networks, regardless of the sector in which they operate. It includes five measures: ========================== 1. infrastructure and connectivity (includes localization requirements type of regulation than impedes digital trade itself); 2. electronic transactions (very common); 3. e-payment systems (very common); 4. intellectual property rights and; 5. other barriers to trade in digitally enabled services. The DSTRI is a composite index that takes values between 0 and 1, where 0 indicates an open regulatory environment for digitally enabled trade and 1 indicates a completely closed regime. → ex. statistics on: countries that have banned products or have planned to do it (it involves China: Geopolitical Aspects:: ====================== Different approaches: - **EU**: Focus on the role of platforms and attempt to regulate the market = attempt to develop regulations that reconcile digital technologies with citizens rights and consumer interests → : ex. Digital Service Act; - **US**: Focus on the interest and in the actors involved; highly competitive = laissez-faire approach to digital services and its digital trade policy is aimed at protecting the interests of its highly competitive digital services sector → ; Multilateralism? ================ - Growing risk of fracture into national spheres? - Multilateralism? - The development of digital tools has as a consequence the difficulty to balance them. There is the need to take in account the users (personal use + privacy problems) and the non-state actors (platforms such as Google or Facebook → role in the perception of a state) involved. Multilateralism is trying to get back in this, but at the same time digital trade is getting fragmented more than ever, it is getting challenging. EX. of Digital Infrastructures: =============================== - center of global connectivity, carrying 99% of international data traffic! Considered CRITICAL INFRASTRUCTURE: - Between 2016 and 2020, submarine fiber design capacity on major routes has increased by 26.4% per year; - As of early 2020, approximately 406 cables across the globe are in service 5G: === - 5G is the 5th generation mobile network; - new global wireless standard after 1G, 2G, 3G, and 4G networks; - 5G enables a new kind of network that is designed to connect virtually everyone and everything together including machines, objects, and devices: 1. ensuring a stable connection for a dense "ecosystem"; 2. allowing the continuous streaming of a massive quantity of data; 3. guaranteeing communications with an extremely high-speed transmission rate. - Succeeding in patenting technologies that will turn out to be essential for the development of the network's physical component means securing considerable financial gains; - Standards definition is a multi-year process that involves different international entities and continues even after the effective commercialisation of the technologies concerned (For instance, it is estimated that US leadership in the transition towards 4G produced a 100 billion US dollars return for the United States' economy). Data Center (physical facility): ================================ Everything that happens online, is housed in a data center→ storing and processing of data; - **Data centers**: a physical facility where (open) data can be stored and processed; - they host computing and storage systems to enable the delivery of web services; - The closer a business is to a data center, the higher the performance of the service → digitalization related to **competitiveness.** - Like how two computers are connected via a local network, the same way Internet servers broadcast information to Web browsers using network connections: a. The data that is stored on a data center server is distributed into packets before transmission; b. and is sent via routers that decide the most suitable path for that data to progress; c. It then uses a series of **wired and wireless networks** to reach the user's Internet service provider and finally arrive at the end user's computer. - Every time a Web address is keyed into a browser, it automatically requests information from a server. If the end-user wants to upload information, then the process will be reversed. Role of different state actors: CHINA: ====================================== - China influence is feared by other countries + focus on Africa; - **Digital Silk Road:** "over 6,000 of China's Internet enterprises alongside over 10,000 Chinese technological products have gained access to overseas markets" - The DSR is a complex system of state-supported investments by Chinese public and private companies in submarine cables and telecommunication infrastructure, data centers, smart city/safe city projects, the BeiDou satellite system and e-commerce platforms; - By 2018, DSR-related investments in digital infrastructure projects outside of China had reached USD 79 billion - Other than money, it offers capacity building to African countries. China Submarine cables: ======================= - China has become the landing point, owner, or supplier for 11.4% of the world's undersea cables and for 24% of planned cables. a. The **SAIL cable**, connecting Angola to Brazil. b. The **PEACE cable** built by Hengtong Group and Huawei is one of the most significant ones. China Data Centers: =================== - Chinese companies are increasingly focusing on building data centers in Africa in countries such as South Africa, Djibouti, Kenya, Tanzania, Zambia, Zimbabwe, Ghana, Nigeria, Mali and Egypt. - Chinese companies built their own 16 data centers mostly in Brazil and Chile; - Chinese companies have built 75 data centers in the Asian-Pacific region; China 5G: ========= - Huawei has signed 46 commercial contracts for the construction and implementation of 5G networks around the world, 25 of them in Europe, exporting approximately 100,000 5G base stations; - In 2019, Huawei's equipment is reported to have played a crucial role in the deployment of 5G infrastructures in more than 288 cases, accounting for almost 30% of the fifth-generation telecommunications equipment used worldwide. Digital Infrastructure and diplomacy: the US: ============================================= The US is the biggest donor country for official development assistance. → own digital strategy, which identifies with the activity of the agency for a responsible use of technology in helping the developing countries. There is no broadly accepted framework to track spending in digital development projects, figures in this area are not available and difficult to estimate → The US is the largest donor country for official development assistance. However, interaction private-public: ==================================== 1. Digital development cooperation led by the **US Agency for International Development (USAID)**; 2. **Private sector investments** in the digital development of countries in the Global South, including large network infrastructure projects by multinational companies such as Google and Facebook. Not until 2020 that USAID gave itself an agency-wide digital strategy!: ======================================================================= → Agency-wide vision for the responsible use of digital technology in development and humanitarian work. \* E.g. ensuring the protection and promotion of an open, interoperable, reliable and secure internet that represents and safeguards the online exercise of human rights and fundamental freedoms. Vs. digital authoritarianism: ============================= repressing governments controlling the internet + using censorship, surveillance and data law/regulation to restrict or repress freedom of expression, association, religion, etc. Vs. digital esclusion: ====================== AI-enabled tools often rely on machine-learning algorithms that use historical data to detect patterns and make predictions, they can reproduce or amplify biases that might be present in those data. USAID Public-Private partnerships announced in 2023 (pt.1): =========================================================== - The U.S. **International Development and Finance Corporation (DFC)** invested one billion USD in Africa's connectivity via the Connect Africa initiative in 2018 (for a 3-year programme): - Connect Africa focused on three areas in order to further integrate Africa into the global market: 1. Transport and logistic; 2. Information and Communications Technology; 3. Value Chains. → the US has stepped up its cooperation with Latin American countries, including cooperation on digital issues: It aimed to: - Expand and increase secure Internet access in targeted emerging markets by enabling market entry/expanded market access for U.S. or like-minded technology companies; - Increase adoption of policies and regulatory positions that encourage open, interoperable, reliable, and secure digital infrastructure; - Promote exports of U.S. Information and Communications Technology (ICT) goods and services; - Increase adoption of cybersecurity best practices in targeted countries. Digital Invest: =============== - It is a blended finance program that seeks to mobilize private capital for digital connectivity infrastructure and digital financial services that strengthen open, interoperable, reliable, inclusive, and secure digital ecosystems in emerging markets. - announced by President Biden in **June 2022** as a flagship program under the **G7-led Partnership for Global Infrastructure and Investment.** - supports a competitive, diverse ecosystem of digital connectivity and financial service providers, promoting the growth of resilient, secure digital ecosystems in developing countries. USAID Public-Private partnerships announced in 2023 (pt.2): =========================================================== **CSquared** (an Africa-based technology company) focused on broadband enabling infrastructure: - it is establishing a 350-kilometer **open-access fiber backbone network** in Liberia; - to provide **transformative network capacity** to ISPs and mobile network operators; - this will bring **quality internet access** to approximately one million people in Liberia. Microsoft Airband: ================== - it is supporting the development and launch of a global incentive fund; - managed by Resonance; - providing digital access to community institutions such as health clinics, schools, and local government facilities. Modus Capital ============= - it is launching a venture-builder program for early-stage financial technology companies that improve financial well-being across underserved populations in Egypt; - building off the infrastructure and best practices of Modus' venture platform, comprising venture capital funds, venture builders, and a corporate innovation arm. - it is launching a new **crowdfunding platform → Sow Good Investments** - the platform will catalyze U.S. retail investments into fintech-enabled microfinance institutions and pay-as-you-go (PAYGo) solar financing and distribution companies operating across sub-Saharan Africa and Southeast Asia. - Connect Africa focused on three areas in order to further integrate Africa into the global market: 4. Transport and logistic; 5. Information and Communications Technology; 6. Value Chains. 5G: === - In October 2021, USAID and the Federal Communications Commission (FCC) signed a **MoU** to cooperate more **closely on 5G technology:** - USAID commits to provide "technical assistance, including through embedded advisors, to the governments of developing countries that request assistance in reforming telecommunications and other ICT regulations and policies, to advance policies that promote secure networks, private-sector investment, competition, and the free flow of data across borders"; - In October 2020, **Export-Import Bank of the United States (EXIM)** President and Chairman Kimberly A. Reed signed a US \$1 billion **Memorandum of Understanding with Brazil's Ministry of Economy** enhancing the strong trade and economic relationship between the two countries. Submarine Cables: ================= - Role of private US corporations: - In March 2021, **Facebook and Google** announced **investments**: - US tech behemoths, including Google, Meta and Microsoft, invested about \$2bn in cables between 2016 and 2022, accounting for 15% of the worldwide total. Subsea cables: central to the US-China Tech War: ================================================ The Chinese government started successfully penetrating the global market BUT the US administrations have managed to freeze China over concerns about espionage and what Beijing might do to disrupt strategic assets operated by Chinese companies in the event of a conflict: Chinese companies have adapted by building international cables for China and many of its allied nations. - In 2018, **Amazon, Meta and China Mobile** agreed to work together on a cable connecting California to Singapore, Malaysia and Hong Kong. - But a spate of maneuvers in **Washington** to **block** Chinese participation in US cables led to China Mobile pulling out of the consortium. - Meta and Amazon filed a **new application** for the system in 2021, this time with no Chinese investment, no connection to Hong Kong, and a new name: - China's original involvement remained a security concern for the US government. =============================================================================== - In 2020, the US government also created the **Clean Network initiative**, in effect banning new cables directly connecting the US to China or Hong Kong: Five new areas: =============== There was also no mention of Russia, which is thought to have actively scouted landing station sites in Ireland, and operates vessels equipped with cable surveillance tech. → In 2021, following pressure from the US government, the **World Bank** scrapped a cable project it was leading to connect three Pacific island nations, to avoid awarding **the contract to HMN Tech.** → In 2022 a successful two-year campaign by US officials culminated in the consortium planning the 19,000 km Sea-Me-We 6 cable from south-east Asia to Europe awarding the contract to US supplier SubCom after initially selecting HMN Tech. Domination of Space: ==================== - In 2021, the U.S. space budget was roughly US\$59.8 billion. - **China has been investing heavily in space and rocket technology** over the last decade and has doubled its spending in the last five years. But with an estimated budget of \$16.18 billion in 2021, it is still spending less than a third of the U.S. budget. - The U.S. also leads significantly in the number of active satellites. ===================================================================== - Similarly, **the U.S. has more active spaceports** than China: - While China may seem like the main competitor of the U.S. in space, **other countries have space capabilities and aspirations that rival those of China**: Digital Infrastructure and diplomacy: the EU: ============================================= Digital development, however, has long been missed on its development agenda. It is only since **2017** that the European Union has made Digital for Development (D4D) a priority: - On 2nd May 2017, the European Commission published the **Staff Working Document Digital4Developmen**t: mainstreaming digital technologies and services into **EU Development Policy (D4D)** setting up its vision, priority areas and future actions in using digital technologies and services as a cross-cutting tool in the EU development interventions; - On 20th November 2017, the Council of the European Union recognised the D4D policy set up by the European Commission and adopted Council Conclusion on the issue. - Launched in December 2020 by the European Commission President Ursula von der Leyen and several Heads of State, the **D4D Hub** already has activities in: a. Eastern Neighbourhood; b. Sub-Saharan Africa; c. Asia-Pacific; d. Latin America and the Caribbean. - Technical assistance; - Knowledge sharing; - Multi-stakeholders dialogues. → **The sixth EU-Africa Business Forum** (Abidjan, November 2017) concluded that the digital economy is a driver for inclusive growth job creation and sustainable development by providing cost-effective solutions to ongoing development challenges, and by removing physical boundaries between people and thus enabling access to vital services that improve people\'s livelihoods; → The Policy and Regulation Initiative for Digital Africa (**PRIDA**) project (EUR 7.5 million); → the Multinational Trans-Saharan Backbone (**TSB**) Optical Fibre Project to connect Algeria, Niger, Nigeria and Chad (Total cost EUR 78.5 million, EU contribution EUR 29 million); - launched in late 2021 under the French Presidency of the European Union (EU); - the **Global Gateway strategy** is a European Commission initiative that contributes to the development of emerging markets and developing countries which are EU partners; - in particular in the field of digital technology, supported by the private sector (identification, co-financing and conduct of tangible projects); - the EU aims to raise €300 billion through this strategy by 2027 to support the financing of high-quality, sustainable infrastructures, which comply with social and environmental standards; - Aas announced during the EU-African Union Summit in February 2022, Africa will benefit from half of the financing committed, or €150 billion. - the strategy also focuses on the Western Balkans and Ukraine, as well as Asia, Latin America and the Caribbean. - This strategy focuses on **5 priority sectors:** 7. ***Digital technology*** (access to digital infrastructures, a protective regulatory framework, skill building); 8. ***Climate and energy*** (renewables and the management of critical minerals, sustainable agri-food systems, water and sanitation, waste management and the preservation of ecosystems); 9. ***Transport*** (rail, road, port and airport networks, logistical centers and multimodal platforms, regulatory convergence and agreements); 10. ***Healthcare*** (security of pharmaceutical supply chains and development of local production capacities); 11. ***Education and research*** (access to quality education and vocational training, creation of academic and research networks). - Southern neighborhood should be a key focus for the EU's Global Gateway infrastructure programme. The EU has so far directed relatively little of its investment to this region. - Strategic EU goals in the Mediterranean include promoting nearshoring to shorten key supply chains including energy; and improving regional connectivity, decarbonising economic activity, and creating jobs. - More attractive investment offers than China and other players? The Global Gateway's use of grants rather than loans is central to this. - Going beyond investments, the EU should promote inclusive growth by sharing technical know-how and supporting training to enhance the skills of workforces in the region. - Protecting physical connections is of great importance. The EU should work hand in hand with southern neighbors to monitor Global Gateway-funded infrastructure. sum up of the keys elements: → what is important is to keep in mind that the Global Gateway is not just an initiative at a European level but the project could come alive thanks to the cofinance, leading and cooperation of private sectors; → **target**: emerging markets and developing countries, but the focus is still on Africa (+ western balkans, ukraine and countries of latin america); → **5 sectors**: digital technology; climate and energy; healthcare; transport; education and research; → **issues**: (ecfr) → (development of infrastructure = make it safe) → EU: **EUR** 5 billion with the EU D4D Hub focusing in particular on African partner countries or the BELLA link with Latam. Digital for Development Hub for the Western Balkans: ==================================================== - The announcement was made at the 6th Western Balkans Digital Summit held in Sarajevo between 4 and 5 October 2023; - The European Union and its Member States have launched the Digital for Development (D4D) Hub for the EU Neighboring Countries to step up their regional engagement in the digital field; - "*We are launching a new branch of the Digital for Development (D4D) Hub for the EU Neighboring Countries to strengthen cooperation and coordinate engagement between the EU, its Member States and our partner regions."* - new mobilization of money trying to achieve different goals in different countries to ensure digital development → projects that connect different countries to one another. Digital Currencies ================== Why do we care about digital currency? → Emergency of new kind of money; The US dollar has been the only dominant global currency → despite the euro being the most involved in currency, the US dollar (ex. visa or mastercard = US companies) is the one that governs the monopolistic system). ex. Apple Pay or Google Pay + Crypto Investments Current Domestic Monetary System: ================================= → money, how we think about them, have two ways of being issued: - money issued by central banks; - bank deposits (central bank money) / APP PAY MONEY → There is the need of TRUST (If your bank is managing your money you need to trust how the system works, how the payment instruments are actually efficient. All these trust mechanisms rely on the central bank\'s monetary policy, on the supervision of financial intermediates and payment systems, plus in the deposit insurance). → EFFICIENCY. **Challenges**: How are innovation and digitalization impacting the monetary systems? There is more competition in the market, which leads to the appearance of new "players in the game". All these new providers in the market are changing the way consumers are using their money. As consumers we are leaving the liability by the central banks (monetary policy is the central bank\'s first role → how much money you put and give out) for the liability for the private banks. Currency has three main functions: ================================== The US is dominating the three dimensions. In all countries around the world most of the reserves are in US dollar, because there is the trust that the dollar will stay longer that the other values (dollar is liquid). If we take into account what happened in 2012, with the sanctions against Iran, none of the EU banks joined, because if you cannot access dollars then you are out of the international payment system. If you are in the sanction you cannot deal with the dollar; therefore you cannot go ahead with any international transaction. 1. means of payment (use money to pay); 2. work value (we use money as a store of value); 3. account. Digitalization: =============== → makes payment easier and cheaper. → makes payments in larger ecosystems; → medium alternative to the dollar. Even though we are going towards a digitalization of society, there is still cash in the world. Italy is in the top three for the lowest percentage of cash transactions → it allows better tracking of money and it gives the idea of how much you are spending + it makes payments faster. → "the reality is cashless": global non-cash transactions have hugely increased. It happened because there is an increase in the offers (ex. if you see something online you'll pay with your credit card). Digital cash society → apps on phones have changed how people access money (ex. Indonesia app where you can buy and pay for everything without using cash + China and India → mobile payment solutions = changed how money is perceived and used). Again, this is changing the nature of our system, because when we rely on credit card payments the liability is issued by banks and not the central banks, it is a game for private banks. Public Interest VS Private sector → financial inclusion issues (access to services). - Digital Currency → ex. If you get paid you see no cash, what you\'re seeing is the balance in your bank account. This is an electronic form of money. - Ex. of **Taxonomy of money**: IMF → different layers: type,value and technology. Digitalization is a dynamic source that is changing how the system works so we do not have a unique and clear idea of what is going on, we are just trying to figure it out in different ways. CRYPTO assets and Stablecoins: ============================== → the first one is not valued by any asset, while the second one ? Stablecoins and issue corporations: → the change could be if big corporations decide to launch their own digital coin; → ex. of FB launching of the Libra project: - massive and huge users = retail and corporate payment (everytime you pay, you are paying the fees to your bank); - remittance market; - deposits (banks cannot grant more loans than deposits → if libra gets launched then there is the risk to damage the market); (ex. of China, there is a kind of Amazon that operates as a technological bank (monopolistic power in the chinese market) that mainly targets middle companies. if they do not get paid back by their users then they can menace to kick the company out); - digital ID market. Digital Currency is just a mirror of the balance of superpowers since money is not only implied with economics but also with politics (ex. US dollars). Digital Diplomacy and Information Integrity: ============================================ Digital Diplomacy as the strategic use of digital technologies as tools to counter disinformation and propaganda by governments and non-state actors has exploded in recent years thus putting the global order at risk. Information Integrity: ====================== - The issue of digital information integrity is intricately connected to several core rights upheld in democratic systems, and these rights may face potential threats due to the increasing prevalence of disinformation across traditional and social media platforms (OSCE, 2017). - **Access to reliable and truthful information** is a necessary condition for well-governed and peaceful societies (UNDP, 2023). - **This is all the truer in times of crisis** -- such as the current one triggered by the Russian invasion of Ukraine/Israel-Palestin war -- when the rule of law is vulnerable to challenges and exposed to new risks; - The European Council first recognized the **threat of online disinformation campaigns** in 2015, when it stressed the need to challenge and address Russian disinformation campaigns: - THREE KINDS: ============ 1. **Disinformation:** information that is false and deliberately created to harm a person, social group, organization or country; 2. **Misinformation:** information that is false, but not created with the intention of causing harm; 3. **Mal-information:** information that is based on real facts, but manipulated to inflict harm on a person, organization or country. FIMI ==== - The acronym FIMI **(Foreign Information Manipulation and Interference)** has recently met a lot of success and is consequently increasingly used; - It has become widespread in the European Union, within the European External Action Service (EEAS) and across the Member States. - FIMI overlaps to a considerable extent with disinformation but some nuances need to be brought up: not all disinformation is FIMI, and FIMI is not only disinformation. - **FIMI is a mostly non-illegal pattern of behavior that threatens or has the potential to negatively impact values, procedures and political processes →** Such activity is **manipulative** in character, **conducted** in an intentional and **coordinated** manner. - Actors of such activity can be state or non-state actors, including their proxies inside and outside of their own territory. Disinformation landscape: ========================= Propaganda: → information designed to manipulate a specific target audience toward a particular behavior or belief, often as part of a prolonged campaign by a state actor with a political agenda; → if you consider the ex. of the invasion of Russia in Ukraine, it can be easily seen that there has been an ongoing spread of false information (mostly concerning politics) all around the internet; Hostile Narrative: → spread of false information but in this case there is a hole narrative = a specific story developed to discredit or defame a particular target; Hostile Information: → we can consider it as a wide range of coordinated actions (conspiracy videos, deep fake images or videos) designed to sow distrust and manipulate opinion, usually involving one or all of the above methods and techniques; like for example on one hand we have access to info, all the platforms but at the same time it cannot come without risks since it is easy manipulative, the spreading of information is possible without any control. Even if you know that the news is false, it is still there. EU-US Joint statement: Information integrity ≠ data integrity ============================================================= - we are on 2 layers and data is the first one, while information is what comes after that; in fact, when we talk about them we are talking about two different things. - Information Integrity in a crisis: 4. Integrity of Information; 5. Fact-Based Information; 6. Mitigate the risk of foreign state-sponsored actions to manipulate and interference. The statement aims to: ====================== 1. Explore cooperation on protecting the digital information space in a crisis; 2. Leverage joint capabilities to identify specific digital risks and exchange of information; 3. Cooperate on crisis responses to online platforms/online platform governance; 4. Exploring practical options available to governments for consideration in crisis situations (funding, digital and support services that promote access to trustworthy and fact-based information); The statement focused on the Ukraine war contest → Addressing ongoing challenges in the context of Russia's war of aggression against Ukraine + Future risks; what was on the focus was to permit people to have access to information that is fact-based information (easy to prove that the info is real and based on facts); their collaboration presents issues: ==================================== - problem of balance → there are so ma