By-TS Vishwanath
Member countries of the World Trade Organisation (WTO) will be debating the possibility of commencing negotiations for a binding agreement on e-commerce at the ongoing Ministerial meeting in Buenos Aires in Argentina, from December 10-13, 2017. The main proposal on the table is from the “Friends of E-commerce for Development” that includes Argentina, Chile, Colombia, Costa Rica, Kenya, Mexico, Nigeria, Pakistan, Sri Lanka and Uruguay. Interestingly, none of the countries where large e-commerce companies are based are part of the Group, though they support this initiative. Broadly, the issues on the table from the Friends Group includes proposals related to infrastructure and services for information and communications technology (ICT), trade logistics and payment solutions. However, India and some of the African countries—which are opposed to this work programme at the WTO—are of the view that the impact of any negotiations for binding rules on e-commerce at the multilateral level would take away the ability of developing countries to regulate and create a sustainable e-commerce model in their respective countries.
The Friends of E-commerce Group is looking to change policies adopted by governments to ease the flow of goods integral to bridging the digital divide, inter alia, ICT hardware and software. They also want to look at regulating telecommunications, computer and related services, and relevant distribution services. India and other countries state that this issue would interfere in the sovereign rights of the country. For example, India’s National Cyber Security Policy (2013) encourages use of open standards to facilitate interoperability and data exchange among different products and services. Further, according to the National Policy on Electronic Accessibility, open source usage has been promoted. This certainly would not benefit some of the large companies that tacitly support this initiative at the WTO.
The Friends of E-commerce Group also hope to have a framework of trade rules and commitments to promote effective transportation and logistics and cross-border trade facilitation measures to advance goods-related e-commerce for development. Such proposals would look for non-discrimination between domestic and foreign players. However, several policies of the Indian government mention giving preferential treatment and incentives to domestic players. Therefore, binding commitments here could hit the government’s current disposition to help Indian industry build a robust domestic sector, say officials who deal with this issue.
Additionally, the proponents of an e-commerce work programme at the WTO want e-commerce users in developing and least developed countries to benefit by making payments safely, easily and affordably using effective solutions involving banking and non-banking operators, with greater interoperability and universal connectivity. This would certainly need a lot more discussion and the full impact of such developments will require far greater understanding.
The other areas of concern for India include the issue of localisation of servers. Over the years, the proponents of rules on e-commerce have been of the view that the servers that help e-commerce transactions should be located in a country of choice. India and other countries have opposed this as they feel that the servers servicing customers, say, in India should be physically located in India. This is for greater control over the data generated within the country and to stop any disruptions in services, according to officials.
Another area of concern for India would be cross-border data flows. The Telecom Regulatory Authority of India (TRAI) in a consultation paper on “Privacy, Security and Ownership of the Data in the Telecom Sector” is of the view that cross-border transfer of data and exercise of jurisdiction over service providers that do not have a direct presence in the country are becoming increasingly relevant in the context of digital trade.
The Friends Group that support rules on e-commerce at the WTO are of the view that there is a need to help identify key legal and regulatory steps to promote an underlying environment for consumer protection, data protection, secure cross-border data transfers, open platforms to facilitate trade, prevention of cyber crime, and other relevant issues.
The Friends Group also hopes to promote efforts to expand capacities and technical skills of enterprises, individuals and policy-makers to harness e-commerce, with a particular focus on removing barriers that inhibit SMEs from engaging in and benefiting from e-commerce. This is an area of concern for countries like India, as the whole move is being seen as one to bring market-driven standards in e-commerce that may hurt new e-commerce players in the country.
Further, the idea of the proposers of these negotiations is to bring about advanced industry standards for e-commerce. This, India feels, will take away any advantage that developing countries may have in the area of e-commerce, as they would always be trying to catch up to the higher standards imposed by large e-commerce companies, thereby always remaining at the lower end of the value chain of this sector.
Overall, the discussion in the e-commerce space at the WTO is about bringing discipline in a sector that developing countries like India are looking to build by evolving a conducive domestic policy environment.
There is a fear that accepting norms at the WTO would put developing countries back by many years in this emerging area of business. So, the way forward in this space may be to find a middle path that takes into account the needs of developing countries like India, while at the same time addresses the needs of some of the other developing countries that are being approached by large companies that have a dominant position in the global e-commerce trade.
Countries at the WTO need to analyse whether harmonisation of rules and regulations will help developing countries that are at the fringes as far as benefits emerging from e-commerce trade are concerned.
However, whatever be the outcome at Buenos Aires, the e-commerce space is an area where countries will target to bring about harmonisation of rules at the multilateral level. Studies suggest that global e-commerce trade by 2021 may cross $4 trillion, and given this huge potential, there will be a push to control markets by harmonising regulations across countries to bring about greater predictability. The question is, what can work better for countries keen on getting a good slice of the emerging market, pushing back proposals or taking charge of the negotiations?
The author is, Principal Adviser, APJ-SLG Law Offices (ASL)
