India, South Africa, and Indonesia have boycotted the “Osaka Track" on the “digital economy" at the G20 leaders’ summit in Osaka on Saturday, as it overtly undermined “multilateral" principles of consensus-based decisions in global trade negotiations, and denied "policy space" for digital-industrialisation in developing countries, say analysts.
Japan, which hosted the G20 leaders’ summit in Osaka on 29 June, attempted behind the scenes to legitimize the informal plurilateral (two or more countries) negotiations on digital trade that were never approved at the World Trade Organization. Tokyo circulated a “take-it-or-leave it" text on digital trade to all the G20 countries on 26 June seeking approval of the “Osaka Track" for promoting purlilateral negotiations among 50 countries (the EU which represents 28 countries is taken as one), say analysts familiar with the development.
Along with the United States, the European Union (which represents 28 countries at the WTO), Australia, and Singapore among others, Japan pushed hard for the plurilateral negotiations on digital trade with the avowed intention of crafting sweeping rules on data flows, removal of prohibitions on data localization, and cloud computing among others. Much of the proposed plurilateral rules on digital trade are based on the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPATPP), say analysts.
India, South Africa, Indonesia, and a large majority of developing countries consistently demanded that negotiations on e-commerce/digital trade must be conducted on the basis of the 1998 work programme. India, South Africa, Indonesia opposed the plurilateral negotiations on digital trade saying they strike at the very roots of multilateral negotiating process based on arriving at decisions by consensus. The large majority of developing countries also repeatedly expressed their fears that they will be denied “policy space" for their digital-industrialization through the proposed plurilateral agreement on digital trade.
Against this backdrop, India, South Africa, and Indonesia among others chose not to sign the declaration on Osaka Track because it would fundamentally undermine the core WTO principles for arriving at consensus-based decisions. The Osaka Track, according to the 50 signatories, is a process for promoting “international policy discussions, inter alia, international rule-making on trade-related aspects of electronic commerce at the WTO."
Significantly, WTO director General Roberto Azevedo, who is the custodian of the multilateral trade body established under the Marrakesh Agreement of 1994, chose to support the Osaka Track at the launch ceremony, despite its overt anti-multilateral approach, said a trade envoy from a South American country, who asked not to be quoted.
However, in contrast to the Osaka Track, the G20 leaders declaration on “Innovation: Digitization, Data Free Flow with Trust" is a compromise text in which India and South Africa had managed to put their demands for “achieving an inclusive, sustainable, safe, trustworthy and innovative society through digitalization and promoting the application of emerging technologies."
India and South Africa also insisted on putting their language on the “critical role played by effective use of data, as an enabler of economic growth, development and social well-being." The G20 leaders also “reaffirmed the importance of the (1998) Work Program on electronic commerce at the WTO," as insisted by India, South Africa, and China among others.
On WTO reforms, India and South Africa demanded that “reforms" must be in accordance with the core WTO principles of consensus-based decision-making, multilateral agreed rules, and an impartial and independent functioning of the dispute settlement body. “We affirm our support for the necessary reform of the World Trade Organization (WTO) to improve its functions," the G20 leaders declared.