Cross-Border Data Flows


What are cross-border data flows?

The proliferation of innovative technology, including the Internet, email, and smart phones, has changed the ways people interact, communicate, and share. Individuals and businesses buy, sell, and communicate via the Internet every day. In the United States over ninety percent of adults have a cell phone, and of those, over fifty percent have smart phones. Every phone call, Skype conversation, and online purchase requires the transfer of information to go from point A to an eventual point B and beyond. The transfer of information, or data, is often referred to as data flows. Placed in a global context, data flows which cross country borders is cross border data flows.

Now information not only travels via the Internet. Physical objects—TVs, home appliances, and cars for example—are being connected to each other more frequently in what’s termed the “Internet-of-Things.” Far from being exclusive to high-tech firms, data flows are used by almost all businesses and customers.

Why are cross-border data flows significant?

As technological innovation like the Internet becomes commonplace, some countries have grown concerned about the free flow of data. Revelations about the ability of governments to collect digital traffic; protectionist goals to favor local companies; and protecting the security of personal data provide a few examples of concern. In response, some governments have placed barriers to impose the free flow of data across borders. Trade agreements are an important avenue for governments to agree on rules and regulations for issues like cross-border data flows. In trade agreements, governments can restrict data to cross borders in clearly defined and pre-accepted needs, like national security. Explicit exceptions reduce uncertainty for businesses and ensure that governments form an adequate justification for any data flow restrictions that are imposed in trade agreements.

Unnecessary barriers to cross border data flows create considerable obstacles to global trade. Ultimately, without the free flow of data consumers and businesses are unable to access valuable digital services. Small and medium-sized enterprises (SMEs), which can greatly benefit from digital trade, can be disproportionately affected by barriers that are created. Many times, SMEs do not have the resources to bear the  costs of entering into a new market, restricting their global reach. Providing strong rules to protect cross-border data flows is vital for SMEs, consumers, and multi-national businesses.

How will trade agreements affect cross border data flows?

The rapid technological developments of cross border data flows have left international trade laws outdated. Ongoing trade negotiations, like the Trade in Services Agreement (TiSA), allow an opportunity for barriers to be eliminated and for the world’s major trading nations to agree on an international framework which promotes free data flow.

Related Documents:

USTR Digital Trade Working Group

Measuring the Economic Value of Cross Border Data Flows

Fact Sheet: Key Barriers to Digital Trade

Cross-Border Data Flows Enable Growth in All Industries

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CSI is the leading business organization dedicated to the development of U.S. domestic and international policies that enhance the global competitiveness of the U.S. service sector through bilateral, regional, multilateral, and other trade and investment initiatives. CSI is the leading business organization dedicated to the development of U.S. domestic and international policies that enhance the global competitiveness of the U.S. service sector through bilateral, regional, multilateral, and other trade and investment initiatives.

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