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Cross Border Data Flows en

Governments can help businesses and consumers realize the benefits of cloud computing without sacrificing privacy and security. They should promote trade rules that protect cross-border data flows, minimize disruptions to data flows in domestic legislation, and avoid conflicting rules that raise barriers. This balances economic growth with privacy, while addressing concerns over misuse of digital technologies.

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Ciise Cali Haybe
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101 views5 pages

Cross Border Data Flows en

Governments can help businesses and consumers realize the benefits of cloud computing without sacrificing privacy and security. They should promote trade rules that protect cross-border data flows, minimize disruptions to data flows in domestic legislation, and avoid conflicting rules that raise barriers. This balances economic growth with privacy, while addressing concerns over misuse of digital technologies.

Uploaded by

Ciise Cali Haybe
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Policy recommendations

Cross-border
data flows
The opportunity Cross-border
data flows
In our increasingly interconnected world, the ability to
transfer digital information across borders is essential to
economic growth and opportunity. McKinsey Global Institute
estimates that the international flow of data contributed
2.8 trillion U.S. dollars to the global economy in 2014, a
figure that could reach 11 trillion U.S. dollars by 2025.

According to Michael Porter and James Heppelmann, writing in


the Harvard Business Review, data-fueled technologies have the
potential to drive a sharp increase in innovation, productivity gains,
and economic growth. Policymakers are beginning to recognize that
cloud computing is creating opportunities for companies large and
small to drive innovation and transform every aspect of business
operations. Access to these technologies and the freedom to use
them to send data across borders is especially important for small
and midsized companies because it can enable them to compete
against larger businesses and reach customers around the globe in
ways that have never been possible before.

The challenge

Most governments recognize that innovations powered by


cloud computing offer huge potential benefits, and they
understand that these innovations often require the movement
of data across international borders. At the same time, there
are growing concerns and misconceptions about the potential
to misuse digital technologies to exploit children, commit
fraud and other crimes, and carry out acts of terrorism.

Striking a balance that facilitates the smooth flow of data and


provides appropriate capabilities to preserve privacy, protect
individual and public safety, and promote national security is a
Cross-border
data flows difficult challenge. Compounding the difficulty is the fact that
many existing laws and agreements governing the flow of data
across international borders were created years—even decades—
before the widespread adoption of email, social networks,
texting, and other capabilities that we take for granted today.

As a result, companies large and small face legal restrictions that


sometimes limit their ability to store, transfer, and process data
across borders. These restrictions include legal mandates to store
data locally, local supply requirements, and the effects of conflicts
between laws in different jurisdictions. The impacts include
higher costs, reduced economic opportunities, closed markets, and
restricted access for consumers to new products and services.

Policy recommendations

Governments can help businesses and consumers realize the


benefits of cloud computing without sacrificing their ability to
protect privacy and public safety. While the responsibility to create
trust primarily lies with technology companies, governments have
a fundamentally important role to play in encouraging greater use
of cloud services to help businesses grow and deliver innovative
services to consumers. As governments assert national sovereignty
over online content and conduct, they must also respect the
legitimate interests and sovereignty of other jurisdictions and
recognize the critical importance of access to an increasingly
global network of cloud services for businesses large and small.

Steps governments can take to protect access to cloud-


based services that rely on cross-border data transfers and
to preserve their own regulatory authority include:
Promote trade rules that protect cross-border data flows.
Cross-border
The proposed Trans-Pacific Partnership agreement provides a data flows
good model for such rules by requiring parties to allow cross-
border transfers of information and restricting forced localization
of computing facilities while also permitting exceptions to the
extent necessary to protect the privacy of personal data and
achieve other legitimate policy goals. The EU-U.S. Trans-
Atlantic Trade and Investment Partnership—that is still under
discussion—and the proposed multilateral Trade in Services
Agreement to complement the WTO General Agreement
on Trade in Services, both offer important opportunities to
expand the reach of protections for cross-border data flows.

Minimize disruptions to data flows in domestic legislation.


Virtually all companies today use services that involve the
transfer of data, and many of these transfers cross borders.
When drafting domestic rules, governments should minimize
adverse impacts on products or services that involve cross-
border data transfers. In particular, they should avoid rules
that prohibit data from being stored or processed in other
jurisdictions or that require the use of domestic cloud services
providers or datacenters. In some cases, such provisions are
incompatible with existing international obligations.

Encourage e-commerce. Electronic commerce, which


invariably involves cross-border data flows, has the potential
to expand opportunity and foster equal access to the benefits
of cloud computing because it brings the global marketplace to
every consumer with an internet connection, while enabling
even the smallest local business to reach consumers and
suppliers anywhere in the world. To ensure that e-commerce
reaches its full potential, governments should refrain from
imposing customs duties or other taxes on cross-border
Cross-border
electronic transmissions (consistent with the 1998 WTO
data flows moratorium on e-commerce duties) and commit to extending
nondiscriminatory treatment to digital products and services.

Avoid establishing conflicting rules that raise barriers. In a


world where data flows are global, the risk of conflicting national
rules is substantial. Because compliance costs from conflicting
rules are enormous, and may exceed what many smaller firms
can afford, governments should ensure that legislation provides
maximum flexibility and creates the least risk of conflict.

Evidence and further reading:

World Bank: “World Development Report 2016: Digital Dividends”

Information Technology & Innovation Foundation: “Cross-Border


Data Flows Enable Growth in All Industries”

European Centre for International Political Economy (ECIPE):


“The Costs of Data Localization: A Friendly Fire on Economic
Recovery”

McKinsey Global Institute: “Digital Globalization: The New Era of


Global Flows”

Organisation for Economic Co-operation and Development


(OECD): “Economic and Social Benefits of Internet Openness: 2016
Ministerial Meeting on the Internet Economy—Background Report”

BSA | The Software Alliance: “What’s the Big Deal with Data?”

For links to these and other resources, please visit:


http://www.microsoft.com/cloudforgood

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