WTO negotiations on electronic commerce

What is the issue?

Many countries have expressed their intention to commence WTO negotiations on trade-related aspects of electronic commerce.

Why are the developed countries seeking e-commerce negotiations?

• They want to have access to free and unrestricted flow of data, which is the raw material that fuels their business.
• Their principal targets are large developing countries, such as China, India, Indonesia, Nigeria and South Africa, which generate large volumes of digital data.
• They also seek to curtail the role of governments in regulating almost all key aspects of the digital economy.
• Through this, they want to leverage the negotiation to reduce their cost of doing business and enhance their incomes.
• This includes prohibiting the data generating countries from imposing taxes on them and on their products.

What exactly is happening at the WTO in this regard?

• Over the past three years, there has been an aggressive push by the developed countries to initiate negotiations aimed at finalising binding rules on different dimensions of the digital economy.
• The digital giants of developed countries have succeeded in projecting these negotiations as being beneficial for developing countries.
• Consequently, many developing countries have joined the chorus for seeking negotiations on this issue.
• However, prominent countries including India, Indonesia and most of the countries in Africa are firmly opposed to these negotiations, especially on the issue of cross-border data flows.
• On account of the stiff opposition from some developing countries, the proponents have failed to secure a mandate to negotiate multilateral rules on e-commerce at the WTO.

• Consequently, they are now actively seeking to initiate negotiations among a group of willing countries — commonly referred to as plurilateral negotiations.
• However, even for a plurilateral agreement on e-commerce to become a part of the WTO, it would require consensus of the entire membership, including countries not part of the plurilateral group.

Why has India chosen not to align itself with the proponents of e-commerce?

• India would be one of the largest creators of data in the world in the future.
• Thus, it could acquire a share in the digital economy in the future commensurate with its status as a significant global source of data.
• On the other hand, if India is compelled by any future agreement at the WTO to allow unrestricted free flow of data across borders, then its ambition in the high-value digital segment would take a hit.
• In such a scenario, the country would be unable to monetise the raw material of the digital economy and would be reduced to becoming merely a consumer of digital products.
• Thus, India chose to stay away from the joint statement on electronic commerce.
• The Indian delegation to the WTO had also reportedly stated its intention regarding this last year.
• It stated that developing countries needed policy space in areas such as ownership and use and flow of data in sunrise sectors like cloud computing and data storage.

What challenges would India face in respect of e-commerce negotiations at the WTO?

• More than 70 countries that include EU members, the US, China, Japan, Australia, Russia and Brazil were already supporting the plurilateral initiative in this regard.
• Thus, India is likely to come under intense pressure from different directions to join the e-commerce negotiations.
• Japan also recently announced that the country would frame new measures on data governance, in the name of the Osaka Track, under WTO.

• Thus, negotiations on e-commerce at the WTO is likely to be the foremost item on the agenda of the leaders in Osaka for the G20 Summit later this year.
• India would also be persuaded to join the WTO negotiations and hence various ministries in India need to work in tandem to stay clear in government’s stand.

What do the past experiences reveal?

• Many experts in India view that, by staying out of the negotiations on e-commerce, India is missing out an opportunity to influence the rules that may get finalised.
• But this view totally ignores the reality and past experience, at the negotiating table.
• This is because the developed countries inevitably write the core rules and the influence of developing countries has been limited to fighting for some exceptions.
• Further, there is hardly any issue in e-commerce negotiations, on which India may stand to gain.
• Instead, its participation would be more about limiting the damage that might arise from binding rules in this area.
• Thus, India is unlikely to wield any meaningful influence on the final rules.
• There is also a view that prospects of exports of IT and IT-enabled services would improve on account of e-commerce negotiation at the WTO.
• However, considering the experience of e-commerce provisions in some of the existing FTAs, India is unlikely to be any gain for India’s IT and ITES exports from e-commerce rules at the WTO.
• Thus, no nation can prosper if it hands over its raw material to other countries for free.
• This is precisely what would be required of India if it becomes a party to an agreement on e-commerce at the WTO.

Source: Business Line