{"id":153,"date":"2022-08-02T13:20:24","date_gmt":"2022-08-02T13:20:24","guid":{"rendered":"https:\/\/publications.clpr.org.in\/the-philosophy-and-law-of-information-regulation-in-india\/?post_type=chapter&p=153"},"modified":"2022-09-22T09:13:43","modified_gmt":"2022-09-22T09:13:43","slug":"indias-engagement-with-global-trade-regimes-on-cross-border-data-flows","status":"publish","type":"chapter","link":"https:\/\/publications.clpr.org.in\/the-philosophy-and-law-of-information-regulation-in-india\/chapter\/indias-engagement-with-global-trade-regimes-on-cross-border-data-flows\/","title":{"rendered":"India\u2019s engagement with global trade regimes on cross-border data flows"},"content":{"raw":"I. Introduction<\/strong>[footnote]I am grateful to Prof. Sudhir Krishnaswamy, Divij Joshi, and everyone involved with editing and reviewing this document. This paper has drawn on previous research I have authored or co-authored in the Economic and Political Weekly, Observer Research Foundation, Diplomat and Seminar. I would further like to thank Amb. Latha Reddy for responding to this paper at the workshop, and providing important insights. All errors remain my own.[\/footnote]\r\n\r\nWith nations and multi-national corporations increasingly treating data as a resource to be curated and monetised, cross-border data flows have become a key opportunity for states and a critical question for data governance both domestically and at global trade forums. Several states, including India have treated both domestic policy-making and global negotiations on cross border flows as a strategic priority.\r\n\r\nThe debate on cross border flows hinges on three ideological nodes between the United States, the European Union, and China.[footnote]Kieron O\u2019Hara and Wendy Hall, Four internets: Data, geopolitics and the governance of cyberspace (New York, Oxford University Press,2021).[\/footnote] The United States, drawing largely from the ideal of the open internet, stresses that data should flow where it can be processed most efficiently and create the most economic value. The European Union is opposed to restrictions on the free flow of data by territorial states. However, in line with its commitment to human rights, through regulations like the General Data Protection Regulation (GDPR), it seeks to prevent personal data about EU citizens leaving the EU or the European Economic Area (EEA) unless the other jurisdiction can prove that they provide privacy protections equivalent to that of the EU. Finally, the Chinese vision is dependent on storing data within territorial borders (known as \u2018data localisation\u2019) coupled with unfettered state access to this data. These three ideological nodes have been reflected in the split at global trade negotiations on cross-border data flows with the EU and the US joining developed nations such as Australia, Japan, and Singapore to push for agreements that limit regulatory restrictions on cross border flows, and emerging economies like India and South Africa pushing for their \u2018sovereign\u2019 right to impose these restrictions.\r\n\r\nThrough domestic regulatory efforts, public statements, and behavior at trade forums, India has driven the agenda of the camp for sovereign restrictions. However, while this position has seen significant media coverage and been bolstered by political rhetoric, it is far from set in stone, and continues to evolve \u00a0based on a variety of factors.\r\n\r\nWhile existing literature has dissected the substantive contents of India\u2019s stances on cross-border data flows and data localisation[footnote]Neha Mishra, India: leading or thwarting data governance and digital trade (Hinrich Foundation, 10 October 2021), <https:\/\/www.hinrichfoundation.com\/research\/article\/digital\/india-leading-or-thwarting-data-governance-and-digital-trade\/<\/a>> accessed 10 January 2022.[\/footnote], there is little reasoning on the factors shaping India\u2019s negotiating stances. Recent research by Nachiappan[footnote]Karthik Nachiappan, Does India Negotiate? (Oxford University Press, 2019).[\/footnote] on India\u2019s multilateral posturing has demonstrated that the nature and extent of India\u2019s participation in multilateral negotiations is a function of three factors: economic or security strategic interests in the issue; institutional capacity and views within government; and the views and influence of domestic stakeholders including both civil society and business actors. When it comes to engagement with global forums on technology, there is no apparent \u2018technology doctrine\u2019 driving the various components of India\u2019s strategy. Therefore, rather than searching for convenient and overarching models or labels that explain India\u2019s behaviour in terms of their counterparts, I adopt Nachiappan\u2019s framework and scrutinize the empirical factors driving India\u2019s engagement, and the strategic interests that underpin this.\r\n\r\nIn this paper, I do not aim to evaluate the merits of the substantive contributions made by India. Further, I limit the scope to India\u2019s engagement on cross border data flows at trade regimes because trade regimes have served as the forums for negotiation on this question. My analysis does not extend to data governance writ large. Consequently, I eschew analysis of other regimes on data governance like competition, taxation and the governance of Artificial Intelligence (AI) (unless it is relevant for the analysis of cross border data flows).\r\n\r\nI divide this paper into four sections. First, I summarise the global debates and regulatory approaches to cross border data flows. Then I summarize India's approach to cross-border data flows-including engagement at global trade forums and the domestic regulation that underpins it. Finally, I assess the empirical factors driving this engagement and conclude with some observations on how these factors will shape India\u2019s behavior on cross border data flows going forward.\r\n\r\n \r\n
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\r\n\r\nII. Global developments on cross border-data flows<\/strong>\r\n\r\nCross border data flows have been touted as the \"hallmarks of 21st century globalization<\/em>\"[footnote]McKinsey Global Institute (March 2016), Digital Globalization: The new era of global data flows <https:\/\/www.mckinsey.com\/~\/media\/McKinsey\/Business%20Functions\/McKinsey%20Digital\/Our%20Insights\/Digital%20globalization%20The%20new%20era%20of%20global%20flows\/MGI-Digital-globalization-Full-report.ashx<\/a>> accessed 5 February 2020.[\/footnote] and the \"lifeblood of the modern economy<\/em>.\"[footnote]World Economic Forum, Exploring international data flow governance (White Paper, December 2019) <http:\/\/www3.weforum.org\/docs\/WEF_Trade_Policy_Data_Flows_Report.pdf<\/a>> accessed 5 February 2020.[\/footnote] McKinsey Global Institute estimated that international data flows added USD 2.8 trillion to the world economy, and estimated this figure to grow to USD 11 trillion by 2025[footnote]McKinsey Global Institute (January 2019), \u201cGlobalization in Transition: The Future of Trade and Value Chains\u201d.[\/footnote]. Big tech corporations undoubtedly benefit from the free flow of data as they are able to economically exploit and derive value from individual data generated all over the world, while still storing data in selected jurisdictions such as the United States. This has been used to evade multi-jurisdictional accountability. Given this reality, regulation of data flow has been a significant point of divergence at multilateral forums and trade negotiations.\r\n\r\n \r\n\r\nA. Multilateral Framework\r\n\r\nThe present legal framework governing the World Trade Organization (WTO) was created well before the advent of the internet and was not geared towards regulating cyberspace as it exists today.[footnote]For a detailed history of WTO\u2019s engagement with e-commerce and digital trade see Nehaa Chaudhari, \"India: E-commerce related discourse at the WTO: A brief history,\" (Mondaq, 29 June 2020) <https:\/\/www.mondaq.com\/india\/international-trade-investment\/958702\/e-commerce-related-discourse-at-the-wto-brief-history-and-subsequent-developments-<\/a>> accessed 5 February 2020.[\/footnote] Discussion on e-commerce at the WTO kicked off with the first Ministerial Conference in Singapore where members made principled commitments to increase digital trade under the aegis of the WTO. Subsequently, at the Geneva Ministerial in 1998, a comprehensive work programme (\u2018Work Programme\u2019) on e-commerce was set up and a moratorium on customs duties on e-commerce was also duly agreed upon[footnote]WTO, 20 May 1998 \u201cThe Geneva Ministerial Declaration on Global Electronic Commerce,\u201d <https:\/\/www.wto.org\/english\/tratop_e\/ecom_e\/mindec1_e.htm<\/a>>.[\/footnote]. Since 1998 several developed countries have expressed concern regarding the slow pace of progress of this Work Programme[footnote]Susan Ariel Aaronson and Thomas Struett, \u201cData Is Divisive: A History of Public Communications on e-Commerce, 1998\u20132020,\u201d Centre for International Governance Innovation Paper No. 247, 14 December 2020. <https:\/\/apo.org.au\/<\/a>> accessed January 10 2022.[\/footnote]. Therefore, member states put forth proposals seeking to alter the existing Work Programme before the eleventh WTO Ministerial Conference (MC11) in Buenos Aires.[footnote]Nehaa Chaudhari (29 June 2020), \"India: E-commerce related discourse at the WTO: A brief history,\" Mondaq. <https:\/\/www.mondaq.com\/india\/international-trade-investment\/958702\/e-commerce-related-discourse-at-the-wto-brief-history-and-subsequent-developments-<\/a>>accessed 5 February 2020.[\/footnote]\r\n\r\nAfter MC11, over 70 member states agreed to \"initiate exploratory work together toward future WTO negotiations on trade-related aspects of electronic commerce<\/em>.\u201d[footnote]WTO (December 13, 2017), \"Joint Statement on Electronic Commerce\". <https:\/\/ustr.gov\/sites\/default\/files\/files\/Press\/Releases\/Joint%20Statement%20on%20Electronic%20Commerce.pdf<\/a>> accessed 5 February 2020.[\/footnote] This initiative, known as the Joint Statement Initiative (JSI), was formally launched in January 2019.[footnote]WTO Joint Statement on Electronic Commerce, WT\/L\/1056, January 25, 2019.[\/footnote] China, along with other emerging economies such as Indonesia who disagreed with most other members of the JSI joined the initiative in 2019 to play an active role in the negotiations, although they had initially chosen to sit out.[footnote]Henry Gao, \"Across the Great Wall: E-commerce Joint Statement Initiative Negotiation and China,\"in Shin-yi peng, Ching Fu-Lin, and Thomas Streinz, Artificial Intelligence and International Economic Law (Cambridge University Press, 2021) 303. WTO Joint Statement on Electronic Commerce: Communication from Indonesia (INF\/ECOM\/47, 22 November, 2019). Yulya Aryani, Wina Andari and Suhindarto, Impact of Information Technology and E-Commerce on Indonesia's trade to ASEAN countries (ADBI Institute Working Paper Series No. 1254, April 2021), 13, <https:\/\/www.adb.org\/sites\/default\/files\/publication\/697176\/adbi-wp1254.pdf<\/a>> accessed 10 January 2022.[\/footnote] Meanwhile, India and South Africa have opted out of the JSI and contested its legal validity.[footnote]Asit Ranjan Mishra (22 October 2021), \"India and South Africa question status of ongoing plurilateral initiatives at WTO,\" Livemint <https:\/\/www.livemint.com\/news\/india\/india-questions-legal-status-of-ongoing-plurilateral-negotiations-at-wto-11634845206547.html<\/a>> accessed 10 January 2022.[\/footnote] They\u00a0 remain committed to reinvigorating the 1998 Work Programme as the appropriate negotiating platform.[footnote]Kirtika Suneja, (10 December 2020) \"India and South Africa revive multilateral talks on ecommerce\", The Economic Times. <https:\/\/economictimes.indiatimes.com\/news\/economy\/policy\/india-and-south-africa-revive-multilateral-talks-on-ecomm\/articleshow\/79650347.cms?from=mdr<\/a>> accessed 10 January 2022.[\/footnote] However, JSI members remain keen to drive negotiations forward, noting in 2021 that \u201cseveral legally viable pathways exist<\/em>.\u201d[footnote]WTO (21 June, 2021), \"E-commerce negotiations: Members share updates, discuss legal architecture of future outcome,\" Press release, <https:\/\/www.wto.org\/english\/news_e\/news21_e\/ecom_21jun21_e.htm<\/a>>[\/footnote]\r\n\r\nThis debate received further traction at the G20 Osaka Summit in June 2019 with the launching of the Osaka Declaration on Digital Economy. The \u2018Osaka Track\u2019 aims to catalyze international rule-making on global cross-border data flows and trade in e-commerce along with intellectual property protections.[footnote]Geneva Internet Platform (1 July 2019), \"The G20 Osaka Track raises controversy\u201d <https:\/\/dig.watch\/updates\/g20-osaka-track-raises-controversy<\/a>> accessed 5 February 2020.[\/footnote] Spear-headed by Shinzo Abe, who was then Japan\u2019s Prime Minister, it is based on the notion of 'data free flow with trust,' and endorses the January 2019 WTO Declaration on E-commerce.[footnote]G20 Osaka summit Declaration (28 June 2019), \u201cOsaka Declaration on Digital Economy\u201d <http:\/\/www.g20.utoronto.ca\/2019\/osaka_declaration_on_digital_economy_e.pdf<\/a>>.[\/footnote] Notably, China, the European Union and the United States signed onto the Osaka Track while India, Indonesia and South Africa did not.[footnote]Geneva Internet Platform (1 July 2019), \"The G20 Osaka Track raises controversy\", <https:\/\/dig.watch\/updates\/g20-osaka-track-raises-controversy<\/a>> accessed 5 February 2020.[\/footnote]\r\n\r\n2021 was a key year for realizing the priorities of JSI members at the WTO. At the time of writing, the parallel tracks at the WTO have started to clash. On 14th December 2020, the 86 members of the JSI published and circulated a Consolidated Negotiating Text titled \u2018WTO Electronic Commerce Negotiations\u2019 that have preventive obligations on the location of computing facilities and the local storage and processing of data.[footnote]WTO Electronic Commerce Negotiations (December 2020), Consolidated Negotiating Text <https:\/\/www.bilaterals.org\/IMG\/pdf\/wto_plurilateral_ecommerce_draft_consolidated_text.pdf<\/a>> accessed 10 January 2022.[\/footnote] Exceptions, including those of 'legitimate public policy' objectives and 'essential security interests' are still being debated by JSI members with four alternative texts being proposed.[footnote]Simon Lester (16 Feb, 2021), \"Exception proposals in the WTO E-Commerce Negotiating Text: Part 2,\" International Economic Law and Policy Blog <https:\/\/ielp.worldtradelaw.net\/2021\/02\/exceptions-proposal-in-wto-e-commerce-negotiating-text-part-2.html,accessed<\/a>> 10 January 2022.[\/footnote]\r\n\r\n \r\n
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\r\n\r\nB. Free Trade Agreements\r\n