The sensitivity about protection of data is clearly not the main reason behind some developing countries staying away from global digital trade work programmes
India abstained from signing the Osaka Declaration on Digital Economy at the G20 Summit last week. South Africa and Indonesia were the two other G20 members rallying with India. Some analysts might feel that the abstaining reflected a broader developing country reservation on participating in efforts to shape global digital trade rules. It is certainly not so.
One of the most profound truths to emerge over the last couple of decades is the sharp heterogeneity amongst the developing world. The latter can no longer be visualised as homogeneous. Multiple developing countries now have interests in global trade that are similar to those of their developed counterparts. Nowhere is this more visible than in regulations on e-commerce and cross-border data flows. Positions taken at Osaka are testimony to the aligning of interests between the developed and developing, as well as differences among developing countries.
Large developing countries and emerging markets—Argentina, China, Brazil, India, South Africa, Indonesia—are walking on different paths on digital trade. The first three have joined the Osaka Track, while the other three have not. The former, along with Russia, are also participating in the informal talks on global e-commerce rules that were launched by almost 80 World Trade Organisation (WTO) members earlier this year on the sidelines of the World Economic Forum meeting at Davos in Switzerland. The difference among these large developing countries, some of which are among the world’s top-10 economies (i.e. China, India, Brazil, followed closely by Indonesia), on digital trade governance is striking.
Both China and Brazil endorsed the Osaka Declaration for working with other G20 members to achieve a high-standard global agreement on digital trade and e-commerce. This might convey the impression that they have identical domestic data governance policies reflecting a tendency towards liberal cross-border data flows. China’s data policies are primarily restrictive, certainly when compared with Brazil. China, much like Russia, is a unique example of large economies displaying a tendency to ‘accommodate’ their commitment to working on global rules for e-commerce with a pronounced hesitation to agree on free flow of cross-border data. In spite of aiming to work with other WTO members on developing rules on trade-related aspects of e-commerce, in its latest submission to the WTO on the subject, China insists on more discussions before including data flows, storage and management as part of e-commerce talks. This is in line with China’s cybersecurity regulations that insist on a large amount of personal data to be stored within China with very restricted scope of cross-border flow. Russia’s data localisation laws, which have come into force a few years ago, impose strict conditions on agencies to store personal data within Russia.
India’s Personal Data Protection Bill, once introduced in the upcoming session of Parliament, would reflect the degree by which Indian authorities insist on localisation. The scope of the latter is primarily defined by what national agencies construe as personal data. Whether the Indian localisation rules would be comparable to those in Russia or in some other emerging markets like Indonesia is a different discussion.
The bigger point, though, is the dichotomy between developing countries in their willingness to engage in global digital trade rule talks. India and Indonesia are unwilling to do so. China, Russia, and even Nigeria, which has fairly strict data laws and mandates all government data to be located within the country, are participating in talks and are committed to the Osaka Track. Vietnam is another example of a developing country participant in both global e-commerce talks and a signatory to the Osaka Track despite bringing in hard data rules.
The sensitivity about protection of data, therefore, is clearly not the main reason behind some developing countries staying away from global digital trade work programmes. Many developing countries are committing to such initiatives notwithstanding tough domestic data protection laws.
India is a notable exception. While it is yet to introduce a domestic data protection framework, it is conspicuously disengaging itself from all ongoing digital trade rule-making efforts. There’s clearly more than the urge to protect data that is driving India’s position.
Perhaps the explanation behind India’s posture can be gleaned from its latest submission on June 3, 2019, jointly with South Africa, on the WTO’s ongoing work programme on e-commerce. The submission argues for discontinuation of the moratorium on imposition of customs duties on e-commerce transactions enabling ‘willing’ WTO members to impose customs duties on electronic transmissions, such as software and digital products. India and South Africa alluded to Indonesia’s policies for doing so in support of their argument leaving no surprise behind their common posture at Osaka.
None would mind India, and others, acting in their own national economic interests. The problem would arise if the former would expect others to support major proposals that might serve only interests of a few. Several developing countries are keen on participating in global digital trade and are not interested in discontinuing the moratorium on e-commerce. They would want digital trade to happen seamlessly and without restrictions as far as possible. That’s precisely why engage in global e-commerce talks and support the Osaka Track. By staying away from both, India might convey the signal that its justification for disengaging with global efforts is more for pure self-interests, and not with a greater welfare objective for developing countries.
The author is senior research fellow & research lead (Trade & Economic Policy) at the Institute of South Asian Studies (ISAS), National University of Singapore (NUS). (Views are personal)