The World Trade Organisation (WTO) Secretariat and the Organisation for Economic Co-operation and Development (OECD) have jointly released the report “Economic Implications of Data Regulation: Balancing Openness and Trust”. The research highlights the critical role data flows play in today’s interconnected world, enabling social and economic interactions. However, with the rise of regulations that either restrict (or impose conditions to) data flows, or that demand localised data storage, the report emphasises the need for a balanced approach that promotes cross-border flows while ensuring trust through adequate protection.
The report identifies the potential economic implications and opportunity costs associated with different types of data flow and data localisation regulations. It concludes that global solutions that promote free data flows paired with appropriate safeguards are likely to yield better economic outcomes for all economies, especially developing ones. The report predicts that this mixed approach could lead to a 3.6% increase in global exports and a 1.77% rise in global GDP. These benefits would be most pronounced for low and lower-middle-income economies, potentially boosting their GDP by over 4%. Conversely, the report warns against ‘full fragmentation’, where complete restrictions on data flow could cause a 4.5% decline in global GDP and an 8.5% drop in exports. While stringent data regulations pose economic challenges, the absence of regulation is also not advisable, as it could result in diminished trust in business transactions, and a decline in exports and GDP. The report makes the case for the implementation of the notion of Data Free Flows with Trust (DFFT).
The African Continental Free Trade Area (AfCFTA) Secretariat has unveiled the draft of the Protocol to the AfCFTA on Digital Trade during the Ninth Extraordinary Session of the Special Technical Committee on Justice and Legal Affairs held in Durban, South Africa. The purpose of the draft is to establish harmonised rules, common standards, and principles for digital trade in Africa.
The protocol applies to all digital trade measures adopted or maintained by State Parties. Digital trade has been defined as “digitally enabled transactions of trade in goods and services that can be either digitally or physically delivered”.
The draft Protocol calls upon State Parties not to impose customs duties on digital products transmitted electronically, while respecting provisions on Rules of Origin. It introduces several trade facilitating measures, such as paperless trading, electronic contracts, electronic invoicing, digital identities and digital payments. It also recognises the need for cross-border data transfers by electronic means, subject to exceptions based on legitimate public policy objectives and security concerns. The notion of legitimate policy objectives will be detailed in an annex to be approved ulteriorly. This means that the full implementation of the protocol may not yet happen after the approval of the draft, but may depend on further regulation. The current draft of the Protocol is subject to potential changes before the final version is adopted.
Canada, Japan, the Republic of Korea, the Philippines, Singapore, Chinese Taipei, and the United States of America have issued a statement on establishment of the Global Cross-Border Privacy Rules (CBPR) Forum that is aimed at multilateral cooperation in promoting trusted global data flows. The Global CBPR Forum intends to establish the Global Cross Border Privacy Rules (CBPR) and Privacy Recognition for Processors (PRP) Systems, based on APEC CBPR and PRP systems – data privacy certifications that help companies demonstrate compliance with internationally recognized data privacy standards.
