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  Title	Globalization and Digital Trade: The New Faultlines of a Fragmented World
  ID	29170946
  External ID	e549dee35ecab70c987cdaf18744cde2
  Author	Ic Tv
  Published Date	Dec. 9, 2025, 11:39 p.m.
  Summary	What once depended on the flow of goods has now become inseparable from the flow of information. And as digital trade expands, its promise and its perils become more deeply intertwined.
  Tags	None
  URL	https://indianconventions.in/2025/12/10/globalization-and-digital-trade-the-new-faultlines-of-a-fragmented-world
  Sentiment	Negative: 0.12085    Neutral: 0.82559    Positive: 0.05355
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  Content ID	36763423
  Key	9fecfd1e-aa9f-479a-8e72-20814bf8703c
  Content	Globalization today no longer moves merely through ships, ports, and tariff charts. It moves through silent streams of data, travelling across borders faster than imagination, shaping economies in ways that even the architects of the WTO could not have foreseen. What once depended on the flow of goods has now become inseparable from the flow of information. And as digital trade expands, its promise and its perils become more deeply intertwined. Developing economies like India stand at the centre of this transformation, navigating extraordinary opportunities while confronting legal and structural challenges that the older multilateral order is simply unequipped to address. The transformation is visible everywhere. The WTO estimates that digitally delivered services crossed US$3.82 trillion in exports in 2022, a number that does not simply reflect economic scale but the reorientation of global commerce itself. Algorithms, cloud computing, artificial intelligence, and digital platforms have become the new engines of globalization. Yet, the legal architecture governing this world remains anchored in agreements drafted in the 1990s, when the Internet was a curiosity and data a technical detail. The GATT and GATS still regulate large parts of digital trade, not because they are sufficient, but because the system has not evolved at the pace of digital reality. In the last few years, the WTO's moratorium on customs duties on electronic transmissions has acted as a fragile bridge, preventing a sudden fragmentation of digital flows. Its recent extension until March 2026 provides temporary relief, but the debate around it reveals a deeper anxiety. Several developing countries, including India, have begun questioning whether a moratorium conceived in a pre-digital era should continue without an honest assessment of its fiscal and regulatory implications. The Joint Statement Initiative on e-commerce shows the world's desire to modernise digital rules, yet its plurilateral nature also reflects the fractures within the multilateral system itself. When global rulemaking begins to occur outside the WTO framework, it is a sign not of progress, but of institutional fatigue. As the multilateral path slows, regional and digital economy agreements have stepped forward to fill the vacuum. The USMCA, with its detailed digital chapter, restricts data localisation, protects cross-border data flows, and guards source code and algorithms from compelled disclosure. DEPA, through its modular architecture, touches upon everything from fintech cooperation to AI governance. These agreements represent the future of digital trade governance, flexible, detailed, and technologically aware. But they also risk dividing the world into digital blocs, each with its own rules, standards, and expectations. For a developing country navigating global and domestic priorities, this fragmentation is not merely a legal dilemma; it is an economic tightrope. Digital trade undoubtedly holds immense promise for India. It lowers entry barriers, empowers MSMEs, expands the reach of IT-BPM and consulting services, and enables participation in global value chains without physical presence. But the inclusiveness of this growth remains uncertain. UNCTAD repeatedly notes that developing economies face structural deficits, uneven digital infrastructure, inconsistent privacy laws, weak enforcement capacity, and limited cybersecurity resilience. For many, digital opportunity coexists with digital vulnerability, and the law is still catching up. At the heart of India's digital trade debate lies a fundamental tension: how to embrace global data flows while safeguarding sovereign regulatory space. India has adopted a calibrated model, balancing openness with caution. The RBI's directive requiring payments data to be stored in India was not an act of protectionism but an assertion of supervisory necessity. The Digital Personal Data Protection Act, 2023, adopts a negative-list system for cross-border transfers, enabling flows while retaining the right to restrict them for legitimate reasons. This approach allows flexibility, but also requires clarity, consistency, and global interoperability, elements essential for business confidence. Digital trade also thrives on trust, and trust depends on consumer protection, privacy safeguards, and transparent grievance redress. Across jurisdictions, these frameworks vary significantly. The result is an asymmetry that affects users and businesses alike. While some digital agreements now include cooperative mechanisms for privacy, spam control, and e-authentication, the multilateral system has yet to articulate coherent global norms. For India, strengthening domestic trust architecture is as important as negotiating external arrangements. Taxation adds another layer of complexity. Even though customs duties on electronic transmissions are prohibited under the moratorium, digital services can still be taxed through domestic GST frameworks. Many countries fear long-term revenue erosion if digital transmissions remain permanently exempt from customs duties. India's concerns are not unfounded; policy space is a legitimate interest for any sovereign state. The coming years must therefore be used not just to refine the GST treatment of digital services, but to reassess what digital value truly means in a globalised economy. Competition in digital markets presents its own challenges. Technology giants today wield incomparable influence due to network effects, algorithmic advantages, and data monopolies. Even as trade agreements protect companies from forced disclosure of algorithms or source code, domestic competition regulators face the daunting task of ensuring fairness in digital markets. India's emerging digital competition framework reflects this reality. Issues such as self-preferencing, app-store dominance, and misuse of data are not abstract concerns; they shape whether innovation will flourish or suffocate. Cybersecurity and technical standards add further pressure points. If cybersecurity rules become opaque or excessive, they risk functioning as technical barriers to trade. Conversely, insufficient security exposes consumers and businesses to threats that undermine trust in digital platforms. The rise of small-parcel e-commerce also places new demands on customs and trade facilitation systems. The WTO's Trade Facilitation Agreement offers a blueprint, pre-arrival processing, electronic documentation, risk-based inspections, but implementation remains uneven. For MSMEs, even small reductions in friction can make global participation feasible. What sets India apart in this evolving landscape is the strength of its Digital Public Infrastructure. Systems like UPI, Aadhaar-enabled e-KYC, and ONDC are not merely technological achievements; they are public goods that democratize access. Their success demonstrates that digital ecosystems need not be monopolised by corporate entities; they can be architected as inclusive, interoperable, and citizen-centric frameworks. The next step is internationalisation, creating pathways through which India's DPI can interact with other jurisdictions, enabling cross-border payments, digital identity verification, and secure data exchange. Yet despite these strengths, the road ahead remains uncertain. The fate of the e-commerce moratorium, the development of global baselines for data flows, the governance of AI, and the restoration of a functional WTO dispute settlement system will determine how digital trade evolves. Without enforceable dispute resolution, even the best rules remain aspirational. Digital trade today is not merely an economic phenomenon; it is a constitutional question. It touches upon equality, access, autonomy, and state capacity. For developing economies, the challenge is not simply to integrate into the digital world, but to do so on terms that preserve sovereignty and protect citizens. A balanced approach is essential, open where competitiveness so demands, cautious where public interest requires it, and always guided by constitutional values. In the end, the future of digital trade will not be decided by technology alone. It will be shaped by trust, by fairness, by laws that recognise the dignity of individuals whose lives now unfold across digital spaces. If India can align its economic ambition with its constitutional ethos, it will not only participate in the digital global order, it will help define it. Connect with the Author: [email protected] Connect: https://www.linkedin.com/in/firdouse-qutb-wani-96a50115/ About the Author Ms. Firdouse Qutb Wani is a distinguished Advocate-on-Record at the Supreme Court of India and the Managing Partner of LCZF (Law Firm). Featured in the Forbes Legal Powerlist 2020–21 as one of India's top individual lawyers, she holds the distinction of being the first Kashmiri woman Advocate-on-Record at the Supreme Court. With over more than sixteen years of extensive litigation and advisory experience, she has represented Government bodies, PSUs, and Corporate entities before courts and tribunals across India and Internationally. Her expertise spans Commercial Litigation, Arbitration, Service and Education Laws, Corporate Advisory, Maritime laws, Intellectual Property Rights (IPR) Laws, Media & Entertainment laws, Consumer Laws, and Constitutional Law. A certified Life Coach, she is also a guest lecturer at leading law schools and a regular panelist on national television discussions and legal forums, where she shares her insights on contemporary legal and social issues. Recipient of numerous national and international honours, including the Legal Era Rising Star Award and the Outstanding Global Leadership Award (Singapore). She is also an accomplished mediator, trainer, and mentor, deeply committed to advancing women's empowerment, youth mentorship, and access to justice.
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