Opting out of e-comm talks, a good idea

The plurilateral negotiations on e-commerce among 76 countries (EU and 43 other countries), which were launched in the beginning of this year, has raised concerns and anxiety amongst industry and policymakers in India. The fear of losing out by not participating in the ongoing negotiations is primarily based on two arguments.

First, India will lose out on the opportunity to shape the on-going negotiations in e-commerce, especially around the rules governing data, and second, if India decides to join later it will have to pay the cost, mainly by accepting the negotiated outcomes.

These arguments have been reinforced by the recent retaliation from the US in terms of removal of India from its GSP beneficiary list as well as threats over H1-B visas and a frontal attack on India’s tariff and subsidies by advanced countries.

Experts and policymakers are jittery and wonder whether India can afford to take the stand of not engaging in the e-commerce negotiations. What is intriguing here is the pressure put on India to join the negotiations by the western powers.

The centrality of data

The reason for this is simple. Data is the heart of the digital revolution, the key resource which can make or break a country in the digital era. All digital technologies like Big data analytics, artificial intelligence, IoT, Robotics, etc need data for them to become more efficient and intelligent.

But who generates data? The larger the population of a country the larger will be the amount of data generated and younger the population the more will be the data generated. India’s 1.3-billion population is bigger than the population of OECD members (36 countries) taken together! Sixty six per cent of its population falls in the age group of 15-64, which is around 18 per cent of the world’s young population.

This amounts to huge data being generated every second in India, which is extremely valuable for the West for making efficient digital products and services in the future. This is the root cause for the pressure being applied on India to join the plurilateral e-commerce negotiations.

Beyond e-comm

Does India really need to fear being left out of the e-commerce negotiations? The term ‘e-commerce rules’ is misleading as the rules that are being negotiated go much beyond e-commerce and encompass all digital rules which are required by the developed world to make sure that they have free access to data of the world in future as well.

The current status in terms of ownership of data is that whoever has the capacity to collect and process data becomes its owner. Therefore, data collected by Google, Amazon, Facebook, Apple, Alibaba, etc are owned by these super platforms, irrespective of where the data is generated. Bulk of these platforms are concentrated in the US.

However, countries are waking up to the importance of data in the digital world, especially countries like China, India and continents like Africa, which are the data mines of the future. There are many emerging initiatives by the developing countries to establish their ownership over their data.

China’s Cyber Security Law is an exemplary law which includes provisions around data not leaving the country, storing data locally, having joint venture partners, and source code sharing provisions.

Many countries in Africa have started ‘owning’ their data. For example, Rwanda’s Data Revolution Policy is based on the principle of national data sovereignty whereby Rwanda retains exclusive sovereign rights and power on its national data. It has decided to be open to host its sovereign data in a cloud or co-located environment in data centres within national premises or outside of Rwanda under agreed terms and governed by Rwandan laws.

It has also decided to put in place adequate legal, policy, infrastructure and privacy environment conducive for offering data hosting services to other external governments or private data owners. South Africa is also working on its Digital Industrial Policy.

India has come out with its Draft National E-Commerce Policy which will allow it to own its data and steer the country into processing its own data and develop the much-needed digital capacities.

However, if countries like China and India and continents like Africa decide to own their data and locally process it, the advanced countries will lose out on the bulk of data generated in the world and consequently on its competitive advantage of processing data and building digital software and technologies.

This is why the developed world is under tremendous pressure to move quickly and bind the hands of the developing world in agreements which will never allow them to own and process their own data. The chapters negotiated in some of the trade agreements like The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) provide enough insights to what these plurilateral e-commerce negotiations are aiming at.

It is often said that ‘data is the new oil’ but never really been understood.

What this really means is that as during the first industrial revolution, countries which produced oil were not the ones that developed; countries which processed oil and used it in their factories were the ones to develop. Similarly countries which generate huge data are not the ones which will digitally develop in the digital revolution but the countries which process data in their data centres and use data to develop software for digital technologies will be the ones to digitally develop.

Fears overblown

Are India’s fears of losing out on binding its hands in terms of never owning and processing its own data justified? The answer is clearly ‘no’. India has nothing to fear and lose by remaining out of these e-commerce negotiations. It has a comparative advantage of large population, growing young population and strong IT skills.

India should therefore concentrate on owning its data and developing its own data centres and data processing capabilities, especially in terms of developing high-end software which can help India to build its own digital technologies like artificial intelligence, IoT, etc.

Big Data analytical skills need to be encouraged so that the country’s key policies like industrial and foreign trade policies can be better digitally informed. In future, the country’s national security will also need to rely heavily on the digital technologies and software developed within India using its own data. China has secured the use of its data and so has the EU through its General Data Protection Regulation (GDPR).

India should fear being left behind in the digital race and not fear losing out by remaining out of the negotiating room which intends to bind its hands with agreements forcing free flow of cross-border data and discouraging data localisation, which will disincentivise building of data centres and data processing skills in the country.

The writer is a Senior Economic Affairs Officer, UNCTAD, Geneva. Views expressed are personal.

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