Professor, University of Mississippi School of Law: How does blockchain solve digital colonialism?

For the application of blockchain in supply chain logistics to benefit both high-income countries around the world and low- and middle-income countries around the world, it is necessary to enable participants in low- and middle-income countries around the world to use blockchain technology and take measures to reduce the use of blockchain technology. possibility.

By Antonia Eliason, Associate Professor, University of Mississippi School of Law

Note: Countries in the Global South refer to low- and middle-income countries, and countries in the Global North only refer to high-income countries.

The wealth of imperialist countries is also our wealth. Specifically, Europe has been bloated with gold and raw materials from colonial countries like Latin America, China, and Africa. Today, the towers of wealth in Europe are facing these continents, from which diamonds, oil, silk and cotton, timber and exotic products have been shipped to this continent for centuries. Europe is actually a product of the third world. The wealth that stifles it is that which has been plundered from underdeveloped peoples. —Frantz Fanon

Summary

Blockchain is increasingly seen as a solution to many trade facilitation problems, but discussions about its implementation for raw material producers in the Global South often overlook the need to bypass systemic poverty and reduce supply chain risks through electronic measures. Labor costs. This paper examines these issues through the dual lens of digital colonialism and colonial models of resource extraction, and argues that because the global North benefits more from the export of raw materials than from industrial competition in the global South, the use of block Chains have the potential to consolidate the supply chain roles that make the countries of the Global South into exporters of raw materials and undermine the potential for these countries to explore manufacturing or processing opportunities to provide greater economic benefit. Technological solutions such as blockchain are often seen as a means to achieve sustainable development, and at their core remains an easily formed concept that benefits consumers and investors in the Global North, but not the Global South. Legal instruments such as the WTO Trade Facilitation Agreement provide mechanisms to address the gaps in technology and raw material development in the Global South. As stated in this article, the application of blockchain in supply chain logistics to benefit both the Global North and the Global South requires enabling global South players to use blockchain technology and implementing measures such as raw material price floors to reduce the number of global North companies and potential exploitation of consumers.

Introduction

There has been a lot of blockchain news lately – everyone from cryptocurrencies to NFTs seems to be participating in blockchain-powered technology, but not much is known about the impact it will have. Likewise, global supply chains have been in the news since the start of the Covid-19 pandemic, as consumers have been dealing with shortages caused by supply chain disruptions. Behind global supply chains is trade facilitation, and blockchain goes far beyond cryptocurrencies and the like, providing a means of increasing transparency in global supply chains, thereby facilitating trade. But like most new technologies, proponents have embraced blockchain uncritically in supply chain management, ignoring potential systemic issues that need to be addressed through legal and policy reforms before the technology can be fully adopted. This paper examines some of the potential drawbacks of the use of blockchain in global supply chains through the dual lens of digital colonialism and colonial models of resource extraction.

Colonialism did not end in the 20th century with the official end of Western domination of much of the global South. Instead, it took on a new guise that allowed it to flourish in the 21st century as neocolonialism. From imposing intellectual property rules in favor of Global North companies on the Global South, to continuing to extract raw materials from the Global South for the benefit of the producers and consumers of the Global North, neocolonialism has weakened the sovereignty of the Global South, limiting the opportunities for their economic development. In addition to the more traditional forms of neocolonialism, the Global South is now facing a new form of colonialism: digital colonialism.

While blockchain has potential in mitigating supply chain problems and facilitating cross-border trade, it is in the collection, use and analysis of data from parties that cannot participate in its monetization, and in more traditional postcolonial frameworks of understanding, Namely, the continuing exploitative relationship between manufacturers and consumers in the Global North and raw material producers in the Global South, which constitutes the issue of digital colonialism. Both frameworks are relevant to the ongoing debate on sustainable development between the industrialized countries of the global North and the agricultural countries of the global South, where recognition and confrontation of these exploitative relationships are particularly important.

The cornerstone of the legal framework applicable to supply chain issues is the Trade Facilitation Agreement (“TFA”), which entered into force in 2017, the first new multilateral trade agreement under the WTO umbrella since its inception in 1995. Trade facilitation is closely related to issues related to cybersecurity. This raises an important question of how to enhance and facilitate trade while maintaining security and protecting information that may be vulnerable to misuse. Trade facilitation measures also need to recognize and address the large technological gap between the countries of the Global North and the Global South, while working towards the Sustainable Development Goals.

Blockchain has been touted by academics, policymakers and international organizations as a solution to many trade facilitation problems and even the broader problem of poverty, especially for countries in the Global South. Blockchain is defined as “a distributed ledger network that uses public key cryptography to cryptographically sign transactions stored on a distributed ledger consisting of cryptographically connected blocks of transactions”, blockchain preserves data privacy and protects Data is immune to cybersecurity attacks. This paper argues that, despite its potential positives, blockchain has the potential to consolidate the role of supply chains, allowing countries of the Global South to continue as exporters of raw materials and undermine the potential for these countries to explore manufacturing or processing opportunities that would provide Its population provides greater economic benefits and allows for sustainable development where it makes sense. In this sense, blockchain is the latest example of innovation in international trade and finance, and its role is not to innovate, but to reaffirm the status quo. Like the CFA franc, it was touted as a way for former French colonies in Africa to benefit from regional integration and close trade relations with France, but in reality it was French industry consolidating its role as the supplier of choice for these African markets. One way that blockchain, without any regulatory constraints, could play a similar role in cementing the role of countries in the Global South as exporters of raw materials.

The logistical challenges faced by the countries of the Global South in implementing blockchain for trade facilitation purposes are enormous and would not be possible without substantial investment from the countries of the Global North, and if the countries of the Global South intend to utilize blockchain to facilitate Manufacturing and processing of domestic raw materials, then these countries are unlikely to invest. The countries of the Global North benefit more from the export of raw materials than from the increasing competition from the emerging industries of the countries of the Global South. Under the guise of environmental protection, the debate on the practical implications of sustainable development reflects the reluctance of the global North to support the industrial development of the global South.

This article first provides some background on blockchain, supply chain logistics, and trade facilitation. In the second part, the article establishes an analytical framework, outlines colonial patterns of resource extraction and digital colonialism, and examines how the concept of sustainable development is interpreted in international discourses. Finally, the article examines the relationship between blockchain, trade facilitation and the Global South, providing a case study of the West African cocoa industry to illustrate the challenges of raw material exporters and highlighting the need to balance the development needs of the Global South with The economic aspirations of companies, governments and consumers in the Global North.

I. Blockchain, Supply Chain Logistics and Trade Facilitation

Blockchain and Trade: Getting Started

Blockchain is often misunderstood as being intrinsically linked to cryptocurrencies such as Bitcoin. In fact, blockchain is a broader concept with greater potential. At its core, blockchain is a distributed ledger technology (“DLT”) consisting of independent nodes that individually store information about transactions. There are some non-blockchain technologies, but the most commonly used and tested DLT is blockchain. The key to the security of a blockchain network is that a block that holds data cannot be edited or deleted without changing all subsequent blocks. To add new data, it must be verified, and once verified, a new block is added to the blockchain. Each block has a hash, which is a cryptographic fingerprint that uniquely identifies the data, and if that’s all the information a party has, it’s nearly impossible to reverse engineer the data. All transactions must be verified using a consensus algorithm, which will depend on whether the distributed ledger is public or requires permission. Bitcoin is an example of a permissionless or public blockchain that anyone can join. For permissioned blockchains, access is restricted and must be granted by some authority. Importantly, more than 50% of the systems in the network must be hacked to be successful. This makes the blockchain exceptionally secure as there is no single point of failure or vulnerability.

In addition to (and as part of) DLT, smart contracts play an important role in providing a secure way for transactions to take place. A smart contract is not a contract in the traditional sense; rather, the phrase describes “code in use to facilitate the exchange of financial instruments or assets and property of some value”. Smart contracts are also described as “automated self-executing computer programs designed on the blockchain, triggered by defined situations”. Triggering events are based on “if…then…” logic – if X happens, then funds are transferred. They are especially useful for automated electronic payments that are triggered after a certain event.

So, how does blockchain potentially impact international trade, especially trade facilitation? Regarding the interaction between cybersecurity and international trade, much of the focus is on data security and digital trade, with e-commerce, national security, data localization, and the role of the General Agreement on Trade in Services (“GATS”) in regulating digital commerce. The center of much academic literature. But this is only one facet of the trade and cybersecurity problem. The other side involves supply chain issues. As pointed out by Huang et al., the issue of cybersecurity in international trade “should not be viewed as merely a regulatory compliance issue, but also as a supply chain risk and geopolitical issue,” recognizing that different countries have concerns about cybersecurity markedly different understanding.

Here, we must first understand supply chain logistics. Global value chains (“GVCs”) are a key element of contemporary international trade, with over 50% of trade in goods being intermediate inputs. Global value chains or global supply chains are complex and require detailed tracking and recording as it is not primarily the final product that is traded, but the inputs that will be used to manufacture the final product.

Trade facilitation “refers to those policies that deal with the entry of goods into a country and the provision of transparency and information related to the entry of goods”. Sometimes described as a conduit for international trade, trade facilitation is critical for making trade more efficient and thus reducing costs. The recent implementation of trade facilitation measures has focused on reducing the paperwork involved and moving towards a paperless, digital environment, especially as recent regional trade agreements include provisions related to paperless trade, compared to the Trade Agreement terms are more comprehensive. Trade facilitation is closely related to supply chain management, as customs and border measures require extensive documentation and constitute a step in the supply chain process.

For GVCs, there are multiple steps, each of which needs to be verified – “When the commodity is moved from the factory or farm to the warehouse, when the commodity is moved from the warehouse to the container, when the container is loaded on the ship, when the ship is sailing when the container is unloaded from the ship at the port, when the goods are transported from the port to the final consumer”. This requires intermediaries to ensure that these steps are properly managed. One of the biggest challenges in trade facilitation and supply chain logistics is the delay caused by the paperwork required at each step of the certification process. Customs procedures, especially in developing countries, have been controversial for causing significant delays at the border.

As explained by Emmanuelle Ganne, four main categories of documents are required in the course of an international trade transaction: (1) documents related to the commercial transaction itself (this includes sales contracts and commercial invoices), (2) documents related to trade finance (this including letters of credit), (3) shipping documents (such as bills of lading), and (4) border procedural documents (certificates of origin, health and conformity certificates, necessary export or import licenses, customs declarations and customs inspection documents). All these documents are required at different steps in the GVC process. Trade facilitation in a narrow sense mainly focuses on transport documents and border formalities documents, but all documents are required for the export of goods. A broader understanding of trade facilitation requires a holistic view of global value chains, recognizing that every step of the process should be as transparent and efficient as possible to reduce costly delays.

For many countries, a lack of infrastructure, both digital and physical, can cause customs and border measures to be a critical point of delay when exporting goods. Blockchain can help streamline some areas and provide a means to increase the speed and accuracy of the trade facilitation process. Starting with income taxation, blockchain offers the possibility of simpler and more accurate auditing for taxation purposes, as well as rapid taxation through automation. Customs and excise measures can benefit from blockchain as customs officials gain the ability to approve more shipment volumes, either by providing supply chain data directly to customs or through the use of blockchain to empower economic operators (” AEO”) mutual recognition. This will increase the reliability of the information about the contents of the cargo. Blockchain can also help enforce compliance as it can easily verify the contents of goods and the origin of raw materials or finished products.

Combining DLTs such as blockchain with smart contracts has the potential to increase transparency, a goal of the Trade Facilitation Agreement. In addition, the use of DLT and smart contracts can greatly reduce the number of middlemen, which can improve efficiency and reduce costs, and reduce risks for buyers. The purpose of trade facilitation is to achieve greater transparency, accountability, efficiency and traceability, and blockchain technology can greatly facilitate this. The application of blockchain technology to customs management will lead to more data-driven customs procedures, and customs may become more embedded in the trade process, potentially leading to automated clearance of goods. In addition, blockchain can improve tax compliance and cooperation between tax and customs, and help customs fight financial crime.

The collaboration between IBM and Danish shipping company Maersk provides an example of permissioned supply chain blockchain in the context of trade facilitation. In 2014, Maersk began tracking certain shipments to determine the actual cost of compliance and intermediation, finding that the cost of documentation could be greater than the cost of actually shipping a shipping container. In particular, they found that shipping a container from Africa to Europe “requires nearly 200 communications, as well as verification and approval from more than 30 organizations involved in customs, tax and health-related matters.” In collaboration with IBM, Maersk developed a A global trade digitization platform designed to reduce the costs associated with these documents. Launched in 2018, TradeLens aims to apply blockchain to global supply chains, including port and terminal operators, global container carriers, customs authorities in some countries, customs brokers, and freight forwarders, transportation and logistics companies. Since its launch, two other major ocean cargo carriers, CMA CGM and MSC, have also joined TradeLens, meaning that nearly half of the world’s ocean container cargo data is now handled by the joint venture. In order to gain the participation of the two companies, each will be substantially involved in the enterprise, notably by acting as a carrier by running nodes on the network and validating transactions across the network. The more parties involved in the blockchain, the more efficient and secure it will be, and TradeLens is expected to have a major impact on ocean cargo shipping, with new ports and terminals joining the platform since its launch.

Due to the scale of maritime shipping and the documentation requirements inherent in the industry, there are great benefits to implementing blockchain technology in this area. Maritime transport undertakes more than 80% of global trade volume and accounts for more than 70% of global trade volume. By sharing data on digitized trade, shipping documents and financial instruments, all parties will have access to this information, which will significantly reduce the costs associated with the documentation required at every step. Okazaki believes that blockchain “will transform the business model of ocean freight” and that every stage of trade and financial flows “will be integrated into a unified ecosystem.” Currently, the IBM/Maersk partnership is the best example of an effective permissioned supply chain blockchain that works at scale and has global reach.

However, blockchain is not a panacea for all supply chain and trade facilitation problems, and there are technical, logistical and legal challenges in moving to a fully digitized trade environment implemented through blockchain.

Challenges related to blockchain implementation

Blockchain, although its cryptographic strength allows it to thwart most hacker attempts, like all technologies, there are some potential limitations. If a single blockchain is used by all parties in the supply chain, this will provide the necessary security; however, if multiple blockchain technologies are used throughout the supply chain, this will reduce the security of the blockchain and efficiency. Blockchain works most efficiently when all entities using the blockchain operate within the same network within a broader blockchain ecosystem, rather than as part of multiple different blockchain systems. Each of the different blockchains may be secure and functional when viewed in isolation, but when interacting with other blockchains, there will be a risk of “frustration, confusion, and massive erosion of deliverable value.” Interoperability issues may arise due to the many different blockchain projects currently underway and the lack of standards to ensure that these platforms can communicate seamlessly with each other.

The many positives of blockchain also present challenges. While blockchain makes it nearly impossible to edit past transactions without the approval of users in the network, it does not prevent the entry of false information. Additionally, where blockchain is most effective is where the input to verification happens as early as possible in the supply chain, which allows for the verification of data and the ability to certify downstream end products (such as fair trade or organic certification). If the blockchain is only deployed halfway, rather than at the origin of the raw material, the accuracy of the input data will be more difficult to determine. This is especially important when upstream raw materials are later used to produce composite products, be it furniture, or food and beverages. Blockchain networks additionally lack a centralized oversight function, which reduces the overall resilience of the system in the event of problems, as there is no designated party to respond to a crisis.

Technically, some areas of the blockchain may be vulnerable to cyberattacks. Most networks run the same code, which means that if a cyber attack finds a vulnerability, the entire system is at risk. To date, successful cyberattacks on blockchains (especially outside of digital currencies) have been limited, but that doesn’t mean such attacks might not be feasible in the future, especially with the possibility of quantum computing. As the Internet of Things (“IoT”) becomes the core of many supply chain related technologies, even when combined with blockchain, its security impact is magnified, as any breach has the potential to have catastrophic physical consequences in real life.

A blockchain is only good at its weakest link, and the strength and value of a blockchain “is determined by the least trusted data of users registered on the blockchain, just as a chain’s strength is determined by its weakest link. The link decision is the same.” This has implications for developing countries – they may become the weakest link in the security process, which will continue to exacerbate the problems between the Global South and the Global North. The correct implementation of blockchain depends on certain infrastructure assumptions, especially regarding the availability of stable internet and reliable electricity supply, which are often lacking in the countries of the Global South. Some of these concerns can be alleviated by developing blockchain applications for mobile phones, which are far more pervasive in rural areas of the developing world than grounded infrastructure such as telephone lines, wires, wired internet and sewage treatment.

There’s also a broader question about getting data and putting it in the hands of operators about the platform or technology. In the case of commodity trading, access to a blockchain ledger has the potential to provide information that can be used by parties to manipulate commodity prices or drive speculation. This type of insider trading will be difficult to identify and easy to cover up. This may be an issue for any situation involving access to confidential financial information, but since blockchain technology is new, it remains to be seen how these situations will play out in blockchain-driven supply chain management. On a separate but related issue, customs use of information obtained from a blockchain-based global trade platform could raise liability issues as there are multiple stakeholders with the ability to enter information, which would allow identification of a single filer become impossible.

These potential vulnerabilities of blockchain technology reflect some systemic concerns about the role played by technology, data, and Big Tech in the Global South, which are discussed in the next section.

II. Colonial Models of Resource Extraction, Digital Colonialism and Sustainable Development

Colonial patterns of resource extraction, the issue of digital colonialism, and the debate on sustainable development are three separate issues that overlap and help provide a framework for understanding some of the challenges of applying blockchain technology to facilitate trade in the global South and hidden dangers. This section first addresses the colonial model of resource extraction and then turns to modern forms of digital colonialism. Finally, this section examines sustainable development and some of the promises and shortcomings of such a framework in terms of technological solutions to trade issues.

Colonial mode of resource extraction

The industrialization of the global North was driven by, and depended on, the extraction of natural resources, a hallmark of colonialism. As Frantz Fanon wrote in the 1960s: “Europe’s wealth is built on the backs of slaves, it feeds on the blood of slaves, and it exists because of the soil and basic environment of the underdeveloped world”.

Utsa Patnaik and Prabhat Patnaik argue that the core fallacy of David Ricardo’s theory of comparative advantage is that the theory depends on the concept that all countries can theoretically produce all goods. In fact, the tropics were capable of producing many commodities that the cooler temperate regions could not, causing the colonial powers of Europe to sit on “gold mines”. [Not only did they get goods that [they] could not produce, completely free for [them] themselves, [they] also got these goods in exchange for free imports from temperate sovereign states, all levied on the colonial population commodity equivalents. In Fanon’s words, capitalism “in its expansion phase sees the colonies as a source of raw materials that, once processed, can be unloaded on European markets.” After a phase of capital accumulation, capitalism has now revised its concept of profitability. The colony has become a marketplace. The colonial population was a consumer market”. At the same time, “the colonial system was only interested in certain wealth, certain natural resources, to be precise, those resources that fueled its industries”.

Understanding that the Industrial Revolution required the exploitation of colonial resources helps explain the dynamics of poverty that persists to this day between the Global South and the Global North; the Global North continues to extract wealth from the Global South without concern for the development of the Global South. According to Jason Hickel, based on economic data, “rich countries are not developing poor countries, poor countries are actually developing rich countries, and it has been so since the end of the 15th century. For the former colonies, the structure that favored the global northern industry was established at the time of independence. Institutions that exist on top of or continue to exist that make industrialization difficult to achieve. For example, in Africa, many former French colonies are still within the CFA franc zone, and this colonial currency has allowed French industry to continue to be the supplier of choice for these African markets. Today , developing countries around the world send far more money across their borders than they receive, much of it in the form of interest payments.

The process of colonial resource extraction had a transformative effect on former colonies, through “the alienation of natural resources and the imposition of new forms of centralized political power over lands and resources previously controlled by more local institutions”. These structural changes created systemic inequalities that, in many cases, persisted in the postcolonial era, as former colonial powers continued to influence the political and economic paths of newly independent nations, often by continuing to exploit natural resources and The conditions of financial aid required for such exploitation. Neoliberalism encourages the unsustainable use of natural resources and places domestic control firmly in the hands of ruling elites who benefit from unequal commercial relationships with the industries of former colonial nations. Unfettered exploitation of natural resources and the consequent environmental commodification and privatization, discussed further in the sustainable development section, remains one of the main drivers of global inequality.

digital colonialism

Digital colonialism is defined as “a structural form of domination,” exercised through centralized ownership and control of the three core pillars of the digital ecosystem: software, hardware, and network connectivity, giving the United States enormous political, economic and social power”. In other words, digital colonialism “refers to the decentralized extraction of citizens’ data without their explicit consent through communication networks developed and owned by Western tech companies”.

In the literature, digital colonialism is most often discussed with Big Tech (Facebook, Amazon, Google, Uber, Netflix, Microsoft) and their data collection and monetization of users in the Global South. However, it is not limited to social networking platforms, search engines, operating systems and streaming services, but extends more broadly to cloud infrastructure and services, including IBM.

As defined by Nick Couldry and Ulises Mejias, data colonialism includes “a large number of areas of economic life where internal data collection has become a fundamental mode of operation of a business, such as in logistics.” In Couldry and Mejias’ formulation In , data colonialism applies to humanity as a whole, arguing that humanity “is currently undergoing a massive transformation of the social, economic, and legal order, based on the massive expansion of capital into human life itself through the medium of data extraction.” Couldry and A broader understanding of Mejias is crucial to understanding the profound implications of this new development, in which “human life, as it is, presents itself unobstructed to capital,” and “human life itself, including its The relationship with technology becomes a direct input of capital and can potentially be exploited for profit.”

This article’s analysis of digital colonialism draws on the work of Couldry and Mejias, while focusing on the ways in which the Global South is affected by the actions of the Global North, particularly by U.S. tech companies. While data colonization as conceptualized by Couldry and Mejias is a global phenomenon, it is still important to distinguish how data collection affects different parts of the world. Here, the use of the term digital colonialism effectively narrows the scope of the global issue of data colonialism, which is beyond the scope of this article.

Abeba Bihane’s academic research on algorithmic colonization and algorithmic injustice is relevant to understanding the position of power imbalances. As Birhane wrote:

[Traditional colonial power] declares control over the social, economic, and political spheres by rearranging and reshaping the social order in its favor. In the age of algorithms, this control and domination occurs not through gross physical forces, but through invisible, subtle mechanisms such as control over digital ecosystems and infrastructure. What traditional colonialism and algorithmic colonialism have in common is the desire to dominate, monitor, and influence social, political, and cultural discourse by controlling core communication and infrastructure media.

Across the global South, and especially in Africa, this digital colonialism can be seen in the control of digital infrastructure by Western tech companies, exploited in ways that are said to liberate, connect the unconnected and help the unbanked in a way that reflects “the same colonial story, but now under the guise of technology.” In addition to the economic exploitation that arises from monitoring, tracking and surveilling the data collected on people and places, digital colonialism “simultaneously enables local Product development is impoverished, while also making the continent dependent on its software and infrastructure.”

With blockchain, digital colonialism takes place, with the global north supplier of blockchain technology dominating the digital architecture of the global south. The monetization of big data is one part of the risk — another is the monopoly of these sectors by global northern tech companies, excluding locally developed technologies. Additionally, the Global South is being used as a testing ground for new technologies — such as efforts to create and monitor digital identities, while the Global North population may object for privacy or stability reasons. Many of these risks are more present in cryptocurrencies, where blockchain offers less immediate risk of speculative financial or identity loss in the context of trade. However, even if blockchain is used more benignly to facilitate trade, elements of neocolonialism exist in the colonialism that continues to appropriate resources from the global south by excluding those who produce and extract them from technological management and governance Tradition. As Michael Kwet put it, “Digital colonialism was about cementing an unequal division of labor, with the dominant power using its ownership of digital infrastructure, knowledge, and control over the means of computing to make the South perpetually dependent.”

sustainable development

Digital colonialism and development narratives related to the introduction of technology to the Global South are echoed in development narratives around sustainable development. The World Commission on Environment and Development’s 1987 report Our Common Future (also known as the Brundtland Report) provided an early definition of sustainable development.

Global sustainability requires those who are more affluent to adopt a way of life within the ecological confines of the planet, for example, their use of energy. In addition, rapidly growing populations increase pressure on resources, slowing any improvement in living standards; therefore, sustainable development can only be achieved when population size and growth are coordinated with the changing productive potential of ecosystems.

Economist Herman Daly took a different approach to the definition of sustainable development, finding that sustainable development “must mean a radical shift from a growth economy and everything it brings to a stable economy, certainly in the North, And ultimately in the South.” This definition is reflected in today’s de-growth movement, which acknowledges that economic growth in the global North was based on colonialism, and that even the concept of growth through the “greening” of industry “presages Continuation of Colonial Arrangements”. The countries of the Global South must be free to break the cycle of resource extraction in order to achieve meaningful sustainable development, not just centered on the economic needs of the Global North.

The paradox in the sustainable development debate is the opposition between the desire for continued economic growth and the need to reduce carbon emissions, and how these conflicting goals are imposed on the global South. As Ruth Gordon puts it, “Sustainability appears to be solving an intrinsic puzzle without meaningfully challenging the impact of existing power structures or the modern quest for a higher standard of material living on the natural world”. The countries of the Global North continue to consume the vast majority of global goods, leading to the “unsustainable development” of the countries of the Global North. It is the countries of the Global South that contribute the least to climate change, and are experiencing disproportionately the effects of climate change, yet are seen by the countries of the Global North as needing to rein in their emissions – while the countries of the Global North continue to meet unsustainable growth targets, It depends on continued exploitative practices.

In 2015, the United Nations adopted 17 Sustainable Development Goals (“SDGs”) aimed at bringing nations together to eradicate poverty and protect the planet. Many scholars and activists have pointed to the inherent contradictions of these goals, which focus on protecting the environment on the one hand, while continuing to call for economic growth on the other. Balancing social, environmental and economic aspects – the three pillars of sustainable development – is a particular challenge. While the SDGs show promise in addressing social issues, with 11 of them focusing on the most marginalized, their commitment to ecological issues is more limited. Although 11 goals address environmental issues, most of the commitments in these goals are growth-focused, centered on technology transfer and scientific solutions. Achieving the growth and environmental goals set out in the SDGs at the same time is not feasible, as this requires a sustained combination of significant reductions in resource use each year, while increasing efficiency at a significantly higher rate than before.

Blockchain can play an important role in facilitating trade in the context of the SDGs. The United Nations Centre for Trade Facilitation and Electronic Commerce has identified potential areas where more traceability provided by blockchain could be used to identify and work towards the SDGs, noting in particular that it could be used to identify SDG 1 ( no poverty), SDG 6 (clean water and sanitation) and SDG 12 (responsible production and consumption). By tracing the origin of items, it is easier to prove that the production of materials did not use child labor or pay workers a living wage, which could help alleviate poverty. Knowing where and how inputs are produced, and being able to track operations to determine if they are operating in an environmentally friendly manner, may help deter companies from overusing and polluting water supplies. Finally, illegal logging is a major problem, both for timber export and for the production of raw materials, for which protected forests are illegally destroyed to make way for more agricultural land. This speaks to the responsible production and consumption of resources. Blockchain can also be used to achieve SDG 2 (Zero Hunger) by reducing transaction costs, thereby reducing food prices, and improving food safety by enhancing traceability.

The journey from colonial means of resource extraction to digital colonialism reflects capitalism’s continued need for growth. As blockchain becomes more accessible as a means of monitoring supply chains, the possibility of digital colonialism through the deployment of this technology and a form of sustainable development centered on production in the global north will increase the overlap. The intersection of sustainable development and digital colonialism has the potential to further cement a development narrative that has not been proven in practice, making the countries of the Global South resource-intensive producers of raw materials.

III. Blockchain, Trade Facilitation and the Global South

To understand how blockchain could impact trade facilitation in the Global South, and to see the ways in which digital colonialism may consolidate the role of supply chains and limit the SDGs, we start with an example, the cocoa industry in Côte d’Ivoire, and then turn to regional A broader analysis of blockchain and trade facilitation.

The case for the cocoa industry

The cocoa industry in West Africa provides an instructive example of neo-colonial resource extraction, while also allowing us to see how digital colonialism can apply blockchain solutions to cocoa-related supply chain issues.

Côte d’Ivoire and Ghana are the world’s leading producers and exporters of cocoa beans. Most of the cocoa beans in Côte d’Ivoire are grown by smallholder farmers, with 600,000 farmers involved in cocoa production and 6 million working in the entire cocoa industry. Fluctuations in global cocoa prices have led to deforestation as poor small cocoa farmers look for new land to expand their farming. This raises major sustainability issues. Climate change has had a persistent negative effect on cocoa production, but Côte d’Ivoire remains economically dependent on cocoa beans, which account for 40% of its total exports. Cocoa farmers in Côte d’Ivoire earn an average of US$0.97 per day (for comparison, the international poverty line is US$1.90 per day) and child labour is a serious problem, with an estimated over one million children working in cocoa production. For chocolate consumers in the West, ethical sourcing of chocolate is increasingly important, and labor and environmental conditions in Côte d’Ivoire pose ethical consumption issues for much of the chocolate produced globally.

The use of blockchain in supply chain management will provide assurance that the cocoa beans in consumers’ chocolates are ethically sourced from growing to exporting and beyond. However, the lack of internet access across Côte d’Ivoire means that significant investment in digital infrastructure is required, even though blockchain is mainly used through mobile devices. Investments in this infrastructure are likely to come primarily from the chocolate producing countries of the Global North and a handful of large cocoa bean exporters, all of which are based in the Global North. At the same time, there are efforts within Côte d’Ivoire to process more cocoa beans and even make chocolate, and economists and experts in the region recognize that exporting raw cocoa adds very little value-added income to the economy. As the Ivorian government recognizes the value of processing cocoa beans domestically, cocoa trading companies have started opening cocoa processing plants in the country. Recent data from Côte d’Ivoire and Ghana show that, by weight, 26% and 29% of their cocoa exports, respectively, are in the form of processed cocoa products (butter or paste). However, most cocoa beans are still exported as raw materials. With funding for technology investments largely coming from outside of Côte d’Ivoire, the financial benefits of blockchain are unlikely to materialize unless Côte d’Ivoire remains primarily an exporter of raw cocoa beans, with profits falling into the hands of large cocoa exporters and chocolate-making companies.

Sustainability is also a complex feature of the cocoa industry. In Côte d’Ivoire and Ghana, a number of multinational sustainable development programmes have been implemented to aid development. With limited domestic use value in these countries, diversification away from cocoa may have a greater impact on development than finding ways to increase the productivity and sustainability of cocoa cultivation. However, as Michael-Odijay points out, “Multinational confectionery companies that rely on cocoa beans as an ingredient can use flexible sustainability language to ensure the safe supply of ingredients if the flow of factors (i.e. away from cocoa diversification) threatens where they come from.” Industry rhetoric related to such sustainability initiatives often uses humanitarian overtones to mask the “anxiety over the security of cocoa bean supply” that actually drives these initiatives.

The cocoa industry in West Africa highlights the colonial structure of resource extraction that has continued into the contemporary era. The cocoa industry is controlled by a handful of cocoa trading companies, almost all of which are European, with the exception of Cargill in the US and Olam in Singapore. Not surprisingly, French companies have a huge presence in the West African cocoa industry, continuing France’s economic influence over its former colonies. The cocoa industry is a classic example of colonial resource exploitation, with the Global North profiting from the products of the Global South, and at the same time it is at the forefront of sustainability efforts related to supply chain management and sourcing. These efforts are consumer concerns about the ethics of chocolate production and require a degree of transparency to be effective, which has not yet been achieved, but can be achieved by applying blockchain to facilitate oversight of the supply chain. The question, however, is whether such oversight will have long-term beneficial effects on Côte d’Ivoire and Ghana, or whether they will primarily benefit large chocolate companies, cocoa traders, and ultimately chocolate consumers in the global North, while West Africa’s cocoa Producers continue to play the role of raw material suppliers to the global north.

The following section explores some of the potential problems and pitfalls of applying blockchain to supply chains, and the ways in which digital colonialism may emerge in well-intentioned efforts to reduce corruption and facilitate trade.

Professor, University of Mississippi School of Law: How does blockchain solve digital colonialism?

Customs, Blockchain and Development

Perhaps unsurprisingly, customs procedures are one of the most significant sources of corruption, especially for developing countries. As noted in a recent World Bank report on corruption, “corruption is a problem in work environments where officials have discretion over important decisions, and where risk-based controls and accountability are absent or easily undermined. It’s easy to act.” Especially where there are high tariffs and complex regulations, “businessmen have a strong incentive to undervalue or underreport goods by trying to bribe customs officials to lower import fees and expedite transactions.” The costs of corruption to exporters include direct monetary payments in the form of bribes and, if the bribes are not paid, loss of product quality and reduced prices due to delayed shipments.

For the Global South, blockchain has been touted as a means to reduce corruption and build trust, replacing “the need for institutional and individual intermediaries” that brought “opportunities that accompany corruption.” This approach is inherently problematic because it bypasses systemic corruption within the state and instead outsources operations to automated technology. Instead of asking why there are corruption problems and how to solve them, blockchain completely eliminates the problem of fickle people through automation. This could make trade more transparent, efficient and cost-effective, but it mainly benefits foreign companies and consumers. All the corruption that affects the daily lives of the people of these countries will continue and local residents will lose their jobs when the role of middlemen and intermediaries is eliminated. Viewing blockchain the way most international organizations and companies do, it has long lacked a focus on sustainable development as a means of obtaining concrete benefits for the people of the exporting countries.

That’s not to say that blockchain shouldn’t be used in the global south. In fact, the use of blockchain in trade facilitation offers solutions to many pervasive problems that need to be addressed, from verifying origin and content to reducing costs caused by border delays. The question is not whether to implement blockchain technology, but how to not simply exploit or ignore the countries of the Global South as they scramble to increase the profits of multinational corporations and reduce costs for consumers in the Global North. In a February 2020 policy brief on trade facilitation and blockchain in developing countries, the United Nations Conference on Trade and Development (“UNCTAD”) stated:

Governments in developing countries will need to actively design policies that promote knowledge building and skills development in blockchain technology to ensure they are not left behind. The government needs to have continuous research in the application of blockchain and related emerging technologies, while maintaining a balance in the construction of key infrastructure of blockchain, so that the technology is mature and regulation is clear.

While the UNCTAD policy brief highlighted the importance of capacity building by international organizations in developing countries, it suggested that UNCTAD could play the role of implementing partner to ensure that “developing countries are fully aware of the emerging technology of blockchain, and how it could support technology-driven trade facilitation reforms in the 21st century,” but it offered no substantive advice on how to achieve those goals. The overarching question remains: where will the money come from in order to design these policies, and how will any development assistance be constrained?

In the Global South, digital technologies often arrive before the government agencies and legal provisions needed to address the challenges posed by these technologies are in place. Of course, the same is true of the Global North, where legal provisions have long lagged behind technological progress. The difference is in hardware rather than software – after more than a century of telephone-based physical infrastructure in the Global North, digital technologies in the form of mobile phones and the Internet have gradually developed, while the Global South has seen no change in physical wired technology. Rapid introduction of mobile and digital technologies without infrastructure investment. This has implications for cybersecurity protection in the Global South, while cybersecurity measures in the Global North are more robust. It is also important to recognize the important role that digital colonialism plays in these efforts in the Global South, as it is primarily tech companies in the Global North who have benefited from this rapid deployment, while data protection laws have been left behind.

According to Nagelhus Schia, digital development must include digital security, “which will require core development assistance focused on improving and securing digital systems and the analog underpinnings of digital technologies, including governance, knowledge, information, education, employment and appropriate institutions”. He sees blockchain as a way to mitigate some of the vulnerabilities created by inadequate cybersecurity infrastructure in the Global South, acknowledging challenges to its implementation, including the additional bandwidth it requires to operate. He also acknowledged that combining cybersecurity with development assistance could be controversial, but stressed that a legal system that recognizes cybercrime and has law enforcement mechanisms to deal with it is necessary to deter cybercriminals. While there is undoubtedly a need for strong cybersecurity measures across the global South, the concept of linking development assistance to cybersecurity assistance can only be achieved if it focuses on building the domestic institutions and human resources needed to identify and address cybersecurity issues success.

Efforts to build institutional capacity to address cybersecurity issues can be more challenging in countries where the rule of law is weak and corruption is endemic. As Kshetri points out, “In some economies of the Global South, the rule of law is ignored and disrespected by corrupt politicians, government officials and other powerful groups. These groups sometimes steal the income and investments of the poor, or create an level playing field”. While economists and policymakers in the Global North are very concerned about corruption in the Global South, business tax evasion by companies in the Global North is a much larger source of corruption, particularly illicit financial outflows. In its 2020 report on illicit financial flows in Africa, UNCTAD found that between 2013-2015, an estimated $88.6 billion, or 3.7 percent of Africa’s GDP, fled Africa as illicit capital. Capital flight includes trade misinvoicing, transfer mispricing and other balance of payments transactions. These illicit financial flows are the responsibility of both developed and developing countries, and many of these funds leave developing countries and reach them. The report states that digital technologies “expand opportunities for cybercrime and provide a platform for the exchange of illicit goods and services by providing a range of functions that facilitate the illicit transfer and use of funds”. While an in-depth discussion of illicit financial flows is beyond the scope of this article, it is important to note the multifaceted nature of cybersecurity issues, both in legal and illicit trade flows. For development assistance to be more than a means for countries and companies of the Global North to open up new avenues of foreign investment in the Global South, it needs to balance the need for a strong cybersecurity architecture with greater efforts to achieve the SDGs in the Global South. extensive requirements.

Legal and Policy Solutions

Looking at the existing international legal instruments, notably the Trade Facilitation Agreement and the more recent Framework Agreement on Facilitation of Cross-border Paperless Trade in Asia and the Pacific, it is not clear whether they are the global South-centred block The chain implementation framework provides adequate support, at least in terms of trade facilitation.

The Trade Facilitation Agreement contains detailed and novel special and differential treatment (“S&DT”) provisions that differ from those in other WTO agreements. At the heart of these provisions is the assistance and support provided by developed country members to developing and least developed country (“LDC”) members in capacity building. Developing country members will themselves designate their trade facilitation measures to fall into one of three categories. Category A provisions require the shortest implementation time, category B measures require a longer implementation time, and category C measures require additional capacity-building support from developed countries. In addition, the Trade Agreement provides two procedures to assist developing countries and LDCs in implementing the rules: one is a protocol to establish an expert group to examine situations in which developing country members are unable to implement categories B and C provisions; the other One is that the committee meets annually to discuss any implementation issues related to capacity building.

While these mechanisms look impressive and 95 developing country members of the WTO have so far requested assistance and support for capacity building for a total of 1,249 measures, only 5% of developing countries requesting technical assistance and capacity building have declared They have entered into arrangements with the donor developed country members. There is no accountability mechanism for donor countries in the TFA. The TFA requires donor countries to provide information on the aid they provide to increase transparency, but does not provide any mechanism to hold donor countries accountable for failing to assist developing countries with capacity building. Although it is too early to draw conclusions about the long-term effectiveness of the special and differential treatment provisions of the Trade Agreement, the wording of the provisions obliges developing countries to notify the WTO of implementing measures, while the description of requirements on donor countries Language is more of a desire. “Donor Members agree to promote assistance and support for capacity building to developing and least developed country Members”, “Targeted assistance and support should be provided to least developed country Members”, and “Members should endeavour to apply The following principles provide assistance and support for capacity building” are examples of the provision of assistance and support for capacity building in Article 21 of the Trade Agreement. The imbalance between the Global South and the Global North remains, even as the Trade Agreement makes significant progress in taking into account the needs of developing countries, there is a need for the massive infrastructure needed to implement blockchain-based customs and border measures , it is not enough.

The most recent Framework Agreement on Facilitation of Cross-border Paperless Trade in Asia and the Pacific (the “Framework Agreement”) was opened for signature by the 53 members of the United Nations Economic and Social Commission for Asia and the Pacific (“ESCAP”) in 2019, dedicated to Digitize trade processes. It builds on the Trade Agreement and focuses on the transition to paperless trade facilitation, which is only limited in the Trade Agreement, and is the first multilateral institution to provide legal provisions on the subject. treaty. Article 7(1) states that “Parties shall endeavour to facilitate cross-border paperless trade by using existing systems or establishing new systems to enable the exchange of trade-related data and documents in electronic form”. As mentioned earlier, methods of creating new systems, if applicable to blockchains, can create interoperability issues and reduce the inherent security of blockchains. However, if electronic systems to facilitate cross-border paperless trade do not exist, new systems will need to be created. Other provisions of the framework agreement will be most effectively implemented through the use of blockchain. For example, Article 8 requires parties to provide for mutual recognition of trade-related data and documents in electronic form from other parties “on a substantially equivalent reliability basis”. “Substantially Equivalent Reliability” is a standard that is most easily facilitated by implementing blockchain technology. The Framework Agreement does contain a capacity-building clause acknowledging the challenges some countries face in implementing paperless trade, but its wording is aspirational, with language indicating that parties “may cooperate”, “may collaborate” and “may invite “. Given that 11 of ESCAP’s 53 members are least developed countries, and that most members qualify as developing countries, this appears to place the burden of implementation primarily on the shoulders of developing country members.

The challenges of implementing blockchain technology in developing countries are unlikely to be addressed through the Trade Agreement or the Framework Agreement, neither of which is sufficiently specific about how capacity-building should be done. While the introduction to the Framework Agreement in the e-book published by ESCAP mentions sustainable development as a strategic priority, the Framework Agreement itself does not mention sustainable development, nor does the Trade Agreement.

If blockchain technology can be properly implemented in a way that emphasizes the sustainable development component of trade facilitation, it can have a positive impact in securing the way supply chains function. This ensures that inputs come from living wage workers and that middlemen don’t take their share of raw materials as they move through the supply chain. However, who will benefit in the end? When the focus is on exporting raw materials from countries in the Global South, this has the potential to rigidify existing relationships, structures and players in supply chains, and can limit opportunities for individuals and companies in exporting countries to develop their own processing capabilities and manufacturing innovations. Blockchain technology itself is also an important source of profit. By using blockchain throughout the Global South, another channel is created for Global North companies (in this case, technology companies) to profit from the Global South countries to the exclusion of them – neither from gaining The benefits of new technologies cannot be part of the economic benefits of deploying such technologies. This is digital colonialism.

Under traditional colonialism, colonies were exploited for raw materials and prevented from industrializing. The purpose of using a blockchain platform for trade facilitation and supply chain management is to track the process of raw materials from inception to final output as a finished product. While this is an undeniably positive goal in terms of overall conditions in input-producing countries, it cements the role of these producers as exporters of raw materials rather than opening the door to manufacturing possibilities. This colonial-era model of extractivist development has left the countries of the Global South struggling with economic growth and has linked them economically to the performance of commodity markets, exposing them to global volatility and risk.

When discussing paperless trade facilitation measures as a means to achieve the SDGs, it is important to clarify what sustainable development means. This article previously discussed some of the controversy surrounding the term. As the authors of this article have stated previously, “What sustainable development means, and for whom benefit, is at the center of the debate between the Global South and the Global North on industrialization, economic development and colonial exploitation. Humanly, this means reducing the industrial footprint, but for the global South, there must be opportunities for industrial development, especially in colonial-era countries that continue to be producers and exporters of raw materials, deprived of economic diversification. Chance.

Nor should blockchain be seen solely as a tool to ensure that raw materials are properly traced from producers in the Global South to consumers in the Global North. As discussed earlier, Global North companies are involved in corruption in the form of trade misinvoicing and transfer mispricing, both of which have led to massive illicit outflows. Blockchain offers a more effective means of combating these types of capital outflows than any existing technology, although it is not foolproof. Incorrect information can be uploaded, which requires a separate information verification step, without which there is a risk of corruption. This risk exists wherever data has to be entered – whether it’s about raw material quantities or about invoice pricing, the information is only as good as the original input.

The neocolonialism of using blockchain to trace raw materials from production in the global south to consumption in the global north can be partially mitigated by participating in projects aimed at ensuring a living wage for raw material producers. From the perspective of the Global South, setting minimum prices for raw materials that are not subject to speculation in commodity markets is a way of protecting the livelihoods of producers and signaling to the Global North that the era of exploitation is over. Côte d’Ivoire and Ghana, the two largest cocoa producers in the world, have implemented price floors and living income differentials (“LIDs”) per ton of cocoa in order to address producer poverty. At the end of 2020, both countries increased the fixed price paid to cocoa growers, with Ghana increasing by 28% and Côte d’Ivoire by 21%. A recent study shows that LIDs are most beneficial to the incomes of already wealthier producers because they already produce larger volumes, meaning that higher prices have a greater impact on their incomes than small producers. obvious. Despite such concerns, LID does provide a better standard of living for all families involved in cocoa production.

Measures like those implemented in Côte d’Ivoire and Ghana work best where there are many producers, rather than production controlled by a few large corporations and/or governments. While setting price floors and securing a living wage, blockchain can play an active role in ensuring that these measures are actually enforced. For more extractive industries, government efforts to reduce poverty more broadly may have a positive impact, but its effectiveness will depend on the level of corruption within government and in the companies exporting and processing these resources. Ultimately, consumers in the global north are more interested in the provenance of their chocolate than the provenance of the oil, gold or rare earth minerals used to make the electronic devices they use every day, limiting blockchain as a monitoring mineral The effectiveness of means of resource supply chains. And ultimately, the simplest and fairest solution – allowing raw material producers to set their own prices, rather than having small cartels of foreign companies controlling them externally – is currently politically and economically unviable.

in conclusion

In November 2020, Côte d’Ivoire and Ghana cancelled all cocoa sustainability programs that Hershey, a US-based chocolate company, had implemented in those two countries. Hershey has joined a program to certify cocoa as a sustainable source, free of environmental and human rights violations, as part of efforts by Côte d’Ivoire and Ghana to improve the living conditions of cocoa producers in their countries. The two countries accused Hershey of using the ICE futures exchange to procure large quantities of cocoa to avoid the LID premium. This shows that large manufacturers and exporters are maximizing their profits at the expense of the decent livelihoods of the people in the countries where the raw materials are produced. Just a few weeks later, Côte d’Ivoire lifted its moratorium on sustainability plans and bowed to the pressure. In February 2021, human rights group International Rights Advocates filed a federal class-action lawsuit on behalf of eight Malian men against seven major cocoa companies claiming they were trafficked as children and forced to harvest cocoa in Côte d’Ivoire . The outcome of the case remains to be seen, but it is clear that Western Cocoa has been and will continue to be complicit in reinforcing the cycle of poverty and exploitation in West Africa.

It is not enough to implement blockchain technology to provide detailed tracking of products from raw materials to final finished products. As long as some countries produce raw materials and others make final products, thereby benefiting from added value, there will be an incentive to maintain the status quo, allowing raw material producing countries to become agricultural economies, even against their own interests and aspirations. Blockchain undoubtedly offers a lot of positive potential, and being able to track a product from start to finish is desirable. But we have to ask ourselves who will ultimately benefit from this tracking and who will be excluded. As long as raw material producers cannot afford the final product made from their inputs, like chocolate in Côte d’Ivoire, we should be as concerned about sustainability and improving the quality of life for producers as we are about reducing international shipping costs. As long as the technologies that create new channels of profit for foreign companies are unavailable to those commoditized under those technologies, the colonialist system will continue to be replicated, this time digitally.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/professor-university-of-mississippi-school-of-law-how-does-blockchain-solve-digital-colonialism/
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