Digitrade Digest #67
USTR seeks feedback on US-Kenya STIP, India withdraws Data Protection Bill, EU wants free flow of data from India and more…
Africa
USTR seeks feedback on U.S.-Kenya trade and investment initiative
Insidetrade: The Office of the U.S. Trade Representative is seeking public comments to inform a developing “roadmap” for a trade and investment partnership launched last month with Kenya, the agency announced on Thursday.
The U.S. and Kenya on July 14 announced a “Strategic Trade and Investment Partnership” to negotiate “high-standard commitments” in areas like digital trade, agriculture, small and medium-sized businesses, standards, labor and the environment and said they planned to develop a “detailed roadmap” for discussions in those areas within three months, as described in a joint statement issued by the two countries.
As the countries develop that plan, USTR is calling for public comments “on matters relevant to specified trade areas, including U.S. interests and priorities, in order to develop objectives and positions for enhanced engagement and subsequent negotiation,” according to a Federal Register notice issued by USTR.
The specified trade areas reflect those outlined in the countries’ July announcement.
Comments are due by Sept. 16, the notice states.
USTR requests that small businesses identify themselves as such in their comments so the agency can “be aware of issues of particular interest” to such companies, according to the notice.
The agency also notes that the administration, at this time, “is not seeking to address tariff barriers.”
“The United States will build upon high-standard trade commitments and develop new approaches in trade policy to advance a broad set of worker-centered priorities and promote durable, broad-based economic growth for the United States and Kenya,” USTR wrote.
Lawmakers from both parties have urged the Biden administration to seek market-access commitments in its trade arrangements with other countries and, in particular, to continue talks toward free trade agreements launched during the Trump administration with Kenya and the United Kingdom, respectively. USTR has pushed back against such calls, focusing instead on issues like those outlined in its new arrangement with Kenya.
The Biden administration’s new envoy to Kenya, Meg Whitman, arrived in the country this week, according to an Aug. 1 tweet by the U.S. Embassy in Nairobi. Whitman, confirmed in July by a unanimous vote in the Senate, previously served as president and CEO of Hewlett Packard Enterprise and the Hewlett-Packard Company, according to a biography issued by the embassy.
During her confirmation hearing before the Senate Foreign Relations Committee in May, Whitman said Kenya was “well-positioned to be an African leader in information, communication, and technology, and mobile banking” and that she hoped U.S. companies would embrace what she described as an opportunity to help build the country’s “Silicon Savannah.”
Whitman’s arrival comes just ahead of presidential elections in the country that will determine President Uhuru Kenyatta’s successor. Kenyatta had pushed for the trade talks with the U.S. during the Trump administration.
Kenya, along with six other African countries, also was recently selected to participate in a pilot trading program under the African Continental Free Trade Area, a continental integration effort launched last year, according to a July 25 tweet by the AfCFTA Secretariat.
In remarks delivered last month at the U.S.-Africa Business Summit in Morocco, AfCFTA Secretary-General Wamkele Mene urged the U.S. to develop a new trade policy that engages the continent as a whole rather than just individual countries. -- Margaret Spiegelman (mspiegelman@iwpnews.com)
India
India withdrawals controversial Personal Data Protection Bill
Insidetrade: The Indian government on Wednesday withdraw legislation that would have required some personal data to be stored domestically, a proposal flagged by U.S. business groups and the Office of the U.S. Trade Representative as a potential barrier to U.S.-India trade. A top official said a new bill would be formulated.
The withdrawn bill would have required companies to store all information deemed “sensitive” and “critical” on servers in India. The export of sensitive personal information would require the “explicit consent” of the information’s owner, while the export of critical personal information -- which the bill did not define -- would have been banned.
Indian Minister of Railways, Communications and Electronics and Information Technology Ashwini Vaishnaw, in a statement on Wednesday, said the bill was withdrawn because a joint parliamentary committee had proposed 81 amendments to the bill’s 99 sections as well as 12 other major recommendations. He said “a new bill will be presented for public consultation.”
The move was immediately lauded by the Information Technology Industry Council. “ITI commends the Government of India for its decision to withdraw the existing Personal Data Protection Bill (PDP), and we look forward to the government implementing a robust stakeholder consultation as it reconsiders a comprehensive privacy and data protection framework for the digital ecosystem,” ITI Country Manager for India Kumar Deep said in a statement.
The Personal Data Protection Bill was first introduced in India’s Parliament in 2019. A joint parliamentary committee last November issued recommendations to improve the bill. According to USTR’s latest annual National Trade Estimate on Foreign Trade Barriers, published in April, an updated version of the bill was expected to create a Data Protection Authority and divide data governance authorities between central and state governments. “U.S. firms remain concerned that the new bill will negatively affect firms’ ability to transfer data across borders, the authority of the DPA remains unclear, and the bill may require sharing of certain categories of non-personal data,” USTR’s report states.
Business groups have long warned of the potential ramifications of the data framework proposed in the bill. Several called for extensive changes to the legislation when the administration of Prime Minister Narendra Modi submitted it to Parliament in March 2020.
US
Joint Statement of the U.S.-Japan Economic Policy Consultative Committee: Strengthening Economic Security and the Rules-Based Order
USDeptofState: United States Secretary of State Antony Blinken and Secretary of Commerce Gina Raimondo co-hosted Japan’s Minister for Foreign Affairs HAYASHI Yoshimasa and Minister of Economy, Trade and Industry HAGIUDA Koichi for the inaugural ministerial meeting of the U.S.-Japan Economic Policy Consultative Committee (EPCC) on July 29, 2022. The Ministers affirmed their shared resolve to present a positive economic vision that highlights the benefits of a rules-based international economic order and emphasized the need to make our economies more competitive and resilient.
1. The United States and Japan commit to enhancing international efforts to address barriers on cross-border data flows, while respecting different approaches to data governance. The two countries further reaffirm the role of U.S.-Japan cooperation in multilateral initiatives, such as promotion and expansion of the newly established Global Cross-Border Privacy Rules (CBPR) Forum and support for efforts to develop the OECD Trusted Government Access to Personal Data Held by the Private Sector. In doing so, U.S.-Japan cooperation advances a common understanding and foundation to promote data free flow with trust among like-minded democracies.
2. In cooperation with interagency partners, the United States and Japan intend to promote information sharing on cybersecurity threats including through discussion of threat assessment and mitigation efforts in the Japan-U.S. Cyber Dialogue. We also affirm our intention to collaborate on the Japan-U.S.-EU Industrial Control Systems Cybersecurity Week for the Indo-Pacific region.
3. The United States and Japan are committed to coordination on business and human rights to foster an environment in which companies uphold human rights, and we welcome ongoing bilateral discussions.
EU
Europe Passed New Tech Rules. That Was the Easy Part
Bloomberg: A beautiful piece of politics
Brussels is poised to become the big tech police after passing the Digital Markets Act and the Digital Services Act in July. The two landmark pieces of legislation have ambitious goals and steep penalties meant to loosen major tech companies’ grip on the digital market and force platforms to better handle illegal and harmful content.
But fears are rising over whether the European Commission will be able to pull it off. Success depends on whether the EU gets the funds, the know-how and the details right—none of which are a given.
The EU needs as much as 25 million euros ($26 million) just to start hiring outside staff to enforce its sweeping new tech rules, lawmakers argue. This isn’t easy. The EU’s budget is already overstretched, and it’s likely to get even tighter as countries grapple with sky-high inflation and brace for an energy crisis.
The commission also needs far more than the 230 people it plans to hire in order to enforce the two pieces of legislation, regulators warn. For comparison, Germany projected it needed 200 people alone when it proposed its own national content moderation laws akin to the DSA. (Germany has roughly one-fifth the population of the EU.)
It’s not just the quantity of people that matters, but also the quality. The EU needs data scientists, computer engineers and people who’ve worked in the big tech companies, Tommaso Valletti, a former chief economist at the commission, told me. You don’t want to just re-assign people from the commission departments who worked on the EU’s antitrust cases.
“I am not sure that the same guys that kind of failed with the antitrust enforcement—because we did fail, I was part of it, so I'm speaking about myself—are going to be the same people in charge of the enforcement of this now,” said Valletti, who now works as an economics professor at Imperial College London. “They need extra support.”
This kind of staffing effort would mean Brussels would be competing directly against big tech for talent. Although giants like Apple Inc. are slowing hiring, they’re still able to offer prospective employees larger salaries and longer-term contracts than the EU. Plus, those companies need experts in-house to comply with the rules (or someday contest them in court). “The task is huge,” Valletti said. And the tech industry has trillions of dollars on its side, he added. “The people they can put on that are different orders of magnitude.”
The people in the commission I speak to think everyone’s concerns are overblown. Some are hopeful they can form a new commission department to enforce the new digital rules, but even if they don’t, a commission task force is currently at work on the rules. They’ve already found skilled people to move from EU institutions to work on enforcement, and believe they’ll have no issues hiring more who want to work for the common good rather than the good snacks at Meta’s offices.
The EU knows what happens if they don’t. The DMA and DSA were written in the shadow of the General Data Protection Regulation, or GDPR, the EU’s landmark data protection rules that have been widely criticized for poor enforcement. With GDPR, enforcement was left to the teams within the EU’s 27 member states, which many argue are poorly funded and staffed.
This time, the EU didn’t want to make the same mistake. Regulators put the commission in the hot seat as the sole enforcer of the DMA, and the one in charge of policing the big tech rules in the DSA. It’s absolutely crucial they get this right and fast—there’s less than a year before many of the rules start to apply.
The EU’s regulations are promising and idealistic, and are already inspiring US lawmakers to follow suit. But if they fail, Sarah Andrew, a former head of online standards at UK regulator Ofcom, said the new rules risk becoming like GDPR—just another “beautiful piece of politics.”
Data Flow
EU seeks unrestricted cross-border flow of data
Mint: The European Union is seeking unrestricted cross-border flow of data between itself and India, including allowing storage of data in the EU’s 27 countries, under the free trade agreement being hammering out by the two sides.
However, India is working on a data protection Bill which will have guidelines on data protection and data storage and cross-border flow of data.
The chapter on Data Flows and Personal Data Protection in the draft advance text of the FTA says that parties are committed to ensuring cross-border data flows to facilitate trade in the digital economy. It said these cross-border flows shall not be restricted—and free of restrictions like requiring localization of data for storage or processing.
It also talks about recognizing protection of personal data and privacy as a fundamental right and recognizing that high standards in this regard contribute to trust in the digital economy and to the development of trade.
In India, the Personal Data Protection Bill, 2021, which currently stands withdrawn, made the case for data localization, requiring that copies of sensitive personal data be available within India and conditions be put on cross-border data transfers. Experts had argued these rules would mean additional cost and infrastructure for companies.
The government on Wednesday withdrew the Personal Data Protection Bill, 2021 and said it would soon be replaced by “a comprehensive legal framework," that will be “designed to address all of the contemporary and future challenges of the digital ecosystem."
Beer, Wine, feta and gouda cheese, luxury cars, fisheries and farm items are among the key interest areas for the EU. India’s demands include greater access to the EU market for its skilled professionals.
SMEs
The digital divide: Why SMEs must cross borders
WEF: Through our research with SMEs, we know that they are crying out for access to digital infrastructure, training and processes to make trade easier. Buyers, sellers and intermediaries now rely on technologies that enable commerce at a speed, scale and efficiency unimaginable just a few decades ago. According to 83% of Indian SMEs surveyed in our research, they still need to learn more about complying with digital laws and regulations, a knowledge gap that then hinders the ability of one of the fastest growing e-commerce markets in the world to efficiently trade and grow.
When these SMEs do try to trade internationally, they often encounter customs administrations that continue to rely on hard-copy documents and manual processes, ill-suited for businesses operating digitally. If we look at the Global Express Association’s Customs Capability Database, 46% of the 139 countries surveyed do not accept or electronically process the data required for the release of shipments in advance of their arrival, even though it has become a global benchmark for efficient and secure customs processing.
These kinds of barriers affect firms of all sizes, yet SMEs shoulder disproportionate burdens in the face of this complexity, particularly in delays and added costs presented by non-digital customs procedures. In the January 2019 World Trade Organization Joint Statement Initiative on Electronic Commerce, WTO members agreed to initiate exploratory work towards negotiations to simplify cross-border trade.
These ongoing discussions seek to establish a more enabling environment for electronic commerce by creating trust in digital trade and providing better access to foreign markets. It’s no secret that when policy-makers take steps to enhance trade facilitation and connectivity and reduce digital barriers to trading in goods and services, whole economies benefit.
We have the capacity to enhance and simplify cross-border commerce, especially for small businesses, by applying the following digital processes to customs procedures:
Electronic submission of customs documents
Process simplification and digitization for low-value shipments and related duties and taxes
Customs simplification for cross-border returns processes
Online government publication of information on customs procedures and rates in an easily digestible format
Digitalizing trade can play a positive role in creating more resilient SMEs and help authorities mitigate border bottlenecks.