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Indonesia’s digital economy commitments in EU and RCEP trade agreements

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Negotiations on the free trade agreement between Indonesia and the EU started in 2016. Many of the EU’s positions were typical of various free trade agreements, but also conspicuously contained new demands related to digital trade. The new demands suggest an EU strategy to achieve a level of digital dominance that could allow the region to see itself as a player in the digital economy, where it currently lags far behind the US and China. It is already lagging behind when it comes to providing infrastructure for 5G. However, the battle for the digital services that the new network will provide may still place the continent in a privileged position.

The EU wants to fit in intelligently with global value chains. Strategically, it seeks to collect data from around the world that will enable the development of new services provided by European manufacturing companies. This implies a strategy of indiscriminate, colonialist digital extractivism, previously pursued primarily by the big US tech companies, but with European companies now wrestling for their own part of the pie.

But instead of search engines or businesses, European companies are trying to develop “smart” versions of their existing products. An intelligent refrigerator, for example, not only keeps groceries cold, but could also make suggestions for shopping and promotions in the neighborhood. All of these services integrated into industrial production are only possible with sufficient data storage and processing. In order to develop the Internet of Things in manufacturing, companies need a large amount of data (big data), which requires the data to be extracted, localized and processed in the European Union and control of all raw materials and the algorithms for theirs To keep processing.

The European data strategy is thus a strategy for the dominance of digital capitalism through the development of cybernetic value chains based on digital extractivism from the global south to the global north. This situation has also been heavily shaped by the strong lobbying efforts2 by North American tech companies in the region who have tried not only to build a liberal model in the digital economy in trade relations, but also within the EU in order to minimize regulations that affect their mining capacity limit on the European market.

Indonesia has long been negotiating these free trade agreements without analyzing the cost of industrialization. The measures will handcuff the state’s ability to regulate and its own data strategy. It seems that Indonesia is ready to provide data for other countries developing technology and selling it back to the Indonesian people. It seems that the Indonesian state is content to forego the possibility of digital industrialization and turn the country once and for all into a mere data producer and consumer of technologies developed and produced abroad.

These type of clauses are also included in RCEP, a free trade agreement agreed and signed by various Asian and Pacific countries (Australia, Brunei, Cambodia, China, Indonesia, Japan, Laos, Malaysia, Myanmar, New Zealand, Philippines, Singapore, South Korea) was, Thailand and Vietnam). This agreement aims to build a new trading bloc in Asia with China as the leading market leader, imposing standards that expand its market. This is especially true of the digital economy given China’s dominance in this sector. This deal will prevent countries from taking the same measures that the Chinese government has taken to become leaders in the digital market.

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