WITA’s Friday Focus on Trade – August 18, 2023




Regulating Artificial Intelligence in International Investment Law

On August 30, the WITA Academy will host an online workshop on Artificial Intelligence and Trade Policy. Information can be found here and below.
Artificial Intelligence (AI) is emerging as a significant phenomenon in the global economy. As multinational corporations pour capital into acquiring AI start-ups, investment in cognitive AI systems is expected to reach USD 98 billion by 2023. The United States and China have established initiatives to pursue strategic dominance of AI, while several other developed countries are nurturing their own AI sectors. Such is the promise of creative destruction associated with AI that the concept of privacy, the nature of work, the accountability of governments, and the value of data must all be reviewed in response to AI-driven technological advancements. Indeed, concerns about the ensuing public interest implications have provoked a series of responses by national legislatures as States attempt to fill the regulatory vacuum….
The Components and Regulation of Artificial Intelligence
There is no consensus on a definition for AI. It has been defined in four different ways, as computer programs capable of: acting humanly, thinking humanly, thinking rationally and acting rationally. None offer a suitably firm basis on which to frame regulation.
The former two categories define AI in relation to human characteristics that are themselves indefinable. What is learning? What is self-awareness? What is reasoning? It is impossible to define these terms with enough precision to identify targets of regulation. The third approach, ‘thinking rationally’, is likely to be over-inclusive, as even rudimentary algorithms follow logical laws of thought. Finally, the ‘acting rationally’ approach defines AI by its ability to operate autonomously, adapt to changing circumstances, and pursue goals. The notion of AI as a ‘rational agent’ has proven to be the most influential approach in the field.
However, two aspects of this definition remain challenging. Firstly, assessing whether a computer program is ‘pursuing’ a ‘goal’ involves allusions to intent and consciousness, which creates the same ambiguity that exists with imitating indefinable human characteristics. Secondly, perceptions of autonomy are highly subjective. They rely upon our perceptions of foreseeability that necessarily shift as the technology becomes more familiar. Indeed, as John McCarthy remarked, ‘as soon as it works, no one calls it AI anymore’.
04/05/2023 | Mark McLaughlin | The Journal of World Investment & Trade

Digital Trade 2023: The Declaration, The Debates and The Next Global Economy

In the single generation since the launch of the internet, a generation’s worth of scientific research and technological innovation, infrastructure deployment, and generally good policymaking has taken a small set of computer networks operated by academics, business researchers, and government scientists, and turned into a global digital world of 5.3 billion people. Associated with this has been an enormous leap forward in individual liberty, in global prosperity, and in new policy challenges. Looking ahead with its allies and partners last year, the Biden administration helped produce a vision of the future. This is the “Declaration on the Future of the Internet,” which, in a brief two and a half pages, illuminates a possible version of the next the digital world: one of freer flows of information, higher-quality consumer protection, enhanced economic growth, and liberty preserved.
Their vision is right, but it is highly contested — in part by authoritarian governments seeking to restore or strengthen controls over their publics (or even, at least in part, other countries’ publics), and in part by often friendly countries mistakenly believing that their own technological leadership might depend on diminishing that of the U.S. tech industry.
…There seems no reason to believe the internet’s second human generation need be more boring or less productive than its first. Still less should anyone believe that developing policies to secure the potential benefits new technologies may bring cannot go along with the policies necessary to address its challenges. But there is good reason to see electronic commerce, and the digital world more broadly, as contested spaces whose future is less certain than they might have been in 1997, and whose potential benefits require defense.
06/05/2023 | Ed Gresser | Progressive Policy Institute

Africa’s Critical Minerals Could Power America’s Green Energy Transition

Few U.S. presidents have done as much as Joe Biden to strengthen ties with African nations.
Last December, the president hosted nearly 50 African leaders for a three-day summit in Washington. During the meeting, the administration committed to invest at least $55 billion in Africa over the next three years, including private sector initiatives of more than $15 billion. Since then, various senior U.S. officials, including Vice President Kamala Harris and Treasury Secretary Janet Yellen, have visited the continent. Biden has also pledged to visit before the year is out.
But when it comes to one of the most important issues on the administration’s agenda—climate change and the transition to a green economy—Africa is missing. As a result, the United States is forgoing an opportunity to deepen commercial ties with the continent, partner with African nations to strengthen supply and production chains, and diversify away from its reliance on China for more than 50 percent of 26 critical minerals.
This message is implicit in the Inflation Reduction Act (IRA), signed into law last August. One of the act’s key provisions is a tax credit available to American consumers who purchase electric vehicles whose batteries contain a certain percentage of critical minerals extracted or processed in the United States or in any country “with which the United States has a free trade agreement.”
Currently, the United States has 20 free trade agreements in effect but only one with an African nation: Morocco, which has the world’s largest known reserves of phosphates but few other known critical minerals. Moreover, the Biden administration has gotten out of the business of negotiating free trade agreements in favor of nonbinding trade and investment frameworks. As a result, there is little prospect that strategic minerals from Africa will contribute on a significant scale to the U.S. energy transition anytime soon. Given the Biden administration’s push on climate change and its desire to prioritize relations with the continent, the administration should redouble its efforts now to include African nations in its energy transition.
As currently structured, the IRA tax credit significantly limits the United States’ ability to engage with key African nations in a way that is mutually beneficial and furthers key climate change goals. Moreover, if Washington does not diversify its suppliers, the U.S. energy transition will remain dependent on a relatively narrow base of trade partners. According to the Congressional Research Service, the United States is 100 percent import reliant on 14 minerals on the critical minerals list (including graphite and manganese) and more than 75 percent import reliant on an additional 10 critical minerals.
Currently, the United States relies most heavily on China for imported mineral commodities but also Germany, Brazil, South Africa, and Mexico. China also dominates the global market in refining strategic minerals. According to a recent study by the Brookings Institution and Results for Development, China refines 68 percent of nickel globally, 40 percent of copper, 59 percent of lithium, and 73 percent of cobalt. China also accounts for 78 percent of the world’s cell manufacturing capacity for EV batteries.
Africa is home to 30 percent of the world’s critical mineral reserves, many of which—cobalt, lithium, manganese, graphite, and nickel—are essential to renewable and low-carbon technologies. The Democratic Republic of the Congo accounts for nearly 70 percent of the world’s supply of cobalt.
Under the African Continental Free Trade Agreement, Africa has an established framework for engagement and has made clear its desire to be a contributing member to global value chains in the processing of critical minerals as well as manufacturing. Africa also has a comparative advantage in the production and early processing of some EV parts, such as battery precursors.
The Biden administration and Congress have made a strategic error in not providing a way for African nations and their critical mineral supplies and value chains to produce for the U.S. market on an incentivized basis.
If not rectified soon, the IRA will have the unintended consequence of lessening U.S. commercial ties with Africa and ceding the African market in critical minerals to other nations—such as China.
08/03/2023 | Witney Schneidman and Vera Songwe | Foreign Policy

A Worker-Centered Trade Policy 

What is a “worker-centered” trade policy? The Biden administration claims that it means protecting all workers—foreign and American—from exploitative working conditions in trade sectors. The administration’s vigorous enforcement of international labor rights suggests a significant departure from previous U.S. trade priorities centered on domestic interests. For economic and humanitarian reasons, various policymakers and scholars celebrate these developments. They optimistically assume that the administration’s new trade policy will influence foreign governments and facilities to comply with international labor rights in trade if the costs of noncompliance outweigh the benefits. They also assume that the policy will influence compliance with strong labor protections as negotiated on the international platform. Both assumptions are misplaced.
Outside the trade context, governments, employers, and workers negotiate how international labor rights mani-fest in their countries based on pragmatic issues such as political ideologies, economic capacity, and legal systems. Those actors tend to respect those labor rights because they actively participate in the design, monitoring, and enforcement processes. Despite its newfound interest in ensuring compliance with international labor rights under U.S. trade agreements, the Biden administration excludes foreign workers, employers, and counterpart governments from those processes. That exclusion risks obscuring and distorting enforcement predictability, perceptions of legitimacy, and the scope of international labor rights protections within and outside the United States—all of which may reduce or weaken compliance and protections for workers in trade sectors. If the administration sincerely intends to protect workers from trade-related exploitation worldwide, it must stop reinforcing its own discretion and control and start reinforcing the participatory processes embedded in international labor rights.
Despite decades of attention and lobbying efforts within the labor community, government parties to trade agreements fail to protect vulnerable workers from carrying the burden of globalized trade. Women and young children continue to be forced into labor, trafficked, sold across borders, worders. Union participation continues to decline globally, and union leaders are arrested or disappeared. Throughout supply chains, factories continue to enslave and torture with impunity. Millions of workers still lose their lives in workplace accidents.
Since the turn of the century, U.S. trade policy has reacted to such labor exploitation by requiring trade partners to commit to the ILO’s four “fundamental” labor rights, namely (1) collective bargaining and freedom of association; (2) prohibitions against child labor; (3) prohibitions against forced labor; ander (4) non-discrimination in employment. Yet, prior U.S. administrations have proved hesitant, if not unwilling, to enforce those commitments, mainly when doing so threatened more pressing foreign policy and geopolitical objectives.
08/12/2023 | Desiree LeClercq | Social Science Research Network


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