Paris and New York, March 22, 2016 – Some 10.2 billion new connected devices are expected to come online over the next five years – nearly double the number in existence today. Many of these devices will transmit user data for processing across borders. But a proliferation of forced localization measures and other government policies to restrict cross-border data transfers threaten to choke off essential cross-border electronic commerce.
Businesses from across the developed world are urging policymakers to avoid imposing rules on data privacy and security that distort global trade. In a new paper, BIAC, the Business and Industry Advisory Committee to the OECD, points to the crucial role of cross-border data flows for the recovery and future of the global economy, and calls on the OECD and governments to develop policies and regulatory frameworks that address concerns for security and privacy in the least trade-distorting way.
“Governments must avoid restricting trade through data localization measures”, said Clifford Sosnow, chair of the BIAC Trade Committee and partner with the Canadian law firm Fasken Martineau LLP. “Considering the importance of this issue for competitive markets, this paper offers recommendations to address the impact of data localization and at the same time deal with privacy and security concerns.”
The BIAC paper had significant input from the U.S. private sector via BIAC’s American affiliate, the United States Council for International Business. The paper estimates that, if fully enacted, government forced localization measures currently in place, or under consideration, could reduce global trade by $93 billion annually.
BIAC recognizes the OECD’s unique capacity to gather and develop evidence on trade restrictive measures on data flows, and accordingly requests the OECD to:
- highlight to governments the impact of data localization on trade and investment
- raise awareness among all industries on the importance of data flows for business operations and participation in global trade
- promote policies that enable open flow of data, to support the rapidly growing number of business models that rely on data flows.
BIAC will work with the OECD to promote best practices in the field of cross-border data flows and encourage governments to refrain from measures that compromise the benefits of open markets and investment for growth.