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Governing Digital Trade


As global data flows and digital technologies transform international trade, governments and regulators have to determine how to benefit from these developments while maintaining the integrity of their domestic regulations. Currently, governments are increasingly restricting global data flows and requiring data localization, undermining the economic benefits of digital trade. To address this trend will require a system of digital trade governance that has two key elements. One element is new digital trade rules, some of which exist in the WTO and others which are being developed in free trade agreements. The other is international regulatory cooperation to develop standards and mutual recognition agreements in areas such as privacy and consumer protection that gives domestic regulators confidence that allowing data to leave their jurisdiction will not undermine achievement of domestic regulatory goals. In the absence of such regulatory cooperation, governments are likely to continue to restrict data flows, relying on the exceptions provisions to their digital trade commitments.

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I would like to thank Mira Burri, Daniel Crosby, Andrew Mitchel and Neha Mishra for their comments and feedback.

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34 USITC (2014), supra n. 3, p., 275.

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47 Manyika supra note 45.

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50 Ibid., at 179–208.

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53 US Federal Trade Commission Staff Report (2015), ‘Internet of Things, Privacy and Security in a Connected World’.

54 Tsai, Chun-Wei et al. (2014), ‘Data Mining for Internet of Things: A Survey’, IEEE Communications Surveys & Tutorials, 16(1): 7797.

55 Davenport, T. H. et al. (2012), ‘How “Big Data” Is Different’, MIT Sloan Management Review, 52(1): 44.

56 McKinsey & Company (2016), Digital globalization: The New Era of Global Flows.

57 Greer D. (2013), ‘Big Data Security, Privacy Concerns Remain Unanswered’, Computerworld, 3 December 2013.

58 WTO (1998), Work Programme on Electronic Commerce (1998), WT/L/274, 30 September 1998.

59 USITC (2014), supra n. 22, p. 29.

60 J. P. Meltzer (2016), ‘Maximizing the Opportunities of the Internet for International Trade’, E15 Expert Group on the Digital Economy – Policy Options Paper, E15Initiative. Geneva, International Centre for Trade and Sustainable Development (ICTSD) and World Economic Forum.

62 J. P. Meltzer (2014), ‘Supporting the Internet as a Platform for International Trade: Opportunities for Small and Medium-Sized Enterprises and Developing Countries’, Brookings Working Paper 69, February 2014.

63 OECD (2009), ‘Top Barriers and Drivers to SME Internationalization’, Report by the OECD Working Party on SME and Entrepreneurship, OECD, Paris.

64 Schoonjans, B., Van Cauwenberge, P., and Bauwhede, H. Vander et al. (2013), ‘Formal Business Networking and SME Growth’, Small Business Economics, 41: 169181.

65 Ebay (2015), ‘Empowering People and Creating Opportunity in the Digital Single Market’, eBay report on Europe's potential, October 2015.

66 United States International Trade Commission, ‘Digital Trade in the US and Global Economies, Part 2,Investigation 332-540’, Pub. No. 4485, August 2014, p. 42.

67 United States International Trade Commission, ‘Global Digital Trade 1: Market Opportunities and Key Foreign Trade Restrictions’, Pub. No. 4716, August 2017, pp. 58–66.

68 PricewaterhouseCoopers (2016). ‘Industry 4.0: Building the Digital Enterprise’, 2016 Global Industry 4.0 Survey.

69 B. Hoekman and A. Mattoo (2008), ‘Services Trade and Growth’, Policy Research Working Paper No. 4461, World Bank, Washington DC; X. Liu, A. Mattoo, Z. Wang, and S.-J. Wei (2017), ‘Services Development and Comparative Advantage in Manufacturing’, Unpublished manuscript.

70 OECD (2012), ‘Mapping Global Value Chains’, TAD/TC/WP/RD(2012)9.

71 Baldwin, R. (2016), The Great Convergence: Information Technology and the New Globalization, Boston, MA: Harvard University Press.

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73 Helpman, E. (2011), Understanding Global Trade, Cambridge, MA: Harvard University Press.

74 Miroudot and Cadestin (2017), supra n. 4, at 16.

75 Ferracane, Martina F. 2017. ‘Restrictions on Cross-Border Data Flows: A Taxonomy’, ECIPE Working Paper No. 1/2017, p. 2.

76 Vietnam Decree No. 72 /2018/NC-CP amending and supplementing Decree No. 72/2013/ND-CP on Internet Services and Online Information; over-the-top refers to services that bypass traditional telecom and media distribution channels – e.g. Skype or Netflix.

77 Reserve Bank of India Notification, ‘Storage of Payment Systems Data’, RBI/2017-18/153.

78 Personally Controlled Electronic Health Records Act 2012, Section 77.

79 General Data Privacy Regulation Article 45. Personal data can also be transferred under binding corporate rules and standard contractual clauses, and in a limited number of other circumstances, see article 47.

80 USTR National Trade Estimates Report 2017, pp. 89–90,

81 Meltzer (2014), supra n. 62.

82 GATS art. 1(3)(b).

83 GATS art. 1.2.

84 Panel Report, United States – Measures Affecting the Cross-Border Supply of Gambling and Betting Services (US–Gambling, WT/DS285/R (10 November 2004) ), paras. 6.285–87; Appellate Body Report, United States – Measures Affecting the Cross-Border Supply of Gambling and Betting Services, WT/DS285/AB/R (7 April 2005), para. 215.

85 WTO Panel Report, China – Certain Measures Affecting Electronic Payment Services (China – Electronic Payments), WT/DS413/R, para. 7.575.

86 WTO Panel Report, US–Gambling, para. 6.285; WTO Appellate Body Report, China-Audiovisuals, WT/DS363/AB/R (Dec. 21, 2009), para. 364.

87 WTO Appellate Body Report, US–Gambling; WTO Appellate Body Report, China–Audiovisuals.

88 WTO Services Sectoral Classification List (1991).

89 A. Mattoo and S. Wunsch (2004), ‘Pre-empting Protectionism in Services – the WTO and Outsourcing’, World Bank Policy Research (2004).

90 Wunsch-Vincent, S. (2006), The WTO, The Internet and Trade in Digital Products: EC–US Perspective, Oxford: Hart Publishing, pp. 9091.

91 Tuthill, L. (2017), ‘Implications of the GATS for Digital Trade and Digital Trade Barriers in Services’, DigiWorld Economic Journal, 107: 114.

92 WTO Committee on Specific Commitments, ‘Report of the Meeting Held on 18 September 2014, Note by the Secretariat’, S/CSC/M/71; see also Shin-yi Pent, ‘GATS and the Over-the-Top (OTT) Services – A Legal Outlook’, Journal of World Trade, 50(1): 10–13.

93 WTO Committee on Specific Commitments, supra n. 92, para. 1.6.

94 Ibid., para. 1.3.

95 R. Zhang (2015), ‘Covered or Not Covered: That Is the question’, WTO Working Paper ERSD-2015-11, 7 December 2015, p. 9.

96 Ibid., p. 10.

97 ‘Comprehensive Economic and Trade Agreement between Canada and the European Union and Its Member States’, Annex 9-B.

98 Mitchell, supra note 14.

99 WTO Panel Report, China – Electronic Payments, para. 7.61.

100 Ibid. at para. 7.180; D. Crosby, ‘Analysis of Data Localization Measures under WTO Services Trade Rules and Commitments’, E15 Policy Brief, March 2016, p. 4.

101 WTO Appellate Body Report, US–Gambling, paras. 238, 251.

102 Hestermeyr, H. P. and Nielsen, L. (2014), ‘The Legality of Local Content Measures under WTO Law’, Journal of World Trade, 48(3): 588.

103 WTO Appellate Body Report, Brazil – Measures Affecting Imports of Retreaded Tyres, WT/DS33/AB/R, December 2007; WTO Appellate Body Report, US-Gambling, paras. 306–308.

104 A. Chander and P. Le Uyen (2014), ‘Breaking the Web: Data Localization vs. the Global Internet’, UC Davis Legal Studies Research Paper Series No. 378, April 2014, p. 5.

105 WTO Appellate Body Report, European Communities – Measures Prohibiting the Importation and Marketing of Seal Products, WT/DS4-00/AB/R, 22 May 2014, para. 5.261.

106 J. P. Meltzer and P. Lovelock (2018), ‘Regulating for a Digital Economy: Understanding the Importance of Cross-Border Data Flows in Asia’, Brookings Working Paper 113, March 2018, for a discussion of how to achieve legitimate policy goals while minimizing restrictions on cross-border data transfers.

107 WTO Appellate Body Report, US – Gambling, para. 339.

108 WTO Appellate Body Report, US–Shrimp, WT/DS58/AB/R (12 October 1998), paras. 115–116.

109 Burri (2017), supra note 14. at 76.

110 TBT Agreement, Art. 2.1 & Art. 2.4.

111 WTO Trade Facilitation Agreement, Art. 3.

112 WTO Trade Facilitation Agreement, Art. 1.1 & 1.2.

114 WTO Work Programme on Electronic Commerce, Ministerial Decision of 13 December 2017, WT/MIN(17)/65, 18 December 2017.

115 Members debate cyber security and chemicals at technical barriers to trade committee, June 2017,

116 WTO Council for Trade in Services, Communication from the United States, ‘Measures Adopted and under Development by China Relating to Its Cybersecurity Law’, S/C/W/374, 26 September 2017.

117 Request for consultations by the United States, China–Certain Measures Concerning the Protection of Intellectual Property Rights, WT/DS542/1, 26 March 2018.

118 China – Certain Measures on the Transfer of Technology, WT/DS549/1/Rev.1 (9 January 2019).

119 WTO Joint Statement on Electronic Commerce, 25 January 2019, WT/L/1056.

120 WTO Ministerial Conference (2017), WT/MIN(17)/60.

121 Wu (2017), supra note 15 at p. 6.

122 Ibid. at p .7.

123 EC 2017, Art. 12 (as of July 2017).

124 CPTPP 2018, Art. 14.11; USMCA Art. 19.11, 19.12.

125 CPTPP 2018, Art. 14.10 & 14.13; USMCA Art. 19.16 & 19.10.

126 CPTPP 2018, Art. 14.8; USMCA Art. 19.8.

127 A. Mattoo and J. P. Meltzer (2018), ‘International Data Flows and Privacy: The Conflict and Its Resolution’, 21(4) Journal of International Economic Law.

128 USMCA Art 20.J.11.

129 CPTPP 2018, Art. 18.66.

130 A. Chander (2014), ‘How Law Made Silicon Valley’, Amory Law Journal, 63: 639.

131 Authors Guild v. Google Inc., 804 F.3d 202 (2nd Cir. 2015).

132 USMCA Art. 19.17.

133 Communications Decency Act of 1996, Pub. L. No. 104–104, sec 230; see also Chander, A. (2014), ‘How Law Made Silicon Valley’, Amory Law Journal, 63: 650652.

134 PWC (2016), Industry 4.0: Building the digital enterprise.

135 Lan Yu et al. (2016), ‘Current Standards Landscape for Smart Manufacturing Systems’, NIST, NISTIR 8107, February 2016.

136 CPTPP Annex 8.B Information and Communications Technology Products; USMCA Art. 12.C.2.

137 See generally R. Howse, ‘The World Trade Organization 20 years on: Global Governance by Judiciary’, European Journal of International Law, 27(1).

138 Drezner, D. W. (2008), All Politics is Global: Explaining International Regulatory Regimes, Princeton, NJ, Princeton University Press.

139 See generally, T. J. Bollyky and P. C. Mavroidis, ‘Trade, Social Preference and Regulatory Cooperation’, EUI Working Papers RSCAS 2016/47.

140 Mattoo and Meltzer, supra n. 127.

141 USMCA Article 19.8.

I would like to thank Mira Burri, Daniel Crosby, Andrew Mitchel and Neha Mishra for their comments and feedback.

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