Trade & investment
How and why to rethink data flow restrictions
Taking part in discussions on the latest developments in world trade at the World Trade Organization's Public Forum in Geneva this week, the International Chamber of Commerce (ICC) has signalled increasing business concern regarding countries that impose restrictions on cross-border data flows without considering the impact on their respective economies and small- and medium-sized enterprises (SMEs) that make up 95% of enterprises globally.
In a new set of recommendations issued today at the Forum, ICC calls on policymakers to consider the detrimental effects to GDP growth from applying blanket restrictions and highlights the importance of creating trusted environments to better enable use of information and communication technologies (ICTs), and related data flows, on which companies of all sizes rely.
The flow of digital information is a key driver of economic development and inclusive growth by raising productivity, increasing efficiency, broadening participation in and facilitating access to markets not least for developing-economy businesses.
Over the last 10 years data flows are estimated to have raised world GDP by at least 10% and today exert a larger impact on GDP growth than trade in goods.
“The Internet and Internet-enabled services, which rely on cross-border data flows, are vital for companies across all sectors of the economy and are particularly critical for small- and medium-sized enterprises,” the ICC paper says. “Access to digital products and services, such as cloud applications, provides SMEs with cutting edge services at competitive prices, enabling them to participate in global supply chains and directly access customers in foreign markets in ways previously only feasible for larger companies.“
To help policymakers address negative implications for growth from blanket restrictions to data flows, the new ICC primer outlines seven steps that governments can take to ensure citizens and companies realise the full potential of the Internet as a platform for innovation and economic growth.
The recommendations are:
This can be done by ensuring that users have appropriate control and practical mechanisms with regard to how personal data is used, and the companies to which they entrust their data should adopt recognised and applicable best practice to ensure that the data is appropriately secured as technology and services evolve.
Promote the establishment of a new trade principle
This should include the underlying objective of allowing the flow, storage, and handling of all types of data across borders, subject to privacy and security laws and other laws affecting data flow covered under GATS article XIV.
Certain compelling public policy issues – including privacy and security – are recognised as possible exceptions and may form a legitimate basis for governments to place some limits on data flows if they are implemented in a manner that is non-discriminatory, is not arbitrary, is least trade restrictive, and not otherwise a disguised restriction on trade.
Include relevant players and show consistency
Any limits on cross-border data flows for privacy and security objectives should be consistent with GATS obligations, and include all relevant players and are equally applied.
This can be done through national rules and regulations that affect the movement of goods, services, and information across borders.
Support the Internet’s enabling role
Especially for SMEs to grow and participate in global trade.
Ensure any regulatory measures which limit data flows are necessary to accomplish the recognised and compelling public policy objective
Measures should be the least trade restrictive policy alternative needed to effectively address the issue, not be arbitrary or discriminatory, and not be disguised restrictions on trade in services.
Read Trade in the digital economy: A primer on global data flows for policymakers