Why is India refusing to join WTO e-commerce talks?

Source: By Amitendu Palit: The Financial Express

More than seventy-five countries agreed to commence informal talks on fixing global e-commerce rules on the sidelines of the World Economic Forum meet at Davos in January 2019. The talks—as reflected in the joint statement issued by the proposing WTO members—would be in conformity with existing WTO rules and would pay special attention to the interests and circumstances of LDCs and SMEs while aiming for high-standard outcomes. The talks would take place outside the WTO with a negotiating agenda likely to take shape during the course of the year. However, with nearly half of WTO members agreeing to join the talks, the negotiations might formally shift to the global trade body in the foreseeable future. At this point in time, however, several WTO members, including India, remain outside the ambit of the talks.

The last WTO Ministerial at Buenos Aires held during December 10-13, 2017, had decided to ‘reinvigorate’ work under the WTO’s e-commerce work programme launched in 1998. Notwithstanding the Ministerial decision, several countries simultaneously agreed to initiate work on identifying the directions of a tentative negotiating framework on e-commerce. It was evident that these WTO members were not willing to wait for the WTO to formally launch e-commerce talks within its fold. The all-too-familiar history of slow progress at WTO on various issues and the difficulties of proceeding on new generation trade subjects would have influenced these members in taking precipitate action. Since the Ministerial, the WTO has received a large number of proposals from various members but has not yet been able to formalise a centralised negotiating agenda. The Davos meeting provided the occasion for members demanding talks to move forward in signalling their intent to begin them soon outside the WTO.

China’s presence in the group of members moving on informal talks significantly enhances the global pressure in proceeding on them. By joining the US, EU and Japan in the chorus for global e-commerce rules, China signals its intent of ‘playing’ by the rules of global digital trade. This could be a game-changer for digital trade talks. It is also important to note that Russia is a party to the demand, as much as Brazil. The presence of these three countries, which have, on various global trade issues in the past, either jointly or individually, been opposed to the traditional ‘north’, makes the credibility and global reach of the group of countries looking to launch the talks sufficiently high.

Many countries are still unwilling to endorse global e-commerce talks. Foremost amongst these is India. India remains opposed to the opening of e-commerce talks at WTO on the larger ground that such talks can obliterate progress on many pending issues on the Doha Development Agenda (DDA) and on the more specific ground of e-commerce talks, if taking place, to be embedded in the WTO’s original digital trade agenda of 1998. It is not known whether similar views are shared by other countries from South Asia. But, along with India, the rest of the South Asian countries—Afghanistan, Bangladesh, Bhutan, Maldives, Nepal, Pakistan and Sri Lanka—have also stayed away from demands for informal talks, displaying rare solidarity in a region fraught with differences. Amongst other large Asian economies, Indonesia, Philippines and Vietnam are also absent, as are most countries from Africa, with the exception of Nigeria.

The division amongst WTO members over their willingness to join talks on global digital trade rules reflects the hesitations prominent amongst many till now. As the world rapidly transitions to embrace digital trade and commerce, many countries are suffering from a lack of preparedness in accepting the change. A country like India, in addition, is grappling with the intimidating prospect of letting its enormous domestic market be dominated by foreign e-commerce and digital service providers. India’s new e-commerce investment rules, as well as its emphasis on data localisation, underscore this fear. While the fears might be justified, India and those other large economies those are yet to support global e-commerce talks face two major problems that might complicate their future prospects in global trade.

There is little doubt that more and more countries will join the demand for global e-commerce talks. As major world powers and large economies push for these talks, the scope for alternative, politically non-aligned views is likely to shrink fast in a world where digitalisation of cross-border transactions are no longer an option, but rather the fait accompli. Views like those of India’s, therefore, would find it increasingly hard to gather support. The other major problem for countries like India is the fact that several influential stakeholders at the WTO, including the EU and China, find global e-commerce talks a precious lifeline for revitalisation of the WTO in a world where the global trade body’s relevance is being increasingly threatened by unilateral trade actions. There is no denying that the push for talks is coming largely from countries that have global comparative advantages in providing e-commerce services. But this is unavoidable and inevitable. Waiting for a level-playing field to emerge in e-commerce capacities across the world, and then commencing talks on global rules, is an irrational expectation.

The WTO is desperately seeking a new lease of life and the e-commerce talks might just be what it is looking for. For that it might well be willing to work with most, if not all—a point to be noted by India and the unwilling others.