JB Cronjé, tralac Researcher, comments on ‘disruptive’ technologies and the growing need for national consumer protection, privacy and cybersecurity measures

The fusion of technologies is transforming international trade. It has had disruptive effects on many economic sectors and will force all businesses including those in manufacturing, mining and agriculture to reconsider existing business models, manufacturing supply chains, and the use of intelligence in marketing and sales. In many cases, market disruptions were caused by high-technology start-ups or small and medium sized enterprises (SMEs), in engineering, software applications, design, and computer games using digital platforms to reach a global market instantly. SMEs are also indirectly engaged in trade in services by providing services such as advertising, marketing, distribution, sales and after-sales to multinational firms, often manufacturing firms.

The internet created a global platform for SMEs to market and sell niche products to customers everywhere. For example, drones, small remote controlled aircraft, might still be viewed by some as toys for hobbyists, but increasingly they are also being used for commercial purposes. For example, a South African start-up recently developed drone technologies to scan barcodes in high warehouses that save hundreds of man-hours during stock-take or physical inventory, with the drone flying up to the high shelves and scanning the barcodes on each item (Disrupt Africa, 2016). There are hundreds of similar enterprises located throughout the continent that are developing services to improve efficiency in the delivery of physical products. New drone technologies, often adapted from smartphone applications, offers new opportunities for especially SMEs in areas such as security, land-surveying, express delivery (some companies are already delivering lightweight parcels such as medicines to customers in isolated areas), film and advertising industry, protection of wildlife and livestock tracking. Opportunities also arise in the design, development, manufacturing and export of drones.

It is perhaps in agriculture that drones offer the biggest opportunities. SMEs can use drones combined with digital technologies to provide an aerial view of agricultural land to monitor diseases, insect infestations, crop growth and areas in need of watering or fertilizer at a fraction of the cost of manned aerial surveys. In countries like South Africa and Namibia where farmers sometimes need to travel long distances from the one end of their farm to the other the use of drones can improve efficiency in production processes and productivity monitoring. The use of drones also makes it possible to capture and analyse these large amounts of data and produce a time series over periods of hours, seasons or even years. This creates endless opportunities for those owning the data and to create partnerships with other SMEs providing knowledge-intensive services. It also provides networking opportunities for agricultural advisory service providers and others if they could offer their services across borders into markets where professional skills might be limited.

However, drones pose significant aviation safety threats, if they stray into commercial airspace during landing and take-off of airplanes. Other risks associated with the increasing and unregulated use of drones include noise pollution, violation of privacy, and criminal activities such as terrorism and drug smuggling. In response, some countries have adopted regulation that prohibits drones from being flown out of sight of an operator. It is still early days in finding an appropriate regulatory balance. Appropriate regulation must strike a balance between competing public policy concerns on the one hand without inhibiting innovation and economic activity on the other. However, the rules of the sky are bound to change.

This is just one example of an area where the internet, combined with the development and use of innovative services created on top of the internet, could provide logical and viable solutions to everyday problems and, to a certain extent, overcome physical infrastructure constraints plaguing all countries on the continent. Gone are the days when governments were concerned about the rollout of fixed line telephony. The African landscape will never be scarred by a network of telephone lines; embracing new technologies have its advantages. Today, governments and regulators should be concerned about the provision of fast and affordable broadband. With the rise in Over the Top services which increasingly offer voice, messaging, content and many other services over the internet, even the mighty mobile operators are being reduced to mere providers of data. Digital technology brings infinite opportunities to even the smallest enterprises, but it also creates new regulatory challenges ranging from the free flow of information to security and the protection of privacy.

Services are regulated for a variety of reasons and in different forms. Regulatory intervention can arise from a need to address market failures due to monopolistic market structures, information asymmetries and externalities to a desire to achieve public police goals such as universal access or technology upgrading. However, the design and quality of regulation can have a restrictive impact on trade. These include regulatory measures that have a discriminatory impact, restrictions of a quantitative nature, or measures that are too stringent to achieve an objective. Therefore the role of lawmakers and regulators is to ensure that regulation is appropriately designed and implemented to achieve legitimate policy objectives in the least trade restrictive manner.

In broader economic terms, SMEs account for a very large share of employment and therefore deserve all the assistance they can get from governments. It is always more difficult for them, due to resource constraints, to absorb burdensome administrative requirements and procedures than for large firms. Conducting cross border trade is costly, and governments in the region can assist by negotiating trade agreements that aim to remove obstacles to e-commerce. For such SMEs, effective market access requires domestic regulation that supports electronic commerce in the form of network neutrality rules; treating all internet traffic equally by prohibiting internet service providers from discriminating between or restricting and interfering with the services provided by users. Other measures supporting electronic commerce include the electronic submission of forms, applications and payments to government; validity of electronic signatures and electronic contracts; secure and multiple electronic payment methods; and not requiring access to source code of software or the establishment of local data centres as conditions to operate in another market. SMEs can also benefit from enhanced transparency measures by making business registration requirements, regulation concerning the protection of intellectual property, foreign direct investment restrictions, employment regulation and taxation measures available on an official government website. Less cumbersome and costly visa and work permit requirements and procedures will also enable high-skilled entrepreneurs to interact with customers and build networks with other businesses across border; contributing to skills transfer. However, digital trade poses risks to consumers which require appropriate regulatory responses for their protection against fraudulent and deceptive online activities. In order to protect consumers effectively, Members to a regional trade agreement must therefore commit to the adoption of national consumer protection, privacy and cybersecurity measures. This will require from them to establish effective regulatory cooperation mechanisms in terms of their trade agreements to ensure that these regulatory objectives are implemented and enforced in their markets.

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Source:

Jackson, T, 2016. SA’s DroneScan to pilot warehousing drones with European customer. Available [Online] at http://disrupt-africa.com/2016/04/sas-dronescan-to-pilot-warehousing-drones-with-european-customer/