Digital trade issue continues to be a major cause for concern for India

Govt seeks clarity before joining trade pillar under IPEF

The government is divided over its final decision to join the trade pillar under the Indo-Pacific Economic Framework (IPEF), even as member-nations are inching towards finalising agreements on all the four pillars by November.

This is because apart from other sensitive areas such as labour and environment, digital trade continues to remain a major cause for concern and is a ‘red flag’ for India, people aware of the matter said.

“India has also sought some clarity regarding the direction of the negotiations on digital trade from the United States, (since it is a sensitive issue) before firming up a decision on joining the trade pillar negotiations,” the person cited above said.

“Even though the first version of the text has been seemingly watered down during negotiations, the digital trade area (in trade pillar) continues to be a red flag for India,” the person said.

Under IPEF, India, for the time being, has opted out of the trade pillar, and has an ‘observer’ status at the moment. While this means that India will have the flexibility of joining the pillar after seeing the final text once the negotiations are over, it also means that it may be losing out on shaping the negotiations with its ‘observer’ status.

“Since India had last year taken a decision to not join the trade pillar and wanted to wait for the final contours, it is not easy to convince all stakeholders and make them understand why it is also important to be a part of the negotiations,” the person said.

Among the 14 countries under IPEF, India is the only nation to have the observer status under the trade pillar. Apart from the US, 13 other members of the IPEF include Australia, Brunei, Fiji, Indonesia, India, Japan, Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand, and Vietnam.

India has been treading cautiously while dealing with sensitive issues such as digital trade. One of the reasons being that India has not been very comfortable giving consent to free flow of data across borders, which has been the top demand for countries such as the US.

In fact, when the commerce and industry minister announced its decision to not join the trade pillar in September last year, India did not have a legislation of digital personal data protection in place. Besides, it wants to tread cautiously before making any commitments in a plurilateral economic cooperation arrangement.

The digital personal data protection Bill, which was passed earlier this week, has a provision for cross-border transfer of data by all countries, excluding those blacklisted by the government.

“We will work to promote and support, inter alia: (1) trusted and secure cross-border data flows; (2) inclusive, sustainable growth of the digital economy; and (3) the responsible development and use of emerging technologies,” according to the zero text of the trade pillar released by the US last year.

The commerce department will once again begin inter-ministerial consultations, before firming up the final view before the end of this month.

There are four pillars–trade, supply chain resilience, clean economy, and fair economy (tax and anti-corruption) under the economic initiative. An agreement on the supply chain pillar has been finalised.

CAUSE FOR CONCERN

 

IPEF member-nations close to agreements on all four pillars by November

 

India not comfortable giving consent to free flow of data for all countries

 

Govt has opted out of the trade pillar, and has an ‘observer’ status at the moment

 

The commerce department will resume inter-ministerial consultations before taking the final decision