US calls out Data Protection Bill as trade barrier

Washington: US Trade Representative Katherine Tai on March 31 released the 2022 National Trade Estimate Report on Foreign Trade Barriers (NTE Report), reviewing significant foreign barriers to American exports of goods and services, foreign direct investment (FDI), and electronic commerce (e-commerce) in key export markets for the country.

The NTE Report identifies a range of important challenges and priorities to guide the Biden administration's trade policy and also raises serious concerns over the proposed and promulgated restrictive data policies in India and cites them as 'Digital Trade Barriers'.

Given the importance of India-US digital trade, its a serious set back to the attempts by Commerce Ministry to get a trade deal going with Washington. The report terms the conditions on the cross-border transfer of Sensitive Personal Data and Critical Personal Data as "onerous". Further, that the requirements could raise costs for service suppliers that store and process data outside India "by forcing the construction or use of unnecessary, redundant local data centres" in India, potentially serving as market access barriers, especially for smaller firms.

The Report also highlights that "in the absence of stand-alone trade secret legislation, there is little recourse for firms in the event of misappropriation of their sensitive information. These provisions would undermine the ability of foreign firms to supply many services to Indian consumers on a cross-border basis and would not increase the protection of personal information".

Further, the Report refers to the Joint Parliamentary Committee (JPC) recommendations on the Bill and states that "US 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".

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