India has rightly decided to stay out of the WTO e-commerce negotiations announced by about 75 members at the World Economic Forum in Davos last week. The Indian delegation has observed that India would not like to be part of any ‘plurilateral talks’ — in simple terms, talks decided by a powerful club of countries — as it believed that such initiatives strike at the very root of multilateralism. The crux of the issue is that India, with its immense reserves of data, is still to come to grips with its impact on the real economy and how it should be managed without privacy and security considerations being compromised. The RBI’s recent policy mandating data localisation, which makes it compulsory for all companies to store data related to Indians in local servers, would also be challenged if India participates in the e-commerce negotiations. India should manage data, a precious resource, on its own terms.

Developed nations pushing for the e-commerce agreement at the WTO including the EU, the US, Canada, Australia and Japan, are quite ambitious in their intent. In fact, Japan wants application of existing WTO agreements to electronic commerce as well. Issues such as the free flow of data located on computer servers without data localisation requirements, permanent moratorium on customs duties, non-disclosure of source code and prohibition of forced technology transfer are all likely to be on the negotiating agenda. E-commerce remains a highly assymetrical space, with a few dominant entries having the potential to distort a level playing field. Even the definition and meaning of e-commerce varies from one country to the other. Meanwhile, India is still unsettled with its e-commerce regulation, especially those related to foreign direct investment. The latest e-commerce rules are a ham-handed exercise in regulatory overreach. They list out arbitrary curbs on exclusive product deals as well as deep discounts. In addition, an entity that is owned in some measure by an e-commerce player cannot place its products on the latter’s platform. India needs to arrive at a sense of balance in its own e-commerce policy, before entering the global arena. Its position of sticking to the traditional framework of WTO talks, without going into new issues beyond ‘trade facilitation’, should continue. E-commerce is not ‘extraneous’ to trade, unlike Singapore Round issues such as TRIMS, but its rules are yet nascent and the space turbulent.

The status-quo on e-commerce should be maintained till there is more clarity amongst developing countries on what is actually at stake in the area of global rule-making. India’s decision to stay away from the e-commerce talks at the WTO will also give its argument of not engaging in negotiations on e-commerce at the on-going RCEP more weight. The fact that China, the home country of e-commerce giant Alibaba, is a proponent of e-commerce negotiations both at the WTO and RCEP is another reason for India to step carefully.

Related Topics