‘India should reject e-comm rules at RCEP, WTO to protect growth, policy space’

India needs to reject attempts by some developed nations at the on-going negotiations of the Regional Comprehensive Economic Partnership (RCEP) and the World Trade Organisation to frame binding rules on e-commerce as it would harm development by diminishing policy space, some economists have warned.

“Just like with industrialisation, where developed countries first industrialised without any rules and then put in various restrictions for developing countries when they tried to catch up, in e-commerce too, they are trying to come up with rules to protect the level of development their companies have reached and stop others from developing,” said Jane Kelsey, Professor, Faculty of Law, The University of Auckland, New Zealand, in an interaction with some journalists on Tuesday.

Kelsey is in India to participate in seminars and events organised by the civil society on the sidelines of the 19th round of RCEP trade negotiations, which will begin in Hyderabad next week (July 24-28). Meetings of working groups and sub-working groups in different areas have already begun.

RCEP members, which include 10-member ASEAN and its six free trade partners — including India, China, Japan, South Korea, Australia and New Zealand — are expected to have detailed discussions where some members might push for strong commitments.

Australia and Japan have already proposed at the RCEP that, apart from making a permanent commitment on zero duties on digital transmissions (which could also include 3D printing), there should be no compulsory disclosure of source codes, no restriction on transfer and processing of data outside the country, prohibition on requirements concerning the location of computing facilities and allowing cross-border transfer of information by electronic means.

All these commitments will have serious ramifications on the development prospects and sovereignty of countries such as India, Kelsey said. “Prohibition on compulsory disclosure of source code (codes behind a software) would be a hindrance to technology transfer and also make it difficult to check anti-competitive practices by companies,” she said.

Similarly, no restrictions on transfer and processing of data outside the country would mean the country’s laws will have no control over it and in case of a crisis (like the collapse of Lehman Brothers), it will be that much difficult and time consuming to get crucial information.

Kelsey said that in the WTO, too, developed members such as the EU, the US, Japan, Australia and also some others such as China and Brazil were trying to push similar rules on e-commerce and put in place a negotiating mandate at the Buenos Aires Ministerial Conference in December 2017.

In a recent paper, Deborah James from the Centre for Economic and Policy Research points out that e-commerce proposals will harm development by diminishing policy space and constraining developing countries’ ability to engage in digital industrialisation by limiting commonly used strategies to boost growth and jobs.

“Corporate lobbies have been clear that they want localisation requirements banned, such as those requiring a local presence in the country in order to conduct business transactions, the hiring of local workers, the use of local servers and computing facilities in which they have invested,” the paper stated.

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