Global Data Flows in Trade

September 19, 2016
Data Flows

Associations representing startups and entrepreneurs around the world strongly advocate that trade agreements under negotiation, in particular the Trade in Services Agreement (TiSA) and Transatlantic Trade and Investment Partnership (T-TIP), include binding obligations to allow data and information to flow freely across borders. We also advocate for the inclusion of provisions concerning exceptions to general rules, which are the norm in trade agreements, so that participating governments have sufficient opportunity to regulate in the public interest without restricting all data flows and therefore trade and investment.

Cross-border data flows come naturally for startups just like the idea of artificially limiting the potential of data seems mind boggling. Startups are today’s drivers of growth and jobs in the digital economy and the United States and European Union generate equally two-thirds of the revenues of the global app market. Governments that take on obligations on allowing cross-border data flows demonstrate powerfully both their intention to strengthen international trade and their commitment to innovation, entrepreneurship, openness and growth.

Trade agreements provide certainty and predictability for markets and firms – especially startups, scale-ups, and other entrepreneurs – who seek the clearest possible and easy-to-use legal and regulatory landscape when introducing new products and services or otherwise doing business.  With thoughtful, carefully tailored exceptions to general rules, they also provide ample room for governments to address legitimate public policy objectives, such as protecting the privacy and personal information of citizens.

When trade agreements do not provide this clarity, governments signal to the marketplace that they may restrict flows of data and information in the future.  Startups, scale-ups, and entrepreneurs, who bear disproportionate costs of compliance with restrictions on data flows, will interpret that signal as a risky bet – which discourages them from innovating, expanding, and creating new jobs.  Indeed, whether or not they face such restrictions can be an existential question for their businesses.

Governments could provide much more positive signals in their trade agreements by showing openness to the flow of data and information across borders.  It would spur startups and entrepreneurs to scale up quickly and go global, therefore trading more, creating more jobs, developing new innovations in different markets, and disseminating skills and knowledge at home and abroad.

TiSA and T-TIP represent the most immediate opportunities for the participating governments to include binding obligations to allow data and information to flow freely across borders. On behalf of thousands of startups, entrepreneurs, and innovators around the world, we respectfully ask that the parties to these negotiations include such provisions.  We welcome the progress that negotiators have made to date and encourage them to include these provisions in negotiating texts as soon as possible. We hope that these agreements can build on the Trans-Pacific Partnership Agreement and spread its norms on openness to data flows to future agreements around the world.