Explained: the new G7 digital trade deal and why India is wary of it

India takes root in data localization, curbing internal data flow to overseas destinations; the new G7 proposal is in direct contradiction to this

The new G7 standards are supposed to ensure a free and reliable flow of data, provide guarantees for workers, consumers and businesses, improve digital commerce systems and establish fair and inclusive global governance.

A Group of Seven (G7) meeting held last week reached consensus on a common set of principles governing cross-border data use and digital commerce. The deal, it was claimed, would end protectionism and liberalize billions of dollars in world trade. The principles of G7 digital trade, however, are not immediately acceptable to many countries, especially emerging economies such as India.

The G7 is an amalgamation of some of the world’s most advanced economies: Canada, France, Germany, Italy, Japan, United Kingdom, and United States. A closer look at what their new trade deal offers sheds light on what non-rich economies find objectionable and under what circumstances it might be best accepted.

Barriers to cross-border data

“We oppose digital protectionism and authoritarianism and today we adopted the G7 digital trade principles that will guide the G7’s approach to digital trade,” said a statement released by Britain. October 22. Anne-Marie Trevelyan, UK Secretary of State for International Trade, hosted the G7 trade ministers meeting in London last week.


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A Reuters report said the deal seeks to establish “common ground between the highly regulated data protection regimes of European countries and the more open approach of the United States.” “Electronic transmissions, including transmitted content, should be duty free, in accordance with the WTO Moratorium on Tariffs on Electronic Transmissions. We support a permanent ban on these rights, ”said a joint statement from the G7 trade ministers.

It is expected that the moratorium will ensure a free and reliable flow of data, provide safeguards for workers, consumers and businesses, improve digital commerce systems and establish fair and inclusive global governance.

The G7 claim is that different rules on the use of customer data currently create significant trade barriers, especially for SMEs (small and medium enterprises). The new uniform global rules will break down barriers, it is claimed.

Call for more clarity

India, for some time now, has taken root in data localization – limiting the flow of data related to Indian users to foreign destinations, storing and processing data on its coasts. The new G7 proposal is in direct contradiction to India’s current position.

India, South Africa and other developing countries oppose the proposal to permanently ban tariffs on electronic transmissions. The subject is expected to emerge at the World Trade Organization (WTO) ministerial meeting next month.

For now, New Delhi wants more clarity on the scope of the proposed moratorium. “We have sought to clarify the scope of the moratorium without which it is difficult for us to advise our political leaders on the issue,” the government said earlier this month.

India’s argument is that the moratorium could have a substantial impact on incomes, politics and industrialization. While developing economies would bear the brunt of the impact, the benefits would flow mainly to rich countries, he said.

In addition, according to India, a moratorium on tariffs on electronic transmissions as proposed by the G7 should help develop electronic commerce around the world. The G7 should be able to display direct links between the moratorium and the development of e-commerce, he adds.

“We advocate a decision based on evidence and data on this matter. It will also help us understand how the growth of this sector depends on the extension of the moratorium and how will it be affected if the moratorium is not renewed, ”he said.

Data encryption standards

On data encryption again, India’s position does not match that of the G7. The rich nations bloc has said companies should not be forced to provide encryption keys. It should be recalled that earlier this year India engaged in a legal battle with WhatsApp, Facebook’s instant messaging platform, over government access to encryption keys.

“Businesses should not be forced or constrained to transfer technology or provide access to source code or encryption keys as a condition of market access. At the same time, governments must retain sufficient flexibility to pursue legitimate regulatory objectives, including health and safety, ”the G7 statement said.

The extent to which India is able to challenge the clauses of the principles of digital trade, and to what extent it is able to lead other emerging countries, will be the key to the success of the new G7 initiative.

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