The Chinese App Ban: Safeguarding ‘Digital’ Borders at the Expense of International Trade Obligations?

India’s bid to protect its sovereignty and security by placing a ban on 59 Chinese apps, including ‘TikTok’, ‘WeChat’ and ‘CamScanner’, provides a ‘digital’ meaning to the Indo-China border disputes.[1] The ban raises serious legal concerns regarding India’s perceived violation of its international trade obligations. In this article, the authors attempt to analyse whether the ban of these app-based services is in violation of India’s extant international trade obligations under the General Agreement on Trade in Services (“GATS”)[2], and whether India can successfully justify the breach under the security exception in the GATS.

INDIA’S PRESS RELEASE

A challenge may be made before the WTO only where there is a ‘measure’ which purportedly breaches international trade obligations. Article XXVIII(a) of GATS classifies a ‘measure’ as “a law, regulation, rule, procedure, decision, administrative action, or any other form”.The ban via a press release has invoked Section 69A of the IT Act, 2000, which requires the central government to pass an ‘order’ to that effect.[3]

One might contend that India’s actions fall outside the scope of WTO scrutiny as a press release, in the absence of an ‘order’, does not constitute a ‘measure’. However, the GATT Panel and the Appellate Body (“AB”) have held that a ‘mandatory legislation’ is not necessarily required to sustain a challenge before a Panel.[4] Moreover, the app ban is being touted as an ‘interim order’ under Rule 9 of IT Blocking Rules.[5] Thus, it can be successfully argued that India’s press release does qualify as a ‘measure’ under WTO law.

ARTICLE XVI GATS

Article XVI of GATS defines Market Access (“MA”) obligations that require member countries to provide equal treatment to access of services and service suppliers in a domestic economy.[6] GATS concerns four modes of supply of services, including cross-border supply (“Mode 1”) and commercial presence (“Mode 3”).[7] The service-based apps herein are generally provided through Modes 1 and 3.[8] Therefore, a determination of whether India has breached GATS obligations under Article XVI would require an investigation into its service schedule obligations provided under these Modes.

Considering the broad spectrums of services offered by these apps, some of these fall under the sector ‘Computer and Related Services’[9] like ‘CamScanner’ (data and information processing), ‘Telecommunication Services’[10] like ‘WeChat’ (relay of data from sender to receiver) and ‘Audio-Visual Services’[11] like ‘TikTok’ (video production) provided under  the India’s GATS schedule of commitments.[12]

To that end, pursuant to Article XVI:1 of GATS, the following two requirements must be proven to allege a MA violation:

Firstly, the complaining nation(s) must show that the services in question fall within one of the sectors provided under the GATS service schedule where India has undertaken obligations to grant full or partial MA. In the present scenario, India’s Schedule of Commitments[13] does reveal certain categories that it has undertaken commitments to grant MA in the aforesaid sectors for Modes 1&3.

Secondly, the complaining nations must show that the measure constitutes one of the MA barriers provided under Article XVI:2.[14] The AB in US-Gambling has noted that Article XVI:2(a), which relates to limitations “on the number of service suppliers whether in the form of numerical quotas […]”, includes a complete prohibition, otherwise known as a ‘zero quota’.[15] Eliminating Chinese apps from the Indian market is a MA barrier under Article XVI:2(a) as the ban imposes a ‘zero quota’ on several Chinese service suppliers in the Indian market. Thus, subject to India’s GATS’ service schedule commitments for Modes 1&3, the app ban could be in violation of Article XVI:2(a) of GATS.

THE SECURITY EXCEPTION

India banned these apps to protect the “sovereignty and integrity of India, defence of India, security of state and public order”, and hinted at the possible invocation of the security exception under GATS to justify it.[16]

Article XIVbis:1(b)(iii) of GATS allows a country to justify actions which “it considers necessary for the protection of its essential security interest” “taken in time of war or other emergency in international relations”. The Panel in Russia-Traffic,[17] has observed in the context of Article XXI(b)(iii) of GATT[18] that both elements need to be fulfilled individually (also known as the two-tiered test).[19] More recently, in the Saudi-IPR ruling,[20] the Panel has shed light on the application of the security exception under Article 73(b)(iii) of TRIPS[21] – which is mutatis mutandis to Article XIVbis:1(b)(iii). The Panel observed that the invoking country must fulfil the following elements:[22]

Firstly, there must exist a state of ‘emergency in international relations’;

Secondly, the measure must be taken during such a time; and

Thirdly, the measure must have a reasonable nexus with the protection of the ‘essential security interest’ which the country believes to be necessary.

So far as the first two elements are concerned, it ought to be ascertained whether the government’s decision came at a time when there existed an emergency in international relations between India and China. The Panel in Russia-Traffic accepted “armed conflict”, or “general instability engulfing or surrounding a state”[23] as an ‘emergency in international relations’ under Article XXI(b)(iii) of GATT[24]. The app ban came in the aftermath of the Indo-China military aggression[25] at the Galwan region border. However, the connection between the app ban and the military aggression is tenuous. Other than citing unlawful data mining by the apps, the Indian Government has not supplied any further reasoning to justify an ‘emergency in international relations’. Therefore, on its own, data mining may not pass the test of Article XIVbis:1(b)(iii).

For the third element, the Panel has accepted the ‘self-judging nature’ of determining ‘essential security interests’, with an additional requirement that the exercise be done in accordance with the principle of good faith. In order to demonstrate good faith, the responding nation would have to show that the ‘essential security interest’ arises from the ‘emergency in international relations’.[26] If the same is not met, then the Panel may conclude that the measure has not been invoked in good faith. This prevents the security exception from being invoked for protectionist measures.[27]

India, in the press release, raised concerns over “data security and safeguarding the privacy of 130 crore Indians”. Although data security may be an ‘essential security interest’, it is not rationally linked to the ‘emergency’ of the Galwan border skirmish. India’s justification isfurther impeachable on the ground that the security threats from these app-based services were not a fresh development in India,[28] and worldwide.[29] Thus, it cannot be said that India’s decision to ban Chinese apps was to protect its ‘essential security interests’ arising out of an ‘emergency in international relations’, thereby making India’s possible invocation of Article XIVbis:1(b)(iii) suspect.

CONCLUSION

The “self-judging” nature of the security exception, as stated by John H. Jackson,[30] makes it vulnerable to political abuse and provides a backdoor entry to protectionist measures under the guise of security. The Chinese app ban elicits similar concerns as the move fails to reach the threshold of a security exception under the GATS. Thus, subject to additional disclosures by the Indian Government, it is likely that a claim by the Chinese counterpart will succeed.

[1] Ministry of Electronics and IT, ‘Government Bans 59 mobile apps which are prejudicial to sovereignty and integrity of India, defence of India, security of state and public order’ (Press Information Bureau, 29June 2020) <https://pib.gov.in/PressReleasePage.aspx?PRID=1635206&gt; accessed 13 July 2020.

[2] General Agreement on Trade in Services, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1B, 1869 U.N.T.S. 183, 33 I.L.M. 1167 (1994).

[3] Information Technology Act 2000, s. 69A.

[4] United States – Taxes on Petroleum and Certain Imported Substances, L/6175 BISD 34S/136 [5.2.2], circulated on 17 June 1987; Argentina – Measures Relating to Trade in Goods and Services, WT/DS453/AB/R and Add.1 [6.260], circulated on 9 May 2016.

[5] Vakasha Sachdev, ‘Can TikTok & Other Chinese Apps Get Ban Overturned In Courts?’, The Quint (3rd June, 2020) <https://www.thequint.com/news/law/can-tiktok-chinese-app-ban-be-overturned-government-review-committee-courts&gt; accessed 13 July 2020.

[6] Argentina – Measures Relating to Trade in Goods and Services, WT/DS453/R and Add.1 [7.391], circulated on 9 May 2016.

[7] General Agreement on Trade in Services, Art.I(2).

[8] Rolf H. Weber and Mira Burri, Classification of Services in the Digital Economy (Springer 2012) Chap. 1, 115.

[9] Council for Trade in Services, Computer and Related Services – Background Note by the Secretariat, S/C/W/45, circulated on 14 July 1998.

[10] The World Trade Organisation, ‘Telecommunication Services’ (WTO, 15 July 2020) <https://www.wto.org/english/tratop_e/serv_e/telecom_e/telecom_coverage_e.htm&gt; accessed 15 July, 2020.

[11] The World Trade Organisation, ‘Audiovisual Services’ (WTO, 15 July 2020) <https://www.wto.org/english/tratop_e/serv_e/audiovisual_e/audiovisual_e.htm&gt; accessed 15 July 2020.

[12] See, Special Session of the Council for Trade in Services, Communication from the United States – Classification in the Telecommunications Sector under the WTO-GATS Framework, S/CSC/W/45, circulated on 22 February 2005; Council for Trade in Services, Telecommunication Services – Background Note by the Secretariat, S/C/W/299, circulated 10 June 2009; Council for Trade in Services, Audiovisual Services – Background Note by the Secretariat, S/C/W/310, circulated 12 January 2010.

[13] The World Trade Organisation, ‘Schedule of Commitments – India’ (WTO, 15th April, 1994) <https://docs.wto.org/dol2fe/Pages/FE_Search/FE_S_S009-DP.aspx?language=E&CatalogueIdList=17946,29466,45355,37261,26014&CurrentCatalogueIdIndex=4&FullTextHash=&HasEnglishRecord=True&HasFrenchRecord=True&HasSpanishRecord=True&gt; accessed 13 July 2020.

[14] United States – Measures Affecting the Cross-Border Supply of Gambling and Betting Services, WT/DS285/AB/R [143], circulated on 20 April 2005.

[15] ibid at 227.

[16] Amriti Sen, ‘India may invoke GATS security exception at WTO to justify ban on Chinese apps’ The Hindu Business Line, (3rd July 2020) <https://www.thehindubusinessline.com/economy/india-may-invoke-gats-security-exception-at-wto-to-justify-ban-on-chinese-apps/article31980218.ece&gt; accessed 15 July 2020.

[17] Russia – Measures Concerning Traffic in Transit, WT/DS512/R, circulated on 5 April 2019.

[18] General Agreement on Tariffs and Trade, Art. XXI(b)(iii).

[19] Russia – Measures Concerning Traffic in Transit, WT/DS512/R [7.77], circulated on 5 April 2019.

[20] Saudi Arabia – Measures Concerning the Protection of Intellectual Property Rights, WT/DS567/R, circulated on 16June 2020.

[21] Agreement on Trade-Related Aspects of Intellectual Property Rights, Art. 73(b)(iii).

[22] Saudi Arabia – Measures Concerning the Protection of Intellectual Property Rights, WT/DS567/R [7.242], circulated on 16June 2020.

[23] Russia – Measures Concerning Traffic in Transit, WT/DS512/R [7.75-7.76], circulated on 5 April 2019.

[24] General Agreement on Tariffs and Trade, Art. XXI(b)(iii).

[25] Amrita Bhinder, ‘Is China the New ‘Nazi’ Germany That the World Is Uniting Against?’ The Quint (7 April 2020) <https://www.thequint.com/voices/opinion/india-china-border-conflict-modi-leh-visit-world-uniting-to-fight-chinese-expansionism&gt; accessed 13 July 2020.

[26] Saudi Arabia – Measures Concerning the Protection of Intellectual Property Rights, WT/DS567/R [7.125, 7.283], circulated on 16 June 2020.

[27] Russia – Measures Concerning Traffic in Transit, WT/DS512/R [7.132], circulated on 5April 2019.

[28] MediaNama, ‘Chinese apps ban: India-China cyber face-off’ ( MediaNama, 30 June 2020) <https://www.medianama.com/2020/06/223-chinese-apps-ban-india-china-cyber-face-off/&gt; accessed 16 July 2020.

[29] Geoffery A. Fowler, ‘Is it time to delete TikTok? A guide to the rumors and the real privacy risks’ The Washington Post (13 July 2020) <https://www.washingtonpost.com/technology/2020/07/13/tiktok-privacy/&gt; accessed 15 July 2020.

[30] John H. Jackson, World Trade and the Law of GATT: A Legal Analysis of the General Agreement on Tariffs and Trade (Bobbs-Merrill Company 1969) 748.