Edition # 11

Welcome Back to DDP: Post-Summer Edition

After a refreshing summer break, I am? excited to catch you up on the latest and most significant developments in the global digital economy and AI governance. Regulatory landscapes and international cooperation are becoming increasingly vital, and in this edition, we explore groundbreaking agreements and regulatory challenges that are transforming our world.

A significant step has been taken with US and European regulators signing a joint statement to ensure fair competition and foster innovation in the AI sector. In a rare consensus, the UN adopted a resolution proposed by China, supported by the US, to close the gap in AI access, highlighting global cooperation. The UK is also ramping up AI regulation for safety and ethical use, aligning with California’s AI safety bill, which faces opposition from tech giants.

In Ethiopia, the government is leveraging AI to boost financial inclusion and national security, showcasing AI’s transformative potential in emerging economies. Taiwan is setting the stage for responsible AI development with a new regulatory framework balancing innovation and ethics.

China is promoting international cooperation on cross-border data flow, complemented by a WTO agreement to ban tariffs on data transmission, facilitating global digital trade. The EU and Singapore concluded a Digital Trade Agreement to enhance bilateral digital commerce. Despite the absence of US support, eighty nations reached an e-commerce agreement, demonstrating global commitment to digital trade.

Meta faces regulatory challenges, suspending its generative AI tools in Brazil and halting new AI model launches in the EU due to data protection laws. In the Middle East and Africa, countries are developing robust frameworks for ethical and effective generative AI use, addressing regional challenges while staying at the forefront of technological advancements.

Join us as we explore these critical developments and their implications for the future of AI and digital trade. Stay informed, stay ahead, and be part of the conversation shaping our digital world.

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Happy reading!

Artificial Intelligence

US, European regulators sign joint statement on effective AI competition

Reuters: Regulators from the United States, European Union, and Britain have issued a joint statement emphasizing the need for effective competition in the artificial intelligence (AI) sector. The rapid evolution of generative AI presents new opportunities for competition, innovation, and growth, according to the statement.

The involved regulatory bodies—the European Commission, the UK's Competition and Markets Authority, the U.S. Department of Justice, and the U.S. Federal Trade Commission—have committed to preventing practices that could hinder fair competition. They aim to ensure fair dealing, prevent exclusionary tactics, and closely scrutinize investments and partnerships between established companies and newcomers.

The statement underscores a commitment to protecting consumers and businesses while fostering a competitive AI landscape, guided by the respective laws of each region.

UN adopts Chinese resolution with US support on closing the gap in access to artificial intelligence

AP News: ? The U.N. General Assembly has adopted a Chinese-sponsored resolution, with U.S. support, calling on wealthy developed nations to close the gap with developing countries and ensure equal opportunities to utilize and benefit from artificial intelligence (AI). This resolution follows a U.S.-led resolution on AI adopted on March 21, co-sponsored by 123 countries including China, supporting international efforts to ensure AI is "safe, secure, and trustworthy."

The adoption of these two nonbinding resolutions indicates that despite being rivals, the U.S. and China are both committed to being influential in shaping the future of AI and have collaborated on these initial international measures. Both resolutions highlight the dangers of AI while also recognizing its potential to promote economic development and improve lives globally.

The U.S. resolution specifically acknowledges the evolving nature of AI governance and calls for further discussions on governance approaches. It also emphasizes the need to protect personal data, safeguard human rights, and monitor AI for potential risks.

Britain's new government aims to regulate most powerful AI models

Reuters: ? The U.K.'s new Labour government has announced plans to develop "appropriate" regulations for powerful AI models as part of its legislative agenda. While there are no immediate plans for an AI bill, the focus is on ensuring the safe and ethical use of AI technologies. Key areas include product safety, economic growth through data utilization, and enhanced cybersecurity. Additionally, the government is considering reforms to data protection laws and the creation of a Regulatory Innovation Office to keep up with technological advancements.

Previously, former Prime Minister Rishi Sunak aimed to position Britain as a leader in AI safety, organizing a summit at Bletchley Park with world leaders and company executives. His government avoided targeted AI regulation, distributing the responsibility among various regulators.

Current Prime Minister Keir Starmer has pledged to introduce new AI laws but is proceeding cautiously. Despite this careful approach, some AI experts argue that the rapid development and deployment of AI tools in the past 18 months necessitate more urgent legislative action.

US: Big Tech unhappy about California’s AI safety bill: why?

Los Angeles Times: California is currently engaged in a legislative battle over AI regulation, with Democratic Senator Scott Wiener proposing a groundbreaking bill aimed at mitigating catastrophic risks associated with AI technology. The bill mandates major AI companies to conduct thorough testing for catastrophic risks, produce safety reports, and establishes a new government office to oversee these processes. The objective is to reduce extreme AI risks and foster public trust.?

new AI safety bill called Senate Bill 1047 that would force companies that spend more than $100 million on training large AI models to do thorough safety testing.

If the firms don’t, they would be liable if their systems led to a “mass casualty event” or more than $500 million in damages in a single incident.

However, the bill faces strong opposition from tech industry leaders and venture capital firms, including Meta (Facebook's parent company) and Google. Opponents argue that the regulations target developers rather than those who misuse AI systems, potentially stifling innovation, discouraging the development of large AI systems, and undermining open-source models critical to startups and small businesses. Rob Sherman, Meta's vice president and deputy chief privacy officer, criticized the bill for introducing regulatory fragmentation and relying on non-existent standards.

Despite the opposition, Wiener defends the bill, stating that it establishes reasonable safety standards without imposing new criminal charges on AI developers who responsibly test and mitigate risks. Proponents of the bill emphasize the urgency of acting now, drawing parallels to past failures in regulating social media companies promptly.

In addition to Wiener's bill, California lawmakers are considering two other measures to protect residents from AI-related harms. One targets automation discrimination in job and rental applications, while the other seeks to prevent social media companies from collecting and selling data of minors without consent.

The debate highlights a significant divide between those advocating for immediate, stringent regulations at the state level and those urging for federal guidance and a more cautious approach to avoid hindering technological advancement and innovation.

Gov’t policy in Ethiopia? favors deploying AI in finance, national security

The Reporter: The Ethiopian Council of Ministers has ratified a comprehensive policy aimed at leveraging artificial intelligence (AI) to enhance financial inclusion and bolster national security. This policy addresses key areas such as financial literacy, credit scoring, market frictions, surveillance, and counter-terrorism.

In terms of financial inclusion, the policy seeks to improve financial literacy by using AI tools to make financial education more accessible and effective. It aims to optimize credit scoring through AI algorithms that provide more accurate credit assessments, helping to extend credit to underserved populations. Additionally, AI will be employed to streamline financial transactions and reduce barriers to market entry, alleviating market frictions.

On the national security front, the policy outlines several strategic initiatives. AI will be integrated into surveillance systems, including unmanned aerial vehicles (drones) and satellite imagery, to provide real-time data and augment on-the-ground monitoring efforts. Advanced AI tools will be used for monitoring communications, identifying security threats, and countering foreign propaganda and disinformation campaigns. The policy also includes measures for fraud detection, where AI will identify fraudulent activities and anomalies in financial markets, safeguarding investments and providing value-added analysis of investment opportunities.

Implementation strategies include the use of AI-equipped drones for surveillance and monitoring unexpected changes in the landscape or the utilization of unusual equipment. High-bandwidth connections will facilitate near-real-time data analysis for security services. AI algorithms will be employed for the lawful surveillance of suspected terrorists and criminals, maintaining profiles, triggering events for security personnel, and linking related content for review.

This policy is part of Ethiopia's broader effort to leverage AI for national development and security, defending national interests and internal territorial integrity. It represents a strategic move to incorporate advanced technology into various sectors to drive progress and ensure safety. By fostering economic growth through improved financial systems and enhancing national security through sophisticated monitoring and analysis capabilities, Ethiopia aims to position itself at the forefront of AI innovation.

Taiwan sets the stage for AI regulation with the new framework

Microsoft Start: Taiwan's National Science and Technology Council (NSTC) has introduced a draft AI bill aimed at regulating artificial intelligence technology. This legislation is designed to mitigate AI risks, ensure data protection, and establish ethical standards for AI applications. Emphasizing transparency and data privacy, the bill outlines measures to support workers affected by AI-driven automation through job retraining programs.

A significant aspect of the bill is its focus on the socio-economic impacts of artificial intelligence, particularly concerning the workforce. It aims to assist workers who have lost their jobs due to automation by providing them with new skills through retraining programs. Additionally, it seeks to create more jobs related to AI, thereby balancing technological progress with social accountability.

The NSTC is inviting public comments on the draft bill until mid-September to incorporate diverse perspectives into the final legislation, ensuring that the bill reflects a broad range of viewpoints and considerations.

Cross Border Data/Digital Trade

China actively promotes international cooperation on cross-border flow of data.

People’s Daily : China has recently achieved significant progress in international cooperation on the cross-border flow of data. It has signed a memorandum of understanding on cross-border data flow with Germany and engaged in exchanges with Singapore during the inaugural meeting of a bilateral digital policy dialogue mechanism. These collaborations signal China's commitment to promoting international cooperation in data flow.

In recent years, China has been advocating for the safe and orderly cross-border flow of data, aiming to work with relevant parties to build an open and mutually beneficial international cooperation framework in the data field. This effort facilitates foreign purchasers in easily accessing information about Chinese suppliers on e-commerce platforms, enhancing global trade efficiency.

As China deepens its cooperation and exchanges with other countries, the cross-border flow of data is expected to become even more active, contributing to global growth. According to a report by McKinsey & Company, the cross-border flow of data is projected to add $11 trillion to global GDP by 2025. This underscores the critical role of data in driving economic development and fostering international collaboration.

WTO members reach digital trade deal to ban tariffs on data.

Nikkei Asia: World Trade Organization (WTO) members negotiating rules on e-commerce have agreed to permanently ban tariffs on cross-border data transmissions. Japan, Australia, and Singapore, which co-convened the talks, released the agreed text involving 91 countries and regions participating in the WTO's e-commerce rulemaking initiative.?

Currently, no countries impose duties on international electronic transmissions, and all WTO members have signed on to a moratorium on such tariffs. However, this moratorium is a time-limited measure set to expire in two years. Industry groups have called for a permanent provision to prevent future duties on a broad category that includes apps, videos, and transfers of business-related information.

The agreement also covers important aspects such as cybersecurity, the transition to electronic trade documents, and improving regulatory transparency. There are still outstanding issues to be addressed in future negotiations, such as barring governments from requiring companies to store data domestically or turn over source code.

The next steps will involve getting the remaining WTO members to agree to the proposed rules and incorporating them into the organization's legal framework. The WTO typically makes decisions through consensus, but it has been struggling to function properly due to clashes between developed and emerging economies. Since 2017, groups of like-minded WTO members have worked to negotiate rules in specific areas. The e-commerce agreement is the third to be produced by one of these joint initiatives, following deals on services and facilitating investment.

EU and Singapore finalise Digital Trade Agreement negotiations.

Techmonitor: ? The European Union (EU) and Singapore have finalized negotiations for a Digital Trade Agreement (DTA) to set global standards for digital trade rules and cross-border data flows. This agreement, which complements the 2019 EU-Singapore Free Trade Agreement, aims to enhance digital trade, benefiting businesses and consumers by fostering consumer trust, ensuring legal certainty, and removing unjustified barriers.

The DTA is expected to strengthen trade relations by facilitating digitally-enabled trade in goods and services and ensuring free cross-border data flows. It also includes strong rules on spam to improve trust in digital trade. EU Trade Executive Vice-President Valdis Dombrovskis highlighted the agreement as a significant step for the EU in setting global digital trade standards.

Building on the 2023 digital partnership, the DTA focuses on advanced technologies, regulatory approaches, resilient digital infrastructures, and trusted data flows. It promotes cooperation in cybersecurity, supports paperless trading, electronic invoicing, and electronic payments. Recently, a similar EU-Japan agreement on cross-border data flows was implemented, benefiting various sectors by streamlining data management.

The EU and Singapore will now proceed with formal procedures to sign and conclude the DTA, positioning both at the forefront of global digital policy development.

Eighty nations strike deal over e-commerce, but lack US backing.

Reuters: Around 80 countries reached an agreement on Friday on global digital commerce rules, including the recognition of e-signatures and protection against online fraud. However, the United States did not join the agreement. After five years of negotiations, coordinators Australia, Japan, and Singapore distributed a "stabilised text" that the European Union and Britain hailed as historic and groundbreaking.

EU trade chief Valdis Dombrovskis announced on social media that they negotiated the first global rules on digital trade. Britain highlighted that the agreement commits participants to digitalizing customs documents and processes, recognizing e-documents and e-signatures, and implementing legal safeguards against online fraud and misleading product claims. The agreement also seeks to limit spam, protect personal data, and support least-developed countries.

Ninety-one of the World Trade Organization's 166 members, including China, Canada, Argentina, Nigeria, and Saudi Arabia, participated in the negotiations. The United States acknowledged the progress but stated that more work is needed, particularly on exceptions related to essential security interests. U.S. WTO ambassador Maria Pagan expressed a desire to resolve remaining issues and conclude the negotiations.

Some countries, such as Brazil, Indonesia, and Turkey, had reservations on minor points. Achieving a formal WTO agreement may still be challenging, as it requires consensus among all WTO members, with India and South Africa particularly critical of deals excluding some members.

Big Tech

Meta decides to suspend its generative AI tools in Brazil

Reuters: Meta has suspended its generative AI tools in Brazil after the National Data Protection Authority (ANPD) raised objections to Meta's new privacy policy concerning the use of personal data for AI training. This decision follows the launch of an AI-driven ad targeting program on WhatsApp in Brazil, a key market for Meta. In a statement, Meta announced the suspension of the AI tools while engaging in discussions with ANPD to resolve the authority's concerns over generative AI.

Meta won't offer future multimodal AI models in EU

Axios: Meta has decided not to release its next multimodal AI model in the European Union due to regulatory uncertainties. This decision highlights a growing tension between U.S. tech companies and EU regulators, particularly around data privacy laws. Meta plans to release a text-only version of its Llama 3 model in the EU but will withhold multimodal capabilities, which include reasoning across video, audio, images, and text, due to compliance challenges with the EU's GDPR. This move underscores the challenges tech companies face in navigating European regulations.

GenAI Regulatory Compliance in the Middle East and Africa

Analyticsinsight: Generative AI (GenAI) is making significant strides in the Middle East and Africa, with countries like the UAE and Saudi Arabia establishing strong regulatory frameworks. The UAE's AI Strategy 2031 and Saudi Arabia's SDAIA prioritize ethical standards and transparency. In Africa, South Africa and Kenya have implemented AI policies focused on data protection and ethical use. However, challenges such as lack of standardization, rapid technological advancements, and resource constraints persist. Future efforts should concentrate on regional collaboration, public-private partnerships, capacity building, and adaptive regulations to ensure effective compliance and foster innovation.

Meta's current issue isn't with the still-being-finalized AI Act, but rather with training models using data from European customers while complying with the GDPR, the EU's existing data protection law. Meta has pointed out that competitors like Google and OpenAI are already training on European data, highlighting the competitive pressure and regulatory challenges in the AI landscape.

See you in next edition!