Today, 78 industry associations active across six continents issued a Multi-Industry Statement on Cross-Border Data Transfers and Data Localization Disciplines in the WTO Negotiations on E-Commerce. The statement urges the 86 countries engaged in the so-called “Joint Statement Initiative” (JSI) e-commerce talks to negotiate an outcome on data flows that: (1) prohibits unnecessary or discriminatory data localization mandates and data transfer restrictions; (2) applies across all economic sectors; (3) reflects principles of transparency and interoperability among legal frameworks; and (4) requires all countries to adopt or maintain legal frameworks to protect personal information. These four principles reflect emerging best practices in regional agreements on data transfers.
The JSI e-commerce negotiations, which involve countries representing more than 90 percent of global trade, are the largest ongoing international effort to develop new rules to unlock the potential of the digital economy. Yet minimal progress is reported on the most fundamental issue in the negotiations – data-related trade barriers.
There are good reasons for the WTO to address this issue. In every country, data transfers are critical to growing jobs and exports in manufacturing and services at every stage of the value chain. Data transfers are critical to small business owners in every country seeking to advertise and sell products online to purchasers in another country. Data transfers are critical to aircraft, vehicle, machinery, electronics, and other manufactured exports that depend upon the ability to transmit and receive machine-to-machine data communications, including across borders. Likewise, without the ability to provide service via information and updates sent across borders, it would in many cases be impossible to provide support for manufactured goods after exportation.
In fact, 75 percent of the value of data transfers is estimated to accrue to traditional industries like agriculture, logistics, and manufacturing. The benefits are present in every sector:
- In farming, 90 percent of crop losses are caused by weather. But food production can be protected when crop damage is reduced by virtue of predictive weather modeling and other precision agriculture techniques that draw upon data gathered from thousands of sensors across countries and regions.
- In advanced manufacturing, companies are combining IoT sensors with predictive analytics software to improve workplace safety and increase productivity, while reducing unplanned maintenance and factory downtime. These software tools perform real-time analysis of performance indicators gathered from factories around the world, measuring things like vibration, heat, and energy use to better understand what is going on deep inside machinery and identify potential equipment failures.
- In the health sector, universities and other institutions deploy research and laboratory data in AI-powered systems that cross-reference clinical queries with insights gleaned from thousands or millions of potentially relevant medical studies from around the world – leading to the delivery of better diagnoses, more cost-effective biopharmaceutical research, and the development of new life-saving cures.
- In the financial sector, service providers analyze data generated in various parts of the world to detect patterns, identify and stop fraudulent transactions, and help combat other criminal behavior.
- In the transportation sector, all types of conveyances – in the air, on land, and at sea – continually communicate billions of operational and business-related data elements across borders to satellites, radar stations, data centers, and control towers, ensuring efficient operations, reducing emissions, and protecting lives.
- In the automotive sector, cross-border data transfers are important for satellite- or cellular-enabled vehicle technologies (over-the-air software updates, navigation software, roadside service, etc.) and core operational functions of OEMs and suppliers (e.g., cross-office R&D activities; connected manufacturing or supply chain functions; international marketing and sales; post-sale service, etc.).
- In the COVID-19 era, the ability of workers to connect through teleworking, virtual collaboration, and online training, as well as remotely delivered health care and other services depends upon cross-border access to technology and cross-border data transfers.
The ability to transfer data across borders also directly contributes to important policy objectives relating to economic development, intellectual property, privacy, security, and regulatory compliance. For example, in the financial services industry, the ability to transfer and analyze data in real-time across borders is critical to efforts to combat financial fraud, money laundering, and other illicit financial transactions. In the context of cybersecurity, cross-border data transfers allow for cybersecurity tools to monitor traffic patterns, identify anomalies, and divert potential threats in ways that depend on global access to real-time data. When governments mandate localization or restrict the ability to transfer and analyze data in real-time, they create unintended vulnerabilities.
We urge all the countries engaged in the WTO JSI negotiations to agree to prohibit – in all sectors – discriminatory or unnecessary data localization mandates or data transfer restrictions and to ensure that countries adopt or maintain interoperable frameworks for the protection of personal information.
