Data security and India-EU trade negotiations

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Sameer Pushp | 01 Dec, 2012
It is said that data is the new raw material of business; it is the new oil which fuels the business and livelihood on this planet. Technological progress and globalization have profoundly changed the way our data is collected, accessed and used. "Data is a precious thing and will last longer than the systems themselves," say Tim Berners-Lee.

As we know that India- EU relations go back to the early 1960s. India was among the first countries to establish diplomatic relations with the (then) European Economic Community (EEC). India-EU relations have grown exponentially from what used to be mostly a trade and economic issues driven relationship to one covering all areas of interaction. The two sides have agreed on a Strategic Partnership and adopted a Joint Action Plan. Today, EU is one of our largest trading partners, and an important source of technology and home to a large and influential Diaspora. While trade and investment still continue to be an important aspect of our bilateral relationship, the relations stand qualitatively transformed as signified by our bilateral efforts to develop common approaches to addressing new and emerging challenges.

On 25th January 2012, the European Commission proposed a comprehensive reform of the EU's 1995 data protection rules to strengthen online privacy rights and boost Europe's digital economy. The 27 EU Member States have implemented the 1995 rules differently, resulting in divergences in enforcement. A single law will do away with the current fragmentation and costly administrative burdens, leading to savings for businesses of around €2.3 billion a year. The initiative will help reinforce consumer confidence in online services, providing a much needed boost to growth, jobs and innovation in Europe.

India stated facing problems dealing with the multiplicity of laws and getting its human resources into overseas to work especially in Euro zone. India is perceived as service economy. The high growth rate achieved by the Indian economy over the last decade has much to owe to the growth of services sector in the country. The services sector contributes around 30% of India’s total trade, around 40% to exports, and 25% of our imports. It accounts for more than 50% of FDI into the country. Internationally, India has registered the highest growth rate of service exports in recent years, averaging around 27% during 2000-08 as against the world average of 14%.

In light of the above mentioned strengths we have positioned ourselves as a ‘demanders’ in Services negotiations at the WTO as well as in the bilateral FTA negotiations. The objective behind these negotiations is to secure maximum and effective market access for our services exports. Based on our comparative advantage our critical requests in the services areas have focused on getting meaningful commitments in Cross Border Supply (Mode 1) and Movement of Natural Persons (Mode 4). One of the areas of crucial interest to India is development of disciplines in Domestic Regulations involving qualifications and licensing requirements and procedures, without which Mode 4 access gets severely impeded.

In November 2012 a bilateral meeting with the European Commissioner for Taxation and Customs Union, Audit and Anti-Fraud Mr. Algirdas Semeta, the Union Minister for Commerce, Industry & Textiles Shri Anand Sharma, highlighted the need for an early conclusion of ambitious and balanced Bilateral Trade and Investment Agreement (BTIA) between India and EU. Shri Sharma stressed the agreement needs to be balanced and should address areas of core interest to India such as services through Mode 1 and Mode 4, agricultural market access and disciplining of Sanitary and Phyto-sanitary (SPS) and Technical Barriers to Trade (TBT) for translating concessions into effective market access. He said that this is important both in terms of optics as well as for obtaining the requisite balance in the India-EU BTIA.

Shri Sharma emphasized that in mode-1, India would need to be declared as data secure in order to provide access. The European Union is in the process of undertaking a study to assess whether India’s laws meet the EU directive. "It is our clear analysis that our existing law does meet the required EU standards. We would urge that this issue is sorted out quickly and necessary comfort in declaring India data secure in overall sense needs to be given as almost all the major Fortune -500 companies have trusted India with their critical data", said Shri Sharma.

With a number of recent reform measures in India, which includes, opening of multi-brand retail trading sector to foreign investors; introducing flexibility in conditions for FDI in single brand product retail trading; allowing FDI in power exchanges; increasing the limit of FDI in Broadcasting sector; allowing FDI through foreign airlines in Civil Aviation sector, Shri Sharma emphasized India’s attractiveness as investment destination in a whole range of sectors from infrastructure to food processing, renewable energy, clean technology, bio-technology, health care, among others. He also highlighted that EU being a union of over 20 countries has strengths in almost all areas in which India needs investment. "Many countries of the EU are particularly strong in state-of-art technology development including green and clean technology for manufacturing industry. Although, the EU accounts for close to 50% of the technical collaborations approved but there is scope for enhancing technology transfer in a range of manufacturing activities," Shri Sharma, added.

The cumulative FDI inflows from EU to India are around USD 44.31 billion (April 2000 to July 2012), while on the other hand, the Indian direct investments in EU are of the order of about USD 20 billion (April 2004 –October 2009). It should also be noted that the FDI inflows from April 2011- March 2012, which stood at USD 46.8 billion, showed an increase of around 35 per cent over the last year.

The Minister also expressed happiness at the growing bilateral relations with the European Union, which is bound by common values based on a commitment to democracy, individual rights and sustainable development. While in 2010, the total trade between India and EU was USD 83.372 billion, it rose to to USD 110.268 billion in 2011. During January-September 2012 the bilateral trade stood at USD 76.511 billion.

Generating data to secure regulatory approval in sectors, such as pharmaceuticals and agricultural chemicals in which product safety and efficacy is paramount, has become ever more extensive and expensive. There is thus a need to provide an incentive to undertake such data-generation efforts by protecting the investment in them against free riding. Article 39.3 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) recognizes as an intellectual property right the need for such protection in those sectors. This chapter discusses how certain jurisdictions, and in particular the European Community, have implemented the TRIPS requirement involving regulatory data protection regimes. Such protection is not provided by the patent system, which instead protects invention.

As the world stand on the cusp of financial recovery it is an opportunity to build upon and maximize our potential as an important economic power. The recent changes in the global economic landscape shows the epicenter of growth has finally moved to our time zone. India resource and size and its demographic profile, sets a strong stage for advantage in service sector which indeed is crucially linked to development. Times are changing fast and the world is looking forward to us to play an active role of a financial life boat in this globally turning economic paradigm. A strong skilled work force and people to people partnership can take India to the position which has been due since long time. (Source: PIB)

* The author is a Freelance Writer.
* Disclaimer: The views expressed by the author in this article are his own and do not necessarily reflect the views of PIB or SME Times.