Where Does India’s Ban on Chinese Apps Fit Into the Global Trade Debate?

Note: This two-part series reviews the geopolitical and constitutional repercussions emerging from the Indian government’s decision to restrict access to 59 Chinese apps from India. They discuss the impact on trade and civil liberties. Read part two here.

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The Centre earlier this week, through an interim order, blocked access to 59 Chinese phone applications from India. Generally, these restrictions are introduced through a ‘geo-block’, i.e. a technological measure which restricts access to content based on the user’s IP address. However, the exact nature and scope of the restriction is not entirely clear and is being configured at this juncture. At present, some of these apps cannot be accessed in India even with the help of a virtual private network or with the help of a technologically advanced firewall.

The order was communicated via a Press Information Bureau notification, which will be enforced under section 69A of the Information Technology Act, 2000 read with the Blocking Rules, 2009. This interim order was probably taken under the emergency powers of the Blocking Rules which permit the government to do away with any notice or hearing requirements for a period of 48 hours. During this 48 hour period, the government has to convene a committee to seek their recommendations. After the 48 hour period is over, the IT secretary then has to pass a final order revoking the interim measure and unblock access, or finalise the blocking order. 

Also Read: After the Indian Ban on 59 Chinese Apps, What Comes Next?

The PIB notification characterises these apps as ‘malicious’, citing several complaints against these Apps for reportedly enabling unauthorised transmission of user data to servers situated ‘outside India’. The reasons stated in the notification are that these apps are engaged in activities which are prejudicial to user privacy and the sovereignty of India.

Even though the app is still available on the phones of existing users, new users are unable to access it. Further, the Ministry of Information and Technology is in talks with the Department of Telecommunications to operationalise the geo-block. 

While the geoblock raises critical implementation concerns as well, in this article, we restrict ourselves to reviewing the repercussions of this move on international trade and the Constitution. 

Will this digital strike to regulate international relations impact trade? 

The timing of the ban makes it prudent to analyse this move in the geopolitical context of the clash between the Indian and Chinese military in Galwan Valley. 

There exists a significant difference in the military strength of India and China in the latter’s favour. India’s huge trade deficit (of about $50 billion) with China, driven by Indian dependence on Chinese goods in various sectors, further limits its ability to impose economic sanctions without severely impacting its growth, this seriously limits the avenues of retaliation available to the incumbent government. 

It is undoubtedly crucial for the government to hold its ground when faced with Chinese expansionism. It doesn’t help that both India and China have nuclear capabilities, which makes it imperative to counter any risk of escalation. While the choice to use a technological measure may be well-intentioned towards reconciling the twin interests of signalling as well as preventing unnecessarily excessive escalation, it may not have the desired effect. These apps barely scratch the surface of the Chinese stake in the Indian economy. 

According to a report published by Brookings India, there has been a huge influx of Chinese capital particularly in the tech and pharmaceutical sectors and this is if we discount the investments from China routed through third-party countries such as Singapore. The report also notes how several Chinese technology firms and venture capital players have acquired minority or controlling stakes in Indian companies. 

As Ananth Krishnan, China correspondent for The Hindu pointed out, India accounts for 0.03% of TikTok’s parent company ByteDance’s global revenue. Thus, banning these apps will make little to no economic impact on China in the short term, provoking claims that this is merely a tool of political showmanship.

On the other hand, this ban might have stymied China’s top tech firms in what many consider to be the world’s largest, untapped digital market. Furthermore, this ban may provide a model for other countries that have expressed concerns about the pervasiveness of apps like TikTok and the privacy threat it poses with regard to their citizens’ data.

In its response to the ban, Beijing has made veiled threats of taking the matter to the World Trade Organisation. Both India and China are members of the WTO and governed by its rules which limit territorial restrictions to cross border trade. 

Columbia law professor Tim Wu has pointed out, censorship was not meant to be considered a trade barrier because many states routinely censor or block products at their borders generally without creating trade disputes. However, by agreeing to liberalise trade in services, both countries have theoretically put the WTO in an oversight position even for domestic laws that regulate the Internet. 

This leaves us with an interesting question: To what extent is the ban a legitimate domestic regulation as opposed to a barrier to trade and a breach of promises made to other members of the WTO? 

To answer this, the first thing that needs to be settled is whether the regulatory framework to evaluate the app ban is the General Agreement on Trade in Services (GATS) or  General Agreement on Tariffs and Trade (GATT). The confusion arises because the technologies being contemplated today were simply not in the minds of the drafters of either of these agreements.

It might be tempting to say that clothes being ordered on the app Shein, for example, involve the movement of a good and therefore implicate GATT whereas apps such as UC Browser constitute services under GATS. Yet, it is not difficult to imagine disagreements on this, for example, whether the UC browser is a service in and of itself or a platform on which other services can be based?

This characterisation is important because the GATS is sector-specific, with many of its sectoral commitments agreed upon before the invention of new service types. Thus, it creates a much weaker set of commitments than GATT. The exceptions in both agreements largely mirror each other. 

In both cases, they are self-judging provisions meaning that they are beyond the purview of WTO jurisdiction sovereign prerogative to use as they see fit.

In Measures Affecting Cross Border Supply of Gambling and Betting Services, the Appellate Body held foreign Internet-based services may presumptively demand access to a state’s markets. Filters, bans, and other burdens on Internet businesses will have to be justified, if they can be, on clear state interests-allowed as exceptions to the GATS commitments. 

Thus, the burden on India, as the state imposing the ban, is to explain what its justifications for the ban are, and to show that the ban operates in a non-discriminatory fashion. The idea here, as in other areas of trade law, is to prevent distorting local markets either in favor of one country over another or in favor of local producers. This seems tricky since India continues to allow domestic and international equivalents of the Chinese apps it has banned. 

Similarly, if GATT is the governing framework, the WTO’s Dispute Settlement Panel issued a landmark ruling in a dispute between Russia and Ukraine in which Russia invoked the exception to justify measures that blocked trade between Ukraine, Kazakhstan, and the Kyrgyz Republic that transited through Russia. Russia claimed it had adopted those measures in response to escalating events in Ukraine after political turmoil there in 2014. The Panel clearly noted that “political or economic differences between Members are not sufficient, of themselves, to constitute an emergency in international relations for purposes of subparagraph (iii) of Art XXI of GATT”. 

Also Read: From India to US, Forcing Proactive Policing of Online Content Is Censorship by Proxy

A retaliatory measure

Although the doctrine of stare decisis does not apply to Appellate Bodies, the reasoning used by previous WTO panels is considered to be highly persuasive. This provides a glimpse of how a future WTO panel might handle litigation between India and China, should it come to that. It is crucial to note that Ji Rong, the spokesperson of the Chinese embassy in India, has already called this move “discriminatory” and says that it “abuses national security exceptions” of the WTO  rules.

It will be interesting to see how this would play out given that China remains, within its borders, committed to one of the world’s most comprehensive Internet regulations, aptly known as the Great Firewall of China. Among the foreign sites banned by China are Facebook, YouTube, Twitter and WhatsApp. Ironically, this is justified by China by framing the idea of internet governance as a sovereignty issue. Arguably, India could also argue that its ban is a retaliatory move against Chinese filtering. 

Further, any analysis on this end needs to be wary of calling for WTO intrusion into the regulatory freedom of the organisation’s members far beyond what was originally agreed to in the WTO Treaty. Global South scholars have long warned us about expanding the realm of these development institutions.

It is also worth pointing out that other member states have only been successful in implementing much more restrictive versions of these bans. In Australia, the use of WeChat has been banned only for the armed forces. Similarly, in the US, geolocating fitness trackers have been banned for the military’s use even after live GPS data was found publicly available on the internet. Further, in the US, Senator J. Hawley’s Bill to ban TikTok on federal devices is yet to be passed by the Senate. 

Ultimately, even if this ban violates the GATT/GATS, the international community would have to compel India to comply with the Agreement or face economic sanctions. Given how states such as the United States, and France have come out in support of India post the ban, this looks unlikely. Ever since the Belt and Road Initiative has taken off, western states have expressed concerns over a hegemonic China whereas India can make use of its soft power of being a secular and liberal democracy to gain moral legitimacy. 

Intelligence reports indicate that Pakistan has come out in support of China and deployed 20,000 soldiers along the LOC. This might just be posturing in a bid to try and put India into more pressure since making this a two-front war and taking Pakistan’s help only erodes China’s image as an aspiring great power. However, it is undisputed that China, unlike India, has been focusing on South Asian diplomacy for a while. A recent Chatham House Report shows the extent of Chinese investments in Srilanka which amounts to nearly $12 billion from 2006-2019. A day after the Ladakh clash, China also offered a 97% tax exemption to Bangladesh, a strong ally of India in the neighbourhood. India and Bangladesh’s relationship had taken a setback last year over the Citizenship Amendment Act (CAA) and National Register of Citizens (NRC). 

However, several policy experts and scholars have noted that instead of an app ban, India must prioritise reviving SAARC to effectively deal with China. For instance, Prabhash Ranjan notes that India’s leadership has inconsistently leveraged its soft power to regain its position as a leader in the SAARC region and this will have to change if it wants to protect its borders without threatening its democracy. 

This idea gains legitimacy, explored in the second part of this series, given how the intersectional implications of India’s app ban can inadvertently exacerbate social exclusion. 

Shubhangi Agarwalla is a final year student of National Law University, Delhi. Siddharth Sonkar is graduating with the class of 2020 from the National University of Juridical Sciences (NUJS), Kolkata with a strong interest in law, technology and regulatory policy. Views are personal.

The authors would like to thank Arindrajit Basu and Divij Joshi for their valuable feedback.