US withdraws proposal on digital trade at the WTO Joint Statement Initiative (JSI) on e-commerce

Subject: Economy

Section: External Sector

In News: US withdraws its proposal on digital trade at the WTO giving boost to India’s position on regulating Big Tech.

Key Points:

The US has decided to withdraw its proposal on digital trade at the WTO to retain the policy space for regulating big-tech firms.
The US proposal on e-commerce rules, has been withdrawn at the WTO’s Joint Statement Initiative (JSI) on e-commerce meeting.
The US is reportedly reviewing its approach to trade rules in sensitive areas such as data and source code to balance the right to regulate in the public interest and the need to address anticompetitive behavior in the digital economy.
The US’ change in position on the matter is likely to be a dampener for on-going efforts of the JSI to highlight the need for global rules on e-commerce at the WTO 13th Ministerial Conference (MC13) in February 2024.

What was the US e-commerce rule proposal?

The proposal was made in 2019 by the Trump regime.
The proposal called for free cross-border data transfers without data localisation requirements and restricting mandatory software source code disclosure.

What will be the impact of the change?

As the US holds a dominant digital position through its MNCs, the decision to withdraw the digital trade proposal will lead to a worldwide reassessment of national e-commerce policies.
This will potentially reshape the future of digital trade agreements.

Indian position:

The new US stand on digital trade syncs with India’s approach on the subject.
India had refused to be part of the JSI on e-commerce over concerns that such rules may strengthen the dominance of large e-commerce companies and go against smaller local companies.
With China and India being major data generators and China already safeguarding its data, India believes in maintaining flexibility in data-sharing with domestic companies rather than international tech giants
This is an opportunity for India to rethink its strategy of negotiating provisions on digital trade in its FTAs.

Joint Statement Initiative (JSI) on e-commerce

The Joint Statement Initiative (JSI) on Electronic Commerce, launched at the World Trade Organization’s (WTO) 11th Ministerial Conference in December 2017 by a group of 71 WTO members.
It aims to achieve e- commerce outcomes that build on existing WTO agreements and frameworks with the participation of as many WTO Members as possible.
The major members of the plurilateral grouping of a include many developed nations such as the EU, Switzerland, Australia, New Zealand, Japan, Korea, and Canada.