[Answered] “India must not trade away its national data rights at the Regional Comprehensive Economic Partnership negotiations.” Comment

Demand of the question
Introduction. Contextual Introduction.
Body. Issue of data localisation. Other issues related to joining RCEP.
Conclusion. Way forward.

The proposed Regional Comprehensive Economic Partnership (RCEP) is gigantic in size and scope. It aims to create a free trade zone of 10 ASEAN nations and Australia, China, India, Japan, South Korea and New Zealand. The region is home to almost half of the world’s population and hold a great potential for India’s exports. But there are some issues and concerns that goes against Indian interests and stop it from joining RCEP.

Issue of right for Data regulation in RCEP:

  1. The e-commerce chapter contains clauses that, if India had agreed to them, would have prevented it from implementing data localisation rules on companies doing business in India.
  2. The section on transfers of information and processing of information says that “a party shall not take measures that prevent transfers of information, including transfers of data by electronic or other means.”
  3. Basically India cannot be prevented from asking financial companies to maintain a copy of their data within India, but it is unclear still whether India can mandate that such data must only reside within the country.

Why data control is necessary for India?

  1. Data localisation is necessary to secure citizen’s data and their privacy. It will not only enhance the nation’s security but would also lead to economic and technological advancement of the country.
  2. Indian users’ data is stored outside the country. This could lead to a situation of conflict of jurisdiction in case of any dispute. Thus Data localisation would help Indian judiciary to deal with situations of conflict according to Data norms.
  3. Digital technologies like machine learning (ML), artificial intelligence (AI) and Internet of Things (IoT) can generate tremendous value out of various data. Data localisation would enable India to en-cash upon the data generated through these technologies.
  4. This will benefit India by creating a local ecosystem of data and data centres. It will provide jobs and livelihood to many.
  5. International companies by entering Indian market will carry technology and experience with it. Data localisation is an opportunity for Indian technology companies to grow.
  6. It will enhance cyber security framework of India by providing valuable inputs and experience.

Other issues related to India joining RCEP:

  1. RCEP will, remove customs duty on about 80-85% of items. The result will be that Chinese goods will flood the Indian market even more. Once the pact is enforced, India will give more market access to China and our trade deficit will increase further.
  2. Assuming that India and China agree to eliminate customs duties on 85% of bilateral trade, Chinese goods imports worth $62.3 billion (85% of $73.3 billion) will become duty free. This will lead to an estimated loss of $6.2 billion to the exchequer, going by the fact that India’s average customs duty is 10%, assuming that the concessions are given at one go.
  3. RCEP would favour ASEAN and Chinese interests more than Indian interest as these countries are already taking over as major exports centre in the new global order.
  4. While trade deficit with ASEAN has grown four-fold during the implementation of ASEAN-India FTA, deficits with Japan and Korea have roughly doubled after the two CEPAs were implemented. Thus RCEP would further increase this deficit.

India should make multi-sectoral reforms in order to make its exports more competitive than other countries especially China. It should not jeopardise it’s interests and try to negotiate with RCEP countries to work for rules that are fair and in India’s interests. Instead of RCEP Indian may go for bilateral trade agreements with ASEAN countries in favour of India. RCEP although is an ambitious trade project Amy jeopardise India’s interests and freedom in formulating trade policies on its favour. Overall impact of RCEP can be negative and may not be favourable for India.

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