Explained: Why India is opposing EU’s proposal on e-commerce rules at WTO

On Friday, May 3, India rejected the European Union’s (EU) proposal on international e-commerce regulations at the World Trade Organisation (WTO). India believes that EU’s proposal disproportionately disadvantages developing nations like itself, particularly in the context of import duties on transmissions and data localisation.

“The EU is fully committed to ongoing WTO negotiations on e-commerce. In this context, it will seek to negotiate a comprehensive and ambitious set of WTO disciplines and commitments, to be endorsed by as many WTO Members as possible. The EU supports the open, transparent, and inclusive character of these negotiations,” said the EU.

What is EU’s e-commerce proposal in the WTO?

On April 29, the EU introduced a proposal regulating e-commerce in the WTO.

EU’s e-commerce proposal details a list of security measures on platforms and online transactions, such as allowing internet access and data and source code sharing.

On electronic contracts, the EU says countries’ legal systems should ensure that electronic contracts related to e-commerce are recognised and processed legally.

To protect consumers, the EU suggests that countries should provide accurate information on goods and services, provide legal redressal for complaints, and cooperate with consumer protection bodies.

An important aspect of the proposal is the sharing of consumer data and source code. EU’s e-commerce proposal says no country should acquire the source code of software owned by other countries, except in the interest of their national security. It also asks countries not to impose customs duties on electronic transmissions.

Countries should allow open internet access and protect consumers’ right to privacy.

The proposal also says countries must commit to “cross-border data flows to facilitate trade in the digital economy”. Moreover, international data sharing cannot be restricted on the basis of computing facilities or localisation regulations.

Why India disagrees with EU’s proposal

India’s representative at the WTO J S Deepak said that like other developing countries, India is not ready to adopt EU’s e-commerce proposal.

“We fear the impact of some of the e-commerce rules being proposed under the Joint Initiative on e-commerce, on existing trade rules, particularly the General Agreement on Trade in Services (GATS) schedules that provide us useful flexibility. Both the GATT and GATS could wither away due to onslaught of the so-called ‘high standard’ e-commerce elements,” he said.

Essentially, India is insisting that these e-commerce rules not be obligations of WTO members and be agreed to outside the forum. The country also takes issue with two points in EU’s e-commerce proposal: no customs duties on electronic transmissions or data localisation.

Deepak said the EU “proposes to preserve out flexibility of imposing customs duty on electronic transmissions to protect the domestic industry and leverage technology for creating jobs and wealth, by ensuring competitions and a level playing field,” he added.

He also said that India will lose out on vital revenue if it is unable to tax any goods produced by digital printing and additive manufacturing.

And the alternative it is working on

Earlier this year, India drafted its national e-commerce policy that made major changes to online marketplaces like Amazon and Flipkart.

In 2018, although experts argued that data localisation might harm India in the future, particularly by slowing the economy, the RBI moved to institute national data localisation, meaning that all consumer data will be stored and processed in India only.

In contrast, other regions like the EU are getting rid of data localisation entirely by 2019, a policy that is also reflected in its proposal to the WTO.

Next week, the WTO will be meeting in Geneva to discuss proposals regulating international e-commerce, of which the EU submitted one.

India will be holding a “ministerial meeting of select developing countries” ahead of the larger meeting to discuss reforms to the WTO keeping in mind the needs of countries with low GDPs, reports Mint.

Rhea Arora is a Staff Writer at Qrius

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