INTRODUCTION
In the backdrop of rising tension in Galwan Valley between India and China, India banned 59 Chinese apps being used in India citing security concerns.[1] The applications would now not be available to users with an Indian IP address. The order was made pursuant to concerns over the security and integrity of India and the defense of India and public order[2] to the chagrin of China, who ironically has been following similar practices by not allowing market access to foreign apps. Immediately after the ban, the Chinese Government claimed that ‘India’s actions may have violated the WTO law’.[3] China’s hesitance in firmly claiming that the banning of apps has led to a WTO violation is what the authors wish to elaborate on. It is important to address preliminarily whether the WTO law is applicable to these nascent digital services, and if yes, then what obligations would arise for India, in the context of digital services? The next question in line with this is that if GATS is applicable in the present case, has there been a violation by the applications ban? And furthermore, would the national security exceptions, absolve India from any liability that may arise?
APPLICABILITY OF GATS TO DIGITAL APPS
The General Agreement on Trade in Services was signed in the Uruguay rounds way back in 1994. It recognizes four modes of trade in services which are defined as ‘supply in services’.[4] These are enshrined in Article I, they are, Cross – border supply, Consumption abroad, Commercial presence and Presence of natural persons. Article II of GATS envisages the Most Favoured Nation principle, which is a general obligation prohibiting member states from undertaking unfair trade practices, such as discrimination between their trade partners, with regards to any of these four modes of supply[5].
Inarguably, the world has seen a phenomenal advancement in technology since those times. However, GATS, as applied to services, is technologically neutral.[6] This means that it covers all kinds of services, irrespective of how those services are delivered.[7] This opens the doorway for the services provided digitally. Hence it can be construed that the 59 Chinese apps which provide digital services, do fall under the jurisdiction of GATS Agreement. The act of banning these digitally provided services would lead to unfavorable treatment with regards to the third mode of supply i.e. commercial presence. This means, that India is curtailing opportunities for the commercial presence of Chinese service providers in its territory.
SPECIFIC OBLIGATIONS AND INDIA’S COMMITMENTS
GATS is not limited to general obligations, the member states have to comply with specific obligations of market access and national treatment. However, these obligations are only limited to services listed in the specific commitments schedule.[8]
The specific commitment schedules of the member states list down those services for which the members have committed to undertake market access and national treatment obligations and the limitations imposed (if any).[9] To assess whether India has market access and national treatment obligations, there’s a need to ascertain whether India has any specific commitments for digital services. A bare perusal of India’s specific commitment schedule would manifest that digital services are not expressly mentioned in the schedule and hence no specific obligations would arise for India.[10]However, even if digital services are not expressly included it could still be classified under one of the sectors based on customary rules of interpretation.[11]This would require the classification of these services as one among those mentioned in the schedule.[12]
For classifying the concerned services, it is vital to determine the scope of the different sectors. Articles 31 and 32 of the VCLT, lay down the rules of interpretation of treaties. According to the rules, to interpret the scope of certain terms, the ordinary meaning of the terms can be relied on for interpretation.[13] However, it is pertinent to note that the schedules were made for trade regulation and liberalization and not for statistical reasons. With the growing use of technology and e-commerce novel services are bound to crop up. A strict adherence to ordinary meanings for interpretation might exclude the services, which ideally should come under any of the service classifications.[14] Therefore, this method of interpretation might restrict the scope of specific commitments.
Specially, for the novel digital services it is better to follow a functional approach, which aims at ascertaining what the purpose of the said service is. The focus here is more on the end-use of the service. Such an interpretation is also in line with the Appellate Body’s approach in China- electronics where user’s expectations were used to classify the services.[15]
The authors contend that the digital services banned by India, can be functionally classified as data and message transmission services, (eg. Wechat), Distribution services, which include distribution of clothing and household products, (eg. Shein, Club Factory), the various video sharing and editing apps could be classified asaudiovisual or Entertainment services.[16] India’s commitments schedule, clearly manifests limitations on the market access and national treatment obligations of the above-mentioned services with regards to their commercial presence.[17] Therefore, due to the presence of these limitations, the act of banning these services would not lead to a violation of India’s specific obligations.
The only question left to be addressed is whether the violation of the MFN principle (which is a general obligation) by India, can be justified. To find an answer to this we shall look into the general exceptions provided in GATS.
INVOKING THE SECURITY EXCEPTION
The GATS permits members in specified circumstances to introduce a measure in contravention of their obligations under the Agreement.[18] Any measure imposed to achieve data protection can be justified under the exceptions available under GATS. This is where Article XIV of the GATS comes in play. While justifying any measure under Art XIV, WTO has relied on a two-tier analysis test. Firstly, the measure should be covered within the scope of one of the paragraphs of Art XIV; and it must be examined whether the measure satisfies the requirements laid down in the introductory clause or chapeau of Article XIV of the GATS.[19]
Under GATS Art XIV, any measure imposed by a WTO member can be justified provided that such measures are necessary to secure compliance with domestic laws or regulations including those related to the protection of the privacy of individuals in relation to the processing and dissemination of personal data and the protection of confidentiality of individual records and accounts.[20] The Indian Government has banned the applications due to data security and privacy concerns. Such a measure may be justified under Art XIV as it aims at complying with security regulations of India. The government has also justified the ban under Section 69A of the Information Technology Act, 2000 in view of the emergent nature of threats and engagement in activities which is prejudicial to sovereignty and integrity of India.[21]
To assess the necessity of such a measure under GATS Art XIV, the WTO tribunal came up with a weighing and balancing test where the panel determines (i) the relative importance of interest and values underlying the measure; and (ii) the contribution of the measure to the objective, the restrictive impact of the measure on international commerce; and availability of reasonable and less trade restrictive alternatives.[22]
In interpreting the importance of a measure, it is to be noted that GATS Art XIV provides for protection of the privacy of individuals, which can also include protection of personal data through Internet and online services.[23] The right to privacy has been widely recognized as a fundamental human right in other international treaties,[24] with many countries across the world having adopted data protection laws. The main reason for the government to impose the ban was the vast number of complaints received by them regarding risk to data privacy.[25]
Further, there must be a nexus between the measure and policy objectives to prove that the ban imposed on applications would contribute to achieve the data security concern. The main objective of the section 69A of the IT Act is to block any content on online platforms that will affect India’s sovereignty, public order and is hostile to national security and defense of India.[26] The ban on applications has a significant contribution to the objective i.e. to secure the privacy of our citizens.
Subsequently, India must show that the ban would have a minimum impact on international commerce and no alternative trade restrictions were available. This might be challenging for India to prove because a ban is the most severe form of sanction. The government could have used a lesser extreme measure to achieve their objectives. For an instance, measures which would call for accountability of these applications in the form of monitoring software facilitating data operations of all the applications or imposing limited ban on their use by army personnel as opposed to a complete ban. Such measures are less trade-restrictive and hence, would be easier to justify under GATS exceptions.
India can also seek protection under Art XIV bis, which provides that any trade restriction measure, which is aimed at the protection of the member’s essential national security interest if adopted in wartime or other emergency, in international relations, can be justified.[27] Therefore, the ongoing military tension between India and China[28] buttresses India’s claim under Art XIV bis.
It is also essential for India to show that the measure to impose a ban on applications satisfies the conditions laid down in the chapeau of GATS Art XIV. The chapeau of Art XIV requires that the Members’ rights to avail themselves of exceptions are exercised reasonably and it must not constitute ‘arbitrary’ or ‘unjustifiable’ discrimination or a ‘disguised restriction on trade in services’.[29] India might face some trouble in justifying the chapeau test as the ban imposed by India to secure data privacy has only been implemented on Chinese apps. This raises some questions regarding whether the ban was discriminatory in nature and was more of a political move against China than a data security measure. The threshold of the chapeau test is too high as there are not many cases where the WTO tribunal has justified a measure under the chapeau test.
However, it is important to note that various other countries have highlighted the same concerns as India with respect to privacy and security problems with Chinese apps. Following India’s ban of many Chinese apps, the United States is certainly considering to do the same.[30] The governments of Australia and Japan are conducting investigations into the apps, whereas the European Union hasn’t issued any formal warning, but has launched a probe into its privacy policies.[31]
CONCLUSION
The world has seen a remarkable change in technology and globalization of services. Since GATS is a technologically neutral agreement, it does not disregard the digital services. India’s imposition of a ban on the 59 apps shall therefore not escape the purview of GATS.
Therefore, the app ban would violate the MFN principle of GATS with respect to trade of digital services. As for the specific obligations of national treatment and market access, India’s specific commitments, have certain limitations on trade and therefore, disallowing the apps would not lead to a violation of the specific obligations.
However, even if the imposition of the ban leads to a violation, India can justify it by invoking the general exceptions of the GATS. Article XIV of the GATS allows the member states to impose any measure or restrict trade, subject to certain conditions.[32] Such measures are necessary to secure compliance with laws or regulations not inconsistent with the GATS.[33] India can rely on the two-tier analysis test to justify that the ban was imposed to fulfill the objectives of section 69A of the Information Technology Act. However, it will be challenging for India to prove the requirements of the Chapeau of Article XIV as the threshold of the chapeau is high because the GATT and GATS exceptions have only ever been successfully employed in one of 44 attempts.[34] But these exceptions clarify that although trade liberalization is given primacy under the WTO agreements, no country is expected to liberalize trade at all costs.
This article has been authored by Gargi Singh and Nayanika Gupta, Third-year students, National Law Institute University, Bhopal.
[1] The Economic Times, China says India’s ban on Chinese apps may violate WTO rules, June 30, 2020 available at https://economictimes.indiatimes.com/tech/ites/china-says-indias-ban-on-chinese-apps-may-violate-wto-rules/articleshow/76713829.cms (Last visited on August 15, 2020).
[2] Press Release, Press Information Bureau, June 29, 2020, available at https://pib.gov.in/PressReleseDetailm.aspx?PRID=1635206 (Last visited on July 29, 2020).
[3] Supra note 1.
[4] General Agreement on Trade in Services, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Article I, 1869 U.N.T.S. 183, 33 I.L.M. 1167 (1994) [hereinafter GATS].
[5]Undertstanding the WTO: Basics, Principles of the trading system, available at https://www.wto.org/english/thewto_e/whatis_e/tif_e/fact2_e.htm (Last visited on August 15, 2020).
[6] Council for trade in services, Work Programme on Electronic Commerce Progress Report to the General Council, S/L/74 (27 July 1999).
[7] Id.
[8] The General Agreement on Trade in Services (GATS): objectives, coverage and disciplines, available at https://www.wto.org/english/tratop_e/serv_e/gatsqa_e.htm#:~:text=(a)%20General%20obligations,suppliers%20of%20any%20other%20country%E2%80%9D. (last visited on August 15, 2020).
[9] Guide to reading the GATS schedules of specific commitments and the list of article II (MFN) exemptions, available at https://www.wto.org/english/tratop_e/serv_e/guide1_e.htm#:~:text=The%20schedules %20are%20complex%20documents,obligations%20it%20wishes%20to%20maintain (Last visited on August 16, 2020).
[10] India – Schedule of Specific commitments, available at https://commerce.gov.in/writereaddata/trade/IMCECA/Annex%208-1%20India’s%20Schedule%20of%20Specific%20Commitments.pdf (Last visited on 31st July, 2020). (‘Schedule’)
[11] Ines Willemyns, GATS Classification of Digital Services – Does ‘The Cloud’ Have a Silver Lining?, Journal of World Trade, 7 (June 6, 2018), available at https://ssrn.com/abstract=3194676 or http://dx.doi.org/10.2139/ssrn.3194676.
[12]Schedule, supra note 9.
[13] United Nations, Vienna Convention on the Law of Treaties, May 23, 1969, 1155 U.N.T.S. 331.
[14] Panel Report, United States — Measures Affecting the Cross-Border Supply of Gambling and Betting Services, ¶ 6.87, WT/DS285/26, (November 10, 2004 adopted on April 20, 2005).
[15] Panel Report, China — Certain Measures Affecting Electronic Payment Services, ¶ 7.180 WT/DS413/R, (July 16, 2012 adopted on August 31, 2012).
[16] Schedule, supra note 9.
[17] Schedule, supra note 9.
[18] Supra note 8.
[19] Panel Report, Argentina — Measures Relating to Trade in Goods and Services, ¶ 7.586, WT/DS453/12 (September 30, 2015 adopted on May 9, 2016).
[20] GATS, Article XIV (c) (i), (ii), (iii).
[21] Supra note 2.
[22] Appellate Body Report, Brazil – Measures Affecting Imports of Retreaded Tyres, ¶ 146, WT/DS332/AB/R (December 3, 2007 adopted on December 17, 2007); Appellate Body Report, United States – Measures Affecting the Cross-Border Supply of Gambling and Betting Services, ¶ 307, WT/DS285/AB/R (April 7, 2005 adopted on April 20, 2005).
[23] Neha Mishra, Privacy, Cybersecurity, and GATS Article XIV: A New Frontier for Trade and Internet Regulation, World Trade Review, (Jan 2019).
[24] Universal Declarations of Human Rights, Article 12, G.A. Res. 217A, U.N. Doc. A/810 (December12, 1948); International Covenant on Civil and Political Rights, Article 17, G.A. Res. 2200A, 999 U.N.T.S. 171 (December 16, 1966).
[25] Supra note 2.
[26] The Information Technology Act, 2000, § 69A r/w the Information Technology (Procedure and Safeguards for Blocking of Access of Information by Public) Rules, 2009.
[27] GATS, Article XIV(2)(iii).
[28] Supra note 1.
[29] Appellate Body Report, United States – Measures Affecting the Cross-Border Supply of Gambling and Betting Services, ¶ 339, WT/DS285/AB/R (April 7, 2005 adopted on April 20, 2005).
[30] The Washington Post, It’s not just the United States: These Governments see TikTok as a growing problem, August 3, 2020, available at https://www.washingtonpost.com/world/2020/08/03/its-not-just-united-states-these-governments-see-tiktok-growing-problem/.
[31] Id.
[32] GATS Article XIV.
[33] Supra note 8.
[34] Public Citizen, Only One of 44 Attempts to Use GATT Article XX/ GATS Article XIV “General Exceptions” Has Ever Succeeded, August 2015, available at https://www.tjm.org.uk/documents/reports/Citizen-org-general-exception.pdf (Last visited on August 17, 2020).
Picture Source: Business Standard
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