Prepared by the United States Trade Representative (USTR) and released by Catherine C. Tai on March 31, the 37th in an annual series, the 2022 National Trade Estimates Report on Foreign Trade Barriers (NTE) says that India’s proposed data The localization requirements that require firms to store data within India “will serve as significant barriers to digital trade” between the two countries. The US says the requirements will act as “market access barriers, especially for smaller firms”.
If implemented, the rules would “raise costs for service suppliers storing and processing personal information outside India” forcing them to build redundant and redundant local data centers here. “In the absence of any standalone trade secret legislation, there is little recourse for firms to misuse their sensitive information,” the report says. The US fears this would “reduce the ability of foreign companies to supply multiple services to Indian consumers across the border and not enhance the security of personal information”.
The inconvenience expressed in the report relates to the Personal Data Protection Bill—slated to become law this year, which has already been examined by a joint committee of parliament—and the electronic commerce policy. If the bill is cleared by Parliament, the firms can be expected to store sensitive and important personal information related to Indians on servers located in India. The transfer of important personal information – which will be classified, has not yet been defined – outside India will not be permitted under any circumstances.
India’s position on data localization has been a bottleneck in bilateral trade relations with the US for some time, and is a matter of debate here too, with the Internet and Mobile Association of India not in favor of stringent data localization rules, and hence, the report was expected to highlight concerns, as it, in particular, last year gave written protests to the USTR from US companies complaining about Indian policies discriminatory towards Indian players. and disturbing the playing field. Their disadvantage in the Indian market is “concerned about Visa India’s informal and formal policies, which seem to favor the business of the National Payments Corporation of India, the non-profit that runs RuPay, as compared to other domestic and foreign electronic payment companies.” is,” Reuters was quoted as saying by the prepared USTR memo. for Tai. Visa Inc.’s complaint to Tai was made last summer. Mastercard had raised similar concerns in 2018 over the rise in economic nationalism hurting its business interests in India.
Nevertheless, this year’s report assumes significance given the expectations of Washington from New Delhi on its position and relations with Moscow after Russia’s attacks on Ukraine. US Secretary of State Wendy Sherman said last week that Washington, apparently, would prefer India walk away from its long-standing history of non-aligned partnership with Russia, while answering a question from a congressman during a congressional hearing . Earlier, on a visit here, US Deputy National Security Adviser for International Economics Dalip Singh said that the US does not want to see a “rapid acceleration” in purchases of Russian energy imports by India, or “such a mechanism”. are designed to promote the ruble or undermine the dollar-based financial system or circumvent our financial sanctions”.
And now, the White House has announced that President Joe Biden is set to meet Prime Minister Narendra Modi on “the consequences of Russia’s brutal war against Ukraine and mitigating its destabilizing impact on global food supply and commodity markets”. Huh.
New Delhi should really see the developments as preparing the ground for retaliation against India over a data localization case, this time under section 301 of the US Trade Act 1974, or at least a bid Its credible danger to increase.
Section 301 provides a statutory instrument by which the US imposes trade sanctions on countries. It authorizes the USTR to investigate trade practices viewed as unfair and unfair or unfair and discriminatory against US commerce in goods, services and investments. and then by imposing tariffs, banning imports, withdrawing or suspending trade agreement concessions, or entering into a binding agreement with the foreign government to either terminate the conduct or to compensate the US with satisfactory trade benefits. Solve foreign trade practice. , The USTR can initiate a Section 301 case on its own or act as a result of the petition.
The clause was used widely to put pressure on countries to eliminate trade barriers and open their markets to American exports by 1995. Its use was significantly reduced after the creation of an enforceable dispute settlement mechanism in the WTO. After that, and until recently, the US used this clause to make up cases and settle disputes at the WTO. The Trump administration relied on this approach, noting the weaknesses and gaps in the WTO’s dispute settlement procedures and rules, with US firms being disadvantaged or discriminatory, and in the years of the Trump presidency, therefore, the US sought to promote it. Demanded to take unilateral action under section 301. “Free, fair and reciprocal trade”, is generating much congressional and international debate.
National security is non-negotiable. Given this, New Delhi must still revisit the data localization bill and e-commerce policy to remove discriminatory practices against foreign firms, while striking the right balance on national security, or the risk of retaliation from the US. All bilateral negotiations will be weighed down.
download
The app will get 14 days of unlimited access to Mint Premium absolutely free!