Geneva: China has come somewhat closer to India’s stance on developing global trade rules for electronic commerce by opposing binding provisions for cross-border data flow, preventing data localization, and protection of source code, among others, said people familiar with the development.

The US, Japan, Australia and Singapore, the proponents of ambitious rules for global e-commerce, have suffered a setback at the World Trade Organization (WTO) after China issued a strong statement, opposing attempts to develop rules on sensitive issues of e-commerce, said a trade envoy, who asked not to be named.

India has all along maintained that rules for e-commerce must be negotiated as per the 1998 work programme. But the US, the European Union (EU), Japan and Australia, among others, seem determined to spike the multilateral work programme for developing ambitious rules for e-commerce and denying policy space for countries such as India.

During a meeting of the plurilateral joint statement on electronic commerce initiative members on 31 October, China delivered the strongest statement yet for an “open, transparent, inclusive and pro-development" outcomes, “without imposing any preconditions on the participation of any member and without prejudice to members’ positions in future discussion".

China told the big boys “to address the concerns and needs of developing members, including those who have not joined the discussion, particularly the least developed countries (LDCs)."

More importantly, China said that “discussions shall focus on ‘trade-related aspects’ of e-commerce as the 1998 work programme so mandated." “Let’s stick to e-commerce without substituting its concept or generalizing its expanded scope," China said, in opposition to the ongoing attempts by the US, Japan, Australia, Singapore and Canada, to incorporate rules from the failed Trans-Pacific Partnership (TPP) agreement.

Many developing countries, led by India and South Africa, have repeatedly said that the sanctity and integrity of any outcome on e-commerce will hinge on how members proceed according to the 1998 work programme on e-commerce.

Clearly, China’s latest position comes somewhat close to what a large number of developing countries, especially India, demanded as per the 1998 work programme, said a trade envoy, requesting anonymity.

Further, China said “members’ right to regulate shall be fully respected and members’ sensitivities be accommodated in scoping the discussion" at the trade body.

Without naming the US, Japan, Australia and Canada, which want to discuss all regulatory issues, China said “any future disciplines that might be foreshadowed in the exploration, shall in no way prevent the WTO members from exercising their right to regulate and fulfilling legitimate public policy objectives".

Clearly, China is calling for a policy space as “most developing countries are still at the lower end of the learning curve or just starting to formulate domestic regulatory frameworks on e-commerce".

“Therefore, their [developing countries] policy space, the right to regulate and the right to develop need to be duly preserved," China added.

All countries, according to China, “are entitled to implementing reasonable regulation in this regard, including allowing lawful and orderly free flow of information on the precondition of protecting privacy and public interests, as well as safeguarding national security and network security".

Against this backdrop, “any multilateral coordination of possible rules cannot neglect members’ legal and institutional arrangements as such," China cautioned the proponents seeking ambitious rules.

Without naming the US, which is calling for complete free data flows and prohibitions against localization of servers, China has expressed serious doubts whether the WTO must develop rules on sensitive issues “for many members, developing or even developed".

China mocked the US and other developed countries calling for free cross-border data/information flows saying “there is no member that permits completely free flow, nor any member that absolutely prohibits such flow". Hence, members may apply different regulatory systems due to various concerns and priorities, said China.

Significantly, China remained silent on a permanent moratorium against imposing customs duties on electronic transmissions. It remains to be seen what it will say during the general council meeting next week to discuss a proposal from India and South Africa, which has called for re-examining the moratorium because of the fiscal burden it would impose on developing and poorest countries

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