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RCEP consultations to conclude; India seems to have relented on e-commerce rules

Joe C Mathew     October 21, 2019

India seems to have dropped its staunch opposition to some of key clauses in the e-commerce chapter of the proposed Regional Comprehensive Economic Partnership (RCEP) agreement in the ongoing meeting that will conclude tomorrow. The negotiating text, which has been agreed upon by participating countries, will now take away member nations' right to demand establishment of local computing facilities as a pre-requisite for granting permission to conduct business in their territories.

While the agreement will allow member countries to pursue measures regarding the use or location of computing facilities (including requirements that seek to ensure the security and confidentiality of communications), it will not be blanket permission. Essential security interest and legitimate public policy objectives could be the only plank left for restricting cross-country flow of electronic data, though defining these objectives may prove to be tricky.

E-commerce is one area where India has been hesitant about signing multilateral agreements, as it has stated that the country with its huge unorganised small and micro manufacturing and trading sector cannot be ready for binding international regulations. Agreeing to RCEP's e-commerce rules means India will no longer have the flexibility to fine-tune its policy space as the development of a legal framework for the protection of personal information will now have to take into account international standards, principles, guidelines and criteria of relevant international organisations or bodies. The regulations announced should also clarify the scope of such measures to ensure personal information protection of the users of e-commerce.

Trade experts who closely track RCEP negotiations fear that once RCEP's e-commerce rules come into force, member nations may have less flexibility to regulate the service delivery channels. For instance, if a technology like drone is used for delivery of e-commerce products in one of the RCEP member countries, another country may not have the freedom for a unilateral ban on the drone delivery. They say that the e-commerce text that has been finalised now states that measures affecting the supply of a service delivered electronically are subject to the obligations contained in other chapters on investment and trade in services etc.

The chapter, however, excludes government procurement.

India already has free trade deals with most negotiating partners of RCEP. It has an FTA with Association of South East Nations (ASEAN) - a group of ten companies - Japan and South Korea. The country's major worry is in joining hands with others, mainly China.

E-commerce was one among the last few chapters where negotiators had failed to reach consensus during the last ministerial meeting in Bangkok. The ongoing meeting of the negotiators is an attempt to resolve all pending issues by October 22. If negotiating countries fail to strike an agreement by then, RCEP's fate will be decided by the leaders of the 16 negotiating countries when they meet next in Bangkok on November 4.

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