US government calls proposed data protection law trade barrier

Washington: U.S. Trade Representative Katherine Tai released the 2022 National Trade Estimates Report on Foreign Trade Barriers (NTE Report) on March 31, reviewing significant foreign barriers to U.S. exports of goods and services , foreign direct investment (FDI) and electronic commerce (e-commerce) in the country’s main export markets.Also Read – US House of Representatives Passes Bill to Decriminalize Marijuana Federally

The NTE report identifies a series of significant challenges and priorities to guide the Biden administration’s trade policy and also raises serious concerns about the restrictive data policies proposed and enacted in India and cites them as “barriers to digital trade”. . Read also – The United States has clearly distanced itself from Pakistan: former military leader

Given the importance of digital trade between India and the United States, this is a serious setback for the Department of Commerce’s attempts to strike a trade deal with Washington. Read also – Nuclear fears in the United States amid the Russian-Ukrainian war: AP-NORC poll

Will also likely negatively impact trade deals being discussed with the EU and UK. All new trade agreements with Western countries have an important digital chapter that must be negotiated.

Data protection bill struggling to close negotiations.

It references the bill and finds that India’s data localization requirements could “pose significant barriers to digital trade between the United States and India”, affecting a wide range of bilateral goods and services.

The report describes the conditions for cross-border transfer of sensitive personal data and critical personal data as “onerous”.

Additionally, the requirements could increase costs for service providers that store and process data outside India “by forcing the construction or use of unnecessary and redundant local data centers” in India, potentially constituting barriers to market access, especially for small businesses.

The report also points out that “in the absence of stand-alone trade secret legislation, companies have little recourse if their sensitive information is misused. These provisions would undermine the ability of foreign companies to provide many services to Indian consumers on a cross-border basis and would not increase the protection of personal information”.

In addition, the report refers to the recommendations of the Joint Parliamentary Committee (JPC) on the bill and states that “American businesses remain concerned that the new bill will negatively affect the ability of businesses to transfer data across borders, the authority of the DPA remains unclear and the bill may require the sharing of certain categories of non-personal data.”

Referring to the Non-Personal Data Governance Framework published by the Expert Panel formed by MeitY in 2020, he says the framework “would impose binding requirements on domestic and foreign businesses, including mandatory data sharing requests, administrative obligations and extension of consent data anonymization obligations. Additionally, these mandatory data sharing requirements may affect the protection of copyrighted content, patents, and trade secrets.”

Over the past few months, the Data Protection Bill and JPC Recommendations have been criticized by the industry in light of their potential negative impact on the ease/cost of doing business in India. Concerns have been raised about the impact of increased compliance on India’s domestic start-up ecosystem, overall global competitiveness and FDI.

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