The global system of trade has its rules for nation States but what happens now that the internet is part of that trade?
There has been a lot written about India’s recent decision to ban a host of Chinese-made smartphone applications in the aftermath of a military confrontation in Ladakh. The legalities of the ban might eventually wind up in Indian courts but this is not an isolated incident. India has barred applications before and not just Chinese ones. Plus, it has the world’s highest rate of internet shutdowns. However, this column is not looking at the rights and wrongs of the current ban. Given the geopolitical situation, one could find merit in the restriction but going forward, India must look at establishing a proper regulatory environment based on legislation for the internet and associated applications and content.
This is because trade as we know it has fundamentally changed. It is not just commerce in physical commodities but on the digital plane. To use that horrible portmanteau, trade, like so many other things in the world today, is “phygital.” As a result, India, like every other nation, will have to realise that legislation around digital access and assets will be crucial going forward. The need to create a cadre of negotiators, regulators and judicial officers to deal with this digital reality will be essential.
Most importantly, the Government as well as institutions will have to brainstorm and lay down a formal digital policy. The current ad-hoc nature of bans, internet shutdowns as well as random prosecution for ill-advised posts on social media and low-level police and judicial requests for content takedowns cannot be allowed to continue. If we define data as the new oil as The Economist described it, we also have to understand that the global petroleum industry has a clearly established set of rules. And those who break the rules can and are punished with punitive sanctions. The last two decades have seen a free-for-all, a landgrab of sorts never seen before in humankind.
At the same time, as Samir Saran of the Observer Research Foundation recently argued, social media sites cannot be allowed to become arbiters of speech and acceptable political content. What is kosher in the US under their sweeping First Amendment rights can often break laws in other countries. Also, the pervasive “cancel culture” that is emerging across the globe cannot and should not be allowed to stifle voices of dissent just like governments should not be permitted to do so.
One principle of business is reciprocity, that is in exchange of access to my market you give me admittance to yours. Of course as we all know, life isn’t that simple and not every country has the same access to natural and human resources. Some nations can produce products far cheaper than others and can swamp out local manufacturers. Thus countries use tariffs to try and level the playing field. That is why imported automobiles cost double in India. But tariffs also have a “best-by” date, like those on imported cars. India has created a vibrant local industry now, and that tariff structure on cars does nothing but hurt demand. But that is another story. However, it is impossible to create tariff barriers on digital commerce and infrastructure. You can’t just say that all data coming from the US should pay an “x” amount for access to India.
But you can create non-tariff barriers. There is, of course, the ban on applications but there are also aspects like local sourcing for e-commerce and content-streaming firms. And as we are seeing, demands from the Indian Government asking service providers to host their data in the country pose another such barrier. We can go into the rights and wrongs of this later, but we should also look at this from a business point of view.
For better or for worse, events in Ladakh have pushed India into the arms of the US, and even if the US Administration changes next January, trade between the two nations will be a major discussion point and a hurdle. And the obstacle will not be around the high import duties that Harley-Davidson is being made to pay but around access for the likes of Facebook and Twitter as well as the digital data generated by US firms. It might be difficult for some to wrap their heads around the concept that digital access and non-tariff barriers could create issues in physical trade or even the issuance of the coveted H1-B visa, but that is the way it is going to be. Similarly internet shutdowns and application bans may not create an international issue today and the fact is that China does not give India (or any other country) reciprocal access to its internet market. But if the likes of Ola, Oyo and Zomato want to go global tomorrow, they will need the Indian Government to understand that trade rules are fundamentally changing. If we want to create a “Digital India,” we have to be open for business for everyone. The time to create a closed internet market like China did has come and gone and digital access and regulations will be the future of trade talks and global geopolitics.
(The writer is Managing Editor, The Pioneer)
