It is common knowledge that the increased use of digital technologies at the workplace has changed the relationship between labor and management across industries. Technology can further skew the already unequal relationship between workers and management. For example, technology has enabled an increase in gig work as opposed to formalized employment, thereby enhancing precariousness of labor. 

While gig work is often claimed to empower workers, it also denies workers rights under labor laws. Similarly, the diffusion of labor enabled by technology has made unionization much more difficult, while labor continues to be subject to unfair contractual terms, unhealthy working practices, uncertain payment schedules and the like. The increased use of practices such as granular workplace surveillance and algorithmic management continues to disenfranchise workers.

These changing dynamics raise critical questions about the nature and scope of regulatory responses that could re-calibrate the relationships between the actors that constitute modern supply chains. As countries seek to explore new ways in which to limit the asymmetries of power created by technology use in a digitized economy, Big Tech companies have increasingly sought to utilize trade agreements to bake-in a favorable digital regulatory ecosystem at a global level.^[1]

Historically, trade agreements have done ““little to reshape workers’ well being and workplace conditions.”^[2] Given that the primary aim of trade agreements has traditionally been to enhance opportunities for cross-country business to develop, agreements are often written with the assistance of big corporations. Workers are denied a seat at the negotiating table, limiting the ability for their rights and interests to be protected.^[3] One of the ways in which business interests are promoted is by limiting the ability of governments to implement public interest regulation within their countries.^[4] 

By seeking to promote the adoption of liberalized regulatory regimes, trade agreements could threaten any mechanisms to regulate technological ecosystems in the interests of labor. It therefore becomes important to understand how labor interests could be threatened by new digital trade related provisions in trade agreements.

How do labor rights intersect with digital trade?

Digital trade chapters in modern free trade agreements cover a variety of issues that could impact the relationship between workers and management. This section discusses how workers rights could be affected by provisions on cross-border data flows, access to source code, and concepts of non-discrimination amongst others.

(A) Privacy rights and Cross border data flows:

The increased ability of management to carry out fine-grained surveillance of workers is a significant problem from a labor rights perspective. Not only does surveillance lead to obvious privacy and related health concerns, but it also reduces the autonomy of labor, creates a toxic work environment, and in some cases could also reduce productivity. Surveillance is also a necessary input to enable algorithmic decision making, which can often lead to biased or unfair decisions being made about workers. It is thus essential that labor is adequately protected from surveillance carried out by their employers, particularly as their relatively low bargaining power can be used to coerce consent to privacy harming practices.

A number of modern trade agreements contain provisions relating to data protection and privacy. These provisions generally require signatory countries to implement a privacy framework in law and to work together to promote compatibility and ensure interoperability of their privacy regimes.

While privacy and data governance more generally is not an issue that should necessarily be dealt with through trade agreements, extant provisions in this regard (as seen in trade agreements such as the Joint Statement Initiative on E-Commerce) are insufficient to adequately protect privacy rights. The focus of these agreements lies more in ensuring regulatory consistency and compatibility across jurisdictions, thereby easing compliance costs for business, rather than ensuring effective protection of fundamental rights.

In addition to the rather basic privacy related provisions contained in modern trade agreements, these also contain provisions that could have significant adverse effects on privacy rights of individuals in signatory states. One example is seen in the form of controversial provisions that seek to liberalize “cross border data flows” between countries. These provisions, seen in slightly different forms in agreements such as the US-Mexico-Canada Free Trade Agreement (USMCA), Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and the Regional Comprehensive Economic Partnership (RCEP) seek to restrict the ability of governments to regulate cross-border data flows, except in certain limited circumstances.^[5]

The phrase “cross-border data flows” refers to the movement or transfer of digital information (or data) between servers located in different countries. The growth of the digital economy over the last few decades has seen an increase in the amount of data being collected by various digital services. This data is not always stored within the country where it is collected. Often, the data is moved around the world by technology companies who process this data to derive value.

While typically justified on the grounds of the supposed economic benefits brought by increased cross border flows of data, restrictions on data flows can also be used to implement measures that promote data protection and privacy.^[6] Simply put, when data moves across borders, it is subject to a different legal regime. This can be problematic if the foreign jurisdiction offers comparatively limited or no privacy rights, in addition to which enforcing rights in a foreign jurisdiction is always likely to be difficult. Companies can therefore evade local privacy and data protection norms merely by moving data to a different location.^[7]

Protection of data of workers is an increasingly important issue – both from a privacy perspective as well as a broader social justice perspective. For example, there are questions about the extent workers can and should have rights over data they generate during employment. Similarly, the ability to capture and export data from local and indigenous communities can lead to an expropriation and privatization of different forms of traditional knowledge in vital areas such as agriculture.

Allowing data to be exported to jurisdictions with limited or no data protection or regulations can adversely impact the ability of workers to enforce their privacy rights. In addition, any attempts at implementing regulations to democratize control over data produced by workers (as proposed for example in India)^[8] or recognising community rights over traditional knowledge could also be doomed to failure if companies can evade such laws by transferring data to foreign jurisdictions. Thus, it becomes vital to ensure that governments retain the ability to implement restrictions on cross-border data flows, when appropriate.

(B) Access to source code of algorithms:

A key issue facing workers across multiple sectors of the economy is the increased use of algorithms replacing what would traditionally be management tasks. This includes for instance, tracking and evaluating worker performance, work allocation, and decisions on hiring and firing. The use of algorithms to intermediate worker-management relationships is problematic for a number of reasons including the possibility of manipulation, bias, discrimination and the like. Several academics and activists have pointed to the need for algorithmic explainability and accountability as a possible solution to this issue. While some have advocated to go even further and establish bright line rules that prohibit certain forms of unethical use of algorithms, ensuring greater scrutiny of the technical means that enhance the power asymmetry between workers and management continues to be important.

Audit or disclosure of algorithms could, for instance, be used to gauge compliance with labor laws and standards and ensure that workers are being treated justly and fairly. There have been recent regulatory interventions that attempt to implement certain standards in this regard. For example, the European Union’s proposed Directive on Improving Working Conditions in Platform Work seeks to recognise gig workers as employees, limit the use of algorithms in certain management tasks (such as hiring and firing), and also establishes rules to ensure greater transparency of algorithms and data processing practices by digital platforms.^[9] While the Directive does not appear to require a preemptive disclosure of source code, it is worth keeping in mind that any verification of the explanations provided about the working of algorithms may require access to source code.

However, a number of recently signed trade agreements, for example the U.S.-Mexico-Canada Free Trade Agreement, the Trans-Pacific Partnership Agreement, the U.S.-Japan Free Trade Agreement, and the EU-UK Free Trade Agreement, seek to limit the ability of governments to require disclosure of or access to the source code of software/algorithms as a condition precedent to the import, sale, use, or distribution of the relevant software or products containing the software. These agreements provide limited exceptions that permit disclosure of source code to a regulatory or judicial body for the purposes of a specific investigation or proceeding, though even in such cases disclosure is subject to various conditions.^[10]

In essence, these provisions restrict the ability of governments, regulators or independent researchers, to access and scrutinize source code or algorithms a priori, that is, before an incident has occurred and an official judicial or other inquiry process has been initiated. With the rapid increase in the use of algorithmic management and similar technologies in the workplace, governments should have the ability to implement regulations that would allow the a priori disclosure of algorithms, where required to protect worker rights.

However, provisions in trade agreements that limit access to source code would preempt any such regulatory interventions, reducing the ability of workers to demand transparency in how algorithms function (which can be critical in safeguarding their rights).

(C) Non-discrimination

As more and more countries begin to implement public interest regulation aimed at making the digital ecosystem fairer and more competitive, Big Tech companies have sought to push back against such regulations based on the international trade concept of “non-discrimination”.

A key aspect of trade law, the concept of “non discrimination” implies that countries should treat similar products/services similarly, irrespective of where they originate from. However, this principle is increasingly being used to question the imposition of pro-competition and taxation related regulations pertaining to the digital ecosystem.

Pro-competition regulations typically seek to enable the creation of a more level playing field in the digital ecosystem by imposing measures on firms that have outsized market power. For instance, the EU’s Digital Markets Act enables regulators to impose a variety of measures such as data sharing and interoperability mandates on dominant digital entities. Any firm that meets certain quantitative and qualitative criteria laid down in the law can be regarded as a dominant entity, consequently having to adhere to specified pro-competition obligations. Similarly, a number of countries have sought to ensure their ability to tax Big Tech companies through the imposition of digital services taxes (DST).

As is the intention of all such regulations, pro competition obligations and DSTs will quite obviously impact dominant or larger entities more than smaller ones. However, Big Tech companies have been alleging that any public interest intervention that has a de facto disproportionate effect on their services/products is in violation of the non discrimination principle of trade law.^[11]

Accordingly, a number of pro-competition laws are said to be on the radar of Big Tech companies. In addition to digital competition frameworks in the European Union, Big Tech companies are also targeting a Korean app store law that requires app store owners to allow diverse payment systems and obliges app stores to permit app developers to sell their products on multiple platforms. While not directly impacting on labor rights (other than the limited instance of app creators), these incidents demonstrate that any attempts to create a fairer and level playing field in the digital ecosystem are likely to face significant push back from Big Tech.

Other notable examples include the opposition by Big Tech companies to measures adopted in Australia and Canadian, that require social media platforms to enter into financial arrangements with traditional news producers for content they (re)use have also been questioned using the principle of non-discrimination.^[12] The demise of traditional journalism has occurred for several reasons, beyond the scope of this note. However, the cannibalisation of journalistic content by digital platforms has a direct effect on the lives of the thousands of people employed in the traditional news and journalism sector. Attempts to limit the ability of governments to implement public interest regulations that could protect the livelihoods of such a vital industry demonstrate the harm that digital trade provisions can cause.

Other pro-competition measures that aim to create a more level playing field in the digital economy, as seen in the case of a number of digital competition related laws such as the European Union’s Digital Markets Act, could also be challenged using the concept of non-discrimination. While such pro-competition interventions do not directly affect labor rights, they do indirectly affect the labor market by allowing the emergence of competing entities, hereby enabling a more diverse ecosystem of digital players to emerge. The protection of small and medium sized enterprises in the digital ecosystem could be important in ensuring productive employment and a fairer sharing of revenues from the digital economy.

It is not a stretch to see how other public interest regulations that target the unfair commercial practices of de facto dominant or large entities in the digital ecosystem could be challenged using similar arguments. For instance, a number of governments are considering regulating the working hours and safety standards associated with certain types of gig work. However, such regulations could be challenged if made applicable only to dominant/large entities (who are the more likely targets of regulation) on the grounds of breaching the non-discrimination principle in trade law.

Big Tech companies (backed by the United States) have also challenged and sanctioned countries for imposing DSTs. The inability to properly tax the digital economy is a significant problem for a number of countries where Big Tech companies have large user bases but pay insignificant taxes. Given that there is no political resolution on the OECD/G20s Base Erosion and Profit Shifting (BEPS) initiative, countries are left with little choice but to impose DSTs. However, the imposition of such taxes can lead to legal challenges under non-discrimination clauses in trade agreements as recently seen in the case of the recent Canadian initiative (to implement a 3 percent DST on the revenues of certain large digital service providers). Countries can therefore be denied significant revenues, while the absence of proper digital taxation contributes to an unequal and unfair digital economy.

(d) Other provisions:

(i) E-commerce moratorium: The E-commerce Moratorium is an agreement at the World Trade Organisation wherein members have agreed to suspend imposition of customs duties on electronic transmissions.^[13] Provisions in this regard are also contained in the WTO’s Joint Statement Initiative on Ecommerce (JSI). The moratorium restricts countries from imposing import duties on electronic goods (and, as clarified in the JSI, services).

While the effects of this provision are debated, it does prevent governments from imposing duties on amongst other things, 3-D printing schematics and designs. The growth of 3-D printing implies that products that were taxed on import can now be printed locally from imported designs. Some have opined that this could affect livelihoods in a number of sectors critical to the economies and societies of developing nations such as textiles, footwear, auto-components, toys, mechanical appliances and the like, which could be replaced through 3-D printing.^[14] Governments would not be able to impose customs duties on 3-D printing designs as a tool to protect their domestic industries in these employment generating economic sectors.

In addition, the inclusion of digitized services within the framework of the moratorium threatens to upend one of the basic principles of the General Agreement on Trade in Services, which allows developing countries to progressively liberalize various service sectors in accordance with the developmental status of the country/sector. By limiting the ability of countries to restrict import of electronically delivered services, employment in a number of labor-intensive service sectors in developing countries could be threatened. The Moratorium also denies countries the ability to tax cross-border transactions, depriving them of a revenue stream that could be utilized to address developmental and welfare issues.

(ii) Local office requirements: While not a component of digital trade related chapters, a number of trade agreements contain provisions that seek to improve the ease of conducting business across borders by limiting the ability of governments to require that multinational corporations appoint a local representative or otherwise establish a physical presence within their jurisdiction as a condition to conducting business within their territory.

A persistent issue faced by workers in technology supply chains is the ability of multinational corporations (MNCs) to utilize jurisdictional defenses to challenge claims brought against them in local courts.^[15] A physical local presence, while not a necessary condition, can make it easier to allocate responsibility in case of violations of labor and other laws.^[16] In addition, the presence of a physical local office or appointment of local representatives can also make it easier for workers to negotiate with management.

Conclusions

Given the intent behind trade agreements is generally to incentivise capital and promote cross-country business, they typically do little to enhance and protect labor rights. Digital trade chapters in modern trade agreements appear to follow suit, by seeking to establish binding international rules that bake in a deregulated technology ecosystem.

Given the impact that technology has on the worker-management relationship, ensuring deregulated technology ecosystems can have significant negative effects on labor rights. This is seen, for instance, in provisions that seek to limit the ability of governments and independent experts to access source code, which could have the effect of limiting the auditability of algorithms for problems such as violation of labor law, bias and discrimination. Similarly, provisions that restrict the ability of governments to regulate the data ecosystem can affect crucial fundamental rights such as that of privacy, while also enabling further data extractivism from indigenous and other marginalized communities. Principles of non-discrimination could be used to challenge safety and other pro-labour regulation.

However, this does not have to be the case. To the extent that trade agreements should cover digital economy related issues, it is essential that they set minimum standards for the regulation of the technology ecosystem. At the very least, trade agreements must not be used to limit the manner in which governments can implement public interest regulation of the sort that could be used to promote and protect worker and other public rights.

Separately, corporations, particularly those that have a multinational footprint should not be permitted to take advantage of labor arbitrage to drive their profits. One way in which this can be done is by crafting trade agreements that protect workers through the explicit adoption and implementation of high-standards of labor law and worker protections. By providing avenues for enforcement of labor standards such as those developed by the International Labour Organisation (ILO), trade agreements can provide a means to tackle particularly pernicious forms of worker exploitation. 

Notably, the ILO is currently engaged in developing new standards on “decent work in the platform economy”, which will likely be discussed in International Labour Conferences in 2025 and 2026. Such standards can be referenced and incorporated into trade agreements, as has been done for instance in the US-Mexico-Canada Free Trade Agreement which seeks to improve labor standards (through provisions regarding the prevention of forced labor, protecting the ability of workers to unionize, etc.) together with enforceable grievance redress and dispute resolution mechanisms.^[17

However, achieving these ends requires a more diverse group of stakeholders to be involved in trade related discussions. It is therefore vital for labor rights advocates to engage with trade related issues at both the national and international level.

Further Reading:

• AFL-CIO, A Worker-Centered Digital Trade Agenda, February 7, 2023, https://aflcio.org/worker-centered-digital-agenda
• Duncan McCann, E-Commerce Free Trade Agreements, Digital Chapters and the Impact on Labor, New Economics Foundation / ITUC, 2019, https://www.ituc-csi.org/IMG/pdf/digital_chapters_and_the_impact_on_labour_en.pdf
• Algorithm Watch, Algorithmic transparency and accountability in the world of work, ITUC, https://www.ituc-csi.org/New-study-highlights-crucial-role-of-trade-unions-in-algorithmic-transparency
• DataSyn Team, Labor and Artificial Intelligence: Emergent Frontiers of Struggle, Bot Populli, April 29, 2024, https://botpopuli.net/labor-and-artificial-intelligence-emergent-frontiers-of-struggle/
• International Labour Organisation, Realizing Decent Work in the Platform Economy, ILC.113/ReportV(1), 2024, https://www.ilo.org/resource/conference-paper/ilc/113/realizing-decent-work-platform-economy
• Privacy International, Response to ILO questionnaire on realizing decent work in the platform economy, September 4, 2024, https://privacyinternational.org/advocacy/5362/privacy-internationals-response-ilo-questionnaire-realizing-decent-work-platform
• Alvaro Santos, Reimagining Trade Agreements for Workers: Lessons from the USMCA, American Journal of International Law, Vol. 113, 2019, https://scholarship.law.georgetown.edu/cgi/viewcontent.cgi?article=3229&context=facpub
• Maria Anna Corvaglia, Labour Rights Protection and Its Enforcement under the USMCA: Insights from a Comparative Legal Analysis, World Trade Review. 2021;20(5):648-667, https://www.cambridge.org/core/journals/world-trade-review/article/labour-rights-protection-and-its-enforcement-under-the-usmca-insights-from-a-comparative-legal-analysis/C24881E4D72CDEAD0A78463875C5CE8C

Footnotes

^[1] Rishab Bailey, Understanding the Indo-Pacific Economic Framework for Prosperity (IPEF), DTA, September 2023, https://dtalliance.org/2023/10/06/understanding-the-indo-pacific-economic-framework-for-prosperity/; Daniel Rangel et al., “Digital Trade” Doublespeak: Big Techs Hijack of Trade Lingo to Attack Anti-Monopoly and Competition Policies, Rethink Trade, November 2022, https://rethinktrade.org/wp-content/uploads/2022/11/20221101-AELP-DocLayout-v7.pdf

^[2] Alvaro Santos, Reimagining Trade Agreements for Workers: Lessons from the USMCA, American Journal of International Law, Vol. 113, 2019, https://scholarship.law.georgetown.edu/cgi/viewcontent.cgi?article=3229&context=facpub

^[3] The privileging of business interests over worker rights is seen in provisions pertaining to private rights of action that trade agreements confer to businesses and provisions that regulate migration, amongst others. Alvaro Santos, Reimagining Trade Agreements for Workers: Lessons from the USMCA, American Journal of International Law, Vol. 113, 2019, https://scholarship.law.georgetown.edu/cgi/viewcontent.cgi?article=3229&context=facpub

^[4] Supra note 1.

^[5] Digital Trade Alliance, Cross Border Data Flows and Free Trade Agreements, https://dtalliance.org/2024/01/05/cross-border-data-flows-and-free-trade-agreements/

^[6] In addition, it has also been argued that restrictions on data flows can be vital in enabling State instrumentalities to access data required for their regulatory and administrative functions. Further, some point to the economic benefits that localizing data can bring in the form of creating employment opportunities and development of local data related infrastructure. Rishab Bailey and Smriti Parsheera, Data Localisation in India: Questioning the Means and Ends, NIPFP WP No. 242, 2018, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3356617

^[7] Even if data is transferred under modern day cross-border data transfer arrangements such as global or regional cross border privacy rules, these are often difficult to enforce and may not provide a practical manner of ensuring data is protected outside its home jurisdiction. Jamael Jacob, APEC’s Cross Border Data Transfer Rules: An Unfulfilled Potential, An Uncertain Future, Digital Trade Alliance, June 2023,  https://dtalliance.org/wp-content/uploads/2023/10/APEC-Cross-Border-Data-Transfer-Rules.pdf

^[8] A Committee of Experts appointed by the Government of India suggested a novel approach to regulating “non personal data” in a report published in 2019. The report and accompanying draft law inter alia seek to empower communities to control and benefit from data that they have produced (in the course of their business or social activities). Rishab Bailey and Renuka Sane, Regulating ‘Non-Personal Data’: Developments in India, in Bart Sloot and Sascha Schendel (Eds.), The Boundaries of Data, Amsterdam University Press, 2024, https://doi.org/10.1515/9789048557998-012

^[9] European Council, Platform workers: Council confirms agreement on new rules to improve their working conditions, Press Release, March 11, 2024, https://www.consilium.europa.eu/en/press/press-releases/2024/03/11/platform-workers-council-confirms-agreement-on-new-rules-to-improve-their-working-conditions/

^[10] Digital Trade Alliance, Source Code Disclosure and Free Trade Agreements, https://dtalliance.org/2023/08/04/source-code-disclosure-and-free-trade-agreements/

^[11] Daniel Rangel et al., “Digital Trade” Doublespeak: Big Techs Hijack of Trade Lingo to Attack Anti-Monopoly and Competition Policies, Rethink Trade, November 2022, https://rethinktrade.org/wp-content/uploads/2022/11/20221101-AELP-DocLayout-v7.pdf

^[12] Ibid.

^[13] Public Citizen, Fact Sheet: WTO Moratorium on Customs Duties on Electronic Transmissions, February 16, 2024, https://www.citizen.org/article/fact-sheet-wto-moratorium-on-customs-duties-on-electronic-transmissions/

^[14] Rashmi Banga, Joint Statement Initiative on E-Commerce (JSI): Economic and Fiscal Implications for the South, UNCTAD Research Paper No. 58, February 2021, https://www.twn.my/announcement/UNCTAD%20Re%20Paper%2058_022021.pdf

^[15] See for example, Sam Kiplagat, Court rules that Meta can be sued in Kenya for Facebook’s alleged violation of labour rights, Business and Human Rights Resource Centre, February 6, 2023, https://www.business-humanrights.org/en/latest-news/court-rules-that-meta-can-be-sued-in-kenya-for-facebooks-alleged-violation-of-labour-rights/

^[16] Duncan McCann, E-Commerce Free Trade Agreements, Digital Chapters and the Impact on Labor, New Economics Foundation / ITUC, 2019, https://www.ituc-csi.org/IMG/pdf/digital_chapters_and_the_impact_on_labour_en.pdf

^[17] The USMCA contains provisions requiring parties to maintain and adhere to various International Labor Organisation standards, prevent forced labor, address various forms of violence and discrimination, and also to ensure the rights of collective bargaining. Critically, however, the USMCA includes significant enforcement mechanisms in the form of a rapid response mechanism that requires timely enforcement action to be taken at the firm level. This has enabled action to be taken to protect Mexican workers from being exploited by various multinational corporations. Maria Anna Corvaglia, Labour Rights Protection and Its Enforcement under the USMCA: Insights from a Comparative Legal Analysis, World Trade Review. 2021;20(5):648-667, https://www.cambridge.org/core/journals/world-trade-review/article/labour-rights-protection-and-its-enforcement-under-the-usmca-insights-from-a-comparative-legal-analysis/C24881E4D72CDEAD0A78463875C5CE8C; Covington, Four Years of the USMCA Rapid-Response Labor Mechanism, May 9, 2024,  https://www.cov.com/en/news-and-insights/insights/2024/05/four-years-of-the-usmca-rapid-response-labor-mechanism#layout=card&numberOfResults=12