Editorials/Opinions Analysis For UPSC 08 February 2022

Editorials/Opinions Analysis For UPSC 08 February 2022

Contents:

1. Notes for India as the digital trade juggernaut rolls on

Notes for India as the digital trade juggernaut rolls on

Context:

The co-convenors of the plurilateral Joint Statement Initiative (JSI) on e-commerce namely Australia, Japan, and Singapore welcomed the ‘substantial progress’ made at the WTO talks over the past three years and stated that they expected a convergence on more issues by the end of 2022.

Relevance:

GS II: Bilateral Groupings & Agreements, Important International Institutions, International Treaties & Agreements

Dimensions of the Article:

1. E-commerce Rules
2. Joint Statement Initiative (JSI)
3. Why the Countries are Holding out of JSI?
4. Free flow of data across borders
5. Choices before India
6. Way Forward

E-commerce Rules:

• The Twelfth Ministerial Conference (MC12) of the World Trade Organization (WTO) was cancelled last year due to the pandemic. However, the digital trade negotiations continued to make the progress.
• Thought the WTO was formed in 1994, the core rules for e-commerce regulation was agreed by members only at the Second Ministerial Conference (1998)
• A temporary moratorium was imposed on customs duties relating to the electronic transmission of goods and services. It was renewed continiously following the opposition from India and South Africa.
• The argument that led to the opposition is that moratorium imposes significant costs on developing countries as they are unable to benefit from the revenue customs duties would bring.

Joint Statement Initiative (JSI):

• JSI was initiated by WTO members in 2017 to initiate exploratory work on the trade-related aspects of e-commerce.
• It was formed by those members who were frustrated by a lack of progress on four e-commerce issues namely goods, services, intellectual property, and development.
• Several countries, developing countries signed up for it in 2019.
• The Joint Statement Initiative (JSI) members account for over 90% of global trade.
• China and Indonesia are also part of the initiative and argued that they sought to shape the rules from within the initiative rather than sitting on the sidelines.
• The initiative also welcomes newer entrants.

Why the Countries are Holding out of JSI?

• The JSI does not include all WTO members.
  • Over half of WTO members mostly from the developing world continue to opt out of these negotiations. 
  • These countries fear of that they would be pressurised into accepting global rules that could be detrimental for domestic policymaking and economic growth.
  • India and South Africa has always been at the forefront by leading the resistance.
  • India has resisted the pressure largely through coherent legal argumentation against the JSI and a long-term developmental vision.
  • India and South Africa have rightly pointed out that the JSI contravenes the WTO’s consensus-based framework, where every member has a voice and vote regardless of economic standing.
  • To ensure its legality, the initiative must either build consensus or negotiate a plurilateral agreement outside the aegis of the WTO.
  • India and South Africa are trying to balance the sovereign right of states to shape domestic policy with international obligations that would enable them to reap the benefits of a global trading system.

Free flow of data across borders:

• The developed and developing countries disagree on several issues that mainly include flow of data across borders.
• Several countries, both within and outside the JSI, have imposed data localisation mandates that compel corporations to store and process data within territorial borders
• Data Localization in India: Data Localization is one of the key policy priority for India.
  • Reserve Bank of India: The RBI gave out its data localisation directive in 2018.
    • Several payment card companies, including Mastercard and American Express, were prohibited from issuing new cards for failure to comply with it.
  • The Joint Parliamentary Committee (JPC) on data protection: It has recommended stringent localisation measures for sensitive personal data and critical personal data in India’s data protection legislation.
• Arguments in favour of free flow of data across borders:
  • Several nations and industries in the developed world are keen to access new digital markets.
  • They argue that these restrictions  impose unnecessary compliance costs, thus arguably hampering innovation and supposedly amounting to unfair protectionism. They are keen to access new digital markets.
  • They also disagree to domestic laws that mandate the disclosure of source codes.
    • Developed countries believe that this hampers innovation, whereas developing countries believe it is essential for algorithmic transparency and fairness

Choices before India:

• Data sovereignty is championed as a means of resisting ‘data colonialism’, the exploitative economic practices and intensive lobbying of Silicon Valley companies.
• Policy making on India’s digital economy should focus on:
  • Surveillance reform,
  • personal data protection,
  • algorithmic governance
  • non-personal data regulation must be galvanised through evidenced insights, and work for individuals, communities, and aspiring local businesses.
• Signing a Trade agreement quickly could reduce the space available to frame appropriate policy.
• However, not signing such agreement would mean that the digital trade will continue unchecked, through mega-regional trading agreements such as the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
• India, by not signing it, could lose out an opportunity to shape these rules instead

Way Forward:

• India can negotiate on exceptions  to digital trade rules, such as ‘legitimate public policy objective’ or ‘essential security interests’ to preserve policymaking where needed while still acquiescing to the larger agreement.
• Further, India can push for a framework where countries can pick and choose modules with which they wish to comply.
• The WTO, being an important global organization that plays a significant role in global governance and is vital to India’s strategic interests.
• Considering the rising importance of the global digital economy, India should consider its  engagement with the WTO to better accommodate its economic and geopolitical interests
• India can negotiate with the WTO without surrendering its hold on domestic policymaking to ensure its digital future.

-Source: The Hindu