In a leg-up to India’s consistent stand against global rules on e-commerce, the US has decided to withdraw its proposal on digital trade at the WTO to retain the policy space for regulating big-tech firms.

The US proposal on e-commerce rules, withdrawn at the WTO’s Joint Statement Initiative (JSI) on e-commerce meeting on Wednesday, was made in 2019 by the Trump regime. The 2019-proposal called for free cross-border data transfers without data localisation requirements and restricting mandatory software source code disclosure.

“Given the US dominant role in the global digital landscape, this decision (to withdraw the digital trade proposal) is poised to spark a worldwide reassessment of national e-commerce policies, potentially reshaping the future of digital trade agreements. The key issues will be ensuring ample policy space and revisiting national digital trade strategies,” according to Ajay Srivastava, founder of Global Trade Research Initiative (GTRI).

The new US stand on digital trade validates India’s approach on the subject, he added.

India had refused to be part of the JSI on e-commerce, which is a plurilateral grouping of a limited number of WTO members, over concerns that such rules may strengthen the dominance of large e-commerce companies and go against smaller local companies.

The US’ change in position on the matter is likely to be a dampener for on-going efforts of the JSI members that includes many developed nations such as the EU, Switzerland, Australia, New Zealand, Japan, Korea, and Canada, to highlight the need for global rules on e-commerce at the WTO 13th Ministerial Conference (MC13) in February 2024. 

“With China and India being major data generators and China already safeguarding its data, India believes in maintaining flexibility in data-sharing with domestic companies rather than international tech giants,” per a GTRI analysis.

The US is reportedly reviewing its approach to trade rules in sensitive areas such as data and source code to balance the right to regulate in the public interest and the need to address anticompetitive behavior in the digital economy.

“This is an opportune moment for India to rethink its strategy of negotiating provisions on digital trade in its FTAs,” said trade expert Abhijit Das, adding that India needs to be watchful as big tech companies may try to influence outcomes.

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