Digitrade Digest #68
US taking steps to counter China, more on why India’s scrapped data protection bill, Indonesia on data flow
India
Experts divided over Govt decision to withdraw Personal Data Protection Bill
TheIndianExpress: Industry experts are divided over the government’s decision to withdraw the Personal Data Protection (PDP) Bill, 2019, and replace it with a new ‘comprehensive legal framework’ and ‘contemporary digital privacy laws’ for regulating online space. The bill was revoked after nearly four years of it being in the works, where it went through multiple changes including a review by a Joint Parliamentary Committee and faced pushback from a range of stakeholders including tech companies and privacy activists.
“The withdrawal of the PDP bill is personally disappointing to me, especially since the industry has already been waiting for four years for this draft to be taken forward,” Dr Rishi Bhatnagar, Chairman, IET Future Tech Panel told indianexpress.com.
According to experts, the proposed Bill stressed on the localisation of data and lacked a bifurcation to accommodate personal and non-personal datasets separately. “There were parts of the proposal that included obtaining of citizen-consent for the usage of personal data and special exemptions to probing agencies from the Act. These aspects of the Bill seem to be collectively responsible for triggering the withdrawal of it,” Bhatnagar said.
However, for Kazim Rizvi, Founding Director, The Dialogue, a New Delhi-based think tank, the withdrawal of the “Data Protection Bill 2021 is the right move as it had various shortcomings and concerns, notably around the lack of independence of the Data Protection Authority (DPA), restrictions on cross-border data flow, the inclusion of non-personal data and broad exemptions to the executive for data processing.”
The Bill had been widely criticised for being biased toward the data collection entity. For instance, if any user wants to withdraw their consent from sharing their data, it is possible but the user will have to give “a valid reason” or bear the legal consequence for such withdrawal. Moreover, what constitutes a “valid reason” is also subjective.
Another major drawback of the Bill was a proposed provision called data localisation, under which it would have been mandatory for companies to store a copy of certain sensitive personal data within India, and the export of undefined “critical” personal data from the country would be prohibited.
Experts hope that a new privacy law will be enacted by next year. “The new bill must balance state interest, business interest, and individuals’ privacy concerns on the same keel,” notes Rizvi.
Bhavya Sharma, Founder, Bhavya Sharma & Associates, a legal firm, believes that the news of withdrawal “will provide relief to giant tech companies who have on several occasions raised concerns against the provision provided in the bill related to the usage, storage and processing of data which contradicts the cyber policies they are following. These restrictions would’ve ultimately increased their compliance burden.”
Meanwhile, Bhatnagar believes that the new Bill can only stand out if the framework contains regulations that are at par with global standards. “The re-framing of the Bill can also be enhanced by the inputs of IT thought leaders and experts, where ground realities and existing problems in the IT ecosystem can be touched upon with clarity,” he adds.
US-China
United States and China vie for influence in Indo-Pacific
EastAsiaForum: In the five years since the United States withdrew from the Trans-Pacific Partnership, US leadership in trade and economic issues has declined and the nature of trade in the region has undergone dramatic changes. Rapid digitalisation throughout the COVID-19 pandemic, new strategic thinking about the role of supply chain resiliency in national security and increased urgency around the need to address environmental challenges have highlighted the need for new rules to govern an evolving trade system.
Meanwhile, America’s retreat from economic leadership in the region has been offset by increased Chinese efforts to establish itself as the dominant power in shaping trade rules and economic engagement. The Belt and Road Initiative, Asian Infrastructure Investment Bank, China’s participation in the Regional Comprehensive Economic Partnership agreement and efforts to expand the BRICS countries — Brazil, Russia, India, China and South Africa — have all worked toward Beijing’s goal of growing its global influence.
But the ASEAN–US Special Summit, IPEF launch and announcement of new US embassies in Kiribati and Tonga have signalled the United States’ intention to reengage with the region.
The 2022 APEC meetings provide a forum for the United States to gain support for its Indo-Pacific trade strategy, as 12 of the 14 founding IPEF members also participate in APEC. Following July’s first full meeting of IPEF members, APEC’s Third Senior Officials’ Meeting in late August 2022 will provide an opportunity for the United States to build further support for its goals.
The Biden administration has also launched several trade-related initiatives with APEC members, which will work to strengthen support for US trade and rule-setting objectives in the region. The Global Cross-Border Privacy Rules Forum, established in April 2022 by six APEC economies, will work toward several of the objectives in the APEC Internet and Digital Economy Roadmap. The new US–Taiwan Initiative on 21st-Century Trade provides an avenue for expanded trade engagement with another APEC economy.
In move to counter China and Russia, US says it has alternative for African nations
SCMP: In a move seen as a counterbalance to Chinese and Russian influence in Africa, Blinken said the US would push for projects focused on health, digital infrastructure, empowering women and girls, energy and climate.
Through the approach, Washington hopes its offerings will be more appealing than what China and Russia provide in Africa.
Blinken said the US Development Finance Corporation was putting US$300 million in financing towards developing, building and operating data centres across Africa. Further, the US has recently awarded a US$600 million contract to build an undersea telecommunications cable that will stretch more than 17,000km (10,500 miles) – from Southeast Asia through the Middle East and the Horn of Africa to Europe – delivering high-speed connections across the continents.
“After all, we’ve seen the consequences when international infrastructure deals are corrupt and coercive, when they’re poorly built or environmentally destructive, when they import or abuse workers or burden countries with crushing debts,” Blinken said in an apparent swipe at Beijing.
US officials use such statements to describe the effects of China’s multibillion-dollar Belt and Road Initiative, which has led to the building of mega infrastructure projects including ports, highways, power dams and railways in Africa.
“That’s why it’s so important for countries to have choices, to be able to weigh them transparently, with the input of local communities without pressure or coercion,” the top US diplomat said.
Chinese officials have variously denied claims that Beijing is burdening or trapping countries with loans they cannot repay.
To counter the belt and road plan, US President Joe Biden led the G7 in launching the Partnership for Global Infrastructure and Investment in June, which aims to mobilise US$600 billion globally towards concrete projects over the next five years.
“The US is committed to raising US$200 billion towards this effort,” Blinken said.
But analysts said Blinken’s trip to South Africa was more about seeking support from Africa to punish Russia over its invasion of Ukraine. South Africa is among dozens of African countries that abstained from voting on the UN resolution condemning the Russian invasion of Ukraine.
IPEF
Australian minister: Upcoming summit to reveal ‘clearer picture’ of IPEF
Insidetrade: A September ministerial meeting to mark the launch of Indo-Pacific Economic Framework for Prosperity negotiations likely will yield details about initial areas of focus and what a final arrangement could look like, according to Australian Trade Minister Don Farrell, who says Australia would like to see an agreement reached “sooner rather than later.”
Farrell was in Washington this week for meetings with U.S. Trade Representative Katherine Tai and Commerce Secretary Gina Raimondo, who are jointly leading the framework. The trip was part of Farrell’s first official visit to the U.S. since stepping into his role as Australia’s minister for trade and tourism following the election of the country’s new prime minister, Anthony Albanese, in May.
During an interview on Wednesday, he told Inside U.S. Trade his key message to U.S. counterparts was to assure them that Australia fully supports the IPEF negotiations and the Biden administration’s efforts to re-engage in the Indo-Pacific after what he described as the prior U.S. administration’s “withdrawal” from the region.
“We are very willing partners in those negotiations,” he said, adding that he wanted to “encourage” the U.S.’ reengagement and help do “anything we can do in the region to get a successful outcome for those negotiations.”
Farrell said ministers planned to meet on Sept. 9 in Los Angeles, confirming a report by Inside U.S. Trade earlier this week. Neither USTR nor the Commerce Department have confirmed the meeting.
According to Farrell, officials from the IPEF countries will meet in the days ahead of the ministerial. Those preparatory meetings likely will “determine what the immediate outcome of that first meeting looks like” and “probably give us a few clues as to the sorts of areas we’ll need to focus on in the initial stages,” he said.
“I think the Americans would like the agreement sooner rather than later,” he said, adding, “we certainly are in that camp.”
Deputy U.S. Trade Representative Sarah Bianchi has said the U.S. would like to see “early harvests” from the agreement.
“In this next month, we'll get, I think, a much clearer picture of what a final agreement will start to look like,” Farrell added.
The U.S., Australia and 12 other countries participating in IPEF have been engaged over the past few months in a scoping exercise to establish the parameters for negotiating the framework’s four pillars, which cover trade, supply chain resiliency, decarbonization and clean infrastructure, and tax and anticorruption. The countries in September will release ministerial statements outlining areas of focus for each of those pillars.
Farrell said the meeting also should provide more clarity on what kinds of incentives developed countries could offer developing countries to encourage their participation in the deal, which lacks a traditional market-access component.
“We're not putting anything on the table or off the table at the moment,” he said. “It’s a case of trying to get a bit of a picture as to what will work and what won’t.”
“Obviously, we're encouraging the United States to be as forward-leaning as they can to re-engage, because that gives us the best chance of a successful outcome,” he added.
Farrell contended the U.S.’ “goodwill” in recommencing its engagement in the region would be “reciprocated,” including by developing countries.
Ahead of the IPEF’s launch this spring, Farrell’s predecessor, Dan Tehan, said elements of the framework -- including digital trade, infrastructure financing and critical minerals cooperation -- could help incentivize countries to join.
Although Farrell said it was still too early to speculate about concrete outcomes that could stem from the arrangement, he offered several “simple things” the countries could do to make real progress, including in areas like digital trade and banking -- for example, creating a mechanism to ensure credit cards can be used easily when traveling between the U.S. and Australia or other countries in the region.
“Getting uniform platforms for all those sorts of things,” he said, could “make business a bit easier between the two countries, and for the region.”
The minister said IPEF also could help guard against supply chain disruptions like those stemming from Russia’s invasion of Ukraine.
“We would hope that out of this IPEF agreement we’d get a smoother operation that makes it easier to get our goods out of Australia and into the United States” and that smooths trade in the opposite direction as well, he said.
In a statement on Tuesday lauding the enactment of the CHIPS and Science Act -- a package of semiconductor manufacturing incentives crafted to bolster U.S. supply chains -- Secretary of State Antony Blinken linked the legislation to what he described as the U.S.’ “regional supply chain diplomacy,” which includes IPEF as well as initiatives launched with the European Union and partners in the Western Hemisphere.
“This fund will help deepen efforts with key allies and partners in alignment with this historic domestic investment in these critical technology areas,” Blinken said.
Farrell pointed to critical minerals as another area in which the new Australian administration was optimistic about engagement with the U.S. -- especially following the U.S. Senate’s passage last weekend of a reconciliation package that includes incentives for electric vehicles. The House is expected to pass the bill this week.
Partnership on critical minerals “has taken a giant leap forward as a result of that legislation,” he said, noting that the incentives would apply to vehicles with batteries made from materials sourced from countries with free trade agreements with the U.S., like Australia.
“One of the things Australia is very … good at is delivering minerals in a politically stable environment,” he added.
The country’s new prime minister has said Australia can be a “renewable energy superpower,” Farrell noted.
“One way we do that is by providing countries like the United States with access to all of our critical minerals,” he said, adding he was “pretty certain” critical minerals would be a key feature of IPEF talks. -- Margaret Spiegelman (mspiegelman@iwpnews.com)
Indonesia
Indonesia won’t go with the flow on data
EastAsiaForum: Indonesia is the 16th largest economy in the world with a GDP of US$1.19 trillion in 2021 — and its digital economy is growing rapidly. It is estimated that Indonesia’s internet economy will be worth US$330 billion by 2030. By going digital, Indonesia can achieve an estimated US$150 billion in economic growth by 2025. Realising the great potential of data-based economic growth, Indonesia is paying close attention to the protection of data security and privacy by regulating data flow across its borders.
Although Indonesia is making progress in promoting cross-country data flows, revoking Government Regulation 82 of 2012 (a provision which required economy-wide data localisation) in 2019, it is still often criticised for its remaining data localisation laws.
Justified for the sake of protecting public and national security, Government Regulation 71 of 2019 requires that all public sector data must be managed, stored and processed in Indonesia. Unless the receiving country has the same personal data standards and level of protection as Indonesia, government Regulation 80 of 2019 also forbids the transfer of personal data offshore.
Indonesia has also imposed strict sector-based controls on cross-border data flows. Bank Indonesia and the Financial Services Authority have imposed localisation mandates for businesses in the financial sector. Regulation Number 1/POJK.07/2013 prohibits the transfer of personal data to a third party by financial services providers unless the consumer’s written consent is obtained.
Once the draft Personal Data Protection Bill passes, legislation specifying strict requirements for and conditions on the transmission of personal data outside of the country’s borders, Indonesia will join countries with stringent regulations on personal data protection such as Brazil, China and India. The United Nations has identified Indonesia as a country with a restrictive approach to cross-border data flows due to these laws and regulations.
Indonesia’s domestic approach to regulating data flows prioritises the importance of data to national security over its economic value, so Indonesia is advocating for data sovereignty in the international arena.
Indonesian Minister of Communications and Information Technology Johnny G Plate called for data sovereignty in regulating cross-border data flows at both the 2020 G20 Digital Economy Ministers’ Meeting and the first ASEAN Digital Minister’s Meeting in 2021. Plate also recently underscored the relationship between data security and sovereignty, affirming the geostrategic nature of data.
So even though Indonesia adheres to the concept of ‘data free flow with trust’, a principle on which G20 members have achieved consensus since 2019, it has emphasised defining ‘trust’ rather than seeking ways to allow the default free flow of data.