The United States Decided To Retract Its Proposal Regarding Digital Trade At The World Trade Organization

Aligning with India's consistent stance against global e-commerce regulations. This move is aimed at preserving the flexibility to regulate major tech corporations.

The US had initially put forth its e-commerce rules proposal during a meeting of the WTO's Joint Statement Initiative (JSI) on e-commerce in 2019 under the Trump administration. The 2019 proposal advocated for unrestricted cross-border data transfers without data localization requirements and limiting the obligatory disclosure of software source codes.

With the United States playing a predominant role in the global digital landscape, this decision to withdraw the digital trade proposal is likely to trigger a worldwide re-evaluation of national policies related with e-commerce, which will somehow reshape the future specifically of agreements related to digital trade. The central concerns will revolve around securing sufficient policy flexibility and revisiting national strategies for digital trade, according to Ajay Srivastava, founder of the Global Trade Research Initiative (GTRI).

This new stance by the US on digital trade aligns with India's approach to the subject. India had refrained from participating in the JSI on e-commerce, a plurilateral coalition of a select group of WTO members. India's reservations stemmed from the belief that such regulations might reinforce the dominance of major e-commerce corporations, potentially disadvantageous to smaller local enterprises.

The change in the US position is expected to be a setback for the ongoing efforts of JSI members, which include several developed nations like the European Union, Switzerland, Australia, New Zealand, Japan, Korea, and Canada.

These members had been advocating for the implementation of global e-commerce regulations at the WTO's 13th Ministerial Conference in February 2024.

According to an analysis by GTRI, given that China and India are significant data generators, and China has already established measures to safeguard its data, India prefers to maintain flexibility in sharing data with some of the domestic companies instead of multinational tech giants.

The US is reportedly reconsidering its approach to trade regulations in sensitive areas such as data and source code, aiming to strike a balance between the right to regulate in the public interest and addressing anti-competitive conduct in the digital economy.

Trade expert Abhijit Das suggests that this presents an opportune moment for India to reevaluate its strategy for negotiating digital trade provisions in its Free Trade Agreements (FTAs). He also emphasizes the need for vigilance, as major tech corporations may seek to influence outcomes.

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