India boycotted the “Osaka Track” on digital economy at the G20 leaders’ summit in Osaka last week, because it reportedly undermines multilateral negotiating processes based on consensus-based decision-making in global trade negotiations, and denies policy space regarding digital economy to developing countries. Along with India, Indonesia and South Africa also boycotted the Osaka Track. Developing countries have consistently demanded that negotiations on digital economy/e-commerce must be carried out on the basis of the 1998 WTO Work programme.

Countries including the EU, France, Germany, Japan, Russia, UK, USA, Singapore, Thailand, and Vietnam signed the “Osaka Track“, a framework for promoting cross-border data flow with enhanced protections for intellectual property, personal information, and cybersecurity. Japan circulated a text on digital trade to all G20 countries on June 26 seeking their approval of the Osaka Track for promoting plurilateral negotiations among 50 countries. The US, EU, Australia, Singapore, and Japan among others reportedly pushed hard for these plurilateral negotiations on digital trade, which is intended to introduce sweeping rules on data flows, removal of prohibitions on data localisation, and cloud computing, among other things.

The 50 signatories of Osaka Track describe it as “our commitment to promote international policy discussions, inter alia, international rule-making on trade-related aspects of electronic commerce at the WTO”. The countries said the agreement was a reiteration of the Joint Statement on E-commerce released at the World Economic Forum at Davos in January 2019. The countries committed to achieving a “high standard agreement” with the participation of “as many WTO members as possible”, and “resolve to make further efforts to achieve substantial progress in the negotiations by the 12th WTO Ministerial Conference in June 2020”.

Japanese President Shinzo Abe underscored the importance of his “Data Free Flow with Trust” concept, a move which calls for formation of international rules enabling free movement of data between countries.

‘Data is a form of trade and talks should remain under the WTO’: India

After a BRICS meeting, India’s Foreign Secretary Vijay Gokhale said that India and other BRICS members believe that the negotiations and discussions on digital economy should be held in the context of the WTO, and not outside it, “since data is one form of trade”. Keeping these negotiations within the WTO is important, he said, because “the flow of data will be critical to trade” as the digital economy grows, and therefore “the rule-making must involve all countries“. Developing countries and LDCs should be given the similar latitude once the rules on data are made, so that we don’t create a digital divide, said Gokhale. “Data is a new form of wealth,” he said.

Free flow of data is also important, data is also in a sense a part of national wealth. On the other hand the flow of data is important in a globalized world. So essentially we will be talking to a number of developed countries including United States and Japan on what they mean by free flow of data. We feel that we need to understand this issue and eventually synergize it with what our domestic requirement are and then come in to the WTO to negotiate on this matter. [emphasis ours]

The message that our Prime Minister is sending and the message that BRICS is sending is that we need to do this collectively in institutions which are sanctioned for that purpose.

DFFT, the basis of Osaka Track

DFFT, proposed by Japanese Prime Minister Shinzo Abe at the World Economic Forum earlier this year, aims to eliminate restrictions on cross-border transfer of information by electronic means, including personal information, and storing data in foreign servers. As a result, DFFT is in direct conflict with India’s Draft E-Commerce Policy and Data Protection Bill which have proposed strict regulation on cross-border data flows, locating computational facilities within India to ensure job creation, and setting up a “data authority” for issues related to sharing of community data. India has already voiced its opposition to Data Free Flow with Trust (DFFT) at the G20 Ministerial Meeting; India is an outlier here, with the Ministerial Statement on Trade and Digital Economy supporting the principle of DFFT while recognising that “the free flow of data raises certain challenges”.

The G20 leaders’ declaration in Osaka dedicated a separate segment to DFFT and innovation; “Cross-border flow of data, information, ideas and knowledge generates higher productivity, greater innovation, and improved sustainable development…” … “By continuing to address these challenges, we can further facilitate data free flow and strengthen consumer and business trust.” … “Such data free flow with trust will harness the opportunities of the digital economy.”